Cooper v. Merchants' & Manufacturers' Nat. Bank of Columbus

• Decision Date: 07 June 1900
• Citation: 25 Ind.App. 341,57 N.E. 569
• Court: Indiana Appellate Court
• Parties: COOPER et al. v. MERCHANTS' & MANUFACTURERS' NAT. BANK OF COLUMBUS, OHIO.

25 Ind.App. 341

57 N.E. 569

COOPER et al.

v.MERCHANTS' & MANUFACTURERS' NAT. BANK OF COLUMBUS, OHIO.¹

Appellate Court of Indiana.

June 7, 1900.

Appeal from circuit court, Clay county; S. M. McGregor, Judge.

Action by the Merchants' & Manufacturers' National Bank of Columbus, Ohio, against George B. Cooper and others on a promissory note. Judgment in favor of plaintiff, and defendants appeal. Reversed.

Henley, J., dissenting.

Henry H. Mathias and Silas A. Hays, for appellants. Lewis & Corwin, for appellee.

COMSTOCK, J.

This suit was founded on a promissory note payable at a bank in this state, alleged to have been executed by one Neil to McLaughlin Bros., and by the latter indorsed to the appellee. The complaint, consisting of one paragraph, was originally filed in the Putnam circuit court. Upon change of venue the cause was put at issue and tried in the Clay circuit court. A trial by jury resulted in a verdict and judgment in favor of appellee for $1,275.83.

The first and second specifications of error question the sufficiency of the complaint. The third and fourth, the action of the court in sustaining the demurrers of appellee to the third and sixth paragraphs, respectively, of appellants' answer. The fifth, the action of the court in sustaining the motion of appellee requesting the court to direct the jury to return a verdict in its favor, and in instructing the jury to return a verdict for the appellee against appellants for the full amount of the note in suit, with interest thereon at the rate of 6 per centum per annum from the date of said note. This is also made a reason for a new trial. The sixth, the action of the court in overruling appellants' motion for a new trial.

In support of the first and second specifications of error (the insufficiency of the complaint) it is urged: (1) That the complaint anticipates the defenses, but does not aver sufficient facts to avoid them. (2) That “it does not sufficiently refer to and identify the note in suit, and neither the original nor a copy thereof is filed with the pleading. It does not contain any averment of a promise to pay, or when the note matured, or where it was payable, or whether it bore interest, and at what rate, and when payable, and no direct or equivalent averment that the note remained unpaid.” A reading of the complaint shows that these objections are not well taken. The complaint avers that: “The plaintiff is now the owner and holder of said note, which note and the indorsement thereon is in the words and figures following, to wit: ‘$1,000.00. Greencastle, Ind., Mch. 15, '94. On July 1st, 1897, after date, for value received, we jointly and severally promise to pay McLaughlin Bros., or order, one thousand dollars, at the First National Bank of Greencastle, Ind., with interest at six per cent. per annum, interest payable annually.”’ The names of appellants are set out, indorsed “McLaughlin Bros.” It appears that the note with the indorsement is contained in the body of the pleading. This is sufficient. Adams v. Dale, 29 Ind. 273;Jones v. Parks, 78 Ind. 539. The note thus made a part of the complaint contains the promise to pay; the date of maturity; where payable; the rate of interest, and where payable. Nor can we agree with counsel in the view that the complaint anticipates the defense. It avers the execution of the note, its purchase, before maturity, for a valuable consideration, by appellees,without notice of any defense. The averments which counsel for appellants claim are designed to supply the place of a reply, and to protect the holder against any defense which the makers might have against the payees, are the following: “Which note was afterwards, for a valuable consideration, indorsed by said McLaughlin Bros., and for a valuable consideration sold, delivered, and transferred, in the usual course of business, to the plaintiff, before the same became due; that plaintiff purchased said note in good faith from the said McLaughlin Bros. before the same became due, and for a valuable consideration, to wit, $1,100, which it then and there paid in cash, without any notice whatever of any defense of the same at law or in equity; that said First National Bank of Greencastle, Indiana, is, and was at the date of said note, a bank in the state of Indiana, and that the plaintiff is now the owner and holder of said note.” In these averments no attempt is made to set up a defense to the note. Latta v. Miller, 109 Ind. 302, 10 N. E. 100, is cited. We are unable to see that it sustains appellants' claim. The complaint is upon a promissory note. It attempted to anticipate the defense, which was a written release of the maker, and then attempted to plead facts to avoid the release. In the course of the opinion the court, at page 307, 109 Ind., and page 102, 10 N. E., say: “It is true, no doubt, as appellant's counsel insist, that where the complaint, or paragraph thereof, after stating the plaintiff's cause of action, sets up an anticipated defense thereto, and then attempts to avoid or defeat such defense by the statement of alleged facts in relation thereto, if the facts thus stated are not sufficient to avoid or defeat such anticipated defense the complaint or paragraph thereof would be held bad on demurrer thereto for want of facts. This must be so in the nature of things, because the anticipated defense, if not avoided, constitutes a complete bar to the cause of action stated in the complaint or paragraph thereof.” The complaint before us contains no averment of any defense, nor that the makers claimed to have any defense.

