Thompson v. Murphy
| Decision Date | 06 July 1931 |
| Docket Number | 5897 |
| Citation | 237 N.W. 653,61 N.D. 134 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Cass County, Cole, J. From an order sustaining a demurrer to a counterclaim for damages for breach of contract against loss on account of the purchase of bank stock, defendant appeals.
Reversed.
Pierce Tenneson, Cupler & Stambaugh, for appellant.
"A contract of 'guaranty' is a collateral undertaking and presupposes an original contract; while a contract of 'indemnity' is original and independent." Oppenheim v. National Surety Co. 231 P. 1076; Meyer v. Moore (Cal.) 237 P. 550; Western Surety Co v. Kelley (S.D.) 131 N.W. 808.
If there is no primary liability of a third person to the promisee which continues after the promise is made, it is an original promise and need not be in writing. Kilbride v. Moss, 54 Am. St. Rep. 361, 45 P. 812; Patrick v. Barker, 112 N.W. 358.
Where the seller of stock promises orally to take the stock off the purchaser's hands and refund the money or repurchase it, courts hold the contract to be one of indemnity and not within the statute. Pierce v. Rothwell (Wyo.) 267 P. 86; Pyskoty v. Sobusiak (Conn.) 145 A. 58; Asplund v. Danielson, 56 N.D. 485, 217 N.W. 848.
The purchase of stock is a sufficient consideration for the making of an indemnity agreement guaranteeing the purchaser against loss on stock. Kenigsberg v. Reininger (Iowa) 141 N.W. 407; Peterson v. Nelson (Mont.) 252 P. 371; Patrick v. Barker (Neb.) 112 N.W. 358.
The complaint need not negative matters of defense. 31 C.J. 466.
It is only when laches affirmatively appear on the face of the complaint that the defense can be raised by demurrer. Varrois v. Gommet (Cal.) 185 P. 1001; 49 C.J. 422.
Laches may arise from an unexplained delay short of the period fixed by the statute of limitations, still laches will not be presumed from such a delay alone. Wright v. Brooks, 47 Mont. 99, 130 P. 968.
"Time alone is not the essence of laches, but every case must be determined on its facts." Lingelbach v. Luckenbach (Wis.) 170 N.W. 711.
"A failure to attempt to mitigate damages will not bar plaintiff entirely from recovery, but will only prevent the recovery of such damages as might have been avoided by reasonable efforts upon his part." 17 C.J. 770. See also Norris v. Reynolds, 131 A.D. 818, 116 N.Y.S. 106; Northern Welding Co. v. Jordan, 184 N.W. 39.
Richardson, Thorp & Wattam, for respondent.
A contract not stating the time of performance or a continuing contract runs for a reasonable time. 31 C.J. 429; 6 R.C.L. 646.
Where the duration of the contract is left to be determined by one of the parties, it is too indefinite to be enforced. 6 R.C.L. 646.
"Plaintiff must allege a breach of the contract of indemnity on the part of the defendant; . . . a general averment of loss is not sufficient." 31 C.J. 466.
This action was brought to recover upon a promissory note for the sum of $ 3,500. The note was given on January 9, 1922, in payment for the purchase price of ten shares of the capital stock of the Farmers State Bank of Page. The defendant, in his answer, admitted the execution and delivery of the note and set up a counterclaim predicated upon an agreement made by the plaintiff as an inducement to the defendant to purchase the stock. The counterclaim sets forth that the plaintiff agreed to "indemnify the defendant and save him harmless from any and all loss and damage that said defendant might thereafter, or at any time, suffer or be put to as a result of the purchase of said stock by the defendant, either on account of the diminution in the value thereof or on account of depreciation or loss of the defendant's investment therein from any cause whatsoever." The defendant further alleges that after the purchase of said stock the assets of the Farmers State Bank of Page decreased and diminished in value so that in 1924 the bank was closed by order of the state banking board, and that to reopen the bank it was necessary to levy and to raise additional capital amounting to an increase of 150 per cent; that notwithstanding this was done the assets of the bank continued to diminish and in 1927 the state bank examiner on that account required that a portion of such assets be removed and charged off as worthless; that to meet such requirements the defendant paid the bank the book value thereof; that thereafter the assets of the bank continued to decrease and diminish in value and in the year 1928 had become worthless and the bank was finally closed by order of the banking board as insolvent, and that the stock thereof became and was of no value, and defendant asks damages in the amount of $ 3,500, the purchase price of the stock.
To this counterclaim the plaintiff demurred on the ground that it failed to state facts sufficient to constitute a cause of action. The trial court sustained this demurrer and the defendant appeals from the order made accordingly.
On this appeal plaintiff contends that the allegations of the counterclaim fail to show a valid and enforceable contract, for the reason, first, that the alleged contract is so indefinite as regards both time and terms as to render it unenforceable; second, that it fails to show the amount of loss and damage, if any, sustained by the defendant; third, that it appears that the defendant abandoned the alleged contract and waived any rights he might have had under it; and, fourth, that it affirmatively appears from the allegations of the counterclaim that the defendant was guilty of such laches as to deprive him of any remedy, if any he had, for the breach of the alleged contract.
The issues here arise on demurrer. The pleading thus attacked must be liberally construed. See § 7458, Comp. Laws 1913. All the intendments are in favor of its sufficiency. Peterson v. First & Secur. State Bank, ante, 1, 236 N.W. 722; Cammack Piano Co. v. Western Surety Co. 56 N.D. 262, 216 N.W. 561. Thus construed the counterclaim is sufficient.
The end sought in the construction of contracts is to ascertain the intention of the parties thereto and effectuate the same if it be reasonably possible to do so. Of course a pleading does not purport to set out all the facts and circumstances in connection with the transaction involved. These can be determined only upon a trial of the issues as made. However, it clearly appears from the allegations of the counterclaim in the instant case that the agreement as made by the plaintiff expressed an intention on his part to protect the defendant against any loss arising from any cause whatsoever that he might suffer by reason of his investment in the bank stock. It is...
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