Hughes v. Griswold

Bleckley, Chief Justice.

1. In its principal elements and characteristics, this case is ruled by Merck vs. American Freehold, etc. Co., 79 Ga. 213. Here, as there, -the loan was procured by the joint services of three intermediaries, consisting of what might he termed a central, a rural and an urban middle-man. Here, as there, a part of the loan never in fact reached the borrower’s own hands, although every cent of it passed from the lender. The amount retained by the middle-men was fifteen per cent., and this was divided amongst them in the ratio of seven to the central, and four each to the others. Here, as there, the lender had no share in these commissions, nor any knowledge that they were exacted. In that case, the contract of lending was made by an agent, the lender being a corporation. In this case, it was *307made by the lender himself, the person or firm with whom he dealt directly being the urban intermediary, to whom was delivered by the lender the whole sum of $1,000. The decision in Merck’s case being that there was no usury, it is only necessary now to examine the points of difference in the present case, and to determine whether any or all of them require or justify a different adjudication of the question as to this case.

2. The station of the urban intermediary was at Hartford, Conn. This intermediary was a partnership (Moore & Co.) composed of several persons, of whom Tallman was one. He alone may be considered as the urban intermediary, since the effect of his connection with this case would be the same, whether his relation to it was as an individual or as a member of the partnership to which he belonged. The notes and mortgage were made payable to Tallman, and his firm received part of the commissions. In this respect the present case is unlike Merck’s case. "We think, however, as there was positive proof that neither Tallman nor his firm was the lender, and also that Griswold, the real lender, knew nothing of any compensation to the intermediaries or of any participation by Tallman therein, this fact is, legally speaking, immaterial; more especially as the jury must have found, under the charge of the court, that what was paid to Tallman’s firm was for actual services rendered, and not by way of shift or contrivance to conceal or cover up usury, that question having been submitted to them in the charge, with instructions that if the share of Moore & Co. in the commissions was not received in good faith for services, the loan would be usurious. This element of the charge was probably more favorable to the borrower than he was entitled to. The compensation to Tallman’s firm did not proceed directly from the borrower, but came *308from the central intermediary, and was the fruit of a contract which the latter had made with that firm, covering as well this loan as any others that they might be instrumental in negotiating upon applications forwarded by him. According to the decided weight of authority, had Tallman been a direct and immediate agent of the lender, his receiving for his own use and benefit commissions from the borrower without authority from or knowledge of the lender, would not infect the loan with usury. 1 Jones Mortg. §642; Boardman vs. Taylor, 66 Ga. 638; Call vs. Palmer, 116 U. S. 98; Stillman vs. Northrup, 109 N. Y. 473; Boylston vs. Bain, 90 Ill. 283; Cox vs. Mass. M. L. I. Co., 113 Ill. 382; Williams vs. Bryan (Texas), 5 S. W. Rep. 401; Vahlberg vs. Keaton, (Ark.) 11 S. W. Rep. 878.

And the same rule applies where the negotiation is through brokers. Brown vs. Scotch, etc. Co., 110 Ill. 235; Hoyt vs. Pawtucket, etc, Co., 110 Ill. 390; Haldeman vs. Mass. M. L. I. Co., 120 Ill. 390.

The jnevailing opinion seems to be that, with knowledge on the part of the lender, the loan is infected, where his own agent exacts a bonus. Bonus vs. Trefz, (N. J.) 2 Atl. Rep. 369 and notes; Payne vs. Newcomb, 100 Ill. 614; Thompson vs. Ingram, (Ark.) 11 S. W. Rep. 881.

As to when knowledge ought to be imputed or implied, see Vahlberg vs. Keaton, supra. In Call vs. Palmer, 116 U. S. 98, supra, the agent of the lender took commissions, and the notes (and presumably the mortgage) were made payable to him ; and there it was held by the Supreme Court of the United States that the loan was pure as between his principal and the borrower, the principal having no knowledge as to the charge or receipt of commissions by the agent. See also Dayton vs. Moore, 30 N. J. Chan. 543, where the *309mortgage was made to the mortgagee’s attorney, who was not described as such in the instrument. The true position of Tallman until he transferred the mortgage and the notes, was that of a trustee holding for the benefit of Griswold, the real lender; and though Tallman shared in the commissions, as the lender did not know of it, he was not affected thereby.

