Goode v. Elwood Lodge No. 166, Knights of Pythias

• Decision Date: 17 March 1903
• Docket Number: 20,032
• Citation: 66 N.E. 742,160 Ind. 251
• Parties: Goode, Trustee, v. Elwood Lodge No. 166, Knights of Pythias
• Court: Indiana Supreme Court

66 N.E. 742

160 Ind. 251

Goode, Trustee, v. Elwood Lodge No. 166, Knights of Pythias

No. 20,032

Supreme Court of Indiana

March 17, 1903

From Superior Court of Madison County; H. C. Ryan, Judge.

Action by Martin E. Goode, trustee, against Elwood Lodge No. 166 Knights of Pythias. From a judgment for defendant, plaintiff appeals. Transferred from Appellate Court, under § 1337u Burns 1901.

Affirmed.

E. S Griffin, Richard Broadbent, C. K. Bagot, Alfred Ellison and Thomas Bagot, for appellant.

C. M Greenlee and B. R. Call, for appellee.

OPINION

Hadley, C. J.

This action was brought by the appellant, as a trustee in bankruptcy, to recover a sum of money alleged to have been received by appellee as a preferential payment, in violation of § 60, subd. b, of the bankruptcy law of 1898. Verdict and judgment for the defendant. The court overruled appellant's demurrer to the third paragraph of answer which forms the basis of the first assignment of error. It is, in substance, averred in the answer that Headley, the bankrupt, had for more than ten years prior to January 18, 1900, held the office of treasurer of the defendant lodge, and as such officer had received in trust for the lodge $ 1,496.37, $ 1,356.95 of which amount he had at the date aforesaid converted to his own use, and the balance, to wit, $ 139.42, he had, and had had since the day of its receipt, on deposit in the bank to his credit as such treasurer, and had never at any time commingled said $ 139.42 with his own money, and held and claimed it only as the money of said lodge; that the wife of Headley receiving knowledge that her husband had converted said sum of $ 1,356.95 to his own use, and, being anxious to assist him, paid to the defendant lodge said sum of $ 1,356.95 from her own individual estate, in full liquidation and settlement of the sum so converted; that she paid the sum by depositing the amount with the bank and to the credit and in the name of her husband as treasurer of the defendant, and which deposit added to the $ 139.42 already on deposit to the credit of said treasurer, made up the full amount of money which Headley had received as such treasurer, to wit, $ 1,496.37, no part of which amount was ever used, claimed, or owned by Headley, or proceeded or was realized from his property, and was possessed and controlled by him in no other way but as the agent and trustee of said lodge, and which money, upon the request of the lodge, he turned over to it, in discharge of his trust, and not as a payment of a debt.

We see no reason why this is not a good answer. A trustee in bankruptcy will not be permitted, under the guise of an unlawful preference, to bring into the bankrupt's estate, as assets, property that never belonged to it, and to which the bankrupt had no claim. The wife had a legal right to pay her husband's debt, and such payment will not be adjudged fraudulent as against his creditors. Its payment from her separate estate did not diminish the assets of her husband's estate, and it can not be counted as his payment within the meaning of the bankruptcy law referred to.

But whether the answer is good or bad, overruling the demurrer to it did not constitute reversible error, because all the matters pleaded were provable under the general denial, which formed the first paragraph of the answer. A general denial traverses all the material averments of the pleading to which it is addressed. Hence under an answer of general denial the defendant may prove any fact, independent of those alleged in the complaint, which is inconsistent therewith, and tends to overthrow the plaintiff's cause of action. Marshall v. Beever, 53 Ind. 119; Balue v. Sear, 131 Ind. 301, 28 N.E. 707; Johnson v. Schloesser, 146 Ind. 509, 520, 36 L. R. A. 59, 58 Am. St. 367, 45 N.E. 702; Jeffersonville Watter Sup. Co. v. Riter, 146 Ind. 521, 45 N.E. 697.

If appellee lodge never received any preferential payment from Headley, as said by this court in Marshall's case, supra, "we do not see that there can be any better form by which to present the question than by the general denial." So, if the answer sets up facts sufficient to constitute a defense, but amounts to nothing more than an argumentative general denial--as we think it does--it was not prejudicial error to overrule the demurrer to it. Todd v. Badger, 134 Ind. 204, 33 N.E. 963. Likewise, if the facts set up in the answer were insufficient to defeat the plaintiff's cause of action, and all such facts were provable under the general denial, it was not reversible error to overrule the demurrer to it. State, ex rel., v. Osborn, 143 Ind. 671, 680, 42 N.E. 921; Board, etc., v. State, ex rel., 148 Ind. 675, 48 N.E. 226.

2. At the conclusion of the plaintiff's evidence, the court, upon motion, directed the jury to return a verdict for the defendant. This action of the court is called in question. Appellant insists that he did submit proper evidence, which tended to sustain his complaint, and that under many decisions of this court the sufficiency of such evidence should have been left to the jury.

The evidence concerning the payment complained of was wholly given by Francis M. Headley, the bankrupt, and was, in substance, as follows: About the first day of January, 1900 the witness came to realize that he was insolvent. He had been master of the exchequer of appellee lodge for ten years, and as such officer had received of its money $ 1,496.37, $ 1,356.95 of which he had mingled with his individual money, and converted to his own use. January 8, upon his invitation, he met with the trustees of the lodge, and informed them that his affairs were in bad shape, and he might have to make an assignment, or do something like that, and he would like to settle for the money he owed the lodge, and resign. He informed them that he did not have all the money on hands, and requested that the settlement be postponed a few days to enable him to raise the balance of the money. This was agreed to. He also informed the trustees at that meeting that he had conveyed to his son certain real estate, hoping thereby to invest his son with such credit that he might be able to borrow the money with his son as surety, but, having failed in raising the money in that way, he had informed his wife of his having used the lodge's money, and the dilemma he was in, and requested her to raise the money for him on her separate property; that his wife had agreed to help him; that she was raising the money expressly for the lodge, and had already a draft in her possession for $ 900, which she had procured by mortgaging her farm in Tipton county, and was awaiting an abstract of title to the "home place," to enable her to procure the balance from the Anderson Loan Association. On January 12, 1900, his son, upon witness' request, conveyed the real estate to witness' wife, which had theretofore been conveyed by witness to his son, without consideration, and for the purpose of giving the son credit...