Buckman v. Hill Military Academy

• Decision Date: 10 February 1948
• Citation: 182 Or. 621,189 P.2d 575
• Parties: BUCKMAN <I>v.</I> HILL MILITARY ACADEMY
• Court: Oregon Supreme Court

182 Or. 621

189 P.2d 575

BUCKMANv.

HILL MILITARY ACADEMY

Supreme Court of Oregon.

Argued January 8, 1948.

Reversed and remanded February 10, 1948.

Appeal and error — Equity — Law — Assumption — Court's action

1. Where action was brought on note as modified by extension agreement, and trial judge, with mute acquiescence of counsel, treated the cause as if it were in equity rather than at law, and where there was at least one feature of case in respect of which adequate relief could have been granted only by court of equity, Supreme Court on appeal would assume that trial court's action in that respect was proper.

Limitations of actions — Not waived — Answering after demurrer overruled

2. In action on note, defense of limitations was not waived by answering over after demurrer had been overruled. O.C.L.A. § 1-710.

Bills and notes — Extension agreement — Effect

3. The effect of extension agreement entered into subsequent to maturity of note but before limitations had run thereon, and modifying note by changing time and manner of payment, was to create a new contract between the parties. O.C.L.A. § 1-204.

Limitations of actions — Installments

4. Where note is payable in installments, statute of limitations runs against each installment from time when it becomes due. O.C.L.A. § 1-204.

Bills and notes — Acceleration clause — Option of holder

5. Where acceleration clause in note was not self-executing but could be called into play only at option of holder, and option was not exercised, mere nonpayment of installment of principal or interest did not have effect of causing whole obligation to mature.

Bills and notes — Note — Extension agreement — One contract

6. Note and extension agreement which modified note by changing time and manner of payment were, in effect, one contract, and action for unpaid balance was upon that contract.

Bills and notes — Collateral agreement — Not pleaded

7. Ordinarily, collateral agreement varying terms of note need not be pleaded, unless such pleading is essential to plaintiff's cause of action. Limitation of actions — Note — Extension agreement — Pleading

8. In action on note which had been modified by extension agreement which changed time and manner of payment, where statute of limitations could have been pleaded against cause of action based solely upon note, it was necessary to plead extension agreement. O.C.L.A. § 1-204.

Mortgages admissible

9. In action on note as modified by extension agreement, real estate mortgage securing note should have been admitted, and its admission should have been followed by evidence showing extent of acreage which had not been released under provisions of extension agreement, in order that amount of unpaid principal of note, as adjusted, might have been established.

Bills and notes — Allegation — Complaint — Holder — Not necessary

10. In action on note as modified by extension agreement, allegation in complaint that plaintiff was owner and holder of note and agreement was not necessary.

Bills and notes — Holder

11. The "holder" of a note is any one in actual or constructive possession of note and entitled at law to recover or receive its contents from the parties to it. O.C.L.A. § 69-1101.

See Words and Phrases, Permanent Edition, for all other definitions of "Holder".

Bills and notes — Execution — Delivery — Admitted

12. In action on note, where execution and delivery of note was admitted by answer, plaintiff was prima facie entitled to recover from maker whatever balance was due thereon.

Bills and notes — Payee — Assignment — Transferred — Payee

13. Note assigned by payee to another as security for a debt could be transferred back to payee by assignment.

Bills and notes — Prima facie — Holder

14. In action on note, proof that note after being assigned to another as security for debt was reassigned to plaintiff, with evidence excusing nonproduction of note, was sufficient, prima facie, to show that plaintiff was "holder" of the note. O.C.L.A. § 69-1101.

Estoppel — Pledges — Reassignment — Payee — Estoppel

15. Where note and extension agreement had been assigned by payee to mortgage company as security for a debt, reassignment of note and agreement by company to payee extinguished the pledge thereof, and company thereby relinquished whatever interest it had in note and agreement, and, after voluntarily lending its assistance to payee to enable her to recover thereon, company would be estopped afterwards to make a second recovery upon same cause of action.

Pledges — Payee — Pledgee — Action

16. Payee of note which had been assigned to another as security for a debt could, with consent of pledgee, have brought action thereon in her own name, without reassignment of note to her.

