Opinion
13455
July 21, 1932.
Before RICE, J., Greenville, July, 1931. Affirmed.
Action by Judson Mills, a corporation, against D.L. Norris and another. From an adverse order, the defendants appeal.
The order of Judge Rice, requested to be reported, follows:
This matter comes before me, (1) upon a motion made by defendants to strike certain parts of the complaint, and (2) upon a motion on the part of the plaintiff to refer the issues to the master.
The defendant contends that the action is one of law upon the notes, and that the allegations sought to be stricken have no relevancy to such an action. The plaintiff, on the other hand, contends that the suit is in equity for the foreclosure of a lien by way of pledge upon certain stocks set forth in the complaint.
If the case is one in equity, the facts set forth in the complaint, to which objection is made, are pertinent as showing the propriety and necessity for resorting to a Court of equity and in showing the inadequacy of the legal remedy.
It is well established by the authorities that suit may be instituted in equity for the foreclosure of mortgages on personal property and of liens by way of pledge upon stock and bonds, and that this is especially true where the debt, and/or the lien, is in dispute. In such a suit all questions arising under the plaintiff's claim can be determined, making an end to litigation. See Bryan v. Robert, 1 Strob. Eq., 334; Stokes v. Liverpool L. G. Ins. Co., 130 S.C. 521, 126 S.E., 649; Broom v. Armstrong, 137 U.S. 266, 11 S.Ct., 73, 34 L.Ed., 648; 49 C.J., 1013, 1014; 21 R.C.L. § 54; Jones on Pledges, §§ 644, 645, 646 and 648; Pomeroy on Eq. Jur. (4th Ed.), § 1230; 6 Fletcher on Corp. § 3931; 6 Thompson on Corp. (3d Ed.), § 4293.
Nor is the nature of the action changed by reason of the fact that the defendants have, in their answers, set up defenses and counterclaims based upon alleged misrepresentations in the transaction upon which the plaintiff's note and pledge are predicated. The questions raised by these defenses and counterclaims directly affect the validity of the plaintiff's lien and the question as to the amount due upon the debt secured by the lien. Where, in actions of foreclosure, the defendant sets up a defense and/or a counterclaim affecting the consideration, and arising out of the transaction in which the mortgage or lien was created, the authorities hold that the issues thus raised are equitable and are to be tried by the Court upon its equity side. Hunt v. Nolen, 46 S.C. 551, 553, 24 S.E., 543; McLaurin v. Hodges, 43 S.C. 187, 20 S.E., 991; Armour Fert. Works v. Burckhalter, 141 S.C. 232, 237, 139 S.E., 465; Mobley Co. v. McLucas, 99 S.C. 99, 82 S.E., 986.
It is my conclusion, therefore, that the matters set forth in those portions of the complaint to which objection has been made are relevant to the issues involved in the proceeding. Paragraph XI gives the context of a letter from plaintiff's attorneys to the defendants and of their reply. It probably would have been better pleading to have set forth the substance of these letters, but as I understand the motion, the objection is upon the ground of the relevancy of the matters contained in those portions sought to be stricken.
It is, therefore, ordered that the motion to strike out certain allegations of the complaint be, and the same hereby is, refused.
I think this is a case which should be referred to the master for the purpose of taking the testimony which, in my opinion, will probably involve matters of accounting, but I am not disposed to require that he report upon the issues of law and fact.
It is therefore ordered that this case be referred to the master with instructions to take the testimony and report the same to this Court.
Messrs. Blythe Bonham and Peacock Dalton, for appellants, cite: Where plaintiff has remedy at law Court of equity is without jurisdiction: 89 S.C. 391; 136 S.C. 327; 141 S.C. 136; 140 S.C. 107. Both legal and equitable issues can be disposed of in one action, legal submitted to jury and equitable tried by Court: 148 S.C. 133; 98 S.C. 289; 134 S.C. 373; 69 S.C. 186; 66 S.C. 459; 45 S.E., 4; 53 S.C. 131; 31 S.E., 53; 39 S.C. 452; 18 S.E., 3.
Messrs. Haynsworth Haynsworth, for respondent, cite: Action to foreclose on property that has been pledged may be tried in equity: 49 C.J., 1013; 20 S.C. Eq., 334; 130 S.C. 521; 137 U.S. 266; 21 R.C.L., 695; 80 Fed., 68; 152 S.C. 448; 156 U.S. 470; 19 S.C. 201; 140 S.C. 105; 158 S.C. 17; 46 S.C. 551; 99 S.C. 99; 69 S.C. 186; 141 S.C. 232. An order refusing to strike out allegations of a pleading does not involve the merits and is not appealable: 74 S.C. 13; 73 S.C. 227; 34 S.C. 169; 49 S.C. 423; 55 S.C. 574; 73 S.C. 198; 79 S.C. 47; 138 S.C. 318; 141 S.C. 86; 93 S.C. 61; 77 S.C. 367.
July 21, 1932. The opinion of the Court was delivered by
The statement of the matters involved in this appeal, fairly stated by appellants' counsel, is as follows:
"This is an appeal from an order of Judge Rice signed December 3, 1931.
"(1) Overruling defendants' motion to strike out certain paragraphs of the complaint as (a) irrelevant; (b) stating conclusions of law and fact only; and (c) that testimony to sustain such allegations would be irrelevant.
"(2) Referring the case to the Master `to take the testimony and report the same to this Court.'
"It is the contention of the appellants that an examination of the complaint will show that it states a cause of action upon certain notes, executed by them to the respondent, for the recovery of money only and that under the Constitution they are entitled to a trial by jury on the issues raised by the pleadings; that the paragraphs sought to be stricken out were no part of the cause of action sued upon; and that extraneous matters were inserted in the complaint in an effort to convert the action, properly one at law, into one in equity, for the purpose of depriving defendants of their constitutional right of a trial by jury."
On examination of the complaint and the answers of the defendants, we are of the opinion that the Circuit Judge was correct in his conclusions. Let his order be reported.
The order of reference to take the testimony does not necessarily deprive the appellants of a trial by jury hereafter. On the coming in of the master's report, submitting the testimony adduced before him, the Court may then, if it is deemed proper to do so, frame issues to be submitted to a jury. Sloan v. Burnett et al., 149 S.C. 12, 146 S.E., 601.
The order appealed from is affirmed.
MESSRS. JUSTICES STABLER, CARTER and BONHAM concur.