Franklin Bank v. International Hospital Equipment Co.

273 S.W. 197, 217 Mo. App. 131, 1925 Mo. App. LEXIS 12

• Court: Missouri Court of Appeals
• Decided: June 2, 1925
• Status: Published

Opinions

^* Headnotes 1. Bills and Notes, 8 C.J., Section 1069; 2. Bills and Notes, 8 C.J., Sections 1247, 1271; 3. Contracts, 13 C.J., Section 909 (Anno); 4. Bills and Notes, 8 C.J., Section 1195; 5. Bills and Notes, 8 C.J., Section 1210; 6. Bills and Notes, 8 C.J., Section 1211; 7. Bills and Notes, 8 C.J., pp. 966, Section 1265, 968, Section 1270; Pleading, 31 Cyc., p. 693; 8. Bills and Notes, 8 C.J., p. 995, Section 1299; 9. Bills and Notes, 8 C.J., pp. 990, 993, Section 1296; 10. Bills and Notes, 8 C.J., pp. 980, Section 1287 (Anno), 990, Section 1296, 1001, Section 1306; 11. Bills and Notes, 8 C.J., pp. 992, Section 1296, 995, Section 1299; 12. Bills and Notes, 8 C.J., pp. 958, Section 1247 (Anno), 992, Section 1296, 995, Section 1299; 13. Pleading, 31 Cyc., p. 209. This is an action on a promissory note. The defendants filed a joint answer to plaintiff's petition; the plaintiff, after filing a general denial reply, then filed a motion for judgment on the pleadings, which the court sustained, entering judgment thereon for $3281.96, from which defendants appealed.

Plaintiff's petition, with affidavit and Exhibit "A", reads:

"Plaintiff states that it is a corporation organized and existing under and by virtue of the laws of the State of Missouri, and as such is engaged in the business of banking in the city of St. Louis, Missouri.

"That defendant, International Hospital Equipment Company, is a manufacturing and business corporation, organized and existing under and by virtue of the laws of the State of Missouri, and having its principal offices in St. Louis, Missouri.

"Further, plaintiff states that on November 2, 1922, defendant International Hospital Equipment Company, executed and delivered to Ruche-Coopersmith Bed Company, a corporation, its certain promissory note (a verified copy of which is hereto attached and made a part of this petition, marked "Exhibit A") of even date, whereby, for value received, it promised to pay to the order of Ruche-Coopersmith Bed Company, ninety days after date, at the Franklin Bank, St. Louis, Missouri, the sum of two thousand nine hundred and seventy dollars ($2,970), with interest from maturity at the rate of eight (8) per cent per annum, and if said note should not be paid at maturity and should be placed in the hands of an attorney for collection it further promised to pay, as attorneys' fees for collection, ten (10) per cent additional on the full amount due thereon; demand for payment, protest and notice of dishonor being waived by all parties thereto.

"Further, that prior to the delivery of said note by defendant International Hospital Equipment Company to said Ruche-Coopersmith Bed Company, the defendants, J.D. Dean and G. Carlander, endorsed their names in writing on the back thereof, in the order stated, and without receiving anything of value therefor, and for the accommodation of said defendant, International Hospital Equipment Company.

"That thereafter said Ruche-Coopersmith Bed Company transferred said note by causing its corporate name to be endorsed in writing on the back thereof by R. Coopersmith, president, to the plaintiff, for value, and before maturity thereof, and that plaintiff was now the holder of said note in due course.

"Further, plaintiff says that defendant, International Hospital Equipment Company, paid upon the principal of said note, and on February 19, 1923, the sum of two hundred dollars ($200), and has paid all interest due on said note up to and including the 31st day of January, 1923, but that the balance of the principal of said note and all interest from February 1, 1923 has not been paid and is now due.

"Wherefore plaintiff prays judgment against the defendants for the sum of two thousand seven hundred and seventy dollars ($2,770) and interest thereon at the rate of eight (8) per cent per annum from February 1, 1923, until the date of judgment, and for an attorney's fee for collection, of ten per cent (10%) additional on the full amount due on said note, including interest."

