161 P. 568 | Or. | 1916
delivered the opinion of the court.
“I am of opinion that the evidence tendered by the defendant went to vary the contract appearing on the face of the note. It is not a question of consideration or collateral security. The consideration of the instrument was not impeached, nor was it given as a collateral security, but the defense attempted to be established was in direct contradiction of the terms of the*318 note. The maker of a note payable on a day certain cannot be allowed to say, ‘I only meant to pay you upon a contingency’; that is at variance with his own written contract. The case must be governed by that of Ramson v. Walker.”
In Central Savings Bank v. O’Connor, 132 Mich. 578 (94 N. W. 11, 102 Am. St. Rep. 433), which was an action upon promissory notes, the defendant pleaded a collateral agreement very similar to the defense here:
“That the notes were given for the amount of a chattel mortgage which plaintiff held upon the property of the J. R. Pearson Company, which property defendant O’Connor had purchased; that the title to said notes never passed to said plaintiff; that the notes were delivered to plaintiff upon the clear and distinct understanding and condition agreed to by plaintiff that in case the said J. R. Pearson Company should thereafter be forced into bankruptcy by any of its creditors, upon proceedings instituted by them for that purpose, and adjudicated a bankrupt, said notes would thereupon, in the event of the happening of such contingency, become and be null and of no effect, and were not to be paid, and that it was upon said condition said notes were delivered to said plaintiff. ’ ’
The court said:
“The meritorious question is whether the defense set out in this notice is one which can be established by parol testimony. It is doubtless true, as contended by the appellants ’ counsel, that it may be shown that a promissory note, unconditional in terms, was conditionally delivered; that is to say, that it was placed in the hands of the payee, but with the distinct understanding that it was not to be operative or to become a binding obligation until the happening of some event: Brown v. St. Charles, 66 Mich. 71 (32 N. W. 926); Burke v. Dulaney, 153 U. S. 228 (38 L. Ed. 698, 14 Sup. Ct. Rep. 816). On the other hand, the rule is*319 firmly established that, where a promissory note for a certain amount, payable at a certain time, is delivered into the hands of the payee, to take effect presently as the obligation of the defendant, parol evidence to introduce conditions or modifications of the terms is not admissible. The case of Hyde v. Tenwinkel, 26 Mich. 93, illustrates this rule. It was there held that an attempt to show a verbal contemporaneous agreement to reduce a note from an absolute and specific promise to a defeasible engagement was inadmissible. The same rule has been followed: one of the recent cases being Phelps v. Abbott, 114 Mich. 88 (72 N. W. 3); Burns & Smith Lumber Co. v. Doyle, 71 Conn. 742 (43 Atl. 483, 71 Am. St. Rep. 235). We think it clear that the present case falls within that line of cases which precludes parol evidence offered to vary the terms of a written instrument. If we adopt the testimony of the defendant as correctly stating the transaction, and more certainly if we adopt the terms of the notice of defense by which the defendant was bound, these notes were delivered to take effect presently, but upon the alleged parol agreement that they were to become void in the event that a certain contingency should happen. This is no more than averring that plaintiff entered into a contemporaneous parol agreement that, while the defendant’s obligation bound him to pay absolutely the sums of money at specified times, yet in a certain contingency this sum should not be payable at all, and the notes be redelivered. It is suggested also that there was a total failure of consideration. This cannot be held, for the reason that there was transferred to the defendant, in consideration for the notes, the chattel mortgage and promissory note of the J. R. Pearson Company, which note had indorsers against whom it would be enforceable. There was no absolute and total failure of consideration, and no defense of partial consideration was noticed under the general issue.”
Other cases tending more or less to support the doctrine announced in the case last cited are Stoddard v.
