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6. JUDGMENT (§ 143*)—OPENing Default to serve a reply until after the default, but DISCRETION. that he had relied upon his attorney to proThe court granted the tect his interests. motion, notwithstanding the defendant's objections, and the latter appealed.

The affidavits upon which the plaintiff's second motion was based, averring a meritorious cause of action, and that the plaintiff's failure to reply properly and in due time was caused by his unfamiliarity with court practice and his attorney's neglect, were sufficient to warrant the relief granted, and the court did not abuse its discretion in the premises.

[Ed. Note. For other cases, see__Judgment, Cent. Dig. §§ 269, 270, 272-291; Dec. Dig. § 143.*]

Appeal from District Court, Wilkin County; S. A. Flaherty, Judge.

Action by Patrick McLaughlin against the City of Breckenridge. From an order vacating the default judgment, defendant appeals. Affirmed.

See, also, 141 N. W. 1134.

George D. Smith, of Breckenridge, for appellant. Henry G. Wyvell, of Breckenridge (W. R. Duxbury, of St. Paul, of counsel), for respondent.

[1, 2, 6] 1. In strict practice the reply should not only have been verified, but served in time. The courts, however, have power to relieve parties from such defaults, and applications of this sort are liberally treated. The defendant contends that in any event the court was right in granting the first and wrong in granting the second motion, because, as it claims, the complaint did not state a cause of action. The point of insufficiency is well taken, for the complaint is defective in not properly alleging the facts concerning the service of a notice of claim upon the city, as prescribed by Rev. Laws 1905, § 768. But this condition is of no avail now; the application for judgment on the pleadings having been based solely upon the plaintiff's failure to interpose a reply. Such motions cannot be used as a substitute for a demurrer, the purpose of the latter being to search the pleading attacked for insufficiency and, if merely inadvertent misstatements or omissions be found, entitle the party in fault to amend on such terms as the court may deem proper, as a matter of course. The allegations of the complaint were material upon the second application only in so far as they evidenced a meritorious claim. Technical nicety in pleading was not involved, and the complaint was sufficient for the purpose stated.

PHILIP E. BROWN, J. The plaintiff commenced an action against the defendant city on February 28, 1912, for the recovery of damages, laid in the sum of $5,200, alleged to have been caused by the negligence of the defendant in caring for one of its streets. The defendant served a verified answer. On March 18th the plaintiff duly mailed an unverified reply to the defendant's counsel, and again on April 26th a verified one. Both were promptly returned; the former because unverified, and the latter as being served too late. On April 26th and before the second reply was received, the defendant [3, 4] 2. On the presentation of the second noticed an application for an order for judg- motion the court overruled an objection ment on the pleadings for want of a reply. interposed by the defendant to the effect that This motion came on to be heard on May 6th, the same was a renewal, without leave, of a together with a counter motion of the plain- former motion-that is, the plaintiff's origitiff for leave to serve a reply, based upon nal application for leave to serve a replythe affidavit of his attorney to the effect for the same relief, and which had previousthat on the day following the mailing of the ly been considered and disposed of by the first reply he was called away from his office court favorably to the defendant. It is urged in St. Paul on business, and did not return that there was error in this regard, and althereto until April 24th, and that he prepar- so that the determinations upon the motion ed and forwarded, on the next day, the for judgment and the first application for verified reply mentioned. The court grant-leave to reply were final, and a bar to any ed the defendant's motion on the day of the subsequent application for relief in the premhearing, and denied the plaintiff relief. No- ises. These positions are untenable. If we tice of the filing of these orders was given assume that the second motion was made forthwith, and on May 13th, pursuant to upon the same state of facts set out in the the order, judgment was entered in favor of first one, which is the view most favorable the defendant. Thereafter, on June 11th, the to the defendant, still the matter of granting plaintiff, by a substituted attorney and leave to a party to renew a motion upon without leave first obtained to renew a mo- the same state of facts rests almost wholly tion, moved to vacate the former order for in the discretion of the trial court. Dunjudgment and the judgment entered thereon, nell's Minn. Prac. § 2078. And the denial of and for leave to reply. This motion was bas- the defendant's application to dismiss was ed upon affidavits of merits made by himself equivalent to an order granting leave to the and his substituted counsel, and the affidavit plaintiff to present his motion. O'Hara v. of his former counsel already referred to; Collins Co., 84 Minn. 435, 436, 87 N. W. 1023. the plaintiff's affidavit also including aver- Whatever may be done upon motion to the ments to the effect that he was not only un-court may, by the court, upon further motion familiar with court practice and unaware seasonably made by either party, be wholly of the necessity for or the effect of failure undone; and hence neither of the first or

