Ehrhart v. Preferred Building & Loan Ass'n

Adkins, J., delivered the opinion of the Court. These two appeals in one record grow out of proceedings instituted to foreclose two mortgages from the appellants 1o the appellee on the same property. A petition was filed by the mortgagee in each case for a decree under the consent to a decree provision in the mortgages, and decrees thereunder were duly passed, whereupon the mortgagors filed answers and. cross bills, in which they alleged in the one ease that, whereas the mortgage was for $10,000, they received only $9,000, .and in the other that, while the mortgage was for $5,000, they received only $4,500, the difference in each case being received by the mortgagee as, a bonus,; and further alleged that the mortgagors have more t-han paid their indebtedness and are entitled to releases of their mortgages and to a return to them of the excess paid by them by reason of the alleged illegal bonuses; that they have demanded releases from tho mortgagee; and that these releases have been refused. The prayers, of the cross bills are for an accounting; for orders requiring the mortgagee to pay back to the mortgagors such excess as may hasve been paid over tho true indebtedness; for orders requiring releases to be executed by the mortgagee; for injunction restraining the mortgagee from taking any further action under the foreclosure proceedings; and for further relief.

The answers of the mortgagee neither admit nor deny the allegations of the cross bills as to the illegal bonuses, and the over-payments, but demand strict proof thereof. The two eases were heard together and the cross bill in each ease was ⁴² dismissed. The appeals in the two- cases -are from these decrees. The testimony offered in behalf of the -appellee, the Preferred Building & Loan Association, Inc., shows that Robert L. Kushnick, who- is president of said association, was requested by a friend of John H. Ehrhart, one of the appellants, to procure for appellants -a loan o-f $10,000 on a second mortgage, which he undertook to- do- in consideration of a commission of $1,000; that, after applying for the loam to two- other building associations of which he was president, and being refused, he offered the lo-an to -appellee, and the committee appointed to- examine the property recommended a loan of $7,500-; that the association finally agreed to- make the loan of $10,000 on the guaranty by Kushnick of the amount -over $7,500; that subsequently Ehrhart applied for another loan of $5,000, which was to be -applied to the reduction o-f a prior mortgage of $45,000, and Kushnick agreed to procure it on the same terms (that is, payment by Ehrhart of ten per cent, (commissions), and did procure it from appellee; that of the amounts deducted from the two loans, $800- and $400 respectively were turned over to the -appellee as entrance fees, and the balance kept by Kushnick for his services, in procuring the lo-ams for the borrower.

It is contended by appellant that the whole of the amounts, deducted from the lo-ans should be credited to- appellants as. usurious interest, on the ground that Kushnick was acting as the agent -of the association, and had no- right to- charge-brokerage fees-. We do- not find this contention to- be supported by the evidence. While there was testimony that certain directors who testified knew that some o-f the directors, charged borrower’s commissions when they procured loans, for them from the association, there is no- evidence that such a practice was authorized or approved by the association. In the two cases now before us there is no evidence that the loans, were m-ade at the instance of the association.

On the contrary, it seems clear that, in presenting the applications, Kushnick was acting on behalf of the borrower. Title Guarantee Co. v. Wheatfield, 123 Md. 458 . ⁴³ Our conclusion is that the