First Bank of Homedale v. McNally

• Decision Date: 28 April 1926
• Citation: 246 P. 5,42 Idaho 443
• Parties: FIRST BANK OF HOMEDALE, a Corporation, Appellant, v. A. W. MCNALLY, Respondent
• Court: Idaho Supreme Court

246 P. 5

42 Idaho 443

FIRST BANK OF HOMEDALE, a Corporation, Appellant, v. A. W. MCNALLY, Respondent

Supreme Court of Idaho

April 28, 1926

JUSTICES OF THE PEACE-PLEADINGS IN JUSTICES' COURTS-DEMURRER-BILLS AND NOTES - EFFECT OF ASSIGNMENT OF WORTHLESS PAPER AS PAYMENT-FAILURE OF CONSIDERATION.

1. Where district court on appeal from justice court ruled that demurrer to complaint should have been sustained, plaintiff in view of C. S., sec. 7181, was entitled to file amended complaint.

2. Under C. S., sec. 7072, great liberality is allowed in pleadings in justices' courts.

3. Where any portion of complaint in action on note in justice court states cause of action, it is not open to general demurrer.

4. Complaint in action on note in justice court, alleging execution and delivery of note and setting out copy of the note with allegations that plaintiff was owner and that note was due and unpaid, held sufficient as against general demurrer, although motion to strike portions of complaint or demurrer for uncertainty might lie as to allegations relative to surrender of note to defendant for consideration of land certificate, which had been canceled and was worthless, with subsequent demand for return of note.

5. Where land sale certificate, assigned by maker of note in payment thereof, was worthless because canceled before assignment, there was total failure of consideration, and note was still enforceable.

6. Assignment of worthless land sale certificate as consideration for return to maker of note is insufficient to constitute payment.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Ed. L. Bryan, Judge.

Action on a promissory note. Judgment for defendant. Reversed.

Reversed, with costs awarded to appellant.

S. Ben Dunlap, for Appellant.

The maker of a note will not be discharged by a surrender or a cancelation which is the result of fraud, duress or mistake. (Banks v. Marshall, 23 Cal. 223; Manufacturers' Nat. Bank v. Thompson, 129 Mass 438, 37 Am. Rep. 376; Blodgett v. Bickford, 30 Vt. 731, 73 Am. Dec. 334.)

Respondent's liability was on the note and the complaint stated a cause of action against him. (Banks v. Marshall, supra; Blodgett v Bickford, supra.)

"Whenever one party has in his possession money, which in equity and good conscience belongs to another, the law raises a promise upon his part to repay it." (Milner v. Pelham, 30 Idaho 594, 166 P. 574.)

"Money paid out under a mistake of fact may be recovered, if it was not due or payable and in good conscience ought to be returned." (Rohn v. Gilmore, 37 Idaho 544, 217 P. 602; Keller v. Hicks, 22 Cal. 457, 83 Am. Dec. 78; Meyer v. Richards, 163 U.S. 385, 16 S.Ct. 1148, 41 L.Ed. 199; Benjamin on Sales, 4th Am. ed., secs. 600-607; Utley v. Donaldson, 94 U.S. 29, 24 L.Ed. 54; Flandrow v. Hammond, 148 N.Y. 129, 42 N.E. 511; Wood v. Sheldon, 42 N.J.L. 421, 36 Am. Rep. 523; Gregory v. Clabrough's Exrs., 129 Cal. 475, 62 P. 72; Prowinsky v. Second Nat. Bank, 265 F. 1003, 12 A. L. R. 358; 2 R. C. L., p. 784, sec. 38; Hathaway v. County of Delaware, 185 N.Y. 386, 113 Am. St. 909, 78 N.E. 153, 13 L. R. A., N. S., 273; Thresher v. Lopez, 52 Cal. 219, 198 P. 419.)

Upon appeal, a judgment which is not supported by the pleadings and findings will be reversed. (Davis v. Devanney, 7 Idaho 742, 65 P. 500.)

Walter Griffiths, for Respondent.

There are no facts stated in the complaint which in law will constitute actionable fraud and there are no facts stated in the complaint which would constitute such a mistake as a court of equity would correct by undoing acts completed by the parties. (Moffett, Hodgkins & Clarke E. Co. v. City of Rochester, 91 F. 28, 33 C. C. A. 319; New York Life Ins. Co. v. Chittenden & Eastman, 134 Iowa 613, 120 Am. St. 444, 13 Ann. Cas. 408, 112 N.W. 96, 11 L. R. A., N. S., 233; 21 R. C. L. 167-170.)

