Commercial Bank v. Scott

The opinion of the court was delivered by

Anders, J.

This action was brought to enforce the payment of a promissory note made and delivered by Eli Scott, the husband of the appellant, to one Durand, and by him endorsed and transferred, before maturity, and for a valuable consideration, to the respondent.

In addition to the ordinary allegations in such cases, the complaint avers that the plaintiff purchased the note with full knowledge that the defendants were husband and wife at that time, and also at the time of the execution and delivery of the same by the said Eli Scott to the said payee; that the said note was given by the said defendant- Eli Scott to the said Durand, in payment of certain of the capital stock of the corporation known as the Durand Organ Company, of Portland, Oregon, which capital stock was in shares issued to the defendants, and was received and held by them as their community personal property; that the defendants at all the times mentioned in the complaint were and still are husband and wife, and that the said wife became the owner of a community interest in said shares of capital stock, and together with her husband received dividends thereon; and that the debt of the defendants as evidenced by said note was and is their community debt. The appellant interposed a demurrer to the complaint on the ground that the same did not state facts sufficient to constitute a cause of action against her. Her demurrer was overruled by the court and exception taken and allowed.

She thereupon filed her separate answer admitting that the said stock was received by the said Eli Scott and retained by him, but denying that any dividends had been received thereon, and that the debt of said note became a community debt, and setting up as a further answer and defense that said note was procured through misrepresentation, in that said share of stock was of no value for the reason that the said Durand Organ Company was in fact insolvent, though falsely represented to be solvent, and that there was therefore an entire want of consideration for said note. A demurrer to this answer was sustained by the court, whereupon it was agreed by and between counsel for plaintiff and defendants that the answer of Eli Scott be withdrawn and judgment taken against him as demanded in the complaint, subject to his right of appeal; and the defendant, Martha E. Scott, refusing to answer further, judgment was entered against her, from which she appealed.

There are but two questions presented for our consideration on this appeal. The first is, did the court err in overruling appellant’s demurrer to the complaints And the second is, did the court err in sustaining the demurrer to appellant’s separate answers And if the first question be answered in the affirmative, a determination of the second will become unnecessary.

The position assumed by the respondent in this case is peculiar, if not unique. As indorsee of a negotiable promissory note it sues the maker and another person not a party to the contract or in any way referred to in the instrument, and demands judgment against both. While citing no precedents for such proceeding, it claims a right of action against the appellant because it alleges in effect in its complaint that the consideration for which the note was given inured by some occult - operation of law to her benefit, and that she therefore became equally liable with her husband. But how any or all of the allegations in the complaint as to the original consideration for the note could be construed so as to make the appellant liable as a party to it, contrary to the very terms of the instrument itself, we are utterly unable to comprehend. The respondent did not bring its action upon the original indebtedness of Eli Scott and the appellant, or either of them, for the stock sold by Durand, nor was it in a position to .do so. That was a matter .of no concern to the respondent. It bought a note made by Eli Scott, presumably for a money consideration, and brought its action upon it, and is entitled to judgment for the amount due thereon against him only. As against appellant the complaint fails to state a cause of action, and the judgment must therefore be reversed, and the cause remanded "to the lower court with directions to sustain the demurrer.

Dunbar, C. J., and Stiles, J., concur.