Peale v. Clark, 50 Utah 83

pleading to which it is directed. The question, therefore, is, In what way does it appear from defendant's answer that the counterclaim therein set forth arises out of a partnership transaction? The basis for such a contention is that the defendant avers that the water rights which were conveyed by the deed mentioned in the counterclaim belonged to himself, to the plaintiff, and to "others." This does not necessarily imply that the owners of the water rights were "partners" as that term is generally understood. Much less does it imply that the claim arises out of unsettled partnership accounts which existed at the time this action was commenced as between the plaintiff, the defendant, and the "others." Nor does it necessarily follow that the other owners of the water rights which were sold are necessary parties to this action, or that they had any present interest whatever when the action was commenced in the $5,000 claimed by the defendant as one-half of the purchase price of said water rights. Indeed, the defendant alleged that he was the owner of one-half of the water rights conveyed as aforesaid, and that by reason of such ownership he was entitled to one-half of the purchase price amounting to $5,000, which was retained by the plaintiff and converted to his own use. Those facts, however inartificially pleaded-and it must be conceded that the pleading is inartificially drawn-are admitted to be true by the demurrer, and, if true, the defendant's claim should prevail. For aught that is made to appear the plaintiff may have paid the shares of the purchase price belonging to the "others" named in the counterclaim, and hence, according to defendant's allegations, no one, except the defendant, has a right to the $5,000, which is one-half of the purchase price of the water rights aforesaid. Whatever rights the plaintiff alone may have as against that part of the defendant's claim certainly may be settled in this action. Why, then, should the defendant not be permitted to set up his claim in this action? If there is any legal reason why such may not be done, it certainly does not appear from the pleadings as they now stand.

Plaintiff's counsel has, however, cited cases in which he contends it is held that unsettled partnership accounts are not a proper subject of counterclaim in an action at law. The

Appeal from Salt Lake County, Third District

cases specially relied on are Wood v. Brush, 72 Cal. 224, 13 Pac. 627, Haskell v. Moore, 29 Cal. 439, Hook v. White, 36 Cal. 299, Lane v. Turner, 114 Cal. 396, 46 Pac. 290, and Roberts v. Donovan, 70 Cal. 108, 9 Pac. 180, 11 Pac. 599. Neither Hook V. White nor Roberts v. Donovan have any bearing upon the question. In Wood v. Brush the Supreme Court of California, in passing upon the question, in 72 Cal. at page 226, 13 Pac. at page 628, said:

"The counterclaim set out in the supplemental pleading is clearly due, if at all, as a partnership account against sundry persons besides plaintiff, and, until an accounting is had and a balance struck, is not the subjectmatter for an action at law. It is not, therefore, a counterclaim 'existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had in the action within the meaning of section 438 of the Code of Civil Procedure.'''

To the same effect are the decisions in Lane v. Turner, supra, and Haskell v. Moore, supra.

As we have pointed out, however, there is nothing contained in the defendant's counterclaim which brings it within the rulings of those cases. It may therefore be conceded that the decisions by the Supreme Court of California are right, but, notwithstanding that, have no controlling influence here.

3

The defendant's counsel, however, also insists that, in view that a cause of action is stated in the counterclaim, and that plaintiff's demurrer should have been overruled, and that plaintiff, nevertheless, stood upon his demurrer without interposing any defense to the counterclaim, therefore we should enter or direct a judgment to be entered in favor of the defendant upon the counterclaim for the amount claimed therein, less the amount of plaintiff's promissory note in case that we overrule the demurrer. In support of his contention defendant's counsel cites Gammon v. Bunnell, 22 Utah, 421, 64 Pac. 958. In that case, in an action for specific performance of a contract, a demurrer was interposed to the complaint, which was sustained by the trial court. The plaintiff elected to stand on his complaint, and judgment was entered against him, dismissing the same, and he appealed to this

court.

This court held that the complaint stated a cause of action, and that the demurrer should have been overruled,

