Smith v. . Building and Loan Assn. , 119 N.C. 257 ( 1896 )

[PLAINTIFFS' APPEAL.] The first and second exceptions of the plaintiff are sustained. The ruling complained of was doubtless a mere inadvertence of the court. The $20 collected as "fines" was simply usurious interest. "A penalty or fine for nonpayment of money is interest." Meroney v. B. and L. Assn.,116 N.C. 882 (on page 922); Mills v. B. and L. Assn., 75 N.C. 292;Rowland v. B. and L. Assn., 116 N.C. 877.

THIRD EXCEPTION: When the wife mortgages her separate property to secure a debt of the husband, the relation she sustains to the transaction, in reference to said property, is that of surety. Hinton v. Greenleaf, 113 N.C. 6; Purvis v. Carstarphen, 73 N.C. 575; Walker v.Mebane, 90 N.C. 259; Gore v. Townsend, 105 N.C. 228. In Hedrickv. Byerly, post, 420, it is pointed out that in such case as to the Statute of Limitations, that being by operation of law, the mortgage would only become barred by the same lapse of time as any other, though as between her and her husband, and in reference to claims against her husband's estate, she was a surety, and hence as to any act of the creditor, as by extension of time, etc., she would be released like any other surety. Here (upon the facts found by the court by consent of parties) there was a tender by the obligor of more than the sum due. The finding that, at the time the $1,600 was tendered, there was a balance of $1,700 due, upon all the facts found, is an erroneous conclusion (260) of law from such facts; for by those findings the plaintiff had received $2,305 from defendant and had made payments aggregating $875, leaving a balance due on the bond, at that time, of $1,430. The tender was therefore sufficient in amount, and being made to the local secretary and treasurer of the defendant was made to the proper person. 17 A. E. Enc., 132. It is found as a fact that the plaintiff stated to said officer that he then had the money in the bank in the same building, and that this was true, and that the plaintiff was ready to pay the sum tendered ($1,600) but said treasurer declined to receive it. The production of the money was thereby rendered unnecessary. 25 A. E. Enc., 904; Holmes v. Holmes, 12 Barb., 137; U.S. Bank v.Ga., 10 Wheat., 347; Bradford v. Foster, 87 Tenn. 11; Koon v. Snodgrass,18 W. Va. 320; Harding v. Davies, 2 Car. P., 77. Evidence of the waiver of a tender is competent and sufficient to support an allegation of tender. Holmes v. Holmes, 5 Selden, 525; 2 Greenleaf Ev., (14 Ed.), secs. 601, 603. This was not a bare offer to pay, which amounts to nothing, but it was a tender by a man ready and able to perform, who did not produce the money when it was at hand because of the creditor's positive and unconditional refusal. When the principal, after the debt is due, tenders the amount due to the creditor, who refuses to receive it, the surety is discharged. 2 Brandt Surety, par. 339, and numerous cases there cited; and such tender need not be kept open nor the money paid into court. White v. Life Assn., 83 Ala. 419, and cases cited therein; Mitchell v. Roberts, 17 Fed., 776; citing a number of authorities. This case differs from Parker v. Beasley, 116 N.C. 1. There the point was as to the effect of a tender upon a mortgage of the principal debtor; and the rights of a surety, upon the refusal by (261) the creditor of a tender by the principal debtor of the sum due, did not arise. In such cases the surety is held discharged, because that single act is an extension of time to the principal, and it is not necessary to pay the money into court, which would stop the running of interest as to the principal. Here the tender had no effect whatever as to the principal debtor, for the debt being usurious bore no interest; but its refusal, according to the authorities, discharged the liability of the wife's property conveyed as security for the husband's debt. When the creditor had the sum due tendered him and declined it, he could no longer look to the surety.

The plaintiff's contention that the defendant can not to his action set up a counterclaim for the debt on which the usury was paid is unfounded. The plaintiff's own claim is "in the nature of an action of debt" (Code, sec. 3836), and hence any cause of action "arising on contract and existing at the commencement of the action" was competent as a counterclaim. Code, sec. 244 (2). But whether the plaintiff's action was in tort or contract, the counterclaim is allowable, because it arises "out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim, or is connected with the subject of the action." Code, sec. 244 (1);Branch v. Chappel, ante, 81.

Also unfounded is the plaintiff's contention that the plaintiff is not barred till two years after payment in full of the indebtedness on which the usury was paid. This is true under the present Usury Act, (chap. 69, Laws 1895), but that statute does not apply to this case, which is governed by The Code, sec. 3836. Roberts v. Ins. Co., 118 N.C. 429.

The judgment must be reformed in the court below by deducting (262) from the amount of defendant's recovery $40 (being double the usurious interest paid as "fines") and by striking out the decree for foreclosure of the wife's land. The findings of fact by the judge by consent are equivalent to a special verdict, and upon those facts, it appearing that there had been a legal tender refused by the creditor, the effect of which was to discharge the surety, the court will direct the judgment below to be reformed. Alston v. Davis, 118 N.C. 202. The costs of the plaintiff's appeal will be taxed against the defendant. Code, sec. 527 (2).

JUDGMENT MODIFIED.

Cited: Sherrod v. Dixon, 120 N.C. 67; Churchill v. Turnage, 122 N.C. 433;Bank v. Ireland, ib., 576; Meares v. Butler, 123 N.C. 208; Flemingv. Barden, 127 N.C. 215; Williams v. B. and L. Assn., 131 N.C. 269;Smith v. Parker, ib., 471; Harrington v. Rawls, ib., 40; Blalock v. Clark,133 N.C. 308; S. c., 137 N.C. 144; Wilson v. Telephone Co., 139 N.C. 396;Lee v. Manly, 154 N.C. 248; Medicine Co. v. Davenport, 163 N.C. 299;McAuley v. Sloan, 173 N.C. 82.