129 N.W. 455 | N.D. | 1910
Lead Opinion
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 J ames 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
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 or warranty exceed 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.
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.
Eegarding the defense of conditional sale, it is, we think, entirely clear from the record that, even if the sales contract was conditional when made, that 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 O. 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 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
In 31 Cyc. Law & Proc. p. 697, it is said: “A counterclaim or set-off must, under Code procedure, always be specially pleaded.” CiV ing many authorities from Code states, including Hogen v. Klabo, 13 N. D. 319, 100 N. W. 847. In 34 Cyc. Law & Proc. p. 1417, tbe correct rule regarding tbe right of a defendant in a replevin action to interpose a set-off or counterclaim is stated as follows: “Since tbe adoption of Codes in most of tbe states, tbe 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 tbe interposition of a counterclaim in tbe full sense of tbe Code, whether arising on contract or based upon a tort in an action of replevin, whenever sucb counterclaim is founded upon a cause of action arising out of tbe transaction set forth in tbe complaint as tbe foundation of plaintiff’s claim, or whenever it is connected with tbe subject of tbe action.” In tbe note at tbe bottom of tbe page is tbe following: “In replevin by a mortgagee to recover possession of tbe mortgaged property, which was sold to defendant, and tbe mortgage given to secure tbe purchase price thereof, defendant may counterclaim damages arising from a breach or warranty of the goods sold. McCormick Harvesting Mach. Co. v. Hill, 104 Mo. App. 544, 79 S. W. 745; Wilson v. Hughes, 94 N. C. 182; Minneapolis Threshing Mach. Co. v. Darnall, 13 S. D. 279, 83 N. W. 266; Aultman Co. v. McDonough, 110 Wis. 263, 85 N. W. 980.” Many authorities are therein collated bolding that, in an action of replevin, defendant may plead matters by way of set-off and counterclaim. :Why. •such bolding, if, as here contended, all sucb matters may be proven under a mere general denial? Expressions may be found in many cases to tbe effect that, under a general denial, defendant may prove any defense tending to refute any of tbe material allegations in the complaint, but it will be found that almost invariably where sucb
In Aultman Co. v. McDonough, 110 Wis. 263, 85 N. W. 980, the facts were quite analogous to those in the ease at bar, but the defendant specially alleged, by way of counterclaim, the matters which de-fendants were permitted in the case at bar to prove under the general denial. We quote from the opinion: “As indicated in the statement, the plaintiff, as mortgagee, brought this action of replevin by reason of the defendant’s default in payment of a part of the purchase price of the machinery covered by the mortgage. The right to maintain such an action is undisputed. Gage v. Wayland, 67 Wis. 566, 31 N. W. 108; Rice v. Kahn, 70 Wis. 323, 35 N. W. 465; Hill v. Merriman, 72 Wis. 483, 40 N. W. 399. Of course, the plaintiff’s special interest in the property is limited by the amount of the mortgage debt. Gage v. Allen, 84 Wis. 323, 54 N. W. 627.
“The defendant, by way of counterclaim, sought to extinguish or' reduce such special interest by alleging damages for the breach of warranty on his purchase of the engine covered by the mortgage, and also damages for loss of time and expenses in trying to operate the engine returned to the plaintiff, and for which the engine covered by the mortgage was, in part, taken in exchange. Such counterclaim arose out of the transaction set forth in the complaint as the foundation of the plaintiff’s claim, and is connected with the subject of the action, within the meaning of the statute, especially as the plaintiff is a nonresident. Stats. 1898, subd. 1, 3, § 2656.”
It is true the court nowhere says that such defenses might not have been proven under a general denial, but, if such is the court’s understanding, it seems queer that they should waste time in giving reasons why such counterclaim was properly interposed. A very clear
If respondents’ contention be sound that they could prove these ■damages without alleging them by way of a set-off or counterclaim, then it would inevitably and logically follow that in claim and delivery actions every conceivable defense, whether consisting of new matter or not may be proved under a general denial, and that consequently set-offs and counterclaims are total strangers to an answer in such cases. Such a doctrine is contrary both to the letter and spirit of all rules of pleading. The books are full of cases in which set-offs and ■counterclaims have been upheld in actions of this nature, but they were .specially, pleaded in all except a very few, which we will here notice.
The appellate court of Indiana in Aultman & Co. v. Forgey, 10 Ind. App. 397, 36 N. E. 939, seems to have squarely held that a breach of warranty constitutes matters of defense, and is available under a general denial without an affirmative plea. The opinion is clearly unsound, and is not supported by any of the authorities therein cited :and relied on.
Another case apparently supporting respondents’ view is that of Davis v. Culver, 58 Neb. 265, 78 N. W. 504. The opinion was written by Ragan, C. That was a replevin action, the answer consisting of a general denial. One defense proved was that the note held by plaintiff was tainted with usury, and it was very properly held that ■such fact was admissible under the general denial. Such defense directly tended to show that the note was void. Defendant was, however, permitted to prove an indebtedness from plaintiff to defendant for blacksmith work, and the court upheld the ruling, but in so doing used this language: “It is insisted on the argument that this $2.75 due from Davis to Culver could not be set off in this action
The case of Plano Mfg. Co. v. Daley, 6 N. D. 330, 70 N. W. 277, is strictly in line with our views above expressed. It was there merely held that, under a denial, fraud or mistake in the execution of the mortgage under which plaintiff based his title and right to possession could be proved. Of course such matters were strictly defensive, as they directly tended to break down plaintiff’s alleged title and right to possession.
Aultman, M. & Co. v. Stichler, 21 Neb. 72, 31 N. W. 241, when carefully analyzed, merely announces the same rule. The defense in that case was, in effect, a failure of consideration for the mortgage in question.
