Bunzel v. Maas

BRICKELL, C. J. This suit was brought by appellant, as the holder and owner of six negotiable promissory notes, for $500 each, which were made on the 24th of February, 1892, by I. L. Levy, and endorsed by the appellees, who were sued as such endorsers. 1. The tenth plea alleges that the endorsements were made without consideration, but at once qualifies this statement by averring that they were made upon the promise of the maker to use said endorsements for the pui’pose of redeemixxg cex'tain collaterals pledged for a debt of his to another party, promisixig to pay off'the incLebtedxxess for which the collaterals were pledged ‘ ‘by the use of said endorsemexxts,” and to deliver the collaterals to appellees for their indemnity. That the said Levy also promised to procure axxd deliver as further indenuxity to the defexxdaxxts for their eixdorsements, the written guarantee of Steiner Bros, of Birmixxgham, “which said guaraxxtee the said I. L. Levy then and there falsely and fraudulexitly assured these defendants, the said Steiner Bros, had' proxnised and agreed to make.” The plea then alleges that relying upon these promises and representations for the purpose stated and no other,, they endorsed said xxotes, and that Levy fraudulently diverted the. eixdorsements axxd failed to keep said promises. The ixlea was.demurred to oxx the groxxxxd that it alleges that Levy fraudulently divexded the exxdorsemexxts. without stating the facts constituting the supposed fraud. Axxd, on the further ground that it does not appear from the plea that the defendants were xxot accoxxxmodation endorsers of said notes without restriction upon their use. The demurrer was improperly — 78 — overruled. It does not appear from the plea how the endorsements were to be used in redeeming the collateral referred to therein ; whether by using the proceeds of a discount of them in paying the debt for which the collaterals were pledged, thereby redeeming them; or by a transfer of the notes to the holder of the collaterals in substitution of the debt, thereby inducing a surrender of them. If the former case, it is obvious that a discount of the notes was contemplated, and the promise would relate only to the use of the proceeds of the discount, not affecting the purchaser of the notes, not having notice of an intention to misapply the proceeds. And the plea rather indicates that the notes were to be sold, since it alleges that the crédito]1 holding the collateral was to be paid ; the words being, “promised these defendants to pay off said indebtedness to said Lehman, Durr & Co. bjr the use of said endorsements.” If it was the intention of the pleader to prove in defense, that the notes were not to be discounted, but were to be transferred only to the creditor holding the collaterals, he should have left no doubt about the fact, by averring distinct^ what the agreement was upou which the endorsements were made. As the plea stands, it is open to both of the objections mentioned in the demurrer. Construing the plea, as we must in this case, most strongly against the pleader, it does not deny the right to sell the notes, but only sets up a breach of promise in the use of the proceeds, which would not bar a recovery by the holder of' the notes, not having notice of the intention to misapply them. 2. The fifteenth plea alleges the endorsement for accommodation of Levy and upon his promise to use the notes with the creditor holding the collaterals referred to in the tenth plea, and upon his promise to deliver the collaterals so taken up to the endorsers for their indemnity, and avers that Levy did not use the notes with said creditors for the purpose for which they were endorsed and delivered, but fraudulently diverted them by discounting them with J. Marx & Co. at an usurious rate of interest. The plea then alleges that the plaintiff did not acquire the notes or either of them before maturity in the usual course of business. These are the substantial averments of this plea. It will be observed that there is no averment how these notes were to be — 79 — used with Lehman, Durr & Co., whether by discount or otherwise ; nor is there any averment how the proceeds of the discount actually made were used. They may have been used to take up the debt with Lehman, Durr & Co., thereby redeeming the collaterals which the endorsers were to have for'their indemnity. And all this may have been done and the collaterals actually delivered to defendants, so far as any averment in the fifteenth plea is concerned. It is obvious the facts stated in this plea form no defense to the action. It may be true in all its averments, since the substance of the agreement averred is that the notes should be discounted with Lehman, Durr & Co. and the proceeds used to take up the collaterals to which it refers. If the discount was with a third person and the proceeds used with Lehman, Durr & Co. for the purpose named, and effecting a redemption of the collaterals for delivery to the defendants, there would be no cause of complaint. And it does not appear from the plea but that all this was done, including the delivery of the collaterals to defendants. As this plea is clearly deficient in substance the demurrers thereto should have been sustained. 3. The plaintiff offered in evidence the examination in chief of a witness examined by deposition in his behalf. The court required the plaintiff to introduce and offer at the same time the cross-examination. We think this was error. A deposition is a simple substitution for an oral examination in -which the cross-examination is called out by the act of the party cross-examining. A party cross-examining does not make the witness his by a cross-examination. He may impeach him by .all the modes open to him notwithstanding the cross-examination. The examination by deposition and the offering of the testimony in such case must stand in all respects as an oral examination.