157 Ind. 120 | Ind. | 1901
The Randolph County Bank, of Winchester, Indiana, as plaintiff, sued William Harris and Eneas II. Turpén to recover a personal judgment against them upon a promissory note- for $3,000 executed by them to the Citizens Bank of Union City, Indiana, and to foreclose a mortgage upon certain real estate in said county executed to said bank by said parties and their respective wives to- secure the payment of the note in suit. Appellant Jesse Canaday, who had previously been appointed receiver of the Citizens Bank, an insolvent institution, and other persons who, along with said receiver, claimed to have and hold liens upon the mortgaged premises, were made party defendants, and expressly challenged, by each paragraph of the complaint, to answer as to any liens or interests which they had or held against said premises. All of the defendants, except Canaday, the receiver of the Citizens Bank, were defaulted. He alone appeals, and assigns that the court committed the following errors: (1) Overruling his demurrer to the complaint; (2) in striking out and rejecting his cross-complaint; (3) in sustaining the demurrer of appellee to the second and fourth paragraphs of his answer; (I) overruling his demurrer to the second paragraph of appellee’s reply to the third paragraph of answer; (5) overruling his motion for a new trial.
The complaint is in two paragraphs. The first paragraph, among other things, after alleging that the plaintiff is an incorporated bank, sets out the execution of the note and mortgage by Harris & Turpén, and that said note was properly indorsed by the said Citizens Bank by N. Cadwallader, president, to the plaintiff as collateral security to secure the payment of $5,000, which latter sum is alleged to be now duo and unpaid. It is further charged that the makers of the
The second paragraph alleges the execution of the note and mortgage in suit by Harris & Turpén to the Citizens Bank, and then alleges that on March 2,1896, the plaintiff, the Randolph County Bank, loaned to said Citizens Bank the sum of $5,000, and received from said bank as evidence of said loan the following, to wit: “The Citizens Bank. Union City, Indiana, March 2, 1896. $5,000. Randolph County Bank, Winchester, Indiana, has deposited in this bank $5,000, payable to the order of itself sixty days (in current funds) after date, with no per cent, interest per annum only for the time stated on return of this certificate properly indorsed. C. H. Cadwallader, Cashier.” This certificate is indorsed as follows: “We hereby guarantee the payment of this certificate.” (Signed) C. H. Cadwallader, Hathan Cadwallader.
It is further alleged that at the time said loan of $5,000 was negotiated and made by the plaintiff to the Citizens Bank, that the latter by its officers and agents, in order to induce plaintiff to make said loan, promised and agreed with plaintiff to turn over and deposit with it as collateral and additional security for the payment of said loan the note and mortgage in suit, together with other notes, as such collateral security, at any time when the plaintiff should request the said Citizens Bank to do SO'. It is then averred that after making said loan to the Citizens Bank that the latter, upon request of plaintiff, did turn over and assign and indorse to plaintiff as collateral security upon said loan the
Appellant as receiver of the Citizens Bank demurred to each paragraph of the complaint upon the ground that neither stated facts sufficient to constitute a cause of action against him as defendant in said suit. His demurrer was overruled, to which ruling he excepted, and, thereupon, he filed an answer in four paragraphs, the first being the general denial. Each of the other three paragraphs was addressed to* the complaint generally, and not specially to either of its paragraphs. Appellant also filed what is denominated a cross-complaint, consisting of four paragraphs, which cross-complaint, upon motion of appellee, was stricken out and rejected in its entirety over the objections and exceptions of appellant. Appellee demurred for insufficiency of facts to the second, third, and fourth paragraphs of the answer, and its demurrer was sustained to the second and fourth and overruled to the third. Thereupon appellee replied in two paragraphs to the third paragraph of appellant’s answer, the first being a general denial. The demurrer to the second paragraph of reply was overruled. Upon the pleadings as they stood after the several rulings of the court as heretofore stated, the issues were joined between appellant and appellee and a trial by the court resulted in a finding in favor of appellee to the effect that it was entitled to recover
The second paragraph of appellant’s answer, after alleging the appointment of appellant as receiver of the Citizens Bank and the acceptance by him of said trust, and that said bank was organized and incorporated under the laws of this State as a bank of discount and deposit, then avers, among other things, that said Citizens Bank, for a long time prior to its suspension and the appointment of said receiver, was an insolvent institution, and was the owner of a large number of bills and notes, including the mortgage note in suit; that on May 6, 1896, the bank suspended and ceased to do business and soon thereafter passed into the hands of appellant as receiver; that on the 27th day of April, 1896, while the bank was in an insolvent condition, the president thereof, Hathan Cadwallader, without any authority from the board of directors, and without any authority whatever, transferred and assigned to appellee the note in suit, together with other notes and bills of said bank, by indorsing upon each the name of the said Citizens Bank; that the assign
The third paragraph of answer proceeds upon the theory that after the Citizens Bank had become insolvent, Cadwallader, its president, by the assignment of the note in suit, along with the other notes mentioned as a security for the $5,000 deposit, thereupon preferred appellee over the other creditors of the Citizens Bank, in violation of §2934 Burns 1894, §2697 Homer 1897, the same being a part of the law under which the Citizens Bank was organized. This section reads as follows: “All transfers of notes, bonds, bills of exchange, and other evidences of debt owing to any association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor, all deposits of money, bullion or other valuable thing to its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, with a view to prevent the application of its assets to the proper payment of its just liabilities, or with a view to the preference of one creditor to another — shall be utterly null and void.”