3. The station of the central intermediary (whose name was Lawton) was at Macon. Through him an application was made by Hughes, the borrower, for the loan. This application was partly in print and partly in writing. It contained answers to numerous questions, a description of the land offered as security and a plat of the same, the whole concluding with a promise “ to pay all expenses incurred in negotiating the above loan, examining the premises, investigating the title to the land offered as security, and executing all necessary papers.” According to Lawton’s testimony, these expenses were then or afterwards agreed upon and fixed at $150, which was the amount retained out of the loan. And Hughes himself testified that he did not demur to paying Lawton his commissions; by which he doubtless meant this gross sum of $150, the whole of which was deducted by Lawton at the time he paid to Hughes the net proceeds of the loan, to wit, $850. The manner in which these proceeds reached Hughes is another circumstance which distinguishes this case from Merck's case. The application bears date in May, and a lender was not found till September. The application being examined at Hartford by' Griswold, the lender, in person, he made known to Moore & Co., Tail-man’s firm, his acceptance of the same, and delivered the $1,000 to them, which they deposited in bank to their credit. They telegraphed to Lawton that the application was approved; by which they meant that a *310lender had been found. After receiving this telegram, Lawton had the mortgage executed by Hughes, and thereupon advanced to him, of his own funds, $850, at the same time checking, upon Moore & Co. for $1,000, the amount requisite to reimburse himself for this advance and to pay the agreed commissions. Whilst the circumstance that the borrower got Lawton’s money, and not that which belonged to Griswold, or ever had belonged to him, complicates the matter somewhat, we think the true interpretation of' this transaction, under all the circumstances, is, that it was only a mode and means of exchange. Griswold’s money was in Hartford, Connecticut; Lawton’s at Macon. The latter was substituted for the former; and by reason of this substitution, Lawton became the equitable owner of an equivalent amount of the money which was on deposit in Hartford. It was there under the control of Moore & Co., his agents, and might be considered therefore as in his own hands. The testimony was clear that Law-ton had no purpose to lend his money to Hughes ; that although he did not know who the real lender was, yet he did know that some person had agreed to make the loan, and he intended the advance of his own money to be temporary, and made it for convenience and to save time. Of course, had he been the real lender, and used the mortgage, notes, etc. as a cover and device to secure a loan made by himself, the transaction would have been usurious; and so in effect the court charged the jury, submitting to them fairly and fully the question of whether' the loan was really made by Lawton, and whether there was any device or contrivance by him to cloak usury. The evidence shows clearly that Lawton carried on an independent business, as did Nelson & Barker in the Merck case, and as did one or more of the intermediaries in the N. E. Mortgage Security Co. *311vs. Towns, (Miss.) 1 South. Rep. 242. He it was who paid the compensation of both the other intermediaries, by contract made severally with them, to which neither the borrower, Hughes, nor the lender, Griswold, was a party, and of the existence of which they were alike ignorant.

4. Although it was shown that Lawton had advertised that he would loan money, and although he had doubtless loaned money, as he was a banker, the proof being that he did not loan it on this occasion, and the jury having found that he did not, the advertisement has no material bearing on the present controversy.

5. Both Lawton and Moore & Co. took part in facilitating the payment and transmission of accrued interest on this loan, Lawton on several occasions giving notice to the borrower that interest was soon to become due, and requesting that it be' forwarded promptly through him, so as to meet the interest notes at maturity. These • services were beneficial to both the lender and borrower, and as they seem to have been rendered voluntarily, they were doubtless beneficial also to the business of the intermediaries. No express stipulation appears, either as to rendering them or as to paying for them, and we see not how they could have tainted the loan with usury. Furthermore, if they did taint it, we are unable to see how any deduction on account of them could be made from the debt, as there was no proof of their value.

TJnon the whole, we are convinced that there is nothing in this case to distinguish it legally, upon the question of usury, from that of the American Freehold, etc. Co. vs. Merck. Although we have not discussed the grounds of the motion for a new trial specifically, we have dealt with the real questions which underlie them, and which control the case.

*3126. Six of tbe grounds, however, were not considered at all, for they go to the overruling of objections to certain evidence, and as it nowhere appears what these objections were, they were not properly before us for adjudication.

The result is that, so .far as appears to us from the record, the court committed no error in upholding the verdict in favor of the plaintiff below for the whole debt, principal, accrued interest and attorney’s fees, or in denying the motion for a new trial.

Judgment affirmed.