Cudd v. Cowley

85 So. 13, 203 Ala. 665, 1919 Ala. LEXIS 100

• Court: Supreme Court of Alabama
• Decided: December 18, 1919
• Docket: 8 Div. 189.
• Status: Published

Opinions

SOMERVILLE, J.

With respect to complainant’s showing and prayer for injunctive relief against the mortgagors’ action at law, it is clear that, if the complete settlement made by agreement between the parties on November 27, 1913, as evidenced by the note and mortgage executed by respondents to complainant on that date, were conclusive and binding upon them as to the amount then due, complainant would have no difficulty in presenting his legal defense to that action, viz. that a balance remained due on the mortgage at the time he carried away and sold or stored the chattels subject to the mortgage.

[1] But that_ settlement, however deliberately made, is not conclusive on the parties. It is strong presumptive evidence that the amount agreed upon is correct, and that the obligation to pay it is valid; and it imposes upon the party who would avoid it the burden of showing its falsity by reason of fraud or mistake. But such a showing the mortgagors in this case would be entitled to make, even in a collateral proceeding at law. First Nat. Bk. v. Allen, 100 Ala. 476, 14 South. 335, 27 L. R. A. 426, 46 Am. St. Rep. 80; 1 Corp. Jur. 715, § 356. See, also, Pollack v. Gunter, 162 Ala. 317, 320, 50 South. 155.

In 1 R. C. L. p. 218, § 17, it is said:

“A stated account may be impeached for fraud, mistake, or error in an original proceeding in equity brought for that purpose. It may also be impeached when interposed as a defense to an action, either at law or in equity, for a preliminary proceeding to set it aside is never necessary to enable a plaintiff to make his principal cause of action available. Wherever it is thrust forward, in whatever form of action it is pleaded, it may be impeached.” Gutshall v. Cooper, 37 Colo. 212, 86 Pac. 125, 6 L. R. A. (N. S.) 820; Dickerson v. Nabb, Sneed, Ky. Dec. 320, 2 Am. Dec. 725; White v. Thompson (Cal. App.) 180 Pac. 953; Perkins v. Hart, 11 Wheat. 237, 256, 6 L. Ed. 463.

[2] So far as we can discover, no case, either in this or any other jurisdiction, has ever denied the right of a party to falsify an account stated or settled whenever it is involved and presented in an action at law. A number of our law cases recognize the right as a matter of course. Ware v. Manning, 86 Ala. 238, 5 South. 682; Sloan v. Guice, 77 Ala. 394; Rice v. Schloss, 90 Ala. 416, 7 South. 802; Wise v. Fuller, 11 Ala. App. 427, 66 South. 827. And in Dickinson v. Lewis, 34 Ala. 638, it was held that a court of equity will assume jurisdiction for the falsification of an account stated only in those cases where the accounts, if unstated, would, from their peculiar nature, be the subjects of equitable cognizance, leaving the complaining party in all other cases to his remedy or defense at law.

[3] The dissenting opinion hereto appended would draw a distinction between stated accounts which have been merely assented to and agreed to be paid and those which have taken the form of a settlement by express written promise to pay an ascertained balance. The authorities, however, do not recognize such a distinction, which is evidently one of degree only. Our accepted definition of a stated account seems to be conclusive as to this:

“An account stated is an account balanced and rendered, with an assent to the balance, express or implied; so that the demand is essentially the same as if a promissory note had been given for the balance.” (Italics supplied.) Comer & Co. v. Way, 107 Ala. 300, 19 South. 966, 54 Am. St. Rep. 93; Loventhal v. Morris, 103 Ala. 332, 336, 15 South. 672.

AYe do not understand the cases of Paulling v. Creagh, 54 Ala. 646, and Scheuer v. Berringer, 102 Ala. 216, 14 South. 640, as in any sense holding that a balanced account, settled by giving a note for the balance can be impeached for fraud or mistake only in a court of equity.

In its last analysis, the question is simply whether the maker of such a note may inquire into its consideration in a court of law by showing fraud or mutual mistake with respect thereto; and the authorities hold, without apparent dissent, that—

“A mistake of fact in executing a bill or note, as where it is given in settlement of a balance mistakenly supposed to exist, is a defense to an action by the payee or holder, other than a holder in due course, provided the mistake is mutual.” 8 Corp. Jur. 797, § 1053.

The bill shows that they have repudiated the settlement in question, thereby opening their account from beginning to end and extending the issue in the action at law to the question of the balance actually due upon all of their business transactions. This would involve such a multitude of items of debit and credit and such a variety of mixed and overlapping securities, as would defy any clear and intelligent solution at the hands of a jury in a collateral proceeding at law.

[4] We hold, therefore, on the showing made by the amended bill, that complainant properly invokes the equitable jurisdiction for an accounting and for injunctive relief against the pending action at law, to the end that complete equity may be decreed in a single proceeding. Watkins v. Tallassee Mfg. Co., 38 South. 756.

It results that the trial court erred in sustaining the demurrer, and the decree thereto will be reversed and one here rendered overruling the demurrer to the bill as amended.

Reversed and rendered.

All the Justices concur, except McCLELLAN, J., who dissents. ANDERSON, C. J., and SAYRE, J., concur in the conclusion.