Budget Plan of Baton Rouge, Inc. v. Talbert

• Citation: 276 So.2d 297
• Decision Date: 26 March 1973
• Docket Number: No. 52308,52308
• Parties: BUDGET PLAN OF BATON ROUGE, INC. v. Willie J. TALBERT.
• Court: Supreme Court of Louisiana

Page 297

276 So.2d 297

BUDGET PLAN OF BATON ROUGE, INC. v. Willie J. TALBERT.

No. 52308.

Supreme Court of Louisiana.

March 26, 1973.

Rehearings Denied May 7, 1973.

Nesom, Mellon, Cavanaugh & Due, Karl W. Cavanaugh, Robert H. Morrison, III, Denham Springs, for defendant-applicant.

Ralph Brewer, Baton Rouge, for plaintiff-respondent.

SUMMERS, Justice.

This suit is by Budget Plan of Baton Rouge, Inc., a lender, against Willie J. Talbert, a borrower, to collect the balance due on a promissory note. The suit was dismissed in the trial court. On appeal to the First Circuit, the trial court judgment was reversed, and judgment was rendered in favor of Budget Plan against Talbert for $704.39, with interest at eight percent per annum from December 5, 1969 until paid, plus an additional twenty percent thereon as attorneys' fees, and for costs, all as prayed for. La.App., 258 So.2d 622. Writs were granted on Talbert's application. 261 La. 535, 260 So.2d 320.

I.

The issue upon which the Court of Appeal decided the case is formed by an objection to evidence sought to be elicited by defendant Talbert on the ground that it enlarged the pleadings.

In its petition Budget Plan alleged that Talbert was indebted in the sum of $704.39 plus interest and attorneys' fees. There is an allegation that Budget Plan was the holder and owner for value in due course before maturity of a promissory note dated November 14, 1967 in the original sum of $1,512, executed by Talbert, payable to the order of Budget Plan in 24 consecutive monthly installments of $63 each, plus interest at the rate of eight percent per annum from maturity until paid; said note stipulating that in case of default the entire balance should become immediately due and exigible, with attorneys fees, principal and interest. It was further alleged that Talbert had defaulted so that attorneys' fees were due and that amicable demand was made without avail.

Talbert filed his answer in which the allegations of fact in the petition were denied. Further answering he alleged:

. . . defendant shows that the note sued on herein contains capitalized interest, and that this suit includes an attempt to collect capitalized interest from the date of acceleration of the note to its maturity, and in violation of the laws of this State that the holder of a note containing capitalized interest who accelerates the maturity of said note is obliged to remit in full all interest from the date of acceleratioin to the maturity of the note. Defendant further shows that this note is a contract for the payment of interest in excess of that authorized by law and, hence, pursuant to R.S. 9:3501, plaintiff is required to forfeit the entire amount of interest represented in said note. Defendant specially reserves the right to bring a reconventional demand against plaintiff if it appears that on the trial of this matter the payments heretofore made by defendant are in excess of the principal sum owed on said note after deduction of the capitalized interest.

Talbert also propounded interrogatories to Budget Plan in which he asked for a copy of the note sued upon and any previous note or notes for which the note sued upon was a renewal. Information was also sought as to the disbursements made by Budget Plan at the time of the original loan and each renewal, the documentary evidence held to prove these disbursements, and the payments made by Talbert on the note. The interrogatories also inquired when Budget Plan claimed Talbert defaulted on the note sued on and when Budget Plan exercised its option to mature the note under the acceleration clause.

In answer to these interrogatories, Budget Plan furnished copies of the notes. It set forth the disbursements made at the time of the original loan and at the time of the loan sued upon. Copies of cancelled checks and ledger cards were supplied supporting these disbursements. The ledger cards also itemized each payment made by Talbert. Default was said to have occurred on October 13, 1969, and the option to mature the note under the acceleration clause was exercised on October 13, 1969.

At the trial counsel for Budget Plan introduced the note in evidence and by the business records and the manager's testimony proved the balance due. On cross-examination Talbert's counsel asked the manager if Budget Plan's records contained the disbursements made in connection with the loan. Objection was made by counsel for Budget Plan stating that the pleadings alleged no ground upon which the evidence sought could be elecited. It was noreover objected that the question was an attempt to expand the issues. When the objection was overruled, it was made general to any question seeking information supporting a credit for unearned interest, counsel stating that these facts were not pleaded and the questioning was an expansion of the pleadings. Thereafter objection was made to any reference to the previous note.

