Court Opinion

ID: 6907814
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:03:28.586044+00
Date Added: 2024-06-11T16:06:25.778351
License: Public Domain

Rehearing denied January 16, 1923.
On Petition eor Rehearing.
(211 Pac. 941.)
RAND, J.
Plaintiff, having’ filed a petition for rehearing, contends that under the doctrine announced in Mayes v. Stephens, 38 Or. 512 (63 Pac. 760, 64 Pac. 319), it was not necessary for the plaintiff to produce the note sued on or to account for its absence, and that there was as much reason to protect the maker -of the note in that case by requiring it to be surrendered up as there is in the instant case.
That case was an action in replevin to recover possession of a tubular boiler and not an action to recover on a promissory note. The plaintiff was the mortgagee of a chattel mortgage upon the boiler given to secure a note payable to and held by the plaintiff. Upon the trial the mortgagee, without objection, had testified that the note and chattel mortgage had' been executed and delivered to him, and that he had taken possession of the boiler on the day the note and mortgage were executed and had held possession of it until the defendant, the sheriff, had taken it from his possession under a writ of attachment. The maker of the note was not a party to the action. Under these facts this court said:
“No objection was made to this method of proving the existence of the note and mortgage, which *351was clearly substantiated by his testimony, thus obviating the necessity of offering them in evidence.”
It must be conceded that the holder of the note in that case was entitled to keep it until the note was paid and that the recovery of the possession of the boiler alone would not constitute payment of the note, and if the recovery of possession could have operated as payment of the note, the sheriff was not the party to whom delivery of the note should be made. And hence, no reason could exist for the production or surrender of the note in that case.
Counsel also cites Creecy v. Joy, 40 Or. 28 (66 Pac. 295), which was an action to recover on a promissory note, but in -that case the note sued on was introduced and offered in evidence, and for that reason that case fails to support plaintiff’s contention.
Plaintiff also cites Sheehy v. Chalmers, 4 Cal. Unrep. 617 (36 Pac. 514), Williams v. Norton, 3 Kan. 295, Reed v. Arnold, 10 Kan. 102, and Miller & Lux v. Dunlap, 28 Cal. App. 313 (152 Pac. 309). In the first case, the plaintiff sought to recover upon a promissory note and set forth in his complaint a complete copy of the note. The answer admitted the execution of the note and set up as a defense thereto that the note was not to become due or payable until the defendant had received sixty days notice thereof, and that as such notice had not been given the note was not due or payable. The note was not offered in evidence and it was, in effect, held that it was not necessary to produce the note as no proof was required as to matters not in issue.
In the second case above cited, the court said:
“Something was said in the argument about the nonproduction of the note at the trial. There was no *352necessity of offering it in evidence. Everything such a performance would have proved, or tended to prove, was admitted by the pleadings.”
In the third case cited the action was founded upon a promissory note and a written contract. Instead of attaching copies of the note and contract to his petition, the plaintiff attached the original note and contract, and during the trial he offered to introduce in evidence the note and contract, but upon the objection of the defendant that the original and not copies of the note and contract had been attached to the petition, the offer was refused. Upon appeal the Supreme Court held that the lower court’s reason for sustaining the objection was erroneous, but sustained the ruling upon another ground, namely, that there was no issue upon which these instruments could he produced. Among other things, the court said:
“A mere denial of indebtedness on. the note or contract is no denial of the execution of either. When the execution of a written instrument is admitted by the pleadings its legal effect must of necessity follow; and what its legal effect is, is purely a question of law for the court to determine. There is then no issue of fact with reference to the existence or effect of the written instrument upon which evidence can be introduced to the jury; and evidence can never be introduced to a jury except in support of some issue of fact made by the pleadings. The evidence then, as we think, was rightfully excluded.”
In the last case cited, the court held:
“The plaintiff rested its case upon the pleadings. The promissory note, upon which the action was founded, was not offered in evidence; neither was any evidence of its nonpayment given. The execution of the note was not denied in the answer of the *353defendants; consequently no evidence of its due execution was necessary. Nor was it necessary to introduce the note in evidence to prove its nonpayment. The allegation of nonpayment is a negative allegation, which plaintiff was not required to prove. ’ ’
We do not think that any of these authorities sustain plaintiff’s contention.
