Vaughan v. Kalyvas

Decision Date09 December 1985
Docket NumberNo. 0661,0661
Citation342 S.E.2d 617,288 S.C. 358
CourtSouth Carolina Court of Appeals
PartiesAllen E. VAUGHAN, William A. Vaughan, Tom S. Bruce, and James R. Mann, Respondents, v. James T. KALYVAS and Anne B. Kalyvas, Appellants. . Heard

Henrietta U. Golding and Howell V. Bellamy, Jr., Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers, Myrtle Beach, for appellants.

A. Camden Lewis, Keith M. Babcock, and Daryl G. Hawkins, of Lewis, Babcock, Gregory & Pleicones, Columbia, for respondents.

HOWELL, Acting Justice:

This is an appeal from an order sustaining the demurrers of respondents Allen E. Vaughan, William A. Vaughan, Tom S. Bruce and James R. Mann (hereafter Vaughans) to the counterclaims of appellants James T. Kalyvas and Anne B. Kalyvas (hereafter Kalyvases), and from a ruling that the ends of justice would be subserved by proceeding to trial with the case. We affirm in part, reverse in part, and remand.

The Vaughans commenced this action to recover upon a promissory note dated September 25, 1980, in the principal amount of Forty-five Thousand and no/100 Dollars ($45,000.00), with interest on the unpaid balance at the rate of Eight percent (8%) per annum.

As the fifth defense in their answer and counterclaims, the Kalyvases allege usury as an affirmative defense. They allege that in January 1979 the Vaughans required them to sign a promissory note in the principal amount of One Hundred Ninety-five Thousand and no/100 Dollars ($195,000.00) in return for a loan of One Hundred Fifty Thousand and no/100 Dollars ($150,000.00). They further allege that they made two (2) payments totalling One Hundred Sixty-five Thousand and no/100 Dollars ($165,000.00) to satisfy the indebtedness, but the Vaughans demanded additional payment of Forty-five Thousand and no/100 Dollars ($45,000.00) and obtained the note that is the subject of this action in lieu of this payment of $45,000.00 on the original note. As a result, the Kalyvases allege that the note sued upon represents unlawful usurious interest.

The Kalyvases also assert three counterclaims: the sixth defense by way of a counterclaim, alleges violations of the South Carolina Unfair Trade Practices Act, the seventh defense, by way of a counterclaim, alleges fraud and the eighth defense, by way of a counterclaim, alleges conspiracy. The Vaughans demurred to the counterclaim.

With the exception of one paragraph in the counterclaim alleging fraud, the issue of usury alleged in the Kalyvases' fifth defense was central to all three counterclaims. The circuit court sustained the Vaughans' demurrers on the grounds that the repeal of the South Carolina usury statutes accomplished after the subject note was executed, but before the suit was initiated, retrospectively obviated usury from the laws of South Carolina and therefore precluded the Kalyvases from asserting usury as a defense.

As to paragraph 23(b) of the Kalyvases' seventh defense, which alleges misrepresentation rather than usury, the circuit court found that the Kalyvases' failure to allege all nine elements of fraud constituted additional grounds for sustaining the demurrer to that counterclaim.

The circuit court also found that the ends of justice would be subserved by proceeding to trial because the demurrers involved only counterclaims.

This appeal presents the Court with four issues: (1) did the circuit court err by ordering that the ends of justice would be subserved by proceeding to trial; (2) did the circuit court err by ruling that the repeal of the South Carolina usury statutes operated retrospectively to disallow any defense based upon usury; (3) did the circuit court err by refusing to allow the Kalyvases to replead the counterclaim alleging fraud after sustaining the Vaughans' demurrer; and (4) did the circuit court err by sustaining the Vaughans' demurrer to the Kalyvases' sixth defense by way of counterclaim, because the Unfair Trade Practices Act presents issues of novel impression.

I.

We do not find it necessary to consider the Kalyvases' argument that the circuit court erred by ordering, pursuant to S.C.Code Ann. § 18-9-220 (1976), that the ends of justice would be subserved by proceeding to trial. This appeal has in fact effectively stayed this action, therefore the issue is moot.

II.

The Kalyvases argue that the repeal of the South Carolina usury statutes do not operate retrospectively to disallow a defense of usury. We disagree.

