Elliott v. Carroll

• Decision Date: 17 February 1936
• Docket Number: 14141.
• Citation: 184 S.E. 92,179 S.C. 329
• Parties: ELLIOTT et al. v. CARROLL et al.
• Court: South Carolina Supreme Court

184 S.E. 92

179 S.C. 329

ELLIOTT et al. v. CARROLL et al.

No. 14141.

Supreme Court of South Carolina

February 17, 1936

Appeal from Common Pleas Circuit Court of Dorchester County; C.J Ramage, Judge.

Action by William Elliott and another, as receivers of the Peoples State Bank of South Carolina, against Francis F. Carroll and others. From adverse orders, the defendants appeal.

Orders reversed and case remanded.

See also, 172 S.C. 276, 173 S.E. 908.

STABLER C.J., and BONHAM, J., dissenting.

Francis F. Carroll, of Summerville, for appellants.

Benet Shand & McGowan, of Columbia, and Legare Walker, Jr., of Summerville, for respondents.

BAKER Justice.

This opinion is substituted for opinion in this case heretofore filed, and the former opinion is hereby withdrawn from the files of the court.

This is the second appeal in this case.

The attorneys for respondents in the "statement" contained in their brief have succinctly stated the history of this litigation and is as follows:

"The history of the case is as follows: It is one for judgment against the defendant Francis F. Carroll, on his certain bond, and for the foreclosure of a certain mortgage of real estate, given to secure said bond. The said bond and mortgage were executed to Bank of Dorchester in October, 1919, and after maturity they were assigned by said Bank of Dorchester to Peoples State Bank of South Carolina, and its receivers, the respondents herein, are now the holders of the same.

The suit was commenced in May, 1933, by the said receivers against the defendant Francis F. Carroll, the maker of the said bond and mortgage, and against the defendants Frances Eloise Carroll (now Plemmons), Julia Reynolds Carroll, an infant (now of age), and J. Waties Waring, trustee, said parties other than the defendant Francis F. Carroll being made parties because of a conveyance of the property covered by the said mortgage, to the said defendant J. Waties Waring, as trustee for the said Frances Eloise Carroll and Julia Reynolds Carroll, dated on August 5, 1922, and recorded on February 2, 1933.

Francis F. Carroll was appointed as guardian ad litem of the infant defendant, Julia Reynolds Carroll (now of age), and as such guardian ad litem filed a formal answer on her behalf, and the defendant J. Waties Waring, trustee, filed an answer alleging that the conveyance of the said property to him as trustee, created a passive trust and that title vested immediately in the cestuis que trustent, upon said conveyance.

In his amended answer, filed in the said cause, the defendant Francis F. Carroll set up in a 'second defense' therein a claim by way of set off, to which said 'second defense' the plaintiffs demurred.

In her amended answer, filed in said cause, the defendant Frances Eloise Carroll set up in a 'second defense' therein a claim by way of set off, to which said 'second defense' the plaintiffs demurred.

The demurrers to the said answers were sustained by the Honorable M. M. Mann, presiding judge, and upon appeal to this court, the said order sustaining the demurrers was affirmed and is reported in 172 S.C. 276, 173 S.E. 908.

After the remittitur had come down, the plaintiffs applied to his honor, Judge Mann, for an order referring the cause to the acting master for Dorchester county, which said order was duly granted.

After the filing of the said order of reference, the defendant Francis F. Carroll served upon plaintiffs' attorneys a notice of a motion to amend his answer, by setting up a certain new affirmative defense therein, and attached to said notice a copy of the proposed answer, designated 'twice amended answer' (Transcript, folios 9 and ff). The motion to amend was heard before the probate judge, as acting master for Dorchester county, and resulted in an order, refusing leave to the said defendant Francis F. Carroll to set up the new defense contained in his proposed 'twice amended answer.'

Exceptions were taken to the said order of the acting master, and the same were heard before the honorable C.J. Ramage, presiding judge of the court of common pleas, and resulted in a decree of the said Judge Ramage, affirming the said order of the acting master, and adopting it as the order of that court, and from this said decree, the said defendant Francis F. Carroll has appealed upon the exceptions set forth in the transcript.

