Hartlep v. Murphy
| Citation | 150 N.E. 312,197 Ind. 222 |
| Decision Date | 27 January 1926 |
| Docket Number | 24,378 |
| Parties | Hartlep v. Murphy et al |
| Court | Supreme Court of Indiana |
1. ESTOPPEL.---Elements of "estoppel by conduct" stated.---To constitute "estoppel by conduct," there must have been a representation or concealment of material facts, made to a person who was ignorant concerning such matter, with intent that such person should act thereon and he must have been induced thereby to act in reliance on such representation or concealment differently from what he would otherwise have done. p. 226.
2. ESTOPPEL.---Estoppel to deny forgery of notes sued on not sufficiently pleaded.---In an action on promissory notes where a defendant denied signing them and filed a verified answer of non est factum, a paragraph of reply thereto alleging that he was estopped to deny such execution by taking a mortgage to secure him as surety thereon, knowing that the notes sued on were in existence bearing his signature, was insufficient as a plea of estoppel to avoid the defense of non est factum. p. 226.
3. BILLS AND NOTES.---Forged note cannot be ratified or confirmed, and the obligation can only become binding by reason of estoppel or new promise on a new consideration.---Where a signature to a note is forged, the act constitutes a crime and cannot be ratified or confirmed and, in the absence of an estoppel, the obligation can only become binding by reason of a new promise supported by a new and valid consideration. p. 227.
4. BILLS AND NOTES.---Where a forged note has been validated by a new promise, suit must be brought on the new promise complaint alleging such promise and the consideration supporting it.---Where a forged note has become binding by reason of a new promise by the apparent maker, supported by a new and valid consideration, the holder thereof must sue on the new promise, alleging in his complaint the subsequent promise to pay the note and stating the consideration by which it is supported. p. 227.
5. PLEADING.---Reply setting up a new promise to pay a forged note is departure from complaint on note.---In an action on a promissory note, where an answer alleging forgery of signature was filed, a reply setting up subsequent promise to pay the note would constitute a departure. p. 227.
6. PLEADING.---"Departure," as applied to a reply, defined.---A reply which abandons the cause of action alleged in the complaint, and avers facts tending to constitute a right of action for another cause inconsistent therewith, constitutes a departure, and is insufficient on demurrer. p. 228.
7. JURY.---Defendant denying, under oath, execution of notes sued on entitled to jury trial of issue made by his plea.---Under the provisions of 437 Burns 1926, 418 Burns 1914, a surety defendant who filed, a verified plea of non est factum denying his execution of the notes sued on was entitled to a jury trial of the issue made by his plea, although the action included the foreclosure of a mortgage given by another securing such notes. p. 229.
8. JURY.---Issue made by plea denying, a surety's signature to notes sued on not incidental to the foreclosure of mortgage securing said notes so as to be drawn into equity along with the foreclosure.---In an action to foreclose a mortgage securing notes, where one defendant, a surety, who did not join in the mortgage, filed a verified answer of non est factum denying his execution of the notes, the issue raised by his plea was not incidental to the foreclosure of the mortgage as against another defendant, so as to be drawn into equity along with the foreclosure. p. 229.
9. JURY.---When equitable causes of action or defenses are joined with actions or defenses at law, former shall be tried by, court and latter by jury, unless waived, and at same or different times as court may direct.---Under 437 Burns 1926, 418 Burns 1914, 409 R. S. 1881, where equitable causes of action or defenses are joined with actions or defenses at law, the former shall be tried by the court and the latter by jury, unless waived, both being tried at the same or different times as the court may direct. p. 229.
10. JURY.---Issue of non est factum by surety on notes sued on held triable by jury in suit to foreclose the mortgage securing them, and it was error to overrule motion for jury trial on that issue.---In a suit to foreclose a mortgage securing promissory notes, where a surety on the notes filed a plea of non est factum denying his signature to the notes, the issue on said plea was triable by a jury, and it was error to overrule his motion for a trial by jury of that issue. p. 229.
From Newton Circuit Court; George W. Williams, Judge.
Suit by Otis Murphy and others to foreclose a mortgage securing promissory notes signed by others than mortgagor, including Charles B. Hartlep. From a judgment for plaintiffs, the named defendant appeals.
Reversed.
Victor H. Ringer, William R. Ringer, Ele Stansbury, D. F. Stansbury and William Darroch, for appellant.
Fraser & Isham, for appellees.
Appellees other than William Marko, as plaintiffs, brought an action against William Randall, Aaron Larch and appellant, to recover on certain promissory notes payable to them purporting to have been executed by Randall as principal and Larch and appellant as sureties, and also to foreclose a mortgage executed by Randall conveying certain land to said sureties to secure the payment of the notes and to indemnify and protect the sureties against loss on account of such suretyship. The notes were dated April 24, 1920, and purported to have been signed by William Randall and Aaron F. Larch, and executed by appellant by "his mark," W. C. Taylor signing as witness to such mark. The mortgage was dated and acknowledged November 18, 1920, seven months after the notes were given, and recited that it was "made to secure and completely indemnify the said Aaron F. Larch and Charles B. Hartlep on account of their suretyship for the said William Randall on five promissory notes," describing them, and it was conditioned that in case Randall should fail to pay the notes or any of them when due, and all expense which the mortgagees (sureties) might be caused on account thereof, such mortgage might be foreclosed and the mortgaged premises sold. The complaint alleged that plaintiffs (appellees) owned a certain tract of land as tenants in common, and through the agency of one of them, acting for all, sold it to said William Randall, and received in payment $ 12,000 which Randall borrowed on a mortgage that he gave on said real estate, and also four notes, aggregating $ 12,000 in amount, signed by Randall, Larch and appellant, as above described, copies of which were filed with the complaint as exhibits; that thereafter, on November 18, 1920, Randall executed his mortgage on the land so purchased, securing and indemnifying Larch and appellant, as above stated, and it was duly recorded; that the notes were long past due and wholly unpaid, but said sureties refused to foreclose the mortgage for the benefit of plaintiffs; and that plaintiffs had no other security for payment of said unpaid purchase money, except the personal liability of the makers, and the mortgage sued on. Answers of general denial and of payment were filed on behalf of all the defendants, and appellant answered separately, under oath, "that the notes sued on, and each and all of them were not executed by this defendant." To this separate answer denying the execution of the notes plaintiffs filed a reply, the material averments of which were Appellant demurred to this reply, specifying that it did not state facts constituting an estoppel, nor facts showing that with knowledge of the existence of the notes and for what they were given appellant ratified or agreed to pay them upon a new consideration. Overruling this demurrer is the first error assigned.
To constitute an estoppel by conduct there must have been a representation or concealment of material facts, made with knowledge of the facts, to a person who was ignorant concerning such matter, with intent that such person should act thereon, and he must have been induced thereby to act in reliance on such representation or concealment differently from what he would otherwise have done. Hosford v Johnson (1881), 74 Ind. 479, 485; Lewis v. Hodapp (1896), 14 Ind.App. 111, 113, 42 N.E. 649, 56 Am. St. 295; Pierce v. Vansell (1905), 35 Ind.App. 525, 533, 74 N.E. 554. But the reply, as set out above, does not allege that at the time when appellant "took and accepted the mortgage sued on" (long after the notes were executed) plaintiffs were ignorant of the fact that the notes were forgeries, nor that appellant took the mortgage with intent that plaintiffs should be influenced thereby in any way, nor that plaintiffs were influenced thereby to act or refrain from acting, or that they really did do anything or omit doing anything...
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