17 Iowa 436 | Iowa | 1864
The several deeds of trust, described in the petition, are found to belong to different parties, of distinct relationships, and, therefore, their joinder in one'suit is not understood; but the objection to the proceeding on this account was subsequently waived, and we proceed to con
We begin with the $60,000 claim. The plaintiffs allege that when purged of its usury, and credited with the payments made, that the same is satisfied and should be canceled. Their statement in regard to its origin is substantially the following: That they were millers and merchants in Davenport, and, as such, had, prior and since January 20th, 1853, a deposit account with Cook & Sargent, bankers in the same city. By agreement they were, to pay Cook & Sargent eighteen to twenty per cent interest upon the balance of the banking account, when against them, and to receive 6 per cent interest when in their favor. From time to time plaintiffs sold to their bankers notes and bills of exchange at usurious rates of interest from the date last aforesaid’ up to a late period. On the 17th of July, 1856, it was found that they were nominally indebted to their bankers in the sum of $68,507.44; but that all of this sum except $29,313.36 was for unlawful interest, nevertheless that Burrows and wife made a deed of trust upon certain property therein described, to secure $60,000 of the above specified sum, payable in three years, together with certain usurious coupon interest notes; that the residue of said sum, namely, $8,507.44 was within three or four days thereafter increased by some charges of insurances, usurious interest, &e., to $10,291.55, and was liquidated on the 21st of July, 1856, with exchange on New York at four months, which plaintiffs claim to have paid. Exclusive of this last sum, and exclusive of the unlawful interest, the plaintiffs claim that there was in fact only due to Cook & Sargent on the 17th day of July, 1856, the sum of $20,873.38, and that they have since then paid on said deed of trust $24,750; that six per cent interest upon this amount from time of payment to the 1st of February, 1860, would make the sum $27,882.53. The
Cook & Sargent admit that plaintiffs, during the time specified, kept their deposit account with them, and agreed to pay eighteen to twenty per cent interest, when the same was against them, and to receive six per cent when in their favor. They admit that on the 17th of July, 1856, the plaintiffs were indebted to them in the sum of $68,507.44, but deny that any part thereof was usurious. They deny that the purchase of notes and bills of exchange by them of the plaintiffs were at usurious rates, or that the plaintiffs ever paid the note dated July 21st, 1856, calling for $10,291.55, &c.
The principle under discussion is supported by a large number of adjudicated cases; one of the best considered of which, perhaps, is the case of Andrews v. Pond et al., 13 Peters, 65. In that case, ten per cent in addition to the legal interest was reserved to cover the rate of exchange between New York and Mobile, and it was held, that this did not render the transaction usurious, unless it was made to appear .that it was a mere cover for an usurious loan.
The case of Earll v. Mitchell et al., 22 Ill., 530, is comparatively a recent case, very similar in its facts and circumstances, as well as the legal questions raised, to the case at bar. The transaction between the parties was upheld, as not affecting the policy of the usury laws.
The parties commenced this course of dealing before the passage of the usury law, and continued it for years after, so far as we can learn, without any allusion thereto, or the provisions of the usury law coming within their contemplations.
It is proper to state, before leaving this branch of the subject, that, in our opinion, the accommodation acceptances by Antoine Leclaire, and perhaps others, made and to be paid at the same place where given, would not fall
There are one or two other matters yet to be settled, before we are ready to state our final conclusion. This
How much usury then does the $60,000 deed of trust contain ? And what amount of payments have been made on the same ? We proceed to answer these two questions: In the first place, we say the illegal interest charged upon the open account between the 20th of January, 1858, and the 8th of March of the same year, being nearly $100, is not usury, as we have shown, but simply an illegal charge (the contract for the same being in parol), which is unavailable as against Lee, Higginson & Co., innocent assignees, and, therefore, must stand. The usury law took effect March 8th, 1853, and the usury upon the open account from that date to the 17th of July, 1856, we find from the books to be,. $15,502 20
The usury charged on the Leclaire acceptances, prior to the 17th July, 1856, and which forms a part of the consideration of the deed of trust, was,. $2,132 10
The usury charged on Burrows & Prettyman’s notes and acceptances prior to July 17th, 1856, and which makes a part of the consideration of the deed of trust, was,. $2,060 00
Making an aggregate of,....'.. $19,694 30
This is to be taken, for reasons above suggested, not from the $60,000 deed of trust, but from the entire account, with reference to which all the calculations have been made,
Deduct,. 19,694 30
Leaving a balance of. $48,813 14
The payments on this sum are:
1st. As we have seen,.$8,507 44
2d. Coupon and interest notes taken up,. 24,828 75
Which makes in the aggregate,. 38,336 19
Leaving a balance of principal of. $15,476 95
We next give attention to the $25,000 deed of trust made on the 8th day of September, 1858, by Burrows and
In the first place, Ebenezer and J. P. Cook and John 0. Davie, testify directly and positively to facts which sustain the defendants’ side of this issue, namely, that these securities were got up by plaintiffs expressly to be sold in market, and that they were sold in Boston, by their procurement and on their account. The proceeds of such' sale, to be sure, were to be applied on their indebtedness to Cook & Sargent, the payment of whom would also, at the same time, relieve Leclaire of his liability as acceptor to the amount of ten thousand dollars. The testimony of these three witnesses is further corroborated by that of Sargent, who was in Boston at the time, and to whom, as agent or broker, was intrusted the sale of these securities. He states that he received the notes and deed of trust through the banking house at Davenport, to sell for, and on account of Burrows & Prettyman; that as such, he effected a sale of the same to the defendants, Townsend & Washburne, and reported the fact to Cook & Sargent, at Davenport, by letter, under date January 7th, 1859, in which he charged the same commissions that he was in the habit of doing for the sale of other like securities, namely, ten per cent. This letter is made an exhibit in the case, showing that this charge of commissions was made at the time, before any trouble or controversy was or could have been anticipated, and it is wholly irreconcilable with the idea that the said securities were the property of Cook & Sargent, and as such sold for and in their behalf; for, upon this hypothesis, such a charge would be absurd.
