Webster v. RushingWebster v. Rushing
Randy Webster, a loan broker, instituted this suit seeking to recover from defendants Chester Rushing and LaBelle Aire, Inc. a sum due under a contract he enterеd into with defendants; said sum represents a fee for services rendered by plaintiff in securing a mortgage loan for defendants. Plaintiff further sought damages on the ground that defendants’ failure to perform caused him embarrassment and mental anguish as well as loss of рrestige in the business community. The district judge rendered judgment in favor of plaintiff and against defendants, in solido, in the sum of $18,250.00, representing the first year‘s commission on $1,000,000.00 of life insurance as contemplated under the contract. The trial judge rejected plaintiff‘s claim fоr damages. Defendants appealed. Plaintiff did not appeal, nor did he answer defendants’ appeal. The court of appeal reversed, dismissing plaintiff‘s suit on the finding that plaintiff was not registered as a loan broker as provided by law and thus was prevented from recovering under the contract by the provisions of
The facts are not in dispute. Desirous of obtaining a mortgage loan for the purpose of construсting an apartment complex, Chester Rushing contacted Randy Webster seeking his services in obtaining the required financing. It was agreed by the parties that, as a fee for his services, plaintiff would take one percent (1%) of the $2,500,000.00 loan. After early attempts to secure financing failed, the parties agreed that Webster should continue his endeavors and, if successful, Rushing and his business associates in the apartment complex would purchase $1,000,000.00 of life insurance from plaintiff, who was also an insurance agеnt. It was further agreed that the commission received by Webster on the life insurance would be in lieu of the one percent (1%) commission on the loan.
After about one and a half years of negotiation, plaintiff was successful in obtaining a commitment for the loan. Ultimately, the apartment complex was completed, and the permanent loan was funded. Thereupon, plaintiff called upon Rushing to fulfill the obligation to purchase the life insurance under the contract. The Rushing group completed the required physical examinations. Some of the policies were issued to the group; however, members refused to accept the policies and pay the premiums.
As a result, plaintiff brought this suit, in which he alleges that he is in the business of brokering mortgagе loans and, pursuant to the contract between the parties, he is entitled to the commission he would have received on the life insurance policies if defendants had complied with their agreement
The court of appeal found, as did the trial court, that plaintiff had carried his burden of proving that a contract was entered into between the рarties, that plaintiff had performed his obligations under said contract, and that defendants had breached the contract by their failure to purchase the agreed insurance. These conclusions could hardly be disputed from a review of the record, and we concur therein.
However, the court of appeal further concluded that plaintiff was nonetheless precluded from recovering under the contract since he was not registered as a loan broker as required under the law аnd was thus prohibited from basing a suit on a right acquired under the contract by the provisions of
Clearly, under the provisions of
ISSUE
There are two aspects to the resolution of the issue. First, whether the fаilure of plaintiff to register as a loan broker, resulting in a prohibition to his bringing a suit based upon the contract, is an affirmative defense which must be specially pleaded. Second, whether the pleadings were enlarged by the evidence adduced without objection to include this defense.
Even before the adoption of the 1960 Code of Civil Procedure, a defendant had to plead special defenses affirmatively in his answer.5 Presently, it is provided in article 1003 of the Code of Civil Procedure that the answer “shall set forth all affirmative defenses as required by Article 1005.”6
Article 1005, in addition to listing certain affirmative defenses7 which must be specially pleaded, contains the omnibus recital “and any other matter constituting an affirmative defense.” (Emphasis added.) Thus, the listing of the named affirmative defenses in this article are merely illustrative. An affirmative defense raises new matter which, assuming the allegations in the petition to be true, constitutes a defense to the action and will have the effect of defeating plaintiff‘s demand on its merits.8 In the instant case, the defense that plаintiff was not a registered loan broker and was thus precluded from recovering under the contract raises a new issue which, assuming the allegations of plaintiff‘s petition to be true, would defeat plaintiff‘s claim on the merits. Hence, it was clearly an affirmative defense which was required to be specially pleaded.
II.
The purpose of pleading a special defense is to give fair and adequate notice of the nature of the defense so that plaintiff is not surprised. Here, no mention of this defense was made in either defendants’ answer (general denial) or in the pretrial order. The question as to the applicability of the prohibition of
CONCLUSION
In sum, the claim of defendants that plaintiff is barred from recovering under the contract because of the statutory defense contained in
However, in our examination of the record, we find no basis for holding Chester Rushing solidarily liable with LaBelle Aire, Inc. The contract sued upon is signed only by Rushing in his capacity as president of the corporation. Further, the evidаnce is clear that Rushing at all times disclosed his representation of the corporation and never led plaintiff to believe that he intended to become personally bound for the obligation herein sued upon. Accordingly, the trial court erred in casting Rushing in solido with LaBelle Aire, Inc. and that portion of the judgment must be amended.
Further, we need not consider plaintiff‘s claims for an increase in the award under the contract and damages for mental anguish and embarrassment. These claims were rejected by the trial court, and plaintiff neither appealed nor answered defendants’ appeal.
DECREE
The judgment of the court of appeal is reversed; the judgment of the district court is reinstated only insofar as there is judgment against defendant, LaBelle Aire, Inc., and in favor of plaintiff, Randy Webster, in the sum of $18,250.00, together with legal interest thereon from date of judicial demand until paid. All costs of these proceedings to be paid by defendant.
Notes
“Loan broker” means any person who engages in the business of purсhasing wages or salaries or who acts as a go-between, finder or agent of a lender or borrower of money for the purpose of procuring a loan of money, or who engages in the business of guaranteeing or endorsing notes and other еvidences of indebtedness. “Loan broker” does not include any business approved by the Federal Housing Administration as an approved mortgagee, insofar only as any of its mortgage loan business is concerned, nor shall it include any business which is otherwise regulated or supervised by any agency of the Federal or State government or any corporation not considered to be transacting business in this state under the provisions of
This portion of Section 701 was amended by Act 493 of 1974 so that it now reads:
“Dealеr” shall mean “broker-dealer” as defined in this section.
No person who has made or engaged in the performance of any contract in violation of any provision of this Part or any rule or оrder hereunder, or who has acquired any purported right under any such contract with knowledge of the facts by reason of which its making or performance was in violation, may base any suit on the contract.
The full text of this article (1003) is:
The answer shall comply with Articles 853, 854, and 863 and, whenever applicable, with Articles 855 through 861. It shall admit or deny the allegations of the petition as required by Article 1004, state in short and concise terms the material facts upon which the defenses to the action asserted are based, and shall set forth all affirmative defenses as required by Article 1005. It shall also contain a prayer for the relief sought. Relief may be prayed for in the alternative.
Article 1005 of the Code of Civil Procedure (1960) states:
The answer shall set forth affirmatively arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, division, duress, error or mistake, estoppel, extinguishment of the obligation in any manner, failure of consideration, fraud, illegality, injury by fellow servant, transaction or cоmpromise, and any other matter constituting an affirmative defense. If a party has mistakenly designated an affirmative defense as an incidental demand, or an incidental demand as an affirmative defense, and if justice so requires, the court, on such terms as it may prescribe, shall treat the pleading as if there had been a proper designation.