Beachy v. Jones

• Decision Date: 08 January 1921
• Docket Number: 22,908 and 22,935
• Citation: 108 Kan. 236,195 P. 184
• Parties: RICHARD BEACHY, Appellee, v. HENRY D. JONES, Appellee and Appellant, and WILLIAM CAMPBELL, Appellant and Appellee
• Court: Kansas Supreme Court

195 P. 184

108 Kan. 236

RICHARD BEACHY, Appellee, v. HENRY D. JONES, Appellee and Appellant, and WILLIAM CAMPBELL, Appellant and Appellee

Nos. 22,908 and 22,935

Supreme Court of Kansas

January 8, 1921

Decided January, 1921.

Appeals from Jewell district court; CHARLES L. KAGEY, judge pro tem.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

1. PROMISSORY NOTE--Holder in Due Course--Defense of Fraud in Its Procurement--Burden of Proof. Where a plaintiff transferee of a negotiable promissory note sues the maker and payee as codefendants thereon, claiming to be a holder in due course, and the defendant maker pleads and his evidence tends to prove that he was induced by the fraud of the payee to execute and deliver the note, the plaintiff has the burden of showing by evidence that he acquired the note in the usual course of business, before maturity, and without notice of any vice in it; and unless that evidence is so clear and unequivocal as to leave no room for difference of opinion concerning it among fair-minded men, the question as to the issue and the credibility of the evidence is for the jury and it is error to instruct the jury to render a verdict for plaintiff.

2. SAME--Pleading--Prayer for Relief Not Important When a pleading states all the necessary facts to maintain a defense to an action on a promissory note, and the evidence is sufficient to support its allegations, and the parties concerned are in court, the pleader's prayer is not important; and it is the court's duty to render the proper judgment therein; and such judgment may or may not conform in whole or in part to the relief prayed for by the pleader--following Eagan v. Murray, 102 Kan. 193, 170 P. 389, and citations, 170 P. 389.

3. SAME--Evidence for Defense--When Pleading Should Be Construed to Conform to Facts Shown. When the trial court permits evidence to be introduced in extenso to support a defense to a promissory note, the pleading upon which such defense was intended to be based should be construed as if it sufficiently set out the facts or as if the issues had been enlarged by consent of parties.

4. SAME--Judgment--Control of, During Term at Which it Was Rendered. During the term at which a judgment is entered the trial court has complete control of that judgment, and may permit amendments to pleadings in furtherance of justice even after judgment, and may grant a new trial thereon; and if the trial court is not satisfied that the litigants have received substantial justice, it may and should grant a new trial.

5. SAME--Statute of Limitations--Can Only Be Raised by Special Plea. Where an action is brought on a promissory note against the maker and payee as codefendants, and the maker files an answer and cross petition against his codefendant alleging the fraud of the latter in procuring the note, and the payee's answer to such cross petition is merely a general denial, such answer is insufficient to raise a question of the statute of limitations, as such a defense can only be raised by a specific plea--following Parker v. Berry, 12 Kan. 351; Croan v. Baden, 73 Kan. 364, 85 P. 532.

6. CHANGE OF VENUE--Judge Interested in Suit--Change Properly Granted. When an attorney who had been of counsel in a lawsuit becomes the district judge of the forum, a change of venue is proper in such case, but such judge may with entire propriety consider the motion for a change of venue and he has jurisdiction to grant it.

7. PROMISSORY NOTE--Two Appeals--Reversed in Toto--New Trial Ordered De Novo Between all Parties. Where a judgment has been rendered against two codefendants on a promissory note, and the question of primary and secondary liability is determined therein, and the defendant who is held primarily liable appeals from the judgment, and the defendant who is held secondarily liable does not appeal therefrom but does appeal from an order granting a new trial of cross issues joined between the two codefendants, this court may, when it is proper that the judgment should be reversed at the instance of the defendant who did appeal, order the judgment reversed in toto and order a trial de novo between all the parties when such order is necessary to prevent a possible miscarriage of justice.

A. M. Harvey, of Topeka, R. C. Postlethwaite, of Mankato, L. C. Uhl, L. C. Uhl, jr., both of Smith Center, for appellant Henry D. Jones; R. W. Turner, and Donald F. Stanley, both of Mankato, for appellant William Campbell.

