58 Minn. 137 | Minn. | 1894
The defense to this action was that the note sued on was usurious, and the only question on this appeal is whether the finding to the effect that it was not is justified by the evidence.
There is practically no conflict in the evidence. The note, which was for $250, payable in sixty days, with eight per cent, interest,
When the loan was made to the defendants, Evarts, in accordance with his usual custom, retained, out of the amount loaned, $25, giving the defendants only $225. It is idle to claim, from the evidence, that Evarts was, in this transaction, a loan broker, or in any sense the agent of defendants. He was acting solely as the agent of plaintiff, and performed no services beyond what any lender would do in his own behalf. He did nothing that could have formed any sort of basis for any charges against a borrower, unless it was the
If the business had been conducted by plaintiff personally, no one would question the usurious character of the transaction. No one would claim that, where a man is lending his own money, he can charge to the borrower, in addition to the maximum legal rate of interest, all the expenses of transacting his own business, including compensation for his own services in attending to it.
But, if he can cast all this burden upon the borrowers by merely turning over the business to a general agent, there would be very little left of the statute against usury.
The “law of usury by an agent” is not in a very satisfactory condition. It would perhaps have been more in harmony with the principles of the law of agency, and have more effectually prevented evasions of the usury laws, had the courts, at the start, adopted the' views of Comstock, J., in his dissenting opinion in Condit v. Baldwin, 21 N. Y. 219, and held that where an agent exacts more than the legal rate of interest the coñtract is an entirety, and if the principal adopts it he must adopt it as a whole, with all its vices; that if the agent has exceeded his authority the principal is not bound by it,, but may repudiate the whole, and recover back his money, but that the principal must either disavow the dealing, or take all the consequences.
In Acheson v. Chase, 28 Minn. 211, (9 N. W. 734,) — followed in some' later cases, — this court adopted in part the doctrine of the opinion of the court in Condit v. Baldwin; and, in so far as we have, it must be adhered to, as having become in effect a law of property. But we-do not propose to extend the application of the doctrine beyond what has been already decided. As was said in Lewis v. Willoughby, 43 Minn. 307, (45 N. W. 439,) in order to protect honest and innocent lenders from suffering for the secret, unauthorized exactions of their agents, we have gone as far as we can go without opening the-door “through which any one can evade the law merely by transacting his business through an agent.
Upon the facts the present case is more than covered by the de
Where, as in this case, the lender intrusts the entire management of his business to a general agent, with unlimited authority to conduct it according to his own discretion, and with the understanding that he is to obtain compensation for his services and expenses as agent by way of commissions or bonuses from the borrowers, he cannot be permitted to shield himself behind the pretext that he gave the agent no authority to exact anything in excess of the legal rate of interest, and that he had no actual knowledge that he was so doing.
Where the lender thus places his business under the exclusive and unlimited control of a general agent, if the agent exacts usury the case stands precisely as if it had been done by the principal personally; and such an agent has no right to exact from the borrower, either for alleged services or otherwise, anything which the principal might not have lawfully exacted, had he transacted the business in person. Nor, upon the facts, is it true, except in name, that the plaintiff received no part of this bonus, for he had the benefit of it in defraying the expenses of conducting his own business. Our conclusion is that the findings are not supported by the evidence.
Order reversed.
(Opinion published 59 N. W. 985.)