Court Opinion

ID: 8510643
Source: CourtListenerOpinion
Date Created: 2022-11-23 08:38:48.057688+00
Date Added: 2024-06-11T16:51:05.416819
License: Public Domain

Powell, J.,
dissenting.
I am constrained to disagree with the judgment of affirmance arrived at by the majority of the court in this case. The petition declares on a negotiable promissory note in the short form authorized by Section 11334 of the General Code. It was filed by the first endorsee on the note and proper averments are made to constitute the plaintiff a holder in due course. To the petition an answer was filed setting up two defenses:
*151a1. That plaintiff was not the owner of the note sued on; that the same was not assigned, transferred and delivered for a valuable consideration to the plaintiff before the same was due and payable. It is averred as a part of said first defense that Will IT. Ade, the payee of said note, is the owner and holder of the same and is indebted to defendants in the sum of $2,850, and that for the purpose of delaying defendants in the collection of their said claim Ade and the plaintiff are in collusion and that, in fact, no sale or transfer from said Ade to plaintiff has ever been made. All this is alleged as a part of said first defense.
2. For a second defense, an unliquidated claim for damages against the said Will IT. Ade, who is the payee and endorser of the note sued on, arising out of an alleged breach of warranty in the sale of a horse by Ade to plaintiff in the sum of $2,850 is set up and judgment asked against Ade.
The said Ade was not a party to the suit, nor was any application made by either plaintiff or defendants that he be brought in as such party, with or without leave to answer. A motion was filed by plaintiff to strike said second defense from the answer, because the same is “irrelevant, immaterial and impertinent.” This motion was overruled. It should have been sustained. It is not a defense to the note sued on in the meaning of that term as used in the Negotiable Instruments Code, for defendants admit the execution of said note for good and valuable consideration and do not set up any defect in it or defense against it. This said second defense is not a counter-claim which defendants would be authorized to set off against the note, for it does not arise out of the contract or transaction set forth in the petition as the foundation of plaintiff’s claim, nor is it connected with the subject of the action. One of these two things must exist to constitute a counter-claim. Section 11317, General Code.
It is not a set-off because it does not exist against the plaintiff in the action brought, 'but against a third person who is not a party to the suit, nor could any judgment be obtained against plaintiff on said second defense. It does not arise on contract, nor has it been ascertained by the decision of a court. It is merely an indefinite, unliquidated claim for damages asserted against an individual who is not a party to the suit and does not come within the definition of a set-off as defined by Section 11319 of the General Code. As such second defense is neither defense, counter-claim or set-off as defined by the statutes, it should not have been allowed to encumber the records and it was prejudi*151bcial error to overrule the motion to strike it out of the answer. Nothing should be permitted to remain in an answer except matters of defense, counter-claim or set-off. Section 11315, General Code.
So far as the pleadings show in this ease no cross demands ever existed between the plaintiff and the defendants to this action. Defendants have no demand against the plaintiff; their demand is against a stranger to the record, one who is not a party to the suit at all, so that the case is not in any wise affected by the provisions of Section 11321 of the General Code; besides, this section does not apply to negotiable instruments until after the same become due. Lillie v. Bates, 3 C. C., 94; Wyman v. Robbins, 51 O. S., 98.
There is but one defense pleaded to the cause of action set out in the petition and that defense is want of ownership on the part of the plaintiff. All of the testimony admitted on any other subject was erroneously admitted and involved absurd consequences. The result of this case is a good illustration. The defendant in the action makes a claim for damages on account of a breach of warranty in the sale of a horse against a citizen of Indiana who is not made a party to the suit. This claim arises out of a transaction wholly independent of the transaction in which a note was given by the defendant to the citizen of Indiana in the sum of $1,100. It is alleged that the note became the property of a third person who claims to be a holder in due course, or, in the ordinary language of business, an innocent purchaser, and who brings suit against the maker of the note only, who in his turn sets up as a reason why he should not pay the note, that he has an unascertained claim for damages against the payee of the note and this payee is a stranger to the record and is not made a party even after this defense has been pleaded, and the issue thus made is submitted to a jury to determine whether or not the payee of the note owes the maker anything in another and different cause of action; and the jury finds that the payee does owe the maker an unsettled amount, but at least sufficient in amount to offset the note sued on and therefore find for the defendant. This, it seems to me, is a proceeding unwarranted by any rule of law. If the finding and judgment are conclusive of anything, they are only conclusive that the plaintiff is not the owner of the note. Ade, the payee of the note, is not in court at all, and yet it is determined by a jury that he owes enough to offset á note admitted to be valid and without any defense, without'his side of the story *151cever having been heard and submitted to a court for adjudication. The iniquity of this proposition from a legal standpoint ought to be apparent in the mere statement of it.
