Illinois Title & Trust Co. v. McCoy

The opinion of the court was delivered by Benson, J.: In this action the plaintiff trust company, the indorsee of two promissory notes, sought recovery from the defendant, McCoy, the maker of the notes. The answer of McCoy alleged that the notes had been transferred by the payee, J. S. Griggs, to the Wm. R. White Co., ¿s collateral security for notes given by the payee to that company for an interest in a patent right, which transaction Griggs had discovered to be fraudulent. The answer further alleged that j udgment had been recovered in a circuit court of Illinois by the White company against Griggs on the notes given for the patent right, which judgment was still in force, but that the trust company still held the collateral notes upon which this action was brought. On this answer, McCoy asked that Griggs and the White company be made parties to the action. A general denial was filed in reply to this answer, and a motion was made by the trust company for judgment on the pleadings, which was overruled, and the motion of McCoy to bring in the new parties was sustained. Thereupon Griggs appeared voluntarily but the White company did not ap — 591 — pear, and no further steps were taken against it. Griggs answered that he had given three promissory-notes for $500 each to the White company, of Bloom-ington, Ill., “without consideration and through fraud,” the company having pretended to sell to him certain territory and right to sell a patent gate in Texas, and that there was no consideration for the notes, and that he had indorsed the McCoy notes in suit to the White company as collateral security only for his own notes. He also pleaded that the White company had obtained a judgment against him on the three notes he-had so given for the patent right for $1500 and interest, and “that upon the rendition of said judgment ... he was entitled to the possession of the (McCoy) notes.” An amendment to this answer stated that the White company represented that they were engaged in the manufacture and sale of the patented gate, which was a new and novel article; that they were making large sales -of territory and of gates; that these representations were false; and that he was induced thereby to give his own notes and to transfer the collateral notes. The prayer was for the possession of the collateral notes sued upon and for judgment against McCoy thereon. A motion to strike out this answer was overruled. A reply was filed thereto and the cause was-tried, the appellant voluntarily assuming the affirmative. The only issue was upon the answer of the inter-venor, Griggs, to determine whether he or the trust company should recover against McCoy, who made no defense. It appeared from the evidence that the White company was engaged in manufacturing and selling a gate at Bloomington, Ill., under letters patent from the United States. Griggs negotiated with that company at Bloomington for an interest in the patent,- but did not then buy it. A representative of the company joined him on his return to Kansas, and at Newton he signed the three notes — 592 — before referred to, bearing date at Bloomington, Ill., and payable there. He then went with the agent to Garden City, where the agent examined the mortgage security which had been given to secure the McCoy notes, then held by Griggs, which notes were offered as collateral security to his own notes. The agent then left with the papers, and later the White company, having accepted the notes of Griggs' with the McCoy notes as collateral security and accompanying real-estate mortgage securing them, executed a conveyance to Griggs of the patent right for a county in Texas, as agreed upon, and sent it to him by mail. Afterward one of the Griggs notes was indorsed with the McCoy notes and mortgage as collateral security to the trust company, appellant. After the maturity of the other Griggs notes, in a correspondence and effort for settlement between an attorney for the White company and Griggs, it being- ascertained that the trust company held the other note, it was obtained by the attorney in order to effect a collection or settlement of the whole liability of Griggs upon the three notes, under an arrangement between the White company and the trust company that the latter should have a proportion of the amount collected. The proposed settlement failed, and thereupon an action was commenced by the White company upon the three notes in the circuit court of McLean county, Illinois, and judgment was rendered therein for the amount of the notes. This is the judgment pleaded by both McCoy and Griggs. No evidence was offered of any false representations or fraud in the sale of the patent right. The conveyance of the right was received by Griggs, who testified that he attempted to make sales of gates and territory; that he learned from people he talked' with that the scheme was being denounced by the papers and he was unable to handle it; that he tried to sel-1 it but was not adapted to it; and that he was unable to handle it at all. Representatives of the White company and of the — 593 — trust company testified to the transfer of the Griggs notes and the McCoy notes and mortgage, as collateral, to the trust company before maturity for a sufficient consideration. It is claimed that their cross-examination shows that the latter had knowledge of the transaction in which the Griggs notes were given, and is not an innocent purchaser. The court instructed the jury that there was no evidence of fraud in the sale of the patent right, but still submitted to them the question whether there was any consideration for the Griggs notes given therefor, and directed that if it was found that there was no such consideration they should return a verdict for Griggs against McCoy for the amount of the McCoy notes sued upon, but if such consideration was found a verdict should be returned in favor of the trust company, the appellant, for that amount. The verdict was for the plaintiff, and, pending a motion for a new trial, the amount was paid by McCoy and satisfaction of the judgment which was afterward rendered was filed by Griggs and entered upon the records of the court, as appears from a certified copy of the release filed in this court. Judgment was also rendered against the trust company for costs. Passing by the question whether the court should have sustained the appellant’s motion for judgment against defendant McCoy on the pleadings, the recovery should have been for the appellant and not for intervenor