Wyoming Construction & Development Co. v. Buffalo Lumber Co.

166 P. 391, 25 Wyo. 158, 1917 Wyo. LEXIS 17

Opinion

Beard, Justice.

The plaintiff in error, as plaintiff, brought' action against defendant in error, as defendant, to recover upon an alleged written contract of subscription for bonds of plaintiff. Upon the trial the court instructed the jury to return a verdict for defendant, and judgment was entered on the verdict, and plaintiff brings error.

The plaintiff is a corporation organized and existing under the laws of the state of South Dakota, and the defendant a Wyoming corporation. The contract sued upon is signed: “Buffalo Dumber Co. by H. G. Campbell.” In its petition plantiff alleged its corporate capacity and that it was lawfully authorized to transact business in the State of Wyoming, and the usual averments as to the execution and delivery of the contract by defendant.

The defendant answered: First, a general denial; second, - specifically denied that plaintiff was authorized to transact business in Wyoming by reason of its failure to comply with the laws of Wyoming, in that it had not filed its certificate of incorporation and an authenticated copy of the corporation laws of the State of South Dakota with the Secretary of State of Wyoming or in the office of the Register of Deeds of Johnson County, nor had it filed an acceptance of the Constitution of the State of Wyoming, or the appointment of a resident agent as required by law; and averred that at the time of making the pretended contract plaintiff was engaged in carrying on and conducting business in Wyoming. Third, alleged false and fraudulent representations on part of plaintiff in procuring the pretended contract, and “believing and relying on said representations, and upon the faith of them, the defendant did subscribe for bonds and stock of said company in the pretended contract set out in plaintiff’s petition.”

For reply to the second defense, plaintiff admitted that at the date of the contract sued upon, to-wit: May, 1913, it had not complied with the laws of Wyoming in the particulars mentioned in said defense, and did not do so until September 13 and 15, 1913. Denied that it was conducting any corporate business in Wyoming until after September 15, 1913. Replying to the third defense, it denied generally, except it admitted the allegations stating “that the defendant did subscribe for bonds and stock of said company,” and that the same had not been delivered, but were ready for delivery upon payment therefor.

We have statéd the substance and effect of the pleadings only as sufficient to show the questions presented in this court. At the close of the evidence submitted by the plaintiff the defendant moved the court “to direct the jury to return a verdict in favor of defendant and against the plaintiff, for the reason and upon the grounds of want of sufficient evidence; and that it is not shown that the defendant ever signed or executed the contract or subscription list sued upon.” The court sustained the motion and instructed accordingly. The record does not disclose upon what ground the court based the ruling, whether upon the ground that plaintiff had'failed to prove the execution of the contract by defendant; or that the court held that the plaintiff could not maintain the action on account of its failure to’ comply with the laws of this state with respect to foreign corporations; both of which questions are urged in the 'briefs. On the first question counsel for plaintiff contends that tlie allegations of the third defense wherein defendant pleaded false and fraudulent representations made by plaintiff’s alleged agents to defendant and upon the faith of which it relied, “the defendant did subscribe for bonds and stock of said company in the pretended contract set out in plaintiff’s petition,” is inconsistent with the general denial contained in the first defense, and relieved the plaintiff from the necessity of proving the execution of the contract by defendant.

