Vallancey v. Hunt

• Decision Date: 31 December 1910
• Citation: 20 N.D. 579,129 N.W. 455
• Parties: VALLANCEY v. HUNT et al.
• Court: North Dakota Supreme Court

20 N.D. 579

129 N.W. 455

VALLANCEY

v.HUNT et al.

Supreme Court of North Dakota.

Dec. 31, 1910.

Syllabus by the Court.

In an action by the assignee of a mortgage to recover possession of the mortgaged chattels, the mortgagors contend that such chattels were sold to them under a conditional sale merely, and that such conditional sale never became absolute. Hence, that such mortgage does not confer upon plaintiff a special property in such chattels, nor the right to the possession thereof. Held, that the evidence discloses that such conditional sale subsequently became absolute, and such contention is therefore untenable.

In claim and delivery by a mortgagee or his assignee to recover possession of the mortgaged property which was sold to defendant, and the mortgage given to secure the purchase price thereof, defendant may counterclaim or set off damages arising from a breach of the warranty of the goods sold, but the matter constituting such defense, set-off, or counterclaim must be specially pleaded in the answer, and cannot be proved under a general denial.

Where the debtor by his conduct induces the assignee to believe that the obligation will be met, and that there is no defense thereto, he will be held to have waived the right to avail himself of a set-off against the assignor in an action by the assignee.

Additional Syllabus by Editorial Staff.

Estoppel by misrepresentation, or equitable estoppel, is the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed, either of property, of contract, or of remedy, as against another person who in good faith relied upon such conduct and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right either of control or remedy.

Appeal from District Court, Rolette County; John F. Cowan, Judge.

Action by Richard G. P. Vallancey against Martha Hunt and another. Judgment for defendants, and plaintiff appeals. Reversed, with directions.

Morgan, C. J., dissenting.W. H. Thomas and Skulason & Burtness, for appellant. C. R. Gailfus and Burke, Middaugh & Cuthbert, for respondents.

CARMODY, J.

Action to recover the possession of personal property consisting of a threshing machine and traction engine. Plaintiff bases his right to recover the possession of such property under a chattel mortgage dated September 3, 1901, and given to secure the payment of a promissory note for the sum of $645 executed and delivered by defendant to one James O'Loughlin on said date and transferred to plaintiff prior to the commencement of the action. The complaint alleges the execution and delivery of said note and mortgage by defendant to O'Loughlin, and the assignment thereof by the latter to the plaintiff as aforesaid. It also alleges nonpayment of the note, a demand for the possession of the property, and that defendants wrongfully refused to surrender possession thereof to the plaintiff. The prayer is in the usual form. The answer is a general denial merely. At the trial defendants, over plaintiff's objection, were permitted to show that such note was given to O'Loughlin as a portion of the purchase price of the threshing machine and engine described in the mortgage and that the oral agreement between defendants and O'Loughlin was to the effect that if the machine, after a fair trial, did not work satisfactorily all papers delivered by defendants to O'Loughlin representing the purchase price of the rig should be returned to defendants, and defendants should return such rig to O'Loughlin. Defendants also were permitted to prove that such machine did not work satisfactorily, and that they from time to time notified O'Loughlin thereof. The proof shows, however, that the defects complained of were remedied from time to time and that defendants have never returned the rig, but, on the contrary, used it during the entire threshing seasons of 1901, 1902, 1903, and several seasons thereafter. Defendants also were permitted to show, over plaintiff's objection, that they were induced by O'Loughlin to keep the machine under the promise that he, O'Loughlin, would make good to them all the damages which they suffered by reason of the defects aforesaid, and they were permitted to prove that O'Loughlin warranted the machine to be a good machine in every respect; that there was a breach of such warranty and that the damages on account of such breach of warranty exceeded the amount due on said note. At the conclusion of the testimony both parties moved for a directed verdict, whereupon the jury was excused from further service, and the court in due time made findings of fact and conclusions of law favorable to defendants, and ordered the action dismissed. From the judgment rendered on such findings and conclusions, plaintiff appeals.

