Smith v. Wolf

• Decision Date: 05 April 1881
• Citation: 55 Iowa 555,8 N.W. 429
• Parties: SMITH v. WOLF AND OTHERS.
• Court: Iowa Supreme Court

55 Iowa 555

8 N.W. 429

SMITH

v.WOLF AND OTHERS.

Supreme Court of Iowa.

Filed April 5, 1881.

Appeal from Poweshiek district court.

This is an action to recover the amount of two promissory notes, executed to the plaintiff by the defendant John D. Wolf, and for the foreclosure of mortgages executed to secure them. One of said notes is for the sum of $6,000, and is dated April 5, 1872. The other of said notes is for the sum of $3,500, and is dated January 27, 1876. Both notes bear interest at the rate of 10 per cent. per annum. The defendants admit the execution of the notes and mortgages, but allege that the notes are usurious. The court found for the plaintiff. The defendants appeal.W. R. Lewis and Ballard & Robinson, for appellants.

Rumple & Lake, and Phillips, Goode & Phillips, for appellee.

DAY, J.

The plaintiff resides in Ohio. The defendant procured one Francis Pike to correspond with Smith, and procure for him the loans, and agreed to pay Pike on the first loan a commission of 1 per cent., and on the second loan a commission of 1 1/2 per cent. Pike has been in the habit of procuring loans for parties in Iowa from the plaintiff. The plaintiff was unwilling to make the loans without a personal examination of the securities offered, and of the titles, and required that his traveling expenses from Ohio to Iowa and return should be paid. Pike agreed to pay, and did pay, these traveling expenses, amounting on the first trip to $50, and upon the second trip to $45. Pike claims that he paid these traveling expenses out of his commissions. The defendant claims that he paid the traveling expenses in addition to commissions. It is claimed that the payment of these commissions and traveling expenses renders the transaction usurious.

1. It is clear from the testimony that Wolf agreed to pay the commissions to Pike as compensation for his services in procuring the loan. The commissions were payments for a service rendered by Pike to Wolf. No portion of it was paid to the plaintiff, nor did the plaintiff derive any pecuniary benefit therefrom. In rendering the service for which the commissions were paid, Pike was the agent of the defendant, and the payment of such commissions does not taint the transaction with usury. The case falls within the principle of Wyllis v. Ault, 46 Iowa, 46.

2. If Pike, as he claims, paid the traveling expenses out of the commissions, then clearly such payment would not render the contract usurious. Would the...