Conklin v. Towne

• Decision Date: 22 November 1927
• Docket Number: No. 38405.,38405.
• Citation: 216 N.W. 264,204 Iowa 916
• Parties: CONKLIN v. TOWNE ET AL.
• Court: Iowa Supreme Court

204 Iowa 916

216 N.W. 264

CONKLIN

v.TOWNE ET AL.

No. 38405.

Supreme Court of Iowa.

Nov. 22, 1927.

Appeal from District Court, Polk County; Hubert Utterback, Judge.

Action at law to recover damages resulting from the sale of stock. The material facts are recited in the opinion. Directed verdict for the defendants, and plaintiff appeals. Affirmed.Leland S. Forrest and Edwin B. Carpenter, both of Des Moines, for appellant.

Bradshaw, Schenk & Fowler, of Des Moines, for appellee C. N. Kinney.

Stewart & Malcolm, of Des Moines, for appellee N. C. Towne.

M. E. Van Laningham, of Des Moines, for appellees Daniel O'Donnell and A. C. Bailey.

STEVENS, J.

Articles of incorporation of the Lead & Zinc Storage Company, which was organized under the laws of South Dakota, were duly filed in the office of the secretary of state of that state on August 11, 1919. The purpose of the organization, as stated in the articles, was to erect warehouses for the storage of ores, minerals, and metals, to do a general warehouse and storage business, to buy and sell ore, minerals, and metals of all description, to erect smelters and engage in the smelting of ores of all descriptions, to build and operate railway lines for the purpose of the organization and for various other purposes therein detailed. The incorporators were the defendants James McNicholas, of Picher, Okl., Daniel O'Donnell, of Des Moines, and one L. E. Gaffy, of Pierre, S. D. The articles provided for a business office in the city of Des Moines.

The board of directors, in addition to the promoters named, were R. T. McNicholas, of Picher, Okl., and Nathan C. Towne, of Des Moines. O'Donnell ceased to be a director in 1920 and Towne became vice president. The president and manager of the corporation was James McNicholas.

The defendants C. N. Kinney and A. C. Bailey were sales agents of the corporation in the city of Des Moines, and, as we understand the record, stockholders. A business office was opened in Des Moines in 1919 or 1920 and maintained until the late summer of 1921. On September 13, 1920, appellant entered into a contract in writing for the purchase of stock at its par value, for which he paid $10,000. The petition alleged that all of the defendants conspired and confederated together for the purpose of cheating and defrauding appellant, and that he was induced by the false and fraudulent statements and representations of the stock salesmen and the officers of the company to purchase the stock, and asked judgment for damage. The testimony of appellant is somewhat voluminous, and, as we deem it unnecessary to consider the case on its merits, we refrain from an extended recital of the facts. Suffice it to say that the evidence shows that the stock was practically, if not wholly, worthless. At the close of plaintiff's testimony, the court sustained the motion of the defendants for a directed verdict. One of the grounds of the motion was that the cause of action was barred by the statute of limitations. This ground of the motion presents the decisive question in the case. The contract for the purchase of the stock, as stated, bears date September 13, 1920. The original notice of the commencement of this action was served October 21, 1925, more than five years after the contract was executed.

Three propositions are urged by appellant: (a) That the plea of the statute of limitations was not timely; (b) that it was insufficient in form to meet the requirements of the statute; and (c) that appellant was unable to earlier commence this action because of the fraudulent concealment thereof by the defendants.

[1][2][3][4] I. The statute of limitations was not set up as a defense until appellant had rested his case. If not taken advantage of by demurrer or answer, it will be deemed waived. Lawrence v. Melvin, 202 Iowa, 866, 211 N. W. 410;Sloanaker v. Howerton, 182 Iowa, 487, 166 N. W. 78, and cases cited therein. Being an affirmative defense, the burden is upon the one pleading it to establish the same by proof. Whether the petition in this instance was vulnerable to a demurrer upon the ground that it showed upon its face that it was barred by the statute of limitations is not material, as it may, even in such case, be raised by answer. Central Trust Co. v. Railway Co., 156 Iowa, 104, 135 N. W. 721;Goring v. Fitzgerald, 105 Iowa, 507, 75 N. W. 358. The waiver, therefore, if any, resulted from the failure of appellees to earlier plead the statute. The appellees offered no evidence, but relied upon the evidence of appellant to sustain their plea of the statute. At least one of the defendants specifically alleged that the plea was interposed to conform to the proof. A large discretion in the matter of permitting amendments to pleadings is vested in the trial court. Section 11182, Code 1924; Knight v. Railway Co., 160 Iowa, 160, 140 N. W. 839;Bruhn v. Ft. Dodge Street Ry. Co., 195 Iowa, 454, 192 N. W. 296;Matheson v. I. S. T. M. A., 180 Iowa, 1019, 164 N. W. 194.

[5][6][7] This court is reluctant to reverse on the ground of an abuse of discretion in permitting a pleading to be amended. The plea of the statute of limitations, if properly interposed and established by the evidence, necessarily terminated the litigation. In such circumstances, great liberality in permitting an amendment should be indulged by the trial court. Appellant was in no wise prejudiced or inconvenienced by the delay of appellees in setting up the statute as a defense in this case. He did not ask for a continuance nor for permission to introduce further proof. The motion to strike the amendment was, we think, properly overruled.

[8] II. It is an elementary rule of pleading that the facts constituting the bar of the statute must be pleaded. Lawrence v. Melvin, supra; Borghart v. City of Cedar Rapids, 126 Iowa, 313, 101 N. W. 1120, 68 L. R. A. 306;Tredway v. McDonald, 51 Iowa, 663, 2 N. W. 567;Jenks v. Lansing Lumber Co., 97 Iowa, 342, 66 N. W. 231.

[9] The appellee filed separate answers and amendments thereto, setting up the statute, all of which were informal and defective. They do not allege fully the facts constituting the bar. They do, however, raise the question. They were attacked by a motion to strike. After the motion was overruled, appellant filed a reply setting up facts in avoidance of the statute. Considering the record made by appellant in the case and the occasion of the filing of the amendments, together with separate motion for a directed verdict upon that ground, we are disposed to give a liberal construction to the pleadings. Taken together, the three amendments constituted a sufficient plea of the statute. A reversal upon the ground that the amendments were insufficient in form and substance to strictly conform to a rule of pleading could not be justified.

[10][11] III. Counsel for appellant, of course, concedes that the action was not commenced within five years after the contract for the purchase of stock was entered into. To avoid the plea of the statute of limitations, it was incumbent upon him to allege and prove that he was prevented by the fraudulent conduct or concealment of the cause of action from sooner...