Murchison National Bank v. Evans, 191 N.C. 535 (1926)

April 7, 1926 · Supreme Court of North Carolina

191 N.C. 535

MURCHISON NATIONAL BANK v. T. C. EVANS et al.

(Filed 7 April, 1926.)

1. Actions — Pleas in Bar.

A good plea in bar of an action is one that goes to its entire merits, and one that is finally determinative of tbe cause alleged, if sustained. Instances of good pleas in bar stated by Brogden, J.

2. Same — Reference—Statutes—Appeal and Error.

Objection that the order of reference of the trial court was erroneously entered to a plea in bar will not be sustained on appeal, ’when it appears that the compulsory reference complained of involved the stating of a long and complicated account between the parties litigant authorized by statute and necessary to a final disposition of the case. O. S., 573.

3. Same — Banks and Banking — Bills and Notes — Negotiable Instruments —Collaterals—Payment.

Where defendants are endorsers of notes, with collateral given to a bank by the maker, who also has a number of other notes given to the bank with a mass of other collaterals subject by agreement to the payment of the note in question, a plea that the bank should have or had collected sufficiently from these collaterals to have paid off the note sued on, and that the trial should have proceeded without the peremptory order of reference, is not a good plea in bar.

4. Reference — Statutes—Liberal Interpretation.

Our statute allowing a compulsory reference by order of the trial judge should be liberally construed, to expedite the trial of causes and to promote substantial justice between the parties litigant. C. S., 573.

Civil ACTION, before Daniels,' J., December Term, 1925, of New HaNOvee.

On 16 September, 1924, tbe Bank of Maxton executed and delivered to tbe plaintiff two promissory notes aggregating $15,000, payable on demand. Prior to tbe delivery of said notes tbey were duly endorsed by tbe defendants. At tbe time of tbe delivery of said notes tbe Bank of Maxton was indebted to tbe plaintiff upon certain other notes in a sum in excess of $150,000, said indebtedness being secured by certain bills and notes receivable wbicb bad been executed and delivered to tbe Bank of Maxton and hypothecated by said bank with the plaintiff as collateral security for tbe payment of money borrowed by said bank from tbe plaintiff. At tbe time of delivery to tbe plaintiff of tbe notes endorsed by the defendants there was an understanding between tbe parties that if said Bank of Maxton had any equity in tbe bills, notes and other collateral, which bad been pledged by it to tbe plaintiff for tbe payment of the $150,000 indebtedness, then such equity should be considered as security for the payment of the notes endorsed by defendants.

On 3 October, 1924, tbe Bank of Maxton executed and delivered to the plaintiff its promissory note for $10,000, which said note was duly endorsed by the defendants before delivery to the plaintiff. As security for tbe payment of said note tbe Bank of Maxton bypotbecated with tbe plaintiff fifty-two notes of various parties, ranging from $75.00 to $700. The plaintiff alleged that there was a credit of $1,892.52 derived from collections made by it on tbe collateral specified and that all the collateral had been exhausted, and, as the notes were long past due, plaintiff demanded judgment against the defendants, and further, that tbe securities held by plaintiff for tbe payment of the said note should be sold by a commissioner for the purpose of applying the proceeds to the liquidation of said note.

The defendants admitted the endorsement of said notes, alleging that their said endorsement was for the accommodation of the Bank of Maxton, and that their liability, if any, thereon, was contingent, and further, that such collections as may have been made on the evidences of debt were not correctly stated in plaintiff’s complaint, and that, as' they are advised, informed and believe, much more money has been collected and much more money should be credited to the Bank of Maxton, which would relieve the liability of defendants accordingly, than is set out in the complaint; and these defendants ask that plaintiff be required to make a full statement showing all collections made, not only on the evidence of debt set out in the complaint but from all securities held by it at the time when a receiver was appointed for the Bank of Maxton, and through and by whom such collections were made, together with the cost and expense thereof. The defendant further alleged that the security in addition to that listed in the complaint was greatly in excess of the note set out in the complaint and that the plaintiff has other property of value upon which considerable sums can be realized. The defendant further alleged “that as defendants are advised and believe, the said account should be revised and corrected, and the plaintiff should be required by the court to submit a full statement in detail of all such charges, not only for the benefit of these creditors, but also for the benefit of other creditors of the Bank of Maxton.”

