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Murphy v. Leiber

Supreme Court of Arizona

July 13, 1953

MURPHY et ux.
v.
LEIBER et al.

Rehearing Denied Sept. 22, 1953.

Page 250

[76 Ariz. 80] Shute & Elsing, Phoenix, for appellants.

Laney & Laney, Phoenix, for appellees.

PHELPS, Justice.

This is an appeal from a judgment of the superior court of Maricopa County in favor of the Leibers, defendant-appellees, and against the Murphys, plaintiffs-appellants, based upon the claim of the Murphys that the Leibers had charged them a rate of interest in excess of $8 per hundred upon a loan alleged to have been made by the Leibers to the Murphys. The parties will hereinafter be referred to as plaintiffs and defendants as they appeared in the trial court.

The facts are that in 1943 and prior thereto plaintiffs were the owners of, and held under lease from the state of Arizona, a large tract of land in Pinal County, a part of which was under cultivation. In 1941 plaintiffs mortgaged some 2,500 acres of this land to the Ohio National Life Insurance Company of Ohio, hereinafter called the insurance company, to secure a loan of $40,000 they had obtained from it. The plaintiffs held 1,440 acres of this land under a deed from the state of Arizona which the superior court of Pinal County in July, 1943, held to be void. This judgment rendered the security given the insurance company for the large loan unsafe and placed plaintiffs in a position where they could not meet the semi-annual payments of some $2,600 due the insurance company upon the principal of their mortgage indebtedness to it nor provide necessary funds to pay attorneys' fees, etc. Neither could they pay other pressing obligations including state and county taxes and the second mortgage due Dr. Harber or the Arizona Title Guarantee & Trust Company without an additional loan from some source.

In October, 1943, plaintiffs were brought in contract with defendant Henry F. Leiber who was lending money belonging to his son, Henry E. Leiber. After some negotiations defendant Henry F. Leiber agreed to lend plaintiffs $15,000 which was carried into execution in November by defendants turning the money over to the Arizona Title Guarantee & Trust Company for the use of plaintiffs, and receiving from plaintiffs their note in that amount and a second mortgage upon certain of the real property upon which the insurance company held a first mortgage.

Plaintiff Harold Murphy testified in the trial court that as a part of the transaction involving the $15,000 loan, defendant Leiber demanded that in addition to the rate of 6% provided for in the note and mortgage, he be given a deed to the east half of section 29 and later demanded that Murphy convey the entire section 29 as [76 Ariz. 81] a bonus for making said loan; that defendant had previously promised to make such loan and that relying thereupon he (Murphy) had commitments out which forced him to accede to the demands of Leiber. The east half of section 29 was at the time included in the mortgage to the insurance company. Murphy further testified that at the time the negotiations were pending for the $15,000 loan Leiber orally agreed to pay to the insurance company the sum of approximately $2,600, semi-annual payments, to be paid under the provisions of the note and mortgage to said insurance company for a period of five years. When asked by his counsel what was said about whether or not he was to repay Leiber for the advancements he was to make on the Ohio National loan, Murphy replied:

'We didn't talk too much about that because at the time this Bill James was going to make a million dollars down there and I was going to have so much money when I came back from the service, and we never talked about repaying, but we did say, of course, that if he did make any advancements, and at times he made me statements and

Page 251

charged me interest, and it was always understood that he was to be repaid at all times.'

At that time there was a balance due the insurance company of approximately $32,000 and one semi-annual payment was considerably past due. A part of the $15,000 loan which was later consummated was used to make this payment. He was later asked by his counsel:

'Q. In your conversation with Mr. Leiber at any time was anything said about your only having to repay him in the event that you sold the ranch? A. There was never. We never talked about that. He just wanted his money every time he talked to me. He said if I didn't get the money, he was goint to take the ranch over from start to finish.

'Q. And was anything in your conversation ever said about you only having to pay him out of the earnings of the ranch? A. Never.'

Defendant Henry F. Leiber testified that as a separate oral agreement with plaintiff Murphy he assumed the payments on the semi-annual installments due the insurance company on its mortgage for a period of five years; that repayment to him of money expended in making such payments to the insurance company was to be made only in the event it could be paid out of the rents or out of salvaging a portion of the ranch, in the event the judgment of the Pinal County court was upheld by the supreme court. The judgment of the Pinal County court was affirmed by the supreme court. Murphy v. State, 65 Ariz. 338, 181 P.2d 336. Leiber further testified that in consideration of his making the payments of semi-annual installments to the insurance company, Murphy conveyed all of section 29 to him; that the agreement to [76 Ariz. 82] assume and pay the installments to the insurance company was entirely separate from the mortgage loan of $15,000 to plaintiffs. He denied that the conveyance of said section was in any way connected with such mortgage loan. He stated that Murphy in his conversation with him relative to the assumption of payment of said installments, stated:

"If have so much land there, if you want to gamble with me,' he says, 'and get these guys off of my neck, that I can save my land, and get the Ohio National payments made when they become due,' he says, 'you and I both can make some money."

Leiber said he would not have assumed the payments to the insurance company had plaintiffs refused to convey section 29 to him. He further stated that he knew nothing about any claims on the part of plaintiffs that he had charged usurious interest on his loan to them until they filed ...


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