"State of Missouri, | ss. City of St. Louis. |

John H. Sills, being duly sworn, upon his oath states that he is vice-president of the foregoing plaintiff, Franklin Bank, and as such has authority to make this affidavit, and further says that the copy of the promissory note charged to have been executed by the defendants, which is attached to the foregoing petition and marked "Exhibit A," is a true copy of the original promissory note charged to have been executed by said defendants and upon which the foregoing petition is founded.

JOHN H. SILLS.

Subscribed and sworn to before me, a notary public within and for the City of St. Louis, Missouri, this 13th day of April, 1923.

My Commission expires January 9, 1925.

(Notarial Seal) MATHILDA A. HAERTGEN,

Notary Public in and for the City of St. Louis, Missouri,"

"EXHIBIT A. (Copy.) St. Louis, Mo., Nov.2d 1922.

$2970.00. Ninety days after date for value received I promise to pay to the order of Ruche-Coopersmith Bed Co. Two Thousand Nine Hundred Seventy and No/100 Dollars at the Franklin Bank, St. Louis, Mo., with interest from maturity at the rate of eight per cent per annum; and if this note shall not be paid at maturity and shall be placed in the hands of an attorney for collection, I further promise to pay, as attorney's fees for collection, ten per cent additional on the full amount due hereon. Demand for payment, protest and notice of dishonor are hereby waived by all parties.

INTERNATIONAL HOSPITAL EQUIPMENT CO. Address By J.D. Dean, (Pres.)

Attest: G. Carlander, Sec. Treas. No. 210952 Due 1/31 Cash

On the back of note is following:

2970. 2/19/23 200. _____ 2770.

J.D. DEAN, G. CARLANDER, RUCHE COOPERSMITH BED CO. R. COOPERSMITH, PRES.

A true copy.

Attest: John Schmoll, Clerk."

Defendants then answered as follows: "Now Comes the defendants in the above-entitled cause and for their joint answer to the petition of plaintiff deny that they are indebted to plaintiff as in said petition alleged.

"Wherefore, having fully answered, they pray to be henced dismissed with their costs."

Plaintiff's reply is as follows: "Now comes the plaintiff and for its reply to defendants' answer, plaintiff denies each and every allegation in said answer contained.

"Having fully replied, plaintiff prays for judgment as in its petition."

Plaintiff then filed a motion for judgment on the pleadings, reading:

"Now comes the plaintiff and moves the court for a judgment upon the pleadings for the reason that the joint answer of the defendants in this action does not deny, either generally or specially, any allegation of the petition; for the further reason that said joint answer does not present any defense to plaintiff's cause of action; and for the further reason that said joint answer is argumentative and without effect as any defense to plaintiff's cause of action."

After the court sustained the motion for judgment on the pleadings and entered judgment thereon, the defendants filed their motion to set aside the judgment, as follows:

"Now come the defendants in the above-entitled cause and the move the court to set aside the judgment rendered herein on the 18th day of January, 1924, and to reinstate said cause for trial, for the following reasons, to-wit:

"First. The action of the court in sustaining said motion for judgment on the pleadings is beyond the jurisdiction of the court, in that said pleadings raised issues of fact and entitled defendants to a trial by jury.

"Second. That the action of the court in rendering said judgment under the issues raised is contrary to the provisions of the Constitution, of the laws and the Constitution of the State of Missouri, and deprives the defendants of their property without due process of law.

"That under the pleadings said judgment is erroneous and void, and the court was wholly without jurisdiction to entertain said motion and render judgment thereon."

I. Defendants assign error on the part of the trial court in sustaining plaintiff's motion for judgment on the pleadings, because the pleadings raised issues of fact. Defendants, however, fail to comprehend the import of their answer. They deny they are indebted to plaintiff as in said petition alleged.

An action on a promissory note is based on a promise to pay the legal holder as provided therein. It is not grounded on indebtedness, but on a promise to pay. Thus, the failure to prove the execution of a promisssory note, does not permit recovery on proof of indebtedness. Conversely, a suit upon a debt is not proven by the introduction of a promissory note. In either case there would be a variance between the pleadings and the evidence. The distinction is evident. As heretofore pointed out, defendants only denial is that of indebtedness. The question arises is this a sufficient answer?

