Rouskulp v. Kershner

| Md. | Jul 23, 1878

Alvey, J.,

delivered the opinion of the Court.

The only questions in this case arise upon the pleas interposed by Mrs. Ilinks, and by John F. Batzler, to the bill of the appellant.

Instead of setting the pleas down for argument, according to established practice, the appellant demurred to them ; and, upon allowance of the pleas as a good defence, the bill was dismissed absolutely.

A plea is not a frequent mode of defence in our equity practice; but when it is resorted to, it has been held that the principles of the English Court of Chancery apply to it, and that it should be dealt with and proceeded on according to settled rule and practice. 7 H. & J., 197, 198.

A plea in equity is defined to be a special answer to the bill, differing in this from an answer in the common form, that it demands the judgment of the Court, in the first instance, whether the special matter set up by it does not preclude the plaintiff from his right to the answer or the relief prayed by the bill. If the plea be allowed, nothing remains in issue between the parties, so far as the plea extends, but the truth of the matter pleaded. The Court, in the first instance, declares that if the matter of the plea be true the plaintiff is thereby debarred of the benefit of so much of his suit, as the plea may extend to ; and, for the purpose of this determination, the bill, so far as it is not contradicted by the plea, is taken as true. But this judgment, upon the sufficiency of the defence, is not definitive ; for the truth of the plea may be denied by the plaintiff by replication, and the parties may then proceed to examine witnesses the one to prove and the other to disprove the facts stated in the plea. Chase vs. McDonald & Ridgely, 7 H. & J., 160, 198; Mitf. Eq. Pl., 15.

The proceeding upon plea filed is very analogous to the proceeding upon demurrer to the bill. If the plaintiff supposes the plea to be defective either in form or substance, he may take the judgment of the Court upon its sufficiency. This he does by setting the plea down for argument, instead of replying to it; for if he pursues the latter course he thereby admits the legal sufficiency of the plea as a complete bar, if the facts be established. Daniels vs. Taggart’s Adm’r, 1 Gill & J., 311; Hughes vs. Blake, 6 Wheat., 453. Upon argument of the plea it may either be allowed simply, or the benefit of it may be saved to the hearing, or it may be ordered to stand for an answer ; or it may be overruled. If, therefore, as the authorities say, a plea is allowed upon argument, or if the plaintiff without argument thinks it, although good in form and substance, not true in point of fact, he may take issue upon it, and proceed to disprove the facts upon which it is endeavored to be supported; and no order of the Court in merely passing upon the legal sufficiency of the plea should preclude the plaintiff the right thus to controvert the truth of the facts alleged. Sto. Eq. Pl., sec. 697; Mitf. Pl., 353, 354.

Treating, then, the demurrer to the pleas as equivalent to setting the pleas down for argument, the questions are, do the pleas constitute a legal defence to the hill for the parties pleading them?

1. And first, as to the plea by Batzler. This party was the purchaser of the property at the sale made by the trustee, acting under a decree passed on the mortgage to Carroll, under the local Code for Baltimore City. He had no connection whatever with any of the transactions between the appellant and Kershner, of which complaint is made in the bill. It is not pretended that the sale made to him was not in good faith, or that he was not a bona fide bidder at the sale. That sale was duly reported, and has been finally ratified; and, according to the averments of tho plea, the purchase money has been fully paid, and a deed made by the trustee. Under such circumstances, there is no principle upon which the purchaser can be called into a separate collateral proceeding like the present either to account for the purchase money or to have the proceedings under which he obtained his title reviewed. As purchaser under the mortgage decree, he dealt with the Court through its trustee; and he was liable to be coerced, by summary proceeding, into a compliance with the terms of sale. The Court had- unquestionable jurisdiction both to decree the sale and to ratify it upon the report of the trustee ; and the proceeds of sale are for distribution in that case alone. To sanction such a principle as that sought to be enforced in this case, would lead to the most dangerous consequences to purchasers; and there is no authority produced for its support. On the contrary, all authority is against it Jackson vs. Henry, 10 John., 185. We can have no hesitation, therefore, in declaring that the plea interposed by Batzler, the purchaser, should be allowed.

2. But the defence set up by the plea interposed by Mrs. Hinks stands upon very different grounds. It is charged in the bill that the making of the deed to Mrs. Hinks by Kershner and wife, and the lease by Mrs. Hinks to Kershner, reserving a ground rent of $480, was but a mode and contrivance for taking usury on money loaned by Mrs. Hinks to Kershner. If this allegation be true, and the transaction operates to the prejudice of the appellant, by lessening the real value of Kershner’s interest in the premises subsequently mortgaged to the appellant, then he has a right to question that transaction, and to show the existence of usury, and the extent of it. Trumbo vs. Blizzard, 6 Gill & J., 18, 23; Lloyd vs. Scott, 4 Peters’ Rep., 205. The allegation of the bill, as to usury, is not denied by the plea ; nor is there any answer in support of the plea, whereby this charge in the bill is responded to or explained ; and, as we have seen, in considering the validity of the plea, all allegations in the bill, not denied or controverted by the plea, are admitted to be true. Taking then this allegation of the bill to be true, the transaction, though assuming the form of a sale and lease of the premises, subject to redemption, would be obnoxious to the usury law of the State; for it is well settled, that no shift or device will enable a party to take more than legal interest upon a loan ; and therefore the question in all such cases is, what is the real substance of the transaction P and not what color or form it has assumed ? Upon the assumption of the truth of the allegation in the bill, the case would fall immediately within the authority of the cases of Tyson vs. Richard, 3 H. & J., 109; Marsh vs. Martindale, 3 Bos. & Pul., 154, 158, and Lloyd vs. Scott, 4 Pet., 205. The plea, in order to be valid,- should have contained a denial of the usury charged in the bill; and not only that, but there should have been an answer in support of the plea, wherein the charge of usury should have been fully met and negatived. For it is a settled principle in equity pleading, that where there is any charge in the bill, which constitutes an equitable ground or circumstance in favor of the plaintiff s case against the matter pleaded, as fraud, notice, or usury ; that charge must be denied by way of answer, as well as by averment in the plea. Mitf. Eq. Pl., 350; Roche vs. Morgell, 2 Sch. & Lefr., 721, 727; Bayley vs. Adams, 6 Ves., 594; Harris vs. Harris, 3 Hare, 450; Daniels vs. Taggart’s Adm’r, 1 Gill & J., 311.

(Decided 23rd July, 1878.)

It follows, therefore, that the plea pleaded by Mrs. Hinks must be overruled ; but she is entitled to an opportunity to answer the bill, if she desires to do so.

Decree reversed, and cause remanded.