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Devol, the payee of the note in suit, appellant, and a large number of other creditors of Gen. Scribner, signed the foregoing agreement.
Benjamin F. Scribner also filed an answer; the first and second paragraphs of which set up the foregoing agreement, and allege that the stock of drugs was turned over to Town as therein provided for, and that he was thereunder and thereby released and discharged from all liability upon the notes in suit.
One paragraph of appellant's reply is to the fourth paragraph of answer by the administrator, and the above-mentioned first and second paragraphs of answer by Benjamin F. Scribner. That reply is, in substance, that, at the time the written agreement was executed, it was orally agreed by and between Devol, the payee, Benjamin F., and Horatio Scribner, the decedent, that the written agreement or release should not apply to, or affect in any manner, the debt evidenced by the notes in suit, and that, in consideration of that agreement, Devol signed the agreement or release. The court below sustained a demurrer to the reply, and that ruling is assigned as error.
Before it can be said that the court below erred in that ruling, it must be determined that the reply is sufficient to meet the several paragraphs of answer to which it is directed. Falmouth Turnpike Co. v. Shawhan, 107 Ind. 47; S. C. 5 N. E. Rep. 408. It will be observed that the writing signed by Devol, a copy of which is filed with and as a part of the answers, is not a receipt, nor a release simply from a single party to another, with no consideration stated, as was the case in Scott v. Scott, 105 Ind. 584; S. C. 5 N. E. Rep. 397. The writing is rather a contract for a release upon the stated consideration that Benjamin F. Scribner should turn over his stock of drugs, etc., to Town, to be by him sold, and the proceeds distributed pro rata upon the debts due to the signers. There is also a positive and unconditional agreement on the part of the signers to release and discharge Benjamin F. Scribner from his indebtedness to them, and each of them. At the time the written agreement was executed Devol held the notes in suit, executed by Seribner & Son, a firm composed of Benjamin F. and Horatio Scribner, the decedent. The liability of Benjamin F. upon those notes was an indebtedness from him to Devol; and, so far as shown by the answers and reply under consideration, that was the only indebtedness from Benjamin F. to him. The plain reading of the writing executed by Devol and the other creditors is that, for the consideration stated, they would release and discharge Benjamin F. from all his indebtedness to them, or either of them.
We are met in limine with the question, can it be shown, as against Benjamin F., that by a contemporaneous parol agreement the indebtedness evidenced by those notes was not within the terms of the written agreement? If it cannot, the reply is bad, and the demurrer to it was properly sustained. A general receipt may be explained or contradicted by parol; but, if a receipt also embodies a contract, that contract may not be varied or overthrown by parol evidence, (Wood, Pr. Ev. 68–72;) and so may a release, executed in the manner and coming in question as in the case of Scott v. Scott, supra, be explained by parol. But, as we have said, the writing here is not a receipt, nor a release, as in that case. Here we have a written contract; and to hold the reply good would be to hold that the terms of that contract may be varied and limited, and, as to Devol, entirely overthrown, by showing a contemporaneous parol agreement excepting from the terms of the written agreement the only indebtedness from Benjamin F. to him, so far as shown by the pleadings under examination. The written agreement cannot be thus varied and contradicted; and especially is this so, as it is an agreement between the debtor and his creditors. Van Bokkelen v. Taylor, 62 N. Y. 105; Pierson v. Hooker, 3 Johns. 68; Acker v. Phoenix, 4 Paige, 305; Rowe v. Thompson, 15 Abb. Pr. 377; 2 Pars. Cont. 715.
It is alleged in one of the answers by Benjamin F. that he turned over to Town the stock of drugs, as in the agreement provided. Having thus turned over the property in accordance with'that agreement, he was discharged from all liability upon the notes in suit. The reply is not good as to all the paragraphs of answer to which it was directed, and hence the demurrer thereto was properly sustained. Such being the case, it is not necessary for us to go into the question as to whether the release of Benjamin F. operated as a release of Horatio, the decedent. There is no brief on the part of appellee, and hence we have not the means of knowing the exact grounds upon which the court below sustained the demurrer to the reply. We must presume in favor of the ruling of the court below, and hence may assume here that the demurrer was sustained because the reply was not a sufficient reply to all of the paragraphs of the answers to which it was directed.