On the single issue presented by the pleadings the evidence should have been confined to the ownership of the note by the plaintiff and whether, in fact, he was a holder of the same in due course and entitled to collect it.
I have examined this entire record with reference to the issue of ownership of this note and can not find therein a single word of competent evidence that upholds the contention of the defendants. It is true that the testimony of ITosack and Litt is to the effect that Ade said in their presence when at Frederick-town and Mt. Vernon, Ohio, on the 6th of November, 1914, that he was the owner of the note. Plaintiff was not present when this statement was made by Ade, nor was there any one representing the plaintiff present, yet the court admitted these statements in evidence over plaintiff’s objections. This was error, .and prejudicial error.
I am at a loss to understand the theory of the court in the admission of this evidence. Plaintiff offered to show by another witness who was present a part of the time when these admissions were said to have been made, that Ade had said to him he had sold the note to plaintiff. This evidence was excluded by the court for the reason as given, that Litt was not present when the statement was made. Ade’s statements seem to have been considered competent to bind the plaintiff, although no representative of the plaintiff was present, but the same class of testimony was inadmissible to bind the defendant because he was not present. I do not think any of Ade’s statements so made were competent evidence to go to the jury. But the particular vice that attaches to these admissions is that they have their weight with the jury as an indication of the position of the court on the issues presented. If it is necessary that either of these parties should be present in order to make this evidence competent against him, the other should have been present also to have made it competent and binding against it.
But aside from all this the controlling questions submitted in this case have all been passed on by one or more of the circuit courts of the state adversely to the holding of the trial court in this case and consequently adversely to the judgment of affirmance of the majority of the court, and the judgment of such courts on these questions has been affirmed by the Supreme Court. This suit is brought by the first endorsee of a negotiable *151dpromissory note against the maker, the endorser not being made a party. The plaintiff in the suit claims to be the holder in due course and asks judgment for the amount of such note. This claim is denied by the defendants and it is affirmatively averred that the endorser is the real owner of the note; this is the only actual defense pleaded vto the note. True, defendants claim a set-off against the endorser but not against the plaintiff, the only other party to the suit.
The case should have been tried and determined on this issue alone because:
1. The suit must be brought by the real party in interest. Section 11241, General Code. This provision of the statute applies to negotiable promissory notes as well as to all other actions. Nichols v. Gross; 26 O. S., 425; Osborn v. McClelland, 43 O. S., 284. Under these authorities the plaintiff must be the real party in interest, or his action must be defeated. If the answer here means anything, it means that plaintiff is not the real party in interest in this kind of a case; that he is not the owner of the note and a holder in due course, for value, and without notice of any infirmity affecting the instrument. It takes all this to constitute him the real party in interest. If he is not the real party in interest, he should be defeated because none but the real party in interest can maintain the action.
This identical case, so far as general principles are concerned, is found in the ease of Independent Coal Company v. Bank, 27 C. C., 297, or 17 C. D., 297. This action was brought by the first endorsee of a negotiable promissory note against the maker of the note, the endorser- not being made a party to the action. The defense made by answer was that the plaintiff was not the owner of the note, but held it by a fraudulent transfer from the endorser for the purpose of defrauding defendant out of a set-off or counter-claim against the maker of the note arising out of a contract to furnish coal, which contract the endorser had not complied with. Defendants offered evidence to show the contract with the endorser by the terms of which the endorser was indebted to it. This evidence was excluded by the trial court and the circuit court held there was no error in excluding it. The court says on page 299:
“It was not necessary that the defendant should show that if -suit had been brought by the payee it would have had a defense. It was sufficient that the defendant show that the plaintiff was not the owner of the note. If he succeeded in showing this he made a complete defense to the action, for if the plaintiff *151ewas not the owner of the noté then it was not the real party in interest as required, by Revised Statutes, 4993. Under this section the real party in interest who brings suit upon a promissory note must be the owner of that note. Such suit can not be maintained by one to whom the note has been transferred, whether by endorsement or by mere delivery for the purpose Qf collection only.”
