
    The Mills Power Company, Appellant, v. Mohawk Hydro-Electric Company, Respondent.
    Third Department,
    March 23, 1911.
    Practice — overruling plaintiff’s demurrer — failure to.withdraw demurrer— trial—complaint to be dismissed — form of decision on interlocutory judgment — appeal from both judgments.
    Where a demurrer to a separate and distinct defense to the entire cause of action alleged in the complaint having been overruled, the plaintiff does not withdraw the same but goes to trial, the complaint should be dismissed.
    By not withdrawing its demurrer, plaintiff at the trial admits all the allegations of the separate defense.
    The effect of an interlocutory judgment overruling the demurrer and thus adjudging the separate defense to be good, was not changed by a statement of the judge in his decision, that the court could not determine whether the defense was good or bad without a knowledge of the circumstances surrounding the giving of a deed and the granting of easement relied upon as a defense.
    A demurrer raises an issue of law which must be decided by either overruling or sustaining it.
    Upon an appeal from the final judgment rendered at Trial Term with a notice of an intention to bring up for review the interlocutory judgment, the Appellate Division should decide whether the demurrer was properly overruled.
    Where it decides that the defendant’s answer was not good and that the demurrer should have been sustained, both the interlocutory judgment and the final judgment founded on it will be reversed.
    Kellogg and Betts, JJ., dissented in part, with opinion.
    Appeal by the plaintiff, The Mills Power Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Fulton on the 28th day of October, 1910, upon the decision of the court rendered at the commencement of the trial at the Fulton Trial Term, with notice of an intention to bring up for review an interlocutory judgment in favor of the defendant entered on the 7th day of October 1910, overruling the plaintiff’s demurrer to part of the answer.
    
      M. H. Nellis, for the appellant.
    
      Hugo Hohlmann and A. Henry Mosle, for the respondent.
   Houghton, J.:

The defendant by its answer set up a separate and distinct defense. The plaintiff demurred to this defense on the ground that the facts stated were insufficient in law to constitute a defense. The issue of law thus joined came on for trial and the court rendered an interlocutory judgment overruling the demurrer. The plaintiff did not withdraw its demurrer or ask to do so, but proceeded to trial of the action with the demurrer still standing. The trial court held that inasmuch as the demurrer had not been withdrawn and the court had held the answer a complete one to plaintiff’s cause of action, he could do nothing else than dismiss the complaint, which he did. In this he was entirfely correct. The separate defense went to the entire cause of action set forth in plaintiff’s complaint and by not withdrawing its demurrer thereto the plaintiff admitted all the facts set forth therein. (National Contracting Co. v. Hudson R. W. P. Co., 110 App. Div. 133.) The effect of the overruling of the demurrer and thus adjudging the defense to be a good one was not changed by the statement of the learned trial court in his decision that the court could not determine whether the defense was good or bad without a knowledge of the circumstances surrounding the giving of the deed and the granting of the easement relied upon as a defense.

When a demurrer is interposed to a pleading an issue of law is presented and it must be decided either by overruling or sustaining the demurrer. A pleading demurred to is either good or bad as it stands.

The case of National Contracting Co. v. Hudson R. W. P. Co. (170 N. Y. 439; 192 id. 209) is not authority to the contrary. On the first appeal in that case the demurrer to the separate defense was held to have been improperly sustained. On the trial of the case, however, the facts developed showed that the defense although good on its face was not effectual and could not be invoked by the defendant. It was urged upon the court on the last appeal that it having once said the defense was good it must stand by that decision and call it good notwithstanding the facts showed it unavailable to the defendant. This contention was of course repudiated. The court explained that although the defense was good on its face it was not good in view of the facts developed. It often happens that pleadings good on their face are insufficient in the light of proven facts.

In the present case, however, the plaintiff has appealed from the final judgment dismissing its complaint, and has brought up for review the interlocutory judgment overruling its demurrer. We are thus called upon to decide whether the demurrer to the separate defense was properly overruled.

The court, although differing as to the practice, is unanimous in the opinion that the defense is not a good one. The defense not being good the demurrer to it should have been sustained. This, therefore, calls for a reversal of the interlocutory judgment and with it falls the final judgment which was founded upon it.

The final and interlocutory judgments should be reversed, without costs, and the demurrer sustained, with costs, with leave to the defendant to amend its answer upon paying such costs within thirty days.

All concurred, except Kellogg, J., who voted for affirmance of interlocutory judgment and reversal of final judgment, in an opinion in which Betts, J., concurred.

Kellogg, J. (dissenting):

The interlocutory judgment adjudges that the court upon the papers cannot determine whether the answer constituted a defense or not; that all the facts and circumstances provable under the pleadings should be placed before the court to aid it in the construction of the deed, and it continued: The demurrer is, therefore, overruled, leaving the question as to whether or not a sufficient defense is set forth in the particular part of the answer demurred to to the trial court upon the trial of all the issues under the pleadings ; the costs on the trial of this issue of law to abide the event.” That was not an improper determination of the demurrer. (Straus v. American Publishers' Assn., 103 App. Div. 277; National Contracting Co. v. Hudson R. W. P. Co., 170 N. Y. 439; 192 id. 209.)

In the latter case the demurrer to an affirmative answer was sustained. The Court of Appeals (in 170 N. Y.) reversed the interlocutory judgment upon the ground that it was not clear from the parts of the contract alleged that the answer was bad. The case then went to trial upon the facts, and the referee considering that he was constrained by the interlocutory judgment to hold that the facts alleged in the answer constituted a defense, gave judgment for the defendant. The Court of Appeals (in 192 N. Y.) reversed the judgment, holding that the decision of the demurrer was simply a failure to find that the answer was insufficient, but did not establish its sufficiency, the court saying (at p. 220): It is obvious, from a careful reading of the whole opinion, that all the court intended to decide was that tested merely by the face of the pleadings, it could not be said as a matter of law that the defense pleaded was necessarily insufficient, but that that question should be left open till the trial of the action, when the clause pleaded would be interpreted in the light of the whole contract and of the conduct of the parties thereon.”

The interlocutory judgment, therefore, does not justify the final judgment which the court based upon it. The demurrer, if it still stands, only admits the issuable facts alleged in the answer, and most of the allegations of the answer are conclusions which are not admitted. The demurrer did not, therefore, admit the plaintiff out of court.

We need not consider whether or not the interlocutory judgment was a substantial withdrawal of the demurrer or the placing of the case before the court for trial upon the complaint and answer. The interlocutory judgment should, therefore, be affirmed and the final judgment reversed and a new trial ordered, with costs to the appellant to abide the event.

Betts, J., concurred.

Final and interlocutory judgments reversed, without costs, and demurrer sustained, with costs, with leave to defendant to amend its answer on payment of such costs within thirty days.  