Murphy v. Ablow

California Court of Appeal Mar 15, 1954 No. Civ. 19935Published

Before: Vallee

AI Brief

AI-generated · verify before citing

Holding. The court held that the trial court's finding that a $1,750 bonus was a usurious charge for a $10,000 loan, rather than a legitimate fee for a separate $35,000 loan, was supported by substantial evidence. The appellate court affirmed the judgment, ruling that the determination of whether a transaction is a usurious subterfuge is a question of fact for the trial court.

Issues

Whether there was substantial evidence to support the trial court's finding that a bonus payment was a usurious charge for a loan.
Whether the trial court's determination that a transaction was a subterfuge to evade usury laws is a question of fact.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“The courts will not permit an evasion of the Usury Law by any subterfuge, and it is always permissible to show that a transaction, ostensibly lawful, actually constituted a usurious loan and was made with intent to evade the statute.”

“Whether a transaction is usurious is a question of fact.”

“The trial court having found the evidence to weigh more heavily for plaintiff, the case is closed.”

VALLÉE, J.

Plaintiff brought this action against A. Ablow, referred to as defendant, to recover moneys alleged to have been paid by him to defendant in violation of the usury law.

On March 29, 1950, defendant, through a broker, agreed to loan plaintiff $40,000, to be evidenced by two promissory notes: one for $35,000, due three years after date with interest at 6 per cent, principal and interest payable in monthly installments, the note to be secured by a first deed of trust on a parcel of realty; the other for $5,000, due three years after date with interest at 10 per cent, principal and interest payable in monthly installments, the note to be secured by a second deed of trust on the same property. On April 12, ' 1950, defendant agreed to loan plaintiff $10,000, to be evidenced by a promissory note due five years after date with interest at 10 per cent,;, the note to be secured by a second deed of trust on a different parcel of realty.

The loans were effected- through separate escrows with the same escrow holder. The escrow with respect to the $40,000

[855]

loan was opened on March 29, 1950; that with respect to the $10,000 loan, on April 13, 1950. On April 13, 1950, defendant demanded of plaintiff that he pay him a honns of $1,750; plaintiff agreed to pay it. The parties executed an instrument directed to the escrow holder, which reads: “You are hereby authorized and instructed to pay A. Ablow the sum of $1,750.00 as a prepaid bonus or consideration for the granting of the $35,000.00 First Trust Deed Loan as described in original escrow instructions dated March 29, 1950.” Defendant then paid $38,250 into the escrow with respect to the $40,000 loan, thus taking a credit for the $1,750 bonus. The $1,750 was deducted from the $35,000 loan. The two loans were then consummated.

Plaintiff sued for treble the $1,750 boffus and claimed below that it was an additional charge to obtain the $10,000 loan, and that it was usurious. Defendant claimed it was paid for the $35,000 loan, and that it was not usurious. If the bonus was an additional charge for the $10,000 loan, its exaction was usurious. If it was paid to obtain the $35,000 loan, it was not usurious. No person shall, by charging any fee, bonus, discount, or other compensation, receive from a borrower more than 10 per cent per annum upon any loan of money. (Const., art. XX, § 22.)

Murphy v. Ablow

AI Brief

More from California Court of Appeal

Related research

AI Brief