Brickley v. Edwards

• Decision Date: 17 March 1892
• Citation: 131 Ind. 3,30 N.E. 708
• Parties: BRICKLEY et al. v. EDWARDS et al.
• Court: Indiana Supreme Court

131 Ind. 3

30 N.E. 708

BRICKLEY et al.

v.EDWARDS et al.

Supreme Court of Indiana.

March 17, 1892.

Appeal from circuit court, Huntington county; H. B. Sayler, Judge.

Action by Richard A. Edwards and others against Andrew J. Brickley and others for a mortgage foreclosure. Plaintiffs had judgment, and defendants appeal. Reversed.

L. P. Milligan and Orlando W. Whitelock, for appellants. H. J. Shirk, John Mitchell, Lyman Walker, and Wm. B. McClintic, for appellees.

McBRIDE, J.

The appellee was plaintiff below. His complaint charged the execution of a note by the appellant Andrew J. Brickley, on January 25, 1882, payable January 25, 1887, to the Ft. Wayne, Warren & Brasil Railroad Company or order, at the First National Bank of Ft. Wayne, Ind., and also the execution by both appellants of a mortgage on certain land in Huntington county to secure the note. It also alleges the assignment of the note and mortgage before maturity to the appellee. Prayer for judgment for the amount due on the note and for foreclosure of the mortgage. The appellants filed an answer in eight paragraphs: (1) A joint answer of general denial; (2) a separate answer by Andrew J. Brickley of non est factum, verified; (3) that the note and mortgage were procured by fraud, of which the appellee had full knowledge; (4) that the note and mortgage were procured by fraud, and were without consideration, and, after they were signed, they were taken and carried away without his authority or consent, and that there was in fact no such corporation as that named as the payee; (5) that the note and mortgage were obtained by fraud, and were without consideration, of which facts the assignee had full knowledge when he took the assignment; (6) that the note and mortgage were without any consideration whatever, of which fact the appellee had full knowledge, etc.; (7) that the note was procured by fraud; that when it was given a suit was pending challenging the existence of the payee as a corporation, which suit was afterwards prosecuted to effect, and a judgment rendered adjudging it no corporation, which judgment was, on appeal, affirmed by the supreme court, and that the appellee had knowledge of all of said facts when he took the assignment, (this answer was verified;) (8) a verified denial of the assignment. The appellee replied in six paragraphs. The first is addressed to the second paragraph of answer, that of non est factum. It alleges that, on the day the note was assigned to him, one William J. Holman, claiming to be the president of the Ft. Wayne, Warren & Brazil Railroad Company, presented to him a memorandum in writing, directed to the appellant A. J. Brickley, making inquiry as to the validity of the note and mortgage, said inquiry being signed by E. H. Shirk; that on the opposite page thereof was a memorandum signed by said Brickley, stating that the note and mortgage referred to were “all right,” and would be paid at maturity. The latter memorandum was adressed to “Hon. E. H. Shirk,” writer of the letter of inquiry. It was further alleged that said writing had been intrusted to said Holman by said Brickley to enable Holman to negotiate the note; that the appellee relied on the representations in said writing without other knowledge of the facts, and purchased the note for a valuable consideration and before maturity, whereby he claimed the appellant was estopped to deny the execution of the note. The second paragraph of reply was addressed to the third and fourth paragraphs of answer, and alleged that the appellee purchased the note before maturity, in good faith, for a valuable consideration, and without knowledge of any fraud in its procurement. The third paragraph was addressed to the fifth and sixth paragraphs of answer, and denies knowledge of any want of consideration, and alleges that he purchased the note before maturity, in good faith and for a valuable consideration. The fourth paragraph is addressed to the seventh paragraph of answer, and also alleges that the note was assigned to him before maturity, for value, etc., and that he had no knowledge of the action to annul the corporation, or of the fraud, or that the payee was not legally incorporated. The fifth paragraph was addressed to all of the answers except the first and second. The facts pleaded were substantially the same as in the first paragraph, setting out the letter to Shirk and the reply by Brickley. The sixth was a general denial addressed to all except the first, second, and eighth paragraphs of answer.

