Moore v. Union Mutual Life Ins.

17 F. Cas. 703, 5 Ins. L.J. 517

• Court: U.S. Circuit Court for the District of Nebraska
• Decided: July 15, 1876
• Status: Published

Opinion

DILLON, Circuit Judge.

I am of opinion:

1. That the defendant company had the power to take and receive the mortgages, and they are not void ab initio.

2. I find that the mortgages are usurious. This result I reach upon the special circumstances of this case, placing it largely upon the ground that the requiring of such a large and extraordinary amount of insurance, not only upon the life of the borrower, but upon that of others, as a condition of making the loans, is a direct loss to the borrower, and in violation of the purpose and policy of the usury laws. Under the statute of Nebraska, no previous tender by the borrower is necessary as a condition of relief, and the contract, though usurious, is void only to the extent declared by the statute. Rev. St. Neb. p. 447.

3. The confession of judgment for $6,734.40 stands as a security only for $3,054, and interest.

4. The contracts being usurious, payments are to be applied in reduction of the principal.

5. An account must be taken in respect of all the transactions between the parties set forth in pleadings. The company is to be charged with the goods purchased at agreed price, $11,046.80, less amount of valid taxes thereon at time of sale, as to which proofs may be taken by the master, if the question has not been fully adjudicated. The company is to be charged with the amounts actually received on the collaterals. I find that there is no liability in respect to the alleged negligence in not collecting thecollaterals. The company to be charged with net amounts received from sales of goods, deducting fair and reasonable expenses of sales, and respecting and carrying out any fair and just settlement of the parties in this regard. Also with the rent of the store at agreed rate, $50 per month.. Also with any premiums charged in respect of the $15,000 life insurance for which no risk was assumed by the company. The commissions at 3 per cent, to be credited on the respective mortgages; the other charges of the agent may stand unless by further proof they are shown to be more than the value of the services rendered. The credits to the estate in bankruptcy to be applied first on the $3,054 and interest thereon; next on the $8,000 loan, and any balance on the $12,00:» loan. Let interlocutory decree be drawn accordingly, and cause referred to master to take and state an account. Right reserved, on coming in of report, to modify the foregoing.