Case ID: tenn_22/html/0561-01.html
Source: Caselaw Access Project
Author: {"author": "Reese, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frierson vs. Moody.
    Where complainant could have made his defence against an usurious security or securities without embarrassment in a court of law, a court of chancery will not relieve. Where, however, there is embarrassment and difficulty in the remedy at law in consequence of the number of usurious securities and number of contracts, and the complex nature ofthe transactions, or where the suits at law, and judgments are to be regarded as usurious securities constituting a portion of the devices resorted to, to conceal and secure the usury, in all such cases a court of chanccrjr will give relief.
    This bill was filed by complainant Frierson, in the chancery court at Columbia, against Moody, for the purpose of obtaining a perpetual injunction against the enforcement of certain judgment obtained by Moody against him. The defendant demurred to the bill, on the ground that complainant failed to avail himself of his rights of defence at law, and the chancellor sustained the demurrer. The complainant appealed.
    Meigs, for the complainant.
    Houston, for the defendant.
    It cannot be doubted for a moment, that the jurisdiction of the courts of law and courts of equity, in cases of usury, is concurrent and like all other cases where there is concurrent jurisdiction of the two courts, the one that first exercises it, exercises it exclusively, unless the party seeking the-aid of another court, was prevented from obtaining justice, “by fraud, or accident, or the act of the opposite party unmixed with negligence on his own part,” (3 Yerg. 167,) and there is no pretence that such is the state of facts in this case.
    There can be no doubt, from the facts stated in the bill, that complainant had his defence unembarrassed at law; having failed to make it, it will not now be allowed. And even if the complainant had alledged in the bill, that there was usury in the transactions, and that he did not know the amount thereof, and that an account was necessary, still if he shows that he knew there was usury to some amount, even if unknown as to the exact sum, it is insisteel that it is too late to malee the defence. And as authority to this point we refer to 1 John. Ch. Rep. 49, and to 3 John. Ch. Rep. 395, where this point is directly raised and discussed by the court, and the language of the court, in the first case, isas follows: “The general rule is, that this court will not relieve against a judgment at law, on the grounds of its being contrary to equity, unless the defendant below was ignorant of the fact in question, pending the suit, or it could not have been received as a defence. If a party will suffer judgment to pass against him by neglect, he cannot have relief here for a matter which he might have availed himself of at law.” 1 Murph. 225, Lee and loifc vs. Boles. 2 Ch. Cas. 95: Williams vs. Lee, 3 Atk. 223: Scott vs. Scott, Mich. 1796, cited in 1 Hall’s Law Journal 365. Lord Hardwicke says, it must appear that the defendant was ignorant, at the time of the*trial, of the fact which renders the verdict at law contrary to equity; and even then, chancery will not relieve where the defendant submits to try it first at law, when he might, by a bill of discovery, have come at the fact, by plaintiff’s answer, before trial at law. See 1 John. 465. “A bill for a discovery comes too late after atrial at law; it should have been filed pending the suit at law, that the facts disclosed in the answer might have been used as evidence before the jury.” 3 Yerg. 99, Duncan vs. Lyon, 3 John. Ch. Rep. 351. Foster vs. Wood, 6 John. Ch. Cases, 87: 4 Hay. Rep. 17-18-19: 3 Yerg. 127,167.
    
      
      Wright., for the complainant.
    1. The decree of the chancellor is erroneous and should be reversed. It is evident from the form and mode of dealing between these parties, as shown upon the face of the bill, that it was a part of the contract and mode of securing the debt, that judgment should be taken from túne to time for the principal and usurious interest, which'was done. In such a case as that, the rule that the party should have made his defence at law, does not apply. 5 John. Ch. Rep. McKoin &j Willcinson vs. Cooley.
    