Cent. Dig. §§ 3602-364; Dec. Dig. § 165.*] Appeal from District Court, Ramsey County; F. N. Dickson, Judge.

Mandamus by the State, on the relation of the City of St. Paul, against the St. Paul City Railway Company. A judgment was entered sustaining a demurrer to the answer, and defendant appeals. Reversed.

ders made nor the judgment entered thereon | question of reasonableness, and the demurrer of became invulnerable to attack upon the ap- the city thereto should have been overruled. plication subsequently made. The practice [Ed. Note.-For other cases, see Mandamus, pursued is supported by numerous decisions of this court. See Dunnell's Dig. § 6512; Dunnell's Minn. Prac. § 2080. It is also expressly authorized by R. L. 1905, § 4160. [5] 3. When the allegations of the complaint are construed as required by R. L. 1905, 4143, no reply was necessary. This aside, the affidavits presented were sufficient to warrant the court in granting the relief prayed, and we find no abuse of discretion. It would be a very drastic application of the rules of procedure to deprive a party of the right to litigate his claim simply because his attorney has failed to serve a reply within the time allowed by statute. Order affirmed.

W. D. Dwyer, of St. Paul, and N. M. Thygeson, of Minneapolis, for appellant. O. H. O'Neill, of St. Paul, for respondent.

BROWN, C. J. Proceedings in mandamus, brought by the city of St. Paul, to compel defendant to construct and operate an extended line of street railway in said city in compliance with Ordinance No. 2905, approved May 7, 1910, by which the common

STATE ex rel. CITY OF ST. PAUL v. ST. council, acting under section 18 of Ordinance PAUL CITY RY. CO.

1227, formally ordered the line constructed.

Supreme Court of Minnesota. June 20, 1913.) Defendant interposed in defense, by way of

(Syllabus by the Court.)

1. STREET RAILROADS (§ 28*)-FRANCHISE CONSTRUCTION.

Section 18 of defendant's street railway franchise, under which it operates a line of street railway in the city of St. Paul, the same being Ordinance No. 1227 of that city, construed, and held to justify the common council of the city in ordering the construction of a new line of street railway only where public convenience and necessity will be promoted thereby. [Ed. Note.-For other cases, see Street Railroads, Cent. Dig. $$ 39-42, 44, 45, 56, 61, 63– 65; Dec. Dig. § 28.*]

2. STREET RAILROADS (§ 11*)-EXTENSIONDETERMINATION OF PUBLIC INTEREST.

The question whether public interests will be promoted to such an extent as to justify a new line or an extension of an existing line is legislative, and the determination thereof by the municipal authorities is ordinarily final, in the absence of some provision in the law for a judicial review of the same.

[Ed. Note. For other cases, see Street Railroads, Cent. Dig. § 20; Dec. Dig. § 11.*] 3. STREET RAILROADS (§ 11*)-EXTENSIONDETERMINATION OF PUBLIC NECESSITY-PRE

SUMPTION.

answer: (1) That there was no public necessity for the construction of the new line, and that the ordinance commanding it was therefore unauthorized; and (2) facts tending to show that the action of the council in ordering the line constructed was arbitrary and unreasonable. The city interposed a general demurrer to the answer, which the court below sustained. Judgment was thereafter entered, commanding and requiring the construction of the line and defendant appealed.