Relative to commercial paper, in 8 C.J., sec. 1195, p. 910, it is said:

"In the code states, and in some other states, where the plea of a general issue is abolished, a plea denying indebtedness, without setting out any facts which constitute a legal defense, is not a denial of plaintiff's right to recover."

In Kinney v. Osborne, 14 Cal. 113, the court say:

"The defendant answered, not denying the execution of the note, but denying that he was indebted to plaintiff. This was no denial at all. The admission that he made the note being equivalent so far to a confession of the debt; and a denial of the indebtedness being only a denial of the legal consequences resulting from the execution of the note."

In Spencer v. Turney (Okla.), 49 P. 1012, an excerpt reads:

"The third paragraph of the answer which denied that the defendant was indebted to the plaintiffs in any sum whatever also presented no issue. Plaintiffs did not allege an indebtedness, which would have been a conclusion, but they did allege the execution and delivery of a promissory note, which was an allegation of fact, and the defendant failed to deny this fact by attempting to deny a conclusion which plaintiff had not alleged. No other question is presented by briefs of counsel. The trial court correctly ruled in sustaining the motion for judgment on the pleadings and the judgment is accordingly affirmed."

An excerpt from Haggard v. Hay's Admr. (Ky.), 13 B. Mon. 175, reads:

"As the answer admitted the execution of the note, it was not sufficient for it to state that the defendant did not owe it, but it should have stated the facts relied upon by him as having the effect to discharge him from all liability for the amount, so that the court could determine whether this was their legal effect, and the plaintiff might be apprised of the actual defense relied upon in the answer. The answer was therefore defective and the demurrer to it was properly sustained."

In Clark v. Finnell (Ky.), 16 B. Mon. 335, it is said:

"The general statement that the defendants do not owe, when the petition merely states the facts from which indebtedness or liability is implied by law, is no proper response to the petition, because it neither denies any allegation of fact nor states any new matter constituting a defense. But if it were allowed to be good in analogy to the plea of nil debit or nonassumpsit it might authorize a defense to be made, in the evidence of which there was no indication in the answer. And the object of the code is that the pleadings shall state facts and not mere implications of law. The court, therefore, properly sustained the demurrer to the first paragraph of the answer, and for the same reasons it properly rejected the proposed amendment, which in form and substance was nothing but a plea of nil debit."

Taylor v. Purcell (Ark.), 31 S.W. l.c. 568, says:

"In the first paragraph he denies that he is indebted to plaintiffs in any amount upon the note sued on. This is only the denial of a legal conclusion and is not sufficient."

Callanan v. Williams (Iowa), 32 N.W. l.c. 384, reads:

"A denial in an answer that the defendants are not indebted in the amount claimed in the petition does not present an issue of fact and does not amount to general denial. [Stacksleger v. Smith, 27 Iowa 286.]"

Relative to the words "as in said petition alleged," Hutchinson v. Bien, 93 N.Y.S. 217, comments:

"This is an appeal from an order granting the plaintiff's motion for judgment on the answer as frivolous. The answer is as follows: `(1) On information and belief he denies the allegations as alleged in paragraphs 2, 3 and 4 of the complaint herein.' The vice of this answer is found in the words `as alleged,' which limit the denial to the form of the allegations of the complaint instead of denying the substance. Such a denial is clearly bad upon mere inspection, and the order appealed from should therefore be affirmed with $10 costs and disbursements."

Sec. 1256, R.S., 1919, provides:

"Every material allegation of the petition not controverted by the answer and every material allegation of new matter contained in the answer not controverted by the reply shall, for the purpose of the action be taken as true, but the allegation of new matter, in the reply shall be deemed controverted by the adverse party, as upon a direct denial of avoidance."

Sec. 1380, R.S. 1919, reads:

"An issue arises upon the pleadings when a fact or conclusion of law is maintained by the one party and controverted by the other. They are of two kinds, first, of law, and, second, of fact."

