Hoopes v. Northern Nat. Bank

ACHESOU, Circuit Judge. In Thompson v. Clark, 56 Pa. St. 38, the court said that it is not necessary that an affidavit of defense be drawn with such nicety that no critical skill can suggest an objection. In Twitchell v. McMurtrie, 77 Pa. St. 383, the rule was laid down that a reasonable intendment is to be made in favor of affidavits of defense; and in Moeck v. Littell, 82 Pa. St. 354, it was declared that the facts [449] set forth as constituting the defense need he averred with reasonable precision and distinctness only. In these cases, and in many other cases, some of which are hereinafter cited, the supreme court of Pennsylvania has ruled that, if the affidavit sets forth substantially a good defense, it should be supported. ITow, it must be conceded that the affidavit of defense which this writ of error brings before ns is not well drawn. Nevertheless, read'fairly, giving to its averments a reasonable intendment, the affidavit discloses, we think, a substantial defense. The suit is by the Northern National Bank of Toledo, Ohio, against 1 human Hoopes upon his irregular indorsement of a promissory note, of which the following is a copy: “?:U00. " Philadelphia, April 1, 1889. •‘Four months after date I promise to pay to the order of Vulcan IronWorks Co., thirty-one hundred dollars at Northern National Bank, Toledo-, Ohio, without defalcation, for value received. John McGill White.” This note is indorsed thus: First, “Frank C. Smythe,” second, “Herman Hoopes,” and thereunder as follows: "Pay to the order of Northern National Bank, of Toledo, Ohio. “The Vulcan Iron-Works Oo„ “By Alex. Backus, Pres’t and Tr. “Alexr. Backus.” The affidavit of defense presents at length a written contract and specifications attached thereto, dated May 11, 1898, between the Vulcan Iron-Works Company, the payee of the note in suit, and the Boise Dredging Company, whereby the former company agreed to furnish to the latter company, for a specified price, certain machinery for an elevator bucket dredge. The contract contains the following stipulation on the part of the Vulcan Iron-Works Company, namely: “We will guaranty ample strength and good construction in every part, and that the material and workmanship shall be first class.” "We will gnaranly the machinery we furnish to perform the work specified without breaking- down, if properly handled.” And the attached specifications stipulate: “The buckets * * * will have two running speeds; one at the rate of eleven buckets per minute, and one at the rate of sixteen buckets per minute.” The contract provided for part payment of the price of the machinery in the notes of the Boise Dredging Company. Tiie defendant’s affidavit of defense alleges that in December, 1898, “at request of the Vulcan Iron-Works Company, said company agreed to accept in payment personal notes of John McGill White, treasurer of the aforesaid Boise Dredging Company, indorsed by deponent and Frank C. Smythe, directors of said Boise Dredging Company, upon an express oral agreement that said notes were to be paid at maturity if the aforesaid guaranty of the Vulcan Iron-Works Company was satisfactorily performed; otherwise, an offset for damages was to he allowed, and in no event was payment to he made till full test was made.” The affidavit of defense then proceeds thus: “Deponent avers that he signed said note as accommodation indorser under said agreement, and that the Vulcan Iron-Works Company has wholly failed [450] to carry out said contract with said Boise Dredging Company; that said dredge and machinery haye failed to perform the work called for hy said contract, have broken down repeatedly, and have never been able to work at the rate of sixteen buckets per minute, owing to defects in workmanship.” And the affidavit contains this further statement, namely: “Deponent believes, avers, and expects to be. able to prove at trial that plaintiff is only the holder of said note, and that the Vulcan Iron Company are the real owners thereof.” Under this last averment it must be assumed for present purposes that the plaintiff is not the bona fide holder for value of the note in suit, but is suing thereon for the benefit of the payee, the Vulcan IronWorks Company, and the case is to be treated as if the suit were by that company itself. Eyre v. Yohe, 67 Pa. St. 477; Bank v. Ellis, 161 Pa. St. 241, 28 Atl. 1082. Now, incontestably, the consideration of every promissory note ⅛ open to inquiry for the purpose of a defense between any of the immediate parties to the note. Clement v. Reppard, 15 Pa. St. 111; Peale v. Addicks, 174 Pa. St. 543, 34 Atl. 201. The present case, upon the averments of the affidavit, clearly comes within this rule, for the nominal plaintiff stands upon the rights of the payee, and the defendant is an original accommodation indorser. The affidavit of defense discloses that the note in suit was given for part of the price of the machinery furnished to the Boise Dredging Company by the Vulcan Iron-Works Company under the recited written contract. The affidavit clearly' connects the note with that contract. It is also quite plain from the affidavit that the note" was not taken in absolute settlement, but was given and accepted under and subject to