Brown v. Guar. Mortg. Co. of Cal.

SHENK, J.

The appeals by the appellants Brown are from judgments in the consolidated cases above entitled and are presented on one record.

The appellants Brown in 1923 applied to Guaranty Mortgage Company of California for and received a loan, the proceeds of which were used in completing the construction of a certain building. Two notes were given to evidence the loan, one for $90,000 and the other for $95,000, each payable to the Guaranty Mortgage Company and bearing interest at seven per cent per annum. The notes were negotiable in form. To secure payment of the note for $90,000 the makers executed a first mortgage on said property and to secure the $95,000 note a deed of trust on the same property was executed. The Fidelity Savings and Loan Association became the owner and holder of the $90,000 note before its maturity. Certain payments on account of the interest on that note were made by the makers, but nothing was paid on the principal. The Fidelity Savings and Loan Association brought an action to foreclose the mortgage. The Browns, the makers of the notes, commenced an action against the lender, Guaranty Mortgage Company of California, the Fidelity Savings and Loan Association, and others to have it declared that said loan transaction was usurious, for an injunction preventing the defendants from proceeding with foreclosure proceedings, and for other relief. The basis for the charge of usury was the claim that the defendant Guaranty Mortgage Company deducted and retained from the proceeds of said $90,000 note the sum of $36,867 as a bonus for making said loan of $185,000. Upon issue joined the cases were consolidated and tried together. The trial court found that the transaction between the plaintiffs

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Brown and the Guaranty Mortgage Company was usurious. It also found that the Fidelity Savings and Loan Association and certain other defendants were purchasers of said notes for value before maturity and without notice or knowledge of the usurious character of the transaction between the' makers and the lender. The court rendered judgment for the plaintiff Fidelity Savings and Loan Association in the foreclosure action. It denied to the plaintiffs Brown in their action for an injunction any relief as against the Fidelity Savings and Loan Association or the other defendants who were found to have been