Sec. 1381, R.S. 1919, reads:

"An issue of law arises: First, upon a demurrer to the petition, answer or reply, or to some part thereof; or, second, upon an allegation of fact in a pleading by the one party the truth of which is not controverted by the other."

Sec. 1382, R.S. 1919, reads:

"An issue of fact arises: First, upon a material allegation in the petition controverted by the answer; or, second, upon new matter in the answer controverted by the reply; or, third, upon new matter in the reply, except an issue of law is joined thereon."

What is now section 1256, R.S. 1919, was interpreted in Granitoid Company v. Cement Company, 169 Mo. App. 302, 152 S.W. 601, as follows:

"This being true, the averment in the petition concerning the agreement under which the switch was laid is admitted, for the statute provides that every material allegation of the petition not controverted by the answer shall, for the purposes of the case, be taken as true. [See Sec. 1830, R.S. 1909.] The averments of the petition touching this matter were material and, as they were not denied, are to be treated identically as though they were established by the evidence. It was unnecessary to introduce proof touching these matters which were admitted on the record, and it would have been superfluous to do so. [See Marshall v. Thames, etc., Ins. Co., 43 Mo. 586; State ex rel. v. Henderson,86 Mo. App. 482, 488.]"

It is evident defendants treated the denial of indebtedness as a general denial. Their denial, however, was not a general denial, and cannot be held such. They seemingly assume that the petition alleges an indebtedness, but it is evident that plaintiff relied upon the defendants' contract and promise to pay as provided in the note, and, as we have before pointed out, the promise to pay in the note and an indebtedness are not equivalent things. A denial of indebtedness is not a denial of the execution of the note. Even if defendants' answer could be construed as a general denial, it was not made under oath as provided by statute, and, consequently, does not act as a denial of the execution of the note. [Sec. 1415, R.S. 1919.] Neither payment, want or failure of consideration, or any other affirmative defense could be legally proven under a general denial. [Smith v. Rambaugh, 21 Mo. App. 390.] Nor was it incumbent upon plaintiff to prove value or consideration. [Sec. 2160, R.S. 1919.] The note, as alleged, was promissory and negotiable, and was deemed prima facie to have been issued for a valuable consideration and every person whose signature appears thereon to have become a party thereto for value. [Sec. 811, R.S. 1919.] Where the execution of the note is not denied, and where the plaintiff is in possession of it, these facts carry with it the presumption that the note was delivered; that it was negotiable, and that its execution and delivery imported that it was given for a valuable consideration. [Silverthorne v. Lumber Company, 190 Mo. App. 716, 176 S.W. 441; Dawson v. Wombles,123 Mo. App. 340, 100 S.W. 547.]

There are numerous cases in this State which hold that, where an issue is raised as to the genuineness of the indorsement by a general denial thereof, it is necessary for plaintiff to prove the indorsement, among them, Bank v. Johnson, 261 S.W. 705. But in the cases in which the above ruling is applied a sufficient denial was filed to raise the issue. The cases heretofore cited point out that defendants' answer was not a sufficient pleading, and therefore could not raise the issues defendants urge. It follows that inasmuch as the material issues in the petition were not denied they will be taken as confessed.

II. Defendants further contend that the burden was on plaintiff to prove value received. This is not the law, because a promissory note imports a consideration. [Secs. 811 and 2160, R.S. 1919; Silverthorne v. Lumber Company, supra; Dawson v. Wombles, supra.] Defendants contend that the petition alleged that the note was given for value received. To that we do not agree, for the petition does not plead such, but merely pleads that the note contained the words "value received." We do not think the petition is subject to the construction placed upon it by defendants, and we therefore hold that the note as pleaded in the petition prima facie imports a valuable consideration, and that it was not incumbent upon plaintiff to prove same. Inasmuch as defendants, answer was insufficient, we think the case stood as though defendants filed no pleading at all, and that the position taken by defendants amounted to a confession of the material allegations of the petition. It follows that the court properly sustained the motion for judgment on the pleadings

The Commissioner recommends that the judgment be affirmed.