Phoenix Chair Co. v. Daniel

• Decision Date: 17 May 1934
• Docket Number: 6 Div. 546.
• Citation: 228 Ala. 579,155 So. 363
• Parties: PH×NIX CHAIR CO. v. DANIEL et al.
• Court: Alabama Supreme Court

155 So. 363

228 Ala. 579

PH×NIX CHAIR CO. v. DANIEL et al.

6 Div. 546.

Supreme Court of Alabama

May 17, 1934

Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.

Bill by the Ph nix Chair Company against A. S. Daniel and others. From a decree sustaining a demurrer to the bill and dismissing it, complainant appeals.

Affirmed in part; reversed in part and remanded.

See also, 155 So. 532.

Monette & Taylor, of Birmingham, for appellant.

Erle Pettus, of Birmingham, for appellees.

KNIGHT Justice.

Bill in equity to reform the indorsements made upon certain promissory notes executed by the Daniel Furniture Company Inc., to the complainant, appellant here.

The bill was filed against A. S. Daniel, W. E. Daniel, L. C Daniel, and J. M. Rowall.

A. S. Daniel filed demurrers to the bill as amended, the demurrers being directed to the bill as a whole. On submission upon this demurrer, the court entered a decree sustaining the same, and dismissed the bill of complaint. Along with this decree, the judge filed an opinion in which he said: "Upon the hearing of this cause it was made to appear that the complainant knew of the alleged mistake in indorsing the notes in blank instead of without recourse certainly some time during the year 1928, more than five (5) years before the complainant filed its bill of complaint in this cause. Under such circumstances applying the rule of laches, I think, the demurrer taking that point should be sustained and the bill dismissed."

The above opinion accompanying the decree was tantamount to a declaration by the court that the complainant would not be allowed to amend its bill, and tantamount to a denial of the right of amendment. In dismissing the bill under the circumstances there was manifest error. Jones v. Henderson (Ala. Sup.) 153 So. 214, 218; Ezzell v. First National Bank, 218 Ala. 462, 119 So. 2.

The bill is loosely drawn, and is entirely omissive in averment as to when the mistake was discovered, or as to when the holder of said notes undertook to enforce liability against the complainant on his indorsements of said notes. The averments of the bill left it open to the ground of demurrer raising the question of laches. However, there is nothing appearing. in the bill that would show that this defect could not be met by proper and timely amendment.

The rule of our decisions in respect to laches is stated in the recent case of Mullen v. First National Bank, 226 Ala. 305, 146 So. 802, 804, where it was observed: "In cases where the charge of laches is predicated upon delay only, and that delay appears on the face of the bill to have been short of the period of limitation, the reason of the rule of analogy obviously requires that special circumstances operating to destroy the right asserted should be brought forward by way of defense. In cases, however, where the bill shows a lapse in excess of the period of limitation, it would seem that special matters obviating the rule of analogy should be brought forward in the bill. The bill in the present case does not show a lapse in excess of the limitation, and there appears nothing upon the face of the bill to indicate lack of due diligence. Gayle v. Pennington et al., supra (185 Ala. 53, 64 So. 572); Henry County v. Winnebago Swamp Drainage Co., 52 Ill. 299; Jarvis v. Martin's Adm'r, 45 W.Va. 347, 31 S.E. 957; Fletcher Eq. Pl. & Pr. § 92."

The demurrer taking the point that, for aught averred to show an excuse for the delay in seeking reformation, the complainant was barred of his relief by laches, was well sustained. But, as pointed out above, the court fell into error in dismissing the bill upon the theory that it could not be amended by averring facts to show an equitable excuse for the delay, as for instance that the mistake was not sooner discovered, or that complainant filed his bill as soon as, or within a reasonable time after, a right was asserted, under the indorsements, contrary to the real intentions of the parties. 23 R. C. L. p. 352, § 49; Griswold v. Hazard, 141 U.S. 260, 11 S.Ct. 972, 999, 35 L.Ed. 678. Of course the facts averred must show a sufficient excuse for the delay, not left to rest merely upon statements of conclusion of the pleader. Upon the record before us, we cannot assume that a proper amendment cannot be made. That remains to be determined.

It is made to appear from the bill that the Daniel Furniture Company, Inc., was indebted to the complainant in the sum of $1,009.14, and in settlement of this indebtedness the debtor executed and delivered to the complainant its thirty-six promissory notes. Thereafter, the complainant received information to the effect that the debtor was in financial difficulty, and was settling its outstanding obligations on the basis of 50 cents on the dollar. Complainant, on receipt of this information, communicated to the debtor its willingness to accept settlement of the notes on that basis.

The debtor responded to the letter of complainant saying: "We are in receipt of your letter of the 23rd inst., and in reply would say you are misinformed as to our offering a cash settlement with certain of our creditors. The Daniel Furniture Company has not bought, or offered to buy, any of its accounts at a cash discount. However there have been a few of their creditors that have sold some [of] its accounts at 50¢ on the dollar to outsiders. If you desire to sell your account for cash, and will advise us at what rate, we will do our best to find a buyer."

The complainant replied to the debtor's letter signifying its willingness to settle on the terms stated, and W. E. Daniel, for the debtor, wrote complainant, under date of November 3, 1926, as follows:

"We are in receipt of your letter of the 29th ult. stating that you would settle our account for $600.00.

"As stated in our previous letter the Daniel Furniture Co., is not offering to settle its accounts for less than one hundred cents, but Mr. Daniel has a few friends who offer 50¢ on the dollar for some of the accounts.

"He has one who offers to take up your account of [on] this basis. If you will transfer your account (the set of notes you have

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