Case ID: kan_12/html/0191-01.html
Source: Caselaw Access Project
Author: {"author": "Brewer, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

P. P. Elder and others v. National Bank of Lawrence and others.
    July Term, 1873.
    New Trial: Action to Set Aside Judgment: Too Late. When, in an action regularly commenced and prosecuted, without any fraud or fraudulent representations, judgment is rendered by consent against the defendants, they cannot thereafter have the judgment set aside and a new trial granted, on the ground of the existence of a complete legal defense to the action, the nature and extent of which they were aware of at the time of the entry of judgment. [Watson v. Voorhees, 14 Kan. 331.]
    Error from Douglas district court.
    On the sixteenth of December, 1872, the National Bank of Lawrence, as plaintiff, recovered two judgments in the Douglas '•"district court against P. P. Elder and John Walruff, defendants, on certain promissory notes given by Elder and Walruff to the First National Bank of Ottawa, and by said Ottawa bank transferred to the Lawrence bank. On the twenty-seventh of February, 1873, Elder and Walruff, as plaintiffs, commenced this action in said district court (under sections 568, 570, Civil Code) to vacate and set aside said judgments, and for a new trial in each of said actions. They also prayed that the collection of said judgments, and the notes on which said judgments were recovered, be forever enjoined. Alleging a conspiracy to defraud, they made the Lawrence bank and Ottawa bank both defendants. The petition for a new trial alleges that they (Elder and Walruff) had a good and valid defense to said notes as against the -Ottawa bank, and should have interposed said defense to the actions brought by the Lawrence bank had not both banks falsely and fraudulently represented that the notes were transferred to the Lawrence bank in good faith, and for value, before the maturity thereof. Upon this petition, duly verified, a temporary injunction was granted. The defendants (the two banks) moved to dissolve said injunction, and said motion was heard before the district judge at chambers. Evidence was taken, and the motion to dissolve the injunction was sustained, and the injunction dissolved on the fifteenth of March, 1873. From this order Elder and Walruff appeal.
    
      J. W. Deford and Nevison é Riggs, for plaintiffs in error.
    The judge below erred in dissolving the temporary injunction previously allowed by him in this case. The bill prays for a new trial and for general relief; and the plaintiffs are clearly entitled to the new trials prayed for, or to an absolute and perpetual injunction of the judgments described in their petition. The notes on which those judgments are founded are illegal, being in violation of sections 8, 28., and 29 of the national currency act,— are void, and the judgments based upon them are no better. Nor is the National Bank of Lawrence a bona fide holder *of these obligations, because they show their invalidity upon their face. They show that they were given by two individuals to a national bank without “personal security.” This was enough to affect the National Bank of Lawrence with notice of their illegality. It is no answer to the plaintiffs to say that their petition for relief comes too late. In eases like this equity will give relief, although the defense might have been made at law. Lucas v. Ward, 12 Smedes & M. 157; Story, Eq. Jur. 85 298, 299, 694-701.
    
      Thaeher é Stephens, for defendants in error.
    The first question to be disposed of is this : Have plaintiffs in error shown any valid legal reason why they did not defend against the original actions, and why the judgments entered in those actions should be set aside and new trials granted ? There were two actions and two judgments. The first is readily disposed of, for it is admitted that the petition in the case disclosed the fact that the Lawrence bank received the note sued on after maturity. Hence, as the record itself apprised plaintiffs in error of the fact that any defense they might have to the note could be interposed; and as a matter of fact they did answer in the ease, and finally in person, as well as by attorney, in open court, consented that judgment should be against them. As to the second note, plaintiffs in error rely upon what they claim was fraud in the defendants in error in obtaining judgment thereon, whereby they were “induced” not to defend against it, but allowed judgment to go against them; but this pretense is disproved by plaintiffs’ own testimony on the hearing.
    Both of the plaintiffs in error were officers of the Ottawa bank when all this indebtedness mentioned in the petition occurred, and Elder was president of the bank — its chief executive officer — when the notes were executed and delivered. The plea the plaintiffs in error set up is this: that bank officers may loan the money of the corporation to themselves in violation of law, and make this fraud on the stockholders, *as well as their own disobedience of their official oath, the basis of affirmative relief in a court of equity! On such a plea the law frowns with severity. It would not listen to it as a defense, and never as the foundation of an action. “Ex dolo malo non oritur actio.” “Nemo ex proprio dolo consequitur actionem.” “Frustra legis auxilmm queer it, qui in legem committit.” These are a few of the maxims wherewith ancient justice, not yet obsolete, speaks of such a plea.
   Brewer, J.

This action grows out of the same transaction between the plaintiffs and the Ottawa bank which gave rise to the suit between these same parties in which an opinion has just been filed, (ante, *238.) As stated in that opinion, the notes for $4,954.08 were transferred by the Ottawa bank to the Lawrence bank, and by it placed in judgment. The petition alleges, substantially, the same facts as stated in that opinion; that the Ottawa bank transferred the notes fraudulently, without any consideration, and for the purpose of preventing plaintiffs from making their legal defense to them; that when said suit was brought the plaintiffs, desiring to avail themselves of their defense, made inquiry of both of the banks, and that both of them falsely and fraudulently represented that the transfer had been bona fide, before maturity, and for a valuable consideration fully paid, and without notice of any defense; and that, relying on and induced by said representation, the plaintiffs failed to make their defense, and allowed judgment to be taken. The prayer was for an order temporarily restraining any proceedings to enforce these judgments, and that upon a final hearing they be set aside and a new trial granted. Upon the hearing of the motion to dissolve the injunction the plaintiffs wholly failed to show any false and fraudulent representations as alleged. On the contrary, Mr. Elder, one of the plaintiffs, testified that “both judgments were taken by agreement made in open court;” and, in reply to a question as to why no defense was made, said; “The principal reason was that I went into a eompro*mise with Thacher & Skinner (officers of the Ottawa bank) for more time, and for waiver of protest damages, I think.”

Assuming in this case, as we did in the other, that the transaction between the plaintiffs and the Ottawa bank was forbidden by law, and that the securities taken were void, — though the testimony comes very far short of showing this to have been a loan on real estate security, but indicates simply the taking of a mortgage to secure past indebtedness, — still we think the ruling of the district court was correct. All that the plaintiffs can, in any phase of the case, claim, is that the Lawrence bank held their notes, which were void, and to which they had a complete legal defense. Said bank sued on those notes, and the plaintiffs here, with full knowledge of their defense, failed to set it up, supposing the Lawrence bank tobe a bona fide purchaser for value, before maturity. It subsequently appeared that the Lawrence bank was not such a holder, and that any legal defense as against the Ottawa bank could have been successfully made to the action of the Lawrence bank. We do not say that the testimony shows all this, — far from it; but simply that this is the most favorable view for the plaintiffs. Now, under such a state of the ease, the plaintiffs are simply too late. They have had their day in court. They knew of their defense. No fraud was practiced on them. They consented to the judgments. If after all this it were proper to open up the cases, and retry the questions, the idea that a judgment is the end of the law would be an illusion indeed. Freem. Judgm. 407-409. The judgment of the district court will be affirmed.

Kingman, C. J., concurring; Valentine, J.,not sitting in the case.