49 Colo. 560 | Colo. | 1911
delivered the opinion of the court:
This action was brought by H. Jacob Kruse, as endorsee of The Rocky Mountain National Bank, against The Kansas-Burroughs Consolidated Mining Company, the plaintiff in error Sykes, and one Hoffman, upon six promissory notes. The complaint contained six separately stated causes of action upon these several notes. Of five of them the mining company and plaintiff in error Sykes were endorsers merely; of one he was the maker. Sykes-filed a separate demurrer to the complaint in its entirety, on the ground that it did not set forth facts sufficient to constitute a cause of action against him, which was overruled. He then filed a separate answer and counter-claim and asked for, and obtained, an order making The Rocky Mountain National Bank and Thomas H. Potter its president, parties, and they were brought into court. The plaintiff below moved to strike certain parts of Sykes ’ answer and counterclaim and to vacate the order making Potter and the bank parties. Potter and the bank filed separate motions to quash the summons and return of the sheriff thereon as against them. All of these motions
Plaintiff being the holder of the notes and having produced them at the trial, even though he paid nothing for the assignment, was entitled to recover against defendant Sykes, the maker of one and endorser of the others, unless for some reason other than the alleged lack of consideration for the assignment defendant could not be held. — Walsh v. Allen,
The complaint does not allege, nor does the proof show, that there was any presentment of these notes endorsed by defendant for payment, or notice of dishonor given, nor were any facts that would excuse presentment, demand, or notice pleaded or proved. That there must be presentment for payment and the giving of notice of dishonor, under our statute, in order to fix an endorser’s liability, is conceded. This is the general rule, and this case, as pleaded, does not come within any exception. — Session Laws ’97, pp. 225, 228, secs. 70, 89. It was the rule of the law merchant; our negotiable instrument act being substantially a codification thereof. — 14 Enc. P. & P. 534, et seq.; Commercial National Bank v. Zimmerman, 185 N. Y. 210; Ford v. Booker, 53 Ind. 395; Bosch v. Kassing, 64 Iowa 312; Knott v. Hicks, 21 Tenn. 161; Baxter v. Erwin, 1 Shannon (Tenn.) 113; Slacum v. Pomery, 6 Cranch (U. S.) 377; Rushton v. Aspinall, 2 Douglas, Court of King’s Bench, 679; Harlan v. Dew, 3 Head’s Rep. (40 Tenn.) 505. Indeed plaintiff does not question this rule of law, but seeks to escape its application upon the ground that defendant did not specifically call the attention of the trial court to the absence from the
Besides, the defendant, at the close of the evidence, interposed a motion for nonsuit and called the court’s attention, not only to the lack of proof of
We now consider tbe order striking tbe new matter of tbe answer which is pleaded as a defense and a counter-claim. It is lengthy, but may be thus summarized: Tbe action, while nominally in tbe name of Kruse, who is a director of Tbe Rocky Mountain National Bank, is really in its interest, prosecuted in its behalf, wholly under its control, and it is tbe real party in interest, and tbe owner of tbe notes. Tbe money for which these notes were given was borrowed of Tbe Rocky Mountain National Bank for, and used by, Tbe Kansas-Burrougbs Consolidated Mining Company, of which defendant Sykes was president, to buy certain mining property acquired by it; that Sykes, from time to time, advanced large sums of money to keep it on its feet and to pay these notes and other claims, and that be is a judgment creditor of his company in a large sum of money; that certain mining property, owned by tbe La Crosse company, adjoins tbe property of tbe Kansas-Burrougbs company ; which, because of its situation, is of great value and advantage to tbe later company in developing its mines, and in order to obtain control thereof, tbe Kansas-Burrougbs company bought and owns 93,000 shares, all that is known to exist, of tbe La Crosse company’s stock; that in October, 1904, tbe creditors
It is the contention of defendant, and seems to be conceded, that as the notes were assigned hy the bank through its president Potter after maturity, the same defense against plaintiff Kruse, the assignee, and a bank director, could be made as if the suit were by the bank itself in its own name.
