Ideal Financing Ass'n v. La Bonte

• Decision Date: 27 June 1935
• Citation: 120 Conn. 190,180 A. 300
• Parties: IDEAL FINANCING ASS'N v. LA BONTE et al.
• Court: Connecticut Supreme Court

180 A. 300

120 Conn. 190

IDEAL FINANCING ASS'N v. LA BONTE et al.

Supreme Court of Errors of Connecticut.

June 27, 1935

Appeal from Court of Common Pleas, New Haven County; Walter M Pickett, Judge.

Action by the Ideal Financing Association to recover on note for $300 under the Small Loans Act against Jeanette W. LaBonte and others, brought to the Court of Common Pleas in New Haven District of New Haven County and tried to the court.Judgment for plaintiff, and defendants appeal.

Error and cause remanded.

Argued before MALTBIE, C.J., and HAINES, HINMAN, AVERY, and FOSTER JJ.

Ephraim Edward Sinn and Louis Feinmark, both of New Haven for appellants.

Abraham S. Ullman, of New Haven (Albert M. Herrman, of New Haven, on the brief), for appellee.

AVERY Judge.

This action was brought by the plaintiff, a corporation duly licensed to conduct a small loan business under the provisions of General Statutes, chapter 213, as amendedCum. Supp. 1933, § § 1080b to 1085b, seeking to recover a balance due on a joint and several note of the defendants, husband and wife, dated September 13, 1933, in the original amount of $300.

The facts found by the court with such corrections as the defendants are entitled to are substantially as follows: On September 13, 1933, the defendants executed their promissory note whereby they jointly and severally promised to pay to the order of the plaintiff the sum of $300 in twenty equal monthly installments of $15 each with interest at the rate of 3 per cent. per month on the unpaid balance.The note contained a provision that if default should be made in any payment of principal or interest, the entire principal should immediately become due and payable.At the same time, the defendants executed and delivered to the plaintiff a chattel mortgage.This was not recorded or used by the plaintiff in any way before or during the trial of the case.This mortgage contained an agreement to pay " any expense which the lender has incurred or contracted for in reclaiming said goods and chattels, including reasonable attorney's fees and costs," etc.The plaintiff also delivered to the defendants two statements of loan wherein this chattel mortgage security was designated " C. M."The defendants failed to pay the monthly installments becoming due on January 13 and February 13, 1934.

At the trial, the chattel mortgage was offered in evidence by the defendants for the limited purpose of showing " that the security was not properly stated in the book given to the borrower."The case was tried to the court.Upon the close of the evidence defendants, by their attorney, argued the facts and stated their claims of law.No reference was made by them to the provision in the chattel mortgage concerning the cost of collection, nor was that matter stated as a defense in the pleadings.Judgment was entered on May 9th.Two days later the defendants filed a written motion to reopen the judgment " for the purpose of allowing argument on the question of law as to the effect of the presence in the chattel mortgage given as security for the loan sued on of a clause allowing the collection of attorney's fees."The motion to reopen was granted by the court and reargument had.In the course of reargument, counsel for plaintiff objected that the question was not raised by the pleadings.Thereafter, the court affirmed the original judgment on the ground, as stated in its memorandum, that the matter raised by the motion to reargue should have been pleaded by way of special defense, and this course not having been taken, the court could not consider it.On the following day, the defendants filed written motions to reopen the case and for permission to file an amendment to the amended answer, setting up the defense that the taking of the chattel mortgage as security and the provision therein that in the event the goods mortgaged were reclaimed, the plaintiff would be entitled to reasonable attorney's fees, rendered the note void and unenforceable because contrary to the provisions of the Small Loans Law as amended, Cum. Supp. 1933, § 1084b.These motions were denied and the trial court stated, in its memorandum, that it did not feel that the defendants were entitled at this stage to have the judgment again reopened after previously having had full opportunity to offer a proper amendment.

Numerous assignments of error are made, but it is necessary to discuss only the one relating to the action of the trial court in refusing to reopen the judgment and allow the defendants to file an amended answer setting forth the invalidity of the loan by reason of the chattel mortgage given to secure it, and the provision therein for the payment of attorney's fees.At the trial, no claim was made that the loan was void for this reason.The chattel mortgage was introduced for another purpose, but the trial court has found that it is undisputed that at the time this loan was made this chattel mortgage was given and the mortgage itself, containing the provision for attorney's fees, was in evidence and before the court.Under our practice, illegality not apparent on the face of the pleadings must be specially pleaded.Practice Book, 1934, p. 46.§ 104;Hendrick v. Lowe,85 Conn. 635, 638, 84 A. 89;Wiggin v. Federal Stock & Grain Co.,77 Conn. 507, 514, 59 A. 607.At the time that the note in question was given, the amendment to the Small Loans Act adopted in 1933, Cum. Supp. § 1084b, was in effect.This provided: " In addition to the interest herein provided for, no further or other charge or amount for any examination, service, brokerage, commission or other thing, or...