Utley v. Stevens

• Decision Date: 23 October 1930
• Docket Number: 6 Div. 688.
• Parties: UTLEY ET AL. v. STEVENS.
• Court: Alabama Supreme Court

130 So. 405

221 Ala. 666

UTLEY ET AL. v. STEVENS.

6 Div. 688.

Supreme Court of Alabama

October 23, 1930

Appeal from Circuit Court, Walker County; R. L. Blanton, Judge.

Action on promissory notes by F. L. Stevens against Utley, Chabert &amp Utley, a partnership composed of W. H. Utley, C. P. Chabert and Charles D. Utley. From a judgment for plaintiff defendants appeal.

Transferred from Court of Appeals.

Reversed and remanded.

Charges authorizing verdict for transferee against makers, if he purchased notes for value without notice in due course before maturity, held proper.

Plea 6 is as follows:

"Defendants allege that at the time the notes sued on were executed there was attached to said notes a printed contract, and the agent of Brenard Mfg. Co., the payee of said notes, who induced the execution of said notes, represented to the defendant who signed said notes for and on behalf of defendants, that the said contract which was between defendants and the said payee, contained a provision that if the goods purchased by defendants, viz., radio receiving sets, for the purchase price of which said notes were executed, were not satisfactory to defendants that defendants would not have to pay such notes. Defendants allege that the defendant who executed such notes for and on behalf of defendants relied upon said representation and executed such notes on the faith thereof, and without reading such contract to determine whether such representation was true.

Defendants allege that such representation was false and that the said agent of the payee of the notes, in making such representation was acting within the apparent scope of his authority."

Plea 7 is as follows:

"7. Defendants adopt all the allegations of plea No. 6, above, as plea No. 7, except the last paragraph of said plea No. 6, and in lieu of said paragraph allege as follows:

"The said Brenard Mfg. Co., the payee of the notes sued upon, accepted said notes and the contract attached thereto, and thereby elected to stand by the contract made by defendant's said agent in the sale of said radio receiving sets, and the said Brenard Mfg. Co., the payee of the notes sued upon, was, therefore, bound by the said representations of said agent."

Plea 11 is as follows:

"Defendants allege that the notes sued upon were executed in consideration of and in connection with a proposed sale by the payee of the notes, acting through its agent, to defendants of radio receiving sets. That the execution of such notes was induced by fraudulent representation and statement made by such agent to defendant, who executed said notes, in attempting to make sale to defendants of such receiving sets; which false and fraudulent representation and statement was that such notes would not be transferred or assigned by the payee to any other person, and if the goods so purchased by defendants were not satisfactory to defendants, defendants would not have to pay the notes. Defendants aver that the party who executed said notes for and on behalf of defendants, and to whom such representation and statement was made, executed the notes upon the faith of such representation and statement, and would not have executed them except for such representation and statement. Defendants further aver that such statement and representation that the notes would not be transferred or assigned by the payee was a false promise, fraudulently made, to deceive defendants and induce the execution of the notes sued upon and with the intention at the time to violate said promise. Defendants aver that after the execution of said notes the payee thereof did assign and transfer the same. And defendants aver that the said goods were not satisfactory.

"Defendants further aver that the said agent of the payee, in making such sale and making such representation, was acting within the apparent scope of his authority as salesman of the payee."

Plea 12 is as follows:

"For plea 12, defendants adopt all of plea 11, except the last paragraph thereof, and in lieu of such last paragraph defendants allege as follows:

"Defendants aver that the payee of the notes sued upon accepted said notes and the written or printed contract which was attached thereto, and thereby elected to stand by the said contract made by said agent and, therefore, was bound by the said fraudulent representation and statement of its said agent."

Defendants propounded the following question to witness W. H. Utley:

"What, if anything, did this agent of the Brenard Manufacturing Co. say to you as to whether or not that contract, that is, the printed form attached to the notes, contained a provision that if these goods were not satisfactory to you, that is, to your firm, that you would not have to pay the notes?"

Plaintiff's objection to this question was sustained, and this ruling is made the basis of assignment 14.

These charges were given for plaintiff:

"5. The court charges the jury that if you are reasonably satisfied from the evidence in this case that the plaintiff purchased the notes sued on before maturity of either of them in due course for value and without notice or knowledge of any defense thereto had or claimed by the defendants, then you should find a verdict for the plaintiff."

"14. The court charges the jury that if you are reasonably satisfied from the evidence in this case that the notes sued on were executed by defendants and payable to the order of The Brenard Manufacturing Company as the payee thereof, that the Brenard Manufacturing Co. endorsed each of said notes in writing to plaintiff and delivered each of said notes to plaintiff, and plaintiff purchased the said notes from The Brenard Manufacturing Company in due course of trade for value before maturity of any one of said notes and without any notice or knowledge of any defense to said notes, then you should find a verdict for the plaintiff."

Arthur Fite and J. B. Powell, both of Jasper, for appellants.

D. A. McGregor and R. A. Cooner, both of Jasper, for appellee.

FOSTER J.

The notes executed by appellants were given for the purchase of merchandise. In plea No. 7 appellants relied upon fraud in procuring their execution, in that the agent of the seller, in effecting the sale, misrepresented the contents of a contract executed as a part of the transaction. It was alleged that the seller accepted said notes and contract and thereby elected to stand by them and the representations of its agent, and was therefore bound by the said representations. Demurrer was sustained to this plea.

The argument of counsel indicates that this ruling was based upon the fact that it did not allege that the agent was authorized to that end, nor that he was within even the apparent scope of his authority. Plea 6, with such allegation, but otherwise similar to plea 7, except as will be noted, was held good.

This interpretation of the sufficiency of plea 7, in our judgment, conflicts with principles settled by this court, and referred to in the cases of Brenard Mfg. Co. v. Cannon, 209 Ala. 626, 96 So. 760; Colt v. Price, 210 Ala. 189, 97 So. 696; and Grissom v. Colt, 218 Ala. 336, 118 So. 580. The allegations of plea 7 are sufficient on these authorities to bind the principal as to the matters shown in the plea. The sufficiency of the plea on account of its failure to allege an offer of restoration of the property or an excuse for not doing so is not included in any ground of demurrer. As a plea in bar this is necessary. Coleman v. Night Commander L. Co., 218 Ala. 196, 118 So. 377; Thompson v. Fourth Nat. Bank, 214 Ala. 452, 108 So. 69; Grissom v. Colt, supra. However, the plea does not allege a rescission nor a repudiation of the contract, and, therefore, upon the authority of Lowery v. Mut. Loan Soc., 202 Ala. 51, 79 So. 389, and Grissom v. Colt, supra, it may be treated as a plea in recoupment, in which such restoration is not necessary.

If we only consider the matter argued by counsel in connection with plea No. 7, we think that it is not subject to the defect to which the argument is addressed. If that were the only defect appearing in the plea, we should say that the ruling of the court in sustaining the demurrer was erroneous. But on examination of it we find that this plea adopts the first paragraph only of plea 6, and makes other allegations in lieu of the last paragraph of that plea. It is only in the last paragraph of plea 6...