Dodge v. Tulleys

STATEMENT BY MR, JUSTICE BREWER.

On February 17, 1886, the appellants, residents of Hall county, Neb., executed and delivered two instruments, each dated February 1, 1886, and together given for a loan of $10,000. Both instruments conveyed the same lands. The first was in form a trust-deed executed to L. W. Tulleys, trustee, to secure payment of a bond of $10,000, given to Clarence K. Hesse, due in five years, with interest at 6 1/2 per cent., payable semi-annually. The second was in form a mortgage to Burnham, Tulleys & Co., to secure 10 notes of $112.50, due, respectively, at the times the semi-annual interest became due on the $10,000 bond. Burnham, Tulleys & Co. were loan brokers doing business at Council Bluffs, Iowa, and took these notes and this mortgage as payment of their commissions, the notes, with the interest named in the $10,000 bond, making the loan in fact, as was intended, at 8 3/4 per cent. Clarence K. Hesse, the obligee in the bond, was in the employ of Burnham, Tulleys & Co. as examiner of lands. He was not the lender of the money, and was named as obligee simply for convenience in transferring title. Default having been made in the payment of interest, a suit of foreclosure was commenced in the name of L. W. Tulleys, trustee, to which suit the present appellants were the sole defendants. The bill described complainant as 'trustee for Cornell University, and for Burnham, Tulleys & Company,' and set out two separate causes of action, the first on the trustdeed, and the second on the mortgage. In respect to the first, after alleging the execution of the bond and the trust-deed, it averred that Cornell University was the present holder of the bond. With reference to the second, the bill contained this allegation as to complainant's title: 'And your orator further shows the court that he is trustee for Burnham, Tulleys & Co., the owners of said promissory notes, and the mortgage deed securing the same, by virtue of the purchase of the same before maturity.' It is also alleged that Tulleys was a citizen of Iowa, and the defendants citizens of Nebraska. To this bill a demurrer was filed by defendants on the grounds- First Burnham, Tulleys & Co. were not made parties; and, third, that a cause of action in favor of Cornell University had been improperly joined with one in favor of Burnham, Tulleys & Co. This demurrer was overruled, and leave given to answer. Subsequently the court held that Cornell University ought to be made a party to the suit, and leave was given to amend the bill by making new parties plaintiff; and thereafter Cornell University and Burnham, Tulleys & Co. appeared and filed what was called an amendment to teh bill, but which simply reaffirmed in their behalf the allegations of the original bill. The answer, admitting the execution of the papers, alleged that Hesse, the obligee, was a mere nominal party, the real lender being Burnham, Tulleys & Co.; and that $534 of the $10,000 loaned had never been paid to the defendants; and also pleaded, generally, usury. Proofs were taken, and a decree entered in favor of the complainants for the full amount claimed, with a thousand dollars allowance for attorney's fees. The defendants appealed to this court.

C. S. Montgomery and Albert Swartzlander, for appellants.

Smith McPherson, for appellees.

Mr. Justice BREWER, after stating the facts in the foregoing language, delivered the opinion of the court.