In Lane v. O’Toole, 8 N. D. 210, 78 N. W. 77, the defense was that the contract under which plaintiff based his right of recovery never took effect.
But one more question remains to be disposed of, which is that •defendants waived their right to urge any of the defense urged by them, and as to plantiff they are estopped to urge such defense.
Plaintiff testifies that he became the owner of the note about November 15th, 1901; that afterwards, and on or about the 7th day of December, 1901, the note was indorsed to him by O’Loughlin; that on that day he paid $1,000 to O’Loughlin; that the $1,000 was not paid for this note alone but as part consideration for the land and the entire transaction, and at that time the land was transferred to plaintiff.
It seems to us that defendants, as far as plaintiff is concerned, waived any defense they might have had to the note in controversy. Defendant John O. Hunt knew O’Loughlin put the deeds on record in violation of his agreement; knew that plaintiff had taken up the deal from O’Loughlin, in fact was present when the deal was closed; paid a $235 note to plaintiff on that day; paid the interest on the note in controversy to December 7, 1901; paid the interest the next year; when requested to sign a neAV note to take the place of the note in controversy, asked plaintiff, if the present note was not all
In 34 Cyc. Law & Proc. p. 750, it is said: “If the debtor promise the assignee of a chose in action to pay the debt to him, he cannot afterward avail himself in set-off of claims he may have against the assignor, as such a promise amounts to a waiver of any right of set-off lie may have against the assignor. Similarly, the debtor by his conduct in inducing the assignee to believe that the obligation will be met, and that there is no defense thereto, may be held to have waived the right to avail himself of, a set-off against the assignor in an action by the assignee, particularly where the assignee was induced to purchase the obligation in consequence of representations by the obligor that he had no defense to it.” The defendant Hunt apparently studiously avoided disclosing to plaintiff any information regarding these alleged set-offs to the note. Batavian Bank v. Minneapolis, St. P. & S. Ste. M. R. Co. 123 Wis. 389, 101 N. W. 687; King v. Fowler, 16 Mass. 397; Downer v. Read, 17 Minn. 493, Gil. 470; Lee v. Kirkpatrick, 14 N. J. Eq. 265; Tylee v. Yates, 3 Barb. 222; Buck v. Wood, 85 Me. 204, 27 Atl. 103.
In King v. Fowler, supra, the court says: “The set-off claimed by Powler cannot be allowed; for it would be manifestly unjust. The assignment by King to Ives was for a valuable consideration; and Powler, having had notice that it was about to be made, should have given notice of his counterdemand against King, in season to prevent Ives from giving up his remedy upon execution. Instead of which he was silent not only then,-but on the day when the assignment was made, having had previous notice for a week. Purther, after formal notice that the assignment was actually made, he does not object, but conceals his intention, until a suit is commenced against him and the other defendants by Ives. This conduct must be considered in equity, as a waiver of any right to set off, and an acquiescence in the assignment.”
In Tylee v. Yates, supra, which was an action by the assignee of a promissory note, the court says: “A party who sees his obligation transferred to a bona fide purchaser for a valuable consideration, without giving notice of any defense or set-off which he may claim, against it, is estopped from setting up any defense against such purchaser.”
In 16 Cyc. Law & Proc. p. 722, it is said: “Estoppel by misrepresentation or equitable estoppel is defined as the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which 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 contract or of remedy. This estoppel arises when by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence, induce another to believe certain facts to exist, and such other rightfully relies and acts on such belief so that he will be prejudiced if the former is permitted to deny the existence of such fácts. It consists in holding for truth a representation acted upon, when the person who made it, or his privies, seek to deny its truth to deprive the party who has acted upon it of the benefit obtained.”
The trial court should have granted plaintiff’s motion to direct a verdict in his favor, as prayed for.
Dissenting Opinion
(dissenting). I respectfully dissent from all the conclusions reached by the court in this case. - I do not disagree with much that is said in the opinion, nor with most of the cases cited in support of the conclusion reached. The proof does not show that the defects in the machine were remedied. The evidence is practically undisputed that the machine failed to do good work up to and including the year 1905, when this action was commenced. The trial court expressly found that such defect continued until 1905.
This is an action at law, decided by the court after each party had moved for a directed verdict, and that fact gives to the court’s' findings the weight that follows the verdict of a jury. This fact renders the statement in the opinion, that the defects were all remedied, wholly unfounded, and if the record showed a conflict.on this question, the findings could not be assailed under prior decisions of this court.
So far as the question of estoppel is concerned, there is no evidence that the plaintiff relied upon any act or declaration of the defendant Hunt. The evidence also shows that plaintiff has not been damaged, if such reliance was placed on Hunt’s, acts. O’Loughlin indorsed the note, and would be responsible to plaintiff as holder under such indorsement. Two essential elements of estoppel are therefore wanting, —reliance on acts or representations, and resultant damage.
In regard to the conditional sale having become an absolute sale, I will only say that the payment of the note and retention of the machine until the defects were remedied were done under the express request and consent of O’Loughlin each year from the sale, including the year 1904. If such request to retain the machine was renewed each year, it is not apparent how the conditional, sale became absolute.
So far as the admission of evidence under a general denial is concerned, • there seems to be a misapprehension as to the nature of the action. The issue in the case is the right to the possession of the machine. In other words, Does the defendant wrongfully detain the possession thereof?
I shall not cite additional authorities than those referred to in the majority opinion. Every text-book on pleading or on replevin establishes this principle as sound, as I understand them.
The direction for judgment in plaintiff’s favor is also erroneous. All that this court should do is to reverse the judgment of the district court -and remand the cause for further proceedings.
In my opinion the judgment should be affirmed.