136 Wis. 239 | Wis. | 1908
The following opinion was filed JVIay 8, 1908:
We are unable to discover any warrant for disturbing the findings of fact. The only question raised in regard thereto is whether respondent knew her son exacted from the borrower a sum of money in addition to lawful interest for the loan and retained the same as compensation for his services. The direct evidence is to the effect that she had no such knowledge, but the claim is made that from the circumstance of the agent not receiving compensation from
Rogers v. Buckingham, 33 Conn. 81, is a good illustration of many cases that might be cited supporting the suggestion that the presumption referred to, when it arises, is merely one of fact which yields readily to evidence showing the contrary. The court said:
“It may be presumed where the agency is general, and embraces the business of making, managing and collecting the loans of a monied man” and he makes an usurious loan, that it was authorized by the lender. “But it is a presumption of fact and may be rebutted. . .
The presumption did arise in that case, but it was held rebutted by circumstances authorizing a finding that the action of the agent was unauthorized and that the exaction of the excessive amount for the use of the money was for his benefit only and must have been so understood by the borrower.
It is useless to review the many cases cited where it has been held that the exaction of a bonus by the agent of the lender which, with the interest charged, exceeded the lawful rate of interest, rendered the transaction usurious. None of them involved exactly such circumstances as characterized this case. In substance, all of the excessive exactions though ostensibly as commissions were in fact cloaks for the real purpose of obtaining more than legal interest for the money.
The cases cited to our attention to support the affirmative do not seem to be in point. In Kemmitt v. Adamson, 44 Minn. 121, 46 N. W. 321, the lender actually participated in the transaction. In Avery v. Creigh, 35 Minn. 456, 29 N. W. 154, the agent was expressly authorized to make all he could for himself out of the borrower and pursuant thereto he charged and received a sum in excess of a reasonable commission. In Joslin v. Miller, 14 Neb. 91, 15 N. W. 214, the agent and the lender shared in the exaction which in the whole added to the interest agreed upon in the note was excessive. In Stephens v. Olson, 62 Minn. 295, 64 N. W. 898, the principal had the benefit, though without his knowledge, of the excessive charge. It was included in the note and the lender, after learning of the fact, ratified the agent’s act by insisting upon payment of the note as written. In Meers v. Stevens, 106 Ill. 549, it was found as a fact that the transactions of the agent were resorted to for the very purpose of circumventing the usury law.
All the other cases referred to by appellants’ counsel out;, side of this state are similar to those we have mentioned, except Austin v. Harrington, 28 Vt. 130, and one or two others of that class, holding that where one makes another a general agent for the loaning of money he is bound by all such other does within the apparent scope of the agency, though he has no knowledge thereof, and that such apparent scope includes the charging of a commission so large as to render the contract usurious. There are two lines of cases on the subject, one holding that the making of usurious loans is not within
The rule laid down in Condit v. Baldwin, supra, is followed in all of the cases cited and with few exceptions has been adopted by the courts of this country. It is stated thus:
If “an agent intrusted with money to invest at legal interest” exacts “a bonus for himself as the condition of making a loan, without the knowledge or authority of his principal,” such circumstance does “not constitute usury in the principal nor affect the security in his hands.”
The court said, in effect, that it is only where the agent of the lender takes a sum in excess of legal interest under such circumstances that the sum so taken can he considered as obtained in whole or in part for the lender that the contract is tainted with usury, and even in that case it is not so tainted unless the lender knows of the taking and ratifies it; that when the sum taken is for the agent exclusively and so understood by the borrower there is no taint of usury; that acceptance of the note by the lender and assertion of a right to recover thereon according to its terms, only ratifies the contract as expressed in the paper.
The doctrine above stated seems to be sound. It is not within the apparent scope of a legitimate business agency to violate the law. So where an agent loans money, exacting a bonus for himself, the presumption is rather that it is' without the knowledge of the principal than with such knowledge. It logically follows that the circumstance of a principal accepting securities from his agent covering the exact amount
The latter author, after reviewing the authorities and particularly Austin v. Harrington 28 Vt. 130 — one of the few cáses out of harmony with the foregoing, — said:
“The doctrine is well settled, and universally recognized, that an agent may lawfully take a reasonable commission or bonus from the borrower for his expenses and services in effecting a loan; and whenever the lender is not a privy to the arrangement between the borrower and the agent or in no way participates in the commission or bonus, the transaction will be regarded as free from the taint of usury. ... If an agent, in making a loan of money, accepts from the borrower a bonus beyond the legal rate of interest, such act of the agent will not render the contract usurious, if the bonus was taken ydthout the knowledge of the principal, and was not received by him.”
That is stated as the law declared in New Jersey, New York, and elsewhere.
The same subject was treated in Acheson v. Chase, 28 Minn. 211, 9 N. W. 734, the court holding under circumstances similar to those here that the contract was not tainted with usury, and that in such a case the exaction of the bonus and receipt of the same ivas not within the apparent scope of the agency contract and so not ratified by the lender’s insisting upon the validity of the securities according to their tenor after obtaining knowledge of the fact.
But counsel for appellants contend that this court is committed to the very limited line of authorities not in harmony with what has been said, of which Austin v. Harrington,
In McFarland v. Carr, 16 Wis. 259, tbe agent made tbe loan under directions of tbe lender and received tbe bonus, not as bis own, but as tbe money of bis principal. Tbe court distinctly beld that in such circumstances as we have here tbe contract would not be tainted with usury. Tbe case was distinguished from those we have cited, particularly Condit v. Baldwin, 21 N. Y. 219. The ground of tbe decision is stated in these words: “We must assume that Warden, in making tbe loan and exacting tbe payment of the $50, acted as agent of McFarland” (tbe lender). If that were so no one will contend that tbe contract was not usurious. In this case it must be kept in mind though respondent’s son acted as her agent, be did not as such agent exact tbe bonus. lie exacted it independently of bis agency. He demanded it not for his principal, but for himself as tbe court found.
In Ottillie v. Wæchter, 33 Wis. 252, tbe agent acted solely for tbe borrower and it was beld that in such a case the exaction-by tbe agent from bis principal, with knowledge of tbe lender, of a bonus does not constitute usury. McFarland v. Oarr, supra, was referred to inadvertently, in a way to indicate that its scope is other than that which we have stated as to tbe circumstance being that tbe exaction was with the knowledge and by the direction of the principal. Condit v. Baldwin, supra, was referred to and tbe rule thereof stated without approval or disapproval.
It is tbe opinion of tbe court that Condit v. Baldwin states tbe true rule, so far as it bolds that tbe exaction by tbe agent of a lender, without bis knowledge or participation, of the borrower of a sum as commission for doing tbe business, such exaction being a private matter between tbe agent and tbe borrower, does not make the loan contract as to the lender usurious; that it is not within tbe apparent scope of such an agency to violate the law, and that tbe receipt by tbe lender
By the Court. — So ordered.
'A motion for a rehearing was denied September 29, 1908.
