Usury has long been recognized as a social and economic evil affecting not only the parties to the transaction but society in general. Being widely regarded thus and condemned by law as well, it is frequently hidden by legalistic devices and cloaked in dissimulation. When, therefore, usury is claimed as a defense, the courts must, after looking beneath the surface of a transaction, examine it in all its ramifications to see if the defense is valid. In this suit to foreclose a real-estate mortgage, the answer sets up usury as a defense, but the basic problem is one of agency.
Maurice A. and Clara Hoard, defendants, borrowed money on their real estate through the Stevens-Norton Company *128of Seattle, a company said to be a mortgage brokerage. The borrowed money came from Hans M. Busk, plaintiff, who made the investment through the Stevens-Norton Company. If Stevens-Norton Company acted as agent for Busk, the lender, as well as for Hoards, the borrowers, the arithmetic of the transaction, coupled with the express statutory policy on agency, makes it usurious under RCW 19.52.030, which provides:
“If a greater rate of interest than is hereinbefore allowed shall be contracted for or received or reserved, the contract shall not, therefore, be void; but if in any action on such contract proof be made that greater rate of interest has been directly or indirectly contracted for or taken or reserved, the plaintiff shall only recover the principal, less the amount of interest accruing thereon at the rate contracted for, and the defendant shall recover costs; and if interest shall have been paid, judgment shall be for the principal less twice the amount of the interest paid, and less the amount of all accrued and unpaid interest; and the acts and dealings of an agent in loaning money shall bind the principal, and in all cases where there is illegal interest contracted for by the transaction of any agent the principal shall be held thereby to the same extent as though he had acted in person. And where the same person acts as agent of the borrower and lender, he shall be deemed the agent of the lender for the purposes of this act.” (Italics ours.)
Authority to look behind the outer facade of the transaction and into the details of the arrangement (Clausing v. Virginia Lee Homes, Inc., 62 Wn. (2d) 771, 384 P. (2d) 644) is found in the statute fixing the maximum lawful rate of interest at 12 per cent in RCW 19.52.020:
“Any rate of interest not exceeding twelve percent per annum agreed to in writing by the parties to the contract, shall be legal, and no person shall directly or indirectly take or receive in money, goods or thing in action, or in any other way, any greater interest, sum or value for the loan or forbearance of any money, goods or thing in action than twelve percent per annum.”
Both Busk, the lender, and Stevens-Norton Company, the go-between, categorically denied the existence of any agency relationship between them, and the trial court en*129tered a judgment of foreclosure for the full amount of the mortgage, specifically finding no agency in its finding of fact No. 2, which reads, in part:
“That the aforesaid Stevens Norton, Inc., was not acting as the agent of the plaintiff at any time prior, during, or subsequent to the transaction between the plaintiff and the defendants Hoard as hereinbefore set forth.”
Since agency is largely a legal concept and describes a legal relationship between the parties to it, we perceive the finding of nonagency to be largely a conclusion of law, though recognizing it may also be said to be a mixture of law and fact. Thus, though the concept or idea of agency be one of law, its existence depends upon factual elements. Restatement, Agency (2d) §1 Comment (lb). The Restatement declares this principle when it says:
“Agency is a legal concept which depends upon the existence of required factual elements: . . . The relation which the law calls agency does not depend upon the intent of the parties to create it, nor their belief that they have done so. To constitute the relation, there must be an agreement, but not necessarily a contract, between the parties; if the agreement results in the factual relation between them to which are attached the legal consequences of agency, an agency exists although the parties did not call it agency and did not intend the legal consequences of the relation to follow. Thus, when one who asks a friend to do a slight service for him, such as to return for credit goods recently purchased from a store, neither one may have any realization that they are creating an agency relation or be aware of the legal obligations which result from performance of the service. ...” (Italics ours.)
