State ex rel. Fatzer v. Miller

• Decision Date: 22 January 1955
• Docket Number: No. 39544,39544
• Citation: 52 A.L.R.2d 691,177 Kan. 324,279 P.2d 223
• Parties: , 52 A.L.R.2d 691 STATE of Kansas ex rel. Harold R. FATZER, Attorney General of the State of Kansas, Appellant, v. I. MILLER, Jr., a/k/a Irving Miller, d/b/a Morgan and Company, Modern Finance Corporation, Morgan and Company and William S. Worford, Appellees.
• Court: Kansas Supreme Court

Page 223

279 P.2d 223

177 Kan. 324, 52 A.L.R.2d 691

STATE of Kansas ex rel. Harold R. FATZER, Attorney General of the State of Kansas, Appellant, v. I. MILLER, Jr., a/k/a Irving Miller, d/b/a Morgan and Company, Modern Finance Corporation, Morgan and Company and William S. Worford, Appellees.

No. 39544.

Supreme Court of Kansas.

Jan. 22, 1955.

Rehearing Denied March 11, 1955.

Syllabus by the Court.

1. Errors, relating to matters occurring at the trial and for which a new trial is asked, cannot be considered on appeal, unless the ruling be included in the notice of appeal and specified as error in the appellant's abstract of the record.

2. An appellant is not compelled to specify error on every ruling, decision and judgment included in his notice of appeal, and where he appeals from a ruling on a motion for a new trial, and from other rulings, decisions and judgments as to which the motion for a new trial is neither necessary nor proper, his failure to specify as error the ruling on his motion for a new trial limits the scope of appeal but does not prevent consideration of other properly specified errors.

3. In order that there be a usurious contract there must be a loan or forbearance of money or its equivalent, an unlawful intent, an understanding that the loan be paid, and an exaction for the use of the loan of something in excess of what is permitted by law.

4. In determining whether a requirement that the borrower pay a commission to an intermediary or broker through whom the loan was actually or apparently negotiated, constitutes usury and not compensation for services to the borrower, the court will look through the form to the substance of the whole transaction.

5. If the facts disclose that a lender receives from the borrower a promissory note for a sum loaned, with interest thereon at not more than ten per cent per annum, but as a condition to making the loan exacts from the borrower a contract for a commission or brokerage fee, that the lender is loaning his own money, and that the stipulated interest plus the commission or brokerage fee exceed ten per cent per annum, the contract is usurious.

6. The record examined in an action to enjoin defendants from lending money in this state at a rate of interest greater than permitted by the laws of this state and from carrying out alleged plans and conspiracies designed to accomplish such a purpose, and held, that the undisputed facts as found by the trial court disclose that plaintiff was entitled to the relief for which it prayed.

Thomas M. Evans, Asst. Atty. Gen., Harold R. Fatzer, Atty. Gen., Paul E. Wilson, Asst. Atty. Gen., and Ward D. Martin, Sp. Asst. Atty. Gen., on the brief, for appellant.

E. E. Sattgast, Wichita, John Madden, and Louis W. Cates, Wichita, on the brief, for appellee Modern Finance Corp.

Tom Harley, Jr., Wichita, for appellee William S. Worford.

THIELE, Justice.

This was an action commenced on August 5, 1953, by the state of Kansas on the relation of the attorney general to permanently enjoin certain named defendants from lending money in this state at a rate of interest greater than that permitted by the laws of this state and from carrying out alleged plans and conspiracies designed to accomplish such a purpose.

No service of process was had on some of the defendants.

We pass by a series of motions to add parties defendant, to quash service of summons, and note that defendant Worford filed an answer alleging that the petition failed to state facts constituting a cause of action against him and denying generally the allegations of the petition, and that the defendant Modern Finance Corporation, generally referred to hereafter as the corporation, filed an answer denying generally the allegations of the petition and specifically that it had any interest in the business alleged to be Morgan & Company on September 23, 1953, or at any time thereafter and alleging that on September 8, 1953, it sold all of its interest and all of its assets in Kansas and particularly in the business alleged to be Morgan & Company, and other matter not necessary to be detailed here. Attached to its answer was a copy of a bill of sale purporting to sell its assets to one George O. Ray.

On the issues so joined a trial was had on February 10, 1954, at which oral and written evidence was produced and argument had. Thereafter an March 16, 1954, the trial court made findings of fact and conclusions of law, as follow:

'Findings of Fact

'No. 1. The Court finds that Harold R. Fatzer is the duly elected qualified, and acting Attorney General of the State of Kansas.