The fourth paragraph of the answer in the main may be said to be similar to the second. It, among other things, alleges that appellee on March 2, 1896, deposited with the
It appears, as previously stated, that appellant as receiver of the Citizens Bank is made a party defendant by appellee in this action to answer in respect to liens and interests which he claimed to have and hold in and against the mortgaged premises. It was not the purpose of the complaint to enforce the collection of the note against him. Appellee under its complaint only sought to recover a personal judgment against the makers of the note, and to enforce the foreclosure of its mortgage. The certificate • of deposit in no manner entered into or forms any part of the foundation of this action. Appellant contends that there is an insufficiency of facts as against his demurrer in each paragraph of the complaint, for the reason that there are no averments therein showing the right of the appellee to maintain this action.
The first paragraph of the complaint alleges that “said note was heretofore properly indorsed” to plaintiff by said Citizens Bank by N. Cadwallader, president, as collateral security, etc. The second paragraph avers that “said Citizens Bank did assign, indorse, deliver, and turn over to the plaintiff as collateral security”, etc. The makers of the note were party defendants to this action, but they did not see fit to appear and demur to the complaint for insufficiency of facts, or because of any defect of party defendants, and ap
We conclude that each paragraph of the complaint was sufficient, so far as appellant was concerned, to require him to answer in respect to the assignment of the note in suit, or in regard to any interest or lien which he had or held upon the mortgaged premises, and therefore the court did not err in overruling the demurrer to each paragraph of the complaint.
When the second and fourth paragraphs of appellant’s answer are stripped of surplusage matter, it becomes evident that the theory or gist of the defense attempted to be interposed by each is that the transfer or assignment of the mortgage note upon which appellee sought to recover was of no effect in passing to appellee any right or title to said note and mortgage, for the reason that the president of the Citizens Bank had no power or authority to make the assignment or transfer in question in behalf of said bank. Each of these paragraphs, under the facts therein alleged, was
If appellant desired to present an issue in regard to the authority or power of the president of the Citizens Bank to make an assignment or transfer of the note in suit, he was required by virtue of the above provisions of the code to do so by a verified plea. Vannoy v. Duprez, 72 Ind. 26; Lassiter v. Jackman, 88 Ind. 118; Phenix Ins. Co. v. Rowe, 117 Ind. 202; Allen v. Studebaker, etc., Co., 152 Ind. 406; Ralston v. Moore, 105 Ind. 243.
These unverified paragraphs of the answer were each but the equivalent of the general denial so far as they attempted to controvert the assignment of the note as alleged in the complaint, and as the general denial remains as a part of the answer, the action of the court, under the circumstances, in sustaining the demurrer to each was harmless, for the reason that if they had been permitted to remain as a part of the answer they would have cast no other or additional burden on the appellee than rested upon it under appellant’s general denial. Ralston v. Moore, supra; Allen v. Studebaker etc., Co., supra.
It is true that a demurrer is not the proper method of assailing an unverified plea of non est factum, but as a correct result was reached through the demurrer instead of a motion to strike out and reject the paragraphs in dispute, therefore, the question of procedure, under the circumstances, is of no importance.
