Sidway v. Harris
| Decision Date | 22 April 1899 |
| Citation | 50 S.W. 1002,66 Ark. 387 |
| Parties | SIDWAY v. HARRIS |
| Court | Arkansas Supreme Court |
Appeal from Baxter Circuit Court in Chancery, JOHN B. MCCALEB Judge.
L. B Sidway and the American Mortgage Company of Scotland (Limited) brought suit against John W Harris and wife to foreclose a deed of trust executed by him to Sidway as trustee for the company. The facts are stated in the opinion.
Decree reversed and cause remanded.
DeRoos Bailey, for appellants.
The burden of proving usury is on him who alleges it. 109 N.Y 477; 57 Ark. 256. When an agent receives a bonus, which added to the interest exacted by the lender, exceeds ten per cent. per annum, but without the knowledge of the lender and without circumstances from which such knowledge could reasonably be presumed, the lender is not guilty of exacting usury. 51 Ark. 544; 54 Ark. 155; ib. 50; 57 Ark. 251; 63 Ark. 249; 116 U.S. 98; 57 Ark. 357; 38 N.Y. 281. Authority to exact usury is never presumed. 116 U.S. 561. Authority to employ sub-agents is not implied. 54 Ark. 566.
Horton & South, for appellee.
A foreign corporation cannot do business in Arkansas until it files the required certificate, signed by its president. Sand. & H. Dig. §§ 1323, 1324; Const. Ark. art. 12, § 11; 104 U.S. 11; 113 U.S. 727; 27 Am. & Eng. Enc. Law, 378, note 2; 23 Ark. ib. 298, 299; 8 ib. 330-340. If the principal suffers the agent to loan money in his own name, without disclosing his agency, the agent will be treated as principal as to all consequences of his acts. Mechem, Ag. § 745; 54 Ark. 566; 3 Neb. 256; 11 ib. 487; 53 Ia. 627. The transaction was usurious. 47 Ark. 287; 55 ib. 268, 143; 51 Ark. 143; 54 Ark. 573, 40; 64 ib. 47, 48.
This is a suit to foreclose a deed of trust given on land to secure a note for $ 850, both dated January 9, 1887, bearing interest at the rate of eight and a half per centum per annum, payable annually on the 1st day of January of each year, and the principal due January 1, 1894. The interest, up to the maturity of the principal note, was evidenced by coupon notes, each for $ 72.25, and payable at the end of each year, as stated. The whole after the maturity of the principal to bear ten per cent. per annum interest until paid. On default of the payment of any one of them, the whole debt might be treated as due at the option of the holder, and all expenses, such as taxes and sums laid out by the parties interested in the preservation of the property, were to be added to the mortgage debt, and also an attorney's fee of ten per cent. in case of suit. The notes, on their face, were made payable in Chicago; but the defendants, in their answer, insist strenuously that this is an Arkansas contract, and the plaintiffs seem to have conceded the point, and the cause was heard and determined according to the laws of Arkansas. One of the defenses set up in the answer is the plea of usury; and if this case is governed by the laws of Arkansas, and if the plea of usury is established by the evidence, the defendant asks that the contract may be declared to be null and void, and the note and deed of trust be cancelled and held for naught. If, on the other hand, the case is governed by the laws of Illinois, and the plea of usury be sustained, he asked that all interest be forfeited, and that he have his recoupment or setoff for such of the interest as he has paid.
On the objection of the defendant, in his answer, to the application of the laws of Illinois, notwithstanding the note is made payable in Chicago, the case was tried and decree rendered as if the case was governed by the laws of Arkansas, and we cannot do otherwise than so treat it now. The interest expressed in the face of the note is eight and one-half per centum per annum, and the maximum rate in this state is ten per centum per annum. It follows, therefore, that, upon the face of the contract, it is not usurious. But it is contended that the extraneous proof shows that the contract was in fact usurious; for, while the amount of money loaned to the defendant, ostensibly, was $ 850, yet, in truth and in fact, only $ 786.25 were loaned to him. The annual interest on the $ 850 would be $ 72.25 at the rate of 8 1/2 per cent. and this is the amount called for by each of the interest coupons; while the annual interest on $ 786.25, the amount claimed to have been actually received on the loan by the defendant, at the rate of ten per cent.--the highest legal rate in this state--would be $ 78.62, which is greater than the annual rate sought to be collected. The plea of usury is to the effect that the plaintiff would receive more than ten per centum per annum by his usurious contract, but, taking the statement of the defendant to be true that he only borrowed $ 786.25, instead of the $ 850, the calculation still does not show usury.
Again, the difference between the amount called for by the note and that claimed in fact to have been loaned to the defendant is $ 63.75, and this amount is shown by the evidence to be made up of the $ 25 paid an attorney in Chicago for passing upon the abstract of title and other papers presented by the defendant as a basis upon which to effect the loan, and is put down among the expenses he agreed to bear, and $ 38.75 which the duly-authorized agents of the defendant in Arkansas appear to have taken out of the fund received by them for him as their fee and expenses paid by them. Under the rulings of this court, these transactions do not evidence usury in the contract. So, looking at it from every standpoint, we see no usury in this case according to the laws of this state.
There is another question raised by the answer, namely, that the plaintiff corporation--the real lender of the money, as is claimed by it--had not by its president appointed, in writing filed in the office of secretary of state, an agent, and designated his place of business, upon whom service of process might be had in order to bind said corporation.
When the contract sued on herein was made, to-wit, the 9th of January, 1887, the act of April 4, 1887, upon which this plea was presumably made, had not been passed and become a law. This record shows that on the 31st of January, 1883, the corporation, over the signatures of two of its directors and its secretary, attested by its corporate seal, had appointed (in writing, and caused the same to be filed in the office of the secretary of state) John M. Rose, Esquire, as its agent designating his residence in the city of Little Rock, upon whom such service might be had, and, when had, that it should be binding upon it. At that time there was only the constitutional provision and prior statutes carried over by the constitution on the subject in...
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