Walker v. Gray

57 P. 614, 6 Ariz. 359, 1899 Ariz. LEXIS 101

• Court: Arizona Supreme Court
• Decided: June 2, 1899
• Docket: Civil No. 668
• Status: Published

Opinion

SLOAN, J.

On the fifteenth day of August, 1893, the Hartford Banking Company, a corporation duly organized under the laws of the territory of Arizona, and doing a banking business in the city of Phoenix, executed and delivered to J. E. Walker a deed of assignment of all the property belonging to the bank,—real, personal, and mixed,—in trust for the benefit of the creditors of the company. The boobs of the bank at the time of the assignment showed that appellee, C. H. Gray, was indebted to the bank for overdrafts in the sum of $4,803.89. On the thirteenth day of June, 1895, said assignee brought suit to recover from said Gray the amount of said indebtedness as shown by the books of the bank. The answer of Gray to the complaint in this action contained a general denial, and by way of special defense set up that between the thirtieth day of May, 1895, and the first day of June, 1897, the defendant, for the use and benefit of the plaintiff’s assignor, the Hartford Banking Company, advanced and paid over to the Bank of British Columbia the sum of $8,528, in which said sum sáid banking company was indebted to the Bank of British Columbia; that neither the plaintiff nor said Hartford Banking Company had repaid said sum to the defendant, or any'part thereof. By way of further answer and counterclaim, the answer alleged that at various times between the first day of January, 1889, and the first day of July, 1893, said defendant deposited with the said Hartford Banking Company large sums of money, aggregating the sum of thirteen thousand dollars, for the use of defendant (to be drawn out and used by him); that on the -day of January, 1893, said defendant demanded of said banking company said sum of thirteen thousand dollars; and that the said bank had failed and refused to pay the same, or any part thereof,—and prayed that the said Hartford Banking Company be made a party to the action, and that defendant recover judgment for said sum of thirteen thousand dollars, with interest; and that the plaintiff be ordered to pay the same out of any funds he might have belonging to said banking company; and for costs. No answer was filed by the plaintiff in this action to the defendant’s counterclaim.

The record discloses that at the time of the institution of the above action there was pending in the district court of Maricopa County an action brought by said C. H. Gray and Mary A. Gray, his wife, against the said Hartford Banking Company and said J. E. Walker, assignee of said company. The object of this suit was to obtain an injunction against Walker, as assignee, restraining him from proceeding with the sale of certain premises owned by plaintiffs under a judgment obtained by the Bank of British Columbia against said plaintiffs for the sum of $10,057.82, including interest and costs, and the foreclosure of certain mortgage liiens against said premises, which said judgment had been assigned to said Walker, as the assignee of said Hartford Banking Company. As a ground for said relief, plaintiffs in this suit set up that the said judgment represented an indebtedness which had been evidenced by two promissory notes of five thousand dollars each, each secured by a mortgage on premises belonging to said C. H. and Mary A. Gray, and that these notes and mortgages were given to said Hartford Banking Company without any consideration whatever, and were accommodation paper merely. The complaint in injunction further alleged that said Gray had paid the Bank of British Columbia on said notes and mortgages the sum of $8,520, for which judgment was asked against said Walker, as assignee, for said amount, together with the costs.

When these two eases were called for trial, they were, by the consent of parties, tried together; the testimony in the injunction case being first taken, and by stipulation, so far as applicable, was considered as offered in the case of Walker, as assignee, against C. IT. Gray. In the injunction suit the court found that the plaintiffs had failed to establish any equitable ground for enjoining the enforcement of the judgment obtained by the Bank of British Columbia, and assigned to Walker as assignee, upon which judgment there was an unpaid balance of $5,154.51, and dismissed the action.