It is further contended that appellant's demurrer to the tenth paragraph of the administrator's answer should have been sustained by the court below. That answer is, in substance, that the debt for which the notes were given was the individual debt of Benjamin F. Scribner, and that he executed the notes in the firm name without authority, and without the knowledge or consent of the partner, Horatio, and that Devol took the notes with full knowledge of those facts. The objection urged to the answer is that it is not averred therein that the firm had not assumed and agreed to pay the debt, notwithstanding it was the private debt of Benjamin F. Scribner. If, by the averments that Benjamin F. executed the notes without authority, and without the knowledge or consent of his partner, it does not sufficiently appear that the firm had not assumed the payment of the debt, yet the answer was not bad. If appellant relied upon such an assumption, he should have brought it forward by a reply.
It is also contended that the debt is shown by the evidence to have accrued after the release was executed. That the notes were executed and delivered in 1872, some five years before the release was executed, is beyond question. Devol testified that, while he held the notes, Benjamin F. conveyed to him a tract of land sufficient in value to have paid the notes, but that it was taken from him upon an outstanding mortgage, after the execution of the release. His theory is that after the conveyance to him, and until the foreclosure of the mortgage, he held the notes as collateral security; and that, after the land was taken from him upon the mortgages, the notes again became a debt in the full sense. It is sutficient to say that the release was complete and full, and discharged Benjamin F. from all liability upon the notes, whether held as collateral security or otherwise by Devol, and that the land transaction did not change the matter. It clearly did not create a new debt subsequent to the release.
Finding no error for which the judgment should be reversed, it is affirmed, with costs.
HOWK, C. J., did not participate in the decision of this case.
(108 Ind. 197)
HUNTER 0. PFEIFFER and others.
(Supreme Court of Indiana. November 3, 1886.) 1. PLEADING-AMENDMENT_EFFECT OF FILING SECOND COMPLAINT.
Where a demurrer to a complaint is sustained, and a new complaint is filed, the gravamen of which is the same as the one held bad on demiurrer, it will be treated as an amended pleading, and will be regarded as having superseded the original
complaint. 2. CONTRACT_PUBLIC POLICY-PREVENTING COMPETITION IN BIDDING FOR PUBLIC WORK,
A contract to prevent competition in bidding for public work is contrary to public policy, and cannot be enforced.
Appeal from circuit court, Warren county.
A contract of partnership, such as that shown in this case, to secure a contract for building a free gravel road, is not void as against public policy. The only question is as to the remedy. Courts have power, in such a case as this, to appoint a receiver. Section 1222, Rev. St. 1881. See, also, Id. SS 5095, 5102. This would not interfere in any manner with the commissioners, for the receiver would simply have such powers as the original contractors had. The third paragraph of complaint states a valid contract, upon a valid consideration, its violation, and the damage thereby caused plaintiff; it is therefore good. Board v. Verbarg, 63 Ind. 107; Wolf v. Esteb, 7 Ind. 448. The court also erred in striking out that part of this paragraph showing special damages. Lindley v. Dempsey, 45 Ind. 248; Hadley v. Prather, 64 Ind. 140; Skeen v. Muir, 34 Ind. 312.
MITCHELL, J. Hunter commenced a suit against Pfeiffer and two others in the Warren circuit court. His complaint was in two paragraphs. The court sustained a demurrer to the complaint, to which ruling the plaintiff below excepted. Thereupon he filed what is styled a third paragraph of complaint, which sets up substantially the same matters as were contained in the original complaint. Subsequently the court sustained a demurrer to this socalled third paragraph. The appellant, by proper assignments, now asks a review of the rulings of the court on all the paragraphs of his complaint.
