Gray v. U.S. Savings & Loan Co.

• Decision Date: 03 December 1903
• Citation: 77 S.W. 200,116 Ky. 967
• Parties: GRAY v. UNITED STATES SAVINGS & LOAN CO.
• Court: Kentucky Court of Appeals

77 S.W. 200

116 Ky. 967

GRAY v. UNITED STATES SAVINGS & LOAN CO.

Court of Appeals of Kentucky.

December 3, 1903

Appeal from Circuit Court, Clark County.

"To be officially reported."

Action by the United States Savings & Loan Company against George Gray. From a judgment for plaintiff, defendant appeals. Affirmed.

D. L Pendleton and Hazelrigg & Chenault, for appellant.

Beckner & Jouett, for appellee.

BARKER J.

In the year 1894, the appellee, the United States Savings & Loan Company, which was a going concern, with its head office at St. Paul, Minn., instituted an action against appellant to recover judgment against him on two notes--one for $500, and the other for $400--and to enforce a mortgage lien by which their payment was secured. On the 24th day of May, 1894, a judgment was entered as prayed for in the petition. The judgment rendered, with the accrued interest and costs amounted, in round numbers, to $1,300. Appellant, although summoned, made no defense to this action, but, on the contrary, his counsel consented that it should be entered. Afterwards, on the 27th day of August, 1894, he entered into an agreement with appellee, by which, in discharge of the judgment against him, he executed and delivered to it his note, with Betty Gray as surety, for $1,050, payable on or before June 1, 1895; and, to secure its payment, they executed a mortgage on property belonging to them in Winchester, Ky. There were, after this compromise was made, a number of payments, the aggregate amount of which is in dispute, but which appellee admits to have been as much as $271.50. Appellant failed to pay any further upon his note and this action was instituted by appellee to recover judgment for the balance due thereon, and to enforce the mortgage lien given to secure it. To this action appellant filed an answer, alleging much larger payments on the note than the amount of the credits given in the petition, and that the claim against him contained a large amount of usury and also charging fraud and covin in the obtention of the original judgment against him, and in the compromise by which be executed and delivered his note for $1,050 in its discharge. To this answer appellee filed a reply, controverting all of its material allegations of fact inconsistent with those of the petition, and then affirmatively setting forth the following state of facts: That, after the rendition of the original judgment against appellant, he was about to prosecute an appeal therefrom to the Court of Appeals, contending that the judgment against him embraced a large amount of usury; that at that time appellee contended that it was a Minnesota corporation, and that its contract with appellant was a Minnesota contract; that, under and by virtue of the laws of Minnesota, it was valid and binding, and that the amount adjudged in its favor against appellant was properly recoverable under the contract, as construed and enforced by the laws of the state of Minnesota; that the question of the validity of this contract had not at that time been decided by this court, but, on the contrary, had been decided by the circuit court of Clark county, and various other circuit courts throughout the state of Kentucky, to be a Minnesota contract, and enforceable as such here; that this controversy between appellant and appellee was bona fide, and involved the question of whether or not the judgment in favor of appellee contained usury; that, with this condition of affairs existing, appellee and appellant, in person, and with the aid and guidance of his attorney, Rodney Haggard, an able and efficient counselor, in good faith, and for the purpose of settling and adjusting the differences between the parties, entered into the contract by which the note sued on was executed and delivered by appellant to appellee; that this contract of settlement and compromise was made in the office of Rodney Haggard, appellant's counsel, with his aid, assistance, and advice, both he and appellant being present at the time; that all of its terms were fully understood, approved, and urged by appellant in person and by his counsel; that it was made and accepted in good faith by appellee, who at once stopped the sale of the property, which was advertised for that day, and thereafter, in good faith, abandoned and released all claims of any sort under the judgment. No rejoinder was made to this pleading, and no proof adduced by appellant to establish the allegations of payment and fraud, which were placed in issue by the denials of the reply. The case being submitted on the pleadings, a judgment was rendered as prayed for in the petition.

In the absence of a rejoinder, all of the well-pleaded allegations of fact in the reply are to be taken as true; and, in the absence of evidence to support them, all of the allegations of payment and fraud in the answer which were controverted by the reply must be taken as untrue. The question, then, for adjudication, is whether or not the compromise made between the parties litigant, as set forth in the reply, can be upheld. There is a wide difference between a compromise by which a debtor agrees to pay in settlement of his debt a less amount of usury than that claimed by the creditor, where there is no dispute between the parties as to the usurious...