In the suit of Walker, assignee, against C. H. Gray, the findings of fact made by the court were as follows: “First. That on the 15th day of August, 1893, the Hartford Banking Company executed and delivered to the plaintiff a deed of assignment, in trust and for the benefit of all its creditors, of all the property belonging to said banking corporation, and that plaintiff is the duly qualified and acting trustee of said corporation. Second. That in divers sums and at divers times between the 1st day of January, 1889, and the 1st day of July, 1893, the said defendant, C. H. Gray, deposited with the Hartford Banking Company, to be placed to the credit of said defendant, and to be drawn out on checks of said defendant when he should so elect, the total sum of $51,851.36, and with said sum so deposited by defendant with the said Hartford Banking Company, was included the sum of $31,500 so deposited by the defendant with the Hartford Banking Company on the 12th day of November, 1890, and of which said sum $22,000 only was placed to the credit of said defendant by the said Hartford Banking Company, and the remainder thereof, to wit, the sum of $9,500, was by the cashier of the said Hartford Banking Company wrongfully, and without the knowledge or consent of said defendant, C. H. Gray, placed to the credit of E. H. Hiller, trustee; that the said sum of $51,851.36 deposited by the defendant, C. H. Gray, with the Hartford Banking Company, also included the sum of $1,000 so deposited by the said defendant on November 12, 1890, to be drawn out by the said defendant on the performance of certain conditions by the said defendant, and that thereafter the said conditions were duly performed by the said defendant, and the bank has undoubtedly received authority to pay said $1,000, but that said assignee placed it to the credit of said defendant in the books of the said bank; and that the defendant never drew out the same, and is now entitled to the same against the plaintiff herein. Third. That between the 1st day of January, 1889, and the 1st day of July, 1893, said defendant drew out of said bank the sum of $46,155.76, which said amount includes the sum of $4,803.89 mentioned in the complaint of plaintiff herein, and for which suit was brought by the plaintiff. Fourth. That on the 15th day of August, 1893, the date upon which said Hartford Banking Company made said assignment, it was indebted to said defendant upon said deposits in the sum of $5,696.11, no part of which has been paid to the said defendant.” Under these findings, the court gave judgment for the defendant, Gray, in the sum found due him,—to wit, $5,696.11,—less the amount due from said C. H. and Mary A. Gray to Walker, as the assignee of the Hartford Banking Company, under the judgment of foreclosure rendered in the suit of the Bank of British Columbia against C. H. Gray and Mary A. Gray,—to wit, the sum of $5,154.51. This left a balance of $541.60, which sum, together with the costs, Walker, as assignee, was ordered and adjudged to pay to said C. H. Gray out of any funds in his hands as such assignee, or that might thereafter come into his hands, belonging to the Hartford Banking Company, at the same ratio as other debts of said company.

The appellant, Walker, filed his motion for a new trial, in which he set up that at the trial of the action he was taken by surprise, in that, from the answer and counterclaim filed, he was led to expect that Gray’s defense would be limited to-proof that the sum of $8,528, alleged to have been paid the Bank of British Columbia, had been paid for the benefit of said Hartford Banking Company under the notes given as accomodation paper, and to proof that between the first day of January, 1889, and the first day of July, 1893, he had deposited with said Hartford Banking Company the sum of thirteen thousand dollars, which had not been drawn by him or paid to him by said bank; that upon the trial Gray was permitted to testify, over objection, that on or about November 12, 1890, a certain check for thirty-one thousand five hundred dollars had been deposited by him in the said bank, which should have been credited to him on the books of the company, but that in fact but twenty-two thousand dollars of this sum was so credited, and that the balance of nine thousand five hundred dollars was placed by one E. H. Hiller, cashier of said bank, to the account of E. H. Hiller, trustee, without authority, and without his knowledge and consent, and that the said sum of nine thousand five hundred dollars was due him from said bank, and for which he should be credited; that there was nothing in the pleadings to indicate that an issue would arise as to the proper disposition of the nine thousand five hundred dollars, and that, had he known or anticipated that such an issue would arise, he would have been prepared to have met the issue with the production of testimony showing that Gray had been credited by the bank in the total amount due him, and that the nine thousand five hundred dollars placed to the credit of E. H. Hiller, trustee, was not the money of said C. H. Gray, but the money of said E. H. Hiller, trustee; that since the trial of the action he has learned by the affidavits of one A. G. Hubbard and said E. H. Hiller that the said nine thousand five hundred dollars was a part of the thirty-one thousand five hundred dollars paid into the bank on a check payable to the order of said E. H. Hiller, twenty-two thousand dollars of which last amount was to be paid to said Gray, and the said nine thousand five hundred dollars was for the purpose of paying certain indebtedness of said Gray, and certain costs incurred in a suit wherein said Gray was a party; that the testimony of said Hubbard and said Hiller could have been obtained by him, had he known or expected, or had reason to know or expect, that said testimony would be material in the trial of said action. The court overruled the motion for a new trial, from which ruling and from the judgment Walker appeals.

Six assignments of error were made by counsel for appellant in their brief. The first two were based upon the reception of evidence on the part of appellee, Gray, and the rulings of the court thereon,—particularly upon the admission of the testimony of Gray relating to the check for thirty-one thousand five hundred dollars, and the misappropriation by the cashier of the bank of nine thousand five hundred dollars, part of the proceeds of the check. It is contended that neither the answer nor the counterclaim filed in this action supports this evidence. This testimony was put in in the injunction case, in which the transactions between Gray and the bank were fully gone into. When the testimony was introduced, the objection was made by counsel for appellant that it was “immaterial, irrelevant, and incompetent.” The question that no issue was made by the pleadings which rendered the testimony of Gray as to the misappropriation of the nine thousand five hundred dollars admissible was not raised. Again, as we have seen, at the close of the testimony put in in the injunction case, counsel for appellant stipulated in open court that said testimony, in so far as applicable, should be considered by the court, and taken as the proof in this case. The record does not show that the court, in ruling upon the objections made to the introduction of evidence in the injunction case, did so with reference to the state of the pleadings in this case. Appellant, therefore, in order to save an exception to the admission of testimony given in the former case relating to the subject-matter of this action on the ground of insufficient allegations in appellee’s answer and cross-complaint, should have, as a part of his stipulation, raised the point, and not waited until after the court’s decision. Had the cross-complaint been so radically defective as not to support a judgment thereon, no objection or exception thereto was necessary in order to save the point. An inspection, however, of the counterclaim, will show that it is sufficient in this respect, no matter how great the variance between the allegations of such counterclaim and the proof may' have been, as it clearly stated a cause of action. We hold, therefore, that appellant waived his objection by his stipulation and failure to raise the point at any time during the trial.

