Ryan v. Southern Mut. Building & Loan Ass'n

• Decision Date: 27 July 1897
• Citation: 27 S.E. 618,50 S.C. 185
• Parties: RYAN v. SOUTHERN MUT. BUILDING & LOAN ASS'N.
• Court: South Carolina Supreme Court

27 S.E. 618

50 S.C. 185

RYAN v. SOUTHERN MUT. BUILDING & LOAN ASS'N.

Supreme Court of South Carolina

July 27, 1897

Appeal from common pleas circuit court of Barnwell county; D. A Townsend, Judge.

Action by G. K. Ryan against the Southern Mutual Building & Loan Association and J. Allen Tobin, as receiver of said association. From a judgment for plaintiff, defendant Tobin as receiver, appeals. Reversed.

Patterson & Holman, for appellant.

Bellinger Townsend & O'Bannon, R. C. Holman, and B. T. Rice, for respondent.

JONES J.

This is an action under section 1391, Rev. St., for double the sum alleged to have been received of plaintiff by the defendant association in excess of lawful interest. The jury found a verdict in favor of plaintiff for $2,864.50, and from the judgment entered thereon the defendant Tobin, as receiver of the defendant association, appeals, on the ground that the circuit court erred in refusing his motion for nonsuit. The defendant Tobin, as receiver, in his answer, after a general denial, set up as a defense that "the action could not be maintained, because the questions involved in said action were res adjudicata, for the reason that in an action in the court of common pleas for Barnwell county the said Southern Mutual Building and Loan Association had brought an action and foreclosed a mortgage against the said G. K. Ryan, and that no plea of usury as a defense or counterclaim was interposed in said action to recover the principal sum out of which the claim for usury arose in this case." The case contains the following relevant facts: "That at the time of the commencement of the suit and the date of the decree in the old suit of the association against Ryan, the said Ryan had not paid any usurious interest, but that said alleged illegal and usurious interest was collected in said suit that the bonds and mortgages sued upon by said association in the case against Ryan were not upon their faces usurious contracts, but provided, inter alia, that in no event should more than the amount borrowed, together with the interest at the rate of 8 per cent. per annum, be collected under said bonds; that Ryan, in attempting to defend in the said suit, put in an answer denying that he was indebted to the association in the amount claimed; that said answer was stricken out as frivolous, and judgment proceeded to be taken against him as by default." At the close of plaintiff's testimony, defendant's counsel moved for a nonsuit, which was refused. The ground for the motion for nonsuit was "that the record in the old case of the Southern Mutual Building & Loan Association against Ryan showed that the cause of action of G. K. Ryan arose out of the transaction involved in that suit, and that Ryan should have set up in that action his plea of usury as a defense or should have interposed a counterclaim for excessive interest, if any, and that he could not now maintain a separate action to recover said amount, as the same had become res adjudicata."

The exceptions are as follows: "(1) Because his honor erred in refusing to grant the defendant's motion for a nonsuit herein, as it appeared in the record of the case of the Southern Mutual Building and Loan Association against G. K. Ryan that the claim of the plaintiff in this action for the recovery of usury as a penalty of forfeiture originated in an action for the collection of the debt and interest in a foreclosure suit to which the said G. K. Ryan was a party defendant, and he is therefore estopped. (2) Because his honor should have granted the defendant's nonsuit, upon the ground that, when a party is a defendant in an action against him for the recovery of a debt and interest, he is bound to set up such a claim of usury as a defense or counterclaim in that action, and cannot afterwards maintain a separate action for the recovery of usury as a forfeiture, when the same arose in such suit as in this instance, where G. K. Ryan was a party defendant to said action of foreclosure."

The only evidence of the receipt of any money alleged to be for usurious interest by defendant from plaintiff was the money paid to defendant out of the proceeds of sale under decree in foreclosure in the case of said association against said Ryan. It is conceded that nothing was paid as usurious interest previous to the rendition of judgment. The question then is, can a suit be maintained under section 1391, Rev St., for double the sum of interest received in excess of lawful interest, when the only evidence of the receipt of usurious interest was the receipt of the proceeds of a judgment and sale in foreclosure in a suit on a contract to which the defense of usury might have been interposed? We think it clear that such a suit cannot be maintained. A judgment is the final determination of the rights of the parties in the action (Code, § 266), and is conclusive of all matter necessarily involved, whether raised or not; especially if the party denying the adjudication knew of the matter, and could have interposed it at the previous trial, either in support of a claim or as a defense. Ruff v. Doty, 26 S.C. 178, 1 S.E. 707. While it is true, as a general rule, that usury is not available as a defense unless pleaded (Bank v. Miller, 39 S.C. 193, 17 S.E. 592), yet, since usury goes to defeat the recovery in whole or in part, and is necessarily based upon, or connected with, the contract sued on, and in the affirmative proof upon the contract must be impliedly, but necessarily, negatived, a judgment defendant must be held estopped to affirm usury in the judgment debt in any subsequent suit involving the existence of such usury as a fact. The law as to payment affords an illustration. The defense of payment is affirmative, and must be pleaded as a...