Griggs. Upon his own answer pleading the Illinois judgment, the validity of the notes which he had given for the patent right had been finally adjudicated. That action was by the actual owner of two of the notes and the rightful holder of the other, and any defense thereto was either tried or might have been tried. He testified that the judgment had not been paid, and it is final. (Sanford v. Oberlin College, 50 Kan. 342, 31 Pac. 1089; McEntire v. Williamson, 63 Kan. 275, 65 Pac. 344; Stroup v. Pepper, 69 Kan. 241, — 594 — 76 Pac. 825; Osage City Bank v. Jones, 51 Kan. 379, 32 Pac. 1096; Cromwell v. County of Sac, 94 U. S. 351; Leslie v. Bonte et al., 130 Ill. 498, 22 N. E. 594; Illinois Conference v. Plagge, 177 Ill. 431, 53 N. E. 76, 69 Am. St. Rep. 252.) The appellant ought also to have recovered without regard to the Illinois judgment. No defense to the Griggs notes was shown upon the trial. As there was no evidence of fraud in selling the patent right, the conveyance of that right was a sufficient consideration for the notes — the consideration contracted for and received. There was no evidence that the patent was invalid or worthless, and it is immaterial whether the trust company was a holder before maturity and without knowledge' of the’ transaction or not. The Illinois judgment was pleaded in connection with the claim that the intervenor thereby became entitled to the return of the collateral notes, but the district court properly instructed the jury that this claim could not be sustained and he does not complain of the instruction. It. is said in the - brief, however, that the judgment was pleaded to show collusion; but whatever may have been the purpose of introducing it into the case it is an established fact, and must have its legal effect. The argument is made in this court that the Griggs notes are void because given without the notation, “Given for a patent right,” as required by statute. (Gen. Stat. .1909, §§ 5515-5517.) But the Illinois judgment is conclusive upon this matter also. Passing that obstacle, however, the suggested invalidity of the notes was not pleaded in or considered by the district court; only fraudulent representations and want of consideration were pleaded. The notes are dated and made payable in Illinois, where the appellant claims they were finally accepted and the deal closed. Had the defense now suggested been pleaded, the laws of Illinois on the subject might have been considered material and pleaded in reply. But in any event, such — 595 — a defense can not be considered in this court at this stage of the litigation. The cause can not now be remanded for the trial of an issue not before tendered. After the judgment was rendered and the appeal had been taken, defendant McCoy died. Thereupon a motion was made to revive the action against Griggs and Hattie Armstrong and Walter McCoy, as trustees, so-called, of certain property and funds of the deceased; that is, it was alleged in the notice that the deceased had sold the lands which had been mortgaged to secure the notes in suit, receiving notes and cash therefor, part of which had been invested in the name of Mrs. Armstrong, his daughter, and part in the name of Walter McCoy, his son, and $1622.85 paid to Griggs in satisfaction of the judgment on the two notes referred to, and that these dispositions- were made to prevent the collection of the plaintiff’s demands in this action. The motion was verified, but no other evidence was offered in support of the allegations contained in it except evidence to prove heirship. Mrs. Armstrong and Walter .McCoy appeared and objected to the revivor, on the ground that there was no sufficient showing and that the court had no jurisdiction to order it. Thereupon the court made an order reviving the action, not only against Hattie Armstrong and Walter McCoy, who are heirs of the deceased, but included in the order of revivor his other heirs, reciting in the order that the revivor against the two persons named above “ran against them as heirs, and that the question of holding said property in trust by them could be heard hereafter on the merits of the cause.” Mrs. Armstrong . and McCoy appeal from this order. Their argument is that a revivor against the heirs is improper, the action being a personal one against the deceased, and that it should not have been revived against the alleged trustees without proof of the facts claimed to show the trust. The action was for money only. The mortgage securing the — 596 — notes sued upon was not pleaded. The original cause of action in such a case survives against the personal representative. Upon this record, however, a personal judgment against the estate is not important. The liability of the deceased was conceded, and the trial was only to determine to whom it was due. That issue was -erroneously decided in favor of the intervenor, Griggs, •and if he has received satisfaction of the judgment ■erroneously rendered in his favor he should be adjudged to pay it to the party entitled to it. (Civ. ■Code, § 581.) But the plaintiff contends, upon the .facts alleged in the motion for revivor, that Walter McCoy and Mrs. Armstrong are also liable to its claims. Without expressing any opinion concerning :such alleged liability, no reason is perceived why it may not be determined, upon proper issues to be framed between the plaintiff and the new parties referred to, ■as contemplated in the order of revivor, which is without prejudice to any defense they may have to the plaintiff’s claim. Had a revivor been asked and ordered against the personal representatives of McCoy, in the usual course of practice, Mrs. Armstrong and Walter McCoy might then have been made parties to the action. The same result is reached by the proceedings taken. While the situation is unusual, it is believed that this course is warranted. (Civ. Code, §§ 429, ■436.) The other heirs of McCoy may not be necessary parties, but they do not appeal, and that question is not considered. The motion for- revivor as against Griggs, the in-bervenor, was rightly denied, since he is already a party; and if, as shown by the clerk’s certificate, he has ■entered satisfaction of the judgment so erroneously rendered in his favor, he should, upon a supplemental reply, pleading the fact and a finding of the truth thereof, be adjudged to pay the amount of such judgment to the plaintiff. — 597 — The judgment appealed from is reversed, and the cause remanded with directions to proceed in accordance with these views. The order of revivor is affirmed.