2 F. 113 | U.S. Cir. Ct. | 1880
Bill in equity brought to foreclose a mortgage upon certain real estate in Nebraska, executed by Robert Kittle and wife to the plaintiff, to secure the payment of a certain promissory note for $2,500.
The defence is that the note sued on is usurious. The legal rate of interest under the law of Nebraska is 12 per cent, per annum, and this rate is contracted for by the terms of the note. It is claimed by the defendants that, in addition to the lawful interest thus provided for, a further consideration for the loan was exacted by the plaintiff under the cover of a transaction of insurance entered into between the plaintiff and defendant Robert Kittle. The plaintiff is a corporation organized under the laws of Kansas, and its purposes are declared by article 4 of its charter, among other things, to be “to make insurance upon the lives of individuals, * * * and to make such legal investments of all moneys received as premiums for policies issued and from
The defendant Robert Kittle applied to the plaintiff for a loan of money. He did not desire, and did not apply for, a policy of insurance upon his life. He was informed in substance that the company was loaning money, and would loan him $2,500 upon satisfactory security, provided he would take from plaintiff a policy of insurance upon his own life or that of some other person for $5,000, and pay the premiums, amounting to about $300 per annum. Whether more than the legal rate of interest has been contracted for is a question of fact to be collected from the whole of the transaction as it passed between the parties. We are to inquire whether there was an agreement, device or shift to- reserve or take more than the law permits. It is not usual to express an usurious contract upon the face of a written agreement. “The charge of usury,” says Mr. Tyler, “in most instances attaches to pretended cases of exchange of credits or commodities, or when a profit is realized for something besides the use of the money loaned or the debt forborne.” Tyler on Usury, 105. We must, therefore, inquire whether, considering the whole transaction, there has been a successful effort on the part of the plaintiff to obtain, under color of the insurance transaction, exorbitant and unlawful gain for the use or forbearance of the money baned to defendant Robert Kittle. Were these two separate
The evidence, as it appears in the depositions, might leave us in serious doubt as to the true answer to be given to these questions, but the matter is rendered reasonably clear by reference to the mortgage sued on, which must be accepted as an authoritative statement of the contract as understood by the parties themselves, and which provides as follows: “And the parties of the first part hereby agree, in consideration of the aforesaid loan, to take out and keep in' force during the continuance of said loan a policy of life insurance in the Missouri Life Insurance Company aforesaid, upon his own life or the life of some other person, and upon which he hereby agrees to pay or cause to be paid to said company the annual premium thereon, and not less than $310 per annum. And it is further agreed in consideration of said loan that all renewals thereof, or extensions of time of payment thereof, are upon the express condition of the payments upon said life insurance policy being made when due; * * * that any neglect or refusal so to do shall cause the whole amount of said loan to become immediately due and payable, any agreement of renewal or extension of payment to the contrary notwithstanding. ”
This language is explicit, and from it we learn that the two transactions were, in some respects at least, blended into one. The insurance was taken in consideration of the loan. It was not a clause inserted in pursuance of a policy to loan only to policy-holders, for it stipulates that the policy to be taken may be upon the life of the borrower “or the life of some othei person.”
It was the profit to be derived from the transaction of in"
In this case the payments which have been made under the name of premiums on the insurance policy must be regarded as paid on account of said loan; the insurance contract, made as it was as a cover for usury, being held void.
The statute of Nebraska on the subject of usury in force when this loan was made, to-wit, the eighteenth day of November, 1812, will determine the rights of the parties in view of this opinion, and decree will be entered accordingly.
Mr. Justice Miller concurred in the foregoing opinion.