Owsley County Deposit Bank v. Burns

• Decision Date: 03 November 1922
• Parties: OWSLEY COUNTY DEPOSIT BANK v. BURNS ET AL.
• Court: Kentucky Court of Appeals

244 S.W. 755

196 Ky. 359

OWSLEY COUNTY DEPOSIT BANK v. BURNS ET AL.

Court of Appeals of Kentucky.

November 3, 1922

Appeal from Circuit Court, Clay County.

Action by the Owsley County Deposit Bank against A. H. Burns and others. Judgment for defendants, and plaintiff appeals. Affirmed.

Rawlings & Wright, of Manchester, and Charles W. Hogge, of Booneville for appellant.

Hall &amp Cloyd, and A. B. Hampton, all of Manchester, for appellees.

THOMAS J.

Appellees and defendants below, A. H. and Susan Burns, on September 7 1910, executed to T. C. Fuller their promissory note for $3,700, due in 12 months. It possessed all the requisites of and it was a negotiable instrument under, our Negotiable Instrument Law, and three days thereafter it was discounted by the payee to the appellant and plaintiff below, Owsley County Deposit Bank, and the proceeds were placed to the credit of the payee, who was at the time cashier of plaintiff. Contemporaneous with the execution of the note defendants also executed a mortgage to Fuller to secure it on a tract of land in Clay county, Ky. This action was filed by plaintiff on January 8, 1918, in the Clay circuit court to obtain judgment for its debt and to subject the land in payment thereof. Two credits were indorsed on the note, one for $1,200, of date September 17, 1910, and one for $463.81, of date April 16, 1914, but each of them was made by or at the instance of Fuller without any knowledge, according to the testimony, of either of the defendants. The petition did not allege that the plaintiff was the holder of the note "in due course," i. e., without notice of infirmities, defenses, or equities as between the original parties thereto, but the answer alleged, in substance, that the note was without consideration, and that plaintiff had knowledge thereof at the time it was discounted, and that it was not therefore a holder in due course. A second paragraph in the answer relied on the statute of limitations. The reply denied the want of consideration and plaintiff's knowledge thereof, and avoided the limitation plea by alleging new promises to pay the note made by defendant. The avoidance was denied by an appropriate pleading, and upon trial the court dismissed the petition and plaintiff has appealed.

The mortgage recites that the indebtedness represented by the note consisted of $3,600, which Burns owed J. F. Chandlier and James Hignite, and $100 to C. B. Lyttle, all which was a lien upon the mortgaged land, and for which it had been sold under judgments subjecting it, and that Fuller agreed to furnish the money with which to pay those judgments. Those facts were alleged in the answer, and in addition it was therein averred that before it became necessary to pay the judgments with the proceeds of the note, Fuller purchased from defendant A. H. Burns other land in Clay county aggregating 981.34 acres at $10 per acre, or a total sum of $9,813.40, out of which sum the judgments for which the note was executed were paid, as well as other debts of defendant leaving a balance of $1,141.51 due from Fuller to defendants, and which amount he then paid to them. It is quite manifest that defendants' answer violated the rule of correct pleading by incorporating therein his evidence to sustain his plea of no consideration, but that fact did not render the pleading bad on demurrer, as is contended by plaintiff's counsel, but only furnished grounds for a motion to strike therefrom the wrongfully pleaded evidence, but no such motion was made. The testimony heard upon the trial will not be set out herein,...