This court said much the same thing in Moore v. Blackburn, 67 Wash. 117, 120 Pac. 875:
“. . . Agency is a fact to be determined by the peculiar circumstances of each case; so that there are many cases holding that the broker who acts as intermediary between the parties is, under some conditions, the agent of one party, and under other conditions, the agent of the other party. It seems to us, however, that the problem must be solved by determining under whose direction the broker was acting. . . . ”
*130In Edmonds v. Altman, 89 Wash. 4, 153 Pac. 1082, we extended this idea to an untenable extreme in holding that, when lender and borrower had mere contact through a loan broker, without more, the broker became the agent of each as a matter of law. But Clemson v. Best, 174 Wash. 601, 25 P. (2d) 1032, overruled Edmonds v. Altman, supra, and reverted to the rule in Moore v. Blackburn, supra. It prefaced McCall v. Smith, 184 Wash. 615, 52 P. (2d) 338, which says:
“ . . . Whether a broker is to be regarded as acting for the borrower, for the lender, or for both, depends on all the facts and circumstances of the particular case, and no one fact, seized from its setting, can be said to be conclusive or controlling under any and all circumstances.”
Although the findings of fact are held to be verities when supported by substantial evidence, and the conclusions of law drawn therefrom by the learned trial judge are worthy of the greatest consideration, we have noted a number of events established from undisputed evidence which warrant a detailed examination of the facts. From this unconflicting evidence, we see what happened.
Defendants urgently needed money; they were willing to pay higher than the prevailing rate of interest for it. On other occasions they had borrowed money through the Stevens-Norton Company, a firm whose officers describe its operations as that of a mortgage broker. They expected to pay the broker a commission for its service, having done so in the past. April 14, 1960, Clara Hoard, acting for her husband under a power of attorney—he was an invalid— signed a written application to Stevens-Norton Company for a $7,500 loan, payable at $200 per month, in which they agreed to pay the company a 20 per cent commission, a $50 appraisal fee, and to pay for title insurance for a first hen mortgage.
The facts, upon which appellants urge that an agency between lender and broker depends, come, as we have said, from undisputed evidence. Mr. Busk read the Stevens-Norton advertisements running in the Seattle Times offering investments in real-estate mortgages and contracts. He *131was a carpenter and had never before invested in real-estate mortgages or liens or engaged in other real-estate transactions. He had little or no knowledge of mortgage paper or the language essential to create a binding foreclosable contract. He had never traded in stocks, bonds, or other securities, and had no prior acquaintance with the Stevens-Norton Company or with the defendants Hoard. Prompted by the advertisement and in the hope of making an investment, Busk went to the Stevens-Norton Company offices in the Dexter Horton Building, Seattle.
Larry Stevens, vice-president of the company, showed Busk the papers pertaining to a number of mortgages and contracts, referred to as “listings,” and exhibited some photographs of real estate concerning them. Larry Stevens told Busk that his company would, without charge, collect the mortgage payments, keep records of principal and interest, and make remittances, and, prior to making the investment, would check to see that the title was free of liens and procure title insurance. He told Busk that the Hoards owned their own home, operated a business and were responsible people, and he appraised the property to be mortgaged at $12,500. On this occasion, Busk agreed to make a $7,500 loan to the Hoards on a note and mortgage and thereupon handed to Mr. Stevens his check for $100. He returned to the Stevens-Norton Company office one week later, on April 21st, and delivered the remaining $7,400.
Coincident with receipt of the $7,400, the Stevens-Norton Company made a formal business record of this transaction by opening an 11-column ledger card on which to record payments, interest, taxes and other pertinent information, and subsequently entered in it four separate rows of entries relating to payments on July 1st and July 28th.
Mr. Busk, the lender, never saw the property on which he was lending his money, nor met his debtors, the Hoards. Stevens-Norton Company exercised dominion over the mortgage paper, placing a message on it to the county auditor directing its return after recordation to their offices in the Dexter Horton Building; and there the instruments *132were kept. Noteworthy, too, on the question of agency is the fact that, while the note and mortgage both bear the date of April 21, 1960, as the date of execution—the date that Busk delivered the $7,400 to Stevens-Norton Company —the acknowledgment on the mortgage and the date of placing the notarial seal thereon is April 25, 1960, four days later. This raises an inference not rebutted by any evidence that the mortgage paper had not been completely executed when Busk turned the $7,400 over to Stevens-Norton Company, and that he impliedly constituted the company his agent to provide him with a binding, legally-sufficient, mortgage contract.
