The court also made an affirmative finding on the question of broker compensation, an essential element of an exempt "broker-arranged" loan. This minimal participation by the broker was sufficient, in the Court's opinion, to qualify the loan as 'broker arranged.'" The court characterized Johnston's involvement in the transactions as follows: "The initial calls requesting the loan were made by plaintiff's agent to a licensed broker who set the terms and reviewed the documents. The statement of decision issued by the court below contains specific findings on the factual issues Jones raises. In Jones's view, the loan and forbearance were arranged wholly by Kallman, a nonbroker. Essentially, he argues the use of Johnston as a "broker" was a subterfuge to escape the interest restrictions applicable to all but exempt transactions. He asserts the only qualifying transactions are ones in which a broker is "actively involved" and receives compensation - neither of which condition was met here, according to Jones. , Jones contends the court erred in finding the loan and forbearance "broker-arranged" within the meaning of the constitutional exemption. The trial court found the transactions were not usurious because they fell within the constitutional exemption for secured loans "arranged" by licensed real estate brokers. Jones thereafter sued Phillips and Kallman, alleging the loan and forbearance were usurious under the California Constitution. In January 1983 he paid the balance and received reconveyance of the deed. Jones made all interest payments due under the note and forbearance agreement. The interest rate on the loan for this additional year was 18 percent, and Kallman again received $10,000 as a commission on the transaction. Phillips agreed to the extension and Kallman prepared the extension contract. īefore the note to Phillips came due, Burridge sought a forbearance of the loan until January 1983. None of this commission went to Johnston. Jones received $90,000 from the escrow account the remaining $10,000, representing the points, was paid directly to Kallman as a commission. Jones executed a $100,000 promissory note, secured by a second trust deed on the real property, in favor of Phillips. Under Johnston's supervision Kallman prepared the loan documents and opened the escrow. Burridge, who had Jones's power of attorney, accepted the terms. Johnston advised Burridge that Phillips would lend Jones $100,000 for one year at 21 percent interest, plus 10 points. Johnston referred Jones's problem to Kallman who found a willing lender, Carolyn Phillips. Johnston jointly owned Bonanza Properties, a real estate brokerage firm, with licensed real estate salesman Kenneth Kallman. Burridge was unable to find a lender to refinance Jones's second trust deed, and so enlisted the aid of another licensed broker, Robert Johnston. Subsequently, his employer transferred him abroad and Jones asked John Burridge, a licensed real estate broker, to handle his affairs. In May 1980 Jones bought an apartment building under a land sale contract and assumed a $100,000 second trust deed loan on the property, due in January 1981. Jones argues the court erred in finding the loan "broker-arranged" and therefore exempt from state usury laws. Plaintiff James Jones appeals from a defense verdict in an action for usury in connection with a real estate loan. No appearance for Defendants and Respondents. (Opinion by Wallin, J., with Crosby, Acting P. KENNETH KALLMAN et al., Defendants and Respondents
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