Niles v. Kavanagh

SLOSS, J.

The plaintiff brought this action to foreclose a chattel mortgage executed by the defendants to secure the payment of their promissory note for six hundred dollars, with interest at two per cent per month. From the judgment, which was in favor of the plaintiff, the defendants appeal.

The execution of the note and mortgage, and the nonpayment of the amount for which judgment was given, are not questioned, the sole claim of the defendants being that the loan evidenced by the note and mortgage was void under the terms of “an act to define personal property brokers and regulate their charge and business.” (Stats. 1911, p. 978.) That act defines “personal property brokers” as including, among others, all persons engaged in the business of loaning money upon the security of chattel mortgages. It authorizes such brokers to charge and receive two per cent per month as a benefit or percentage upon money advanced, and declares (section 3) that “no further or other charges either for recording, insuring or examining the security or property, or for the drawing, executing or filing of papers, or for any services or upon any pretext whatsoever beyond the aforesaid charge for interest or discount shall be asked, charged, or in any way , received, where the same would thereby make a greater charge for the money or thing advanced than the aforesaid rate of two per centum per month, and where made, all such charges shall be considered and be of the same effect as so much added interest. ...” Section 4 of the act provides that no such contract of a personal property broker, by which any greater interest rate than two per centum per

[100]

month is ehargéd, received, or contracted for “shall be valid or of any force, virtue or effect.”

The court found that the plaintiff was not a personal property broker-; or engaged in the business of loaning or advancing money as such, and found further, in effect, that she had not charged or received any rate of interest in excess of that permitted by law. These findings are assailed as unsupported. We need not consider the first of them, which becomes immaterial' if there was sufficient evidence to justify the findings that the plaintiff had not charged or received interest beyond the lawful rate.

It appears that the plaintiff was a widow, who had been, for a number of years, in the habit of loaning small sums of money upon the security1 of chattel mortgages. Her transactions were conducted through one Winston, a broker. In the instance under consideration, there was no direct communication between her and the defendants. The latter applied to Winston for a loan upon the security of their household furniture. The loan was made upon the following day, the defendants executing their note for six hundred, dollars and their mortgage. They received from Winston the amount specified in the note, less $30, which he claimed as a commission for obtaining the loan. From the sum so advanced, the defendants subsequently paid the sum of $12, as a premium upon a policy insuring the mortgaged property against fire, the loss, if any, being, made payable to the plaintiff, as her interest might appear. The mortgage required the borrowers to keep the property thus insured for the protection of the mortgagee.