177 Ind. 240 | Ind. | 1912
This is an action brought by appellee against appellants, as partners doing business under the firm name of the Kokomo Trunk Company. The complaint is based on two checks, one of which was given in renewal of the other. It was answered by five paragraphs, one of which was the general denial.
Appellants, in this appeal, claim that the judgment against them resulted from alleged errors of the trial court in sustaining appellee’s demurrer to their fifth paragraph of answer, and in overruling their motion for a new trial.
The fifth paragraph of appellee’s complaint makes the following allegations: “That defendants were, on or about the 10th or 12th day of January, 1907, and still are, doing business as partners in the city of Kokomo, under the name of the Kokomo Trunk Company. That on or about said 10th or 12th day of January, 1907, the defendants by their check, a copy of which this plaintiff is unable at this time to file and make a part of this paragraph, for reasons here
Copy of check.
“EXHIBIT ‘A’
Kokomo, Ind. Aug. 6, 1907.
HOWARD NATIONAL BANK OF KOKOMO, IND.
Pay to W. B. Hendricks or order...............$200
Two Hundred........................00/100 Dollars
Kokomo Trunk Co.,
Per. Almira Reed.
[Indorsed on back]
W. B. Hendricks.”
The fifth paragraph of answer contained the following allegations: “For answer to all the paragraphs of complaint based upon the check dated August 6, 1907, the defendants say: The check sued upon in this action was executed under the following circumstances and conditions, to wit: on the 10th day of January, 1907, the defendants Johnson and Cain were, and still are, partners doing business in the city of Kokomo under the name of the Kokomo Trunk Company, and on said day said Johnson and Cain and William B. Hendricks, the payee of the check in suit, executed to the Kokomo National Bank of the city of Kokomo their promissory note, dated January 10th, 1907, for the sum of $200, due in ninety days after date; that said note was executed for the purpose of borrowing money to pay a partnership debt of said Johnson and Cain, as the Kokomo Trunk Company, and the proceeds of said note, to wit: $196, was used in the payment of a debt then and theretofore owing by said Kokomo Trunk Company, to the Boston Artificial Leather Company; that William B. Hendricks
The contention that the court erred in sustaining the demurrer to the fifth paragraph of answer is involved with objections to the unusual character of the allegations of the fifth paragraph of the complaint, and the question presented is whether the answer was good as to it.
But the mere fact that a complaint, otherwise good, sets up also a defense to the cause of action pleaded, does not make the pleading bad, where matter avoiding the defense is also pleaded. Latta v. Miller, supra; Bowlus v. Phenix Ins. Co., supra; Chicago, etc., R. Co. v. West (1871), 37 Ind. 211; Hunt v. State, ex rel. (1884), 93 Ind. 311, 316; Lake Erie, etc., R. Co. v. Holland (1904), 162 Ind. 406, 69 N. E. 138, 63 L. R. A. 948; Bunting v. Mick (1892), 5 Ind. App. 289, 31 N. E. 378, 1055; Bradley, Holton & Co. v. Whicker (1899), 23 Ind. App. 380, 55 N. E. 490.
4. That the indorsee and holder suing on a check or other negotiable instrument, obtained or put into circulation fraudulently, has the burden of proving that he became a holder before maturity, without notice of the fraud, and for a valuable consideration, is firmly settled. Giberson v. Jolley (1889), 120 Ind. 301, 22 N. E. 306; First Nat. Bank v. Ruhl, supra; Shirk v. Neible, supra; Ray v. Baker, supra.
We know of no reason or rule of pleading which would prevent a plaintiff in such ease assuming such burden in the first instance by making proper allegations in his complaint of facts showing him to be a bona fide holder. It could deprive the defendant of no right that would otherwise be his, and the practice has been recognized and permitted. Bunting v. Mick, supra; Bradley, Holton & Co. v. Whicker, supra; Kimble v. Christie (1876), 55 Ind. 140; Cooper v. Merchants, etc., Bank (1900), 25 Ind. App. 341, 57 N. E. 569.
The question then arises, whether the facts alleged in the fifth paragraph of the complaint, for the purpose of showing that appellee was a bona fide holder, were sufficient for that purpose, and therefore sufficient to avoid the defense of fraud pleaded in the fifth paragraph of answer • or whether, if these facts had not been first pleaded in the complaint, but had been pleaded as a reply to the answer of fraud, they would have been sufficient as such.
The charge of fraud injected into the issue by the fifth paragraph of answer, as will be seen by a look at its allegations, is that Hendricks fraudulently put into circulation, by indorsement to appellee, a check which appellants’ firm had drawn in his favor to indemnify him as a surety on their note, which note was afterwards paid by them; that he
This is in accordance with the well-settled rule of law, that when two innocent persons are harmed by the act of another, that one of the two must bear the loss who has put it into the power of the wrongdoer to harm the other. So if appellee was a bona fide purchaser, appellants, according to the allegations of these pleadings, having drawn the check
It is true, as stated by counsel in their brief, that the issuance of a check implies, ordinarily, that there is money in the hands of the drawee belonging to the drawer to pay it; and that it is a fraud to put a check into circulation when there is not money to pay it. But this, obviously, is not a fraud on the drawer, but on the payee or one to whom it is indorsed, who has no knowledge of the lack of funds. Where such knowledge is imparted to the payee, and bv him to the indorsee and the check nevertheless is taken, to be presented at the time when it is represented that funds will be available, there can be no fraud involved. The taking of the check under such circumstances imparts notice that it cannot be cashed at once, but it is not calculated to carry notice of any fraudulent infirmity in the contract. Matlock v. Scheuerman (1908), 51 Or. 49, 93 Pac. 823, 17 L. R. A. (N..S.) 747. And this is particularly true where, as alleged in the complaint in this case, the drawers had, at the hands of Hendricks, previously procured appellee to cash similar checks drawn by them when they were out of funds, with a similar request that they be not presented until a time designated, when appellants would have the money to meet them, which checks were afterwards paid as agreed.
But aside from this, the rule is, that the fact that the holder has taken a check from the payee four days or even more after its date, unconnected with other suspicious circumstances, does not subject him to equitable defenses in an action by him against the drawer. 2 Daniel, Negotiable Inst. (5th ed.) §1634; 2 Morse, Banks and Banking (4th
The court did not err in sustaining the demurrer to the fifth paragraph of answer to the fifth paragaph of complaint. As to its sufficiency as an answer to the other paragraphs of complaint on which appellee had judgment, we express no opinion, as the question is not presented.
Questions are raised on instructions given and refused and on rulings on evidence which may not arise again, and they are not, therefore, considered.
Judgment reversed, with instructions to grant appellants a new trial.
Note.—Reported in 97 N. E. 930. See, also, under (1) 31 Oyc. 109; (2) 31 Cyc. 110; (3) 31 Cyc. 109; (4) 8 Cyc. 233; (6) 17 Am. St. 807; (7) 7 Cyc. 924 ; 39 L. R. A. (N. S.) 1207; (9) 7 Cyc. 952; (10) 8 Cyc. 114; (11) 7 Cyc. 696; (12) 7 Cyc. 956; (13) 7 Cyc. 941; (14) 8 Cyc. 209. Eor a discussion of the sufficiency of the complaint in an action on a bank check, see Ann. Cas. 1912 A. 184.