Later, when the Hoards became delinquent in their payments, Stevens-Norton sent them a notice of foreclosure which seems to imply a continuing agency. It commenced with these words:
“We wish to advise you that it will be necessary to turn over to our attorney for foreclosure the mortgage held by our client on property legally described as: . . . ”
and closes with the words:
“You are further notified that failure to pay the above delinquencies as stated or failure to make any future payments on the due date hereafter will result in our immediately turning this mortgage over to our attorney for foreclosure.”
While both Mr. Busk and Larry Stevens stoutly denied any agency between them, we cannot overlook the responsibilities placed upon and assumed by Stevens-Norton Company, as indicated by the following direct examination of Larry Stevens, its vice-president:
“A. When he came in to invest this money I submitted to him several investments we had available and at that time we agreed we would collect the account for him. Q. Did you give him information relative to these various investments which you were showing him? A. Yes. Q. And did you advise him about the relative credit merits of the people who were borrowing? A. I would answer any question that he asked me, and if he had asked me the question at that time, I had the information available for him. I don’t recall if he asked any particular questions. I think mainly it was the security involved that was the main issue. *133Q. And you supplied him the information about that? A. Yes. Q. Did you at his request undertake any further study of the property other than that you had already made when you first talked to him? A. We would follow through with our plan naturally. The next thing on the property is, we get it clear of liens and so forth before we can have a title insurance issued to Mr. Busk as a first mortgage. Q. Did you obtain any title insurance for him? A. We obtained the title insurance through a title company for his benefit.”
And we are mindful of the testimony given by Earl W. Stevens, president of Stevens-Norton Company, who described in general his company’s methods of operation. He acknowledged, though disclaiming any knowledge of an agency relationship in this case, that, in some instances, the company did act for and on behalf of others in making and servicing investments. He said that his company on occasion gave investment advice to prospective investors, appraised property, and operated an escrow department for the handling of an investor’s money. The escrow department protected the investor by conserving his money until the investment broker had cleared any title defects and provided title insurance.
He testified that his company prepared the legal instruments by which debts are evidenced and security given. The company followed this practice here when it prepared the note and the mortgage upon which Busk advanced his money—thereby assuming the functions of an agent in preparing a complicated legal instrument for a client. At the time of the instant transaction, he said, they were using forms supplied them by Puget Sound Title Insurance Company, but since then Stevens-Norton Company had had its own forms for mortgages and notes printed.
The inexorable force of these combined facts creates an agency between Busk, the lender, and Stevens-Norton Company, the broker, as a matter of law. Busk relied and acted upon the advice given and information furnished him by Stevens-Norton Company in selecting the particular individuals to whom and the property upon which he would lend his money. He relied upon the broker’s *134advice that the property was worth $12,500 and that the Hoards owned their own home and operated a business. He made the Stevens-Norton Company his agent to check and clear the title, to procure title insurance for him, and to prepare written instruments in the form of a note and mortgage, legally sufficient to give him a cause of action for foreclosure and recovery in case of default. He made the broker his agent to transmit the $7,500 to the borrower, and to record the mortgage as well, and to continue as his agent in collecting the payments specified. He made Stevens-Norton his agent to keep records of account, making proper allocations to principal and interest, and to remit the collections to him. He impliedly designated the broker his agent to retain possession of the mortgage paper by having the same returned to the broker’s office from the county auditor.
Through their actions, conduct and words, the parties may bring into existence an implied agency, despite their intention that this not come to pass. But, being implied in either law or fact, it is no less a true agency and carries with it all of the legal responsibilities arising from an agency created by explicit agreement. Turnbull v. Shelton, 47 Wn. (2d) 70, 286 P. (2d) 676; Freeman v. Navarre, 47 Wn. (2d) 760, 289 P. (2d) 1015.
