GRANDWAY CREDIT CORPORATION, APPELLANT,
v.
ROBERT BROWN, SR., AND CLARE M. BROWN, HIS WIFE, APPELLEES
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Grandway Credit Corporation appealed the trial court's dismissal of its mortgage foreclosure complaint and declaration that the note and mortgage were void due to alleged Truth in Lending Act violations. The appellate court reversed, holding that defendants bore the burden of proving their counterclaim allegations and that TILA violations do not automatically void valid legal obligations.
The burden of proving Truth in Lending Act violations rests with the party alleging them (the defendants in their counterclaim), not with the plaintiff-lender. TILA violations do not affect the validity or enforceability of valid legal obligations, and the statute provides its own penalties for violations.
[1] A defendant asserting a counterclaim bears the burden of proving the facts alleged therein.
[2] A violation of the Federal Truth in Lending Act does not, in itself, invalidate or render unenforceable a valid legal obligation.
Previewing 2 of 3 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“Since a counterclaim is in effect a separate cause of action, the defendant has the burden of proving the facts alleged therein.”
Establishes the legal principle that defendants bear the burden of proving their counterclaim allegations, not the plaintiff.
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Join FLexlaw to unlock all legal intelligenceGrandway Credit Corporation filed a foreclosure action on a $2,700 mortgage note executed by Robert and Clare Brown. The Browns defaulted after making…
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PER CURIAM.
Plaintiff-appellant seeks review of the trial court’s order dismissing with prejudice plaintiff’s complaint for foreclosure and declaring the subject note and mortgage null and void.
Plaintiff, Grandway Credit Corporation, filed a complaint to foreclose a mortgage wherein it alleged that defendants, Robert Brown and his wife, after having made one payment defaulted on a mortgage note in the sum of $2,700 which they executed and delivered to the plaintiff. In response thereto, defendant-appellees filed an anwer and counterclaim for $1,000 in damages and alleged therein that plaintiff violated the Federal Truth and Lending Act, 15 U.S.C. A. § 1601 et seq. in that it failed (1) to make full disclosure thereunder, (2) to provide defendants with a duplicate instrument containing the required disclosure, and (3) to give the three-day notice of rescission. The cause came on for trial on July 24, 1973 where it was admitted that the defendants had made only one payment on the note and mortgage. In addition, a representative of the plaintiff testified that the three-day notice of rescission was furnished to the appellees. The defendants, Mr. and Mrs. Brown, did not testify. At the close of plaintiff’s case, the trial judge intervened and invalidated the subject note and mortgage and as grounds therefor reasoned that the three-day notice of rescission was a prerequisite to the establishment of a prima facie case for and on behalf of the plaintiff. Thereupon, the court entered the herein appealed order dismissing plaintiff-appellant’s complaint with prejudice and declaring the note and mortgage a nullity for failure of the appellant to affirmatively show compliance with the Federal Truth and Lending Act. In addition, the court also dismissed the counterclaim as being inequitable. We reverse.
In their counterclaim for damages, defendants alleged the violations of the Truth and Lending Act, IS U.S.C.A. § 1601 et seq. Since a counterclaim is in effect a separate cause of action, the defendant has the burden of proving the facts alleged therein. 8 Fla.Jur. Counterclaim § 46 (1956). Thus, it was clearly erroneous to have placed the burden upon the plaintiff in the case sub judice to negate the allegations of the counterclaim. Further, we note that the Truth and Lending statute provides for its own penalties upon violation thereof (IS U.S.C.A. § 1640) and does not affect the validity or enforceability of valid legal obligations.
Accordingly, we reverse the order herein appealed and remand this cause for a new trial on both plaintiff’s complaint and defendants’ counterclaim.
Reversed and remanded.
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