International Harvester Co. v. Merry

MR. JUSTICE COOPER delivered the opinion of the court. This action was brought to enforce payment of a promissory note in the sum of $4,437.77, and to foreclose a mortgage upon the real estate of defendants, situated in Custer county. The complaint alleges that defendants have failed to pay the principal or interest due thereon, except the sum of $128.20 indorsed on the note. The answer denies that the note and [502] mortgage were ever delivered to plaintiff, or that it now possesses or owns the same, or that the sum of $128.20 is the full amount to which credit should be given them thereon. Affirmatively defendants allege that on September 14, 1912, they purchased an engine and plowing outfit from plaintiff for the sum of $3,750, and gave a note to evidence the debt which they secured by a mortgage upon their real estate above mentioned. They further allege that the note and mortgage in suit are renewals of the original obligations, and that William A. Bell, acting as agent for the plaintiff, with intent to cheat and defraud them out of their land, falsely and fraudulently promised and represented to them that, if they would redeliver the engine and plowing outfit to him, as plaintiff’s agent, and pay him the sum of $1,250, “as soon as they could negotiate a, loan” upon their said real estate, the plaintiff would return all their written obligations to them, satisfy them, and defendants would then be released from further liability thereon j that, in furtherance of his purpose, he fraudulently represented to defendants that the only purpose in obtaining the renewal note and mortgage was to satisfy' the plaintiff’s Chicago office of their good intentions to insure the settlement, and to comply with a rule of that office in transactions of that nature. The same compromise agreement is pleaded in another distinct defense without any averment that fraud was resorted to for the purpose of inducing its making or delivery. As other matters of defense, it is alleged that defendants performed services for a person acting as agent for the plaintiff, for which they were not allowed proper credit, and that the quality and capacity of the machinery were insufficient for the work for which they were sold to them. The prayer of the answer is that judgment be given for the defendants, and that all their obligations to plaintiff be canceled and annulled. The reply consists of general denials of all the affirmative matters of defense. [1,2] Upon the trial the plaintiff offered evidence to show the execution and delivery of the note and mortgage set [503] forth, in the complaint, that it was the owner thereof, and that the only amount paid thereon by defendants is the sum of $128.20 as alleged. The plaintiff then rested, and Dennis R. Merry was sworn, and testified that he was one of the defendants, and gave his name. "Whereupon counsel for plaintiff objected to the introduction of any evidence in support of the allegations of fraud, because of their insufficiency to charge actionable fraud, or new matter that would amount to a counterclaim; and that it was an attempt to vary the terms of a written contract. Mr. Leavitt, of counsel for defendants, then stated that they would waive all special defenses except the special defense of fraud. The court then sustained plaintiff’s objection, and, upon request of counsel, defendants were given sixty days within which “to prepare, serve, and file a bill of exceptions.” Mr. Leavitt then said: “In view of the court’s ruling, the defendants rest.” Responding to the direction of the court in that behalf, the jury returned a verdict for plaintiff in the amount claimed, and judgment was rendered and entered accordingly. This appeal is from the order of the district court granting a new trial. Plaintiff’s position is that the statements of counsel that defendants would waive “all special defenses except the special defense of fraud,” and, after the court had overruled the defense of fraud, that defendants would rest their ease, amounted to a waiver and abandonment of all the other defenses pleaded. The contention of counsel must be sustained. The affirmative defenses are so at variance with the general denials that both cannot be true. By the rule announced in O’Donnell v. City of Butte, 44 Mont. 97, 119 Pac. 281, a defendant may plead as many inconsistent defenses as he may choose, but they must not be so incompatible with each other that if one is true the other must be false. The answer denies the making or delivery of the note and mortgage, and, in two separate and distinct affirmative defenses, directly .alleges that they were in fact executed and delivered to plaintiff. The incongruity of a pleading which denies matter in one paragraph, makes the [504] same thing a full and substantive defense in another, and in still another impugns the entire transaction as fraudulent and deceitful, is too palpable to admit of argument, and furnishes ground enough to compel the pleader to elect upon which allegation he intends to rely upon the trial. Otherwise the opposing party cannot know, until the case is made out against him, what proof he is called upon to rebut. A situation so dubitable was enough to perplex both court and opposing counsel, and in all probability induced the court to change its mind and grant a new trial. The effect of counsel’s statement, waiving all special defenses except the special defense of fraud, and later, upon an adverse ruling upon the sufficiency of his defense of fraud, announcing that defendants would rest, was tantamount to an admission that he had no other defense to offer, and would therefore accept the ruling of the court. [3] The note and mortgage set forth in the complaint were renewals of the obligations given as security for the purchase price of the machinery in the first place. Their cancellation could not, and would not, in view of the admission that the machinery had been in the possession of defendants ever since its purchase, and had been used by them for a period of four years, serve to discharge the original obligation nor restore the parties to their original status. Assuming the truth of their allegations that a settlement and compromise were effected whereby the plaintiff was to take back the engine and plowing outfit and defendants were to pay plaintiff the sum of $1,250 as a consideration therefor, without a showing of their readiness and ability to perform their part of the undertaking, that defense was not maintained. (Holton v. Noble, 83 Cal. 7, 23 Pac. 58.) [4] The mere making of a promise which the promisor fails to keep does not constitute actionable fraud. (Rheingans v. Smith, 161 Cal. 362, Ann. Cas. 1913B, 1140, 119 Pac. 494; Hickman v. Johnson, 36 Cal. App. 342, 178 Pac. 145.) There being no allegation in the answer, nor proof that Bell did not intend to keep his promise to cancel and return [505] the papers to defendants, and no offer by defendants to perform their part of the settlement agreement by payment of the money, a defense upon that ground is not sustained. The ruling of the trial court was correct. (Rev. Codes, sec. 4978.) The verdict and judgment should have been allowed to stand. The order granting a new trial is reversed, with directions to set it aside. Reversed. Mr. Chief Justice Brantly and Associate Justices Reynolds, Holloway and Galen concur.