Gardner v. Watson, 13 Johns. 362 (N.Y. Sup. Ct. 1866)
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A loan is usurious if an agent, authorized to loan money at legal interest, takes a bonus for their own benefit, effectively exceeding the legal interest rate, and there is no evidence of a separate, independent agreement for the bonus unrelated to the loan.
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Summary
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Gardner borrowed money from Watson through Watson’s agent, Childs. Gardner claimed the loan was usurious because he paid Childs an extra $10 beyond the legal interest rate. Watson claimed he only authorized Childs to loan money at legal interest and was unaware of any extra payment to Childs. The court found that the jury instruction was misleading because there was no evidence that the $10 payment was based on a separate agreement for Childs’ individual benefit, independent from the loan itself. The court reversed the judgment, holding that the case should have been decided on the issue of whether the loan was usurious based on the evidence presented, and not on a hypothetical separate agreement.
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Facts
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Gardner borrowed money through Mrs. Childs, who was acting as the agent for Watson.r
Gardner alleged that the loan was made at a usurious rate of 12% interest, which included an extra $10 paid to Mrs. Childs.r
Watson testified that he only authorized Mrs. Childs to loan money at the legal interest rate and was unaware of any extra payment to her.r
Mrs. Childs testified that she was authorized to loan money at a legal rate of interest and vaguely suggested the $10 might be related to an old mortgage. She did not clearly deny receiving the $10.r
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Procedural History
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The trial court instructed the jury that the note was not usurious if Watson authorized Mrs. Childs to make the loan at lawful interest, and she did so, even if Mrs. Childs made a separate agreement with Gardner to pay her an additional $10, provided Watson had no knowledge of or sanctioned such agreement.r
Gardner appealed after a jury verdict in favor of Watson.r
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Issue(s)
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Whether the jury instruction was erroneous for allowing the jury to find no usury based on a hypothetical