Challiss v. Wylie

The opinion of the court was delivered by PIojkton, C. J.: 1. Embezzlement; waiver of tort; We think the trial court committed error in striking out of the answer of Challiss his set-off against Robert W! Wylie for the sum of $2,000. In this state, any cause of action arising from contract, whether it be for a liquidated demand or for unliquidated damages, may constitute á set-off and be pleaded as such in any action founded upon contract; and a cause of action founded . -,. 1 , , , -, . upon an implied contract may be pleaded m set-off as well as any other cause of action. Even where a cause of action is founded upon a tort, a party may waive the tort if he choose, and treat his cause of action as one arising upon an implied contract. Wherever a person commits a wrong against the estate of another, with the intention of benefiting his own estate,- the law will, at the election of the party injured, imply or presume a contract- on the part of the wrong-doer to pay to the party injured the full value of all benefits resulting to such wrong-doer. And in [509] such a case the party injured may elect to sue upon the implied contract for the value of the benefits received by the wrong-doer. (Stewart v. Balderston, 10 Kas. 142; Stevens v. Able, 15 id. 584; Read v. Jeffries, 16 id. 534; Tightmeyer v. Mongold, 20 id. 90; Fanson v. Binsley, 20 id. 235.) The answer of Challiss alleged that Mrs. Mamie A. Wylie, the plaintiff, was not the real party in interest; that the consideration of the note sued upon was furnished by Robert W. Wylie, and that he was the actual owner of the note. If this was true, Challiss had the right to plead and establish his alleged set-off. ■ ■ The material question in the case is, conceding the error of the court in striking out portions of the answer, was this error a material one; that is, did it affect or prejudice in any way the substantial rights of Challiss? After the trial court had sustained the motion of Mrs. Mamie A. Wylie to strike from the answer the alleged set-off of • Challiss against Robert W. Wylie, there still remained in the answer the allegations that the plaintiff was not the real party in interest, as the owner of the subject-matter in controversy; that she was not entitled to make any claim of ownership to the note sued on, or any part thereof; but that, on the contrary, the entire consideration of the note at the time of its execution belonged to Robert W. Wylie; that he then had the consideration of the note in his possession and under his control, and was the actual owner thereof. The action was tried, with consent of all the parties, by the court, without a jury. In support of the allegations of the answer, Challiss testified that in the month of May, 1884, after the execution of the note, he had a conversation with Mrs. Mamie A. Wylie concerning her - knowledge and interest in the same; that she told him that she didn’t know anything about the note, and had never seen it. Robert W. Wylie testified, in rebuttal, on the part of Mrs. Mamie A. Wylie, that he acted as agent for his wife when he took the note from Challiss; that the money for which .the note was given was in the- bank at the time of its execution, in his own name; that [510] he drew his individual check therefor, and had it transferred to the account of Challiss; that he counseled with his wife before he loaned the money; and that he made the note payable to her. It was also shown that the note was subsequently indorsed as follows: “Pay to the order of A. M. Wylie. (Signed) Mamie A. Wylie.” Subsequently, it was indorsed with the name of “A. M. Wylie.” The trial court rendered judgment for Mrs. Mamie A. Wylie against the defendant for the full amount of the note, with interest and costs. 2' set-off"®™1 material error. The special findings of fact made by the court in no way ■ conflict with the conclusion of law and the judgment rendered. Upon the findings of fact and the judgment rendered, it is clear that the trial court found that Mrs. Mamie A. Wylie was the real party in interest, and entitled to recover. Therefore, upon the evidence, the court found as a fact that the allegations of Challiss in his answer were not true. One of the findings of fact is, “that at the commencement of the action the plaintiff was, and ever since said time has been, the indorsee and holder of the promissory note sued on.” Now the possession of a note, where the note itself and the indorsements thereon do not show who the owner is, is prima fade evidence that the person in possession is the owner and has good title to it. (*Eggan v. Briggs, 23 Kas. 710.) If Challiss had been successful in showing that Mrs. Mamie Wylie was not the owner of the note, and therefore not the real party in interest in the action, the error of the t J t t \ trial court in striking out' his alleged set-off would have been material and prejudicial. As the court, however, found otherwise, we can see no reason for disturbing the judgment rendered. It is admitted that the note was payable to the order of Mrs. Mamie A. Wylie; that Challiss knew this at the execution of the same. At that time it does not appear that Robert W. Wylie was indebted to any person. Even, therefore, if the money for which the note was given was the individual property of Robert W. Wylie, he had the lawful right to give it to his wife. If thereafter, and before the wrongs committed by Robert W. Wylie, the wife became [511] the holder and owner of the note by gift of her husband, her ownership in the same was as full and complete as if she furnished her own money for the consideration of the note. It appears from- the evidence that she must have seen and known of the note, as she at one time indorsed it to A. M. Wylie. A. M. Wylie subsequently indorsed it, and the finding of the court is, “that at and before the commencement of the action Mrs. Mamie A. Wylie was the indorsee and holder thereof.” If Challiss, at the execution of the note, had desired to protect himself against any misconduct of Eobert W. Wylie as his manager or clerk, he might, if the parties had consented, have made the note payable to Eobert W. Wylie only, and thereby rendered it non-negotiable. If at the time of the execution of this note, Eobert W. Wylie had been contemplating and planning the embezzlement, which it is alleged he subsequently committed, it would seem that he might have more readily secured the confidence of Challiss by making the note negotiable and payable to his own order. He could then have transferred it to his wife or to any other bona fide holder, so as to be freed from any counterclaim or off-set of Challiss. Where a case like this is tried by the court without a jury, the court, in its discretion, may direct the manner in which evidence shall be received. Eor instance, in this case, if the alleged set-off of Challiss had not been stricken out, the court could have directed before hearing any evidence concerning the set-off, that it would hear first the evidence whether the plaintiff was the real party in interest; and if, upon the evidence submitted, the court was satisfied that the plaintiff was the real and only party in interest, it might then have refused any evidence to support the alleged set-off. The judgment of the district court will therefore be affirmed. All the Justices concurring.