Section 342 of the Code provides, in substance, that, when the court sustains a demurrer to a pleading, the party affected by such ruling may amend, upon such terms as the court may direct, upon payment of the costs occasioned by the demurrer. In case the court sustains a demurrer to an entire complaint or pleading, and no leave to amend is asked or obtained, it becomes the duty of the court to render the proper judgment upon the demurrer. Bicknell, Pr. 107. If, without obtaining leave to amend, a fresh complaint is filed, the gravamen of which is the same as that demurrered out, it will be treated as an amendment, and will be regarded as having superseded the original complaint. Without considering what would be the effect of filing an additional paragraph counting upon a different cause of action, we are clear that a plaintiff to whose complaint a demurrer has been sustained, waives his exceptions to such ruling by filing another complaint in the same case, based upon substantially the same facts. The orderly, and, in our opinion, the only proper, course allowable under the statute, when a demurrer is sustained to an entire complaint, is either to stand by the demurrer, or to ask and obtain leave to amend. Whether leave to amend is asked and obtained or not, the section of the statute above referred to cannot be avoided by filing a new complaint embracing substantially the same cause of action as that already demurrered out, and styling such new complaint an additional paragraph, instead of an amended complaint. Where a demurrer has been sustained to a pleading, any other pleading subsequently found in the record which presents substantially the same cause of action or defense will be regarded as having been filed by leave of court as an amendment, and will be treated as having superseded the pleading, or paragraph thereof, which it amends. This, too, without regard to the manner in which the subsequent pleading is entitled. Trisler v. Trisler, 54 Ind. 172; section 650, Rev. St. 1881.
The third paragraph or amended complaint, which we now proceed to consider, presents, in substance, the following facts: On the fifth day of February, 1885, Hunter, Pfeiffer, and two others entered into an agreement to form a partnership, the purpose of which was to secure the contract for building a free gravel road, the construction of which, we may infer from the complaint, had been duly determined upon by the board of commissioners of Warren county. The arrangement was that Pfeiffer should attend the letting, which had been advertised, and bid for the work, and secure the contract, and that Hunter and his associates should become sureties on the bond required by law in that behalf to be given by the contractor. Pfeiffer bid off and was awarded the contract at the price of $13,465. The contract for the work was duly executed by the board to Pfeiffer. Hunter and the other two signed his bond according to the agreement. The plaintiff avers that the contract between Pfeiffer and the board is worth $3,000; that $10,000 is more than sufficient to execute the work according to the agreement. It was further averred that, but for the alleged agreement of partnership, the plaintiff would have bid for and received the contract, and would have made $1,000 profit thereon. The plaintiff alleges that after the contract was secured, and the bond signed, Pfeiffer and the other two defendants wholly refused to permit him to participate in the prosecution of the work, and excluded him from the partnership which had been agreed upon; that the defendants were proceeding with the work, had already made $1,000 in profits; and that, when completed, the contract would yield a net profit of $3,000. He demanded judgment for $1,000.
On motion of the defendant below, the court struck out that part of the complaint which avers that, but for the alleged agreement of partnership between the parties to the suit, the plaintiff would have bid for and received the contract for the construction of the work proposed, and would have made a profit of $1,000 thereon. The appellant complains of this, and insists that the ruling on the demurrer to his complaint should be considered here as though the rejected averment remained in.
Apart from the averment eliminated, there can be little question of the invalidity of the complaint. With that part considered as in, it is bad beyond any doubt whatever. Without the averment in question, it is fairly inferable from the complaint that the agreement to form a partnership was nothing more nor less than a thinly disguised scheme to stifle or diminish competition for the obtainment of a contract to construct a public work. With the averment in, the real purpose of the partnership is not left to inference; the averment being boldly made that but for the agreement the plaintiff would have bid for and received the contract for the work at a price at which he would have derived a profit of $1,000. In effect, this is to say that the appellant and appellees were about to bid for the construction of a public work which was to be let in pursuance of law, and that the appellant was induced to withhold a lower bid than that which the appellee proposed to make, in consideration that he should be taken into partnership, and be permitted to share in the profits of a contract which the appellee Pfeiffer was thus to secure. Upon all such partnerships the law sets the seal of its condemnation. Persons who combine in schemes of the character disclosed, can secure no aid from the courts in coercing a division of profits anticipated or accrued.