Defendant is a street railway corporation, and by Ordinance No. 1227, above referred to, was granted a franchise to construct and operate upon certain streets of the city lines franchise and all the terms and conditions of street railway. Defendant accepted the imposed by the ordinance, and subsequently constructed its car tracks, and now operates therewith. Section 18 of the ordinance proits cars upon said streets in accordance

vides as follows: "The common council reserves and shall possess the right at any time, after January 1, 1892, to order the construction and completion by said St. Paul City Railway Company of any new railway upon any and all streets in the city of St. Paul, upon which sewers shall have been constructed, and all lines or extensions so

An order for the construction of a new line of street railway, when made under the provisions of the ordinance referred to, is presumed to have been founded in public necessity, and also that the order imposes upon the street railway company no unreasonable requirement. [Ed. Note.-For other cases, see Street Rail-ordered shall be constructed and in operation roads, Cent. Dig. § 20; Dec. Dig. § 11.*] 4. STREET RAILROADS (§ 11*)—EXTENSIONDETERMINATION OF PUBLIC INTEREST-CON

CLUSIVENESS.

The presumption of reasonableness is not conclusive, and the street car company is entitled to a hearing thereon in proceedings to enforce compliance with the order directing the new line to be constructed.

[Ed. Note. For other cases, see Street Railroads, Cent. Dig. § 20; Dec. Dig. § 11.*]

within one (1) year after such orders are made: Provided, that when such new lines or extensions are constructed, all the provisions of this ordinance shall apply thereto."

Ordinance No. 2905, being the order of the city council requiring the construction of the new line, proceeds as follows: "That the St. Paul City Railway Company be and it is hereby ordered and required, under and 5. MANDAMUS (§ 165*)-ANSWER-SUFFICIEN- pursuant to Ordinance No. 1227 of the city of St. Paul, approved September 20, 1889, and more particularly under and pursuant

CY-EXTENSION OF STREET RAILWAY.

Defendant's answer held, by the facts pleaded therein, to present an issue upon the

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

to section 18 of said ordinance, and within the time therein required, to lay and construct a double track line of street railway, with all necessary poles, wires, and appliances for the operation thereof, upon St. Clair street from West Seventh street to Oxford street, and to properly connect the tracks thereof with the present tracks upon West Seventh street, and when so constructed to run and operate cars upon and over the same."

It is contended by defendant that no public necessity exists to support the order requiring the construction of the new line, and that the order, in view of the facts pleaded in the answer, is unreasonable, and therefore void. While the city contends: (1) That the order was based upon the contract obligation created by section 18 of the franchise ordinance, and is not dependent for its support upon the question of public necessity; and (2) that the facts pleaded in the answer of defendant wholly fail to present an issue upon the question of reasonableness, or of arbitrary action on the part of the common council in ordering the extended line.

council. But if it was attempted to require the extension of the service of any line over a track on which another line was operated, entirely through the center of the city, out into a suburban district on the opposite side of the city, we apprehend that, unless there were some very exceptional circumstances creating a necessity for it, a court would unhesitatingly hold that the common council had no authority, under either section 18, or the general police power, to require this to be done." While it is probable that decisions of other courts may be found in which a distinction is made in cases involving expressly reserved authority, such as that contained in section 18 of the ordinance in question, and those involving the general municipal authority implied by law, we are content with the rule as stated by our court, which we follow and apply, holding that the power reserved by section 18 of defendant's franchise may be exercised only when public interests require it.

