179 Ky. 755 | Ky. Ct. App. | 1918
Opinion of the Court by
Reversing.
Appellant remained in the employ of Jones Brothers & Company until December 24th, 1913, and then quit their service and returned to Louisville, Kentucky, where he has since resided, his reason for doing so being that he had ascertained during the early part of the year 1913 that it was not operating its manufacturing business at a profit. Although appellant had paid, in addition to the $100.00 cash payment on the stock purchased by him, $50.00, there was never a delivery of the stock to him nor surrender to him of the three notes. After his return to Louisville, however, and after the maturity of the last note which became due January 1st, 1914, the three notes- were sold and assigned by
The appellant’s answer denied his liability upon the notes or any of them, pleaded the contract above set forth under which he had purchased of Jones Brothers & Company the capital stock of the value of $1,000.00 and the conditions upon which he had executed the three notes, and also alleged that by the terms of the contract and his quitting the service of Jones Brothers & Company he was entitled to the return of the three notes, but that they were never returned to him, nor' did he receive of Jones Brothers & Company any 'of the stock for which they were executed. It was, in addition, alleged in the answer that the sale of the stock to' him by Jones Brothers & Company and his execution of the notes therefor were procured by fraud upon the part of the company through its president, George C. Jones, in falsely representing to him that the stock sold him was of the value of $1,000.00 and that the business of the company was being conducted at a profit; that the appellee, bank, purchased and obtained an assignment of the notes after each of them had become due and by reason thereof did not become a holder of them in due course. The prayer of the answer asked the cancellation of the three notes in question and to that end the pleading was made a counterclaim against the bank. The affirmative matter of the answer was denied by' reply, which in turn was controverted of record. . A jury was waived and the case submitted to the court for trial and judgment, and upon the conclusion of the evidence the appellee moved to dismiss its petition without-prejudice, which motion was sustained, the petition dismissed and appellant allowed his costs. Appellant there- • upon moved the court for judgment upon his counterclaim and a cancellation of the notes sued on in accordance with the prayer of his answer; but this motion the court overruled, and dismissed the counterclaim as it had the petition. Appellant excepted to so much of the judgment as refused the cancellation * of the notes and-dismissed his counterclaim. Hence, this appeal.
It is patent from the evidence that when appellant 'quit the service of Jones Brothers & Company that com
In addition to the support given it by the testimony of witnesses appearing in the record, the defense interposed by the answer was conclusively established by the writing executed to the appellant by Jones Brothers & Company at the time the latter obtained of him the notes, and it was doubtless appellee’s recognition of this fact that induced the dismissal by it of the action.
The question to be determined is, should the circuit court have cancelled the notes as prayed by appellant? Civil Code, section 372,- declares: “A defendant is entitled to a trial of a set-off or counterclaim, although the plaintiff dismiss his action or fail to appear. ’ ’ In refusing this relief that court seems to have proceeded upon tbe theoryv that, appellant’s counterclaim could not be maintained because: (1) Jones Brothers & Company, the original payee in the notes, were necessary parties to the action or counterclaim; (2) that the facts alleged by appellant did not constitute a counterclaim. Manifestly, Jones Brothers & Company were not necessary p'arties to the action for the cancellation of the notes or any other-purpose, as according to the averments of the petition that company had no interest whatever in the notes;'for it is alleged in the petition that the bank.“is now the owner and holder of said notes,” which were “sold, transferred and assigned” to it by Jones Brothers & Company for a valuable consideration. This being true, the assignment operated in law to vest the entire right and title to the notes in the bank and this would be equally true if as intimated in another part of the petition; when first received these notes were as
The cases of Howard v. Jones, 147 Ky. 303, and True v. Triplett, 4 Met. 51, cited in the opinion of the circuit court in support of its conclusion that appellant was not entitled to the cancellation of the notes, are not in point. In Howard v. Jones it was held that when an answer, called in the caption a counterclaim and cross-petition, stated no facts to sustain a judgment against the plaintiff, it could not be amended as a- counterclaim after the latter had dismissed his action without prejudice. And further that .a cross-petition against one not
“A counterclaim is a cause of action in favor of a defendant against a plaintiff, or against him and another, which arises out of the contract .or transactions stated in the petition as the foundation of the plaintiff’s claim, or which is. connected with the subject of the action. ’ ’
Measured by the above definition of a counterclaim the pleading filed by appellant must be regarded a counterclaim. The facts alleged therein for the cancellation of 'the notes, would, if alleged in a petition filed by appellant against appellee, as assignee and holdef of the notes to obtain their cancellation, have authorized the relief prayed without making the assignor, Jones Brothers & Company, a party to the action; and if by himself suing he could obtain the relief, for the same reason, he would be entitled to it when sued upon the notes.
On the other hand, if the doctrine announced in True v. Triplett, supra, should be applied, and the pleading in question be declared not a counterclaim, the matters alleged as a ground for the cancellation of the notes would nevertheless constitute a good defense to a recovery upon the noteá; and if sufficient to defeat a recovery thereon, the right of appellant to the cancellation prayed would necessarily result in or-de'r to afford him' complete relief. Here there was no failure to plead the facts constituting the counterclaim before the dismissal of appellee’s action. They weiw pleaded at the begin
For the reasons indicated the judgment is' reversed and case remanded with direction to the lower court to enter a judgment setting aside the order dismissing appellant’s counterclaim, and cancelling the notes.