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the time of executing these notes the three makers thereof, to secure the payment of the notes, executed to the appellant a chattel mortgage upon said machine and other property, which was duly recorded in the recorder's office of said Howard county, wherein the mortgagors resided. Upon the execution of the notes and mortgage the appellee wrote his name on the back of each of the notes, which was done in accordance with the requirements of his contract of agency, and in no other or different capacity and for no other or different purpose. No part of the consideration for the notes, or either of them, was received by the appellee, and it was understood at the time by both the appellant and the appellee that the latter was to guaranty the payment of all notes where the "payees" had no defense to the same. Afterwards, and before the 11th of April, 1890, the three makers of the notes paid the appellant the $140 note. On the 4th of April, 1890, the appellant filed a complaint in the court below against said three makers, as such, upon the two notes for $137.50 each, making the appellee a defendant as an indorser on each of the notes, and seeking the foreclosure of the chattel mortgage; being cause numbered 9,469 in the court below. Summons for the second day of the May term, 1890, of said court, was duly issued, served, and returned in said cause, 9,469. On the 9th of June, 1890, the appellee was duly called and made default, and on the 12th of July, 1890, judgment upon said default was rendered against the appellee, as indorser upon said notes, for $339.08 and costs, taxed at $21.90, and the cause was continued as to the other defendants therein, who on the 4th of June, 1890, as makers of the notes and mortgage, appeared in said cause and filed their answers; and afterwards they filed amended answers, wherein they admitted the execution of the notes and mortgage, as alleged in the complaint, but averred, among other defenses, that said machinery was sold to them by the appellant upon a written warranty, by which the appellant warranted to the three makers of said notes that said machine was made of good material, and would do as good work as any other separator or threshing machine of like size in use throughout the country, and said defendants averred in their said answers that said separator was not well made; that it was made of poor material, was defective in its construction, would not do as good work in threshing as other machines of like size in use throughout the country; that, by reason of its defective construction, it would not thresh wheat clean; that it cut the threshed grain, and blew the wheat over, and carried the threshed wheat with the chaff and straw; that, with the best care and management, it could not be made to thresh wheat as well as other separators of like size in use throughout the country; that, by reason of its being poorly and improperly constructed and made of poor material, it

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was worthless and of no value as a threshing machine, for the purposes for which it was manufactured and bought and sold; that, by reason of its being made of poor material and improperly constructed, the consideration for the execution of each of said notes and chattel mortgage had entirely failed, and by reason thereof said defendants were not liable to the appellant on said notes and mortgage in any sum whatever, and said defendants demanded judgment for their costs. this answer the appellant filed its reply in general denial, and, the cause being at issue and called for trial, it was on the 23d of March, 1891, submitted to the court for trial. The court, for its information, submitted certain questions of fact to a jury, whereupon the court, at the request of the parties to the suit, made a special finding of facts, and announced its conclusions of law thereon, in which special finding the court found for the defendants that the consideration for the execution of each of said notes involved in said suit executed by said Kennedy, Hochstedler, and Kly to the appellant, and indorsed by the appellee, had wholly failed, by reason of inherent defects in the construction of said separator, and on account of the poor material used therein. On the 16th of April, 1892, the court in said cause found and adjudged that said Kennedy, Hochstedler, and Kly, as the makers and payors of said notes, were not liable thereon, and found as its conclusions of law upon the facts found in said cause that the consideration for each of the notes had wholly failed, and that said three defendants were entitled to judgment for their costs; and at said date the court rendered judgment upon said special finding of facts and conclusions of law, in which judgment it was adjudged that the plaintiff in said cause (the appellant here) take nothing of said three makers of said notes, and that they recover their costs. The appellee, Michener, when said default was taken and judgment was rendered against him, had no notice or knowledge whatever that said Kennedy, Hochstedler, and Kly, or either of them, as makers of said notes, had any defense against the notes, or either of them, by reason of failure of the consideration thereof, or that said separator was made of poor material and was improperly made, or would or could not be made to do as good work as other separators of like size in use throughout the country, and had no notice or knowledge that said makers, or either of them, had or intended to make any defense in said action against the payment of the notes, or either of them, and had no notice or knowledge that said other defendants in said action would be discharged from liability on account of the execution of the notes by reason of any inherent defect in the construction of said machine, or for any other reason; but he knew that said makers of the notes were complaining that the machine was not doing good work. It was stated in the special find

