J. Schnarr & Co. v. Virginia-carolina Chemical Corp.

• Citation: 118 Fla. 258,159 So. 39
• Parties: J. SCHNARR & CO. et al. v. VIRGINIA-CAROLINA CHEMICAL CORPORATION.
• Decision Date: 06 December 1934
• Court: United States State Supreme Court of Florida

159 So. 39

118 Fla. 258

J. SCHNARR & CO. et al. v. VIRGINIA-CAROLINA CHEMICAL CORPORATION.

Florida Supreme Court, Division A.

December 6, 1934

Rehearing Denied Jan. 25, 1935.

Second Petition for Rehearing Denied Feb. 15, 1935.

Error to Circuit Court, Duval County; De Witt T. Gray, Judge.

Action by the Virginia-Carolina Chemical Corporation against J Schnarr & Co. and another. Judgment for plaintiff, and defendants bring error.

Reversed.

COUNSEL

Kay, Adams, Ragland & Kurz, of Jacksonville, for plaintiffs in error.

Lee Guest, of Jacksonville, for defendant in error.

OPINION

ELLIS Justice.

A writ of error was taken to a judgment in favor of Virginia-Carolina Chemical Corporation against J. Schnarr &amp Co., a corporation, and C. M. Slaughter, in the sum of $5,447.44.

The action was based upon a promissory note, a copy of which was attached to the decclaration and by appropriate words made a part of it. The declaration which was filed February 1, 1932 contained three counts, but the plaintiff withdrew the second and third counts.

By stipulation of the parties the case was tried by the judge. A jury which had been called to try the issues joined was withdrawn, and the judge took under advisement the testimony which had been submitted, and entered his judgment for the plaintiff in the sum stated on February 21, 1934.

The defendants severally interposed as a defense to the action a plea in which it was averred that the plaintiff had at another time in the same court brought an action against J. Schnarr & Co., and C. M. Slaughter upon the identical promissory note which the plaintiff declares upon in this action; that in that action the defendants interposed as their second amended plea the plea which was interposed in this case as the plea numbered one. That plea avers that the note was executed by the defendants wholly as an accommodation for the Southern Fertilizer Works; that the defendants were not indebted to the plaintiff in any sum; that the note was executed by the company's president without any authority in that behalf; that under the corporation's charter it had no power or authority in law to assume the debt which was a debt of the fertilizer works.

The plea set out fully and clearly the powers of the Schnarr Company under its charter, the limited powers of its president, the circumstances under which the note was executed, and the debt of the fertilizer works to the plaintiff created. The plea then proceeded to aver that in the former action the plaintiff interposed several replications to the plea, and to those replications the defendants demurred. It is averred that after argument the court sustained the defendants' demurrers. The order of the court is set out fully in the plea which then avers that the order and judgment sustaining the defendants' demurrers to the replications have ever since remained unrevoked; that the plaintiff then set the former down for trial, whereupon the defendant moved the court for a final judgment upon the pleadings.

The court announced during the argument that the motion for judgment in favor of the defendant upon said pleadings would be granted. The plea then avers that the plaintiff requested the court to summons a jury in order that the said plaintiff might go through the form of taking a nonsuit; that the judge of the court 'then went through the form of empanelling a jury as if to try the issues in said cause, and thereupon permitted the Plaintiff to have an order of nonsuit entered.' The plea avers in its last paragraph that the 'proceedings had in the aforesaid former suit were upon the identical same cause of action as is now sued upon, and the orders entered by the Court in said former suit were judgments on the merits, and a determination that the plaintiff had no right to recover against this defendant.'

The plaintiff demurred to that plea, and the demurrer was sustained.

That order of the court constitutes the basis of an assignment of error. It is contended that as the replication to the pleas in the former suit was an admission of the accommodation character of the note sued on in that action, which is the identical note on which the present action rests, the plaintiff is estopped to deny the accommodation character of the note in the present action.

