UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
Petition for Rehearing Denied April 30, 1970.
McGowan and MacKinnon, Circuit Judges, and Jameson,* Senior Judge.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCGOWAN
Appellee sued in the District Court to recover a deficiency in the amount realized by him on the foreclosure of a second deed of trust securing appellants' note. Judgment was entered for appellee on a jury award of $12,567.11. At the close of appellee's case, appellants moved for a directed verdict on the grounds that (1) appellee's own showing revealed the transaction to be a usurious loan, as distinct from a bona fide purchase of a note, and (2) the transaction was void because it occurred in a course of dealing by appellee as an unlicensed money lender. The motion was denied. We hold that this was error by reference to the first such ground. I
In April, 1966, one Reiss telephoned Irving Kamins, a real estate agent, and reported the availability for purchase of a $12,500 promissory note secured by a second deed of trust on three properties in the District of Columbia. Kamins inquired with respect to the properties, the asking price for the note, and the commissions. The makers, appellants here, were said to have set a price of $11,000; and Reiss and Kamins were to divide a $1,000.00 commission payable by appellants. Kamins approached appellee, who expressed an interest in purchasing the note, subject to a satisfactory title search by his own attorney.
That search revealed that there was no second trust of record; and it is undisputed that no note was in existence at that time. Reiss suggested that appellee's attorney, Mr. Sheeskin, prepare the note and trust deed; and this was done by the preparation in Mr. Sheeskin's office of a note naming his secretary, Miss Ferguson, as payee. The note was made payable on October 20, 1966, and purported to bear interest at a 6% annual rate. It was accompanied by a printed form deed of trust naming Mr. Sheeskin as one of the trustees. The note was endorsed by Miss Ferguson immediately and transferred to appellee who drew a check to the order of Sheeskin in the amount of $11,000.
Miss Ferguson at no time paid any money to appellants, and it was stipulated that she received no consideration for transferring the note to appellee. Appellants received a check for $9,305.93 from Sheeskin. *fn1
On the due date, October 20, 1966, appellants were unable to pay off the note. The following day a "Note Extension Agreement" was consummated wherein appellants were granted an additional six months (to April 20, 1967) and also granted the right to demolish structures on one of the three securing lots. At this time, appellants paid appellee $2,900.00. Of this sum, $375.00 represented accrued interest for the original term of the note, $25.00 was a fee to Sheeskin, and $2,500.00 was variously characterized as consideration to demolish the structure (appellee) or consideration for the six months' extension (appellants).
The note was not paid on April 20. After alleged verbal extensions, appellee instituted foreclosure proceedings in August 1967. Appellants informed appellee that a refinancing deal was pending on another piece of property and that, upon settlement, appellants would have ample funds to satisfy their undertakings. On September 12, 1967, appellee agreed to postpone foreclosure until September 27 in return for an irrevocable assignment of $16,151.60. *fn2
On September 26 appellants informed appellee that the refinancing transaction with respect to which the assignment had been made had collapsed. Appellants also informed appellee that still another refinancing was imminent, provided appellants could raise a standby fee of $1,750.00. Appellee agreed to advance these additional funds in return for a $2,750.00 30-day note and an additional assignment of $2,750.00. *fn3 This note was not paid on the October 26 due date and foreclosure proceedings began in earnest. On November 10, foreclosure was held, appellee realizing $3,721.28. II
In discussing instructions with counsel prior to submitting the case to the jury, the transcript contains the following comment by the court:
". . . We might say that counsel have agreed that as to the basics here, that it would go to the jury on two bases, one, if the jury finds that this was a sale at discount as distinguished from a loan, the figure which the plaintiff would be entitled to would be $12,567.11; whereas, if the jury finds on the theory that this was a loan ...