ing that, after the rendition of said judgment in favor of the three makers of the notes, the appellee, within a reasonable time, proceeded to prepare and file his complaint in said cause in said court, and, in the preparation, bringing, and prosecution of this suit to be relieved from said judgment so rendered against him as indorser, exercised due diligence. After said judgment in favor of said three makers of the notes, the plaintiff in that suit (the appellant here) appealed from said judgment to this court, and upon the submission and hearing of the cause in this court said judgment of the Howard circuit court was in all things affirmed on the 27th of September, 1893, which judgment remains in full force and effect. 34 N. E. 856. The court upon the foregoing findings stated a conclusion of law in favor of the appellee for the review of the judgment rendered against him upon default. The appellant excepted to the court's conclusion of law. The material new matter discovered after the rendition, on the 12th of July, 1890, of the judgment against the appellee, for which the review of the judgment was sought, was the release of the makers of the note by the judgment rendered on the 16th of April, 1892, in their favor in the same cause. It appears from the record before us that this proceeding was commenced in the next term of court, on the 14th of June, 1892. The special finding contains some conclusions of law, yet we think it sufficiently appears from the record that there was a fulfillment of the requirement of the statute (section 617, Horner's Rev. St.; section 629, Burns' Rev. St.) that the new matter could not have been discovered before judgment, and the complaint was filed without delay after the discovery. It appears that the appellee was an indorser, and that the consideration for the notes was received by the makers, and that there was an entire failure of consideration, for which the makers were released by the subsequent judgment of the court in the same action in which the judgment had been rendered against the appellee as indorser. The principals were discharged for matters inherent in the transaction. This would entitle the appellee to his discharge from his liability upon the notes, and therefore the special finding, sufficiently covering the issue submitted for trial, and sustained by the evidence, showed the appellee's right to have the judgment against him reviewed. Michener v. Thresher Co., 142 Ind. 130, 40 N. E. 679.

We have not found any available error in the record. Judgment affirmed.

(25 Ind. App. 71)

FARMERS' BANK OF FRANKFORT v. ORR et al.1

(Appellate Court of Indiana. Oct. 25, 1899.) ROAD CERTIFICATES-ASSIGNMENT-PAYMENT -PLEADING ESTOPPEL IN PAISAPPEAL AND ERROR.

1. Where, in an action to foreclose gravel-road certificates, plaintiff admitted their validity, but

1 Rehearing denied.

pleaded payment without alleging payment be fore suit brought, such plea was insufficient to constitute a defense.

2. In an action on gravel-road certificates issued under Act April 8, 1885, § 11, declaring that such certificates shall be assignable as promissory notes, an answer by the owner of land against which certificates assigned to plaintiff were issued, pleading payment, but failing to allege payment before assignment, or before he had notice thereof, was insufficient.

3. Where, in an action on gravel-road certificates assigned to plaintiff by the county superintendent, defendant answered that such certificates and the assessments on which they were based had been paid under an agreement with the contractor performing the work, with the knowledge of the superintendent, who had agreed to cancel the certificates, a reply that the defendant, with the knowledge of the assignment of the certificates to plaintiff, had refrained from informing defendant of such payment until plaintiff's rights against the superintendent for the wrongful assignment, alleged facts sufficient to constitute an estoppel in pais. 4. On an appeal from an order overruling a demurrer to an answer the overruling of a demurrer to a complaint cannot be reviewed where appellee did not assign cross error thereto.

Appeal from circuit court, Clinton county; J. V. Kent, Judge.

Action of Farmers' Bank of Frankfort against Curran Orr and others. From orders overruling demurrers to defendants' answer and cross complaint and sustaining demurrers to plaintiff's reply, plaintiff appeals. Reversed. H. C. Sheridan, for appellant. L. J. Curtis and M. A. Morrison, for appellees.

WILEY, J. Appellant was plaintiff below, and brought its action against appellee Orr and others to foreclose and enforce a lien for certain gravel-road certificates held by it as assignee. The cause was put at issue, and a trial was had by the court, resulting in a general finding and judgment against appellant on its complaint and in favor of appellee Orr on his cross complaint. The errors assigned question certain adverse rulings to appellant, in this: (1) The overruling of appellant's demurrer to the cross complaint of appellee Orr; (2) the overruling of appellant's demurrer to the second paragraph of the separate answer of appellee Curran; (3) the overruling of appellant's demurrer to the fourth paragraph of the separate answer of appellee Curran; (4) the sustaining of the demurrer of appellee Orr to the second paragraph of reply to the second and amended fourth paragraph of the separate answer of appellee Orr; (5) the sustaining of the demurrer of appellee Orr to the second paragraph of answer to the cross complaint of Orr; (6) the sustaining of the demurrer of appellee Orr to the third paragraph of reply to the second paragraph and fourth amended paragraph of appellee Orr's answer to the complaint; and (7) the sustaining of the demurrer of appellee Orr to the third paragraph of appellant's answer to the cross complaint of appellee Orr. appellee Orr. While these several paragraphs of pleading are voluminous, the questions at issue may be briefly stated. The three paragraphs of complaint are identical, except that they are each based on different certificates,