JOHNSON, Commissioner. William A. Lee, C. J. , and Budge and Givens, JJ., concur. Wm. E. Lee and Taylor, JJ., did not sit.

OPINION

JOHNSON, Commissioner.

This is an action, originally instituted in the justice court at Homedale in Owyhee county by the appellant, to recover from respondent on a promissory note executed by the latter in favor of appellant for the principal sum of $ 190, dated February 21, 1922, and due October 15, 1922. For convenience we shall hereafter refer to the parties as plaintiff and defendant.

The defendant in the justice court filed a general demurrer on the ground that the complaint did not state facts sufficient to constitute a cause of action, which demurrer was overruled. The defendant also moved for a change of venue which was denied. He also filed what is termed a "protest and objection and answer." The cause was tried by the justice and judgment was entered in favor of the plaintiff for the sum of $ 285.77. The defendant appealed from said judgment to the district court, the appeal being taken "upon questions of both law and fact." A stipulation was signed by the attorneys for both parties agreeing that the cause should be transferred for trial from the third judicial district in and for Owyhee county to the seventh judicial district in and for Canyon county. This was done on account of the convenience of witnesses and was approved by the judge of the third judicial district who signed an order transferring the case. The cause was tried by the court without a jury, and judgment rendered in favor of the defendant and costs fixed at $ 35. From this judgment plaintiff appeals.

The complaint as originally filed in the justice court was never amended, and the pleadings remained the same as in the justice court. The court filed its findings and conclusions. The closing paragraph of the court's findings of fact, numbered VII, is as follows: "That defendant's demurrer to plaintiff's complaint should have been sustained, and that judgment for defendant should be entered." Why the court made this ruling as a finding of fact is not apparent from the record.

C. S., sec. 7181, provides that: "When a party appeals to the district court on questions of fact, or on questions of both law and fact, no statement need be made, but the action must be tried anew in the district court."

This court in the case of Chase v. Hagood, 3 Idaho 682, 34 P. 811, in conclusion, used the following language: "As the statute provides that where appeal is taken from probate or justice's court to the district court on both law and fact, there shall be a trial de novo in the latter court, and either party shall be entitled to any and all objections and exceptions taken in the lower court, we cannot consider anything anterior to the proceedings in the district court."

If the district court by this finding that the demurrer should have been sustained was intending to rule on the demurrer, then the plaintiff was entitled to file an amended complaint.

Great liberality is allowed in pleadings in justices' courts. C. S., sec. 7072, provides that pleadings in justices' courts "are not required to be in any particular form, but must be such as to enable a person of common understanding to know what is intended." Measured by this standard it is not difficult to understand what was intended. In any event the defendant should have presented his demurrer and had a ruling from the court in advance of the introduction of evidence. The complaint does allege the corporate existence of the plaintiff. It alleges that "the defendant, for value received, made, executed, and delivered to the plaintiff his certain promissory note," and follows this allegation with a copy of the note. It also alleges that the plaintiff is now the lawful owner and holder of said note, and that the same is now due, owing and unpaid from defendant to plaintiff. It also alleges that forty dollars is a reasonable sum to be allowed plaintiff as attorney fees, and prays for judgment.

If any portion of the complaint states a cause of action it is not open to a general demurrer. The other matters in the complaint are not alleged with the care usually exercised in district court proceedings, but it is clearly apparent that the defendant before the maturity of the note assigned and delivered to the plaintiff a land sale certificate by which the state agreed to sell certain described lands in Owyhee county; that at the time the defendant and his wife executed said assignment the said certificate had been canceled by the state land board for nonpayment of the deferred payments of principal and interest thereon, and was entirely worthless and valueless, all of which was well known to the defendant; that the plaintiff believing the certificate a valid certificate and contract of sale accepted the same and delivered to the defendant the note; that within a few days after the acceptance of said assignment and delivery of the note to the defendant, the plaintiff discovered that said certificate was valueless and had been canceled, and immediately made demand upon defendant for return of said note, and offered to deliver back to defendant the certificate; that the plaintiff is now ready and willing to deliver to defendant the said certificate and make any assignment thereof that may be requested or required by said defendant.

It will be observed that it is not alleged that the defendant failed to return the note...