Sallee v. Security Bank & Trust Co. , 119 Ark. 484 ( 1915 )

Wood, J.,

(1) (after stating the facts). The only issue in this case was whether or not the appellee acquired the note in controversy by discount land purchase thereof, or whether or not appellee acquired the same by an agreement with the maker thereof for a loan. This issue, as to whether the appellee purchased the note or obtained the same for a loan of money, was sharply drawn, and there was a decided conflict in the evidence. The issue was properly submitted to the jury, and there was evidence to sustain their verdict.

The court did not err in refusing appellants’ prayer for instruction, because that prayer assumed that the transaction in evidence was a loan of money iand ignored the testimony on behalf of the appellee tending to prove that the transaction was a sale of the note.

Appellants contend that the note in controversy was offered to appellee for discount by the maker, and that this fact showed that the indorsements were for accommodation; and that inasmuch as the discount from the face value was greater than that allowed under our Constitution and statutes for a loan, the ¡same was therefore usurious and void. To sustain this contention, appellants rely upon the case of German Bank v. DeShon, 41 Ark. 331. But it was a question for the jury as to whether the note .in controversy was offered for discount and sale by the maker, and the jury have settled that issue in favor of the appellee upon evidence amply .sufficient to sustain the verdict. The maker of the note was the Morton Mercantile & Handle Company, and Isom was the president of that company. But the testimony on behalf of the appellee tended to show that Isom was not proposing to discount the note for that company ¡at áll.’ On the contrary, the testimony of the appellee’s cashier was unequivocal to the effect that the proposition came to him purely as one of discount from M. W. Cobbs. “Isom,” said he, “purported to represent M. W. Cobbs. The note was payable to Cobbs, and nothing was said about borrowing or loaning or bonus. The proposition was offered to sell me the note, and when the time came to talk business, I made a price that I could not give more than $1,050 for a $1,155 note. If Mr. Cobbs was willing to take that, I could handle the paper for him. ’ ’ While Isom testified that he told Light, the cashier of appellee, that he was trying to borrow the money for the Morton Mercantile & Handle Company, .this conflict in the evidence made it purely a question for the jury as to whether Isom, in the negotiations with the appellee, claimed to be the agent of Cobbs, the payee of the note, or the agent of the handle company, the maker thereof. It being settled in favor of the appellee that Isom, in discounting the note in controversy, held himself out as the agent of the payee, and not of the maker, the case is thus clearly distinguished on the facts from the case of German Bank v. Deshon, upon which appellants rely for a reversal.

In that case, one Fatherly executed his note for the sum of $1,650, bearing interest at 10 per cent per annum, payable to his own order, ;ahd which was indorsed by Francis E. Ashley and A. Q. DeShon. The note was executed and indorsed for the purpose of borrowing money. After the note was indorsed by Ashley and DeShon, Fatherly discounted the same for the sum of $1,608.75 to Blocher, and indorsed and delivered the note to him, and paid Blocher in addition the sum of ten dollars. Blocher thus had notice that the note had been indorsed for accommodation, and that it was being negotiated by the maker for a loan, and he agreed -with the maker Fatherly, to take the note upon Fatherly, paying him in addition to the 10 per cent., the sum of ten dollars, making a greater rate of interest than that allowed to be taken for the use of money, and making the note usurious at the time it was first put in circulation. Blocher transferred the note to the German Bank for value without notice. The hank brought suit against the maker of the note and the in-dorsers. Usury wias set up as a defense. In that case there was a verdict and judgment declaring the transaction usurious, and in sustaining the judgment, this court said: ‘ ‘ The jury evidently found, first, that the note sued on was transferred and delivered to Blocher by Fatherly in consideration of a loan of mohey; secondly, that Fatherly paid Blocher the sum of ten dollars in part consideration of the money loaned, and that in the discount of the note and the ten dollars there was paid to and received by Blocher, pursuant to an agreement .coeval with the loan, more than ten per centum per annum interest for the use of the money loaned. ’ ’

And in holding that the facts as thus found by the jury constituted usury, the court further said: “Where parties to a contract for a loan ‘knowingly agree to pay and receive more than 10 per centum per annum for the use of the money borrowed, this, in the sense uf the law, is a corrupt agreement. If it be the real intention of the parties to receive or, reserve a given rate of interest, and that rate proves to be usurious, the contract will be void for usury, whether the parties ‘knew the interest to be usurious or not. * * * If the note in question was transferred and delivered ¡by Fatherly to Blocher, in consideration of money loaned, iand it was void on account of usury in the hands of Blocher, it was likewise void in the hands of the German hank, notwithstanding it was transferred to the ¡bank for a valuable consideration before maturity, and without notice of the usury.”

(2) But here the facts were entirely different. Thjury have found, and were warranted in finding, that the note was not presented to the appellee for discount by the maker, but that it was presented (by one who claimed to be acting for the payee. Such being the fact, there was nothing to put ¡appellee upon notice that the endorsements were for accommodation, and that the note was executed to Cobbs without 'any consideration, therefor.

Learned counsel for the appellants assume that the uncontroverted evidence shows that the note in controversy was presented to the appellee for discount by the maker thereof. Hence, they contend here that the verdict and judgment should have ¡been in favor of the appellants under the doctrine of the case of German Bank v. DeShon, supra. But, as we have shown, this is a misapprehension of the facts, ¡and hence the doctrine of the above mentioned case has no application.

The trial court announced the law applicable to the evidence adduced under the issue presented, in conformity 'with many decisions of this court on the subject of usury. See, Briggs v. Steele, 91 Ark. 458, and cases there cited.

The judgment is correct, and it is therefore affirmed.