United States Supreme Court
116 U.S. 98
Call v. Palmer
Argued: December 14, 1885. --- Decided: the following facts: Albert C Burnham, residing in Illinois, was a partner in the firm of Burnham, Ormsby & Co, bankers, at Emmetsburg, Iowa He had in his hands for investment $10,000 belonging to his relative, one Mrs Davidson Call applied in writing to Burnham, Ormsby & Co for a loan of $10,000 Soon after the application was made, Call met Burnham at Emmetsburg, Iowa, and they entered upon a treaty for the loan Burnham, thinking Call's proposition to be a favorable one, decided to accept it for Mrs Davidson, and, after his return to Illinois, sent the money to Burnham, Ormsby & Co, at Emmetsburg, to be lent to Call on the terms proposed by him Burnham, Ormsby & Co took the note of Call dated in November, 1872, for $10,000, payable to A C Burnham, or order, on November 1, 1875, with 10 per cent interest, payable semi-annually, which Call secured by a mortgage on certain of his real estate in Iowa Call received from Burnham, Ormsby & Co $8,000 for his note; they retainining $2,000 as a compensation for their services in negotiating the loan No part of this sum was paid to Mrs Davidson did not know that it had been deducted from the $10,000 lent by her to Call, and she never authorized Burnham or Burnham, Ormsby & Co to lend her money at a greater rate of interest than 10 per cent, or to retain any commission or bonus out of the sum lent In short, she received no benefit from the usury, and had no knowledge of it A C Burnham held the note as the agent and trustee of Mrs Davidson, but subject to her control Afterwards the appellee, Palmer, who lived in New Jersey, bought of Burnham the $10,000 note of Call, with five coupon notes of $500 each, not then due, given by the latter for interest thereon The notes were indorsed by Burnham to Palmer in September, 1873, and Palmer paid therefor in cash to Burnham for Mrs Davidson the face of the principal note, $10,000, and the accrued interest In this purchase Palmer acted for himself without the intervention of any agent whatever
On November 13, 1875, the principal note being past due, Call, in order to raise money to pay it, applied in writing to Burnham, Ormsby & Co. to lend him $11,000 for five years. They, as agents of Palmer, agreed to loan Call the money. They took his note, dated November 1, 1875, for $11,000, payable to the order of Palmer on November 1, 1880, with 10 per cent. interest, payable semi-annually, secured by a mortgage executed by Call on his lands in Iowa. The consideration for the note was as follows: Palmer delivered up to Call the $10,000 note, which he had purchased from Mrs. Davidson, and released on the record the mortgage made to secure it, and he sent to Burnham, Ormsby & Co. $1,000 in cash for Call. Five hundred dollars of this 1,000 was returned to Palmer through Burnham, Ormsby & Co., in payment of one of the coupon notes, for interest due on the Davidson note, and Call consented that Burnham, Ormsby & Co., who, through Ormsby, had procured for him the loan from Palmer, might retain the remaining $500 as a bonus for their services. Palmer had no notice or knowledge that Call had not received the full amount of the $10,000 for which he gave his note to Burnham for Mrs. Davidson, until after the bringing of this suit; nor any notice or knowledge that the said $500 had been retained by Burnham, Ormsby & Co. for their services in procuring the loan for $11,000, and did not in any manner authorize its retention of Burnham, Ormsby & Co.
Call set up the plea of usury to the suit brought by Palmer to foreclose his mortgage. The circuit court overruled the defense, and entered a decree against Call for the amount due on the note, and for the foreclosure of the mortgage. The appeal of Call brings that decree under review.
Jo. H. Call, for appellant, Asa C. Call.
M. F. Morris, for appellee, Henry H. Palmer.