Contracts — Proof — Performance — Conditions

17. Generally, plaintiff suing upon contract must prove performance of all conditions thereof on plaintiff's part.

Pleading — Complaint — Defect — Cured — Answer

18. In action on note as modified by extension agreement, any defect in complaint, arising from failure to allege that plaintiff had performed stipulation in extension agreement that for each $300 of principal paid she would release one of lots covered by mortgage, was cured by allegation in answer that defendant had paid a sum of $350, for which it was entitled to release of one lot, and that plaintiff had refused to make such release.

Bills and notes — Condition subsequent — Defense — Burden

19. Proof of the happening of a condition subsequent, defeating cause of action on note, is a defensive matter as to which defendant has burden of proof.

Bills and notes — Initial pleading — Defense

20. In action on note, plaintiff in his initial pleading need not anticipate a defense and negative or avoid it.

Bills and notes — Produce in court

21. Note sued upon must be produced in court, in order to recover thereon, or at least a showing made that there is no possibility of double liability thereon, and generally if there is such possibility defendant is entitled to be indemnified in the premises.

Lost instruments — Does not impair obligation

22. Loss of note does not change or impair obligation of parties thereto, and holder may still enforce it by appropriate action.

Lost instruments — Indemnity to defendant

23. Equity may require, before permitting recovery upon lost note, that plaintiff furnish suitable indemnity to defendant against being subjected to further liability in case the note is subsequently found. Lost instruments — Complaint — Allegations

24. In action on lost note, complaint need not allege loss of note, as such loss is no part of cause of action.

Lost instruments — Prove loss

25. In action on lost note, where execution and delivery were admitted, plaintiff was required to prove fact of loss in order that nonproduction of note might be excused.

Bills and notes — Nonproduction — Excused

26. In action on note, testimony by witness for plaintiff that his best recollection was that he had original note in his possession at time he collaborated with other counsel in preparation of complaint, that since then he had mislaid it or lost it "or something", that he had made a search for it but could not find it, that he did not know what happened to it, but believed that he had lost it, proved loss of note sufficiently to excuse its non-production.

Bills and notes — Secondary evidence — Unnecessary

27. Note having been set out in haec verba in complaint, and its execution and delivery having been admitted by answer, secondary evidence of its contents was unnecessary.

Bills and notes — Extension agreement — Abandoned — Confession and avoidance

28. In action on note, affirmative defense that extension agreement was abandoned and canceled by mutual consent was in the nature of a plea of confession and avoidance.

Bills and notes — Rescission — Extension agreement — Restores parties — Former position

29. Rescission of agreement extending time and mode of paying note would not discharge note but would simply restore parties to their former position, leaving debt unpaid.

Bills and notes — Qualified denial

30. In action on note as modified by extension agreement, where defendant admitted execution and delivery of note and fact that last payment thereon, under terms of extension agreement, was a certain amount paid on a certain date, formal denial that such payment left an unpaid balance of certain amount, in accordance with terms of extension agreement, would be construed as only a qualified denial, modified by defense of mutual rescission of extension agreement.

Bills and notes — Defendant's burden

31. In action on note as modified by extension agreement, defendant had burden, at close of plaintiff's case, of going forward with truth of its affirmative defense of mutual rescission of extension agreement.

                  See note 65 A.L.R. 1321
                  8 Am. Jur. 554
                  129 A.L.R. 977
                  34 Am. Jur. 608
                  31 C.J.S., Estoppel, § 106.
                

Appeal from Circuit Court, Multnomah County.

FRANK J. LONERGAN, Judge.

Robert G. Clostermann, of Portland, argued the cause and filed a brief for appellant.

John C. Veatch, of Portland, argued the cause for respondent. On brief were Veatch & Bradshaw, of Portland.

Before ROSSMAN, Chief Justice, and BELT, KELLY, BAILEY and HAY, Justices.

Action by Elma Buckman, an unmarried woman, against the Hill Military Academy on a promissory note as modified by an extension agreement. Judgment for defendant, and plaintiff appeals.

REVERSED AND REMANDED.

HAY, J.

On October 8, 1929, Hill Military Academy, an Oregon corporation, executed and delivered to Miss Elma Buckman its promissory note in the sum of $14,000, due five years after date and bearing interest at six per cent per annum, payable semi-annually. The note contained an acceleration clause giving the holder the option, upon default in due payment of the interest, to declare the whole indebtedness to be immediately due and collectible.

On or about June...