Opinion
Argued April 10, 1888
Decided April 24, 1888
Wayland E. Benjamin for appellant. William E. Millard for respondents.
This action was brought to recover damages for the conversion by the defendants of two notes and the mortgages which secured them. The first cause of action pleaded respects a note and mortgage upon land in Kansas, dated in 1871, and, as an answer to that, the defendants alleged in their seventh defense, that by the laws of that state in which the maker of the note resided and the land was located, the note and mortgage were barred by the statute of limitations, and that no action could now be maintained thereon. To this answer the plaintiff demurred, on the ground that it was insufficient in law on the face thereof. The demurrer was sustained by the Special Term, but that decision was reversed by the General Term on appeal.
We are of the opinion that the reversal was erroneous. The facts stated in the answer were not pleaded as a partial defense or in mitigation of damages. Where that is attempted the Code explicitly requires that the answer shall so state, and give notice that the facts relied upon are intended as a partial defense. (§ 508.) Where no such statement is made the plaintiff has the right to assume, and the court must assume, that the new matter alleged is pleaded as a complete defense, and if demurred to must be tested as such. ( Matthews v. Beach, 5 Sandf. 256; S.C., 8 N.Y. 173.) Applying that test the answer is insufficient. It merely affects the amount of damages to be recovered, by tending to reduce the value of the securities converted. It confesses but does not avoid. It admits the cause of action and questions only its extent and amount, and is not a bar to a recovery. It is bad, therefore, as a defense, and the Special Term was right in so holding. It is not denied that the facts alleged, if admissible at all, may, nevertheless, be put in evidence for the purpose of affecting or reducing the value of the securities. ( Booth v. Powers, 56 N.Y. 22.) So far as the question of pleading is concerned they are admissible under the denials of the answer. The plaintiff must prove the value of the articles converted as the basis of his recovery, and what he may prove the defendants, denying, may disprove. The plaintiff averred the value of the note to be $300 and the accrued interest at twelve per cent. The defendants deny that allegation, and aver that the same had no value, and also deny the alleged conversion. While the allegations of value and no value may perhaps not make a technical issue, because needless, yet, under the denial of the answer which puts in issue plaintiff's whole cause of action, the defendants have a right to prove any facts which affect the value of the securities, and possibly to an amount which would reduce the recovery to merely nominal damages, and so as a question of pleading, and although the seventh defense be stricken out, may prove the law of Kansas and show the difficulty and uncertainty of collection. ( Knapp v. Roche, 94 N.Y. 333.) So much the plaintiff concedes. Precisely what useful purpose was served by interposing this demurrer it is, therefore, difficult to see, but the question is raised and must be correctly decided.
The argument of the General Term appears to be that the facts pleaded might induce the jury to find that the securities converted were absolutely valueless, and so the defense become a complete one. It would be more correct to say that the damages would become merely nominal, although the conversion would remain and the wrong itself be undefended. An answer does not bar a cause of action and so constitute a defense when it affects merely the measure of damages.
The judgment of the General Term should be reversed, and that of the Special Term affirmed, with costs, but with leave to the defendants, upon payment of the costs of the demurrer, to plead anew or amend within twenty days after entry and notice of this judgment.
All concur.
Ordered accordingly.