The errors assigned, so far as they relate to the pleadings, are that the court erred in overruling appellants' motion to strike out the first and fourth paragraphs of the reply, and in overruling appellants' demurrer to the second and fifth paragraphs of reply. The ground upon which the appellants insist that the court erred in refusing to strike out the two paragraphs of reply is that they were both addressed to pleas of non est factum, and that a plea of non est factum closes the issues, and does not admit of a reply. It is true that a plea of non est factum closes the issues, and does not require a reply. It does not follow, however, that a reply may not be proper. A reply of estoppel may be pleaded to an answer of non est factum. Pattison v. Norris, 29 Ind. 166;Rudd v. Matthews, 79 Ky. 479.Webb v. Corbin, 78 Ind. 407, is not in conflict with this. The court did not err in refusing to strike out the replies. But if it had, the cause could not be reversed upon that ground. A cause will not be reversed because of the refusal of the court to strike out a pleading. Crawfordsville v. Boots, 76 Ind. 32;Smith v. Martin, 80 Ind. 260;Railway Co. v. Kinsey, 87 Ind. 514;Hoke v. Applegate, 92 Ind. 570.

It is unnecessary for us to consider, in this connection, the sufficiency of the seventh paragraph of answer as a plea of non est factum, nor did the motion to strike out raise any question as to the sufficiency of the reply of estoppel. A motion to strike out does not perform the office of a demurrer.

The court did nor err in overruling the demurrer to the second paragraph of reply to the third and fourth paragraphs of answer. The averments of the fraud, by which it is alleged the execution of the note and mortgage were procured, are not sufficient to bring either of the paragraphs of answer within the rule of Cline v. Guthrie, 42 Ind. 227, upon which the appellant relies. It is not alleged that the appellant was deceived as to the character of the papers he executed. He knew he was making a note and mortgage. Nor are the averments that they were taken a way without his authority or consent sufficient to bring the facts pleaded within the rule of that case. Neither of the answers is verified. They do not call in question the execution of the note and mortgage, but seek to avoid them because of the alleged fraud of the parties who procured their execution, and the alleged knowledge of the appellee of the fraud. As against the payee, or one chargeable with notice, they plead a good defense. The note being payable at a bank in this state, none of the facts thus pleaded can avail against a bona fide indorsee for value who acquired it before due. So also of the averments of the non-existence of the corporation. Having contracted with it as a corporation, he is, as against an innocent indorsee of the note, estopped to deny its existence or its capacity to contract. Smelser v. Turnpike Co., 82 Ind. 417;Jones v. Association, 77 Ind. 340;Beatty v. Society, 76 Ind. 91;Baker v. Neff, 73 Ind. 68;Snyder v. Studebaker, 19 Ind. 462;Meikel v. Society, 16 Ind. 181;Heaston v. Railroad Co., 16 Ind. 275.

The fifth paragraph of the reply was, as we have heretofore said, a reply of estoppel, and was pleaded to all of the several paragraphs of answer except the first and second. It was based upon the following writings: “Peru, Ind , April 1st, 1882. Mr. Andrew J. Brickley, Markle, Ind.-Dear Sir: William J. Holman, of Fort Wayne, wishes to negotiate with us for a loan, or rather the sale of a note of yours for ($2,000) two thousand dollars, dated June 25th, 1882, payable to the Fort Wayne, Warren and Brazil Railroad Company, maturing January 25th, 1887, and secured by mortgage of the same date of note on one hundred acres of land, being a part of your home farm opposite the town of Markle, in Huntington county, Indiana, and recorded February 4th, 1882, in Book S, on page 297 of Mortgage Records of Huntington county. We wish to know if the note is all right, and will be paid at maturity, and interest as it becomes due. Please answer on opposite page, and oblige. E. H. SHIRK.”...