By sec. 57 of our code a counter-claim • is one existing in favor of a defendant against a plaintiff, between whom a several judgment might be had in ■the action, and arising out of one of the following causes of action: First, a cause of action arising out of the transaction set forth in the complaint as ■ the foundation of plaintiff’s claim or connected with the subject of the action; second, in an action arising upon contract, any other cause of action arising also upon contract and existing at the commencement of the action. The argument advanced by defendant is that since Potter, the president of the bank, which is the real owner of the notes, became the managing trustee for the benefit of the creditors of the Kansas-Burroughs company, he could not,- especially in view of his agreement with Sykes, without violating his duty as trustee, purchase at the execution sale the property of the La Crosse company and hold it for his own private interest or assert title in himself as
If the new matter in the answer is not a counterclaim under the first, it is so under the second, clause of sec. 57. It is also a good defense, in whole or in part. But it is more than a defense. It entitles defendant to affirmative relief, and for that reason Potter and the bank were properly made parties to the action; so that, whatever relief defendant is entitled to thereunder in addition to an offset against the notes, if any, might be awarded against them, whereas, as against plaintiff, relief would be restricted to the amount of the notes. To a complete determination of the controversy, Potter and the bank should be retained as parties.
The matters set up in the counter-claim of the' answer are of such a character that they would either destroy altogether plaintiff’s cause of action, or to some extent tend to decrease or diminish the amount of his recovery. They are therefore properly matters which may be included in a defense or a counterclaim. It must be borne in mind that, in passing on the motion to strike, we are required to assume the truth of the matters well pleaded in the answer. "What the facts are is for determination on a trial. If it be true, and such is the charge, that Potter, for the benefit of the beneficiaries, undertook to operate the mining property and conduct the business of the
It is argued, however, by plaintiff that the rule invoked by defendant is not applicable for the further reason that the property which Potter bid in at the execution sale was not covered by the declaration of trust; that the trust agreement did not include the mining property itself owned by, but merely all the known existing stock of, the La Crosse Mining Company, and only the mining claims themselves were bought. We do not think the distinction makes any difference in the principle of law applicable. Defendant cites the case of Harrison v. Mulvane, 62 Kans. 454, in favor of this contention. We do not so interpret that decision. In that case the trustee was charged under the trust with the duty of selling certain corporation stock — which belonged to an individual stockholder — -to raise a fund to pay encumbrances on the property of the corporation, including an encumbrance belonging to the trustee junior in time. to the others and acquired by him before he became a trustee, and it was held that the trustee was not thereby a trustee of the encumbered property of the corporation and forbidden to protect his. own lien by buying the prior liens. That, however,
We are of opinion that if the equitable matters set up in the answer are not connected with the subject of the action or do not arise out of the transaction set forth in the complaint, they do arise out of the contract by which the trust relation was created, existed at the commencement of the action, and directly tend to decrease or diminish the extent of the recovery by the plaintiff under the causes of action arising out of contract set up in the complaint and have a direct connection therewith. As we read the case of Bannerot v. McClure, 39 Colo. 472, there is nothing in that ease which opposes the conclusion that the matters set up in the counter-claim of the pending action are properly interposed, either as a defense or counter-claim. On the contrary, that case is authority for our conclusion that this is a proper counter-claim. If the matters set up in this counterclaim are established, certainly there would be something due defendant from Potter’s bank upon it, and it can be applied in diminution of plaintiff’s claim, which is really the bank’s, upon these notes, and
For the reasons given, the trial court erred in overruling in its entirety the motion for nonsuit. It also erred in striking out the new matter in the answer, and in vacating the order making Potter and the bank parties. The complaint is bad in not averring presentment and notice of dishonor.
The judgment must be reversed and the cause remanded for a new trial, proceedings thereat to be in harmony with the views expressed in this opinion. Plaintiff may amend his complaint as he may be advised, with leave to defendant to plead anew thereto. Potter and the bank must be retained as parties, with leave to them to plead to the matters charged against them, and like permission to defendant to plead.
Reversed and remanded.
Mr. Justice Mussee and Mr. Justice G-arrigues concur.