Farmers and Mechanics' Bank v. Gallaher Investment Co.

• Citation: 43 Idaho 496,253 P. 383
• Court: Idaho Supreme Court
• Decision Date: 31 January 1927
• Parties: FARMERS AND MECHANICS' BANK, a Corporation, Respondent, v. GALLAHER INVESTMENT COMPANY, a Corporation, and BURRELL L. GALLAHER and HYACINTH E. GALLAHER, Appellants

253 P. 383

43 Idaho 496

FARMERS AND MECHANICS' BANK, a Corporation, Respondent, v. GALLAHER INVESTMENT COMPANY, a Corporation, and BURRELL L. GALLAHER and HYACINTH E. GALLAHER, Appellants

Supreme Court of Idaho

January 31, 1927

PLEADING-AMENDMENT OF ANSWER - COURT'S DISCRETION - FAILURE TO PLEAD WAIVES OBJECTION TO CAPACITY TO SUE.

1. Under C. S., sec. 6725, defendants are not entitled to amend answer as of course.

2. Any power to permit amendment of answer must rest on a sufficient showing, in furtherance of justice, under C. S., sec. 6726.

3. In refusing to allow amendment of answer to set up for first time defense that plaintiff was a foreign corporation doing business in the state without having complied with its laws in respect to such corporations, held court acted within its sound discretion, it appearing defendants or their counsel at time of demurrer to complaint, knew plaintiff was a foreign corporation doing business within the state, and no valid reason for delay in pleading the defense being suggested.

4. Defendants, by not raising by special demurrer or answer objection to capacity of plaintiff, foreign corporation, to sue, waived such objection.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Dana E. Brinck, Judge.

Action to foreclose mortgage on real estate. Judgment for plaintiff. Motion to dismiss appeal denied. Judgment affirmed.

Judgment affirmed. Costs to respondent.

J. B Eldridge and J. A. Gallaher, for Appellants.

The court erred in refusing to permit the defendant to file an amended answer. (Katz v. Herrick, 12 Idaho 1, 24, 86 P. 873; Marshall-Field & Co. v. Houghton, 35 Idaho 653, 208 P. 851; Tarr v. Western Loan & Sav. Co., 15 Idaho 751, 99 P. 1049, 21 L. R. A., N. S., 707; Bonham Nat. Bank of Fairberry v. Grimes Pass Placer Min. Co Ltd., 18 Idaho 629, 111 P. 1078; Weber v. Pend d'Oreille M. & Red. Co., 35 Idaho 1, 203 P. 891; Moody v. Morris-Roberts Co., 38 Idaho 414, 226 P. 278; Junction Placer Min. Co. v. Reed, 28 Idaho 219, 153 P. 564; Green v. Smith, 37 Idaho 502, 217 P. 604; Kroetch v. Empire Mill Co., 9 Idaho 277, 74 P. 868; Havlick v. Davidson, 15 Idaho 78, 100 P. 91; Rankin v. Caldwell, 15 Idaho 625, 99 P. 108.)

The court erred in overruling defendant's motion for new trial. (Hoy v. Anderson, 39 Idaho 430, 227 P. 1058; Dunbar v. Griffiths, 14 Idaho 120, 93 P. 654; Phy v. Edgerton, 40 Idaho 67, 231 P. 426; Ross v. Swearingen, 39 Idaho 35, 225 P. 1021; Caravelis v. Cacavas, 38 Idaho 123, 220 P. 110; McAllister v. Bardsley, 37 Idaho 220, 215 P. 852; Watt v. Stanfield, 36 Idaho 366, 210 P. 998.)

Johnson & Nixon, for Respondent.

Appellants were not entitled to file their amended answer as a matter of course, but were required to proceed under C. S., sec. 6726, and make a sufficient showing by affidavit of merits. (Craven v. Bos, 38 Idaho 722, 225 P. 136; Cady v. Keller, 28 Idaho 368, 154 P. 629.)

