Brown v. Scottish-American Mortgage Co.

Mr. Justice Scholfield delivered the opinion of the Court: This was a bill in chancery, by the Scottish-American Mortgage Company, (Limited,) against Azra E. Brown, Lydia Elizabeth Brown, his wife, Philo Allen, and Mary Allen, his wife. Philo Allen and Mary Allen made default, and a decree pro confesso was rendered against them. Azra Brown and Lydia Elizabeth Brown answered, denying the existence of the complainant as a corporation, and also its right or power to loan money in this State. They allege that the loan mentioned in the bill was made by James Duncan Smith and Thomas J. Gordon, capitalists of Scotland, in the kingdom of Great Britain, to Azra F. Brown, through their agents, Henry I. Sheldon and Daniel H. Hale, of the firm of Daniel H. Hale & Co., of Chicago, and not by or through them as officers of complainant; that as such agents they were guilty of fraud and circumvention, in exacting usurious interest and a bonus of $225 for negotiating said loan, and in requiring the giving of the principal note of $4500 when the borrower received only the sum of $4220. There was a replication to the answer, and the cause was, at the October term, 1882, of the court, referred to the master in chancery, to take and report the evidence, and his conclusions thereon. The master in chancery subsequently made his report, in writing, to the circuit court, and Brown filed exceptions thereto, and after-wards, at the February term, 1883, of the court, these exceptions were overruled, and the court decreed a foreclosure of the mortgage. Azra and Lydia Elizabeth Brown sued out a writ of error from the Appellate Court for the First District, upon that decree, and that court, at its October term, 1883, affirmed the decree of the circuit court. They now appeal from that affirmance to this court, and bring this record before us for review. The charge in the answer that there was fraud and circumvention in the loan in charging usurious interest, is very clearly not made out. In the first place, it is not shown that the firm of Daniel H. Hale & Co., to whom the $225 was paid, were' the agents of complainant in making the loan. If they were not the company’s agents, but were the agents of Brown, in that transaction, although he might have paid them an amount which, added to the current interest upon the note, largely exceeded legal interest, it would not prove usury in the loan. It can not concern the lender what the borrower pays to his own agents. (Kihlholz v. Wolf, Ex’x. 103 Ill. 362; Phillips v. Roberts, 90 id. 492.) The burden of proving a transaction usurious rests upon the party alleging it. (Boylston v. Bain, 90 Ill. 283; Kihlholz v. Wolf, Ex’x. supra.) In the next place, at the time this loan was made (July 15, 1875,) it was lawful to exact ten per cent per annum interest on money loaned. The note given bears interest only at the rate of nine per cent per annum, and runs for five years. It has been held, and is the well settled law of this court, that it is not usurious to exact the payment of interest in advance. (Mitchell v. Lyman et al. 77 Ill. 525; Goodrich v. Reynolds, 31 id. 490; McGill v. Ware, 4 Scam. 21.) One per cent on $4500 (the amount borrowed) for five years makes just $225 ; and so, in any view, interest has not been exacted beyond the rate of ten per cent per annum—the then legal rate. McGovern v. Union Mutual Life Ins. Co. 109 Ill. 151. The objection to the master’s fee is untenable. Without stopping to inquire whether the amount charged is illegal, we deem it sufficient to say the circuit court has never adjudicated upon that question. The facts are, the master appended below his signature to his report, a statement of costs, as a guide to the clerk in making up his fee bill. • It is not within the reference, is no part of the report proper, and the court in approving the report is not to be presumed to have passed u}Don it. When the fee bill is made up including it, it will be competent for appellants to question its validity by a proper proceeding, if they shall deem it advisable. In all respects, we think the evidence authorizes the amount of the decree as rendered. The principal question, and only one upon which we have had any hesitancy, is that arising upon that part of the answer which denies the existence of the complainant as a corporation, and its authority to loan money in this State; but after mature consideration we are satisfied it must be decided against appellants. They do not deny, but, at least indirectly, admit, the execution of the promissory note, the power of attorney to confess judgment, and the deed of trust or mortgage,—each of which expressly admits and recognizes the existence of the complainant. The rule is, the execution of a note, mortgage, etc., to a corporation, as such, is sufficient prima facie evidence of the existence of the corporation, and no further proof thereof is necessary until such proof is rebutted. Morawetz on Private Corporations, sec. 138: Angell & Ames on Corporations, (5th ed.) 635; Hermann on Estoppel, (2d ed.) 424; Dutchess Manf. Co. v. Davis, 14 Johns. 238; Jones v. Cincinnati Type Foundry Co. 14 Ind. 90; Cahill v. Kalamazoo Mutual Ins. Co. 2 Doug. (Mich.) 124; Steam Navigation Co. v. Weed, 17 Barb. 378; Black River R. R. Co. v. Clark, 25 N. Y. 208; Lombard v. Sinai Congregation, 64 Ill. 477. But counsel contend this is upon the principle of estoppel, and could properly only have been relied upon, here, by demurring to the answer. In this class of cases, while it is usually said the party is estopped to deny the existence of the corporation, the courts really proceed upon a rule of evidence, rather than upon the strict doctrine of estoppel. As is well said by Perkins, J., in Jones v. Cincinnati Type Foundry Co. supra: “They have treated the contract with a party by a name implying a corporation, really as evidence of the existence of a corporation, more than as an estoppel to disprove such fact. ” But we are not aware that any question could have been raised by demurrer to this answer. Under the chancery practice, if an answer is defective it must be excepted to,— a demurrer is not allowable. (Stone et al. v. Moore, 26 Ill. 165.) But where the answer is not under oath exceptions will not lie, because such answer is not evidence for the party making it. (Supervisors of Fulton County v. Mississippi and Wabash R. R. Co. 21 Ill. 366.) Nothing could have been replied specially, for the statute provides: “Replications shall be general, with the like advantage to all parties as if special.” (Rev. Stat. 1874, chap. 22, sec. 28.) The oath to the answer is here waived by the bill, and the answer is not under oath. It must result, either that the effect of the evidence of the execution of the note, cognovit and trust deed to appellee, by its corporate name, can not be considered at all in cases like the present, or it is competent to consider it under the issue raised upon the answer. This latter course seems to us unobjectionable, and appears to be in the interest of justice. There is nothing in the character of such a corporation contrary to public policy in this State, (Stevens v. Pratt et al. 101 Ill. 206,) and to allow the plea of ultra vires here would be to work a wrong,—it would be contrary to natural right and justice. This is never admissible. Darst v. Gale et al. 83 Ill. 136. We perceive no reason for disturbing the decree below, and it is therefore affirmed. Decree affirmed.