Holczstein v. Bessemer Trust & Savings Bank

BROWN, J. This is an action by the appellee against the appellants on a promissory note. The complaint consists of á single count, and, omitting the paragraph alleging waiver of exemption and claiming attorney’s fee, is in the following words: “Plaintiff claims of the defendants $1,548.45 due by promissory note made by them on December 10, 1929, and payable the 11th day of February, 1930, with interest thereon from maturity at the rate of 8 per cent, per annum.” To this complaint the defendants filed the general issue, and seventeen special pleas. The trial court sustained a demurrer to twelve of said special pleas, leaving in the record five of such pleas, including plea 3, “That there was no consideration for the note sued on” ; plea 6, which alleges that the note- sued on is a renewal of a note which was endorsed by the defendant without consideration ; pleas 8 and 9, fraud and deceit on the part of the plaintiff in procuring the execution of the original note by one of said defendants and the indorsement by the other, and alleging that the note sued on is a renewal of the original note, without any other or further consideration; and plea 15, “That the plaintiff cannot maintain this joint action against the defendants for that this defendant is a mere endorser of the note sued on and the obligation of the endorser and maker is several, and the obligation of each is dependent on different conditions.” Clearly pleas 4, 5, and 14 assert nothing more than that there was no consideration for the execution of the note, the defense asserted by pleas 3 and 6. Plea 7, a plea of confession and avoidance, was bad in that it confesses the execution of the note by the defendants as joint makers, as averred in the complaint, and seeks to impeach the law by imputing to the contract a meaning other than its legal meaning. That is, they say by this plea that though defendants executed the contract as joint makers, they are in fact indorsers, and not otherwise liable, because there was an understanding to that effect with the plaintiff not embodied in the contract. It is familiar law that in the absence of fraud in procuring the signature to a writ *277 ten contract by misrepresenting or concealing its contents, it cannot be impeached by proving a different contemporaneous agreement, or because the party signing was ignorant of its legal effect. If this were not the law, “contracts would not be worth the paper on which they are written.” Georgia Home Insurance Co. v. Warten, 113 Ala. 479, 22 So. 288, 290, 59 Am. St. Rep. 129; Upton v. Tribilcock, 91 U. S. 50, 23 L. Ed. 203; Central of Georgia Ry. Co. v. Garner, 219 Ala. 441, 122 So. 429; Beck & Pauli Lithographing Co. v. Houppert & Worcester, 104 Ala. 503, 16 So. 522, 53 Am. St. Rep. 77; Little v. People’s Bank of Mobile, 209 Ala. 620, 96 So. 763; Barbour v. Poncelor, 203 Ala. 386, 83 So. 130. To state the proposition in another way, “If all contracts made in ignorance of the law were to be held invalid, there would be no certainty in business, and- no security in titles. All rights of property would be endangered, and the most important encouragements for industry and enterprise would be taken away. It is indispensable, therefore, that the obligation of contracts should be maintained, unless there is some stronger reason for annulling them than a mere mistake of the law.” 6 R, C. L. pp. 627, 628, 629, §§ 46 and 47. The cases cited and relied upon by the appellants (Jackson, Supt. of Banks v. Lancaster, 213 Ala. 97, 104 So. 19; Hood v. Robbins & Smith, 98 Ala. 484, 13 So. 574; Zadek v. Forcheimer, 16 Ala. App. 347, 77 So. 941) do not sustain appellants’ contention. In all of those cases the parties held not to be liable were indorsers on the face of the respective transactions, and they all,indorsed after the paper had been executed and delivered by the maker and the delivery accepted. The defensive matters alleged in pleas 10, 11, and 13 were admissible in evidence under pleas 8 and 9. Plea 10 was also bad as a plea of recoupment in attempting to hold plaintiff liable for damages caused to defendant’s reputation by defendant’s own act— placing the signature on the note. Plea 13 shows that the note in suit was given in renewal after the maturity of the original obligation, and is subject to the construction that it was given in consideration of forbearance or extension of time for payment. Jackson, Supt. of Banks v. Lancaster, supra. The note in suit was executed December 19, 1929, and the defendants’ plea 12 alleges that the defendant Holczstein was discharged in bankruptcy October 14, 1927. So construing the plea most strongly against the pleader, the note was executed in renewal of the indebtedness from which said defendant was discharged. This was a sufficient consideration for the renewal, and its legal effect was to remove the bar effected by the discharge in bankruptcy. Griel Bro. v. Solomon, 82 Ala. 85, 2 So. 322, 60 Am. Rep. 733; Dearing v. Moffitt, 6 Ala. 776. Plea 16 does not deny that defendant signed the note — in fact, confesses its execution— and seeks to impeach the law, by asserting that though defendants signed as makers, they are in fact only endorsers. It has