Exchange Bank of Ft. Valley v. McMillan
| Decision Date | 22 March 1907 |
| Citation | 57 S.E. 630,76 S.C. 561 |
| Parties | EXCHANGE BANK OF FT. VALLEY v. McMILLAN et al. |
| Court | South Carolina Supreme Court |
On Rehearing, April 19, 1907.
Appeal from Common Pleas Circuit Court of Marion County; W. C Benet, Special Judge.
Action by the Exchange Bank of Ft. Valley against John P. McMillan and others. Judgment for plaintiff, and defendants appeal. Modified.
Ferd. D. Bryant and Shand & Shand, for appellants. E. O. & M. C Woods, for respondent.
This action was brought in the court of common pleas for Marion county against the defendants for judgment upon four notes and for the foreclosure of a mortgage securing the same executed by the defendants, J. P. McMillan, W. A. McMillan and J. Sydney McMillan, embracing their interests in certain lands in Marion county, this state. Upon the trial W. A. McMillan was discharged of liability, so he is out of the case. The notes are dated November 22, 1897, and payable to the order of the plaintiff at the Exchange Bank of Ft. Valley, Ga., and are as follows: $481.14 payable on the 1st day of April, 1898; $1,217.16 payable on the 1st of April, 1898; $2,775.60 payable on the 1st of January, 1898; $2,852.70 payable on the 1st day of October, 1898. All these notes bear interest after maturity at 8 per cent., and were all executed by the defendants and delivered to the plaintiff at Ft. Valley, Ga. The last three notes are indorsed by other parties.
The cause was referred to the master to take the testimony and report his conclusions of law and fact, and came on to be heard by the court upon the report of the master, testimony, and exceptions, and resulted in a decree confirming the findings and conclusions of the master, except in so far as he allowed the claim of usurious interest, and as to his computation of the amount due upon the notes and mortgage these findings were overruled and judgment ordered against the defendants, except W. A. McMillan, for the full amount of the notes, interest, and attorney's fees, with interest from the 15th of April, 1906; and the interest of J. P. McMillan and J. Sydney McMillan in the mortgaged premises ordered to be sold in satisfaction thereof. From this decree the defendants appealed to this court upon numerous exceptions. At the hearing in this court the appellants abandoned all the exceptions, except those alleging error in the circuit court, as to the question of usury, discharge of surety, and the plea of infancy on behalf of the defendant J. Sydney McMillan. These questions will be considered in their order.
1. As to the question of usury: We concur with the circuit judge that there was no usury. The contracts sued on were entered into prior to the act of 1898, now sections 1661 and 1664 of the Civil Code of 1902, and by the express terms of section 1664 and the authority of Tobin v. McNab , 53 S.C. 73, 30 S.E. 827, and Loan & Investment Company v. Logan, 55 S.C. 295, 33 S.E. 372, are excluded from the operation of these statutes. They are therefore governed by the law of force prior to that time. Usury is purely statutory, and is unknown to the common law, and the burden of proving the facts constituting usury rests upon the defendants who plead it. When plaintiffs introduced the notes in evidence showing that the contract was made in Georgia, to be performed in Georgia, and payable to a Georgia corporation resident in Georgia, the presumption that it was a Georgia contract attached, and, unless rebutted by the defendants, became conclusive. It was then incumbent upon the defendants, in order to establish their plea, to show by evidence that under the laws of Georgia the transaction was usurious. Failing in this, the common law applied, and under this law there is no usury. Rosemand v. Railroad, 66 S.C. 98, 44 S.E. 574; Association v. Rice, 68 S.C. 236, 47 S.E. 63; Butler v. Butler, 62 S.C. 177, 40 S.E. 138. But it is urged that the statement in the master's report, to the effect that plaintiff's counsel admits that the transaction is usurious and the law of this state governs, unexcepted to and unappealed from, is conclusive in this case. Usury is a mixed question of law and fact. The necessary facts being proven, the law applies, and the legal results follow. So, also, whether the contract is foreign or domestic in the particular case is dependent upon the facts admitted or proved. In the trial of causes counsel has the right to admit facts, and such admissions will be conclusive unless withdrawn before judgment in time to allow the opposite party to supply their place with proof; but not so with admissions of law. It is the duty of the court to know and apply the law to the facts as proven, and no erroneous admission of law can be conclusive before judgment, but the court may, upon its own motion, correct it. 1 Wharton, Evidence, 276-283; 2 Wharton, Evidence, 1189; 4 Cyc. 950. There is nothing in the record to show the basis of this statement by the master, and, while it is true no specific exception appears to have been filed to the report on this point, it was a matter within the discretion of the court, upon the hearing, to permit such exceptions to be then taken and to adjudge accordingly. Brown v. Rogers, 71 S.C. 512, 51 S.E. 259. And that this was done is manifest from the decree. These exceptions were overruled.
