Coleman v. Cole

BARCLAY, J.

This litigation has been prolonged. After the first trial the cause reached this •court by appeal and was reported under the title of Coleman v. White, 69 Mo. App. (St. L.)( 530, where a general outline of the case appears as the record stood •at that time.

The case began as an ordinary suit by plaintiff against defendant, Eugene M. Cole, on an account, for merchandise sold, amounting to $601.84, in which an attachment was obtained and was levied upon property of the defendant, Cole. The Aurora State Bank (by E. J. White as its assignee) then filed an interplea claiming the attached property by virtue of a chattel mortgage which forms the principal subject of contention now. The attachment was levied on a -mining plant, consisting of an engine, boiler, pumps, etc. The claim of the interpleader includes the same property.

After the decision in the 69 Missouri Appeals Report the cause was tried again.

The amended answer of the plaintiffs to the inter-plea charged, among other things, that the “pretended debts ’ ’ due to the bank were fraudulent as to plaintiffs because the interpleader had required the Davie Mining Company and the defendant, Cole, “to pay about twenty per cent for the said loan,” after the enactment of the law making eight per cent per annum the highest lawful rate of interest. But before the last trial the interpleader filed an amended reply (August 16, 1897) which is important to notice, because the court on *29 motion of plaintiff struck out all of it except the general denial contained in the first sentence. Its terms are as. follows (omitting caption and signature):

“Comes now the interpleader and for amended reply to the plaintiff’s amended answer to the interplea filed herein denies each and every allegation of new matter in said answer contained. Further answering interpleader says it is not true as alleged in said answer that any interest above the mortgage to the inter-pleader from the defendant, or that any interest at all was ever paid on said note, or that any interest was ever exacted or received from the defendant on the-debt secured by said mortgage, but interpleader states that the note secured by the mortgage in controversy was executed by the defendant and received by theinterpleader as a full payment of two certain notes, payable to the order of R. L. McElhaney, executed by R. L. McElhaney, president, and N. L. Wickwire, secretary, in the respective sums of $1,000 and $350, on which the defendant had indorsed on the back as a guarantor, simply. That the defendant was not a party maker to said notes nor a party to the payment of whatever interest may have been paid, if any, thereon, but was a separate, independent contractor with reference thereto, in no way connected with, or interested in, the payment of the interest thereon. That as such guarantor of said notes -the said defendant is not in a position himself to set up the defense of usury paid on the notes of McElhaney and Wickwire, not being in privity with the parties who paid such usury, not being interested therein or injured or prejudiced thereby, and the plaintiff being simply his attaching creditor has no' stronger rights to such defense than said defendant himself has.

“Interpleader further says that if by reason of the fact of his indorsement on the said note of Mc-Elhaney and Wickwire the defendant could have originally claimed the defense of usury paid thereon, *30 by tbe makers of said notes, he waived snob defense by tbe payment and discharge of said notes in full, by the execution and delivery of tbe note secured by tbe mortgage in controversy, wbicb was paid for and accepted as a full payment and discharge of said notes. That no interest, legal or otherwise, bad ever been paid on tbe note secured by tbe mortgage, or on tbe indebtedness secured thereby, wherefore interpleader say its mortgage is not affected by Laws of 1891, page 170, relating to tbe payment of usury and making void all chattel mortgages given to secure debts on wbicb usury has been paid. Further answering interpleader says that tbe mortgage is valid and binding on tbe defendant and tbe plaintiffs herein for tbe reason that said Laws of 1891, page 170, do not apply to tbe mortgage of tbe interpleader, since no interest, legal or otherwise, was ever paid on tbe debt secured by tbe mortgage and for tbe further reason that tbe said Laws of 1891, page 170, relating to usury and chattel mortgages, is void and unconstitutional, being in conflict with sections 28 and 53 of article á, of tbe Constitution of tbe State of Missouri.”

The grounds on wbicb tbe motion to strike out was sustained were that tbe reply contained no defense to plaintiff’s answer: that it was argumentative; that it stated conclusions of law instead of facts; and that tbe conclusions of law pleaded were opposed to tbe decision of tbe St. Louis Court of Appeals on tbe former appeal.