The trial judge allowed the questions and answers, permitting the note to be introduced, all subject to a later ruling to be made after study of written memoranda. In addition, over objection, Talbert's counsel was permitted to introduce the interrogatories, answers and attachments. On the basis of the evidence received the trial judge dismissed plaintiff's suit. As already noted the Court of Appeal reversed, holding that defendant's defense was not affirmatively pleaded.

In brief to this Court counsel for Budget Plan states the issue to be: 'Relator (Talbert) failed to plead any material fact supporting the supposed affirmative defense of usury that he tried to allege by way of conclusions of law.'

To support its position Budget Plan contends the claim of usury is an affirmative defense which must be set forth affirmatively in the answer as required by Article 1005 of the Code of Civil Procedure. ¹ According to counsel, this was not doen. Fourther argument points out that the traditional requirement of fact pleading in Louisiana now embodied in Articles 854, 891, 1003 through 1005 of the Code of Civil Procedure is not satisfied by the answer.

Budget Plan asserts another position, arguing that when evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the Court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby. La.Code Civil P. art. 1154. ² However, notwithstanding the availablity of the procedural device of amendment to supply the deficiencies of Talbert's answer, no effort has been made at any stage of this litigation to cure the defect.

The Court of Appeal agree dwith these contentions saying:

The answer of the defendant in the instant case fails to allege any particular facts to support the general allegations or conclusions of illegality or usury and defendant did not attempt to amend his answer. The evidence on which the trial judge based his opinion should not have been admitted and considered after plaintiff's timely objection thereto.

By citing and referring to Section 3501 of Title 9 of the Revised Statutes Talbert pleaded extinguishment of the obligation to pay interest by forfeiture of the interest on account of a stipulation for interest in excess of that authorized by law. This is an affirmative defense. In unmistakable terms the statute relied upon provides: 'Any contract for the payment of interest in excess of that authorized by law shall result in the forfeiture of the entire interest so contracted.' By alleging that the note sued on is a contract for the payment of interest in excess of that authorized by law and that plaintiff is, therefore, required to forfeit the entire amount of interest, defendant Talbert has pleaded 'extinguishment of the obligation,' at least insofar as interest is concerned, as contemplated in Article 1005 of the Code of Civil Procedure. See La.Civil Code arts. 2031 and 2130. The question, then, is whether the answer alleges sufficient facts to meet the requirements of Louisiana's traditional system of pleading.

Conceding that the answer does not satisfy the requirement of fact pleading and that the allegations are more properly to be considered conclusions of law, the full context of facts and circumstances of record surrounding the issue does not warrant a holding that the answer is fatally defective.

The requirement of affirmatively pleading extinguishment of a debt or 'any other matter constituting an affirmative defense has for its purpose the giving of fair notice of the nature of the defense, and preventing surprise.' Roberts v. Meche, 204 So.2d 592 (La.App.1967). See Davis-Delcambre Motors, Inc. v. Simon, 154 So.2d 775 (La.App.1963); Norman v. City of Shreveport, 141 So.2d 903 (La.App.1962); and source provision Rule 8(c) Federal Rules of Civil Procedure (28 U.S.C.A.); also Edmonds v. United States, 148 F.Supp. 185 (D.C.Wis.1957); Sly v. United States, 125 F.Supp. 89 (D.C.Ill.1954).

Recognizing that fair notice of the nature of the defense and preventing surprise are the objects of the requirement that affirmative defenses must be affirmatively pleaded, it cannot be said that these elements are lacking here. Counsel for Budget Plan had in his possession at the time of the trial, available for introduction into evidence, the first note executed by Talbert, the payment ledger sheet, and the cancelled checks showing actual disbursements on the first loan. Long prior to the trial, as the record indicates, Talbert propounded interrogatories to Budget Plan to obtain production of these documents. Budget Plan was not surprised by any aspect of the affirmative defense. Indeed, at no time during the trial or in subsequent proceedings has counsel stated that he was surprised. The issue plainly posed by the answer was a narrow one with limited facts needed to present it. Plaintiff was fully aware of these facts, with all documents needed to prove them in its possession.

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