Numerous assignments of error are urged by appellant's counsel, but those relied upon for a reversal of the judgment may be summarized as follows: (1) The alleged improper admission under the general denial of evidence duly objected to. (2) Error in holding that the contract of sale was conditional and not absolute. (3) That defendants waived their right to urge any of the defenses urged by them, and as to plaintiff they are estopped to urge such defenses.

Regarding the defense of conditional sale it is, we think, entirely clear from the record that, even if the sale's contract was conditional when made, it became an absolute sale when defendants were induced to keep the machinery under the promise on O'Loughlin's part that he would make good to them all damages suffered by reason of defects in the machinery or breach of warranty. The defendant, John C. Hunt, testified that he gave to O'Loughlin as a part of the consideration for the purchase price of this machinery deeds to three quarter sections of land, and that O'Loughlin agreed to hold such deeds and not place them of record until Hunt had had an opportunity to try the machine; that thereafter, and in the month of September, Hunt learned of the fact that O'Loughlin had placed said deeds on record, but he never at any time protested or objected thereto, but, on the contrary, continued to use the threshing rig throughout the threshing season, not only of that year, but for four or five years thereafter; not only this, but he paid one note given as a portion of the purchase price of said rig and paid the interest on the $645 note; not only this, but he was present at the time the note in suit was indorsed by O'Loughlin to plaintiff, and he actually handed the note to O'Loughlin for the purpose of indorsement over to plaintiff. All of these acts on defendant's part are wholly inconsistent with his theory that such sale never became absolute and they unmistakably show an executed sale. The sale having become an executed contract it follows that plaintiff, as the assignee of the note and chattel mortgage which are past due and unpaid, has a special property in such separator and engine, and is entitled to the possession thereof for the purpose of foreclosing the chattel mortgage, unless defendants have established a legal defense thereto, and this brings us to the question whether, under the general denial in the answer, it was error to permit defendants to prove a warranty, a breach thereof, and damages resulting from such breach. We are entirely clear on principle and authority that such evidence was wholly inadmissible. Manifestly, such defense consisted of new matter and must be specially pleaded. It was in the nature of a set-off or counterclaim. It did not directly tend, in the least, to deny or refute any of the allegations of the complaint. The authorities are practically unanimous to the effect that such a defense cannot be proved under a general denial.

In 31 Cyc. 697, it is said: “A counterclaim or set-off must under code procedure always be specially pleaded”-citing many authorities from Code states, including Hogen v. Klabo, 13 N. D. 319, 100 N. W. 847. In 34 Cyc. 1417, the correct rule regarding the right of a defendant in a replevin action to interpose a set-off or counterclaim, is stated as follows: “Since the adoption of Codes in most of the states, the doctrine of set-off and counterclaim has undergone much change. At first, counterclaims were held not to be available in any action for a tort, and therefore not in replevin, which sounds in tort. But this rule has been so far modified as to allow the interposition of a counterclaim in the full sense of the Code, whether arising on contract or based upon a tort, in an action of replevin, whenever such counterclaim is founded upon a cause of action arising out of the transaction set forth in the complaint as the foundation of plaintiff's claim, or whenever it is connected with the subject of the action.” In the note at the bottom of the page is the following: “In replevin by a mortgagee to recover possession of the mortgaged property, which was sold to defendant, and the mortgage given to secure the purchase price thereof, defendant may counterclaim damages arising from a breach of warranty of the goods sold. McCormick Harvesting Machine Co. v. Hill, 104 Mo. App. 544, 79 S. W. 745;Wilson v. Hughes, 94 N. C. 182;Minneapolis Threshing Machine Co. v. Darnall, 13 S. D. 279, 83 N. W. 266;Aultman v. McDonough, 110 Wis. 263, 85 N. W. 980.” Many authorities are therein collated holding that in an action of replevin defendant may plead matters by way of set-off and counterclaim. Why such holding, if, as here contended, all such matters may be proven under a mere general denial? Expressions may be found in many cases to the effect that under a general denial defendant may prove any defense tending to refute any of the material allegations in the complaint, but it will be found that almost invariably where such expressions were used the courts were dealing with defenses in the strict...