Court Opinion

ID: 5435091
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:52:22.047821+00
Date Added: 2024-06-11T08:31:47.510250
License: Public Domain

Norton, J. delivered the opinion of the Court
Field, C. J. and Cope, J. concurring.
This is an action to recover the amount of a promissory note, and to foreclose a mortgage given as security. The complaint alleges that the defendant, Fulton, being indebted to Redick McKee in the sum of $3,000, made a promissory note for that sum, dated July 3d, 1856, and payable to said McKee, or order, six months from date, and delivered the same to the said McKee, who then and there became the legal owner and holder thereof, whereby the said defendant became liable to pay the same to the said McKee, or to his order, according to the tenor and effect of the said note; that a mortgage was executed and delivered as collateral to the note; that on the fifteenth day of March, 1860, the said McKee, being still the owner and holder of said note and mortgage, and the money remaining due and unpaid, the said McKee, for value, sold and assigned said note and mortgage to the plaintiff.
Fulton, by answer, denies that he was indebted to McKee in any sum; and denies that being indebted he made the said note ; and denies that McKee ever was the legal owner or holder of the said note, “ except as hereinafter stated;” and denies that he became liable to pay said note to McKee or his order; and denies that on the fifteenth day of March, 1860, McKee was the owner or holder of said note, or that there was anything due on said note; and denies, upon information and belief, that plaintiff paid value for the pretended assignment; and denies that the plaintiff, by virtue of said pretended assignment, became the owner or holder of said note; and denies that the amount of the said note remains due or unpaid, or that he is justly indebted thereon to the plaintiff. And then the answer proceeds: “ Further answering, he says,” stating in substance that he, Fulton, made the note and mortgage at the request of McKee, to be placed by McKee in the hands of one Swain as security against certain debts due by McKee and Fulton, and to be returned to him, Fulton, when these debts were paid; that these debts having been subsequently paid, he applied to *435McKee to have the note returned and the mortgage canceled, and that in pursuance of such application McKee procured Swain to redeliver to him the note, and execute a satisfaction piece of the mortgage; and that he, Pulton, supposed said note and mortgage had been duly canceled by McKee, until several years after, when he learned that McKee had omitted to cancel them.
There was a separate answer, setting up a counter claim, and answers by some other defendants.
The answers of Fulton were filed on the tenth day of September, 1860, and on the fifteenth day of the same month a stipulation was made between the parties, containing, besides other matter, the following : “ And it is further stipulated and agreed that this action be referred to Lewis Aldrich, Esq., to try all the issues, and to report a judgment thereon, the cause being now at issue upon the complaint and answer on file, and to be tried thereon.”
When the action came on to be tried before the referee, he decided that there being no replication filed, the special affirmative matters set forth in the answer of Fulton must be deemed to be admitted, and did not require to be proved, and that as they constituted a defense he was entitled to judgment, which was accordingly reported in his favor.
On this appeal the plaintiff insists:
1st. That the affirmative matters set forth in the answer of Fulton are not “ new matter.”
2d. If they are to be treated as new matter, a replication was waived, and an issue joined upon them by operation of the stipulation.
Section forty-six of the Civil Practice Act provides that the answer shall contain: first, a denial of the allegations of the complaint; second, a statement of any new matter or counter claim constituting a defense. The denial and the new matter are thus treated as different defenses. If what is claimed as new matter is in effect only a denial of the allegations of the claimant, it is not new matter within the meaning of the Practice Act. The circumstance that the answer consists of affirmative allegations, instead of a direct negative of the allegations of the complaint, does not determine that it consists of new matter. Thus, in the case of Frisch *436v. Caler, (ante, 71) recently decided by this Court, an answer averring payment of the promissory note, which was the cause of action, was held not to be new matter; because, although it was an affirmative allegation, its effect was only a denial of an essential allegation of the complaint, to wit: the non-payment of the note. The Court says: “ Whether matter is new or not must be determined by the matter itself, and not by the form in which it is pleaded, the test being whether it operates as a traverse or by way of confession and avoidance.” If the answer, either directly or by necessary implication, admits the truth of all the essential allegations of the complaint which show a cause of action, but sets forth facts from which it results that, notwithstanding the truth of the allegations of the complaint, no cause of action existed in the plaintiff at the time the action was brought, those facts are new matter. But if those facts only show that some essential allegation of the complaint is not true, then such facts are not new matter, but only a traverse. In the case of (Gilbert v. Cram (12 How. Pr. R. 455) the complaint averred a sale of goods, and that the defendant “ is now indebted to the plaintiffs ” therefor. The answer averred that the sale was upon a credit of six months, and that the credit had not expired. It was held that the answer did not contain new matter, the facts only amounting to a denial of the allegation in the complaint that the defendant is now indebted. (See, also, the cases of Stoddard v. Onandago Annual Conference, 12 Barb. 573; Sawyer v. Warner, 15 Id. 282; Conger v. Johnson, 2 Denio, 96 ; Brown v. Archer, 1 Hill, 266.)
In this case, the note was transferred to the plaintiff several years after it was by its terms payable. The plaintiff, therefore, has no other cause of action than such as McKee had, and the complaint necessarily avers a cause of action in McKee on the note. The facts set up in the answer show that McKee never had a cause of action against Fulton on the note. They do not, directly or impliedly, admit that McKee ever had a cause of action. The note was not delivered to him as a valid instrument that could be enforced by him. Nothing occurred after the note was placed in McKee’s hands to give him a right of action upon it, and nothing has occurred to discharge such a right of action, if it ever existed. *437For anything alleged in the answer, if McKee ever had a right of action on the note, he or his assignee has it still. The complaint alleges that Fulton, for value received, promised to pay McKee $3,000. This allegation shows the cause of action, and was indispensable to be alleged. The facts set up in the answer show that this allegation is not true, and this is all they show. The answer, therefore, is a traverse, and not a confession and avoidance.
The error which has occurred in this case has, perhaps, arisen from considering that the note, when produced, would alone prove a cause of action, and that hence an answer which impliedly admitted the signing of the note, and placing it in the hands of the person to whom it was by its terms payable, confesses a cause of action. But the note is only evidence of the fact of delivery. It is not conclusive. Under an issue formed by a direct denial of delivery, the note in the hands of the plaintiff would prove his case; but the defendant, under his denial, would be at liberty to show that it came to the plaintiff’s hands in some other way than by delivery to him as a valid contract. In other words, the defendant could prove, under a direct denial of the plaintiff’s allegation of delivery for value, the very facts that he has specially set up in his answer.
The counsel in them arguments have treated the special matter set forth hi Fulton’s answer as constituting a defense separate from the denials by which it is preceded. In fact, the denials and special matter are pleaded as parts of one defense, the special matter being nothing more than an explanation of the preceding denials, and showing how it occurred that the note was made, and placed in McKee’s hands without having been delivered as a contract. We have not treated this circumstance as material, and have considered the effect of the special matter as if it had been set up as a separate defense; but it indicates that the pleader, when interposing his answer, understood the law of pleading, in this particular, as we have found it to be.
We conclude, therefore, that the special matters set up in the answer of Fulton were not new matter within the meaning of the Civil Practice Act, and did not require a replication to prevent their being taken as true, and deemed proved at the trial.
*438Our determination upon this point renders it unnecessary to consider the effect of the stipulation.
Judgment reversed, and cause remanded for a new trial.