'No. 2. That the defendant, Modern Finance Corporation is a Delaware corporation, with its principal place of business in Nashville, Tennessee, and admitted to do business in the State of Kansas.

'No. 3. That the Modern Finance Corporation operated an office known as Morgan & Company at 212 East First Street in Wichita, Kansas.

'No. 4. That the defendant, William S. Worford was the manager of the office of Morgan & Company here in Wichita, and continued in that capacity until the early part of January, 1954.

'No. 5. That the method of operation was as follows: The borrower or customer, would go into the office of Morgan & Company at 212 East First Street, Wichita, Kansas, and ask for a loan;

'That if Morgan & Company thought that the borrower or customer was a good risk, then the borrower would sign a note in the form of State's Exhibit 1, the note being in the amount of the amount of (sic) money received by the customer plus interest at 8%, with a minimum charge of 55 or 60 cents.

'That this note was endorsed by Morgan & Company in substantially the following form:

"Payment of this note is fully guaranteed by Morgan & Company'

and signed by one of the employees of Morgan & Company.

'That at the same time, an instrument similar to State's Exhibit 2, being designated as customer's draft, was drawn on the American Bank & Trust Company a corporation, organized and existing under the laws of the State of Louisiana, and authorized to do a general banking business with its principal place of business at Baton Rouge, Louisiana, in the amount of the money received by the customer or borrower.

'That the draft, in addition to being signed by the borrower, was also endorsed on the back by the borrower, and endorsed by Morgan & Company.

'That at the same time, the borrower or customer would sign a brokerage contract substantially in the form of State's Exhibit 3.

'That at the time of the signing of the note State's Exhibit 1, it was in blank with the exception of the amount.

'That the draft was in blank with the exception of the amount.

'That the brokerage contract was in blank. (Emphasis supplied.)

'That upon the completion of the signing of these instruments, the customer or borrower was paid the money in cash from the petty cash fund which was money belonging to Morgan & Company or Modern Finance Corporation.

'That from the time the borrower or customer entered the place of business of Morgan & Company and made his request for money that he received the money within ten minutes and that no phone calls were made by an employee of Morgan & Company or Modern Finance Corporation, and no employee left the office of Morgan & Company. That the entire transaction was completed at one time and the borrower or customer received the money over the counter out of the petty cash fund at the office of Morgan & Company.

'That at the time a customer or borrower would make application for a loan at Morgan & Company, no oral statements were made to the customer or borrower by Mr. Worford or any other employee of Morgan & Company to the effect that it was necessary for Morgan & Company to obtain the loan for the customer or borrower from a third person, more particularly the Louisiana bank.

'That at the close of the business of that day Morgan & Company would send to the American Bank & Trust Company, the completed note, the completed customer's draft which, when received by the American Bank & Trust Company at Baton Rouge, Louisiana, the bank would then issue its check covering the face amount of the draft to Morgan & Company and remit the same to Wichita.

'That the brokerage contract was completed and retained by Morgan & Company or Modern Finance Corporation.

'No. 6. That the Bank in Louisiana received no money other than the face amount of the note, which included the amount of money loaned, plus the interest.

'No. 7. That the Bank did not share in any of the other monies paid by the customer or borrower to Morgan & Company.

'No. 8. That in addition to the notes forwarded to the Louisiana Bank by Morgan & Company, the bank was secured by 80 to 85% of the money loaned on these notes. The security being government bonds or other securities deposited with the Louisiana Bank by Modern Finance Corporation in an amount equal to 80 to 85% of the total of the face value of the notes.

'No. 9. The Modern Finance Corporation or Morgan & Company did not receive or share in any of the interest paid to the bank.

'No. 10. The money obtained by the customer or borrower was paid in periodic installments at the office of Morgan & Company, 212 East First Street, and the money paid was forwarded to the Bank in Baton Rouge, Louisiana, to be credited upon the note until the note was paid in full with interest. That in the event of default upon payment of the note, the note was paid by Modern Finance Corporation or Morgan & Company.

'No. 11. That all monies paid over and above the face amount of the note, including the interest, were retained by Morgan & Company or Modern Finance Corporation, and the Bank did not share in these monies.

'No. 12. That Modern Finance Corporation leased the property located at 212 East First Street * * *'

Nos. 13, 14 and 15 pertain to an effort by Modern Finance Corporation to dispose of its assets in Kansas after the instant action was filed.

'No. 16. That the money...