British & American Mortg. Co. v. Strait

• Citation: 65 S.E. 1038,84 S.C. 141
• Parties: BRITISH & AMERICAN MORTGAGE CO. v. STRAIT et al.
• Decision Date: 03 November 1909
• Court: South Carolina Supreme Court

65 S.E. 1038

84 S.C. 141

BRITISH & AMERICAN MORTGAGE CO. v. STRAIT et al.

Supreme Court of South Carolina

November 3, 1909

Appeal from Common Pleas Circuit Court of Lancaster County; John S Wilson, Judge.

Action by the British & American Mortgage Company against Thomas J Strait and another. From an order setting aside a default judgment for plaintiff on motion of defendant, Thomas J Strait, plaintiff appeals. Affirmed.

R. E Wylie, for appellant. J. Harry Foster, for respondent.

HYDRICK J.

On November, 16, 1904, the defendant Strait gave the plaintiff five notes, payable at intervals of one year, aggregating $8,750, for borrowed money, and five notes for the interest on the respective principal notes, accruing before maturity. These notes were all secured by a mortgage on real estate which provided that in case of default in the payment of any of said notes, within 10 days after maturity thereof, all of them should at once become due and collectible. The mortgage also provided that in case of foreclosure the mortgagor should pay 10 per cent. of the mortgage debt and interest as attorney's commissions. Default having been made, plaintiff brought this action for foreclosure. The defendant accepted service of the summons and complaint July 10, 1906, and allowed judgment to be taken against him by default. The order for judgment bears date October 11, 1906, and the amount for which judgment was rendered includes 10 per cent. of the mortgage debt and interest, which was claimed by proper allegation and prayer in the complaint. On December 6, 1906, the plaintiff, by two of its directors, indorsed on the judgment an assignment thereof to W. V. Clyburn, without recourse. Thereafter, in December, 1906, the defendant Strait commenced an action against the plaintiff to recover usurious interest paid, alleging the execution of the notes and mortgage by him, the action to foreclose, and the judgment of foreclosure, and that the 10 per cent. attorney's fees provided for in the mortgage was not intended as such, but only as a subterfuge to evade the usury laws, and that plaintiff's attorney did not receive said amount, but received only a nominal fee, and the plaintiff received the 10 per cent. as usurious interest, and that he had paid said judgment, interest, and costs. The defendant's answer denied that the 10 per cent. was intended or received as interest, set up the judgment as an estoppel, and the assignment thereof to Clyburn, and alleged that it had no further interest in the judgment. The plaintiff moved to strike out certain allegations of the answer as sham and frivolous, and demurred to the defenses of assignment of the judgment and the plea of estoppel. The court refused the motion to strike out, and overruled the demurrer. On appeal by plaintiff the order was affirmed. Strait v. Mortgage Co., 77 S.C. 367, 57 S.E. 1100. On October 1, 1907, the defendant Strait served on defendant's attorney notice of a motion in the foreclosure suit, to set aside the judgment therein. The motion was based on affidavits, served with the notice and the record in the case, and also the record in the case of Strait v. British & American Mortgage Co. The affidavits are long, and for the purposes of the decision it will be necessary to state only the substance of the material parts of them. On the part of the defendant Strait they tended to show that he discovered, for the first time after the rendition of the judgment, that the 10 per cent. attorney's commissions, provided for in the mortgage, were not intended for the attorney of the company, and would not be paid to him; that after the rendition of the judgment he went to Mr. Wylie, the attorney of the mortgage company, and asked him to rebate the 10 per cent. attorney's commissions; that Mr. Wylie told him the commissions did not belong to him, and he would get no part of them, but that they belonged to the company, and that he was to receive only a nominal fee; that at his request Mr. Wylie wrote the company relative to rebating the commissions, and that the company replied that the commissions did not belong to Mr. Wylie, but to it, and that he (Mr. Wylie) had no authority to rebate them; that the insertion of the provision for the commissions in the mortgage was a scheme to evade the usury law and collect usurious interest, and to use the judgment as a part of the scheme to cloak the intent; that he did not know, and had no means of knowing, these facts until he discovered them after the rendition of the judgment, and that if he had known them in time, he would have interposed them as a defense to the action; that his land was advertised for sale on sales day...