2. The question of the discharge of the surety arises out of the following state of facts: The defendant, J. P. McMillan, then, and for some time prior, an employé of the Ft. Valley Manufacturing Company, a Georgia corporation engaged in business in Georgia, entered into negotiations for the purchase of the plant, stock, and business of the corporation, which was consummated by the execution and delivery to the plaintiff of the four notes and the mortgage now in suit. The financial business of the company had been done with the plaintiff bank, who was then a large creditor of the manufacturing company, and also held a large majority of its stock in pledge to secure indebtedness of the owners of the stock for the purchase of the same. For this reason the notes were made direct to the plaintiff. The two smaller notes covering the price agreed upon for the stock with interest to their maturity were respectively substituted for the notes held by the bank for the two blocks of stock; the larger of the two being first indorsed by Dasher and Mathews, the then respective owners of the stock. And the two larger notes covering the indebtedness of the manufacturing company to the plaintiff bank, with interest added to their maturity, were collateral security for the payment of the company's indebtedness to it in addition to the securities of the manufacturing company then held by the bank. The transaction was consummated on the 22d of [76 S.C. 567] November, 1897, and the manufacturing company turned over to the purchasers. Sufficient appears in the evidence to show that at the time of this transaction the bank held a mortgage upon the plant, etc., of the company as security in part of the indebtedness of the company to it. This mortgage was foreclosed by the Georgia courts before the commencement of this action, and $1,125.75, the net proceeds of the mortgaged property realized from the sales of the property under the decree of the Georgia court, paid over to the plaintiff on the 1st of March, 1901, by the receiver of the manufacturing company. On the pass book of the manufacturing company with the bank appears under date of November 23, 1897, the following entries, debit, "ck payment note and int. $3,811.10," credit, "dep. note $5,138.07."" It appears from the testimony of J. P. McMillan that the manufacturing company continued in business running a current account with the plaintiff until June, 1899, at which time it became insolvent and suspended, and the company was then indebted to the plaintiff upon two notes of the company aggregating $6,616.79, less a credit of $800, in addition to the amounts covered by the notes in this suit.
Upon this state of facts it is insisted that, the notes being collateral to the indebtedness of the stockholders and the manufacturing company to the plaintiff, the makers thereof occupy the position of sureties, and as such are discharged by the plaintiff taking additional securities in the indorsements stated, by giving further credit to the manufacturing company, the principal debtor, and by the pass book which it is insisted amounted to a payment of the indebtedness by the manufacturing company and a release of its mortgage. The rule undoubtedly is that a surety is bound by the terms of his contract, and if the creditor, by agreement with his principal debtor, without consent of the surety, varies these terms, the surety is discharged although the change was not in fact injurious to the surety. Gardner v. Gardner, 23 S.C. 590. The right of the surety to be subrogated to all the securities that the creditor has, and the rule that he will be discharged if the creditor releases them, to the extent of the value of the security released, is also familiar doctrine; but, in order to affect the discharge, the acts complained of on the part of the creditors must be of a positive character, or be an "omission to do an act when required which equity and his duty to the surety enjoined it upon him to do, and which omission is injurious to the surety." Lang v. Brevard, 3 Strob. Eq. 59; Smith v. Tunno, 1 McCord, Eq. 443, 16 Am. Dec. 617; Stearns' Law of Suretyship, p. 137, § 198; Brandt on Suretyship, etc., § 370. In the application of the rule, a written contract cannot be construed one way against the debtor, and another way against the sureties. Pelzer, Rogers & Co. v. Steadman, 22 S.C. 279. The indebtedness of the manufacturing company being ascertained and placed in the notes, the...
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