Smith v. Mack

• Decision Date: 23 December 1912
• Citation: 151 S.W. 431,105 Ark. 653
• Parties: SMITH v. MACK
• Court: Arkansas Supreme Court

151 S.W. 431

105 Ark. 653

SMITH v. MACK

Supreme Court of Arkansas

December 23, 1912

[Copyrighted Material Omitted]

Appeal from Greene Chancery Court; Charles D. Frierson, Chancellor affirmed.

STATEMENT BY THE COURT.

C. A Mack brought this suit against appellants to recover $ 10,642.50 on two promissory notes and interest, and to foreclose a mortgage upon lands in Greene and Poinsett counties, given to secure the payment thereof.

The answer admits the execution of the notes and mortgage, and pleads usury in bar of the recovery, alleging that appellee agreed to make said loan, charging interest at the rate of 10 per cent. per annum from date until paid and an additional sum of $ 1,000 as bonus for the forbearance and use of the money, which was paid to his agent and attorney, who delivered the amount of the loan to appellants, the money having been deposited by Mack with his said agent, D. G Beauchamp; the said Mack having full knowledge and consenting for his said agent to demand and receive said $ 1,000; alleged further that the notes sued upon are void for usury and the mortgage likewise, and prays that the same be surrendered up and cancelled, and the cloud upon their title removed.

It appears from the testimony that appellants had been trying to procure a loan of about the sum of money which they finally borrowed, with which to purchase certain lands in Greene and Poinsett counties, the acreage of which had not been exactly determined; that J. A. Smith had offered to pay, to any one who would procure them the loan of the amount upon five year's time, $ 1,000 for the service; that G. W. Cox had been attempting to procure the loan, but none of them had succeeded in doing so. J. A. Smith testified that he had been in Memphis, trying to negotiate the loan, and it occurred to him that he could procure it from C. A. Mack. That he went to him upon his return from Memphis, told him he desired the loan for the purpose of buying certain lands, which were worth $ 10 or more per acre; that he would secure the loan by mortgage upon the lands, and, in addition, upon the farm of one of the appellants, Virginia Thompson, in Greene County. That Mack intimated that he was favorable to the proposition, and, after an hour's absence, returned, when they had another conversation. Mack said he had investigated the matter a little during the time, and one or two people told him it was a good loan, and he said further: "I understand, Joe, that you have offered a bonus of $ 1,000 to anybody that will loan you this money." "I looked at him a short time, long enough to get his expression, and saw that he knew something about this $ 1,000, and I told him yes. He said: 'That $ 1,000 looks good to me, and if I make the loan you will have to give it to me.' I told him all right." That thereafter Mack went to the bank to make the necessary arrangements, returned, and said the money would be forthcoming when the title was approved by Mr. Beauchamp, who was not then in the city. That it was arranged that evening or the next morning that Beauchamp, in Mack's behalf, and Williams, in behalf of his associates, should go to Harrisburg, and investigate the title of the land that was about to be purchased. That they went there. George Cox informed the witness that Beauchamp had telephoned from Harrisburg for him to tell Williams to have the $ 1,000 placed in the bank and inform him by 'phone that it had been done, or that matters at that end of the line would not be fixed up. This was done. Witness made no arrangement with Mack how the $ 1,000 should be paid, and at no time had he had any conversation with Beauchamp about this $ 1,000 or asked him to assist him in procuring the loan. The next day the notes and mortgages were executed and delivered in Mr. Beauchamp's office, the check for the $ 1,000 having been first turned over to him; that witness had never made any agreement with Beauchamp, nor had any conversation with him relating to any compensation to be paid to him for procuring the loan, and in answer to this question said:

"Q. Did you know who was getting the $ 1,000 at the time you were making the check to Beauchamp? A. Mr. Mack was the man I was paying this money to, and the reason I gave it to Beauchamp was that Mack told me that Beauchamp was his attorney, and would attend to the matter for him, and that is why I gave the check to Beauchamp. Otherwise I would have given it to Mr. Mack."

Witness said further that he had never had any conversation with Cox at any time in which he was told that Beauchamp would procure the loan, and that he must be paid for it.

