Gregg v. Groesbeck

• Decision Date: 27 April 1895
• Docket Number: 536
• Parties: F. E. GREGG, DOING BUSINESS AS F E. GREGG & CO., RESPONDENT, v. HYRUM GROESBECK AND OTHERS, DEFENDANTS, HENRY M. RYAN, APPELLANT
• Court: Utah Supreme Court

40 P. 202

11 Utah 310

F. E. GREGG, DOING BUSINESS AS F E. GREGG & CO., RESPONDENT, v. HYRUM GROESBECK AND OTHERS, DEFENDANTS, HENRY M. RYAN, APPELLANT

No. 536

Supreme Court of Utah

April 27, 1895

APPEAL from the District Court of the Third Judicial District. Hon Samuel A. Merritt, Judge.

Action by F. E. Gregg, doing business as F. E. Gregg & Co., against Hyrum Groesbeck, Nicholas Groesbeck, Henry M. Ryan, Alexander Wood, and P. H. Rasche, defendants, of whom Henry M. Ryan is appellant. The separate answer of Henry M. Ryan was stricken out as sham and frivolous and judgment entered on the pleadings, from which he appeals.

Reversed and remanded.

Mr. T J. Anderson, for appellant.

Under our practice there is no authority for a court to render judgment summarily against a defendant on the pleadings. 2 Comp. Laws, § 3239, provides, "sham and irrelevant answers, and irrelevant and redundant matter inserted in the pleadings, may be stricken out on such terms as the court may in its discretion impose," but this means, or at least ought to mean, a legal and not an arbitrary discretion, such as rendering judgment summarily against the defendant without granting him the privilege of amending upon terms. A motion for judgment on the pleadings is ordinarily called a "cut-throat demurrer." The practice is wrong and unauthorized by our statute. "It seems that the plaintiff cannot move for a judgment, as on a frivolous plea unless the answer as an entirety is frivolous." 3 Estee's Plead. § 4610. If Rasche held the note as agent to sell, and his instruction was to erase appellant's name and plaintiff bought it knowing this instruction, then appellant is not liable, as plaintiff did not purchase the indorsement. "The instructions will not limit the authority of the agent, as against the third person dealing with him, unless this person has notice of these restrictive instructions." Tiedman on Com. Paper, § 81. "It is in the next place to be noted that the rule is not infringed by the admission of parol evidence showing that the instrument is altogether void, or that it never had any legal existence or binding force, either by reason of fraud or for want of due execution and delivery, etc." 1 Greenleaf's Ev. § 284. "It may always be shown by parol evidence that indorsement was procured by fraud, accident or mistake." Tiedman on Com. Paper, § 274. Where fraud, accident or mistake is alleged, parol evidence is admissible to vary, qualify or contradict the terms of a written contract where the oral agreement was made at the indorsing of a bill or note. Forsyth v. Kimball, 91 U.S. 291; Brennan v. Furniss, 90 Pa. St. 186; Hill v. Ely, 5 Serg. & R. 363; Kirkham v. Boston, 67 Ill. 599; Lewis v. Dunlap, 72 Mo. 178; Hamburger v. Miller, 48 Md. 325; Wharton's Law of Ev. §§ 1059-1060.

Mr. Frank B. Stephens and Mr. Benner X. Smith, for respondent.

There is nothing the court can review on this appeal. The appeal is from the judgment taken upon the judgment roll. There is no bill of exceptions saving the motion and the order made thereon to strike out the answer and for judgment on the pleading. Without a bill of exceptions there is nothing for the court to review, neither the notice of motion for judgment on the pleadings, nor the order made upon such motion can be considered without a bill of exceptions. Douglas v. Dakin, 46 Cal. 50; McAfee v. Randall, 41 Cal. 136; Emerick v. Alvarado, 64 Cal. 594; Lowell v. Parkinson, 4 Utah, 64; Reever v. White, 8 Utah, 188; Perego v. Dodge, 9 Utah 3; Harper v. Minor, 27 Cal. 107; Spencer v. Scott, 97 Cal. 181; Pedrerena v. Hotchkiss, 95 Cal. 636; Hemme v. Hayes, 55 Cal. 337; Strathern v. Dakin, 63 Cal. 478; Nash v. Harris, 57 Cal. 242. Upon the merits the answer stated no defense. It was clearly sham and frivolous. Wood and Ryan were the payees and both indorsed the note in blank. Plaintiff purchased the note for a valuable consideration before maturity, and has ever since been the owner and holder thereof. There is no allegation of agency whatever in the answer, and for aught that appears therein Rasche was the owner of the note, and after he became such owner Ryan exacted a promise from him that on the transfer of the same his name should be erased. Ryan could not plead this defense against Rasche if Rasche was plaintiff, and consequently can not plead this defense against the plaintiff, who is the vendee of Rasche.

