Court Opinion

ID: 6640093
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:44:43.8213+00
Date Added: 2024-06-11T15:59:12.435253
License: Public Domain

By the Court

Sherburne, J.
This is a demurrer to tbe Defendant’s amended answer. The first point made by tbe Plaintiff in Error, (tbe original Defendant,) is, that tbe Court erred in sustaining tbe demurrer to tbe original answer. It is too late to make this point. It was waived by answering over. This question was made in this Court in tbe case of Coit against "Waples and Zirkle, (Ante, p. 134,) in which it was held that a party so situated cannot re-examine, in this Court, tbe original demurrer.
It is said in argument that that portion of tbe original answer which was not demurred to, is still before tbe Court, and is to be taken in connection with tbe amended answer now demurred to. But I think otherwise. Tbe Defendant must be confined to bis amended answer. Such is tbe practice *317which has been pursued heretofore, and any other would lead to uncertainty and confusion. Such was, undoubtedly, the design of the pleader who drew the amended answer; for he calls it “ The amended answer of George L. Becker, Defendant in the above entitled action, to the complaint of the Plaintiff therein.” This language necessarily. excludes the idea that the pleader intended to rely upon any portion of the former answer. I do not mean to decide that the Defendant could not have filed an amendment to the original answer, and have saved that portion of it which was not demurred to; but whether he could or could not, is immaterial, for in this case it was not attempted.
This action is founded upon two promissory notes alleged to have been given by the Defendant to the Columbus Insurance Company, on the 6th day of September, 1851, and at the same time endorsed by that Company to the Plaintiff. The amended answer avers, in substance, that at the time of the alleged indorsement of the notes aforesaid to the Plaintiff, the Columbus Insurance Company was indebted to the Plaintiff in a sum .greater than the amount of the notes, and that if the notes were so endorsed, they were endorsed as collateral security for the payment of- the indebtedness of the Columbus Insurance Company to the Plaintiff; that the notes were given by the Defendant to said Company on account of premiums upon policies that the Defendant had issued as the agent of said Company; that on or about the 3rd day of October, 1851, said Insurance Company failed, and said policies of insurance became worthless; that on the 21st day of said October, said Company instructed the Defendant to return the premiums to the policy holders for the unexpired term of the policies, amounting to $167,07, “which sum the Defendant agreed and became liable to pay to the said holders of said policies,” and holds said sum subject to the determination of this action.
Waiving the objection as to the form of the answer, and admitting that the defence would be good as between the Insurance Company and the Defendant, is it good as against the present plaintiff ?
The question principally discussed by counsel as to whether *318a negotiable note endorsed to a third party as collateral security for the payment of a pre-existing debt, is subject to the-equities between the original parties, at the time of the endorsement is not presented by these pleadings. If the-pleadings show anything as to time, they show that the endorsement and delivery of the notes to the Plaintiff were made prior to the failure of the Insurance Company. The Complaint alleges the endorsement and delivery of the note to have been made at the time the note was executed. This allegation is ordinarily in the old practice a mere matter of form, and it may have been so considered by the counsel who drew the-complaint. But, however this may be, I cannot presume that it is false, and that the endorsement was made subsequent to-the failure of the Company, while the complaint and answer show the contrary, although in language which may be considered matter of form; especially when it is considered that under our present practice, matters of form are excluded and the pleader is bound to state only facts.
But even if the pleadings fail to define the time of these transactions, the defence is left in no better condition; because if the Defendant would avail himself of the fact that the Columbus Insurance Company had failed prior to the endorsement of the notes, his answer must set up that fact affirmatively or it must appear distinctly from all the pleadings together.
The question for consideration then is, can a defence be set up in this action originating between the original parties to the note, subsequent to the endorsement thereof to the Plaintiff?
I do not find that such a defence has ever been sustained in a single instance, but the contrary doctrine has often been held. 1 Sanford’s Reps., 56, Farniss vs. Gilchrist.
So far as appears from the pleadings, neither the Defendant nor the policy holders, at the time of the endorsement, had any defence to an action upon these notes, if they had been then due, either equitable or otherwise. The Plaintiffs, if the notes had been due, could have brought their action and the facts which are now set up in the defence could not have been interposed, because at that time they did not exist. If acts arising subsequently can be set up in defence, then the endorsee takes *319the negotiable paper subject to any future discharge of the maker by the endorser. The endorser will then have it in his power, at any time, at least before the note matures, and notice to the maker, to make it valueless in the hands of his own endorsee, by his own act subsequent to the endorsement. Such a doctrine cannot be sustained upon authority or reason.
I commenced an examination of this case under a full conviction that the answer would also be bad as to any equities between the original parties prior to the endorsement; that the law was as laid down by Judge Story in Swift against Tyson, 16 Peters’ Reps., 1. But a careful examination of the authorities leads me to doubt the correctness of that opinion upon this point. The authorities cited by Judge Story to sustain his view upon this point in that case will be found, with a very few exceptions, based upon an endorsement of negotiable paper, ss> payment of an antecedent debt, and not as collateral security for the payment. It should be recollected that in the case of Swift vs. Tyson, the bill of exchange was endorsed in payment of an antecedent debt, and not as collateral security ; and that so far as the opinion relates to an assignment as collateral security, it is foreign to the question which was before the Court, and “its weight of reaon must depend upon what it contains.” See Carroll vs. Lessee of Carroll et al, 16 How. U. S. Rep., 287. But even as the mere cUcimn of' Judge Story, I would not presume to dissent from it without very strong reasons or the support of high authority.
The opinion, however, has been reviewed by Chancellor Walworth in the case of Stalker vs. McDonald, 6 Hill Rep., 93, in which it seems to me to be clearly shown that the dictum of Judge Story cannot be supported as sound law.
If the allegation in the answer, that the Defendant had promised to pay the policy holders the amount in dispute, is necessary to enable him to support his defence, it is also necessary that the promise should appear to have been made prior to the commencement of this action.
It is unnecessary to notice the other points made, as the judgment below must be affirmed.