Court Opinion

ID: 6638198
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:43:06.904336+00
Date Added: 2024-06-11T15:59:08.423999
License: Public Domain

De Witt, J.
On December 3, 1886, Albert Kleinschmidt transferred absolutely to John W. Buskett one-eighth of his (Kleinsehmidt’s) interest in the profits arising from the construction of the Helena, Boulder Valley and Butte Railroad. This was for a consideration delivered by Buskett, and received by Kleinschmidt. The transaction was evidenced by a writing signed by Kleinschmidt, and delivered to Buskett. Defendant proved that the loan of $1,350 was on January 5, 1887, and that for this loan Buskett gave him a promissory note, at ninety days, which had been renewed by Buskett, and negotiated by Kleinschmidt, in 1887. The court refused to allow defendant to prove whether the debt had been paid. Now, in this condition of affairs, on April 22, 1887, T. H. Kleinschmidt, plaintiff, buys from Buskett, for a valuable consideration, his one-eighth interest. Afterwards, and on October 22, 1888, the money for Buskett’s one-eighth interest’ in the contract comes into the hands of Albert Kleinschmidt, along with Kleinsclimidt’s own profits, which he had not transferred. ’ Now T. H. Kleinschmidt is in court demanding from Albert Kleinschmidt that he (Albert Kleinschmidt) deliver to him that which he (T. H. Kleinschmidt) bought from Buskett. Albert Kleinschmidt declines to deliver these profits to T. H. Kleinschmidt, and says that he holds them as security for the payment of said $1,350, and interest at twelve per cent per annum since January 5, 1887. The position of Albert Kleinschmidt seems to be that he claims that these alleged facts are an absolute defense to the action of plaintiff. But whether a defense or a counterclaim or a setoff, it does not here seem necessary to determine, as will appear below.
The writing of December 3, 1886, by which Albert Kleinschmidt and Henry Klein transferred the one-eighth interest in the profits to John W. Buskett, was not a negotiable instrument. Therefore, when Buskett transferred his interest so obtained in these profits to T. H. Kleinschmidt the latter took the same subject to the provisions of section 5 of the Code of Civil Procedure, which is as follows: “In the case of an assignment of a thing in action, the action by the assignee shall be *69without prejudice to any setoff or other defense existing at the time of, or before, notice of the assignment; but this section shall not apply to a negotiable promissory note or bill of exchange, transferred in good faith, and upon good consideration before due.” Therefore, under this statute, if Buskett was indebted to Albert Kleinschmidt when he, Buskett, transferred the one-eighth profits to T. H. Kleinschmidt, then Albert Kleinschmidt could plead against T. H. Kleinschmidt said debt, as a defense or setoff, as the case might be, in an action by T. H. Kleinschmidt on the assigned Buskett claim. Therefore, the $1,350 debt of Buskett to Albert Kleinschmidt was proper matter in the answer, and was good, against T. H. Kleinschmidt, unless Albert Kleinschmidt had estopped himself from setting it up. Such estoppel was pleaded — whether well or not, need not be said — in the replication, but that point was not reached in the case, as will appear below. The court struck out the evidence as to this $1,350 debt. This was on the ground of a variance between the allegations of the answer and the proof. The answer stated that Buskett requested the loan of $1,350, and Albert Kleinschmidt advanced that amount to him. The proof showed that Buskett had given Albert Kleinschmidt a note for the amount. It did not appear that the note had been paid. It appeared that the note had been renewed, but it did not appear that the debt evidenced by the note had been paid, and the court declined to hear evidence as to whether it had. A promissory note is not itself the payment of a debt. It is the written evidence of the debt. If the answer pleads the fact of an indebtedness, and it appears in proof that the indebtedness is evidenced by a note, the fact is then in proof that the debt exists. It is that fact that was alleged. A debt was alleged. A debt was proved. We do not understand that there was a variance. Therefore the court erred in eliminating the testimony of Buskett’s indebtedness to Albert Kleinschmidt, on the ground upon which the motion was made, viz., a variance. Such is the point before us on the appeal, and the views just expressed are decisive.
Respondent urges some other points upon which he contends that his judgment should be sustained, notwithstanding the error above discussed. But those matters which he presents *70for our consideration were not reached in the case, nor were they before the lower court. For example, he contends that defendant was estopped to set up the Buskett debt. But such matter was for a replication by plea, and for rebuttal in proof. But defendant’s matter in the answer as to the Buskett debt being swept out of the case, the trial never reached the point of rebuttal. Nothing was offered to rebut that which in the defense had been put out of the case by the ruling of the court upon the question of variance. On which ruling, as above observed, the judgment and order denying the new trial must be reversed.

Reversed.

Pemberton, C. J., and Harwood, J., concur.