After tbe trial, wbicb resulted in a verdict for plaintiffs, tbe interpleader filed a motion for a new trial on various grounds, wbicb tbe trial court sustained, making at tbe time tbe following order:

“Now on this day come tbe parties in tbe above cause plaintiffs and interpleader in their own proper person as well as by attorneys and tbe motion for a new trial by tbe interpleader coming on to be heard, being seen, beard and fully understood by tbe court *31 after the argument of counsel, it appearing to the court that on the trial of the interplea the jury was instructed by the court as to what their finding from the evidence .should be and that the court failed to submit all the issues to the jury and that the interpleader under the evidence should have been permitted to amend its reply before proceeding to trial and the same was improperly stricken out by the court, and the plaintiffs at the trial were permitted to introduce improper and illegal evidence and the interpleader was prevented from introducing legal evidence in the cause and that an improper verdict and finding was occasioned by such matters and that the interpleader has a just cause of action and has discovered new and material evidence since the trial likely to charge the result on a new trial, it is therefore considered, ordered and adjudged by the court the motion for a new trial by the interpleader be and is hereby sustained, that the verdict and finding of the jury in the cause on said interplea be and is hereby set aside and held for naught, the parties interpleader and plaintiff be and are restored in all things to their positions held prior to said trial and that a new trial of said cause be had.”

It appeared from the testimony offered on behalf of plaintiffs at the trial that the note which was secured by the last chattel mortgage (under which the interpleader claims the property) is for the sum of $1,350, and that it is of date, May 26, 1893. It was signed by defendant and another person, Mr. Wick-wire. It calls for interest at the rate of eight per cent per annum from date. No one claims that it is usurious except by its relation to former transactions between the parties.

We need not review the facts stated in the former opinion indicating the general outlines of the case. The differences shown between them and the facts exhibited *32 at the last trial will be noted along with onr comments thereon.

The plaintiffs appealed from the order granting a new trial, after saving exceptions in the usual way.

• This case was transferred to the Supreme Court upon a suggestion'that a constitutional question was involved, but the first division of the Supreme Court decided that claim to be invalid and remanded the cause to this court for further proceedings. Coleman v. White, 158 Mo. 253 .

1. The most important feature of the case, as disclosed by the present record, is found in one of the defenses advanced in the amended reply filed by the interpleader after the first appeal. It embodied a theory to parry the charge of usury which theory was not discussed in the former opinion. Coleman v. White, 69 Mo. App. (St. L.) 590.

The learned trial judge struck out that part of the amended reply and left nothing of it standing except the general denial. After the verdict for plaintiffs he repented, and granted a new trial. We think he was entirely right in so doing.

There can be no doubt that, conceding the older notes to be usurious because of the excessive interest exacted of the original makers (R. S. 1899, secs. 3709, 3710), the facts stated in the amended reply relieve the' last note of that taint and thus save the chattel mortgage securing it from the fatal mark of nullity defined by the statute last cited. The amended reply states that the last note was executed in consideration and full payment of the two earlier notes charged to be^ usurious, whereon the defendant, Cole, was merely guarantor. By the new note, he became principal debtor, and the debt became his primarily by virtue of the new contract. The extension of time was- a perfectly valuable consideration to bind the maker of the new note (Cole); and his assumption of the debt by the last note in payment .of .the older debts was the *33 creation of a new contract which obliterates the connection with the usury exacted of the parties primarily liable on the prior notes. Tenny v. Porter, 61 Ark. 329 ; Craig v. Butler, 9 Mich. 21 ; Bank v. Hottenstein, 89 Penn. St. 328.

There is not the slightest suggestion or evidence that the introduction of Cole as the primary debtor by the new contract was a makeshift or contrivance to cover usury, and, of course, no such blemish appears in the amended reply.

The facts shown to the court by the interpleader in that pleading should have been admitted as a defense ag’ainst the alleged usury, and if sustained the interpleader should have had the benefit thereof.

2. The foregoing ruling makes it unnecessary to discuss whether plaintiffs as mere attaching creditors are entitled to assert usury to invalidate the chattel mortgage in view of the recent rulings in the Supreme Court. Vette v. Geist, 155 Mo. 32 ; Gabriel v. Imboden, 158 Mo. 632 .

3. It is also needless to inquire whether the learned circuit judge was right in granting the new trial for newly-discovered evidence — a ground for such action which unquestionably rests in the sound judicial discretion of the .trial judge.

The order awarding a new trial was well grounded. It is affirmed.

Bland, P. J., and Goode, Jconcur.