Stein v. Swensen

• Decision Date: 06 August 1890
• Citation: 44 Minn. 218,46 N.W. 360
• Parties: STEIN v SWENSEN, SHERIFF ET AL.
• Court: Minnesota Supreme Court

44 Minn. 218

46 N.W. 360

STEINvSWENSEN, SHERIFF ET AL.

Supreme Court of Minnesota.

Aug. 6, 1890.

(Syllabus by the Court.)

1. A contract for the loan of money for a stated time, at a rate of interest not usurious, is not avoided, and the original debt forfeited, by a contemporaneous agreement not intended as a means of evading the usury law, that at the option of the borrower the time of payment may be extended by the payment of more than the legal rate of interest for the period of the extension.

2. If a general agent loaning the money of his principal makes an illegal exaction from the borrower solely for his own benefit, and without the knowledge, authority, or sanction of his principal, who in no manner ratifies it, the latter is not affected by such illegal exaction, but the acts of the general agent are to be presumed to have been authorized, in the absence of proof to the contrary.

3. An insolvent debtor having made a general assignment of all his property for the benefit of creditors, the assignee may assert the invalidity, by reason of usury, of mortgages upon the assigned property given by the assignor prior to the assignment.

4. A sheriff holding the property under a writ of attachment against the property of the mortgagor may assert the invalidity of the mortgage for usury.

5. A defendant sued personally for a wrongful detention of goods, and who appears to have acted as an assignee in insolvency, is not entitled to have the action dismissed merely because he was not sued in his representative capacity.

Appeal from district court, Hennepin county; HICKS, Judge.

Simon Meyers, (Hart & Brewer, of counsel,) for appellant.

Selden Bacon, for respondents.

DICKINSON, J.

This action is for the conversion of personal property. The plaintiff's rights in respect to the property are those of a mortgagee, the owners of the property, a partnership bearing the name of H. C. Vaughn & Co., having mortgaged the same to the plaintiff in June, 1888, by two separate mortgages given to secure the promissory notes of the mortgagors to the mortgagee for $500 and $300, respectively, payable 30 days after date, with interest at the rate of 10 per cent. per annum. The defendant Swensen, as sheriff of Hennepin county, took the property in September, 1888, as the property of H. C. Vaughn & Co., under a writ of attachment issued to him in an action by other parties against H. C. Vaughn & Co. Three days after that attachment the members of the partnership of H. C. Vaughn & Co. made a general assignment of all their property to the defendant Knowlton, for the benefit of their creditors, pursuant to the insolvent law of 1881. Knowlton qualified as such assignee, and thereafter duly signified his election as such assignee to retain the attachment, and pursuant to the statute he was substituted for the plaintiff, as a party in the action in which the attachment had been made. The defense relied upon is that the mortgages were void for usury. The case before us may be thus stated: The plaintiff resides in the city of New York. Vaughn & Co. did not negotiate or deal with him personally in respect to these matters, but only with a brother of the plaintiff, one Henry Stein, in the city of Minneapolis. Vaughn & Co. agreed to pay Henry Stein 3 per cent. of the moneys borrowed for his services in connection with the loans, and did make such payments at the time of making the loans. According to the first, third, and fourth special findings of the jury, Henry Stein was the general agent of the plaintiff in matters of this kind. The 3 per cent. thus charged by him, and paid by Vaughn & Co., was but a reasonable compensation for his services in connection with the making of the original loans, and the plaintiff did not receive any part of it. At the maturity of the notes, 30 days after their making, they were renewed, or extended, for another month, the debtors paying to Henry Stein, as required by him, the same percentage (3 per cent.) on the principal debts. This was again repeated, and a second renewal secured for a like period, upon payment of the same sum, at the expiration of the term of the first renewal. At this point there was some conflict in the testimony. On the part of the plaintiff it was claimed that the percentage paid for such renewals was but a reasonable compensation to the plaintiff's agent for his proper services in connection with the renewals, and that this feature of the case was no part of the original agreement for the loan. The evidence on the part of the defendants tended to show that the original agreement embraced a condition for such renewals. The evidence was insufficient to have justified the claim that this was a reasonable compensation for services, and the general and special verdicts involve the conclusion on the part of the jury that these were usurious exactions, in which the plaintiff shared. The jury also found specifically that it was a part of the original agreement that renewals of the notes might be had for a month after their maturity by the payment of 3 per cent. of the sums loaned. In view of the third and fourth special findings of the jury, it is apparent that their general verdict must have been based alone upon the idea that the agreement for the payment of 3 per cent. for such extension was usurious, and worked a forfeiture of the whole debt. That the jury took this to be the law of the case is apparent from the charge of the court, to which exception was taken. The court instructed the jury at the defendants' request: “If the jury find that it was part of the original agreement that H. C. Vaughn & Co. might obtain extensions of a month on payment of three per cent. of the amount loaned, then that agreement would be an agreement for a usurious taking, which, if referable to the plaintiff, would defeat any recovery by him.” And further, in qualification of the general charge, at the defendants' suggestion, the court added that if at the time of the making of the loans there was a contract that Vaughn & Co. should pay for extensions the sums specified, “that would be a usurious contract which would invalidate the note.” There is no claim that the agreement or a renewal was absolute. It was...