Newman Grove Creamery Co. v. Deaver, 43225

• Court: Supreme Court of Nebraska
• Citation: 208 Neb. 178,302 N.W.2d 697
• Docket Number: No. 43225,43225
• Parties: , 31 UCC Rep.Serv. 624 NEWMAN GROVE CREAMERY COMPANY, Appellee, v. Howard DEAVER et al., Appellants.
• Decision Date: 27 February 1981

Page 697

302 N.W.2d 697 208 Neb. 178, 31 UCC Rep.Serv. 624 NEWMAN GROVE CREAMERY COMPANY, Appellee,
v.
Howard DEAVER et al., Appellants. No. 43225. Supreme Court of Nebraska. Feb. 27, 1981.

Page 698

Syllabus by the Court

1. Uniform Commercial Code: Consideration. Under the Uniform Commercial Code, no consideration is necessary for an instrument given as security for a debt already owed by the party giving it or by a third person.

2. Pleadings: Demurrer. A demurrer ore tenus is a permissible practice; and if a pleading to which it is addressed is totally defective, it is error to admit any evidence under such pleading.

3. Pleadings. Under our system of code pleading, a party is required to plead the fact, not the theory of recovery or defense; and generally speaking, the pleading of legal conclusions is insufficient to raise an issue of fact.

4. Pleadings: Trial. Where an objection that a pleading does not state a cause of action or a defense is interposed for the first time during the trial of a cause or after verdict, the pleading must be liberally construed in light of the entire record, and, if possible, sustained.

5. Pretrial Conferences. The purpose of a pretrial conference is to simplify and to narrow the issues of the case and to avoid traps and surprises.

6. Pleadings: Demurrer. Generally, it constitutes an abuse of discretion to sustain a demurrer without leave to amend where there is a reasonable possibility that the defect can be cured by amendment.

Crosby, Guenzel, Davis, Kessner & Kuester, Lincoln and James F. Brogan, Madison, for appellants.

Vince Kirby, Norfolk, for appellee.

Heard before KRIVOSHA, C. J., McCOWN, WHITE, and HASTINGS, JJ., and MURPHY, District Judge.

HASTINGS, Justice.

The plaintiff, Newman Grove Creamery Company (Creamery), brought suit against Howard Deaver and Betty Deaver for recovery on a promissory note in the principal amount of $15,948.11. The District [208 Neb. 179] Court

Page 699

for Madison County, without a jury, granted judgment against the Deavers in the amount of the note, together with costs of the action. The Deavers appeal, assigning as error: (1) That the court erred in finding that no consideration is necessary for an instrument or obligation given for an antecedent debt owed by a third person; and (2) That the court erred in sustaining the plaintiff's demurrer ore tenus as to the defendants' answer alleging duress in the execution of the note. We affirm in part, and in part reverse the judgment of the trial court.

Howard Deaver was employed as manager of the plaintiff Creamery, during which time credit was extended to his son, Scott Deaver, for products purchased from the Creamery. On or about November 15, 1977, Howard and Betty Deaver executed a blank promissory note to the Creamery. The blanks were filled in sometime later by Harold Conford, chairman of the board of the Creamery, in the amount of $15,948.11. That amount was the approximate balance of the account owed by Scott as of November 30, 1977. In defendants' answer to the petition, they alleged that there was no consideration given for the execution of the note, as well as that the note was signed under duress.

A pretrial order was filed on November 9, 1979, which stated: "All pre-trial motions concerning amendment of pleadings and all motions in limine shall be filed and noticed for hearing and heard before the Court at least ten days prior to trial." Trial was held on December 4, 1979. The plaintiff offered the note in evidence, as well as parts of the pretrial stipulation, and rested. The plaintiff then demurred ore tenus to the defendants' answer, for the reason that it failed to state facts which constituted an affirmative defense to the action. The court sustained the demurrer ore tenus so far as it concerned the defense of duress. However, the court overruled the demurrer as it related to the question of consideration. The trial then [208 Neb. 180] proceeded on the issue of consideration.

The first assignment of error concerns the finding by the trial court that no consideration is necessary for an instrument or obligation given for an antecedent debt owed by a third person. Neb. U.C.C. § 3-408 (Reissue 1971) states in part: "Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (section 3-305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of any kind." (Emphasis supplied.) The comments to that code section state that the "except" clause includes a debt owed by a third person. We recognized this exception in First Nat. Bank of Omaha v. Kizzier, 202 Neb. 369, 275 N.W.2d 600 (1979), by declaring that no consideration is necessary for an instrument given as security for a debt already owed by the party giving it or by a third person.

The appellants argue that the comment which refers to an antecedent debt of a third person goes beyond the words of the code section and should not be given effect. The appellants cite no...