James Bradford Co. v. United Leather Co.

Citations

• 11 Del. Ch. 46
• 95 A. 308
• 1914 Del. Ch. LEXIS 30

Syllabus

<p>As a receiver of the estate of an insolvent corporation acts for all creditors, it is his right and duty to question a transaction whereby the insolvent borrowed money, paying an alleged usurious rate of interest.</p> <p>A borrower, who pledged accounts receivable as collateral to- secure its loans, agreed with the trust company making the loan that the lender should, as compensation for its services in connection with keeping the accounts and collecting the collateral, receive $125 per month. The accounts at first were numerous, but when they became less the trust company voluntarily ■ reduced the compensation. Held, that, though such compensation was in excess of the six per cent, interest allowed by Rev. Code 1915, c. 77, §§1, 2, the agreement was not usurious, for the services were substantial, and though performed by an officer of the trust company, no new agent having been engaged, the company was entitled to compensation, just as an individual would be.</p> <p>Where the taking of compensation by the lender for services rendered to the borrower is relied upon to show usury, the decision depends on the facts in each case, and the test is the reasonableness of the amount and the intent of the parties.</p> <p>Where there is a contract whereby money is loaned and payment thereof secured by book accounts payable to the borrower, who is to act as agent for the lender in the collection of the accounts, and the lender receives, in addition to the full legal rate of interest, compensation for the work done by him in examining the books and keeping a record of the accounts of the borrower in order to protect the interests of the lender, the agreement is not usurious if made in good faith and not to avoid the usury law, and the compensation be reasonable in amount proportionate to the work done.</p>