Morris v. Case

The opinion of the court was delivered by Gilkson, P. J. :

The only question presented in this case is, Upon whom was the burden of proof? “In all actions, allegations of the execution of written. instruments and indorsements thereon . shall be taken as true unless the denial of the same be verified. . . .” (Civ. Code, §108 ; Gen. Stat.1889, ¶ 4191.) The first question then to be answered is, Does the petition contain any allegation of indorsement upon the instrument declared upon? This we must answer in the negative. It could with as much propriety be said that, because the note shows on its' face that it was made November 11, 1890, and to be paid in five months, and has written thereon “Due April 11, 14, 1891,” this would constitute an allegation of nonpayment, because the court could see that the time for which it was to run had expired. Section 87 of the code provides: “The petition must contain ... (2) a statement of the facts constituting the cause of action, in ordinary and concise language, and without repetition.” What are the facts constituting the cause of action as stated in this petition? That Morris made his note for a certain amount payable to the Union Investment Company in five months from its date; with a given rate of interest, that the payee sold and delivered it to the plaintiff, and that it is due and unpaid. Here is a distinct allegation of title, and how it is derived, and we think that the plaintiff is bound by it. Sale and delivery of a note do not include indorsement. It is one of the methods of transferring the title, it is true, but not *694 the only one, and the cause of action would have been as complete if the indorsement on this note had never been written. Nor does indorsement necessarily imply a sale of the instrument indorsed.

But it is contended that a copy of the note is attached, and that the indorsement appears thereon. But is there any allegation in the petition that intimates that the plaintiff relied upon this indorsement as his source of title? Not the slightest hint is given" of any such intention. He does not allege the execution of any indorsement, nor even allege tha't it is a copy of the note with all indorsements thereon, or that the copy shows any indorsement. Can it be said that an indorsement is a part of a note? We think not. It is a sex>arate and independent contract. “The indorsement of "a note is not merely a transfer thereof, but it is a fresh and substantive contract.” (Daniels, Neg. Inst. § 669 ; Hess v. The State, 5 Ohio, 9.)

We think that, as Case did not refer to any indorsement, the unverified denial of Morris put in issue the title of Case to the note and the burden of proof was upon him. We think this is well settled in this state. In Washington v. Hobart, 17 Kan. 275 , the court says :

“ Ordinarily, where anote payable to order is transferred, it is so transferred by a written indorsement placed on its back. And ordinarily, where such note is sued on, the plaintiff inserts in his petition an allegation of the execution of such indorsement, and such ‘ allegation ’ can be put in issue only by a denial thereof, verified by affidavit. . . . But a negotiable promissory note payable to order, as well as every other kind of promissory note, may be transferred in this state without any indorsement, or without any written instrument, and by delivery merely, and so as to authorize the transferee to sue in his own name. Therefore, in an action on any kind of promissory note by a person who is not the payee *695 thereof, where the petition says nothing about any indorsement thereof, but there is an allegation in the petition stating that the note was duly transferred to the plaintiff, and that he is now the owner and holder thereof, such allegation may be put in issue by a pleading not verified by affidavit.”

A parol assignment of this note would have sustained the allegation of the petition, yet a failure to verify a denial would not admit a parol assignment. (Pattie v. Wilson, 25 Kan. 326 .) If the note was in fact indorsed, the plaintiff should have alleged it in his petition as one of the facts constituting his cause of action. A failure to file an affidavit of denial mentioned in section 108 of the code admits nothing except the execution of a written instrument and the making of an indorsement thereon when they are set forth and alleged in the petition.

The judgment of the district court will be reversed, and the case remanded for new trial.

All the Judges concurring.