At the time the subject note was executed, S.C.Code Ann. § 34-31-30 (1976) controlled the maximum interest rate on written contracts. In addition, S.C.Code Ann. § 34-31-50 (1976), in essence a penal statute, set forth a statutory defense to usury and imposed upon usurious lenders a loss of interest contracted for and forfeiture of double the total amount of interest actually received. Both code sections, however, were repealed by Act No. 385, § 57(1) of the 1982 Acts and Joint Resolutions of the General Assembly of South Carolina.

The repeal of usury laws, absent a savings clause, operates retrospectively to cut off the defense of usury, even in actions upon contracts previously made. Ewell v. Daggs, 108 U.S. 143, 2 S.Ct. 408, 27 L.Ed. 682 (1883). The Court reasoned that the retrospective application of the repeal of usury laws neither deprives parties of vested rights nor impairs the obligation of contracts. Many state courts have also held that the repeal of a usury statute disallows the defense of usury as to contracts entered into before the effective date of repeal, "[u]pon the theory that the privilege of pleading usury as a defense pertains only to the remedy and is not an element in the rights inhering to the contract" 45 Am.Jur.2d, Interest and Usury § 13 at 26.

As a general rule, the repeal of a statute under which penalties have been incurred removes the right to recover such penalties unless a savings clause preserves the right or suit brought under the statute has been prosecuted to judgment before the repealing act takes effect. 82 C.J.S. Statutes § 438 at 1012 (1953).

In South Carolina, the general rule is that the repeal of a statute, "has the effect of blotting it out completely as if it had never existed and of putting an end to all proceedings under it." McGlohon v. Harlan, 254 S.C. 207, 174 S.E.2d 753, 757 (1970); Marshall v. Richardson, 240 S.C. 318, 125 S.E.2d 639, 642 (1962).

Act No. 385 did not include a savings clause preserving the right of a party to assert the defense of usury when sued upon contracts executed before the effective date of repeal.

The Kalyvases cite two South Carolina cases in which contracts were found to be usurious despite subsequent repealing statutes. See Gilliland v. Phillips, 1 S.C. 152 (1869); Magwood v. Duncan, 19 S.C.L. 182 (S.C.1833). In light of Ewell, supra; McGlohon, supra; and Marshall, supra, these two very old cases are of limited precedential value, and we do not find them to be controlling in this case.

Based on the foregoing, we affirm the circuit court's ruling that the repeal of the South Carolina usury statutes operates...

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8 cases
  • State v. Thrift
    • United States
    • South Carolina Supreme Court
    • May 3, 1993
    ...prosecutions under a repealed statute. See also State v. Patterson, 220 S.C. 269, 66 S.E.2d 875 (1951); Vaughn v. Kalyvas, 288 S.C. 358, 342 S.E.2d 617 (Ct.App.1986). In the cases which dismissed indictments, the court presumed that the statute in question had been repealed. In all of the c......
  • Klein v. Wolf Run Resort, Inc.
    • United States
    • Vermont Supreme Court
    • April 14, 1995
    ...situations, should be presumed retroactive in the absence of a legislative indication to the contrary"); Vaughan v. Kalyvas, 288 S.C. 358, 342 S.E.2d 617, 619 (Ct.App.1986) ("repeal of usury laws, absent a savings clause, operates retrospectively to cut off the defense of usury"); see also ......
  • Taylor v. Murphy
    • United States
    • South Carolina Supreme Court
    • May 18, 1987
    ...280 S.C. 167, 311 S.E.2d 922, 926 (1984) ["[v]ested rights ... are not destroyed by repeal of a statute."]; Vaughan v. Kalyvas, 288 S.C. 358, 342 S.E.2d 617 (Ct.App.1986). See also, Hasell v. Medical Society of South Carolina, Inc., 288 S.C. 318, 342 S.E.2d 594, 595 (1986) ["[i]t is obvious......
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    • United States
    • South Carolina Court of Appeals
    • June 23, 2021
    ... ... "len[t] nothing to the dispute over ... attorney[']s fees." See Vaughan v. Kalyvas, ... 288 S.C. 358, 362, 342 S.E.2d 617, 619 (Ct. App. 1986) ... (declining to allow appellants to assert a contrary position ... ...
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