[2, 3] 2. It is, however, well settled that in the matter of the exercise of the police power all questions of propriety and public necessity, being legislative in character, are committed to the Legislature, or to such other inferior tribunals or boards as the exercise of the power may lawfully be delegated. The determination of the question in that manner is ordinarily final, and not open to judicial review, except where expressly or by necessary implication it is so provided by law. This is elementary. It is also well settled that an order or determination by proper authority that public interests require

[1] 1. We sustain the contention of defendant that, to authorize an order requiring an extension of the street car service under section 18, the common council must first determine that public interests demand and require the proposed improvement, and that if no public necessity exists in fact the extension cannot lawfully be ordered. While the franchise ordinance and defendant's acceptance thereof constitute a contract between the city and defendant, obligating defendant to comply with the terms and provisions a particular exercise of the police power is thereof, the basis for its support is found in presumptively valid, not only as respects the an exercise by the city of its municipal po- question of public necessity, but the reasonlice power, and the contract should be con- ableness of the order as well. State ex rel. strued in the light of and in harmony with v. Railway Co., supra; Mayor, etc., v. Railthe principles of law upon that subject. The way Co., 133 N. Y. 104, 30 N. E. 563, 28 Am. law vests in the city of St. Paul the control St. Rep. 609; People v. Railway Co., 134 and supervision of the public streets therein, Mich. 682, 97 N. W. 36, 63 L. R. A. 746, 104 and the authority to permit and regulate the Am. St. Rep. 626; Booth, Street Rys. § 224. construction and operation of street railways The rule is founded on the necessity of comthereon. Its authority and power in this re-mitting a wide discretion to the tribunal auspect was involved and exercised in the pas- thorized to determine such questions, and sage of the ordinance forming defendant's the courts rarely interfere even in those franchise, and the obligations and rights cases where judicial review is provided for. there imposed and reserved should be held Nellis, Street Railways, § 121. The presumpas imposing and reserving obligations and tion applies to ordinances of municipal corrights arising from its police power. Such porations regulating and controlling the conwas undoubtedly the intention of the par- struction and operation of street railways. ties, and was the view taken by the court Nellis, Street Railways, § 118. It applies to in State ex rel. v. Railway Co., 117 Minn. the case at bar, and under it we presume 316, 135 N. W. 976, and State ex rel. v. that the ordinance requiring the extended car Railway Co., 78 Minn. 331, 81 N. W. 200, | line in question was founded upon a prior deboth of which involved section 18 here in termination that public interests required its question. In the last case cited Judge Mitchell, speaking for the court, said: "How far and to what distance any of these lines shall be extended into this business or central portion of the city is, and must necessarily be, a matter largely addressed to the

construction, and that the obligations thereby imposed upon defendant are not unreasonable. Mayor, etc., v. Railway Co., 133 N. Y. 104, 30 N. E. 563, 28 Am. St. Rep. 609.

[4] 3. This presumption of validity is not, however, conclusive. Public service corpo

ant.

ance of uncompensated duties for the public and the reasonable demands of the city welfare, may not be proceeded against arbi- should promptly be responded to by defendtrarily nor in an unreasonable manner. 1 Dunnell's Dig. 1604. The question whether a particular act or thing required by the public authorities in this respect is arbitrary and unreasonable is a judicial question (Freund, Police Power, 63), and may be raised by the person proceeded against in any appropriate legal way, by affirmative action, or by way of defense in mandamus proceedings to compel the performance of the thing required. It is ordinarily one of fact, to be heard and determined as other issues of fact are heard and determined, and the burden is upon the complaining party to establish the allegations of unreasonableness. Booth, Street Railways, 224; Mayor, etc., v. Ry. Co., supra; State v. City of Trenton, 53 N. J. Law, 132, 20 Atl. 1076, 11 L. R. A. 410; People ex rel. v. Cregier, 138 Ill. 401, 28 N. E. 812.

