Case Name: Martin Caughman and John Meetz vs. Henry J. Drafts et al.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1845-05
Citations: 1 Rich. Eq. 414
Docket Number: 
Parties: Martin Caughman and John Meetz vs. Henry J. Drafts et al.
Judges: Harper and Johnston, CC. concurred.
Reporter: South Carolina Equity Reports
Volume: 18
Pages: 414–418

Head Matter:
Martin Caughman and John Meetz vs. Henry J. Drafts et al.
Complainants confessed a judgment at law to the defendant, and after-wards, at different times, gave him their notes, as compensation, over and above the legal interest, for indulgences on the execution. On these notes the complainants made sundry payments. Held, that the notes were usurious, and that the complainants were entitled to have the payments made on them credited on the judgments, and the notes delivered up and cancelled. Held, further, that the Court of Equity had jurisdiction of the matter.
Before DunkiN, Ch. at Lexington, June, 1843.
■ The decree of his Honor the Chancellor is as follows :
On the 18th March 1840, Henry J. Caughman, with the complainants as sureties, gave their joint and several note to the defendant, Henry J. Drafts, for two thousand six hundred dollars, payable on the 1st of November following. On the 31st December, 1840, they confessed judgment on the said note.
On the same day, H. J. Caughman gave his note to the defendant, for one hundred and fifty five dollars, 10 cents, being a compensation, over and above the legal interest, for a stay of execution for one year, or until 1st January, 1842.
On the 7th February, 1842, the complainants also signed the last mentioned note, and they, with H. J. Caughman, gave to the defendant another note for one hundred and sixty-three dollars, being a compensation, over and above legal interest, for indulgence on the execution for another year.
On the second of January, 1843, Martin Caughman, one of the complainants, paid the defendant two hundred and twenty-five dollars, gave a new note signed by himself and the other complainant, for one hundred and thirty-six dollars, and took up the former two notes, already described.
On the 10th February, 1843, the complainants gave the defendant another note for two hundred and fourteen dollars and twenty-eight cents, in consideration of another year’s indulgence, which was over and above the legal interest on the judgment so delayed. On this last note, several payments have been made, and the defendant is using coercive measures to recover the balance.
The allegations of the bill are that the payments made by the complainants on the judgment of December, 1840, added to the usurious payments, have fully satisfied that judgment, and the prayer of the bill is, among other things, that the judgment may be satisfied, and the two notes be delivered up to be cancelled.
It may be as well first to dispose of the amended bill. The answer of John Black, as well as the evidence, prove, beyond reasonable doubt, that the complainants must have acted under some misconception in this matter. The allegations are entirely unsustained — and the bill as to John Black and John Fox, must be dismissed.
Nor does the evidence sustain the allegation, that the consideration of the judgment was infected with usury. The complainants have made a witness of-the defendant Drafts, by the character of the bill, and the answer repels the charge. Besides, the case of Fowler vs. Henry, 2 Bail. 54, is conclusive, that unless the confession of judgment was part of the original agreement, (which is not suggested,) the party is estoped from charging usury.
But all the subsequent transactions seem to the court plainly obnoxious to this objection. It was said there was no loan of money, as the judgment was already confessed. But as is said by Mr. Ord, p. 29, “the forbearance is nothing more than lending the 'money for a further time.” The court looks at the transaction “as equivalent to a loan” — see Manners vs. Postan, 3 Bos. and P. 343; Wade vs. Wilson, 1 East, 195.
Then it was urged that the payments by the complainants were voluntary. But to this the answer is given by Sir Joseph Jekyll, in Bosanquet vs. Dashwood, (cases Temp. Talb. 37.) It was there insisted that the party “had acknowledged the accounts, and voluntarily paid.” But the master of the rolls decreed that the defendants should account, and that if more than what was due, with legal interest, had been received, it should be refunded. Lord W. Talbot, affirming the decree, said “this court would never see a-creditor running away with an exorbitant interest beyond what the law allows, although the money has been paid. The court would relieve against what was unjust and oppressive, though the party may have submitted for a time to the terms imposed upon him. The payment of the money will not alter the case in a Court of Equity, for it ought not to have been paid. The debtor was oppressed, and his necessities obliged him to submit to these terms. Nor can it be said in any case of oppression, that the party oppressed was partice'ps criminis, since it was this very hardship which he labored under, and which was imposed upon him by another, that constituted the crime.” “Must he keep,” concludes the Chancellor, “what he has no right to, merely because he has got it in his hands.” See Palmer vs. Lord, 6 J. C. R. 103: Dey vs. Dunham, 2 J. C. R. 182.