An examination of the replications in the first action shows that they did not deny the material averments of the plea. There was a failure to allege that the defendants' president had authority under the corporate powers or action of the board of directors to execute the note. While the replication denied in terms that the note was an accommodation note, other allegations in the replication which must be taken in connection with such categorical denial in construing the pleading under the demurrer showed that the pleader depended upon those latter allegations as taking the note out of the class of an accommodation paper, as, for instance, the allegation that the crediting and discharge of the debt due by the Southern Fertilizer Works was by the use of the note sued on. Nor did the alleged failure of the Schnarr Company to disaffirm the note establish such a ratification of it as to estop the company from denying its liability.

The note purported to have been executed by the corporation. The defense was that it was an accommodation note. No consideration moved to it for its execution. Its charter and by-laws did not authorize its execution. Its president had no power either under charter provisions or resolution of its board of directors to execute the paper. To meet that position the plaintiff said that the Southern Fertilizer Works owed a debt to the Virginia-Carolina Chemical Corporation; that the president of the Schnarr Company was president or manager of the fertilizer company; that the fertilizer company was to receive a credit upon its indebtedness to the amount which the Schnarr Company would undertake by its note to pay; that in such circumstances the note was taken out of the class of an accommodation paper.

That position was not sustained by the trial court, so it sustained the demurrer of the defendant to the replications, and on motion of the defendant for a judgment on the pleadings announced that it would grant the motion.

Now the accommodation character of the note being established by the pleadings in the former suit, as also the lack of authority of the corporation to execute it for that purpose and the lack of the president, Slaughter, to execute it in the corporation's name, the defendant contends that the plaintiff is estopped by the pleading in the former action to relitigate that point of law in the present action.

This court has held that a litigant is estopped by the proceedings in a former suit from occupying an inconsistent position in another and subsequent suit. See Warren v. Warren, 73 Fla. 764, 75 So. 35, L. R. A. 1917E, 490; Flynn-Harris-Bullard Co. v. Hampton, 70 Fla. 231, 70 So. 385.

It is the opinion of the writer that the so-called nonsuit taken in the former case was an involuntary nonsuit because it was prompted by an adverse ruling on the pleadings in which the plaintiff's replications to the defendants' pleas were held to be insufficient and that the facts alleged did not take the note sued on out of the class of an accommodation paper which ruling by the court was in that case preclusive of a recovery by the plaintiff. See 18 C.J. 1147.

The statute provides that no plaintiff shall take a nonsuit on trial unless he do so before the jury retire from the bar. Section 4357, Comp. Gen. Laws 1927 (section 2690, Rev. Gen. St. 1920).

That statute is, in effect, a re-enactment of the English statute of 2 Hen. Iv. c. 7, providing that after verdict a plaintiff shall not be nonsuited. See Southern Cotton Oil Co. v. Shore, 171 N.C. 51, 87 S.E. 938.

A nonsuit is of two kinds, voluntary and involuntary. It is voluntary when the plaintiff allows judgment to be entered against him for costs by absenting himself or failing to answer when called upon to hear the verdict. But even a voluntary nonsuit would not be allowed to him under our statute after the jury had retired from the bar, even though he should absent himself by failing to answer when called to hear the verdict.

It is involuntary when the case is called for trial and the plaintiff neglects to appear, or when he has given no evidence on which a jury could find a verdict, and it has been held that a nonsuit is involuntary when it is prompted by an adverse ruling of the court which is preclusive of a recovery by the plaintiff. See 18 C.J. 1147.

The circumstances in which the nonsuit was entered in this case show it to be an involuntary one. The plaintiff had declared upon a promissory note which was signed by the Schnarr Company as maker, by Slaughter as president. The company had interposed a plea that it was not authorized by its charter to execute accommodation notes; that the note was an accommodation note, and set out the circumstances in which it was given in support of that averment; that under the charter the president of the corporation had no power to execute such an obligation in the name of the corporation.

The plaintiff replied denying that the president of the corporation was without authority to execute the note previously given by the corporation; that the note was executed by the corporation's president merely for the accommodation of Southern Fertilizer Works; averred that it was executed by the defendant through its president upon an understanding between him and the plaintiff that the plaintiff would credit the principal sum of the note to the debt of the fertilizer works to the plaintiff, which was done after the note was executed; that Slaughter was president and...