[5] 4. In the case at bar we have only to determine whether defendant's answer, as against a general demurrer, presents an issue of unreasonableness. While section 18 authorized the city to require the construction of a car line upon any street in which a sewer has been laid, it would be manifestly unreasonable to require a line constructed upon all such streets, and an order of the city to that effect would not be sustained. St. Clair street, upon which the new line is required to be constructed, is supplied with a sewer, and, as we understand the claim of defendant, there are no residences or business buildings upon the greater part of the street covered by the proposed new line. The main purpose of the extended line is to accommodate people residing in territory tributary to St. Clair street, between Avon and Oxford streets, and those residing in the vicinity of the terminus of the line at the latter street. There can be no serious question but that the common council is authorized by section 18 to provide street car accommodations to the people residing in this section of the city, and, if the proposed line is not manifestly unreasonable and unfair to defendant, the ordinance providing for the construction of the line must be sustained. But in determining the reasonableness of the requirement, consideration should not be limited exclusively to the propriety or necessity of accommodating those living at one end of the proposed line. The most feasible route to reach that section of the city, the difficulties to be encountered in constructing the line, if any, the comparative cost and expense of different routes, either of which would, if adopted, accomplish the desired object, should receive due consideration and attention. And though a mere difference of expense of construction should not be the sole guide in selecting the route, that fact is entitled to weight, in connection with all the facts and surrounding circumstances. The defendant is entitled to fair treatment,

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In reference to the question whether an issue of unreasonableness is presented by the answer, we can do no better than to quote from the allegations made therein. The answer alleges, among other things: "Defendant specifically alleges that St. Clair street, from approximately its east terminus to Avon street, runs along the middle of a steep declivity and hill, so that access to St. Clair street is practically impossible from the territory upon either side of the street, and for that reason that portion of a street railway thereon would receive but little patronage and would be of little use, if any, to the traveling public. That the south side of said proposed line of railway, from West Seventh street to Victoria street, is vacant and unoccupied property. That at the westerly terminus of the proposed line of railway there is a considerable population, but this population could be best served, and would be naturally tributary, to a line connecting with the present Grand Avenue line, and such line would be only a few blocks long, and would only cost a small part of the cost of construction of the proposed St. Clair Street line, and would better serve the public need; and for that reason defendant specifically alleges that there is no public need or necessity for the construction and operation of a street railway line upon St. Clair street. That the construction and operation of a street railway line upon St. Clair street would necessarily involve an expenditure of many thousands of dollars by defendant, with no corresponding income or return therefrom. That the construction and operation of said line would not yield sufficient revenue or income to said defendant to pay the actual and necessary expenses of operating the same, and its construction and operation and the cost thereof would be a total loss and waste investment to defendant, and deprive it of its property for no public use and without compensation."

The answer further alleges that, if defendant be required to construct the proposed line, the result thereof would not benefit the public, and, on the contrary, would deprive defendant of its property without due process of law and in violation of its constitutional rights. These allegations are, of course, conclusions of law, and we do not set them out in full. The portions of the answer quoted, however, set forth issuable facts, and bear directly upon the question of the reasonableness of the order for the construction of the proposed line. While the allegations are not as complete and specific as they might perhaps have been made, we are of opinion, within the rule guiding the determination of the sufficiency of pleadings when challenged by general demurrer (2 Dunnell's Dig. 7724), that an issue in respect to

Action by the First National Bank of Min

the question of reasonableness is presented, Appeal from District Court, Morrison and should be determined as other issues of County; C. A. Nye, Judge. fact are determined. The judgment of the court below, sustain-neapolis against B. Y. McNairy. Verdict for ing the demurrer to the answer, will therefore be reversed, and the cause remanded for trial.

Judgment reversed.

BUNN, J., took no part.

FIRST NAT. BANK OF MINNEAPOLIS v.

MCNAIRY.

defendant. From an order denying blended motion for judgment n. o. v. or for new trial, plaintiff appeals. Reversed and remanded.

A. H. Vernon, of Little Falls, for appellant. D. M. Cameron, of Little Falls, for respondent.

HOLT, J. Appeal by plaintiff from an order denying its blended motion for judgment

(Supreme Court of Minnesota. June 20, 1913.) notwithstanding the verdict or a new trial.

(Syllabus by the Court.)

