Bell v. Farmers D. N. Bank

Opinion, Mr. Chibe Justice Paxson: This case has been so well considered by the learned master and the court below that an elaborate discussion of it here is unnecessary. The master finds the pivotal fact in the case as follows: “ From this testimony the master has found as a fact that Thompson Bell, at the time he made the loan of $20,000, and took as security the stock in controversy, knew that the money loaned was to be used for the purposes of James Marshall & Co.” It needs neither argument nor authority to show, that if Mr. Bell knew when he loaned this money that it was for the use of the firm of which James Marshall, Jr., was a member, he had no right to receive and hold the assets of an estate of which the said James Marshall, Jr., was an executor as collateral security for such loan. He knew that it was a misapplication of trust funds ; that it was a pledge of securities belonging to the estate for the personal debt or liability of the executor’s firm. [332] Without denying the legal conclusion from this fact, however, the appellee contends that it was found upon incompetent evidence, and. his first specification of error is directed to this point. We are of opinion that under the authority of Duffield v. Hue, decided at the last term, in the western district, and not yet reported [129 Pa. 94], James Marshall, Jr., was an incompetent witness, under the act of 1887. If this were all, we would be compelled to reverse this case. It is not all, however. In his answer to the bill, James Marshall, Jr., distinctly avers that the money was borrowed for the use of the firm of James Marshall & Co., and that the plaintiff knew such to be the fact. The other executors make substantially the same averment in their answer. If, then, this averment is responsive to the bill, the answer must stand, for the reason that it was not overthrown by plaintiff’s proofs. In such case, it matters not that Marshall was an incompetent witness, and his testimony improperly received. The effect of his answer remains the same, and,. until it is overcome by the quantity of proof essential in such cases by equity practice, the fact must be assumed to be as set forth in the answer. This brings us at once to the question, was the answer responsive ? Upon this point we are not in any doubt. The answer sets up no new contract. On the contrary, it admits the contract as set forth in plaintiff’s bill, and denies a matter outside of the contract itself. This subject was thoroughly discussed by our late brother Sharswood, in Eaton’s App., 66 Pa. 483, and the authorities collected with his usual care. He there adopts the rule laid down by Chief Justice Parker, in Bellows v. Stone, 48 N. H. 475, as follows: “If the whole subject matter of the statement or allegation in the answer might have been left out, then the allegation in the answer upon that subject is in no sense responsive to the bill; the bill requiring no statement upon that point. But, if the omission of some statement upon that subject would furnish just ground of exception to the answer, then the statement to the extent to which it is required, and whatever its character, whether affirmative or negative, is but a response to the requisition of. the plaintiff.” In Allen v. Mower, 17 Vt. 61, it was said: “It is readily perceived that everything in the answer responsive to the bill, as to the creation of the original liability charged, must be taken together, [333] as part and parcel of one entire transaction.” In Pusey v. Wright, 31 Pa. 387, it was said by Thompson, J.: “ If a con-contract be set forth, and the defendant be called on to answer it, a- denial that it exists, modo et forma, would not be good, according to chancery practice, for this is subject to the implication that it existed in some other form. To avoid this, the defendant should state how it existed, and wherein it had no existence.” This meets the case in hand precisely. The defendants did not deny the contract. They admit having borrowed plaintiff’s money to the amount averred in the bill, but they say it was not borrowed for the use of the Marshall estate, but for the firm of James Marshall & Co., and that the plaintiff knew it. We are of opinion the answer was responsive. The decree is affirmed, and the appeal dismissed, at the costs of the appellants.