Otis v. I. Eisner Co.

COATS, J.,

pro tem.

The Quinby Corporation executed to the defendant I. Eisner Company two certain notes or bonds, denominated in the instrument themselves as bonds, and which for convenience will hereafter be referred to as such. The first of these was executed on April 1, 1928, for the principal sum of $450,000, and the second on June 26, 1929, for the sum of $274,566.66. The second bond was in renewal of the first bond, and was for the unpaid balance of the original indebtedness. After default was made in the payments of principal and interest, plaintiff, as receiver for the Quinby Corporation, brought this action claiming that the bonds were usurious and asking for a money judgment for the interest paid, and for other relief. Prom the judgment of the trial court in favor of defendants, plaintiff appeals.

The claim of plaintiff is that the transaction was usurious in the inception, and that the renewal, being connected with or growing out of the original transaction, is also tainted with usury. The appeal is on the judgment roll. The court in its findings clearly sets forth the particulars of the transaction.

On April 1, 1928, the Quinby Corporation executed to the defendant, I. Eisner Company, a bond for the principal sum of $450,000, and bearing interest at the rate of eight per cent per annum, payable monthly on the first day of each month. The principal sum was also payable in monthly instalments on the first day of each month, beginning May 1, 1928. These instalments were sixty-two in number, and for the following amounts: Por the months of May, 1928, to December, 1928, inclusive, the sum of $1666.67 each; for the month of January, 1929, the sum of $1666.64; for the months of February, 1929, to January, 1930, inclusive, the sum of $3,000 each; for the months of February, 1930, to December, 1930, inclusive, the sum of $4,166.67 each; for the month of January, 1931, the sum of $4,166.63; for the months of February, 1931, to January, 1932, inclusive, the sum of $4,500 each; for the months of February, 1932, to May, 1933, inclusive, the sum of $5,500

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each; and the last instalment on June 1, 1933, for the remainder of the principal, to wit, the sum of $207,000. The bond was secured by a deed of trust, and before it was executed a permit was applied for and secured from the commissioner of corporations, authorizing the Quinby Corporation to incur an indebtedness of $450,000. The real amount of the money loaned, however, was the sum of $405,000, the remainder being in the nature of a bonus for the making of the loan. The court treated this $45,000 as interest, and adopting plaintiff’s calculations, found from the foregoing facts that the rate of interest throughout the entire period of the bond was 12.03293 per cent per annum, and, therefore, usurious. It further found that the bonds were issued pursuant to the permit from the commissioner of corporations, and, therefore, did not come within the provisions of the Usury Act. It accordingly affirmed the judgment.