The defendants in their answer, while admitting the endorsement of the notes, allege in substance, that their liability is contingent for the reason that sufficient security was pledged by the Bank of Maxton with the plaintiff to pay said notes under the agreement and therefore relieve the defendants of liability on said endorsement. And there are further allegations in the answer of waste and mismanagement on the part of plaintiff in handling said securities, the various aspects of the contention being contained in the forty-two allegations of the answer.

After the pleadings were read, Daniels, J., being of the opinion that the cause involved the taking of a long and complicated account, referred the case to D. H. Bland with direction to take the testimony and find the facts upon all issues of fact raised by the pleadings and to report his findings with his conclusions of law arising thereon to the next term of court.

From the order of reference the defendants excepted and appealed.

Rountree & Carr, Varser, Lawrence, Proctor & McIntyre for plaintiff.

Henry A. McKinnon and J. G. McCormich for defendants.

Brogden, J.

The defendants base their appeal upon the sole proposition that the answer filed by them constitutes a plea in bar, and therefore the trial judge had no authority to order a compulsory reference under C. S., 573, subsec. 1, until tbe merits of tbe plea in bar bad first been determined. Tbe rule of law invoked by tbe defendants, is declared as follows in Duckworth v. Duckworth, 144 N. C., 620: “It bas been established witb us tbat no order of reference to take and state an account should be made when there is a plea in bar of account which goes to tbe entire demand until said plea bas been first considered and determined.”

"What then is a plea in bar ? Tbe word “bar” has a peculiar and appropriate meaning in law. In a legal sense it is a plea or peremptory exception of a defendant, sufficient to destroy tbe plaintiff’s action, a special plea constituting a sufficient answer to an action at law, and so called because it barred — i. e., prevented — tbe plaintiff from further prosecuting it witb effect, and, if established by proof, defeated and destroyed tbe action altogether. Wilson v. Knox County, 34 S. W., 45.

Black’s Law Dictionary defines a plea in bar as follows: “A plea which goes to bar tbe plaintiff’s action; tbat is to defeat it absolutely and entirely.” It bas been further defined as “any plea tbat denies tbe plaintiff’s right to bring and maintain bis action.” Jones v. Beaman, 117 N. C., 261.

In North Carolina the, following pleas have been held to be pleas in-bar: (1) Statute of Limitations. Oldham v. Rieger, 145 N. C., 254. (2) Account stated. Kerr v. Hicks, 129 N. C., 141; 131 N. C., 90; Jones v. Wooten, 137 N. C., 421. (3) Failure to comply witb tbe provisions of a contract which are conditions precedent to liability. Bank v. Fidelity Co., 126 N. C., 320. (4) Plea of sole seizin by reason of adverse possession of twenty years against a tenant in common. But plea of sole seizin which by its very terms involves an accounting, is not a good plea. Duckworth v. Duckworth, 144 N. C., 620. (5) Release. McAuley v. Sloan, 173 N. C., 80. (6) Accord and satisfaction. McAuley v. Sloan, 173 N. C., 80. (7) Estoppel by judgment. Jones v. Beaman, 117 N. C., 259.

Tbe latest utterance by tbe court on this question is contained in tbe comprehensive and pointed opinion of Connor, J., in Lumber Co. v. Pemberton, 188 N. C., 532, and tbe sound reasoning of tbat opinion is conclusive of tbe merits of this controversy.

Tbe record discloses tbat tbe answer of tbe defendant does not constitute a plea in bar or such a plea as would deny tbe plaintiff’s right to bring and maintain bis action; but, upon tbe other band, when liberally construed, tbe liability of defendants was contingent upon a proper collection and application of a mass of collateral securities. This, in itself, and by its essential nature, “requires tbe examination of a long account on either side” and thus comes within tbe principle prescribed by C. S., 573, subsec. 1. Therefore, tbe judgment as rendered is correct and must abide.

It is generally agreed that the civil issue dockets of the State are greatly congested by reason of the overwhelming increase in business incident to the progress and expansion of commercial and industrial activities, and for this reason it is, perhaps, not amiss to be reminded of the practical wisdom contained in an utterance by Faircloth, C. J., in Jones v. Beaman, 117 N. C., 259: “Our statutes relating to trials by referees serve a useful purpose, and must be liberally construed. They aid and simplify the work which would otherwise fall upon the court and jury, and often expedite the litigation and save the parties from trouble and expensive trials, and are a saving in time to witnesses and attorneys.”

Affirmed.