64 Minn. 162 | Minn. | 1896
Action upon a promissory note secured by a mortgage. Defense, usury. The court below, trying the case without a jury, found against defendants, and from an order denying'a new trial they appeal.
Stated as briefly as possible, the controlling facts are these: Plaintiff, a nonresident, had made a few loans in the city of St. Paul, taking real-estate security. One Griggs collected interest and principal for him as it became due, remitting as collected. Through •the foreclosure of a mortgage given to secure the payment of one >of these loans, plaintiff, in 1893, became the owner of five unimproved and unproductive city lots, in which he had thus invested about $1,300. It had always been represented to him by Griggs and others that these lots were worth the amount invested. He
We are of the opinion that the order denying defendants’ motion for a new trial must be affirmed, and, for the purpose of disposing of the case, shall assume that Griggs’ knowledge of the market value of the lots, and that they could not be sold for more than $500, must be imputed to plaintiff. We therefore proceed upon the
The case of Bank of United States v. Waggener, 9 Pet. 378, is a leading case, and is specially in point here. The facts were that a loan of $5,000 was negotiated at full legal interest, on condition that the borrower should accept $1,100 of the amount in depreciated bank notes, at their par value, although their current value was only 60 or 70 per cent, of the par value. After laying down some general rules in respect to usurious contracts, the court said:
Now, let us examine the facts in this case. Plaintiff was not a dealer in real estate, but had a few thousand dollars loaned out in the city of St. Paul. He was a young man, just about to commence the practice of law at his place of residence in the East. He was in great need of the income which came from his loans as the annual interest, and, from the evidence, it quite clearly appears that his agent had not made the best of investments. His interest was not being paid when due, and the letters from Griggs to him show that the former was endeavoring to smooth matters over, and was concealing the fact that the loans made were not first-class. Through a foreclosure the lots in question became plaintiff’s property, and he realized that they would greatly increase the unpleasantness of his condition. He believed that in time the lots would prove a remunerative investment at what they cost, $1,300, although, attributing to him his agent’s knowledge, he knew that their present market value did not exceed $500. Exceedingly anxious to dispose of them, and thus to have the money earning something, he conceived the plan of making a loan of sufficient size to induce a purchaser at $1,300. Not only was he willing to make the loan of such an amount of money as was necessary to bring a
These facts tend to demonstrate that the loaning of money 'at an usurious rate of interest was not in the plaintiff’s mind at all, but that his anxiety was to dispose of his unproductive real estate so that he would lose nothing, — to find another willing to carry it until times should so far improve as to permit a sale without any loss to the latter. In passing upon what was intended, we are not to lose sight of the fact that plaintiff believed that ultimately there would be no loss to any one. And we must also bear in mind that we are dealing with a case in which city lots were sold, the value of whicb. present and prospective, is largely, almost wholly, a matter of opinion, and that a transaction of this kind cannot be treated as we would one in which some staple article, having an easily ascertained and certain value, had been the property sold to a borrower. In the one case the discrepancy between actual market value and the price is frequently very great,- — largely based upon the seller’s or the buyer’s idea of what the future prospects may be, —while, with the staple article of commerce, the market price of to-day is almost always controlling. Real estate is frequently valued by the owner at what he thinks may be its prospective value, and is often bought because the purchaser believes its prospective value is so far above the market value as to warrant an investment. Now, in the case at bar, the defendants’ contention that
The point is made that the note must be held usurious because of the amount of commissions paid by defendants to Griggs for his services. We are of the opinion that the findings of fact on this matter of commissions or compensation to the agent, paid by defendants, were supported by the evidence;
Finally, the appellants’ counsel contend that the decision of the trial court must be reversed, and it must be held that the transaction was usurious, because plaintiff was a married man when he deeded the lots, and his wife did not join in the deed. As the wife retained her inchoate statutory interest, which, should her husband die first, would ripen into a perfect title to an undivided one-third, the lots, or such part as defendants acquired title .to, were worth but two-thirds of $500. This, in effect, is a claim that the corrupt bargain is shown because plaintiff did not convey a perfect title. It is evident that, because plaintiff concealed the fact that he was a married man, defendants did not get what they bargained for, and it is also evident that they are not remediless. But the circumstance is not evidence of an intent on the part of the parties to enter into a corrupt bargain. It is really against it, for parties
Order affirmed.
At pages 400, 401, 403.
The court found, as a fact, that the commissions were paid “without any intention on the part of any one of evading the usury laws.”