Appellant next contends that the court erred in rejecting and striking out his cross-complaint, which consisted of four paragraphs. Appellee, however, insists (1) that neither
As we previously stated, the subject of the cause of action set out in the original complaint is not the certificate of deposit, but the note and mortgage therein embraced. The theory of this paragraph is to the effect that appellee acquired no title to the notes and bills so transferred to it by the president of appellant’s bank; that it has unlawfully converted said notes and a part of the proceeds thereof to' its own use, and that, therefore, appellant is entitled to recover against it for the alleged conversion of the notes and the money collected thereon. '
The facts averred in the fourth paragraph are substantially the same as those set out in the third. It sets out facts in relation to the organization of appellant’s bank and other, facts in regard to its failure and suspension and the appointment of appellant as its receiver, etc. It then proceeds to charge that on the 2nd day of March, 1896, appellee deposited $5,000 in the said bank and received a certificate of deposit as evidence thereof; that prior to the suspension of appellant’s bank on April 2'Tth following, the president thereof, one Nathan Cadwallader, delivered, turned over and assigned to’ appellee, as collateral security for the said de
The principal purpose or theory of this paragraph seems to be to recover against appellee for the alleged conversion of the notes and bills. As to the standing of this paragraph as a counterclaim or cross-complaint, it may be said to be open to the same objections as the third, inasmuch as it does not disclose by any positive averments that the notes and bills turned over and transferred to appellee, and by the latter unlawfully converted to its own use, have any connection with the subject-matter of the original action, and therefore there is nothing, under the circumstances, upon which appellant can base any right to inject such matters into this action, and recover thereon, by way of counterclaim or cross-complaint. Appellant insists that the first and second paragraphs of his cross-complaint each presented a proper claim and demand by way of set-ofi against appel
Again, the first paragraph sounds in tort, and the rule is ' well settled in this State that a claim or demand arising out of tort can not be pleaded as a set-off against a cause of action arising out of contract. See cases collected in 1 Woolen’s Procedure, §1999.
As the subject-matter of each of the paragraphs in question is not shown by averments therein to have any connection with or relation to the original cause of action they can not be maintained by way of counterclaim. The code defines the latter to be “any matter arising out of or connected with the cause of action which might be the subject of an action in favor of the defendant, or which would tend to reduce the plaintiff’s claim or demand for damages.” §353 Burns 1894. Assuming that the facts and matters set out in the first and second paragraphs constitute a cause of action against appellee, still as it does not appear therein
What we have said in regard to the first and second paragraphs applies to the third and fourth, and, therefore, as none of the paragraphs of the cross-complaint in question in any manner profess to'answer appellee’s complaint and as each seeks only to recover against appellee upon what is apparently an independent cause of action, the cross-complaint had no legitimate standing in the case, and it was not error for the court to reject or strike it out as an entirety on the motion of appellee. In passing upon the question here involved, we recognize the well settled rule that where objections to a pleading can apply merely to its insufficiency of material matters or facts to constitute a cause of action or defense, such pleading should be challenged by demurrer, and not by a motion to reject or strike it from the files. Even where the facts in a pleading are such only as to tend to constitute a cause of action or defense, the court, under such circumstances, is not justified in striking out or rejecting such pleading, for a motion to strike out can not perform the office of a demurrer. Atkinson v. Wabash R. Co., 143 Ind. 501, and cases there cited.
Had appellant under the facts alleged in his fourth paragraph sought to dispute appellee’s ownership or title to the mortgage note set out in the original complaint, and upon that theory sought affirmative relief against appellee and his codefendants, to the effect that the court adjudge upon his cross-demand that appellee had no title to said note by reason of its alleged unauthorized transfer and assignment, and
Appellant complains of some intervening rulings in the proceeding during the trial in respect to the evidence, and also that the evidence is not sufficient to sustain the judgment of the court. We do not, however, consider these alleged rulings and determine if any of them is erroneous, for the reason that in our opinion it fully appears from the legitimate evidence in the record that the merits of this cause, under the issues, have been fairly tried and determined, and that appellant has received substantial justice, and a correct result has been reached. Consequently, under
Counsel for appellant has made an extensive argument and one replete with much research in regard to the question as to whether the money received by the hank from the appellee and evidenced by the certificate of deposit in controversy should he considered or treated as a loan or merely as
Appellant’s bank, having received the money from appellee while a going concern in the prosecution of its business under and upon the faith of the agreement to secure it by assigning as collateral security the note in suit, it necessarily follows as a legitimate sequence that by the assignment or transfer of'the note to appellee, appellant’s bank simply discharged that which it, under its agreement, had obligated itself to do in order in the first instance to secure the money, and as to whether the same was obtained as a loan or as a deposit to be paid at a fixed time is evidently not an essential feature of the transaction. That an incorporated bank or banking institution may borrow money in the prosecution of its business, and secure the payment thereof by collaterals, or otherwise, is a well settled proposition, and the fact that such bank is insolvent at the time the loan is obtained does not impair or deprive the bank of its power or right to negotiate the loan and secure the payment thereof, unless it is forbidden by some statutory provision. First Nat. Bank v. Arnold, 156 Ind. 487; Wright v. Hughes, 119 Ind. 324, 12 Am. St. 412; Boone’s Law of Banking, §22; 1 Morse on Banking (3rd ed.), §§48, 160; Zane on Banks, §125.
We conclude that the record in this appeal presents no reversible error, and that the judgment should be affirmed. Judgment affirmed. Monks, J., did not participate in this decision.