Carlson v. Ozmun

• Decision Date: 14 July 1927
• Docket Number: 4833
• Citation: 258 P. 1078,44 Idaho 500
• Parties: A. K. CARLSON, Appellant, v. A. D. OZMUN, Respondent
• Court: Idaho Supreme Court

258 P. 1078

44 Idaho 500

A. K. CARLSON, Appellant, v. A. D. OZMUN, Respondent

No. 4833

Supreme Court of Idaho

July 14, 1927

LIMITATION OF ACTIONS - BREACH OF WARRANTY-COUNTERCLAIM FOR DAMAGES-BAR TO RECOVERY-APPEAL AND ERROR-NO REVERSAL REQUIRED IN OVERRULING DEMURRER-LACK OF EVIDENCE IN RECORD-INSTRUCTIONS.

1. Under C. S., sec. 6611, subd. 4, counterclaim in action on note for damages for loss of profits resulting from breach of warranty was barred, where alleged fraud as set out in counterclaim was discovered and known for more than three years before filing counterclaim.

2. Overruling demurrer to counterclaim in action on note, though barred by C. S., sec. 6611, subd. 4, held not to require reversal, where it was apparent from verdict that jury determined that consideration for note was paid, thus reaching the same result and having the same effect as if cause of action set forth in counterclaim had been disposed of on demurrer.

3. Where evidence is not in record, instructions given should be regarded as pertinent to case made, unless clearly erroneous under any supposed state of facts.

APPEAL from the District Court of the Second Judicial District, for Latah County. Hon. Edgar C. Steele, Judge.

Action on promissory note. Judgment for defendant. Affirmed.

Judgment affirmed. Costs to respondent. Petition for rehearing denied.

Guy W Wolfe and James H. Forney, for Appellant.

The demurrer should have been sustained to the cross-complaint and counterclaim demanded by the defendant and respondent in the sum of $ 800. In such an action it must appear that the party demanding such relief is not guilty of laches. In such a case the defendant and respondent must have acted promptly and without delay. Statute of limitations does not apply to defensive matter, but only where affirmative relief is sought. Under C. S., sec. 6611, subd. 4, knowledge of such facts as would put a reasonably prudent person upon inquiry is equivalent to knowledge of fraud and will start commencement of statute. (Williams v. Shrope, 30 Idaho 746, 168 P. 162, and cases cited; Frank v Davis, 34 Idaho 678, 203 P. 287; 29 Cyc. 114; Lady Washington C. Co. v. Wood, 113 Cal. 482, 45 P. 809.)

An action for relief on ground of fraud must be commenced within three years from the discovery of the fraud, or three years after the commission of the fraud. An independent action cannot be maintained on account of the statute unless commenced within three years from the discovery of the fraud. (C. S., secs. 6611-6644.)

A. H. Oversmith, for Respondent.

A counterclaim is defined as follows: "A cause of action arising out of the transaction set forth in the complaint as the foundation of the plaintiff's claim, or connected with the subject of action." (Sec. 438, Kerr's Cal. Code; Hunter v. Porter, 10 Idaho 72, 77 P. 434; Stevens v. Home Savings & Loan Assn., 5 Idaho 741, 51 P. 779, 986.)

The matter set forth in respondent's separate answer and cross-complaint, having arisen out of the transaction set forth in the complaint, constituted a proper counterclaim and is not barred by the statute of limitations. (McDougald v. Hulet, 132 Cal. 154, 64 P. 278; Perkins v. West Coast Lumber Co., 120 Cal. 27, 52 P. 118; Stauffer v. Campbell, 30 Okla. 76, 118 P. 391.)

When an action is instituted to enforce a contract, the statute of limitations does not bar the defense that the contract was obtained by fraud until the cause of action on the contract itself is barred by the statute. This is true where the defense is pleaded as a recoupment of damages and where fraud is pleaded as a defense to recovery on a fraudulent contract. (24 R. C. L. 837; Caples v. Morgan, 81 Ore. 692, 160 P. 1154, L. R. A. 1917B, 760; Williams v. Neely, 134 F. 1, 67 C. C. A. 171, 69 L. R. A. 232.)

The burden is upon appellant to show error affecting the judgment of the trial court (Boise Valley Traction Co. v. Ada County, 38 Idaho 350, 222 P. 1035.)

BUDGE, J. Givens, T. Bailey Lee, JJ., concur. Wm. E. Lee, C. J., did not sit at the hearing of this case and took no part in the decision.

OPINION

BUDGE, J.

Appellant brought this action to recover upon a promissory note, executed and delivered by respondent to appellant's assignor, representing the purchase price of certain machinery. Respondent answered the complaint, admitting the execution of the note but denying that there was anything due thereon or that anything had been paid thereon; and as a further and separate answer, setting forth, among other things, that the consideration for the note was a Case tractor and baler; that appellant's assignor warranted the tractor to be as good as new, but that it was worthless for any purpose except junk, all of which was known to appellant's assignor; and that there was an entire failure of consideration for the note. In a second further and separate answer to the complaint, respondent referred to all of the allegations contained in his first separate answer, making the same a part of his second separate answer, and alleged therein that he had been damaged in the sum of $ 800 on account of loss of profits by reason of the fact that the machinery did not come up to the warranties made by appellant's assignor; and prayed for judgment against appellant in the sum of $ 800.

Appellant demurred to the further and separate answers, raising the bar of the statute of limitations thereto. The demurrer being overruled, the cause was thereafter tried to the court and a jury, and verdict was rendered for respondent. This appeal is from the judgment.

It is first contended...