Peale v. Clark, 50 Utah 83

and further held that, in view that the defendant interposed no defense to the complaint, except the demurrer by which the facts stated in the complaint were admitted, therefore the plaintiff was entitled to judgment for specific performance as prayed for in the complaint. On rehearing, however, the opinion was modified so as to permit the defendant to interpose a defense to the complaint, and the cause was remanded to the district court for that purpose. The decision in that case, so far as we are aware, has never been followed, nor has it been overruled, not directly at least. The question, therefore, is, Should the original opinion in that case be followed in this one? We think not. It should not be overlooked that in this case the principal ground of demurrer, and the one argued in this court, was that the matter set up in defendant's answer as a cause of action against the plaintiff was not a proper subject of counterclaim. While it is true that the facts pleaded in the counterclaim were admitted by the demurrer, yet it is also true that the ground of demurrer was in the nature of abatement merely. That is, if the trial court's ruling on the demurrer were affirmed by this court, the facts pleaded in the counterclaim as a cause of action against the plaintiff would not be adjudicated, but the cause of action would continue to exist in favor of the defendant and against the plaintiff as if no demurrer had been interposed. All that would have been adjudicated, therefore, was that the cause of action pleaded in the counterclaim was not pleadable against the plaintiff in this action, and not that the defendant had not stated a cause of action. While it is true that in this jurisdiction matters in abatement and matters in bar must be set forth in the same answer, yet it is also true that matters in abatement, where the defects appear on the face of a pleading, may be reached by special demurrer as was done in this case by plaintiff's counsel. When, therefore, a special demurrer is interposed which, if sustained, would merely abate an action or cause of action, we do not think that if such a demurrer is overruled the party against whose pleading the same was directed should be entitled to judgment on the merits, even under the broad rule first announced in Gammon v. Bunnell, supra. Nor do we think that in case a

Appeal from Salt Lake County, Third District

demurrer is sustained by the trial court, which is ultimately held bad by this court on appeal, a judgment should be entered upon the merits against the party interposing the demurrer, except it is clearly made to appear that the demurrer was frivolous or that no defense could, in any event, be made to the cause of action against which the demurrer was directed. It is elementary, in this jurisdiction at least, that either party may interpose a demurrer to invoke the judgment of the trial court respecting the sufficiency of any pleading, and that if the pleading is found sufficient, the demurrant may, on proper terms, and within a reasonable time, be permitted to interpose his defense upon the facts, if he have any. Why should a party be deprived of his right to interpose a defense upon the facts, so long as, in the opinion of his attorney, no cause of action is stated in the pleading demurred to? And why may not a party, if done in good faith, in this court on appeal test the sufficiency of a pleading by demurrer, as well as in the trial court, without being deprived of the right to interpose a defense as to the facts if he have one? While courts should not permit litigants to interpose frivolous demurrers, or merely for delay, yet upon the other hand, they should not deprive either party of the right to defend upon the merits merely because he, in good faith, may have misjudged the law upon a given point by interposing well taken. We are satisfied that the demurrer was interposed in good faith in this case, and that the plaintiff should be given an opportunity to present his defense to the counter

a demurrer which the court holds to be not

claim if he have any.

him.

We are of the opinion that the district court erred in sustaining plaintiff's demurrer and in entering judgment for The judgment is therefore reversed, and the cause is remanded to the district court of Salt Lake county, with directions to overrule the demurrer and to permit either or both parties to file additional pleadings and to proceed with the cause in accordance with the foregoing opinion. Defendant to recover costs on appeal.

MCCARTY, CORFMAN, THURMAN, and GIDEON, JJ.,

concur.

In re Hone's Estate, 50 Utah 92

In re HONE'S ESTATE

No. 3058. Decided July 26, 1917. (166 Pac. 990.) TAXATION-INHERITANCE TAXES COMPUTATION-STATUTES-CONSTRUCTION. Under Comp. Laws 1907, section 1220x, as amended by Laws 1915, c. 98, as to the assessment of inheritance taxes, an estate worth in excess of $25,000 must be assessed 3 per cent. upon the difference between $10,000 and $25,000 or $15,000, and 5 per cent. upon the balance, and not 3 per cent. in gross upon the entire estate, though after the deduction of the $10,000 exemption, the balance of the estate is not worth in excess of $25,000.

Appeal from District Court, Fourth District; Hon. A. B. Morgan, Judge.

Proceedings for assessment of inheritance tax upon the Estate of Joshua Hone, Deceased.

From decree rendered, the State appeals.

REVERSED and REMANDED, with directions.

Dan B. Shields, Attorney General, and O. C. Dalby and James H. Wolfe, Asst. Attys. Gen. for the State.

Harvey Cluff for respondent.

FRICK, C. J.

One Joshua Hone, a resident of Provo, Utah county, this state, died on the 5th day of October, 1915. It is agreed that said Hone died possessed of an estate of the gross value of $31,264.15; that the debts, taxes, funeral and other expenses to be deducted from the gross value of the estate amounted to the sum of $2,309.97, and that the net value of the estate amounted to $28,954.18. The only question involved on this appeal is the amount of inheritance tax that may legally be assessed against said estate under Comp. Laws 1907, section 1220x, as amended by Laws Utah 1915, p. 153. That section reads as follows:

"All property within the jurisdiction of this state, and any interest therein, whether belonging to the inhabitants of this state or not, and whether tangible or intangible, which shall