Crabb v. Cole

• Decision Date: 30 March 1935
• Citation: 84 S.W.2d 597,19 Tenn.App. 201
• Parties: CRABB et al. v. COLE et al.
• Court: Tennessee Court of Appeals

84 S.W.2d 597

19 Tenn.App. 201

CRABB et al. v. COLE et al.

Court of Appeals of Tennessee, Middle Section.

March 30, 1935

Certiorari Denied by Supreme Court June 29, 1935.

Appeal in Error from Chancery Court, Giles County; Thos. B. Lytle Chancellor.

Suit by N. A. Crabb and others against Murel Cole and others. From a decree, complainants appeal in error.

Reversed and remanded.

R. E Dotson, of Pulaski, for appellants.

J. L Jones, of Pulaski, for appellees.

CROWNOVER Judge.

The original bill in this cause was filed on October 4, 1933, by N. A. Crabb and wife, Willie Crabb, against Murel Cole, for the purpose of purging a note of usury and having an offset on account of said usury, and for injunction to restrain the foreclosure sale of their property mortgaged to secure said note.

Defendant answered and denied that he had charged usurious interest.

Complainants filed an amended and supplemental bill in which they calculated that the amount of their indebtedness on their notes, of which this $569.16 note is a renewal, with interest at the rate of 6 per cent., would amount to $341.57, and they alleged that they had tendered this amount to Murel Cole but he had refused to accept it. The bill further alleged that the original loan was made by J. W. Cole, father of Murel Cole, and that J. W. Cole is now dead; that he died intestate and is survived by two sons, Murel Cole and Carlos Cole; that Carlos Cole is deaf and dumb and, while not non compos mentis, is unable to attend to business affairs; that no administrator has been appointed to take charge of said estate and no one can be found who will administer on same, and that more than six months have elapsed since the death of J. W. Cole; that their several notes are one continuous transaction. And they prayed that an administrator be appointed for the estate of J. W. Cole, deceased; that the note be declared usurious and be abated to the extent of its usury.

Defendants answered and alleged that this note was given to Murel Cole by J. W. Cole before his death, when said J. W. Cole made a division of his property between his two sons, Murel Cole and Carlos Cole, who were his only heirs; that Carlos Cole is of sound mind; that there is no need for the appointment of an administrator of the estate of said J. W. Cole; that complainants cannot maintain this bill because the amounts paid in usurious interest do not equal the amount borrowed; that there was a settlement made in 1932 and a new note and mortgage executed, which was a novation, and the statute of limitations of two years has run against any claim for usury on the old notes. The answer denies all charges of usury and all other allegations of the amended bill.

Complainants moved the court to appoint an administrator of the estate of J. W. Cole, deceased, but no action was taken on the motion.

A jury was demanded to try the cause.

The complainants submitted issues of fact, which the chancellor refused. Thereupon the chancellor submitted issues of fact to the jury. The following are the issues and the jury's answers thereto:

"Ques. 1. What amount is due on the indebtedness growing out of the note dated April 14th, 1932, and secured by deed of trust on certain real estate set out and described in the pleadings, executed by the complainants and payable to the order of Murel Cole?

"Ans. 496.03 due Cole,

49.60 Fee

545.63 Total indebtedness.

"Ques. 2. When did said indebtedness become due?

"Ans. Dec. 1st, 1932."

Decree was entered for $545.63, injunction dissolved, and the clerk and master appointed special commissioner to sell the land to satisfy said debt.

Complainants filed motions for a new trial and in arrest of judgment, which were overruled by the court, to which complainants excepted and appealed to this court, and have assigned errors, which are, in substance, as follows:

(1) The chancellor erred in submitting to the jury only the question whether usury was charged, and the amount of same, on the note executed April 14, 1932, payable to Murel Cole.

(2) The chancellor erred in refusing to submit to the jury the issues of fact tendered by complainants, which were as follows: 1. How much money did N. A. Crabb and wife, Willie A. Crabb, borrow from J. W. Cole on January 11, 1922, and how much did the said Crabbs pay on this loan each year up to the time it was renewed, November 16, 1926?

2. What amounts of money made up the note of $569.16 executed by N. A. Crabb and wife, Willie A. Crabb, dated November 16, 1926, and due December 15, 1927?

3. What amount each year did N. A. Crabb and wife, Willie A. Crabb, pay on this note dated November 16, 1926, and due December 15, 1927?

