Barnwell Production Credit Ass'n v. Hartzog, 17305

• Decision Date: 06 June 1957
• Docket Number: No. 17305,17305
• Citation: 98 S.E.2d 835,231 S.C. 340
• Court: South Carolina Supreme Court
• Parties: BARNWELL PRODUCTION CREDIT ASSOCIATION, Respondent, v. J. L. HARTZOG, Gerard Hartzog, The Federal Land Bank of Columbia, Planters Fertilizer & Phosphate Company and J. W. Conder Company, of whom The Federal Land Bank of Columbia is Respondent and J. L. Hartzog and Gerard Hartzog are, Appellants.

Page 835

98 S.E.2d 835

231 S.C. 340

BARNWELL PRODUCTION CREDIT ASSOCIATION, Respondent, v. J. L. HARTZOG, Gerard Hartzog, The Federal Land Bank of Columbia, Planters Fertilizer & Phosphate Company and J. W Conder Company, of whom The Federal Land Bank of Columbia is Respondent and J. L. Hartzog and Gerard Hartzog are, Appellants.

No. 17305.

Supreme Court of South Carolina.

June 6, 1957.

Gerard Hartzog, Columbia, for appellants.

Blatt & Fales, Barnwell, Carter & Hiers, Bamberg, Frank P. McGowan and Robert H. Hodges, Columbia, for respondent.

LEGGE, Justice.

This action was commenced in October, 1954, as the result of alleged default of the defendants J. L. Hartzog and Gerard Hartzog in payment of a promissory note given by them to the plaintiff under date September 21, 1953, in the amount of $28,640 payable $10,000 on December 15, 1953, and $18,640 on September 15, 1954, with interest from date at 6% per annum, and in two mortgages of the same date as the note, one of real estate and the other of chattels (livestock, farm implements and motor vehicles), given by said defendants as security for the payment of said note. The Federal Land Bank of Columbia was made a party defendant as the holder of a senior mortgage of the real estate; and the two other corporate defendants were joined as judgment creditors of the individual defendants.

J. L. Hartzog and Gerard Hartzog appeal from an order of the circuit court refusing their motion to transfer the cause to calendar one for trial by jury and granting that of the plaintiff for a general order of reference.

The complaint, after setting forth the execution of the note and mortgages, alleged, in paragraph 11:

'11. That the plaintiff is now the owner and holder of the said described note, real estate mortgage and chattel mortgage; that the terms, covenants and conditions thereof have been breached in that the indebtedness evidenced by said note and mortgages has not been paid as and when due under the terms thereof; and there is now past due and owing thereon to the plaintiff by the said J. L. Hartzog and Gerard Hartzog the sum of Twenty-five Thousand Three Hundred Thirteen and 44/100 ($25,313.44) Dollars, as principal, and the sum of One Thousand Six Hundred Sixty-two and 02/100 ($1,662.02) Dollars, as interest, totaling the sum of Twenty-six Thousand Nine Hundred Seventy-five and 46/100 ($26,975.46) Dollars due as of October 9, 1954, together with reasonable attorney's fees for plaintiff's attorneys to be added thereon, as provided for by the terms of said note and mortgage; that payment thereof has been demanded and refused; and, under the terms of the said chattel mortgage, the plaintiff is entitled to immediate possession of the personal property described in paragraph 7 herein.' (Italics ours.)

Paragraphs 12 and 13 explain the joinder of the corporate defendants; and in paragraph 14 it is alleged that the plaintiff waives its right to a deficiency judgment.

The prayer is:

'1. That the amount due and owing the plaintiff by the defendants, J. L. Hartzog and Gerard Hartzog, on the said note and mortgages held by it and herein alleged, including interest and attorney's fees, be ascertained and determined by direction of the Court.

'2. That the amount, if any, owing on the real estate mortgage and now held by the defendant, The Federal Land Bank of Columbia, be ascertained and determined under the direction of the Court.

'3. That possession of the personal property described in said chattel mortgage and described in paragraph 7 herein be given over to the plaintiff. (Italics ours.)

'4. That the plaintiff's said mortgages be foreclosed, the equity of redemption barred, the mortgaged premises and personal property described herein be sold under the direction of the Court in the manner provided by law; that the proceeds derived from said sale be disbursed and applied as follows and in the order stated, that is to say: (a) To the payment of the cost of this action and any past due taxes assessed against the mortgaged premises and personal property; (b) To the payment of the amount ascertained to be owing on the said mortgage of The Federal Land Bank of Columbia, the same to be paid out of the proceeds derived from the sale of said tract of land only; (c) To the plaintiff the amount ascertained to be due and owing on its said note and mortgages, the same to be paid from the proceeds derived from the sale of the said tract of land and the personal property described herein; (d) The balance, if any, be paid to the defendants, other than The Federal Land Bank of Columbia, as their respective interest may appear.

'5. That the plaintiff be granted such other and further relief as the Court may adjudge to be just and equitable.'

The Federal Land Bank of Columbia answered, setting up its first mortgage of the real estate in question. One of the other corporate defendants answered, setting up its judgment. The other corporate defendant defaulted.

The defendants J. L. Hartzog and Gerard Hartzog answered, alleging:

That the note of September 21, 1953, was a renewal note and was executed in reliance upon representations, by plaintiff's authorized agents, that the said defendants 'would be given a period of time of five years or longer if necessary to repay the said renewal note by annual payments from the proceeds the defendants received from the sale of offspring of bulls, heifers, steers and culls from its registered purebred Hereford herd'; that the plaintiff, when it made such representations, never intended to carry them out, and thereafter refused to carry them out; that said representations were false, fraudulent, and part of a general scheme on the part of the plaintiff to induce the defendants to execute the said note and mortgages; that as the result of said false representations, fraud and deceit, the defendants' farming and stock-raising operations were drastically reduced and severely damaged; and that, because of such false representations, fraud and deceit the said note and mortgages are null and void. These defendants also set up a counterclaim in which they alleged that as the result of the aforementioned false representations, fraud and deceit on the part of the plaintiff they were forced by the plaintiff to sell some of their purebred cattle at a sacrifice, were refused advances of money that the plaintiff had promised to make to them annually for the purchase of fertilizer, seed and supplies, and were deprived of credit necessary for their farming and stock-raising operations, to their damage, actual and punitive, in the sum of $100,000.

Appellants' contention here is, as it was before the circuit judge, that they are entitled to trial by jury as a matter of right because:

1. The complaint contained a cause of action in claim and delivery;

2. The answer pleaded fraud and deceit; and

3. The counterclaim stated a cause of action in tort, based upon such fraud and deceit.

They concede that in respect of the chattel mortgage the respondent had the right to proceed either in claim and delivery or in foreclosure similar to that of a mortgage of real estate; and they take the position that because of (1) the last clause of paragraph 11 of the complaint and (2) the third paragraph of the prayer, hereinbefore quoted and italicized, it elected to proceed in claim and delivery.

The 'Statement' prefacing the transcript of record appears to have been settled by Judge Henderson's order of February 1, 1957, from which no appeal is taken. It includes the following:

'At the hearing the Hartzog defendants contended that the complaint contains a cause of action for claim and delivery of personal property, and that the entire pleadings raised issues of fraud and a tort action for damages; and the attorneys for the plaintiff stated to the court that it was asking for a foreclosure of the personal property in equity, and that in no manner did plaintiff seek claim and delivery; that the plaintiff made no claim whatsoever to the immediate possession of the personal property, was not seeking such possession, but sought only to foreclose the chattel mortgage...