"Indorsements in blank, written on promissory notes, constitute well defined contracts, and parol evidence cannot be admitted to explain them." 1 Greenleaf on Ev. § 276, note. "A mutual mistake which will afford ground for relief means a mistake reciprocal and common to both parties, who alike labor under a misconception in respect to the terms of the written instrument." Rice on Ev. vol. 1,298. It is not alleged that the delivery was made under a mistake, and the allegations do not set up that the mistake is material, mutual, shared in by all the parties to the transaction, unintentional, or free from negligence. See 15 Enc. of Law, 645. Appellant was payee on the note and his name appears upon the back indorsed in blank regularly, and the authorities are settled that he cannot by parol evidence vary the terms of his express contract or indorsement. Tiedman on Com. Paper, supra; Dale v. Gear, 38 Conn. 15; Martin v. Cole, 104 U.S. L.Ed. 647; Remier v. Bank, 9 Wheat. 587; Brown v. Wiley, 20 How. 442; Specht v. Howard, 16 Wall. 564. In the case of Lee v. Pyle, 37 Ind. 107, cited in Randolph on Com. Paper, § 779, the defendant was sued as indorser by his immediate indorsee upon a promissory note. He filed a plea to the effect that the note was given to the plaintiff in exchange for certain property, and that it was expressly agreed that the note should be accepted as payment under the contract of exchange, and that plaintiff would not rely on the defendant for payment, and that defendant indorsed the note simply to transfer his ownership, and was not to be held liable as assignor, and that the words "without recourse," were omitted in making the indorsement. The court held that these allegations being a part of the verbal agreement at the time of the indorsement and delivery of the note, its existence could not be legally proved for the reason that it would be in contradiction of the legal effect of the indorsement, citing: Wilson v. Black, 6 Blackf. 509; Blair v. Williams, 7 Id. 132; Campbell v. Robbins, 29 Ind. 271. See, also, Courtney v. Hogan, 93 Ill. 101; Skelton v. Dustin, 92 Ill. 49; Mason v. Burton, 54 Ill. 349; Beatty v. Brown, 64 Ill. 360; Johnson v. Glover, 121 Ill. 283; Eaton v. Mahone, 42 Wis. 484; Charles v. Dennis, 42 Wis. 56; American Co. v. Clark, 47 Io. 671; Kern v. Van Phul, 7 Minn. 426; Doolittle v. Ferry, 20 Kas. 230; Farsin v. Hubbard, 55 N.Y. 465; Altman v. Anton, 60 N.W. R. (Io.) 191; Bank of U.S. v. Dunn, 31 U.S. 51.

KING, J. BARTCH and SMITH, JJ., concur.

OPINION

KING, J.:

Hyrum Groesbeck and Nicholas H. Groesbeck executed their promissory note in favor of Henry M. Ryan and Alexander Wood. Plaintiff, in his complaint, alleges that he purchased said note, after its indorsement by the payees and P. H. Rasche, for a valuable consideration, and before maturity, and that said indorsement was a part of the consideration inducing the purchase. Defendant Ryan filed a separate answer, the other defendants having defaulted, in which he averred that the defendant Rasche sold and transferred said note to plaintiff, but prior thereto the defendant Ryan specially ordered and instructed him, in case he should sell or transfer said note, that at or before making such transfer he should erase Ryan's name from the back, as an indorser; that Rasche expressly promised and agreed that he would do so, and would not transfer the note with Ryan's indorsement thereon; that, at the time of the sale and transfer of the note to the plaintiff, he was expressly informed of the agreement between Ryan and Rasche, and the said instructions given by the former to the latter; that the plaintiff then purchased and received said note understanding that the transfer was to be without recourse upon the defendant Ryan, and that the latter was not to be responsible as an indorser; and that the plaintiff purchased and took said note with this understanding and agreement. Defendant further avers that, owing to mistake and inadvertence of the plaintiff and Rasche, Ryan's name was not erased from the back of said note as was agreed and understood between them (plaintiff and Rasche). Plaintiff filed a motion to strike out the answer as sham, and for judgment on the pleadings, which was overruled. Afterwards he moved to set aside the order denying this motion, and for judgment on the pleadings, and upon this motion the court entered the following judgment: "It is therefore ordered and adjudged that the order of this court heretofore entered on the 17th day of February, 1894, overruling the plaintiff's motion for judgment on the pleadings, be set aside and vacated; that the answer of the defendant be stricken from the files as sham and frivolous. And it is further ordered and adjudged that the plaintiff do recover of the defendant Henry M. Ryan the sum of," etc.

The assignments of error relate to the action of the court in striking from the files defendant's answer, and present for determination the question of its sufficiency as a defense. Respondent insists that, conceding the truth of the averments therein contained, no facts constituting a defense were presented, and no proof would be admissible under it for the reason that it would tend to vary the terms of the written instrument upon which suit was brought. Appellant's contention is that the rule forbidding parol evidence to contradict written instrument has...