4. Does the note dated April 14, 1932, and due December 1, 1932, represent a continuous transaction by and between J. W. Cole and his estate, beginning January 11, 1922, to the date of said note?

5. Does the note dated April 14, 1932, for $569.16 belong to the estate of J. W. Cole or to Murel Cole; if so, what is the source of Murel Cole's title to the same?

(3) The chancellor erred in excluding from the jury certain testimony of N. A. Crabb.

(4) The chancellor erred in failing to appoint an administrator ad litem for the estate of J. W. Cole, deceased.

(5) The chancellor erred in charging the jury that it should allow 10 per cent. attorney's fee.

(6) The court erred in refusing to admit testimony in regard to interest paid to J. W. Cole.

On January 11, 1922, N. A. Crabb borrowed some money from J. W. Cole, and he and his wife executed a note, payable to J. W. Cole, for $312, secured by a mortgage on 97 acres of land in Giles county. On the back of the note are entries showing that interest was paid to January 11, 1926.

On November 16, 1926, he borrowed some more money ($257.16) from J. W. Cole, and he and his wife executed a new note for $569.16 and a new mortgage to secure same on the same real estate.

One entry on the back of this note reads: "Interest $45.54 cents." Other entries show interest paid to November 16, 1931.

J. W. Cole died intestate on July 26, 1930.

On April 14, 1932, Murel Cole, son of J. W. Cole, procured Crabb and wife to execute a new note for $569.16, payable to Murel Cole, and a new mortgage to secure same, payable to Murel Cole, trustee.

On May 28, 1932, N. A. Crabb and his son, S. C. Crabb, executed a note payable to Murel Cole, for $56.28, secured by a mortgage on their crop. Notations on the back of this note show payments of $54.26.

On April 29, 1933, Murel Cole executed a receipt to N. A. Crabb for $20 for "interest on real estate note for 1932."

N. A. Crabb testified about the different renewals of the original note, and payments of interest on these notes from 1922 to 1932, which tended to show that he had paid usury on the notes and the renewals; but the court, on exception, excluded all this testimony about usury being paid on the old notes up to 1932. However, on redirect examination he testified, without objection, that he first borrowed $300 and agreed to pay 10 per cent. interest, and paid 10 per cent. for four years; that when he made the note for $569.16 it was agreed that he would pay 8 per cent. interest, which he paid; that the $56.28 chattel mortgage note was for $5.52 interest, and the rest for registering and making the mortgage to secure the $569.16. This testimony was not excluded.

Defendant Murel Cole testified that in 1928 his father, J. W. Cole, made a division of his property, giving him (Murel Cole) $1,200 in notes, including this note, and Carlos Cole $1,200 in money; that he has collected 6 per cent. interest on this note since it came into his hands; that he did not make the entry of "45.52" on the back of the note; that on April 14, 1932, Crabb executed a new note and mortgage. He denied that N. A. Crabb paid him $45 in the presence of Arthur Crabb, and stated they paid him $55 on two years' interest; and denied that he made calculations on a sheet of paper filed as an exhibit by Crabb, showing that 8 per cent. interest was charged. He testified that only $20 interest has been paid on the last note of $569.16; and that the total amount of principal, interest, and attorney's fee due on this note on October 4, 1933, was $682.41.

1 and 2. Defendants contend that the note executed by Crabb and wife on April 14, 1932, payable to Murel Cole, was a novation. This note was clearly a novation of the debt. Both Crabb and Cole testified that a settlement of the debt was made on that date, a new note executed payable to Murel Cole, a new mortgage executed to Murel Cole, and the note of $56.28 made to pay the interest to that date and the cost of having the mortgage drawn and registered.

"'Novation' is 'the substitution of a new obligation for an old one, which is thereby extinguished' (Bouvier's Law Dictionary), and the four essentials are well recognized to be (1) a previous valid obligation, (2) an agreement supported by evidence of intention, (3) extinguishment of the old contract, and (4) a valid new one." Peoples Bank of Clifton v. Russ, Wayne County Equity Opinion of the Supreme Court filed June 6, 1932, at Nashville (not published).

But "novation" does not cut off the right of the debtor to assert claims for usury contained in the original transactions.

"It is by the running of the statute of limitations that this right is cut off, and the question of whether or not a novation, or payment, or a final settlement in any conclusive form, has taken place at a given time is important only as fixing the date of the setting in motion of the statute. ***

"A...