Judy v. Warne

• Decision Date: 27 June 1913
• Docket Number: No. 7,784.,7,784.
• Citation: 102 N.E. 386,54 Ind.App. 82
• Parties: JUDY v. WARNE.
• Court: Indiana Appellate Court

54 Ind.App. 82

102 N.E. 386

JUDY

v.WARNE.

No. 7,784.

Appellate Court of Indiana.

June 27, 1913.

On motion for rehearing. Motion granted, and cause reversed and remanded.

For former opinion, see 100 N. E. 483.

HOTTEL, P. J.

Appellant brought this action to recover on a promissory note executed by appellee. The pleadings tendering the issues passed upon by the court were appellant's complaint and appellee's special answer thereto, and appellee's cross-complaint and appellant's special answer thereto. A demurrer filed by appellant to appellee's answer to said complaint was overruled, and a demurrer by appellee to appellant's answer to the cross-complaint was sustained, to each of which rulings the appellant excepted, and refused to plead further. Judgment was then rendered against appellant on his complaint and for appellee on his cross-complaint. The respective rulings on the demurrers to each of said answers are each assigned as error, and relied on by appellant for a reversal of the case.

The complaint is in a single paragraph and avers, in substance, that appellee on the 11th day of June, 1907, by his promissory note, a copy of which is filed with and made part of the complaint, promised to pay one Morrow the sum of $850 one year after date, negotiable and payable at Farmers' State Bank of Bunker Hill, Ind., with 6 per cent. interest from date, payable semiannually in advance and 8 per cent. after maturity. Other averments of the complaint show the several transactions of indorsement through which the note was finally transferred to appellant as owner, and also that the maker of the note executed a mortgage on certain real estate to secure the same, all of which averments are set out more in detail in said answers. These answers are so nearly identical in their averment of the facts relied on as a defense to the complaint and cross-complaint respectively that we will set out only the averments of appellee's answer to the complaint, and then indicate wherein the averments of appellant's answer to the cross-complaint are different.

The averments of the answer to the complaint are in substance as follows: On the 11th day of June, 1907, appellee was the owner of a certain lot in the town of Oxford, in Benton county, Ind., particularly described in the answer, and on that day he executed the note sued on and described in the complaint, and also executed at the same time a mortgage on said part of said lot to secure the payment of said note and delivered both the note and mortgage to the payee Warren Morrow, who duly recorded the mortgage in the mortgage records of said county on the 9th day of June, 1907. On the 14th day of October, 1907, the appellee sold and conveyed by deed said part of said lot to one John C. Fullenweider, and in said deed was set forth the following condition, to wit: “Subject to a mortgage in the sum of $850.00, payable to Warren Morrow of Miami County, Indiana, *** all of which the said John C. Fullenweider assumes and agrees to pay.” The deed from appellee to Fullenweider was within 45 days after its execution duly recorded in the deed records of Benton county. On the 14th day of October, 1907, Morrow delivered said note to Fullenweider, with the following words and figures indorsed thereon: “Oct. 14, 1907, I hereby assign without recourse this note herewith to John C. Fullenweider. Warren Morrow.” On the 19th day of November, 1907, Fullenweider obtained from the appellant 280 acres of land situated in Washington county, Ind., and as a part of the consideration therefor transferred to appellant said part of said town lot in the town of Oxford above mentioned and said note, and delivered up to appellant the possession of said part of said lot and said note and indorsed the said note on the back thereof with the following words and figures: “Nov. 19, 1907, for value received I hereby assign the within note to John F. Judy, or order. John C. Fullenweider.” At the time appellant received said note as aforesaid he gave to Fullenweider full and valuable consideration therefor, to wit, $900, in lands in Washington county, without any knowledge of the condition and agreement in said deed from Warren to Fullenweider, whereby Fullenweider assumed and agreed to pay said note, and did not have such knowledge until several months after receiving said note, nor did he have any knowledge or information of any defense the appellee had or claimed to said note or any part thereof until long after he had received such note, except such notice as he had by reason of the stipulation in the deed from the appellee to Fullenweider and of which he may have been and was bound to know. The note sued upon is of the tenor following. (Here follows the copy of the note.) Appellant knew that said note so purchased was secured by mortgage, and that by the terms of the deed of appellee to Fullenweider he knew that Fullenweider agreed to pay the note, that said note was procured by said Fullenweider from said Morrow, and that the debt evidenced thereby was thereby paid, and that appellant having received as part consideration of the Washington county real estate, the real estate secured by said mortgage, he knew of the stipulation contained in said deed. “Wherefore appellee says that the note when it came into the hands of Fullenweider was paid and the debt discharged, and that the appellant knew and was bound to know of such fact, and therefore ought not to recover herein, and appellee asks judgment for costs.”

The averments of the answer to the cross-complaint are almost identical with these averments both in form and substance, except on the subject of appellant's knowledge of any defense of appellee to the note in suit when he purchased the same.

Upon this subject the answer to the cross-complaint alleges: “That at the time said Judy received said note as aforesaid he had no knowledge of the condition and agreement in said deed from said Warne to said Fullenweider, whereby said Fullenweider assumed and agreed to pay said note, nor did he have any such knowledge or information concerning any agreement on the part of said Fullenweider to pay said note or in any manner to become liable for its payment, nor did he, said Judy, at any time have any knowledge or information of any defense said Warne had or claimed to said note or any part thereof until long after he received the same as aforesaid.” So that the difference between the two answers seems to be in the conclusions of the respective pleaders as to the effect of the specific facts pleaded upon the subject of appellant's knowledge of any secret equities or defense of appellee to the note in suit when appellant purchased the same, rather than in the facts upon which such conclusions are based. Appellee's cross-complaint to which appellant's said answer was directed contains averments substantially the same as those in said answers with reference to the execution of the note and the mortgage and the sale of the real estate by appellee to Fullenweider, and the condition contained in the deed conveying such real estate, and also avers that on the 14th day of October, 1907, said Morrow turned over to said Fullenweider the said note described, which he, Fullenweider, had agreed to pay and which he did in fact pay, that said note has been fully paid and satisfied; that the appellant is claiming to be the owner of the note by virtue of the purchase of the same for value and has possession of the same without right; that he is not the owner, nor is he entitled to the possession thereof. Appellee asked that the note be declared paid, and that he have possession thereof. The averments common to each of said answers show that appellant “gave full and valuable consideration” for the note in suit without any actual knowledge of the condition and agreement in said deed from said Warren to said Fullenweider, whereby the latter assumed and agreed to pay such note “and without any actual knowledge or information of any defense the appellee had or claimed to have to said note or any part thereof”; the theory of appellee's answer being, as indicated by its additional averments, that the facts pleaded charged appellant with actual knowledge that the note was secured by mortgage, and that by reason of the provision of the deed of appellee to Fullenweider appellant was charged with constructive knowledge that Fullenweider had assumed and agreed to pay the note. The note is payable to the order of Warren Morrow at a bank in this state, and hence upon its face is negotiable paper governed by the law merchant, unless the words “secured by mortgage,” above indicated as appearing at the close thereof, have the effect of destroying its negotiable character as such paper.

As a general rule agreements, contemporaneously executed, and pertaining to the same subject-matter, are to be construed together, but we think the courts generally have...