— Van Horn v. Smith, 59 Iowa, 142; Converse v. Meyer, 14 Neb. 190; Cellatly v. Lowrey, 6 Bosw. 113; Citizens Bank v. Rhutasel, 67 Ia. 316; Herring v. Skaggs, 73 Ala. 446. 4. The fourth assignment of error was an objection by plaintiff to a question put by defendaiits, asldng a witness to describe the notes referred to in certain letters attached as exhibits to the deposition of M. L. Ernst. The question was objected to on two grounds : that the evidence was irrelevant, and, second, that the notes — 80 — themselves were the best evidence. The question was not open to the second ground'of objection, because the writing not being the foundation of the suit, but coming up collaterally, is not required to be produced. — 1 Brick. Dig. 856, § 753 ; 3 Brick. Dig. 439, §486. But it seems that the evidence called for was clearly irrelevant, since the transaction referred to related to matters without the issues of this case and between different parties. The objection, therefore, should have been sustained. And for the same reason the objections to the statements made by Marks to the witness -Maas should have been sustained. The plaintiff was not present and the direct assertion or admission by Marks of having an interest in the notes could not affect the plaintiff whose rights were then fixed. It.was hearsay and res inter alios acta, and was not good to contradict the answers of another witness as to same matters called forth by defendant, since being irrelevant and collateral matter no issue can be raised on it. The party must be content with the reply to his first inquiry in such case. — 1 Green. Ev., § 449 ; 2 Brick. Dig. 549, § 125. 5. We think there -was no error in allowing proof that certain interlineations in the deposition of the plaintiff were in the handwriting of Ernst, one of the iiarties from whom the plaintiff derived title and who is charged, by implication at least, in assisting the plaintiff. It -was a transaction supposed to have taken place in the presence of the plaintiff and to have received his assent, and tended to show the relation and intimacy between the parties and to heighten the probability of the alleged fraud in putting the notes in the hands of the plaintiff, and it reflected light upon matters affecting the credibility of the witnesses relied on by the plaintiff. The evidence of a witness upon the stand who has taken or received aid or suggestion may not be excluded for that reason alone, but the fact is proper to be shown so as to be used for all legitimate purposes ; and so we think it proper to prove any fact relating to a deposition which would be competent in the case of a witness being examined orally. 6. The charges numbered one and six asked by the plaintiff and refused by the court,, we think should have been given. They stated a complete answer to the defense set up in the tenth and other pleas, which the — 81 — plaintiff was required to take issue upon or to reply to, and were in strict conformity to the replications. We have seen that the pleas did not inhibit a sale of the notes though made at usurious rates, but based the defense upon notice to the plaintiff of the facts set up in the pleas which related to promises made by Levy and not kept. The charges asked practically affirmed that if the plaintiff bought the notes, as the pleas concede might be done, before maturity and for value without notice of any of the matters set up in defense in the pleas, plaintiff was entitled to recover. It is evident that all a party has to do is to answer fully pleas which have been held good against his objection. If the defendants force the plaintiff to take issue upon-bad pleas, the plaintiff is entitled to recover upon a full answer to such pleas. The charges in the case, substantially asked the court to instruct the jury that if the evidence did not sustain the pleas, the plaintiff was entitled to recover. The right of the plaintiff to recover as far as the pleas were concerned was not affected by the fact of usury in the first or other sales of the notes, since as we have seen, the pleas contemplated a conversion of the notes into cash, a fact which must precede the breaking of promises relating to the disposition of the proceeds. In a case of this kind, therefore, a purchaser for value before maturity without notice, though at usurious rates, could be affected by no defense, except that of usury, duly pleaded and to the extent allowed in such cases. Having held that the demurrers to pleas ten and fifteen should have been sustained, it is deemed unnecessary further to consider the propriety of the charges based upon the replications. 7. The court properly refused the fifth charge asked by the plaintiff. The fact that the plaintiff knew that tjhe maker of the notes was insolvent when he bought them, was proper evidence to be considered by the jury along with the other evidence upon the question of actual purchase by the plaintiff. 8. The court properly refused to give charge seven requested by the plaintiff. There was some evidence tending at least to impeach the conclusion that the plaintiff had paid anything for the notes ; and it was, therefore, a question for the jury under all the facts of — 82 — the case to determine whether or not plaintiff was a purchaser or a formal holder for other persons. 9. The second charge asked by the defendant and given by the court should have been refused. It assumes that a sale of the notes to any other person than Lehman, Durr & Co., though the proceeds had been used in redeeming the collaterals held by them, and though the collaterals had been delivered to the defendants in pursuance of the agreement, would be a fraudulent diversion of the notes and a breach of the agreement upon which the endorsements were obtained, which we have above seen is an incorrect view of the transaction. For the errors noticed, the cause is reversed and remanded.