Smith v. Mack ( 1912 )

Kirby, J.,

(after stating the facts). The sole question in this case is one of fact. The law is well settled that, “to sustain the plea of usury, it must appear that excessive interest was paid to the lender, or that a bonus or commission was paid to the agent of the lender with his knowledge, or under circumstances from which his knowledge will be presumed, which commission, when added to the interest paid or to be paid to the lender, would exceed the lawful rate.” The burden of proof is upon the party who pleads usury to show clearly that the transaction was usurious. Banks v. Flint, 54 Ark. 40; Vahlberg v. Keaton. 51 Ark. 585; Thompson v. Ingram, 51 Ark. 547.

In Leonhard v. Flood, 68 Ark. 162, the court said:

“Our law visits on a lender, who contracts for usurious interest, however small, a forfeiture of his entire loan and the interest thereon. It follows from the plainest principles of justice that such a defense shall be clearly shown before the forfeiture is declared. Usury will not be inferred from circumstances when the opposite conclusion can be reasonably and fairly reached.”

If Beauchamp acted as the agent of the borrowers alone in procuring the loan, it makes no difference whether he received the bonus or not, for what the borrower pays to his own agent for procuring the loan is no part of the sum paid for the loan or for forbearance of money. Vahlberg v. Keaton, supra.

“To constitute usury, there must be an agreement on the part of the lender to receive and on the part of the borrower to give for the use of money a greater rate of interest than 10 per cent.” Banks v. Murphy, 83 Ark. 36.

As already said, the sole question in this case in one of fact. The lender denied positively any agreement to make the loan upon receipt of $1,000 bonus above the amount of the interest agreed to be paid, and stated that he absolutely refused to make the loan at all when he learned that such a transaction as proposed to him would be usurious. That, later, he was approached by Beauchamp, who insisted upon his making the loan and agreed to do the work of getting up the papers for nothing, if the loan could be arranged. He refused then to make the loan for the time proposed, but later agreed to and did make it for two years. He denied receiving any bonus, and that any one else was acting as his agent in receiving one.

Appellants do not deny that they offered to pay the bonus to any one who could procure the loan, and both Cox and Beauchamp stated positively that they procured the loan and received the bonus, Cox insisting with Beauchamp that appellants were still willing to pay the $1,000, and that the loan should not be permitted to fall through, and that he ought to be able to procure it, and that he would pay him half the bonus if he would assist in procuring the loan or get Mack to make it. These witnesses both testified that they did procure the loan from Mack, that they received the bonus and divided it between themselves, and that Mack had nothing to do with it and did not receive any part of it.

Of course, if appellants were believed, the transaction was usurious, but the evidence is in direct and irreconcilable conflict, and it was passed upon by the chancellor, and we can not say that his finding and decision is against a preponderance of it. Such being the case, the decree is affirmed.