1. BILLS AND NOTES (§ 497*)-DEFENSESBURDEN OF PROOF.

In this action against the defendant on his promissory note, discounted by the plaintiff bank before maturity, and placed to the deposit account of the payee, a customer of the bank, except such as arose from an alleged breach of warranty in the sale of an automobile; the note being given as part payment therefor. Held, that the burden was upon the defendant to prove that the plaintiff was not a bona fide holder.

the evidence disclosed no defense to the note.

[Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. §§ 1448, 1675-1681, 16831687; Dec. Dig. § 497.*]

2. BILLS AND NOTES (§ 2712*)-INDORSEMENT-VALIDITY.

The note was executed and delivered to the Northland Motor Car Company, but the word "Car" was omitted from the name of the payee. In discounting the note, the true name of the payee was indorsed. It is held that the variance or omission is not fatal to a valid indorsement under the law merchant.

[Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. § 650; Dec. Dig. § 2712.*] 3. BILLS AND NOTES (8 356*)-DISCOUNTSEXHAUSTING DEPOSIT ACCOUNT-PURCHAS

ER FOR VALUE.

A bank, which, upon discounting its customer's negotiable paper, places the amount to the credit of the customer's deposit or checking account, does not become a purchaser for value until the credit so given is exhausted by payment of checks drawn against such account. In determining whether such credit has been exhausted, the rule is to be applied that, as checks are paid, the amount is to be charged against the oldest item of deposit or credit of the customer.

[Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. § 908; Dec. Dig. § 356.*] 4. BILLS AND NOTES (8 525*)-DISCOUNTS EXHAUSTING DEPOSIT ACCOUNT.

Under this rule, the whole amount for which credit was given upon the discount of the note was paid out the day after its discount before any notice of any defense thereto and be

fore it became due.

[Ed. Note. For other cases, see Bills and Notes, Cent. Dig. §§ 1832-1839; Dec. Dig. § 525.1

5. BILLS AND NOTES (§ 537*)-EVIDENCE-DIRECTED VERDICT.

Upon the evidence, the plaintiff was entitled to a directed verdict.

[Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. §§ 1862-1893; Dec. Dig. 537.*1

On June 13, 1911, the Northland Motor Car Company sold an automobile for $1,400 to the defendant, and such sale, he claims, was made upon certain representations and warranties. The defendant paid $1,000 at the time, and gave his two promissory notes for the balance of the purchase price-one for $100, due in 20 days, and one for $300, due in 90 days. The first was paid when due; the second is the note involved in this suit. The plaintiff claims that in the ordinary course of business, for value, and in good faith it purchased the note before maturity. This the defendant puts in issue, and, while admitting the execution of the note, sets up as a defense thereto that the representations and warranties of the Northland Motor Car Company, inducing the defendant to buy the automobile, were fraudulent and untrue, and because thereof alleges damages in a sum exceeding the amount of the note sued on. It appeared at the trial that the Northland Motor Car Company was a customer of the plaintiff, that it kept a checking account with it, and was indebted to it in a large sum for money borrowed. The evidence also shows that on September 5, 1911, plaintiff discounted the note at the request of the Northland Motor Car Company for $299.70, placing that amount to the credit of the company's checking account in the bank. the close of business on September 5th, the company's credit balance on its checking ac count was $295.08; on the 6th, $1,536.98; on the 7th, $209.63; but thereafter it was never less than $540. On the 6th of September the company deposited with the bank $1,241.90 (this included the note in suit and other notes then discounted by the plaintiff), and on the 7th of September $1,000. So that, if the rule be applied that, as checks are paid by the bank, the payment should be charged against the oldest deposit item, then the whole of the amount deposited on the 6th, together with $790.37 out of the $1,000 deposited on the 7th, was paid out before the close of that day's business.

At

The first eight errors assigned relate to the contention that the evidence fails to

show that the plaintiff was not a bona fide holder of the note; therefore the defense

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