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Opinion of the Court.
loaning the money of the latter, exacts from the borrower a sum in excess of lawful interest does not make the loan usuri. ous, said of Payne v. Newcomb, 100 Illinois, 611, that it was "quite another case than the one before us, and does not apply to the facts of the present case. There, services were rendered by the loan agent for the lender of the money, and the commission paid by the borrower to the agent was paid under a pre-arrangement made between the lender and the agent that the latter should get his compensation for the services rendered by him to the lender, by charging commissions to the borrower.” See also Ballinger v. Bourland, 87 Illinois, 513, 516; Kihlholz v. Wolf, 103 Illinois, 362, 366; Meers v. Stevens, 106 Illinois, 549, 552; Ammondson v. Ryan, 111 Illinois, 506, 510; Mass. Mut. Life Ins. Co. v. Boggs, 121 Illinois, 119, 127.
This case cannot be distinguished from Payne v. Newcomb. In view of the decisions of the Supreme Court of Illinois, and the manifest policy of the law of that State relating to usury, we cannot adjudge that a loan, under a fixed arrangement between the lender and an individual that the latter will act as the agent of the former at a particular place, and obtain compensation for his services by way of commissions exacted from the borrower, is to be governed by the same principles that apply in the case of one who holds no relations of agency with the lender, but is a mere broker getting his commissions from the borrower without the knowledge, authority or assent of the lender. It is not consistent with the law of Illinois, as declared by its highest court, that the lender, when taking the highest rate of interest, shall impose upon borrowers the expense of maintaining agencies in different parts of the State through which loans may be obtained. We, therefore, hold that the exaction by the Trust Company's agent, pursuant to his general arrangement with it, of commissions over and above the ten per cent interest stipulated to be paid by the borrower, rendered this loan usurious.
The result is that the recovery must be limited to the principal sum due the company. The statute declares, in respect to an usurious contract, that the lender shall only recover the principal sum due; in other words, that judgment shall be rendered only for that sum.
Opinion of the Court.
But what are the rules for the guidance of the court in de termining the principal sum due? In Illinois it is settled that a party making application to a court of equity for affirinative relief against an usurious contract is entitled to such relief only upon the condition that he shall pay, or offer to pay, the principal sum with legal interest. Clarke v. Finlon, 90 Illinois, 245, 248; Sanner v. Smith, 89 Illinois, 123, 125; Carter v. Moses, 39 Illinois, 539, 542; Ilenderson v. Bellew, 45 Illinois, 322, 324; and Tooke v. Newman, 75 Illinois, 215, 217. It is equally well settled there that one who has voluntarily paid usurious interest cannot recover it back in an action at law. Riddle v. Rosenfeld, 103 Illinois, 600, 603; Hadden v. Innes, 24 Illinois, 381, 384; Town v. Wood, 37 Illinois, 512, 516; Carter v. Moses, 39 Illinois, 539, 542; Tompkins v. Hill, 28 Illinois, 519. But it is the established doctrine of the Supreme Court of that State that these rules have no application where the transaction has not been settled and the lender sues to recover a balance due on the principal sum. In such a case the borrower, being sued, may have all payments made by him on account of interest applied in diminution of such part of the principal as remains unpaid. Harris v. Bressler, 119 Illinois, 467, 472; Payne v. Newcomb, 100 Illinois, 611, 623; Hamill v. Mason, 51 Illinois, 488; Ileffner v. Vandolah, 62 Illinois, 483, 486 ; Saylor v. Daniels, 37 Illinois, 331; Mitchell v. Lyman, 77 Illinois, 525. Such is the uniform construction of the statute, which, in the case of usury in a loan, forfeits the whole of the interest contracted to be received, and permits a recovery only for the principal suin due. As there is no interest really due, if the transaction be usurious - the right to recover interest being forfeited at the moment the contract of loan is consummated — whatever the borrower pays on account of the loan must go as credit on the principal sum; otherwise, the usurer would get the benefit of his illegal contract, and the statute be rendered inoperative.
The court below proceeded upon the ground that the Trust Company was entitled to a judgment for the amount actually received by Fowler, in cash, with interest at six per cent from the date of the decree, and no credit was given on the prin
Opinion of the Court.
cipal sum for numerous payments made by the borrower on account of interest. Under the settled course of decisions in the Supreme Court of Illinois, this decree must be held erroneous. Fowler paid off all the interest represented by the coupons, and made payments after the debt became due. And as the company retained out of the $9000 an amount equal to the present value of three per cent of the ten per cent stipulated to be paid, Fowler must be regarded as having paid that amount on the principal debt. Within the meaning of the statute, the amount due the company, at the date of the decree below, was: 1. The principal sum, $9000, diminished by all payments made by Fowler at any time on account of the debt.