The statute under which free turnpike or gravel roads are constructed, requires contracts for their construction to be let to the lowest and best bidder, and that all bids shall be sealed when filed. If the courts should lend any countenance to such a contract of partnership as that disclosed in the complaint in either aspect in which it is presented, the effect would be to afford facilities for bidders to enter into secret agreements and combinations with each other, and thus enable them to defeat the plain purpose of the legislature in requiring such contracts to be let to the lowest and best bidder. The whole purpose of the statute is to encourage open, fair competition between responsible bidders, and any secret combination--call it partnership or anything else—the effect of which is to abate honest rivalry, or prevent fair competition, is to be condemned as in violation of public policy, and void. No one can predicate an enforceable right upon such an agreement. Atcheson v. Mallon, 43 N. Y. 147; Woodworth v. Bennett, Id. 273; Gibbs v. Smith, 115 Mass. 592; Hannah v. Fife, 27 Mich. 172; Greenhood, Pub. Pol. 178, 179, and notes.
The partnership contemplated by this agreement was a secret arrangement, unknown to the officers who had the public interest under their protection. It was intended that the officers should believe they were contracting with Pfeiffer alone, while he and those who were accepted as sureties on his bond intended among themselves a secret partnership wholly unknown to the board of commissioners. No lawful contract of partnership resulted from such a combination. Lewis v. Armstrong, 3 Mylne & K. 45. Persons who engage in forming partnerships of the character disclosed must rely for division of the resulting profits upon those sentiments of honor which are supposed to prevail among all who form combinations which are condemned by the policy of the la
The purpose, tendency, and necessary effect of such a contract was to stifle fair, open, actual competition, and to perpetrate a fraud upon the public offičers. If, in the letting a contract such as this, parties, without knowledge of the bids of each other, submit their bids as the law requires, and afterwards enter into a partnership for the construction of the work, with the knowledge of the officers letting the same, a question of a different character is presented. Such a transaction bears some similitude to the contract which was upheld in Breslin v. Brown, 24 Ohio St. 565, a case which, on account of the liberal view taken of the contract there involved, is not universally indorsed. That case, however, affords no aid to the appellant here.
The judgment is affirmed, with costs.
(108 Ind. 232)
STERNE V. VERT and others.
(Supreme Court of Indiana. November 18, 1886.) APPEAL-RECEIVING BENEFIT OF JUDGMENT PREVENTS APPEAL.
A party cannot accept the benefit of an adjudication, and yet allege it to be er roneous. So, where a judgment is rendered foreclosing a mortgage on two out of three parcels of land therein described, and declaring it invalid as to the third, the plaintiff, having bought the two pieces at thesheriff's sale, and thus elected to abide by the judgment, her appeal should be dismissed. Appeal from Hamilton circuit court. Kane & Davis, for appellant. F. M. Trissal, for appellees.
MITCHELL, J. This was a suit by Sophie Sterne to foreclose a mortgage executed by William Vert, and Augusta, his wife, on the twentieth day of October, 1881. The mortgage covered three separate parcels of land in Hamilton county. At the time the mortgage was executed, the mortgagors, William and Augusta Vert, owned one of the tracts mortgaged as tenants by entireties. Prior to the commencement of this suit both William Vert and his wife departed this life, the husband having died first. The contest below related wholly to the tract of land owned, as above, by the husband and wife. The surviving children and heirs of the wife, by a cross-complaint, set up the state of the title at the time the mortgage was executed, and alleged that the mortgage was void because the debt thereby secured was the debt of their father, William Vert, the husband of Augusta, who it is alleged was surety. Upon issues made on the complaint and cross-complaint the court found the facts specially, and stated conclusions of law to the effect that there remained due the plaintiff, on her mortgage debt, the sum of $2,000, and that the mortgage was a valid lien upon two of the tracts of land therein described, and invalid as to the tract in contest as above mentioned. A decree was given for the plaintiffs below foreclosing the mortgage, and ordering the sale of two of the tracts, and in favor of the cross-complainants as to the other, quieting their title thereto. From this decree, the appellant, who was the plaintiff below, appealed to this court; the record having been filed here on March 27,