The action of the trial court in sustaining appellee's demurrers to the third and sixth paragraphs of answer are not discussed. The third paragraph avers that the note in suit was signed by appellants under an agreement with the payee that it was to be signed by certain other persons named, and that those persons failed to sign it. The sixth paragraph alleges that appellants were induced to sign the note by certain false and fraudulent representations made to them by the agent of the payees. In each it is alleged that three annual installments of interest on the note were due and unpaid at the time of the indorsement of the note to appellee. Counsel for appellants, admitting that the note in suit was originally negotiable under the law merchant, yet claim that it was dishonored at the time of its purchase by appellee, because annual installments of interest were then due and unpaid. The argument in support of the third and fourth specifications of error is based upon this proposition. In the recent case of Cooper v. Bank, 21 Ind. App. 358, 50 N. E. 775, this court held adversely to the claim of appellants, giving the following citations: 1 Daniel, Neg. Inst. § 787; Bank v. Kirby, 108 Mass. 497;Patterson v. Wright, 64 Wis. 289, 25 N. W. 10; and in addition we cite Railway Co. v. Sprague, 103 U. S. 756, 26 L. Ed. 554;Boss v. Hewitt, 15 Wis. 287;Cromwell v. Sac Co., 96 U. S. 51, 24 L. Ed. 681. To the opinion expressed in Cooper v. Bank, supra, we still adhere as supported by the weight of authorities. In discussing the action of the court in overruling appellants' motion for a new trial, counsel for appellants claim that the court erred in striking out of the deposition of Robert McLaughlin questions numbered 49, 50, 52, 54, 66, 67, 68, 69, and 70 of his cross-examination. This witness had testified in his examination in chief that, as agent of his sons, McLaughlin Bros., payees of the note in suit, he assisted in negotiating the sale of the horse for which the note was given, and took the notes which appellants gave in settlement for the horse. The questions which were stricken out relate to an agreement claimed by appellants and the agent of the payees that the notes were to be signed by some other person, and were placed in the hands of such agent to be delivered to the payee upon the happening of certain conditions. In this action of the court there was no error. Clanin v. Machine Co., 118 Ind. 372, 21 N. E. 35, 3 L. R. A. 863. The delivery to the agent of the paper passed title to the payees. Murray v. W. W. Kimball Co., 10 Ind. App. 142, 37 N. E. 736.

The second reason assigned for a new trial is that the court erred in sustaining appellee's motion to strike out of the deposition of Howard C. Park questions numbered 4, 5, and 6, and the answers thereto, of his cross-examination. These questions are as follows: “Q. 4. How many annual installments of interest were due on the note at the time of this transfer to the plaintiff? A. There were two installments. Q. 5. Did you understand, at the time that the note was transferred to the bank, that two annual installments of interest were overdue and unpaid on the note? A. I must have noticed it, since there was no indorsement of interest on the note. Q. 6. You bought the note, then, with the understanding that two annual installments of interest were due thereon? A. I bought it with the knowledge that two annual installments were due.” It appears from the examination in chief of this witness that he was cashier of the appellee; that, as such cashier, he purchased the note for appellee; that no other officer of the bank had anything to do with the purchase. In Bank v. Kirby, supra, the court said: “The fact that a promissory note, the principal of which is payable in four years, with interest annually, bears no indorsement of the receipt of either of three installments of interest which have fallen due, does not of itself render the note subject, in the hands of a third person, who then took it as collateral security, to equities existing between the original parties to it, but is a circumstance for the consideration of the jury on the issue whether he took it in good faith and without notice of such defense.” See, also, Parsons v. Jackson, 99 U. S. 434, 25 L. Ed. 457; 2 Daniel, Neg. Inst. 1506a. This was proper evidence to go to the jury upon the question of...