Pass v. N. E. Mortgage Security Co.
Pass v. N. E. Mortgage Security Co.
Opinion of the Court
delivered the opinion of the court.
The lender in this case, the N. E. Mortgage Security Co., did not take or stipulate for a greater rate of interest for the use of its money than the law allows, and therefore its contract was not usurious. It matters not, if intermediaries, through whom the borrower effected the loan, charged for their services a sum which added to the interest stipulated made the cost of the use of the money to exceed the legal rate of interest. If the borrower has to pay others than the lender for the means of obtaining the loan, that is not usury, for it is not the price of the use of the money, but the cost of getting it at all. If I agree to pay a man a thousand dollars to secure for me from another a loan of five thousand dollars at a legal rate of interest, and he obtains it by his credit or influence or labor, it matters not by what means, I cannot maintain the defence of usury against the evidence of debt executed by
The N. E. M. S. Co. had money to lend on mortgages of real estate at eight percent, interest, if satisfied as to the security. The Corbin Banking Co. was engaged in the business of negotiating loans of this kind, and was in the habit of effecting them with the N. E. M. S. Co., which had confidence in its business methods and representations, and was willing to lend on transactions it favored. The Corbin Banking Co. found the business of effecting loans profitable, and sought to extend it by agents at different points to whom it furnished printed blanks for making applications for loans according to its methods, and in this case it advanced money to pay off an incumbrance on the land, and thus make it an acceptable security on which the N. E. M. S. Co. would lend the money, and this consummation enabled the Corbin Banking Co. to earn the compensation it had bargained for, if the loan was' effected.
The fact that the N. E. M. S. Co. was in the habit of lending money on securities presented and recommended by the Corbin Banking Co. did not create the relation of principal and agent between them. Mere frequency of transactions between inde
This case presents, only somewhat' more distinctly, the same-features as N. E. M. S. Co. v. Townes, MS. (Southern Rep. vol. 1, No. 6, p. 242), in which we held the transaction free from usury.
Affirmed.:
Reference
- Full Case Name
- R. J. Pass v. N. E. Mortgage Security Co.
- Cited By
- 3 cases
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- Syllabus
- 1.Usury. Cost of negotiating loan. Pay of intermediary. A loan at the highest legal rate of interest is not rendered usurious by the fact that the borrower pays another than the lender a certain sum. for negotiating the loan. 2. Same. Interest. Cost of negotiating loan, not interest. Interest is the price paid for the use of money. If a sum be paid by the borrower to another for the means of obtaining a loan, this is not interest, and it is not to be estimated in determining whether the rate be usurious. 3. Cost to Borrower. Lender’s knowledge thereof. Loan not affected thereby. The fact that the lender has knowledge that the borrower is paying a certain sum, even though it be exorbitant, to a third person for procuring the loan, does not render the transaction usurious, if the lender receives no more than the legal rate of interest for the use of his money. 4. Usuky. Expense of obtaining loan. Case m judgment. P agreed to pay A six hundred dollars to procure for him a loan of three thousand dollars, for five years, at eight per cent, per annum, upon the security of his farm, and an additional twenty-five dollars for the necessary abstract of title. A forwarded the application and abstract to 0, the agent of the Corbin Banking Co., who forwarded them to said company. The latter referred them to the N. E. M. S. Co., which consented to lend three thousand dollars upon the security. Thereupon the C. B. Co. procured the execution of the note and trust-deed by P, payable to N. E. M. S. Co., and advanced the three thousand dollars, which was paid, less the commission, six hundred dollars, to P. The six hundred dollars was shared between the C. B. Co., O, and A. The ÍT. E. M. S. Co. received none of the commission, but upon receipt of the note and trust-deed, paid the three thousand dollars to the C. B. Co. Held, in a suit between the NE. M. S. Co. and P, that there was no usury in the transaction. 5. Principal and A&ent. Creation of agency. Mere frequency of transactions of the same sort between independent parties does not create the relation of principal and agent.