Mellott v. Downing

Mr. Chief Justice Bean, after stating the facts, delivered the opinion of the court. 1. There are some twenty assignments of error in the abstract, but it is unnecessary to notice them in detail. They are practically all predicated on the contention— which we think is sound — that the court permitted the defendants to recover upon defenses not pleaded. The answer admits that the certificate of deposit mentioned and described in the complaint was received from the plaintiff “as security for losses suffered by plaintiff, commissions earned, and advancements made by defendants on or account of transactions thereafter to be had by defendants with plaintiff.” There is- no averment, however, that any losses were suffered, commissions earned, or advancements made by them on account of any transactions with the plaintiff, or that there is any amount due them for which they were entitled to retain possession of the certificate, or its proceeds, as security. 2. Where, as here, the defendant admits the ownership “of the property to be in the plaintiff, and claims a [224] right to its possession by virtue of a lien thereon, such lien should be pleaded, and can not be shown under a general denial: Guille v. Wong Fook, 13 Or. 577 (11 Pac. 277). It was, therefore, necessary.for the defendants, in order to' defend on the theory that the certificate of deposit had been assigned to them as security, to plead that fact, and to set out the obligations incurred or losses sustained which it was intended to so secure, and that plaintiff had not reimbursed them therefor. The allegation that they duly performed all the provisions of the agreement under which the certificate of deposit was received does not imply that they suffered any losses, earned any commissions, or made any .advancements for or on account of the the plaintiff, entitling them to hold and retain possession of such certificate. They may have duly performed all the provisions of the contract, whatever they were, and still not be entitled to hold it or its proceeds. We are of the opinion, therefore, that the court erred in permitting defendants to give evidence tending to show that they were entitled to the possession of the certificate of deposit, as security for and on account of money they had advanced to the plaintiff, commissions earned, and losses sustained, and in submitting that question to the jury, with an instruction that, if they found plaintiff had not returned or offered to return such advancements or paid such commissions or losses, he could not recover. 3. Indeed, as we understand the argument for the defendants, it is not seriously contended that such rulings were proper under the pleadings, but that the errors were harmless, because the complaint does not state facts sufficient to constitute a cause of action, and the plaintiff was not entitled to recover under the testimony. The objection to the complaint is that it does not allege payment by the plaintiff of the indebtedness intended to be secured [225] by the certificate of deposit, or a demand for an accounting. The theory, however, upon which the complaint was framed and the action prosecuted, is that the defendants failed to carry out their contract, and did not make any purchases or sales for him on the Chicago Board of Trade, and therefore no commissions were earned or liabilities incurred by them for the security of which they would be entitled to hold the certificate of deposit. The complaint, after alleging the terms of the contract of bailment under which the certificate was assigned to the defendants, avers that they never earned any commissions, advanced any money, suffered any loss, or assumed or incurred any liability whatever in the purchase or sale of grain or options, and never purchased any grain or any option for or on account of the plaintiff on the Chicago Board of Trade or elsewhere, and all transactions between plaintiff and defendants with reference to such purchase or sale of grain ceased and determined on or before the thirteenth of November, 1896. It therefore appears from the complaint that there never was any secured indebtedness or conditions to be performed by the plaintiff before he would be entitled to the proceeds of the certificate of deposit, but the defendants became liable to him for the money received therefor as for money had and received: White Pine Bank v. Sadler, 19 Nev. 98 (6 Pac. 941). 4. It is argued that none of the averments of the complaint, excepting the statement that defendants never advanced any money, etc., can avail the plaintiff, because the assertion that defendants never earned any commission, suffered any loss, or assumed or incurred any liability for or on account of the plaintiff in the purchase or sale of grain or options, etc., is a mere conclusion of laiv, [226] and the negative allegation that defendants never purchased any grain or any options is inconsistent with the affirmative statement that all transactions between plaintiff and defendants with reference to the purchase or sale of grain ceased on the thirteenth of November. It must be remembered in this connection that the objection to the sufficiency of the complaint comes after answer, and therefore it must be construed most strongly in favor of the pleader : Oregon & Cal. R. R. Co.v. Jackson County, 38 Or. 589 (64 Pac. 307). The most that can be urged against the allegation that defendants never earned any commission, suffered any loss, or incurred any liability for or on account of the plaintiff in the purchase or sale of grain or options on the board of trade of Chicago is that it is a defective statement of a cause of action, which, under all the authorities in this state, is cured by answering over. Nor does it necessarily follow from the averment that all transactions between plaintiff and defendants ceased on the date named in the complaint that there had previously been any actual purchases or sales made by the defendants for and on account of the plaintiff on the board of trade of Chicago, under the terms of the contract of bailment. The allegation is that all transactions with reference to such purchases ceased. This may imply nothing more than that all negotiations between plaintiff and defendants with reference thereto ceased and terminated on that day. It is true, while the complaint alleges that defendants never purchased any grain or any options for or on account of the plaintiff on the board of trade, it does not aver that they never sold any grain for him; but, in view of the general allegation that no commissions were earned, advancements made, or liabilities incurred by the defendants for or on account of the plaintiff in either the purchase or sale of grain or options on the Chicago Board of Trade, the omission to allege that no sales were made [227] is not fatal to the complaint, after answer. If the objection now made to the complaint was on a demurrer, the argument of counsel would perhaps not be without merit, but it comes too late after answer. 5. So. far as the right to recover under the testimony is concerned, but little need be said. From the statement of facts it appears that the evidence tended to show that the defendants disobeyed the instructions of the plaintiff, and, while he assumed and believed that his orders were actually placed as directed, the several transactions were in fact fictitious. If this is true, the defendants have no lien upon the money deposited with them to cover margins for advancements made or liabilities incurred on account of such fictitious transactions, and the plaintiff is entitled to recover it as for money had and received : Jones v. Marks, 40 Ill. 313 ; Denton v. Jackson, 106 Ill. 433 ; Larminie v. Garley, 114 Ill. 196 (29 N. E. 382); Gregory v. Wendell, 39, Mich. 337 (33 Am. Rep. 390). It follows from these views that the judgment of the court below must be reversed, and a new trial ordered. Reverse».