The defendant Frances Eloise Carroll (now Plemmons), and the defendant Julia Reynolds Carroll, an infant (now of age), served upon the attorneys for the plaintiffs a notice of a motion for leave to file a joint supplemental answer, the proposed allegations of the supplemental answer being set forth in said petition. The motion also came on to be heard before the Honorable C.J. Ramage, presiding judge of the court of common pleas, and resulted in an order in which the said defendants were refused leave to file the said proposed joint supplemental answer, and from this said order the said defendants have appealed to this court upon the exceptions set forth in the transcript."

It is material to a proper consideration of this case to state in addition to the above "statement" that the new defense attempted to be interposed was that of "usury," pleaded as an offset and counterclaim to the mortgage debt.

The section of the Code allowing amendments to pleadings is as follows:

"§ 494. Amendments by the court.-The court may, before or after judgment, in furtherance of justice, and on such terms as may be proper, amend any pleading, process, or proceeding, by adding or striking out the name of any party; or by correcting a mistake in the name of a party, or a mistake in any other respect; or by inserting other allegations material to the case; or, when the amendment does not change substantially the claim or defense, by conforming the pleading or proceeding to the facts proved."

The phrase in the above statute, "or by inserting other allegations material to the case," is the one upon which appellants must rely, and the new defense, of course, must also be "in furtherance of justice." The apparent conflict in the decisions of this court is fully discussed in Knight, Yancey & Co. v. Cotton Mills, 80 S.C. 213, 61 S.E. 396, 397, and from which we quote:

" With respect to the nature of the amendments allowable under section 194, the decisions of our court are in great conflict. Without attempting to be exhaustive, one line of cases holds that before trial amendments may be allowed which insert a new cause of action. Among these cases are Nesbitt v. Cavender, 27 S.C. 1, 2 S.E. 702; McDaniel v. Monroe, 63 S.C. [307], 308, 41 S.E. 456; Standard Sewing Machine Co. v. Alexander, 68 S.C. 506, 47 S.E. 711.

Other cases hold that amendments may be allowed before trial which insert or substitute a new defense. Among these are the leading cases of Hall v. Woodward, 30 S.C. 564, 9 S.E. 684, and Jennings v. Parr, 54 S.C. 109, 110, 32 S.E. 73.

Since the cause of action is single and the defenses thereto may be manifold, it is apparent that stating new defenses may be allowable when stating a new cause of action would not be. With respect to the bringing of the action the Code declares that it must be commenced by the service of a summons. If a defendant should be summoned into court on one cause of action, and kept there involuntarily on another, as to that cause of action he would be compelled to answer without a summons. But there is no such obstacle in allowing a new defense to the cause of action stated in the complaint. [All italics added.]

On the other hand, the court has expressly held that the Code does not authorize the substitution of a new cause of action by way of amendment, and that the amendment proposed should be material to the case which has been defectively stated and must not substantially change the cause of action. Ruberg v. Brown, 50 S.C. [397], 398, 27 S.E. 873; Proctor v. Railway, 64 S.C. 491, 42 S.E. 427; Sutton v. Catawba Power Co., 70 S.C. [266], 270, 49 S.E. 863; Leesville Manufacturing Company v. Morgan Wood & Iron Works, 75 S.C. [342], 350, 55 S.E. 768."

It will therefore be observed that the cases holding that section 494 of the Code does not authorize the substitution of a new cause of action by way of amendment, and that the amendment proposed should be material to the case, which has been defectively stated, and must not substantially change the cause of action, refer entirely to amendments sought to be made in complaints and not answers.

Again quoting from Knight, Yancey & Co. v. Cotton Mills, supra, "It will be further noticed that the above section imposes no limits as to time, except in the fourth class of amendments. The express provision is that the amendments may be allowed 'before or after judgment,' which, of course, means 'at any time.' Kennerty v. Etiwan Phosphate Co., 21 S.C. [226], 242, 53 Am.Rep. 669."

The case at bar does not fall in the fourth class referred to...