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and describe different tracts of real estate; and a statement of the facts charged in one will suffice for all. The complaint avers the filing of a petition in the commissioners' court, praying for the improvement, grading, etc., of a certain described highway; that the board of commissioners duly found that the requisite number of petitioners whose lands were within two miles of the proposed improvement had signed the petition; that the board thereupon appointed viewers, as required by statute; that they were directed by the board to proceed to exarine, view, lay out, and straighten the road to be improved, and make their report to the board at a time fixed in the order appointing them; that the board also appointed an engineer; that said viewers were duly qualified, and filed their report; that said proposed improvement was found by said board to be of public utility; that the benefits❘ assessed exceeded the expenses and damages, and it was ordered, and so entered of record, that said improvement be made. It is also averred that one Samuel Merritt was appointed superintendent to superintend the proposed work; that as such superintendent he executed his bond to the approval of said board; that he was duly qualified, and entered upon the duties of his said office. It is then alleged that said road was constructed; that appellees' lands, describing them, were assessed therefor in a fixed sum; that the pro rata share of said lands, as fixed by the superintendent, was a certain and definite sum, which is specified; that said superintendent made, executed, and issued certificates of assessment for the construction of said road against the real estate of appellee Orr, by the terms of which the payment thereof was divided into six equal installments, due 6, 12, 18, 24, 30, and 36 months from date, as designated by coupons attached. It is further averred that after the levy of said assessments and the issuance of said certificates the same were sold and assigned to appellant, before maturity, for a valuable consideration, and indorsed by said superintendent and Thomas Slattery & Co. It is also charged that the said Merritt is dead, and his children and heirs at law are made parties. It is then charged that the first two coupons on account of said certificates have been paid, and that on May 23, 1891, the interest on the coupons was paid by appellee Orr to such date. It is then averred that on October 13, 1887, the improvement of said highway was reported to the board as completed, and was then turned over to the board of commissioners by said superintendent. It is further charged that such certificates are a frst lien upon the real estate described therein; that the appellee Orr is still the owner of the same; that said certificates are due, and remain unpaid; wherefore, etc. Copies of the certificate and coupons upon which each paragraph of the complaint is based are filed as exhibits. A demurrer to each paragraph of complaint was filed and overruled. Appellee filed a cross complaint

and an answer in four paragraphs. The cross complaint avers, in substance, the same facts as set out in the complaint as to the petition and proceedings before the board of commissioners, the assessment of his lands, and the issuing of the certificates sued on, and their assignment to appellant. It is then charged that said certificates have been fully paid by the appellee in the following manner: That on the — day of, 1886, appellee Orr entered into a written contract with one Charles Pence, the contractor, for the construction of said road, whereby he agreed to furnish gravel from pits on his real estate to gravel about 111⁄2 miles of said road at the rate of eight cents per load, and that the pay for such gravel should be applied to the payment of the assessment made against his lands; that by an oral agreement with said Pence appellee was to work in said pit, and furnish a team and hand to haul and work on said road, and to furnish other work and material thereon; that under said contract he furnished gravel for 11⁄2 miles of said road; that he also furnished a team and hand to haul and work in said pit, and in all things complied with his . said contract; that the gravel, work, etc., amounted to $400; that in the settlement between said Pence and appellee the pay for said work and material was first applied to the payment of said assessments on appellee's real estate; that said Merritt knew of and concurred in said contracts, and in the settlement between appellee and said Pence, and that, instead of delivering to said Pence certificates to the amount of said assessments, he was charged with having received pay in said amount, and said certificates were retained by said Merritt as fully satisfied, to be delivered to appellee. It is then averred that said assessments appear as a lien against his real estate, and he prays that they be canceled, and that the title to his lands be quieted. A demurrer to this cross complaint for want of facts was overruled.

The first paragraph of appellee Orr's answer was a general denial. In the second paragraph of answer appellee simply avers payment of the certificates sued on, without describing the manner or stating the time of payment. In the third paragraph appellee admits the construction and completion of the road, the assessments made against his lands, and the issuance of the certificates, but denies the assignment to appellant. The amended fourth paragraph of answer is a special plea of payment, and the facts alleged therein are the same as stated in the cross complaint. A demurrer to the second, third, and amended fourth paragraphs of answer was overruled.

