Sulger v. Maslin

• Decision Date: 08 November 1961
• Docket Number: No. 7038,7038
• Citation: 365 P.2d 1113,90 Ariz. 70
• Parties: David G. SULGER and Mary Elaine Sulger, his wife, Appellants, v. Jack MASLIN and Shirley Maslin, his wife, Appellees.
• Court: Arizona Supreme Court

Page 1113

365 P.2d 1113

90 Ariz. 70

David G. SULGER and Mary Elaine Sulger, his wife, Appellants, v. Jack MASLIN and Shirley Maslin, his wife, Appellees.

No. 7038.

Supreme Court of Arizona, In Banc.

Nov. 8, 1961.

W. Shelley Richey, Douglas, for appellants.

Hirsch, Van Slyke & Richter, Tucson, for appellees.

JENNINGS, Justice.

In an action for usury, plaintiffs David G. Sulger and Mary Elaine Sulger, hereinafter called appellants, appeal from that part of the judgment rendered in favor of defendants Jack Maslin and Shirley Maslin, hereinafter called appellees. The case was tried before a court sitting without a jury.

The sum of $100,000 was advanced by appellees to appellants or to the appellants and associates in a series of seven loans or transactions between November 22, 1955 and July 3, 1958. Of this amount $73,000 was advanced on four realty mortgages, $7,000 on two unsecured notes and $20,000 under a transaction wherein appellants sold a realty mortgage to the appellees in return for an option to repurchase the same at specified times for increasing prices of repurchase.

Early in January of 1959 a dispute arose between appellee Jack Maslin and appellant David Sulger concerning the required amount to be paid appellees under the option to repurchase the mortgage. Consequently the suit was precipitated in the trial court which also involved other issues relating to the above-mentioned loans.

We are here concerned with the claimed error of the first, second, and fourth causes before the trial court in which appellants claim (1) that the trial court erred in holding that the appellees did not exact usury from the appellants, and (2) that the trial court erred in entering a judgment for the appellees on the above-numbered causes of action, for the facts, considering them in the light most favorable to the appellees, established every element constituting usury.

The first cause of action involved a note in the sum of $15,000 secured by a realty mortgage and executed by the appellees, together with cotenants having interest in the real property involved. The note provided for interest at the rate of 8% per annum, all of which was duly paid in the sum of $2,243. Simultaneously with the execution of the note and mortgage the appellants and their cotenants entered into an agreement under which they were to pay appellees 10% of the rental income from the property involved under the mortgage during the period covered by the note. The agreement reads in part as follows:

'* * * Whereas, Jack Maslin is interested in the development of said area and has advised the first parties in business matters and counseled with them as to future plans for said properties, and has had considerable experience in the construction of building structures, and has counseled with them with respect to all said properties, and

Whereas, the first parties have full faith and confidence in the abilities of Maslin and acknowledge that Maslin has given them valuable business advice and has examined the plans for the improvements and has approved said plans,

Now Therefore, It is Agreed that Jack Maslin shall be and hereby is employed to be the exclusive rental agency, solely for the properties * * * and the first parties agree to pay him a commission of ten (10%) percent of all rentals of buildings erected on the realty above described, and said employment is to continue uninterrupted for the period of five years from this date. (May 19, 1956) * * *.' (insert of date ours.)

Under this agreement the appellees received from appellants and their cotenants the sum of $1,994.60. Appellants contend that the payment of the 10% rental income was received by appellees as consideration of the loan in addition to the 8% interest received in the amount of 2,243, and that the transaction was usurious. We cannot so hold.

The memorandum rental agreement was a separate instrument which on its face purported to be and was a separate and distinct transaction apart from the execution of the note and mortgage. It is true that the agreement was executed simultaneously with the former but this, without more, does in no way merge the two transactions. The consideration recited in the rental agreement was that Maslin should perform certain services. The agreement itself admits that certain of those services had already been in fact performed. The agreement bespeaks the good faith and confidence between the parties at the time. Testimony of both parties indicates that indeed services were performed. This Court must assume that the trial court was satisfied that the services performed were adequate and commensurate to the rental consideration to be received in return. We cannot carve out a new contract for the parties. It is well settled that this Court will not disturb a judgment on appeal when there is any reasonable evidence to support it. Correspondingly evidence will be viewed in the strongest manner in favor of appellee and in support of the trial court's findings. Sturges v. Tongeland, 83 Ariz. 148, 317 P.2d 941.

Appellants indicate that since appellee Maslin was not a licensed real estate broker at the inception of the agreement it was unlawful by reason of his violation of A.R.S. Section 32-2154. An examination of this section discloses that it provides for criminal prosecution of those acting as real estate brokers without a license, and this case is not one of a criminal nature. In this instance the appellees, by reason of the agreement, had a perfect right to insist on overseeing both the work of construction and the tenants that would be obtained for the property covered by the mortgage in question.

The judicial definition of usury has been declared on many occasions by this Court. The most recent pronouncement set forth in Britz v. Kinsvater, 87 Ariz. 385, 390, 351 P.2d 986, 989 reaffirmed the prior cases of Blaisdell v. Steinfeld, 15 Ariz. 155, 137 P. 555, and Seargeant v. Smith, 6o Ariz. 466, 468, 163 P.2d 680, to wit:

''In deciding whether any given transaction is usurious or not, the courts will disregard the form which it may take and look only to the substance of the transaction in order to determine whether all the requisites of usury are present. These requisites are: (1) An unlawful intent; (2) the subject-matter must be money or money's equivalent; (3) a loan or forbearance; (4) the sum loaned must be absolutely, not contingently, repayable; and (5) there must be an exaction for...