    
      2. How could a full and adequate defence have been made here at law? The amount mentioned in some of these numerous notes, or a part of it was justly due and not tainted with usury, but how could the defendant when sued at law, show which note was affected with the usury? And indeed how could a court of law, at all ascertain and settle what notes were to be rejected and which not? Here was not one entire contract embodying the just and the unjust part of the debt, but the creditor artfully has fifteen or twenty distinct notes and contracts, intermingling the valid and invalid portions together. If the defendant had said this note or that note is usurious, how could the proof point to it? And could any one but a court of equity, in such a state of facts, ascertain and adjust the rights of the parties? Coleman el al. vs. Childress, 6 Terg. R. 308.
   Reese, J.

delivered the opinion of the court.

This bill is filed to obtain relief against usury; a demurrer was filed to the bill, and allowed by the chancellor, upon the ground, that complainant had omitted to make his defence at law; where, without difficulty and embarrassment, as is alledg-ed, it could have been made. The principles applicable to this general subject, have repeatedly come under the consideration of this court, and may be considered as well settled. In the case of Buchanan against Nolen, at Jackson, {ante) this court repelling the exercise of jurisdiction in the particular case, adds: “we do not say, that there may not arise cases, where the principle of relief in a court of chancery after a trial at law, may be applied, especially where usury would be the subject of inquiry. An oppressed debtor in the hands of an artful and heartless usurer might be induced so to- change securities, adding in usurious interest, and for along course of time repeating this process, so as to make it difficult for a jury in the mode of trial before them, to defeat the contrivance and separate the sum really due;” and at the present term in the case of McKoin & Wilkerson vs. Cooley, the court adds, that the usurer might make the courts of justice the medium through which to consummate his usurious contracts, holding over his debtor an influence that would paralyze his will, and prevent him from making his defence. The question in the case before us is whether the facts in this bill show a state of things, falling within the scope of these exceptions; that is embarrassment in the legal forum, arising from complication and multiplication of contracts and securities, or were the very suits at law, and judgments themselves, to be regarded as usurious securities, constituting a portion of the devices resorted to in order to conceal as well as to secure the usury? And we think this case belongs to either category. The bill in brief is, that in 1840 the complainant becoming embarrassed and needing a loan of money, applied to one J. W. Smith, who acted as agent for the defendant Moody, and made to him several notes, within the jurisdiction of a justice, amounting in all to upwards of seven hundred dollars; that Smith endorsed them, and Moody discounted them at 15 per cent, the proceeds amounting to something upwards of six hundred dollars. Shortly after these notes were placed in the hands of another friend, agent and manager of Moody, one M. Smith, a constable.’ Judgments were got, and then to satisfy said judgments, new notes were given to J. W. Smith, endorsed by him to Moody, discounted by Moody at 15 per cent, handed to the same constable, new judgments were taken, new notes given in satisfaction in a constantly recurring series of operations, the last judgments being used to coerce into existence the new notes, and the new notes being taken in satisfaction of the judgments enlarging and accumulating by the addition of usury upon usury, by the inclusion of justices’ fees and the constable’s costs and commissions, and the said notes and judgments constantly multiplying from the necessity of keeping the operations within the jurisdiction of the justice, until after the lapse of two years the aggregate amount rose to $2500, and the number of notes and judgments to thirteen.

It would be idle and delusive to regard these judgments as the result of actual litigation, in which the parties were seeking the one to resist, and the other to enforce the contracts between them. The judgments were but processes in the operation, like the notes themselves, a system of production and reproduction; the parties were never at arms-length; the complainant was throughout the slave of defendant in vinculis. How could relief at law have been easily given upon these thirteen notes, of the aggregate amount of $2500, including principal and interest and usury and costs, repeatedly compounded and recom-pounded, and this too before a justice of the peace, whose jurisdiction is limited to two hundred dollars, and who to do justice would have had to consider of the whole transaction from the beginning, and the entire amount involved in all the cases, and to have given judgment for the true amount?

The transaction as set forth in the form of the bill is a most nefarious one, and the complainant’s claim to equitable.relief under the circumstances very clear.

Let the demurrer be overruled, the decree be reversed, and the defendant answer.