In opposition to all this, we have the direct testimony only of one of the plaintiffs, who, really, as we suppose, understood the transaction differently, believing, as we interpret his testimony, that, inasmuch as the proceeds of the
Such, however, is not our opinion. These facts and circumstances, properly interpreted, will be found in the main to harmonize with the theory of the defendants’ case, at least not necessarily inconsistent therewith. Of the various corroborating facts alluded to, and relied upon by plaintiff’s counsel, the following written agreement between Leelaire and Cook & Sargent may be set down of the best and highest type.
Agreement, 11th September, 1858, between C. & S. and A. Leelaire: Whereas, Burrows & Prettyman have executed notes to the amount of $25,000, principal and interest, notes at ten per cent, principal due in three years, payable to A. Leelaire, and a deed of trust on certain property therein described; and whereas the interest of A. Leelaire in said notes and mortgage is $10,000, and the interest of Cook & Sargent $15,000, and it is proposed to sell said notes and security, now it is agreed, that if said notes shall be sold, with the proceeds thereof shall be taken up two acceptances of $5,000 each, of Leelaire, drawn by B. & P., and delivered to said Leelaire canceled. And if not sold, the interest of each of said parties is to remain the same as above, except that Leclaire’s lien is to take precedence of 0. & S. If the notes of B. & P. should not be paid at maturity, and proceedings are had to foreclose and sell the property upon the deed of trust, Leclaire’s lien is to be first satisfied.
(Signed) A. Leclaire,
Cook & Saegbnt.
It is contended that the above indorsement and agreement contain an acknowledgment of Leclaire’s and Cook & Sargent’s ownership of and interest in said securities, and that the same were sold not by them as agents, but for them as owners and parties interested.
The object, unquestionably, of putting these securities in market was to raise money to pay an indebtedness of $25,000 to Cook & Sargent, and at the same time extinguish Leclaire’s liability as acceptor for the sum of $10,000, they, therefore, had a direct resulting interest in these securities the moment they were executed and delivered ; and the alleged language of ownership, which it is claimed the agreement aforesaid contains, may readily be referred to this sort of an interest.
The Leclaire interest consisted simply in that of a contingent liability, whilst that of Cook & Sargent consisted of the indebtedness itself, yet the securities all run in Leclaire’s name as payee, hence the propriety of having some agreement between them, to show the actual relative interest of each, and just how the funds should be applied when realized. And this seems to have been the only purpose of the agreement. But even if there had been a distinct understanding between the parties, that in the event the securities did not, or could not be sold, then Leclaire and Cook & Sargent were to hold the paper for themselves, as the evidence of plaintiffs’ indebtedness to them (and this is understood to be what the plaintiffs claim that the agreement in part shows), still that this could not alter the rights of Townsend & Washburne, so as
But the transactions before us present no such state of case. We find no fact indicating in the least degree, that the subject of usury was at all in the minds of the parties implicated, when the arrangement was entered into. Leclaire, to get rid of one, was willing to incur a larger liability, and the securities ran in his name, not as a device to cover usury, but, as we have reason to believe, to secure, by his superior credit and indorsement, a more ready negotiation of the paper.
Well now, to complete the illustration, suppose in the ease just put, that in addition to the arrangement to place A.’s paper in market to pay a debt due from him to 0., there should be a further side agreement between A., the maker, B., the payee, and 0., the creditor, that in case the paper does not sell, B. shall retain the same as evidence of that amount of indebtedness to 0., would the existence of such a contract, in the event paper sells, have the effect to render the same usurious in the hands of an innocent purchaser? The statement of such a proposition would carry its own answer. Without more, it is plain, it would
We therefore cannot give to this agreement the effect claimed for it ’ by plaintiffs’ counsel; nor do we think the other facts and circumstances relied upon, so strengthening the plaintiffs’ evidence, as to make it overcome that of the defendants. They are less strong than the agreement which we have been considering, are all susceptible of the same general solutionwe feel, on that account, that it is unnecessary to state and answer each separately. As it respects this deed of trust, we conclude the judgment below should be affirmed. With regard to the $10,367Tyv deed of trust, finding no proper parties before the court, we make the same order that the court below did, dismissing the bill as to it without prejudice. The costs of this court and the court below, will be equally divided between the plaintiffs and the defendant, Lee, Higginson & Co.
being the trustee in one of the deeds of trust, and all of the other members of the court agreeing, he took no part in the determination of the cause.