Holmes v. Clark
| Decision Date | 24 June 1938 |
| Citation | 274 Ky. 349 |
| Parties | Holmes et al. v. Clark. |
| Court | United States State Supreme Court — District of Kentucky |
2. Appeal and Error. — Where record was not filed in the Court of Appeals within time provided by statute, apparently because of a bona fide mistake between counsel, the Court of Appeals would not dismiss the appeal (Civil Code of Practice, sec. 738).
3. Bills and Notes. — In action on notes, evidence was insufficient to establish defendants' defense of no consideration.
4. Bills and Notes. — Where defendants in action on notes had renewed original notes and made payments thereon over a period of about 8 years before time of controversy, they would be deemed to have waived any illegality in the execution of the original notes, on ground that there was no consideration for them, notwithstanding that the payments were not made by defendants personally, but were taken out of defendants' money in plaintiff's hand with defendants' consent.
5. Contracts. — An absolute promise to loan money gives rise to no enforceable contract, since the promise is nudum pactum.
6. Bills and Notes. — The fact that finance company agreed to refinance motor company's indebtedness to bank on condition only that motor company execute notes for amount finance company claimed that motor company owed it, was not "duress" which would relieve motor company from liability on renewal notes.
7. Taxation. — In action on notes, defense that plaintiff had failed to list the notes for taxes was without merit, where, before judgment was rendered, the notes were retroactively listed for taxes from the time of execution, and the taxes paid thereon (Ky. Stats., sec. 4019a-13).
8. Action. — The doctrine of laches is not to be substituted for the established limitation period for the assertion of a right, nor should it curtail the established period of limitation.
9. Action. — The office of the doctrine of laches is in the nature of an estoppel, whereby a litigant may not delay action to such a period that his antagonist in the meantime has materially altered his position and would sustain irreparable loss if the right thereafter is upheld and enforced.
10. Action. — The essential element which distinguishes laches from established periods of limitation is a detrimental change in the position of defendants because of delay on part of the plaintiff.
11. Action. — In action on notes, defendants failed to establish defense of laches on part of plaintiff, where they made no showing of any detrimental change in their position because of delay on part of plaintiff in filing action.
12. Champerty and Maintenance. — The statute making void a sale of land adversely held was inapplicable in suits on notes acquired by plaintiff when he purchased all assets of finance company which went into voluntary liquidation (Ky. Stats., sec. 210).
13. Champerty and Maintenance. — The statute making void contracts to aid in prosecution or defense of suits was inapplicable in action on notes which had been acquired by plaintiff when he purchased all of the assets of a finance company which went into voluntary liquidation (Ky. Stats., sec. 209).
14. Champerty and Maintenance. — The bona fide purchaser or assignee of a mere right of action is not guilty of champerty or maintenance, unless a statute expressly forbids it.
Appeal from Boyd Circuit Court.
HANNAH, VAN SANT & McKENZIE and A.W. MANN for appellants.
WOODS, STEWART & NICKEL for appellee.
Affirming.
In 1922, the appellants and defendants below, M. H. Holmes, P.C. Holmes, Kate I. Holmes and Nora Holmes (now Nora Moran), who were brothers and sister, embarked as a partnership in the business of dealers in new and secondhand automobiles, which was conducted in the city of Ashland, Kentucky, under the firm name of "Holmes Motor Company." They financed their notes and contracts taken by them from purchasers of automobiles through the plaintiff corporation then operating in Ashland as "Ashland Finance Company" of which the present appellee, Raleigh Clark, was president. About two or three years after the Holmes Motor Company began business it made a large purchase of Willys-Knight and Willys-Overland automobiles (about 30) which were shipped from the factory to defendants at Ashland, and for the cost price of which they executed their note or notes. The seller of that purchase of automobiles assigned and transferred defendants' obligation or obligations to a bank in Toledo, Ohio, who carried the indebtedness for some time by accepting renewals from defendants; but eventually it notified them that at the due date of the then current note or notes payment would be demanded. No current obligations existed between defendants and the Ashland Finance Company for the latter to aid or assist the former in refinancing any such indebtedness; nevertheless, defendants, about thirty days before the Toledo bank debt became due, applied to the finance company, upon receiving the notification referred to, to assist them in taking care of it when its due date arrived.
It is the contention of defendants that the finance company promised absolutely to refinance for them that debt, while the finance company and its officers deny an absolute promise to do so, but that it then intimated that it might do so under acceptable conditions and which would be investigated. At any rate about three days before the due date of the Toledo bank debt defendants again approached the finance company and called its attention to the matter, when they were confronted with the proposition from it that it would refinance the debt for defendants, provided they would settle a debt — amounting to about $3,000 — that the finance company claimed defendants owed it on prior transactions, and about which the parties had been disputing and controverting for some considerable time past. Defendants claimed to be surprised at the suggestion and took it under advisement for some days and finally concluded to and did accept it by executing their series of notes to the finance company aggregating $2,900. The Toledo bank debt was then arranged by the finance company and defendants continued to operate their business until 1928 when they wound it up. They renewed the notes for the aggregate amount of $2,900 from time to time and paid part of it and the interest thereon, reducing the principal to the sum of $1,091.28, which was the balance due at the time this action was filed by plaintiff, the finance company, in the Boyd circuit court against defendants on August 2, 1932, and in which the judgment appealed from was obtained.
Defendants in their answer to the action pleaded (1) no consideration; (2) duress practiced upon them by the finance company to procure the execution of the notes; (3) failure to list the notes for taxes; (4) laches in not filing the action sooner; but no plea of statutory limitations was interposed, since none existed. There was also a counterclaim contained in the answer, whereby defendants sought to recover from plaintiff the payments they had made on the note or notes, as well as interest thereon, upon the same grounds that they interposed as a defense to the recovery of the remainder of the indebtedness. A reply filed by plaintiff put in issue all of the material facts pleaded in the answer. The case was then transferred to equity and referred to the court's commissioner to take proof and report on the issues made by the pleadings. Before that report was made the finance company went into voluntary liquidation and sold and transferred all of its assets to its president, Raleigh Clark. After that purchase by him he filed an intervening pleading manifesting the fact of his purchase, and asked to be made a plaintiff in the cause, which was done, and he adopted the pleadings of his assignor, the finance company. When that was done defendants filed an amended answer asserting the additional defense (5) of champerty. The commissioner rejected all of the defenses interposed and recommended a judgment in favor of plaintiff for the amount sued for. Exceptions were filed to that report but they were overruled and the report adopted by the court rendering judgment for the amount sued for — from which defendants prosecute this appeal.
The judgment was rendered on November 11, 1936. Execution was thereafter issued thereon and defendants then superseded the judgment in the trial court, but the record was not filed in this court twenty days before its April 1937 term, but which should have been done in order to perfect the appeal granted by the trial court, as is expressly provided by section 738 of the Civil Code of Practice. Upon the filing of the transcript in this court at a later date, plaintiff (appellee) moved that the appeal be dismissed with 10 per cent damages on the supersedeas bond executed in the trial court; whereupon a copy of the judgment was filed in this court with a prayer for an appeal and summons was issued for defendants and later served on them. The two efforts to take the appeal were then on motion consolidated. The motion to dismiss the first appeal with damages was then overruled; but which was later followed by another motion of appellee to reconsider the overruling order, which was done, and the motion to dismiss was passed to a hearing of the merits of the cause, and that preliminary question will be first disposed of.
The responses and replies thereto filed in this court on the motion to dismiss revealed what we conclude was a clear bona fide misunderstanding between counsel for the respective parties. Two of the counsel for defendants, in resisting the motion to dismiss the appeal, filed their...
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