Appellant's answer to the cross complaint was in two paragraphs, the first of which was a general denial. In the second paragraph it is averred that appellant purchased the certificates sued on, and paid a valuable consideration therefor, before their maturity, and without notice of the facts stated in the cross complaint; that such purchase was made on

the day of 1886; that ever since appellant had been engaged in the barking business in the city of Frankfort, Ind., and has known the cross complainant intimately all of said time; that it has had possession and has been the owner of said certificates since their purchase; that during said time appellant's president, cashier, and other officers have frequently and at divers times since the maturity of the first coupon notified the cross complainant that it was the owner of the certificates, notified him to call at its office and pay the same, and since the maturity of the last of said certificates appellant, in the due course of mail, has frequently demanded of appellee to call at its office and pay said certificates. It is further alleged that appellee frequently called at appellant's office, conversed with its officers within the past 10 years in reference to said certificates, but at no time did he ever claim that any portion of them had been paid; that frequently during said last 10 years appellee promised and agreed with appellant to pay the same; that he had frequently and at various times begged and requested appellant to extend the time of the payment, and give him an opportunity to pay the same without suit; that appellant has threatened suit against appellee on said certificates, and he called at appellant's office, and begged appellant not to enter suit, but to give him further time, and that he would pay the same; that on May 23, 1891, appellee called at appellant's bank, and paid on each of said certificates all the interest then due, and such interest was credited upon the back thereof in appellee's presence; that on the 31st of August, 1894, appellee paid as interest on said certificates the sum of $10, which was credited thereon; that neither when said payments were made. nor at any other time, did appellee claim or pretend that said certificates had been paid, but, on the contrary, led appellant to believe that there was no defense existing against the collection thereof. It is further alleged that when said payments were made, and until the day of March, 1896, the said Samuel Merritt, the superintendent who issued said certificates, was living in the said city of Frankfort, at which time he died, and that at any time previous to his death the facts relating to said certificates were obtainable from him by appellant. It is further charged that it was wholly and entirely because of the promises made by appellee that it deferred its action on said certificates, and deferred the collection thereof; that it was induced by his requests and promises of payment, and because of being led by appellee to believe that there was no objection or defense existing against said certificates, and to defer a suit at law to collect the same till after the death of said Merritt. It is also alleged that appellant had no knowledge of the facts set out in the cross complaint till after the death of said Merritt, and until after this action was commenced, when a knowledge of said facts was first imparted

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by the filing of the cross complaint and answer herein; that by reason of said facts appellant was induced to defer its action to collect and enforce said certificates until it was too late for it to obtain the information that must necessarily have been possessed by said Merritt, and until it was too late to bring an action against said Merritt in the event that the facts set up in the cross complaint are true, and that by reason of the facts above stated appellant was misled and prevented, in the event said facts are true, from bringing suit upon the bond of said Merritt as such superintendent, who would have been liable thereon at any time before the statute of limitations had run against him for selling such certificates, if the same were paid. The prayer of this paragraph of answer is that appellee Orr be estopped from pleading said contract and payment and the facts charged in his cross complaint. Appellant replied to the second paragraph of the separate answer and the amended fourth paragraph of appellee's separate answer in two paragraphs. The first was a general denial, and the second sets up the same facts as alleged in the second paragraph of answer to the cross complaint. demurrer for want of facts was sustained to the second paragraph of answer to the cross complaint and to the second paragraph of reply to the second and amended fourth paragraphs of the separate answer of appellee Orr. After these rulings, appellant filed its third paragraph of reply to the second and amended fourth paragraphs of the separate answer of appellee Orr. These paragraphs seek to state facts constituting an estoppel in pais, and are similar to the preceding paragraphs of a like character, and differ from them in that the facts relied upon are set out more fully, and with greater particularity. Appellant averred in these paragraphs that the conduct, acts, words., and promises of appellee were intended to and did mislead it, by which its right of action against Merritt was postponed until the statute of limitations had run against it, and until after his death, and left it without remedy except its right to enforce its lien, etc. A demurrer to each of them was sustained. There is no cross error assigned. As the various questions presented for decision may arise upon a retrial of the cause in case of reversal, it will be necessary for us to decide each of them. and we will take them up in the order in which counsel for appellant has presented them.

