Brock v. Clio Banking Co.

• Decision Date: 11 February 1922
• Docket Number: 4 Div. 933.
• Citation: 92 So. 805,207 Ala. 404
• Parties: BROCK ET AL. v. CLIO BANKING CO.
• Court: Alabama Supreme Court

92 So. 805

207 Ala. 404

BROCK ET AL. v. CLIO BANKING CO.

4 Div. 933.

Supreme Court of Alabama

February 11, 1922

Rehearing Denied April 27, 1922.

Appeal from Circuit Court, Barbour County; J. S. Williams, Judge.

Bill by C.J. Brock and another against the Clio Banking Company to enjoin the foreclosure of mortgage, to purge it of usury, and to redeem. From the decree rendered, complainants appeal. Affirmed.

See also, 204 Ala. 57, 85 So. 297.

H. L Martin, of Ozark, and J. J. Mayfield, of Montgomery, for appellants.

George W. Peach, of Clayton, and McDowell & McDowell, of Eufaula for appellee.

MILLER J.

This bill was filed by C.J. and J. P. Brock against the Clio Banking Company for an accounting under several mortgages given by complainants to the defendant, to purge the account of usury, and to enjoin foreclosure of the mortgages. The accounting and purging of usury involved several mortgages beginning with those given in 1908. The cause was submitted for final decree. The court on February 19, 1919, decreed "that the complainants are entitled to the relief sought in their bill." This decree names all of the mortgages and says:

"All usury contained in each of said notes and mortgages should be expunged and interest on all of the same disallowed."

The decree also says:

"That the register, in ascertaining the present indebtedness due from complainants to respondents, begin with the papers executed to the Clio Banking Company on September 26, 1908, and that he ascertain what amounts have been paid by complainants on all papers, those payable to respondent as well as those payable to Planters' & Merchants' Bank, to Mrs. Laura Kirkland, and to J. E. Z. Riley, to secure any of the indebtedness involved in this controversy, and that he allow no interest whatsoever on any of said papers, and that he apply as payments on only the principal sum all amounts which may have been paid, whether paid as interest or otherwise; in other words, it is ordered, adjudged, and decreed that the register in his calculations allow no interest whatsoever on any of the papers involved in this controversy, and that he apply as payment on the principal sum such amounts of money as may have been paid by the complainants on any of the mortgages which are mentioned, those to respondent, to Planters' & Merchants' Bank, to Mrs. Laura Kirkland, to J. E. Z. Riley, and to J. T. Jackson, respectively."

There was an appeal from this decree of February 19, 1919, to this court. It is reported in 204 Ala. 57, 85 So. 297 (Clio Banking Co. v. Brock). A part of the opinion of this court in this case reads as follows:

"As stated by counsel for appellant in brief, the decisive question to be determined on this appeal is whether the settlement made by the parties on January 31, 1910, was a bona fide settlement by which complainants' indebtedness to respondent and respondent's interest therein were completely extinguished by complainants' payment of the balance then agreed upon as due, or whether, on the other hand, that settlement was simulated and colorable merely, by reason of some collusive understanding between respondent and the Planters' & Merchants' Bank of Ozark, J. E. Z. Riley, and Mrs. Laura Kirkland, who successively loaned the money to complainants upon ostensibly new mortgage securities, but for and at the instance of respondent, in order to purge respondent's demand of its usurious elements-respondent remaining all the while the real creditor and beneficiary of the mortgage securities-so that the final transaction of February 3, 1916, by which complainants executed to respondent the last mortgage in suit, covering their previous indebtedness since January 31, 1910, and also the sum of $4,000 borrowed by them in 1914 to pay off Mrs. Kirkland's mortgage, was in effect as to that $4,000 but a renewal of the original usurious debt of January 31, 1910.

"This is the theory of the bill, and, if satisfactorily established by the evidence, it would require the elimination from the present mortgage indebtedness of all items of usury, even those prior to the settlement of January, 1910. The law of such cases was clearly stated and applied in the recent case of Blue v. First National Bank, 200 Ala. 129, 75 So. 577. But in that case it was said that 'if there had been a bona fide novation-a new debt created payable at a legal rate of interest to Scott [the alleged and proven dummy] for his use and benefit-and the novated debt had been transferred to the bank [the original creditor], the plea of usury could avail appellant nothing.'

"The burden of proof is here upon complainants to show to our reasonable satisfaction that their successive transactions with the Ozark bank, with Riley, and with Mrs. Kirkland were not in fact bona fide novations, but were in legal effect renewals of their original indebtedness to the respondent bank. It may be conceded that, in the absence of clear explanations and denials on the part of respondent and the several mortgagees named, complainants' contention would be sufficiently supported to warrant the relief prayed for. But our examination of the evidence, especially the testimony of all the parties concerned, leads us to a contrary conclusion. We shall not indulge in a discussion of the testimony further than to say that we are convinced that complainants' transactions with the Ozark bank, with Riley, and with Mrs. Kirkland were bona fide novations, in which respondent was not concerned, and that respondent's loan of $4,000 to complainants in 1914, to pay off the Kirkland mortgage, did not operate as a renewal of the indebtedness of January, 1910, so as to open that indebtedness for usurious impeachment now.

"Respondent concedes that there is usury in its account with complainants since January, 1910, and the decree of the circuit court will be reversed, and the cause remanded for a reference to the register, for an accounting to ascertain the amount legally due to respondent, based upon transactions since the settlement of January, 1910."

After this cause was reversed, the complainants made application on July 12, 1920, to amend the bill of complaint, and they aver in the proposed amendment that complainants paid $926.98 to the defendant in 1908, for which they received no credit, and that large sums were charged them by defendant in 1909, which they did not receive, that on account of these errors in debits and credits complainants by mistake improperly paid defendant $4,878.14 in January, 1910, and they seek now by this amendment to reopen that settlement and to recover for said items, with interest, in the accounting prayed for in the bill and in this amendment. This amendment, on motion of defendant, was stricken from the file and not allowed. There are many reasons why this was not error.

The original bill as amended September 26, 1917, sets forth these same alleged errors in debits and credits in the settlement of January, 1910, as are set out and claimed in this proposed amendment. They were clearly and directly in issue by the bill as amended September 26, 1917, and in the answer filed to it October 11, 1917. The amended bill and the answer both referred to each item, and the correctness of each item was in issue, and the pleadings averred and the proof showed a full bona fide settlement on those transactions was made between the parties in January, 1910.

The circuit court by its decree under the issues directed the register to ascertain the amount legally due respondents based on transactions beginning with papers executed September 26, 1908, to the Clio Banking Company, and to purge them of usury. This court, in 204 Ala. 57, 85 So. 297, on former...