The affidavit of merits made by appellants' attorney, as well as the motion itself, made no reference to the alleged doing of business in Idaho by plaintiff or when appellants or their attorneys first learned of the alleged facts. Nor did they show any excuse whatever for not incorporating this matter in the original demurrer or answer. This fact taken in connection with the admission of appellants' attorney in open court that he did know of the alleged facts relating to the doing of business in Idaho by respondent, when the complaint was filed, justified the trial court, in the exercise of its discretion, in refusing to permit the amended answer to be filed on the day set for the trial. (Snowy Peak Min. Co. v. Tamarack etc. Co., 17 Idaho 630, 107 P. 60; Bates v. Smiley, 179 N.Y.S. 552; Manha v. Union Fertilizer Co., 151 Cal. 581, 91 P. 393; Williams v. Youtz, 178 Cal. 107, 172 P. 383.)

The fact that plaintiff alleged in its complaint that it was a corporation organized under the laws of Nebraska did not make it necessary for it to allege that it had complied with the laws of Idaho relating to foreign corporations. This was a matter to be raised by special demurrer on the ground of want of capacity to sue, if apparent on the face of the complaint, or by answer, otherwise it was waived. (C. S., sec. 6693; Valley Lumber Co. v. Driessel, 13 Idaho 662, 13 Ann. Cas. 63, 93 P. 765, 15 L. R. A., N. S., 299; Valley Lumber Co. v. Nickerson, 13 Idaho 682, 93 P. 24; Bonham Nat. Bank v. Grimes Pass Co., 18 Idaho 629, 111 P. 1078; Marshall Field & Co. v. Houghton, 35 Idaho 653, 208 P. 851; McIntosh Live Stock Co. v. Buffington, 116 Ore. 399, 241 P. 393.)

VARIAN, Commissioner. Wm. E. Lee, C. J., and Taylor and T. Bailey Lee, JJ., concur.

OPINION

VARIAN, Commissioner.

This is an action to foreclose a real mortgage executed by Gallaher Investment Company to Almon J. Hall, and by him assigned to respondent prior to maturity. The mortgagor conveyed the premises, subject to liens and encumbrances, to appellant Burrell L. Gallaher.

Complaint was filed September 4, 1925, to which appellants filed a general demurrer September 25, 1925. The next day the demurrer was overruled, and appellants given fifteen days to answer. On October, 13, 1925, appellants answered, admitting execution of the note and mortgage, the amount paid on account of interest, but denying the payment of certain delinquent taxes, as alleged in the complaint, the value of attorneys' services and their right to fees herein. As a further defense, appellants allege that a considerable part of the sums paid by respondent for taxes "was illegal and unwarranted." The cause was set November 2, 1925, for trial on November 24, 1925, at 10 A. M.

The day before trial, counsel for appellants served respondent's counsel with notice that on November 24, 1925, at such time as the court would permit, appellants would file a motion, supported by affidavit, for permission to file an amended answer, and served the affidavit, motion and proposed amended answer at the same time. The next day, before trial, respondent filed written objections to allowing the amended answer to be filed, upon the principal ground that no sufficient reason had been shown for allowing defendants to file said amended answer. The proposed amended answer, lodged with the clerk on November 23, 1925, incorporated the admissions and denials of the original answer, and contained more definite allegations regarding the controversy over the payment of taxes and the action of the county board in regard thereto had subsequent to the filing of the original answer. It also alleges, in effect, that respondent is a foreign corporation doing business in this state, and has not complied with the Idaho statutes relative to such corporations doing business here. This defense, asserted for the first time in the proposed amended answer, is not mentioned in the motion for leave to file amended answer, or in the affidavit in support thereof.

The motion was denied, and the cause tried upon the complaint and original answer, resulting in a decree for respondent. January 22, 1926, appellants moved for a new trial upon the grounds that the court erred in refusing to permit appellants to file their amended answer, and that the court erred in rendering judgment in favor of respondent and for the sums and amounts therein stated. The motion was taken under advisement and denied. Appellants appeal from the judgment and from the order denying the motion for a new trial.

On the argument, respondent moved to dismiss the appeal from the order denying the motion for a new trial. This court, after considering the motion to dismiss, concluded to deny the same.

Appellants contend that the trial court erred in refusing to permit them to file...