It is urged that the second paragraph of appellee's answer is bad. In this paragraph appellee admits the construction of the gravel road, the assessments against his lands, etc., as charged in the complaint, and it avers, in the language of the pleader, "that he fully paid said assessments, and that he owes nothing on acccunt thereof." It seems to us that this paragraph of answer is defective in at least two particulars: First. There is no averment that payment was

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made before the beginning of the action. A plea of payment does not need to allege the amount paid, nor the exact date of payment, nor the person to whom the payment was made. Demuth v. Daggy, 26 Ind. 341. But it is necessary to allege, to constitute a bar to an action, that it was paid before the commencement of the action. Epperson v. Hostetter, 95 Ind. 583; Johnson v. Breedlove, 104 Ind. 521, 6 N. E. 906; Cranor v. Winters, 75 Ind. 301; Works, Prac. & Pl. § 555. The reason for the rule that a plea of payment should aver that payment was made before the commencement of the action is based upon the fact that, to constitute a complete defense, the payment must have been made before the plaintiff sought his remedy at law. If payment is made after suit is brought, it does not go in bar of the action, but only in mitigation of damages, unless it appears that costs accrued to the time of payment have been included in the payment, for the general rule prevails that a plaintiff who successfully maintains his action shall recover costs. Works, in his work on Practice and Pleading, at section 596, says: "Payment made after the suit is brought cannot be pleaded in bar of the action. It has been held that such payment can be proved in mitigation of damages. But the defendant may plead payment of the debt after the suit is brought, not in bar of the action, but in bar of the further maintenance of the action." See Bischof v. Lucas, 6 Ind. 26; Bank v. Brackett, 4 N. H. 557; Herod v. Snyder, 61 Ind. 453. Second. The second paragraph of answer is bad for the additional reason that it fails to allege that the payment was made before the certificates were assigned to appellant, and before notice to appellee of such assignment. In this connection it is important to look at and determine the force of some of the provisions of the statute under which the certificates in suit were issued, for such provisions may be of controlling importance in the discussion of other pleadings in question. The proceedings to establish the gravel road described in the complaint were had under the act of April 8, 1885 (see Acts 1885, pp. 162-169). By section 9 of the act, after the improvement has been ordered, and the assessments confirmed, it is made the duty of the commissioners to appoint a superintendent, who shall have charge of the work. He is required to execute a bond, and is made liable thereon by any person aggrieved. By section 10 the superintendent is required to let the contract for construction, and the contractor is required to give bond. By section 11 it is made the duty of the superintendent to make assessments on all lands benefited ratably upon the amount of benefits, etc. He is also required to issue certificates which certify the sum assessed against each tract of land. By this section, also, the superintendent is authorized to give such certificates in payment of any sum due for any labor performed, or to negotiate and

sell them at not less than their par value. By this section it is provided that any holder of the certificates when any installment becomes due and remains unpaid may maintain an action thereon. It is also provided that such certificates shall be assignable as promissory notes. The certificates in suit are made payable at the First National Bank of Frankfort, Ind. By these provisions of the statute it is plain from the averments of the complaint that appellant is legally and rightfully the owner of the certificates in suit, and can successfully maintain an action upon them, unless some valid defense is interposed. The complaint avers that appellant purchased, for a valuable consideration, and before maturity, these certificates, and that they were assigned to it. Payment by the appellee of the certificates to the superintendent or contractor after such purchase and assignment could not defeat an action for their collection in the hands of the purchaser and holder, in the absence of an averment which would tender that issue. We are confronted with the fact that they are made by statute assignable "as promissory notes." A note not negotiable by the law merchant may be assigned, and by such assignment the title passes to the assignee, and he may maintain an action for its collection. In such case an answer by the payor that he had paid the note to the original payee would not be good unless it showed that payment was made before the assignment, and before he had notice thereof. When a debt is evidenced by a nonnegotiable instrument, and the instrument is not produced when the payment is made, such payment is made at the risk of the debtor; and if it turns out that the instrument has been assigned, and is held at the time of payment by another party, the payment is not a valid one, and will not discharge the payor from liability. Clark v. Igelstrom, 51 How. Prac. 407; Mobley v. Ryan, 14 Ill. 51; Capps v. Gorham, Id. 198. We cannot indulge any presumption in favor of the answer we are now considering, and are required to construe it most strongly against the pleader. Nill v. Comparet, 15 Ind. 243; Helms v. Sisk, 8 Blackf. 503; Woodward v. Elliott, 13 Ind. 516; Chit. Bills, 393; Works, Prac. & Pl. § 595, p. 384. From the authorities and what we have said the second paragraph of appellee Orr's answer was insufficient to withstand a demurrer for want of facts, and the demurrer should have been sustained.

The amended fourth paragraph of answer, it seems to us, is bad. This paragraph of answer is a special plea of payment, wherein the facts relied upon constituting payment are set out. Appellee Orr there relies upon an alleged contract with the contractor for the construction of that part of the road abutting on his lands that he would furnish a certain amount of gravel, and perform certain labor, which was to be applied in dis charge of his his assessments. The The answer

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