2. The sums paid by the company for insurance, taxes and assessments, with interest at ten per cent on each from date of payment until the rendition of the decree, that being the rate fixed in the deed of trust in respect of sums paid by the mortgagee for insurance, taxes and assessments on the property which the mortgagors should have paid. The decree should have been only for the aggregate amount due on these two accounts, ascertained in the mode just indicated, with interest from its rendition at six per cent per annum, the rate allowed on judgments by the statute of Illinois.
The Trust Company insists that the decree should have made to it an allowance for solicitor's fees. There is no foundation for this claim. The trust deed provides that in the case of a sale by the trustee, at public auction, upon advertisement, all costs, charges and expenses of such advertisement, sale and conveyance, including commissions, such as were at the time of sale allowed by the laws of Illinois to sheriffs on sale of real estate on execution, should be paid out of the proceeds. This provision does not impose upon the borrower the burden of paying to the lender a solicitor's fee where a suit is brought for foreclosure. The commissions referred to in the deed are allowed only where the property is sold, upon advertisement, by the trustee, without suit. The trust deed made no provision for a solicitor's fee to the company in the event suit was brought. That a suit became necessary because of the refusal
Statement of the Case.
of the trustee to act, is no reason for taxing such a fee against the mortgagor. The decree is reversed, and the cause remanded with direc
tions to modify the decree in accordance with the principles of this opinion.
FOWLER v. EQUITABLE TRUST COMPANY. (2)
EQUITABLE TRUST COMPANY v. FOWLER. (2)
APPEALS FROM THE CIRCUIT COURT OF THE
UNITED STATES FOR
THE SOUTHERN DISTRICT OF ILLINOIS.
Nos. 34, 35. Argued April 16, 17, 1891. – Decided October 26, 1891.
The decision below in these cases is reversed on the authority of Fouler
v. Equitable Trust Company, ante, 384.
The court stated the case as follows:
The Trust Company made a loan to Rose H. Fowler, a citizen of Illinois, of the sum of $6000, for five years, with interest at the rate of ten per cent per annum, payable semi-annually. The latter executed to the company six coupon bonds of $1000 each, dated May 1, 1874, payable May 1, 1879, with interest semi-annually at the rate of seven per cent per annum; the principal and interest payable at the office of the company in New York. As security for the payment of the bonds and the interest thereon, the borrower conveyed to Jonathan Edwards, trustee, a lot in Springfield, Illinois, with the appurtenances thereon. The deed was similar in its provisions to the one given in the preceding cases, Nos. 32 and 33.
The present suit was brought October 27, 1882, to foreclose the grantor's right and equity of redemption, and for a sale in satisfaction of the amount found, upon an accounting, to be due the Trust Company. Sophie Fowler was made a defendant upon the ground that she claimed some interest in the mort gaged property. She filed an answer and cross-bill, to which
Statement of the Case.
the company filed a replication and answer. By a decree entered October 20, 1884, it was adjudged by the court that · the plaintiff was entitled to recover $2162.48 as the balance of the principal actually received by the defendants, $23.12 for insurance paid ; in all, $2185.60. When this decree was entered the defendants filed a written motion and petition for rehearing, in respect to which the same proceedings were had as in the preceding cases. A formal order for rehearing was made June 30, 1885, and entered as of October 31, 1884 ; and there was a final decree, January 11, 1887, in favor of plaintiff for $5411.23, of which $5381.83 was found to be the principal sum actually received by the defendants, and $29.40 to have been paid for insurance. From that decree both parties appealed.
In reference to the loan in question, Johnston, the local agent of the company at Springfield, through whom the loan was obtained, testified : “ The trust deed and bonds were executed and delivered to me about the 22d day of June, 1874, as complete. This was a loan of six thousand at ten per cent. Seven per cent of the interest was evidenced by the interest coupons attached to the six one-thousand dollar bonds, and the remaining three per cent was discounted for the five years and deducted from the $6000. The trust deeds and bonds in this case bear date the 1st day of May, 1874, and the interest which accrued on them from May 1, 1874, to June 23, 1874, was paid to the defendant.
For that amount Johnston executed and delivered to the defendant his sight draft on the Trust Company, which was negotiated by her. Pursuant to a previous agreement with him, she paid him a commission of $150. The evidence as to