Under the provisions of our Code of Ciyil Procedure, Section 4390, Comp. Stat. 1910, “The defendant may set forth in his answer as many grounds of defense, counterclaim and set-off as he has, whether they are such'as have been heretofore denominated legal or equitable, or both”; and requires the several defenses to be separately stated. The only limitation upon the pleading of inconsistent defenses seems to he the requirement that pleadings of fact must be verified (with certain exceptions) by the affidavit of the party, his agent or attorney, to the.effect that he believes the statements to be true. (Secs. 4422, 4425, Comp. Stat. 1910.) We think the real test as to the limitations upon pleading inconsistent defenses under our system of pleading is well stated in Citizen’s Bank v. Closson, 29 O. St. 78': “When two alleged grounds of defense plainly contradict each other, they are not susceptible of verification, because it is impossible for -both to be true. The verification of one is the falsification of the other. In such a case, the answer, though sworn to, is not ‘verified,’ and should, on motion, be stricken from the files, or the defendant be put to his election.” In the case before us there was no motion by plaintiff to require the defendant to elect between the' defenses pleaded in the first, and in the third defense set up in the answer. The proper practice where inconsistent defenses are pleaded is by motion to strike them out or to require the defendant to elect upon which he will rely. (Phillips on Code Pleading, Sec. 266; Pomeroy’s Code Remedies (3rd Ed.), Sec. 724; Pavey v. Pavey, 30 O. St. 600; Harper v. Fidler, 105 Mo. App. 680, 78 S. W. 1034; Broderick v. Andrews, 135 Mo. App. 57, 115 S. W. 519; Clink v. Cohen, 13 Cal. 623; Uridias v. Morrell, 25 Cal. 31; Murphy v. Russell & Co., 8 Idaho, 133, 67 Pac. 421; Buhne v. Corbett, 43 Cal. 264; Billings v. Drew, 52 Cal. 565.) By failing to move to strike out, or to require defendant tO' elect, plaintiff waived the inconsistency in the defenses pleaded, if there was in fact any such inconsistency, and defendant could rely upon either. That was the theory upon which the case was tried. Plaintiff put in evidence the certificate of incorporation of defendant; called Mr. Campbell as its witness and proved by him that he was the party who signed- the contract; that he was president of the defendant company; that the company carried a bank account and that 'both he and the vice president each signed checks on such account. Upon that evidence it is argued that his authority to sign the contract in question is presumed, and that the burden was then upon the defendant to prove his want of authority. A number of decisions are cited as sustaining that proposition ; but an examination of them discloses that where it has been so held, the act done or the contract entered into was in the usual and ordinary business of the corporation. Here, as shown by the certificate of incorporation, the business authorized thereby was the carrying on and conducting the lumber business. Without deciding whether defendant was authorized to purchase or subscribe for the bonds or stock of plaintiff,’ it is clear that to do so was outside the usual and ordinary business of the defendant, and would not give rise to such presumption. The contract offered in evidence and excluded by the court, does not, on its face, purport to be executed by any officer or agent-of the defendant. In that respect it differs from the copy set out in the petition. By the denial in the first defense the burden was cast upon the plaintiff to prove that the contract was entered into and executed by defendant. That it failed to do, unless the claimed admission contained in the third defense relieved it of that burden. There is no direct admission in the third defense that defendant in fact subscribed for the bonds of defendant. We think it admitted no more than that the contract was signed and executed in the manner and form apparent on its face, and was not an admission that it was so signed by authority of defendant; and “must be considered as having been made for the sake of the plea merely.” (Siter v. Jewett, 33 Cal. 92.) Where the contract is mentioned in the third defense it is referred to as the “pretended contract.” In Rudd v. Dewey, 121 Ia. 454, 96 N. W. 973, the court said: “But even in states where inconsistent defenses are not allowed, the remedy is by motion to strike or require an election; and, if the two defenses are allowed to stand, the colorable confession in one division, which is introduced or impelled in order to support matters in avoidance, does not waive the general denial pleaded in another.” In 2 Enc. Daw & Practice it is said: “While there is some conflict on the question, the great weight of authority, both at common law and under the statutes, favors the doctrine that, where several inconsistent pleas are filed, the admissions in one are not competent as evidence to rebut a repugnant averment in another.” The authorities upon which the author arrives at this conclusion are cited in the notes. In 1 Elliott on Evidence, Sec. 236, it is stated: “There is much reason in support of the view that where the law authorizes a party to plead in this way, as, for instance, where it authorizes him to set up independent and even inconsistent defenses in different paragraphs of answer, the statements in a particular paragraph are made for the purpose of presenting the issue to which they relate, and no other, and to permit them to be used against the pleader on another issue would deprive him of his denials or at least make it dangerous for him to do what the law authorizes him to do. He may, for instance, plead by way of denial in one paragraph and by way of confession and avoidance in another, and it would seem unjust to permit his unavoidable and, in a sense, conditional admissions in the latter paragraph to be taken as admissions upon the issue raised by the denial. This seems to be the view taken by most of the courts by which the question has been expressly decided.” In Pomeroy’s Code Remedies (3rd Ed.), Section 724, the rule is stated: “When a denial is pleaded in connection with a defense of new matter, or two defenses of new matter are set up, the admission in the one can never be used to destroy the effect of the other. The concessions of a defense by way of confession and avoidance do not obviate the necessity of proving the averments contradicted by the denial. This rule is universal. Even in those states where inconsistent defenses are not permitted to stand, the remedy is by striking out, or by compelling an election, and not by using the admissions of one to destroy the issues raised by the other.” (See also Quigley v. Merritt, 11 Ia. 147; Glenn v. Summer, 132 U. S. 152, 10 Sup. Ct. 41, 33 L. Ed. 301; McDonald v. Southern Cal. Ry. Co., 101 Cal. 206, 35 Pac. 643; Spaulding v. Saltiel, 18 Colo. 86, 31 Pac. 486; DeLissa v. Coal Co., 59 Kan. 319, 52 Pac. 886; Morris v. Henderson, 37 Miss. 492; Lake Shore & M. S. Ry. Co. v. Warren, 3 Wyo. 134, 6 Pac. 724.)

Upon consideration of the conflicting authorities we have arrived at the following conclusions: (1) That it is not permissible to plead separate defenses in the same answer which are so inconsistent in fact that the proof of one would necessarily disprove the other; but, if so pleaded, the remedy is by motion to strike or to require the defendant to elect upon which he will rely; and in the absence of such motion the objection is waived and both can stand and defendant may rely upon either, and the plaintiff cannot disregard them, or either of them, on the trial. (2) That admissions contained in a defense of new matter, requisite for the introduction of such new matter in defense, are not inconsistent with a denial pleaded in a separate defense in the same answer and cannot be used to defeat the denial. In other words, de fendant “may both deny and avoid, although the avoidance is a tacit admission of what is denied.”

Applying those rules to the case before us, the plaintiff failed to prove the contract sued upon to be the contract of the defendant corporation, and for that reason alone there was no error in granting the motion for a directed verdict in favor of defendant. As that disposes of the case, the other question has not been considered. The judgment of.the District Court is affirmed. Affirmed.

Potter, C. J., concurs.