As interpreted by the courts, all statutes against usury prohibit contracts made to evade their provisions, whether such prohibition be expressly declared in the Act itself or be left to be inferred. Whether a particular contract was made with intent to evade the provisions of our statute against usury (Public Acts of 1911, Chap. 244), is a question of fact for the jury; and no ostensible scheme or device will be of any avail to render the contract valid, provided an intent to evade the terms of the statute is found. In the present case the contract required the plaintiff to advance money from time to time to the defendants for the purchase of automobiles and automobile trucks, and in addition to interest at six per cent upon the moneys so advanced, the defendants were to pay the plaintiff a commission of $50 upon every car or truck sold. The plaintiff insisted that this commission was payable for his services in giving sound business advice and for recommending to his friends and acquaintances the purchase of the defendants' cars and trucks; while the defendants contended that it was a mere device or cover for a usurious loan. Held that under these circumstances the reasonable worth or value of the plaintiff's services as compared with the amount which the defendants agreed to pay therefor, became a material and important matter for the consideration of the jury, and that the omission of the trial court in its charge to call the jury's attention to the significance of this relation or comparison, coupled with a remark which practically removed that subject from their consideration as bearing upon the question of intent, constituted reversible error. Every circumstance surrounding or connected with an alleged usurious loan is relevant and material, if it will in anywise aid in revealing the true intent of the parties in the transaction.
SHUMWAY, J.
Section 1 of Chapter 244 of the Public Acts of 1911, page 1539, provides that no person, and no firm or corporation, other than a pawnbroker, shall, directly or indirectly, loan money to any person and, directly or indirectly, charge, demand, accept, or make any agreement to receive, therefor, interest at a greater rate than twelve per centum per annum. The second section of the same Act prohibits the taking of any note, with intent to evade the provisions of section one. Section five provides that no action shall be brought to recover the principal, interest, or any part thereof, or any loan prohibited by the Act. It is also made a penal offense to violate any of the provisions of the Act.
All statutes against usury, as interpreted by the courts, have been held to prohibit contracts made with an intent to evade the statute, whether or not such statutes have provisions the same as the one now in force in this State. Whether such an intention is present in any contract is always a question of fact for the jury. No device can be invented, and no disguise can be put on, which will make a contract valid, if behind or underneath an intent to evade the statute is found. It, then, must follow, that every circumstance surrounding or connected with the transaction is material, if in any manner it will reveal the intention of the parties. Therefore where a lender of money contracts with the borrower that the lender shall be paid for services, which contract is a part of the contract of loan, whether of money or credit, the reasonable value of the services becomes material and important upon the question of intent. If the services are of little or no value and the amount agreed to be paid for them is considerable, from our knowledge of the usual conduct of parties in business transactions the inference to be drawn therefrom is that the compensation was to be for the use of money rather than for services.
Even a broker, who may properly charge a commission for the sale of his principal's property in addition to legal interest upon sums advanced upon the property, cannot make a valid agreement to charge unreasonable and exorbitant commissions, if the purpose be to evade the statute against usury; for the law will tear off the disguise and treat the contract as usurious. Mills v. Johnston, 23 Tex. 308. In the case of Beckwith v. Windsor Mfg. Co., 14 Conn. 594, the agreement claimed to be usurious was to pay an indorser six per cent on the amount of the notes indorsed. This court said such an agreement "raises a very strong presumption, that it was designed as a cover for a usurious loan, . . . and unless satisfactorily explained, would justify such an inference;" but the court held that the question of an intention to evade the statute should be left to the trier.
In the present case the court charged the jury as follows: "I don't think it is material, gentlemen, whether the services rendered by the plaintiff to the Boulevard Company were reasonably worth the amount of compensation to be paid for them or not." It is true the court added to this statement, "If the Boulevard Company and the plaintiff entered into an agreement whereby he was to render certain services at a fixed sum, and that agreement was in all respects apart and separate from the loan of money, was a bona fide transaction, not intended in any way to increase the compensation to the plaintiff for the use of his money — the amount received for the cars could not properly be considered as bonus or interest." The court, at no place in its charge, called the attention of the jury to the significance of the value of the services as compared with the price agreed to be paid for them, as bearing upon the question of the intention of the parties, but rather, by the remark quoted, removed from their consideration the question of intent in case the jury found a contract was in fact made that the commissions should be regarded as pay for services rendered and not as pay for the use of money loaned. The instructions as given must have been harmful to the defendant and were erroneous.
In view of the conclusions of the court it is not necessary to consider the other assignments of error.