In addition to the authorities cited in the original opinion we cite 3 R. C. L., page 1338, where it is said:
“Where a note sued on is in the possession of the plaintiff, he must produce it, as it is the best evidence; but if it is in the defendant’s possession, and he fails to produce it, the plaintiff may prove its execution and contents by secondary evidence. And secondary evidence must be produced, of course, if the instrument has been lost. * * If the instrument has been lost or destroyed, the plaintiff must prove the fact of loss or destruction. Where a note has been given, its production is generally required in an action on the original cause, for the security of the defendant, and not from any rule of evidence which would prevent the introduction of evidence of indebtedness without the production of the note.”
See also cases there cited; see also Wyman v. Rae, 11 Gill & J. (Md.) 416 (37 Am. Dec. 70).
In Roberts v. Parrish, 17 Or. 583 (22 Pac. 136), this court quoted with approval from Van Santvoord’s Pleadings, 115, as follows:
“The holder of a promissory note is presumed to be the owner and real party in interest within the meaning of the Code. The production of the note and proof of signature of the maker and indorser is sufficient, without showing value given, even though the note was received after due.”
*354The statute (Section 7982, Or. L.), defines the term “holder” as follows:
“ ‘Holder’ means the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.”
Section 7880, Or. L., provides:
“Payment is made in dne course, when it is made at or after the maturity of the instrument, to the holder thereof, in good faith, and without notice that his title is defective.”
In construing the last section Mr. Williston says:
“Payment before maturity is only a personal defense even though made to the holder, and if made to one who is neither the holder nor authorized by him to receive payment is totally inoperative, unless the party paying acquires the instrument properly indorsed, and in effect becomes a purchaser of it. Payment at or after maturity is in effect an absolute defense if made to the party entitled to receive it, since there can be no new holder in due course after maturity. But the only conclusive proof that a person is entitled to receive payment is the contemporaneous surrender of the instrument properly indorsed, and a payment made to one who is not at the time the holder is inoperative. On the other hand, payment at or after maturity to a holder is a discharge by the express words, of section 88; but the party paying will not be discharged if he has notice that the holder is not the person equitably entitled to payment.” 2 Williston on Contracts, p. 2168.
It is a general rule that a complaint must contain all the elements necessary to show a complete cause of action, and in an action to recover upon a promissory note or bill of exchange, it is necessary, on the face of the complaint, to show that the party bringing the suit is the lawful owner or holder of the note. •
*355“Plaintiff’s interest in the note is an essential fact to be proved, and it must be averred either expressly or by necessary implication.” Moak’s Van Santvoord’s Pleadings (3 ed.), § 227.
The same text-writer, states that where suit is brought directly by the payee against the maker, it is held to be unnecessary to allege that the plaintiff is the owner or party in interest, it being sufficient to say that the defendant is indebted upon the instrument and promised to pay the same to the plaintiff.
In Moss v. Cully, 1 Or. 147 (62 Am. Dec. 301), where the complaint did not allege a delivery of the note to the plaintiff, but did allege that defendant “made his promissory note in writing and thereby promised to pay to the plaintiff,” etc., it was held that the allegation was sufficient to sustain a judgment in favor of plaintiff on demurrer to the complaint.
Again in Dorothy v. Pierce, 27 Or. 373 (41 Pac. 668), where the complaint did not allege that the party to whom certain county warrants had been issued was the owner and holder of the warrants, but did allege that the warrants were issued and delivered to such party, it was held upon demurrer that the complaint was sufficient.