all of the infirmities of plea 7, and was subject to tne fifteenth ground of demurrer. Moreover, it was in substance and legal effect the same as plea 15. Although in the first instance the indorsement by the defendant McElhenney of the note of the defendant Holczstein was without consideration, yet if they renewed the obligation by giving a new note, for the purpose of renewing the indebtedness from which Holczstein was discharged in bankruptcy, or if in consideration of forbearance or extension of the time of payment of an indebtedness existing, granted to Holczstein, the defendant McElhenney joined Holczstein in the execution of the renewal note, the execution of the renewal note is not subject to the defense of no consideration; nor does it violate the statute of frauds-. The consideration moving to Holczstein is sufficient to sustain the contract. Jackson, Supt. of Banks v. Lancaster, 213 Ala. 97, 104 So. 19, and authorities there cited. Pleas 17, 18, and 19 were subject to all the vices inhering in pleas 7 and 16, and the demurrers thereto were sustained withouterror. While it is not permissible for the plaintiff to depart from the cause of action stated in the complaint, and by a replication to resort to a new cause of action, yet, when the cause of action is stated generally in the complaint, he may, if necessary, in a replication to a special plea, restate it more minutely. Herring, Farrell & Sherman v. Skaggs, 73 Ala. 446, 453; Louisville & Nashville Railroad Co. v. Walker, 128 Ala. 368, 30 So. 738. However, the matter more specifically stated must, in legal effect, either traverse the plea, or confess and avoid it. McNeill v. Atlantic Coast Line Ry. Co., 161 Ala. 319, 49 So. 797; Matthews v. Farrell, 140 Ala. 298, 37 So. 325. Therefore, while replication 3 was good as to pleas 6, 8, 9, and 15, in that it shows that tire note was executed by the defendants as joint makers subsequent to the alleged fraud and in renewal of an obligation of one of them the matters therein alleged do not traverse or avoid the averments of plea 3, which are confessed by the replication and on the authorities above cited the demurrers should have been sustained to the replication in so far as it related to said plea 3. The plaintiff’s replication to plea 12, which had been eliminated on demurrer, presented an immaterial issue and the court erred in overruling the demurrer to said replication. *278 The plaintiff’s evidence tended to show that the defendants purchased from one Shearer a business in the city of Bessemer, the defendant Holezstein giving his notes and mortgage for the purchase price; that previous to said purchase the defendant Mc-Elhenney made arrangements with the plaintiff bank to take over the notes and mortgage given, with his indorsement, and thereafter payments were made and the obligation renewed. Before the note in suit was given, Holezstein went into bankruptcy and was discharged, and thereafter the defendants executed the note in suit as joint makers in renewal of the original indebtedness. The evidence offered by the defendant tended to show that McElhenney was in no way interested in or connected with the purchase of the business from Shearer; that the purchase was made by Holezstein, and that he (McElhenney) at the request of the president of the plaintiff bank indorsed Holczstein’s note and mortgage; that previous thereto said bank President, Ross, misrepresented to him the condition of said business, as affecting its solvency, and that he (McElhenney) would not incur any liability by such indorsement ; that it was a mere matter of form to comply with the custom of the banking business ; that after the defendant Holezstein had gone into bankruptcy and been discharged, said Ross threatened to sue on said original papers, or some 'former renewal; and that thereafter the defendant .signed the note sued on, Ross representing to McElhenney that his signature was nothing more than an endorsement. The defendants’ evidence further tends to show Shearer was indebted to the plaintiff, and that it held his paper, and that the result of the original transaction with Holezstein was to substitute Holezstein for Shearer, with McElhenney’s signature as an accommodation indorser added. The evidence does not sustain defendants’ third plea—no consideration—and if it be conceded that the alleged fraud on the part of Ross was proved as alleged, and constituted a good defense in the first instance, the subsequent renewal of the note after knowledge of said fraud was a waiver of the defense. So, also, the undisputed evidence disproves the defendants’ plea 15, which is nothing more than the conclusion of the pleader unsustained by facts. After due consideration, the judgment here is that on the issues as framed, the defendants were allowed to fully develop the facts, and the undisputed facts show that the defendants have no legal defense to the note in suit, and plaintiff was entitled to the affirmative charge. Therefore the errors heretofore noted, and any error committed in given or refused instructions to the jury, are clearly without injury. Terry Realty Co. v. Martin et al., 220 Ala. 282, 124 So. 901. Affirmed. ANDERSON, C. J., and SAYRE and THOMAS, JJ., concur.