the provisions of the contract for the machinery. According to the alleged facts, the payee took the note subject to defenses arising from the breach, by the payee, of that contract. The real defense here set up to the note is the failure of the payee to perform its contract. We are of opinion that the breach of the contract is set forth with sufficient particularity and fullness to send the case to a jury. It is averred that “the Vulcan Iron-Works Company has wholly failed to carry out said contract”; that “said dredge and machinery have failed to perform the work called for by said contract”; that they “have broken down repeatedly, and have never been able to work at the rate of sixteen buckets per minute”; and the cause for these failures is specified, namely, “owing to- defects in workmanship.” The draftsman has not here nicely distinguished between the dredging machinery and the dredge boat, but, giving to the language of the affidavit a reasonable construction, it discloses an out and out breach of the contract by the Vulcan Iron-Works 'Company; virtually, a total failure of the consideration for which the note in suit was given is averred and shown. Undoubtedly, the defense is available to this defendant, who • is an accommodation indorser, and is here to be treated as a surety. Moeck v. Littell, 82 Pa. St. 354; Gunnis v. Weigley, 114 Pa. St. 191, 6 Atl. 465. The affidavit,- we think, is not defective in that it does not affirmatively allege that the machinery was “properly handled.” This is to be presumed in the first instance. If improper handling caused the failure, that is to be shown in rebuttal of the defense. Martinez v. Earnshaw, 143 Pa. St. 479, 486, 22 Atl. 668. An affidavit of defense [451] need not Tbe framed with the technical accuracy of formal pleadings. Kaufman v. Mining Co., 105 Pa. St. 537, 542. Our conclusion that this affidavit of defense is sufficient to carry the ease to a jury is well sustained by the decisions. Bronson v. Silverman, 77 Pa. St. 94; Moeck v. Littell, 82 Pa. St. 354; Kaufman v. Mining Co., 105 Pa. St. 537; Ludington v. North, 141 Pa. St. 184, 21 Atl. 517; Martinez v. Earnshaw, 143 Pa. St. 479, 22 Atl. 668; Bacon v. Scott, 154 Pa. St. 250, 26 Atl. 422; Lane v. Sand Co., 172 Pa. St. 252, 33 Atl. 570. In Bronson v. Silverman, supra, which was a suit by the holder of a note against the maker, the defendant’s affidavit, after alleging (hat the plaintiff was not a bona fide holder, averred that the note was given for part of the purchase money of land, and that the payees wen; to execute and deliver to him a written contract as his title thereto, but had failed to do so. This was held to be sufficient to prevent judgment, the court saying: “As evidence of Ms title, the written instrument would be of great value to him. The deprivation of it might work Mm great injury. Be that as it may. it was an indivisible part of the agreement which entered into the consideration for which the note was given.” In Kaufman v. Mining Co., supra, an averment in an affidavit of defense that the plaintiff sold the iron ore for the price of which the suit wav» brought upon a warranty as to quality which had been broken, was held sufficient to prevent judgment, although damages were claimed according to an alternative measure, and were stated only approximately. Speaking of the damages, the court said: "We can only determine that question when.it comes properly before ns. It is now essential to the proper adjudication of the matters involved in this record.” In Ludington v. North, supra, an averment in an affidavit of defense1 that the note in snif was given in payment of pianos purchased under a contract by which the defendants were to be the exclusive sales agents of the payees for five years, and that by reason of the revocation of the agency without cause the defendants had been unable to dispose of the pianos, was held sufficient to prevent a summary judgment, although the affidavit set up an erroneous measure of damages. The* court said: "Tiie question to be determined in this motion is, not whether the defendant have adopted a correct measure of damages, but whether they have stated facts from which a. right to damages results. ⅝ * * These facts show a cause of action, and, they are, therefore, good as matter of defense to an action by Iho vendors on a. noie for part of the price of the stock thus depreciated by (heir breach of their agreement.” In Martinez v. Earnshaw, supra, the plaintiffs had sold to the. defendant ‘‘dry iron ore"’ of usual quality, “guarantied to contain a yield of fifty per cent, of iron in the natural state,” and in a suit for damages for a refusal to accept the full quantity of iron ore sold the defendant filed an affidavit of defense averring that a portion delivered did not contain 50 per cent, of iron in the natural state; and that, as soon as he discovered this, he refused to receive [452] any more ore under the contract. This was held sufficient to prevent judgment, and the court said: “We lrnow at this time only that a literal breach by the plaintiffs is alleged and claimed, and a literal breach is enough to defeat a. compulsory judgment without a hearing.” The judgment of the circuit court is reversed, and a procedendo is awarded.