In the present case, all the evidence relating to the purchase of the horse, Constant, and the warranty of Ade, and the breach of it, was incompetent and immaterial and should have been excluded on plaintiff’s objection, because it was only competent in a suit on a breach of the warranty, in which the warrantor is a party with a right to make his defense, if he has one. The evidence offered and excluded was the same evidence in that ease as the evidence offered and admitted in this ease relating to the purchase of the horse, Constant, and the warranty accompanying such purchase and the breach of it; and if the exclusion of the evidence offered was not error in the case cited, the admission of this evidence in the ease at bar must have been error. The case last above cited was affirmed by the Supreme Court without report. Coal Company v. Bank, 74 O. S., 463.
Again, in this same case just quoted from, another question arose as to the admission of evidence which is conclusive - of a question raised in the case under discussion. Defendant in that case offered to show by its manager that “after this note fell due the payee, in company with the cashier of the plaintiff, appeared at the office of this defendant and together they -were anxious to have this matter settled up, and that thereupon and after a long consultation the payee, to-wit, Mr. Walthour, and Mr. Thrasher, the principal persons in the payee, thereupon said to the manager of the defendant that they then were going to sue that note — the bank were going ,to sue on this note — • and that thereupon the cashier of the bank made no objection or made no claim to be the owner of the note.” This evidence was excluded and the court say upon that subject that “if the witness had testified to exactly what counsel for the defendant stated he expected him to testify to, it would have had no tendency to show that the plaintiff was not the real owner of the note.” And the court say that the exclusion of this evidence was not error. If the exclusion of this evidence was not error, then it seems to me that the admission of the evidence of Ho-*151fsack and Litt that Ade said he was the owner of the note, was error and such error as was prejudicial to the rights of the plaintiff below.
The ease cited was decided right both in principle and upon authority, and while the questions are presented on the exclusion of evidence it is the same evidence, or bore the same relation to the case on trial as was admitted in this case, and if it was not error to exclude it in that ease it certainly was error to admit it in the ease under discussion. The evidence here was clear and conclusive that plaintiff was the owner of the .note sued on and became such owner more than eighteen months prior to the date when such note fell due. ' Plaintiff produced the note in court and offered it in evidence. This alone made a prima facie case in its favor. Out of an abundance of caution the testimony of its cashier, assistant cashier and president were given at the trial, together with exhibits of its record of the transaction, -all of which was uncontradieted and which was conclusive as to the ownership of said note if evidence- of witnesses is to be believed at all. Against this testimony there was not a word of competent evidence offered, and only a few incompetent statements of a party who was not a party to the action.
It seems to me that the trial court misapprehended the issue that was before it and that the judgment of the majority is in direct conflict with the decision of the Supreme Court in affirming the case above cited, and that the judgment of the trial court should have been reversed and judgment given to the plaintiff in error on the admitted facts shown by the record. Minnear v. Holloway, 56 O. S., 148. Many other authorities might be cited in support of the propositions set out in this opinion, but it is not necessary to cite them, as those that are presented are conclusive of the points raised in the decision of the ease.
The several errors, any one of which, in my opinion, would have justified the reversal of the case, are as follows:
1. The overruling of the motion to strike the second defense from the answer.
. 2. The admission of any evidence.relative to the sale of the horse, Constant, the warranty by Ade relative to said horse, and the breach of the same.
3. The admission of the testimony of ITosack and Litt that Ade made the statement in their presence that he was the owner of the note in suit.
*1524. The overruling of plaintiff’s motion at the close of all the testimony for a directed verdict.
5. In refusing to charge before argument recpiests seven and eight asked for by the plaintiff.
6. The charge of the court relative to any and all other matters than the single issue of, whether or not the plaintiff was the owner of the note in suit. And
7. In overruling plaintiff’s motion for a new trial.