Court Opinion

ID: 6602260
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:08:46.792407+00
Date Added: 2024-06-11T15:58:03.456810
License: Public Domain

Lyon, T.
The ruling of the learned circuit judge rejecting all evidence under the answer is equivalent to sustaining a general demurrer to the answer interposed ore tenvq at the trial. The question is, therefore (and it is the principal question in the case), Does the answer state facts, which, if proved, would constitute a defense to the action, in whole or in part?
It is alleged in the answer that the note and mortgage were given without consideration, and pursuant to a pretended settlement with Lockwood, who (quoting from the answer) “ made this defendant Relieve that according to the terms of said contract she was indebted to him for miller’s wages in the sum of about twenty-four hundred and fifty dollars, and induced her at that time to pay or cause to be paid to him, the said Lockwood, the sum of one hundred dollars, and also at the same time, in order to secure the balance of said alleged indebtedness, viz., $2,350, induced her to execute the note and mortgage described in the complaint herein; whereas in truth and fact she did not owe him anything for such wages, and there was no valid consideration for said note and mortgage; but this defendant, believing the representations of said Lockwood,” etc. This ordinarily would be a traversable averment, which the defendant would have a right to prove, and which, when proved, would necessarily defeat the action; for it goes to the validity of the whole mortgage debt. This is so because of the alleged want of consideration, and not because of fraud, for none seems to be charged in the pleading. The averment may be true, and still Lockwood may have honestly believed that Mrs. Hooe owed him $2,450. No unfair or de*671ceptive means, no falsification of accounts, are claimed to have been resorted to in order to make the defendant believe she owed a debt of $2,450, when in fact she owed nothing; and it seems just as credible that Lockwood was honestly deceived, as it is that Mrs. Hooe was honestly deceived.
But proof of the alleged want of consideration for the securities should have been received, unless there are averments in the answer which show that it was not admissible.
The judgment roll or record in the case of Gates v. Lockwood and Hooe is made a part of the 'answer by reference, and, the same having been introduced in evidence by the plaintiff, we are fully apprised of its contents. The parties in that case and in the case under consideration are the same, for the receiver named as plaintiff in this case represents Gates and Lockwood. Hence, each question of fact involved in the issue and adjudicated in the original action, is res judicata in this case. It is quite immaterial whether such adjudication is contained in the final judgment or not. If the court decided the question, that is sufficient. The fact found may result in dismissing the action, or it may result in a judgment for the plaintiff; yet, in either case, the finding is conclusive between the same parties in any future action. Ely v. Wilcox, 26 Wis., 91, is authority for these views, if any authority is necessary to support a doctrine which is almost or quite elementary.
The action of Gates v. Lockwood and Hooe was for an accounting between the parties. It was essential to a full determination of the questions involved in it, that the court should ascertain whether Mrs. Hooe was indebted to Gates and Lockwood, and, if so, the amount of such indebtedness, and the respective interests of Gates and Lockwood therein; and, should it be found that Gates had no claim: against Mrs. Hooe, then it remained to be determined whether Gates had any interest in the indebtedness of Mrs. Hooe to Lockwood. If he had such interest, it was essential to the complete determination of the action that the court should ascertain the *672amount of such indebtedness, and the respective interests of Gates and Lockwood therein.
It was determined that Gates had no claim against Mrs. Hooe, hut that if she owed Lockwood on account of the original contract between them, Gates had an interest in that demand ; and it was also determined that when she gave the note and mortgage in suit, she really owed Lockwood a much larger sum than that for which they were given. But, because Lockwood could not make a valid assignment of an interest in his contract with Mrs. Hooe, so as to render her liable on it to Gates, without her consent (which she never gave), it was held that it was competent for Lockwood to accept a less sum from her than was actually due on the contract, in full satisfaction thereof, and that Gates could not be heard to object to the transaction, if there was no fraud. This ruling deprived Gates of all right to relief against Mrs. Hooe, but it did not deprive her of the right to contest the amount of her indebtedness to Lockwood, which, as we have seen, was involved in the action. It necessarily resulted that on the final hearing and determination of the cause the complaint was dismissed as to her, but not until the issue was tendered and an opportunity given her to deny her indebtedness to Lockwood on the note and mortgage. She did not make the denial, but, on the contrary, in her sworn answer she indignantly repelled the charge in the complaint that her indebtedness was not to Lockwood but to Gates, and affirmed that when she executed the securities she owed Lockwood the full amount for which they were given, and even more. Her answer'prevailed, and the.findings and judgment in the action accord therewith.