And in Williamson v. Hurlburt, 99 Or. 336 (195 Pac. 562), where the complaint alleged the execution and delivery, for a valuable consideration, of a promissory note and a chattel mortgage given to secure the same, and it was urged that the complaint failed to state that the plaintiff was the owner and holder of the note and mortgage, it was held that as against the demurrer, the complaint was sufficient. *356to it; 4th, that the defendant has not performed his contract. The possession of the note is prima facie evidence that it is not paid. So, too, it is of ownership, even where there is no averment of ownership in the complaint, and the answer does not set np such a defense. * * If the action he hy the payee in person, a copy of the note will, in general, be sufficient, without accompanying it with an averment to show the plaintiff’s ownership or interest, within the principle of Peets v. Bratt, 6 Barb. (N. Y.) 662, and James v. Chalmers, 2 Seld. (6 N. Y.) 209; and, should the defendant wish to show in his defense that the plaintiff has parted with his interest in the note, he must allege such fact on his part in his answer. Possession of the note, as we have seen, raises the presumption of ownership sufficient to make out a prima facie case to sustain the action, which, however, under such a state of pleadings, the defendant would be at liberty to disprove. But the case is different if the right of action has vested in, and the suit is brought by, a third person.” Moak’s Van Santvoord’s Pleadings, § 227.
*355“The plaintiff is required to prove, in a suit on a promissory note, 1st, the identity of the note; 2d, his interest in it; 3d, that the defendant is a party
*356As this action was brought by the payee against the maker of the bills of exchange and copies of the bills were set forth in the complaint, and the complaint in substance alleged that the defendant, for value, executed and delivered them to the plaintiff and thereby promised to pay plaintiff the amount thereof, this sufficiently stated plaintiff’s cause of action. Prom these allegations it would be implied that the plaintiff was the owner and holder of them. Instead of standing upon these allegations alone the plaintiff also alleged that it was the owner and holder of the bills. It thereby gave to the defendant the opportunity to raise the issue of defendant’s ownership by a denial of plaintiff’s allegation, and thereby relieved the defendant from any necessity of affirmatively alleging that the plaintiff was not the owner *357or holder of the bills. Plaintiff’s ownership was a material fact which the defendant had the right to dispute, and whenever a dispute arose under the pleadings sufficient to raise this issue the plaintiff was bound to prove its ownership of the bills, either by a' production of the bills themselves or by proving a sufficient legal excuse for their nonproduction. As the defendant had the right to put this question in issue and has exercised the right by a sufficient denial of plaintiff’s allegation of ownership, we cannot treat plaintiff’s allegation of ownership and defendant’s denial thereof as surplusage.
Bach party must allege “every fact which he is required to prove and will be precluded from proving any fact not alleged, and he must allege nothing affirmatively which he is not required to prove.” Melone v. Ruffino, 129 Cal. 514 (62 Pac. 93, 79 Am. St. Rep. 127).
See also Thompson v. Rathbun, 18 Or. 202 (22 Pac. 837), where the court said:
“Ordinarily immaterial' and nonessential allegations need not be proven but may be entirely disregarded or treated as surplusage; but it is still true that a party must prevail upon substantially the case made in his pleadings.”
Without producing the instruments in question and offering them at the trial, and without offering any testimony tending to show that the bank was in possession or was entitled to the possession of them, there was nothing before the court to show that plaintiff was entitled to maintain an action thereon. Production of the bills of exchange or an accounting for their absence was necessary to establish plaintiff’s right of action as well as to protect the defendant from the possibility of being compelled to pay them a second time.
*358After reading plaintiff’s petition for rehearing, we think that plaintiff must have misunderstood the effect of what we intended to say in our application to the particular facts of this case, of the statutory presumption that a thing once proved to exist is presumed to continue to exist as long as is usual with things of that nature. What we intended to hold was that proof of the execution of these negotiable instruments was, under this particular presumption of law, evidence of the fact that these instruments are still in existence, that they have not been paid, and that they are enforceable by the holder thereof against the maker and nothing further, and that therefore the presumption invoked by the plaintiff was not evidence of the facts contended for by him. That there are other presumptions applicable under certain conditions to negotiable instruments is unquestioned. And where a negotiable instrument is made payable to the order of another the presumption is that the payee continues to be the owner thereof: Hoffman v. Habighorst, 49 Or. 379 (89 Pac. 952, 91 Pac. 20). But this is a presumption that cannot be indulged in this case because if the plaintiff was in possession of the bills, it was its duty, under the issues made by pleadings, to produce, identify and introduce them at the trial.
For these reasons the petition for rehearing is denied.
McBride, O. J., and Burnett and Harris, JJ., concur.
Rehearing Denied.