F. W. Mahin, of Smith Center, and J. R. White, of Mankato, for appellee Richard Beachy.

OPINION

DAWSON, J.:

These appeals pertain to distinct but related phases of an action to recover on a promissory note for $ 4,500 given by Henry D. Jones to William Campbell, who sold and guaranteed the note to Richard Beachy.

Campbell and Beachey are competing bankers in the little town of Esbon in Jewell county. Jones is a farmer residing in Smith county, 18 miles southwest of Esbon.

During the year 1916, one H. J. Egan, a comparative stranger who had been in that locality for a short time, together with Charles Campbell, a son of William Campbell, called on Jones and offered to sell him some stock in the Midwest Asbestos Company, an Arizona corporation having offices in Denver and some mining property in Wyoming. Egan and young Campbell told Jones that a railway was about to be built to the company's mines and that asbestos was being shipped therefrom at the rate of two or three carloads per day. They also assured Jones that the stock was regularly paying dividends of 8 per cent. Jones did not buy when first approached; he said he wanted to investigate. Egan and Campbell called at other times and exhibited letters and telegrams pretending to show that the situation of the mining company was prosperous and auspicious. On one occasion the defendant William Campbell called at the Jones farm, accompanied by Egan and the younger Campbell, and the subject of the asbestos mining stock was discussed. Jones testified:

"I says to Mr. William Campbell, says I, 'Mr. Egan and Mr. Charlie Campbell have been trying to sell me some asbestos stock,' and I asked him what he thought about it, he said he thought it would be an awful good deal, he thought it was very valuable stuff and he thought it was going to get more valuable, he said he thought it would be a good buy, was a good investment, I said, 'the boys here say, Egan and Charlie, that you own twenty-seven thousand shares of asbestos stock yourself,' and he says, 'Yes, that is about right, I guess about that many,' and I asked him how long he had owned it, and he said, well, he had bought it at different times, but he had owned it about three years and I asked him if he always got his eight per cent dividends on his preferred stock, and he told me he had and then we talked a little about one thing and another, not much in particular, and Mr. Egan says to me, 'Well,' they had been trying to sell the stuff before, this stock, and he said, 'Well, Henry, are you going to buy this stock this evening?' He wanted the cash for this and I told him I didn't have the money just then. I didn't have any doubt but what it was good stock from what they told me, and Mr. William Campbell had recommended it, and I said I didn't believe I would buy any just at present, but I said I would study the matter over and 'let you know in a day or two,' and so they drove off and that is as near as I can tell you what they said about it."

Shortly thereafter, the younger Campbell brought to Jones a certificate for 10,000 shares of common stock and 10,000 shares of preferred stock in the asbestos company, for which Jones gave this note in dispute for $ 4,500, payable to William Campbell in two years at Campbell's bank in Esbon. Before signing the note, and above his signature, Jones wrote--"For $ 10,000 shares of Midwest Asbestos Stock." William Campbell promptly sold the note to the plaintiff, Richard Beachy, cashier of the other local bank in Esbon, and Campbell opened an account in Beachy's bank with the proceeds. In time this account was closed. At the time Beachy purchased the note he exacted a written obligation from William Campbell guaranteeing its payment.

A few weeks later, Jones was called on to pay a small assessment on his stock, and he went to William Campbell to inquire about it. Campbell said he intended to pay his own assessment, and that he still thought the stock would prove valuable. In August, 1917, when it transpired that he received no dividends, Jones made a journey to the asbestos company's headquarters at Denver, and also to the company's mines in Wyoming. There he learned that the property was not being worked and that the company had never paid a dividend, and upon his return to Kansas in September, 1917, he called upon William Campbell and Beachy, tendered them the certificates of stock and demanded the surrender of the note. This was refused. The day after this transpired, Beachy sold the note to his own bank, and later he reacquired it, and in July, 1919, this action by Beachy was begun against William Campbell and Jones.

Jones filed an answer and cross petition, alleging at length the misrepresentations of Egan and the two Campbells whereby he was defrauded into giving them the note. His prayer, as originally drawn, did not ask for a judgment against Campbell if he failed in his defense against Beachy. He merely prayed that the plaintiff take nothing as against him and that the note be held for naught as far as he was concerned.

Campbell's amended answer admitted the matters alleged in plaintiff's petition, but with this addition:

"But this defendant further avers that his liability on said note is that of a surety or endorser, is not primary but is secondary to that of the principal...