"We are of the opinion, therefore, that it conclusively appears from the answer of Mrs. Hooe in the present case, that the note and mortgage in suit are valid securities for the sum therein expressed, and interest, and the averment that; they were given without consideration is not available to her.
*673II. We now come to consider the allegations in the answer of the appellant in respect to the payment of rent reserved in the lease executed by her to the defendant Earn. This lease was executed at the same time the note and mortgage in suit were given, and the payments of rent were made to correspond in amount and time with the payments provided for in such note and mortgage. The material portion of the lease is as follows: “And it is mutually agreed by both parties, and as a consideration of his release of his rights and claims to said premises, that all of said rents shall be paid to James M. Lockwood, of said county of Iowa, and applied in payment of a note this day executed to the said James M. Lockwood, or order, for the sum of two thousand three hundred and fifty dollars, payable in installments of one hundred dollars each, on the first day of August next, and on the first days of each February, May, August and November, in each year (except November, 1872), until the whole of said notéis paid; and the balance of said rents, after the full payment of said note, to be paid to said party of the first part, or her heirs or assigns.” The question is, whether Mrs. Hooe is entitled to a deduction from the amount of the note and mortgage by reason of the failure of Lockwood or the plaintiff (the receiver) to collect such rents.
But one payment of rent became due before the action of Gates vs. Lockwood and Hooe was commenced and the injunction order made therein. If that payment was made to Lockwood before that time, it should have been made to appear in that action, for reasons already stated. After the injunction was granted, Lockwood could not be in default for failure to collect the rents, for the injunction restrained him from doing so. The circuit judge held that there was nothing in the lease or the injunction which prevented or restrained Mrs. Hooe from collecting the rents, and hence, that she was in default for failing to do so, and not the receiver.
Clearly the rents reserved in the lease were not the sole *674fund, provided for the payment of the note and mortgage. The clause making such rents payable to Lockwood was, at most, collateral security for the mortgage debt. It may be conceded that before the injunction Lockwood could have enforced payment of the rents, and that the receiver, after his appointment and qualification, might have done the same thing. The claim of Mrs. Hooe that she was prevented from doing so by the terms of the lease may also be conceded, although that is a very doubtful proposition. Conceding all this, still we think it was the duty of Mrs. Ilooe to ¡have applied to the court for directions to the receiver to collect the rents, or at least she should have requested the receiver to enforce payment thereof. The allegation in the answer that the receiver knew before his appointment wliat.were the terms of the lease, is insufficient to place him in default. Besides, nearly a year and a half intervened between the injunction and the appointment of j the receiver. Because Mrs. Hooe could at any time have applied to the court to appoint a receiver to collect the rents, or to direct the plaintiff, after his appointment, to collect the same, but failed to do so, we think she is in equal default with the other parties, or the receiver, in that behalf, and can have no remedy against either because the rents remain uncollected.
III. It is alleged in the answer that “ a portion of said rent has been by said Lockwood collected, and should have been credited on said note and mortgage over and above the amount credited therein as set forth in the complaint, the exact amount of which she I is not informed of, but believes the same to be one hundred dollars.” This averment is indefinite as to time, and on a proper motion the court would doubtless have required the appellant to make it more definite and certain. But no such motion was made. We cannot regard the averment as a nullity. We think the appellant should have been permitted to prove under it that Lockwood collected rents after the injunction was issued, or, at least, after the de*675termination of the original action. That such collection would have been a violation of the injunction is true, jet, if he received rents, although in violation of the injunction, the amount should be allowed to Mrs. Hooe and deducted from his share of the proceeds of the note and mortgage. This appears very plain to our minds. Hence, we find an allegation in the answer which, although somewhat indefinite, contains a valid defense or counterclaim to a portion of the mortgage debt, and which, therefore, is not reached by a general demurrer. Because this allegation was not excepted from the ruling of the court excluding evidence under the answer, the judgment in its present form cannot be sustained.
"Whether a new trial will be necessary in the circuit court depends upon the proceedings in that court after the cause shall be remanded. On a proper showing, we think that court should permit Mrs. Hooe to amend her answer so as to charge fraud in the inception of the note and mortgage. But the court will require her to make out by affidavit a prima facie case of fraud before doing so.
If the answer is not amended, and the plaintiff remits $100 from the principal of the mortgage, another trial will be unnecessary, and judgment should go for the reduced sum.
In either case the appellant should be allowed to show, if she can, that the mortgaged premises included a homestead, and the judgment should conform to the fact as found.
By the Gotort. — Judgment reversed, and cause remanded for further proceedings in accordance with this opinion.