The Court is of opinion that the complainants are entitled to have an account of what has been paid on the notes, and to have the same applied, as far as may be necessary, towards satisfaction of the judgment of Dec. 1840.
It is ordered and decreed that the commissioner take an account of the amount due on the judgment in favor of the defendant, crediting the complainants with all payments made thereon, as well as with the payments on account of the notes described in the pleadings, and that he report the result. It is further ordered that the notes of the 2d January, and 10th February, 1843, be delivered up to be cancelled.
Finally, it is ordered, that as to John Black and John Fox, executor W. S. Miller, the bill be dismissed at the cost of the complainants, and that they also pay the costs of their own amended bill — and. all other costs to be paid by the defendant Henry J. Drafts.
The defendant appealed, on the following grounds, viz:
1. Because money paid by a debtor for forbearance, on an existing bona fide debt, cannot be recovered back, even if such payment exceed the rate of 7 per cent, per annum.
2. Because the judgment mentioned in the pleadings, is free from the infection of usury, and ought not to be invalidated or credited with the amount of any payments made by the complainants, in order to procure indulgence thereon, which were not intended when made to be applied thereto.
3. Because the several payments made by complainants to the defendant Drafts, on the notes described in the pleadings, were not made on said judgment, nor were they intended, either by the complainants or Drafts, when made, to be applied thereto, and the complainants have no right now to have the amount of such payments applied to the credit of said judgment.
4. Because the application of the amount paid on said notes to said judgment, would be equivalent to a recovery thereof in a separate suit, to which it is submitted the complainants have no right, in this or any other court.
5. Because, if the complainants are entitled to relief, they have a plain and adequate remedy at law.

Opinion:
Curia, per Johnson, Ch.
This court concurs in the decree of the Circuit Court. There are, however, two questions mainly relied on here, which deserve further notice. They are, (1) whether the complainants are entitled to set off the usurious interest against the judgment at law; and if so, (2) whether this court has jurisdiction of the matter.
In Clark vs. Hunter, 2 Speers, 86, (and it would be unprofitable to trace further back for authority,)-it was solemnly ruled that, in an action at law on a promissory note, the defendant might set off against the principal debt, usurious interest paid on it. In that case it is said, arguendo, that the borrower having voluntarily paid the usury, he could not, since the Act of 1831, maintain an action to recover it back; and it is insisted that this is in effect a bill to recover back money so paid. But I am not altogether prepared to assent to such a construction of the Act, nor can I perceive how it can be reconciled to the right of the party to set it off in an action at law to recover back the principal sum. If it may be set off, it would seem to follow that an action at law would lie to recover it back. If the right exists there must be an adequate remedy. It cannot be set off here, because the judgment at law was obtained before the usury was paid,— apart from that consideration, the object of this bill is to obtain precisely what was allowed in the case referred to — not to recover back money paid, but to set off, against the. judgment at law, money paid to the defendant, which he ought to have applied towards its satisfaction.
No notice is taken of the objection to the jurisdiction of the court in the circuit decree, and I suppose it was not insisted on there, and although it is raised in the answer, I question much the propriety of considering it he're, as the jurisdiction of this court is strictly appellate; nor do I think that the Chancellor on circuit is bound to look critically into the pleadings to ferret out something that the counsel did not think worthy of being brought to notice. There is, however, no difficulty about the matter. The argument in support of the objection is, that if the complainants have a right to set off the money paid on account of excessive usury, they may recover it in an action at law, and having a remedy there they cannot come into this court. The defendant has a judgment against the complainants, which, but for the interposition of this court, he might enforce at any moment, and thus compel them to pay again a debt which they have already paid; and if they are driven to law to recover it back, they may be despoiled before the relief comes. It has occurred to me that the complainants might have substantially obtained the relief they now seek, in the law court, on a rule to shew cause why satisfaction should not be.entered on the judgment ; but that is an equitable proceeding, and although exercised there, is, I suppose, not incompatible with its exercise here. The bill, however, prays that the unpaid usurious notes may be delivered up and cancelled, and that is itself a distinct ground of equity jurisdiction never exercised by the law court.
The appeal is therefore dismissed, and the decree of the Circuit Court affirmed.
Harper and Johnston, CC. concurred.