Liter v. Hoagland
| Decision Date | 13 May 1947 |
| Parties | LITER v. HOAGLAND. |
| Court | Kentucky Court of Appeals |
Rehearing Denied Sept. 26, 1947.
Appeal from Circuit Court, Jefferson County, Common Pleas Branch First Division; Roscoe Conkling, Judge.
Action by E. C. Hoagland against W. T. Liter to recover on a promissory note. From an adverse judgment, defendant appeals.
Reversed in accordance with the opinion.
Farnsley, Hotell & Stephenson, of Louisville, for appellant.
Wilbur O. Fields and Garner M. Petrie, both of Louisville, for appellee.
E. C Hoagland, the appellee, sued W. T. Liter, the appellant, on a promissory note. Before the evidence had been completed, the trial court directed a verdict in favor of Hoagland. Judgment for the amount of the note having been entered against Liter he is now seeking a reversal by this appeal.
The directed verdict for Hoagland was based upon the assumed merit of his reply in which he pled limitation as a complete bar against the defense set up by Liter, who had pled full payment of this debt by some subsequent transactions following the execution of the note.
The gist of Liter's contention on this appeal is that the statute of limitation may not serve as a bar to extinguish a valid defense, where no affirmative relief is sought and where the defense of an alleged payment of a promissory note springs from transactions directly connected with the claim on the note itself.
According to evidence introduced on this trial, Hoagland was a banker and an insurance agent in the town of Prospect. He was business and financial adviser and rather close friend to Liter, who operated a rock quarry and who also did a hauling business with trucks. The business relationship between Hoagland and Liter began about the year 1923 and it extended through a twenty year period thereafter. Hoagland wrote insurance for Liter, advanced the premiums thereon, then charged him with these items on an open account. Liter did hauling for Hoagland, furnished him with quarry rock, then charged him with these items on an open account. There seems to have been a mutuality of open accounts and also interrelated transactions between Hoagland and Liter during the years of their business dealings. This note was executed by Liter in favor of Hoagland in 1929 in the principal sum of $930, representing insurance premiums due in that amount, and this note was credited in 1937 in the sum of $100 by Hoagland's application of that amount on the note out of funds in Hoagland's hands belonging to Liter. The 1937 credit on this note was made by Hoagland without the knowledge or consent of Liter. It appears that after the 1929 execution of this note, the business transactions between Hoagland and Liter continued in unabated volume and with unchanged character. And although Liter's business methods were probably inefficient and his accounting practices were doubtless inaccurate, yet Hoagland seems to have kept a rather accurate accounting of the debits and credits between himself and Liter, so much so that Hoagland wrote Liter a letter in 1943 and enclosed his version of the complete state of accounts between the two of them up until that date. This 1943 Hoagland version of the state of accounts between himself and Liter listed this $930 promissory note as one of the items of credit in favor of Liter, thus giving countenance to the idea that the note obligation and the other open account items were all related and connected. Hoagland, through the following testimony, gave further countenance to this idea that the note transaction and the open account transactions were all connected in a unified sphere of business dealings between himself and Liter:
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In re Magnolia Gas Co., LLC
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