The third and fourth assignments of error are based upon the insufficiency of the evidence to support the judgment. It is contended in support of these assignments that appellant was concluded from claiming that the bank misappropriated the sum of nine thousand five hundred dollars out of the proceeds of the check for thirty-one thousand five hundred dollars deposited by him with the Hartford Banking Company, and that he therefore should be credited with that amount, because subsequently he gave to the bank two notes, for five thousand dollars each, secured by mortgage on his homestead and other real estate, as found by the court in the judgment rendered in the injunction case. In support of this contention, counsel for appellant cite a large number of authorities. None of these, however, go to the' extent of holding that the giving of a note is conclusive evidence of a settlement of all accounts between the parties, and that the amount, expressed in the note represented the exact indebtedness of the maker to the payee, as a result of such settlement. The farthest extent to which these eases go is that the giving of a note where there are mutual accounts between the maker and .payee is prir.ia facie evidence of a settlement of the accounts, and that the amount expressed in such note actually represents a balance due from the maker to the payee. Such a note is not held, in other words, to be conclusive evidence that the maker was actually indebted to the payee in the amount mentioned therein, as a result of a complete and full settlement of mutual accounts, but only to-raise a presumption of this fact, which may be overturned by competent evidence.

The fifth and sixth assignments of error have reference to the action of the court in overruling appellant’s motion for a new trial upon the ground of surprise and newly-discovered evidence. Appellant contends that the trial court erred in not granting him a new trial for the reason that he was taken by surprise by the testimony of Gray relative to the misappropriation by the cashier, Hiller, of the nine thousand five hundred dollars, because there was nothing in the answer or counterclaim of appellee, Gray, to indicate that any such defense would be made, and for the reason that the affidavits of A. G. Hubbard, of the firm of Hubbard & Bowers, who drew the cheek for thirty-one thousand five hundred dollars, and the affidavit of the cashier, E. H. Hiller, made part of the motion, contradicted the testimony of Gray, and showed that the latter had been credited with the full amount of the proceeds of said cheek for thirty-one thousand five hundred dollars which was due him, and that there was no misappropriation of the remainder, as was claimed by him, and for the further reason that if appellant had had reason to expect or had had knowledge that such a defense would be made, he would have had the testimony of said Bowers [Hubbard] and of said Hiller on the trial of the cause. Surprise which is the result of no lack of diligence, and which operated to the prejudice of the party surprised, upon the trial, and prevented his obtaining evidence material and competent, is a good ground for'the granting of a new trial. The party affected, however, must first have exhausted all his other remedies, before he is entitled to a new trial. He will not be permitted to take his chances of obtaining a verdict or decision, and to then for the first time avail himself of the,point on motion for a new trial. As we have seen, the testimony of Gray was put in in the injunction case. The records show that this cause was begun on the twenty-eighth day of May, 1898, and concluded on the ninth day of June, 1898. Gray was the first witness called in the action. The record fails to disclose that appellant made any application to the court for a continuance in the injunction case in order that he might meet the testimony of appellee which he claims occasioned his surprise; nor does it show that at the conclusion of the injunction ease he made an application for a postponement of the hearing of this case in order that he might procure the testimony of Hubbard and Hiller; nor did he call the court’s attention to the fact that the testimony of Gray made it necessary that he should procure the testimony of other witnesses than those then in attendance on the court. The appellant had abundant opportunity to apply to the court for a continuance of this cause upon the ground of surprise, and during the trial of the injunction suit had abundant time within which to consider and determine whether the testimony of Hiller or other witnesses would have been needed to meet the testimony of Gray in this suit. His silence upon the point of surprise during-the trial of the injunction case, and his willingness to enter upon the hearing of this cause under stipulation that the proof in the injunction case should he the proof in this case, indi-, cated that he was content to submit the question as to the misappropriation by the bank of the nine thousand five hundred dollars as claimed by Gray, on his part, upon the evidence of the books of the company, and upon' the other evidence in the cause. And, having lost, he should not thereafter be heard to complain because of insufficient preparation to meet the issues as raised by appellee. For that reason, we do not think the trial court erred in overruling appellant’s motion for a new trial. The judgment of the court below is affirmed.

Doan, J., and Davis, J., concur.