Whaley v. American Freehold Land-Mortg. Co. of London

HUGHES, District Judge (after stating the facts as above). The foregoing statement embraces the material facts on which the decision of this case must turn. The appellant, who was the defendant below, contends that, although the Corbin Banking Company and the Duncans were indeed his own agents in negotiating for him the loan which was ultimately granted by the American Freehold Land-Mortgage Company of London, yet, that these agents of his were also the agents of the mortgage company, in what is called the “placing” of this loan, and that the mortgage company was in such relations to the negotiation as to make the loan usurious. There are three established principles of law on this subject, which are as follows: (1) There can be no doubt that when one negotiates a loan through a third-party, with a money lender, and the latter, bona fide, lends the money at a legal rate of interest, the contract is not made usurious merely by tbe fact that the intermediary charges the borrower with a heavy commission; the intermediary having no legal or established connection with the lender, as agent. Fowler v. Trust Co., 141 U. S. 385, 12 Sup. Ct. 1; Grant v. Insurance Co., 121 U. S. 105, 7 Sup. Ct. 841; Call v. Palmer, 116 U. S. 98, 6 Sup. Ct. 301. (2) So, also, when an agent authorized to lend money for his principal exacts, without the knowledge or authority of such principal, money from the borrower for His own benefit, this does not make the contract usurious. Call v. Palmer, 116 U. S. 98, 6 Sup. Ct. 301. (3) But when a lender authorizes his agent to make loans for him under a general arrangement that he must Itiok to the borrower for his compensation, and such agent for the lender effects a loan, and charges the borrower a commission, this will make the contract [78] usurious, whether the lender knew of the charge or not (Fowler v. Trust Co., 141 U. S. 385, 12 Sup. Ct. 1), for this exaction is by the authority of the lender, the principal. The question in this case, therefore, is,- were the Corbin Banking Company or Duncan (both or either) agents of the American Freehold Land-Mortgage Company of London, Limited, the mortgagee complainant in this case? This was the controlling fact in Bates v. Mortgage Co., 37 S. C. 90, 16 S. E. 883; in Brown v. Brown, 38 S. C. 173, 17 S. E. 452; in Sherwood v. Roundtree, 32 Fed. 122; and in Security Co. v. Gay, 33 Fed. 636. The two men who conducted and" made the negotiation for the loan under consideration (Wheeler, as agent in New York for the Corbin Banking Company, and Sherwood, agent in New York for the American Freehold Land-Mortgage Company of London) both testify fully and positively that there was no previous contract, agreement, or understanding" between the two companies, by which the mortgage company made loans to the banking company for the latter’s customers. Wheeler testifies that his banking company applied for loans for its customers to various firms or companies, indiscriminately, and that none of them had any interest in any commissions which the banking company charged its customers, and that the American Freehold Land-Mortgage Company had no interest either in the commission of 15 per cent, charged by the banking company to Duncan, or in the commission of 5 per cent, charged by Duncan to the borrower, Whaley. He testifies that the mortgage company had no knowledge of those respective commissions, and that the agent had not such knowledge. Sherwood, the agent of the mortgage company, also testifies positively that neither his company nor himself had any knowledge of what commissions the banking company and Duncan, respectively, received for negotiating the loan which his company granted. Both of these agents testify that the whole sum of $5,000 was paid by the American Freehold Land-Mortgage Company to the banking company, — no more and no less, — and that the mortgage company had no interest in, or knowledge of, the commissions received by the banking'company and by Duncan, respectively. The character of these respective agents and witnesses is not impeached by anything in the testimony. The defendant appellant, however, contends, in substance, that, in its very circumstances, this case shows that the Corbin Banking Company, who negotiated for, received, and paid over, less its commissions, the money respectively loaned and borrowed, was the agent both of the mortgage company, which lent, and the defendant, who received, the money, less commissions, borrowed, and that this is a necessary presumption from the nature of the transaction, in spite of the positive testimony to the contrary of the respective agents who conducted the transaction. WTe see nothing in the evidence, or in the character of the transaction, to justify this presumption. The learned circuit judge who conducted the trial of this case below held, in an opinion, in which he fully discusses this question, and in which we fully concur, that there was nothing in the evidence to justify this presumption. This fact, and other material evidence in this case, distinguish it from the case of Mortgage Co. v. Owens (decided by [79] this court at its last term) 18 C. C. A. 513, 72 Fed. 219. The decision of the court below is therefore affirmed. After the decision and order of Uie court below on the main question in controversy, there were subsequent proceedings in the court below, dealing with the details of the case consequent upon the decision in chief. We see nothing in the action ox the court below in these details to question, or to dissent from. We accordingly affirm the action of the court below in all particulars.