Seattle Trust Co. v. Morgan

• Decision Date: 08 April 1932
• Docket Number: 23533.
• Citation: 167 Wash. 567,9 P.2d 1079
• Court: Washington Supreme Court
• Parties: SEATTLE TRUST CO. v. MORGAN et ux.

9 P.2d 1079

167 Wash. 567

SEATTLE TRUST CO. v. MORGAN et ux.

No. 23533.

Supreme Court of Washington

April 8, 1932

Department 2.

Appeal from Superior Court, Whatcom County; Edwin Gruber, Judge.

Suit by the Seattle Trust Company, formerly the Seattle Title Trust Company, trustee, against Byron M. Morgan and wife. From a decree for plaintiff and an order overruling a motion for new trial, defendants appeal.

Affirmed.

R. W Greene, of Billingham, for appellants.

Edward J. Crowley, of Seattle, for respondent.

BEALS J.

Defendants Byron M. Morgan and Mabel B. Morgan, under date April 23 1928, signed an application directed to Washington General Mortgage Company, appointing the addressee their agent for the purpose of securing a loan of $4,746, to be secured by a mortgage upon a tract of land in the city of Bellingham. Among many other provisions, the application for the loan contains the following:

'I do hereby agree to pay to the depository to be named in the deed of trust, interest at the rate of 6% per annum payable semi-annually and in addition thereto agree to make the following principal curtailments. This loan is for $4,200 applied for on the 60/40 plan which calls for a payment of $10.10 a month per thousand when so paid, pays all the interest and 60 percent of the principal in 120 months.

'This loan is to carry the two year deferred payment plan which calls for a 1 1/2 percent service charge. And will pay on the final maturity date the sum of One thousand six hundred eighty and no/100 Dollars ($1,680.00). * * *'

Mr. Morgan also stated, in a supplement to the application above referred to, that he was an accountant, and that his annual income was $5,000. The blank forms upon which defendants' application for a loan was made were evidently furnished by Mortgage Security Coporation, an eastern concern loaning money through its New York office. After considerable negotiation, Mr. and Mrs. Morgan, under date May 1, 1928, executed a 'first lien real estate trust deed note,' due May 1, 1938, payable to bearer, in the principal sum of $4,700, bearing interest at the rate of 6 per cent. per annum, and having attached thereto twenty coupon notes, some for $254.40, and others for $255.35. As security for payment of the note, defendants executed, in favor of Seattle Title Trust Company (plaintiff's predecessor in interest) and Union Trust Company of Maryland, a mortgage covering the real estate which was intended should stand as security for the loan. This mortgage referred to the note as being in the principal sum of $4,700. It is admitted that the actual amount of money loaned to defendants was $4,200, from which amount was deducted certain items of expense, in accordance with the application signed by defendants.

Defendants made payments on account of the note for approximately two years, and during the month of August, 1930, were advised by the agent of the owner of the mortgage that the balance due on account of the loan May 1, 1930, had been $4,271. At this time defendants had paid on account of the loan $1,018.08, and they objected to the amount said to be due, stating that the original loan was only $4,200, and that the balance claimed to be due was incorrect. Defendants failed to make payments called for by the note, and during the month of January, 1931, suit was brought on the note and for the foreclosure of the mortgage, plaintiff claiming that there was due thereon the sum of $4,359.22, together with interest at 6 per cent. per annum from November 1, 1930. The trial court signed a decree awarding judgment against defendants in the sum of $4,359.22, together with interest, attorney's fees and costs, and directing foreclosure of the mortgage and the sale of the property covered therby. From this decree defendants appeal.

Appellants assign twenty errors, which they contend entitle them to a reversal or modification of the judgment appealed from. We sasume that Mortgage Security Corporation of America (hereinafter referred to as the mortgage company) was the actual principal in making the loan to appellants, and that the respondent is trustee for the mortgage company, which operated through several agents, and, in making loans, followed an extremely complicated procedure.

Appellants demurred to respondent's complaint, and assign error upon the order of the trial court overruling the same, in which as signment of error we find no merit. In their answer, appellants denied any indebtedness to respondent, and alleged fraud in the execution of the instrument sued upon together with misrepresentation as to the rate of interest, and other matters. They also pleaded usury, and that in no event should any recovery be allowed against them on any basis other than that of an original loan to them in the sum of $3,970.01, less a credit in the sum of $1,018.08, paid by appellants on account of the loan. The affirmative allegations of appellants' answer were denied by respondent in its reply.

It is apparently conceded by respondent that the actual loan made amounted to no more than $4,200, from which certain deductions were made on account of expenses in connection therewith.

Appellants objected to the introduction of any evidence, and moved for a nonsuit on the ground that the real party in interest was not Before the court and was a foreign corporation, not entitled to maintain the action. Appellants also contend that the trust has been fully executed, and that respondent is not qualified to bring or maintain the action. They further contend that respondent's case was pleaded in its reply, rather than in its complaint. Respondent contends that it, as trustee for the mortgage company, is entitled to wage the action, and that the decree entered by the trial court was in all particulars correct.

Under Rem. Comp. Stat. § 180, the trustee of an express trust may, as trustee, maintain an action without joining the beneficiary of the trust. We are satisfied that, under the law and the decisions of this court in the cases of Thompson v. Huron Lumber Co., 4 Wash. 600, 30 P. 741, 31 P. 25; Thompson v. Price, 37 Wash. 394, 79 P. 951; Carr v. Cohn, 44 Wash. 586, 87 P. 926; Goodfellow v. First Nat. Bank, 71 Wash. 554, 129 P. 90, 44 L. R. A. (N. S.) 580; and Ritchie v. Trumbull, 89 Wash. 389, 154 P. 816, respondent may maintain this action. Neither does it appear that he trust has been executed, or that the action must fail because the beneficiary has paid no corporate license fees under the laws of this state.

The trial court held that the loan was not usurious, and with that holding we are constrained to agree. The note sued upon is payable ten years from its date, and, in determining whether or not a contract is usurious, the entire period of the contract must be considered. Cissna Loan Co. v. Gawley, 87 Wash. 438, 151 P. 792, L. R. A. 1916B, 807, Ann. Cas. 1917D, 722; Lewis v. Vassar, 132 Wash. 480, 232 P. 312. It is also true that, 'in determining whether or not a given contract for the payment of money is usurious it is clearly the rule that where the contract is susceptible of two constructions, the one lawful and the other unlawful, the former will be adopted.' German Savings, Building & Loan Ass'n v. Leavens, 89 Wash. 78, 153 P. 1092, 1093. There is considerable variation in the testimony as to what the rate of interest upon the loan here in question actually was, but we are satisfied that under no theory can it be determined that under our statute and the decisions of this court the loan was usurious.

Appellants strenuously argue that the transaction is tainted with fraud,...