Discerning the Stevens-Norton Company to be the lender’s agent, we are next confronted by the lender’s want of notice or knowledge of the usury. Well established rules governing notice to or knowledge by an agent seem to solve this problem readily. That Stevens-Norton Company, under its agreement with the borrowers, withheld $1,500 as a commission from the $7,500 loaned, without notice to or knowledge by the lender, does not relieve the lender of the implications of usury, for the knowledge of the agent must be attributed to his principal. This court has said as much on many occasions.
Knowledge or notice by or to the agent is imputed to his principal (Chase v. Beard, 55 Wn. (2d) 58, 346 P. (2d) 315; Rocky Mountain Fire & Cas. Co. v. Rose, 62 Wn. (2d) 896, 385 P. (2d) 45); and the knowledge had by an *135agent will, therefore, bind his principal (Miller v. United Pac. Cas. Ins. Co., 187 Wash. 629, 60 P. (2d) 714; American Fidelity & Cas. Co. v. Backstrom, 47 Wn. (2d) 77, 287 P. (2d) 124); and, in most instances, the time, place or manner in which the agent obtains the knowledge is immaterial as far as charging the principal with it is concerned. Restatement, Agency (2d) § 276. Nor is benefit to the lender of any great moment; the fact that the lender derives no benefit from a usurious transaction is immaterial. Ostiguy v. A. F. Franke Constr., Inc., 55 Wn. (2d) 350, 347 P. (2d) 1049, 81 A.L.R. (2d) 1271.
Under these rules, Busk is held to have known that, of the $7,500 which he loaned the Hoards through their mutual agent, the borrowers were to receive only $6,000, but bound themselves to repay to him the full amount ($7,500) at 10 per cent interest. He thus became party to a usurious contract, for the $1,500 withheld by his agent when added to the 10 per cent interest contracted for on the gross amount to be repaid pushes the interest rate far beyond the maximum 12 per cent. The law will look behind subterfuge, devices and evasions by which the real rate of interest contracted for or reserved may be hidden. Home Sav. & Loan Ass’n v. Sanitary Fish Co., 156 Wash. 80, 286 Pac. 76; Ostiguy v. A. F. Franke Constr., Inc., supra; Clausing v. Virginia Lee Homes, Inc., supra. Though not conclusive in all instances, the most reliable test for usury, we believe, is to compare the amount of money actually received with the amount of money the borrower is obliged to repay, adding thereto whatever additional charges are imposed upon the borrower for the use of the money.
The mortgage transaction being usurious, we are bound to apply the penalties to it fixed by RCW 19.52.030. Respondent’s mathematical interpolation of this statute, as set forth in his brief, we think, quite accurately expresses the intendments of the statute, so with slight exception we accept his formula. From the $6,000 net proceeds of the loan received by the appellants, there should be deducted in penalty the $1,500 commission for this usurious item, *136leaving $4,500 as a balance. From this $4,500, there should next be subtracted the interest actually paid, i.e., the sum of $369.04, and a like amount as penalty, making a total deduction of $738.08 from the previous balance of $4,500. This leaves a principal balance of $3,761.92 from the amount actually received by the borrower. Then, from this $3,761.92, we should deduct the amount of all unpaid interest calculated at the agreed rate. In this case, since the unpaid interest will be computed after deducting the first payments to principal, we have unpaid interest at 10 per cent on $5,786.88 from October 21, 1960, to not the date of final judgment but to the day the remittitur goes down. Clausing v. Virginia Lee Homes, Inc., supra. The amount remaining after deducting this last item shall be the amount of the judgment of foreclosure together with such costs as may be taxable.
The judgment is reversed, and is to be entered in accordance with this opinion, appellants to recover costs on appeal.
Finley and Weaver, JJ., concur.
Rosellini and Hamilton, JJ., concur in the result.