The lands were purchased, and the deed of conveyance made to C. A. Mack, for a consideration of $ 10.642.50. He later, for the same consideration, made a quitclaim deed to appellants at the time of the execution of the mortgage.

J. W. Williams, another appellant, testified that the lands were purchased from J. H. Vandever for something in excess of $ 10,600, and the title was taken in the name of C. A. Mack; that he went to Harrisburg to close out the trade with Beauchamp, who gave Vandever his personal check to cover the consideration. It was witness' understanding that they were to pay Mack $ 1,000 additional, to be embodied as a part of the principal in the mortgage, and he didn't understand, until he returned from Harrisburg, that the transaction had been arranged otherwise. He then joined with the others in executing a note for $ 1,000, but did not know to whom the money realized thereon had been paid. That he represented the firm when he went with Mr. Beauchamp to look up the titles, and supposed that Mr. Beauchamp represented Mack. Didn't remember that Beauchamp said anything about who he represented. That he didn't represent witness, and that he had never spoken to him about representing him, nor with his associates, nor agreed to pay him anything, nor had he spoken to him about procuring a loan from Mack. This witness admitted that he had offered a bonus to other parties if they would get the money for appellants, but that he had never had any conversation with Mack or Beauchamp in regard thereto, and could not recall any conversation with Mack to the effect that he refused to make the loan after reconveying the lands for the additional $ 1,000. He understood Mack to refuse to make the loan because it had originally been for five years, but consented to do so if it was to be for one and two years. He denied that Cox had any conversation with him, in which he stated that he thought Beauchamp could get the loan if he would pay him $ 1,000 to do so, and also that he had any conversation in his office, or Cox's, in which Cox told him the $ 1,000 they put up goes to Beauchamp. The only thing said about $ 1,000 in his presence was that they were paying Clyde Mack $ 1,000 more than he was paying for the land. That he knew nothing of what became of the $ 1,000, other than what they told him. He had never employed Cox to represent him. He acknowledged he and his associates were ready to pay any one $ 1,000 that secured the money for them, and he believed the bonus was to be included in the principal and mortgage.

Wright also denied any conversation with Cox, in which he had been informed that they could procure the loan through Beauchamp by paying him (Cox) $ 1,000.

Mack testified that he had not employed Beauchamp in this or any other matter as his agent, and he made the deal to loan the money with Beauchamp; that he never got any part of the $ 1,000 paid to Cox and Beauchamp for procuring the loan, and answered further as follows:

"Q. Did you ever have any understanding, tacit or expressed, in any way that you were to have any part of it? A. Most emphatically not. Q. Have you ever received any part of it from Mr. Cox or me? A. Not a penny."

He said first the appellants wanted the money for five years, and he felt that was too long a time, and afterwards when Beauchamp came to see him about it he agreed to let them have it on two years' time. The check covering the consideration for the land was given by Beauchamp personally, because the exact acreage was not known at the time Beauchamp and Williams departed for Harrisburg, and the title was taken in witness' name to protect him until the mortgage was executed. He denied ever having had any conversation with Smith relative to the making of the loan about the bonus, and said it was first broached to him by G. W. Cox about three weeks before the loan was made. In this conversation, Cox said they would give $ 2,000 personal security and a bonus of $ 500 in addition to secure the loan. He rejected this and all other propositions after he learned that this would be usurious, and said J. A. Smith had called on him twenty-five or thirty times before the loan was procured to see if some arrangement could not be made which was satisfactory. He told him if he could get things on a satisfactory basis he could make the loan, and thought he could get the money, if he could cash his time deposits at the bank. This was all he ever said to appellant about getting the money from the bank. That he agreed with Mr. Beauchamp to make the loan on Saturday night between 7 and 9 o'clock, and it was closed on Monday or Tuesday following. That he saw the bank on Monday and made the arrangement that he could draw the money at that time. That ordinarily he would have given them a few days' notice before drawing such a large amount, but didn't on this, as the deal went on through then.

He didn't see the bank as stated by Wright at the time. He told Beauchamp he would make the loan at the time the deal was closed. He could only recall one instance when an attorney other than Beauchamp did anything for him during four or five years before he was testifying....