Smith v. G. Cavaglieri Mortgage Co.

This action was begun and prosecuted by the plaintiffs to recover as a penalty under the Usury Act three times the amount of interest alleged to have been paid by them to the defendant by reason of the transactions hereinafter referred to. The defendant had judgment and the plaintiffs appeal.

Two questions are presented to us in this action for our consideration: First—Was the transaction involved a loan of money or the sale of a promissory note? Second—Has there been any payment of usurious interest ?

The trial court found that the transaction constituted a sale of a negotiable instrument, and not a loan, and also that no payment had been made.

The following facts are disclosed by the record: On and prior to the seventeenth day of June, 1925, the Edwin R. Rockwell Company, a corporation, was the owner of a contract for the purchase of certain lots in the city of Los Ángeles, upon which there remained an unpaid balance of the purchase price of $20,000. The corporation desired to erect an apartment house upon the premises, and also to raise sufficient money to complete the purchase price of the lots. Tentative plans and specifications for such an apartment house had already been…