“We did not think it necessary to inquire further into the evidence brought to sustain this defense; for we are quite clear that the testimony does establish the agreement alleged by the defendants to have been made at the various interviews between the persons composing the firm of Allen, West & Bush, or some of them, and the plaintiff, at and before the time when they delivered to him the instrument sued on and received from him the two notes made by his brother, T. P. Ware; that the firm were to have an opportunity to consult counsel, upon whom they relied, as to the validity of the transaction; and that, if such advice was adverse, then the instrument given by them was to be of no effect. It also sufficiently appears that they were advised, without hesitation, by the counsel to whom they had reference in those conversations about the agreement, that the transaction was not one that would stand the test of a legal investigation. This is to be considered in connection with the fact that the firm only brought suit for their own claim, and have since returned, or offered to return, the notes of W. P. Ware, which were given him by his brother and delivered to them when the paper was executed. We are of opinion that this evidence shows that the contract upon which this suit is brought never went into effect; that the condition upon which it was to become operative never occurred, and that it is not a question of contradicting or varying a written instrument by parol testimony, but that it is one of that class of cases, well recognized in the law,_ by which an instrument, whether delivered to a third person as an escrow or to the obligee in it, is made to depend, as to its going into operation, upon events to occur or to be ascertained thereafter.”
In the case of Pym v. Campbell, 6 El. & Bl. 370, cited by Mr. Justice Miller, it appeared that the defendants agreed in writing to purchase an interest in
“I think that this rule ought to be discharged. The point made is that this is a written agreement, absolute on the face of it, and that evidence was admitted to show it was conditional; and if that had been so it would have been wrong. But I am of opinion that the evidence showed that in fact there was never any agreement at all. The production of a paper purporting to be an agreement by a party, with his signature attached, affords a strong presumption that it is his written agreement; and, if in fact he did sign the paper animo contrahendi, the terms contained in it are conclusive, and cannot be varied by parol evidence; but in the present case the defense begins one step earlier; the parties met and expressly stated to each other that, though for convenience they would then sign the memorandum of the terms, yet they were not to sign it as an agreement until Abemethie was consulted. I grant the risk that such a defense may be*324 set up without ground, and I agree that a jury should therefore always look on such a defense with suspicion; hut, if it be proved that in fact the paper was signed with the express intention that it should not be an agreement, the other party cannot fix it as an agreement upon those so signing. The distinction in point of law is that evidence to vary the terms of an agreement in writing is not admissible, but evidence to show that there is not an agreement at all is admissible.”
In La Grande National Bank v. Blum, 26 Or. 49 (37 Pac. 48), the defense pleaded was that at the time of the execution of the note in suit the plaintiff entered into an agreement with defendants whereby defendants were to collect for plaintiff two promissory notes held by plaintiff against one O. N. Ramsay, which it delivered to defendant under an agreement that he would pay over the proceeds if collected, or, if unable to do so, would return the notes, and that the note in ■suit was given to secure the compliance with said contract, and that defendant had performed his part of the agreement. This was held a good defense, Mr. Justice Bean saying:
“If the note was given to secure the performance of Blum’s contract to collect and pay over to plaintiff the proceeds of the Ramsay notes, or to return them if not collected, and Blum has performed his agreement, such performance would manifestly operate as a failure of consideration.”
Another case cited by counsel for defendant is McKnight v. Parsons, 136 Iowa, 390 (113 N. W. 858, 125 Am. St. Rep. 265, 15 Ann. Cas. 665, 22 L. R. A. (N. S.) 718). In this case the note was given as the purchase price of a cow which was warranted to be a good breeder, and there was an agreement that the note should not be negotiable until the cow should have heen bred and have a calf. The payee negotiated the
“It has been held in a number of cases that a note may be delivered to the payee to take effect only upon a condition precedent, and that default in the fulfillment of such conditions may be shown by parol evidence, and will defeat recovery as between immediate parties. But unless the nonfulfillment of the condition goes to the failure of consideration, this would seem to trench upon fixed principles of law. Evidence of want of consideration is admissible between original parties. ‘Every bill or note imports two things: Value received, and an agreement to pay the amount on certain specified terms. Evidence is admissible to deny the receipt of value, but not to vary the engagement. ’ The cases amply sustain the foregoing views, which seem to us altogether correct. It has been held that it is competent to show by parol that at the time a note was made it was agreed that it should be held for nothing on the happening of a certain event. But unless such event operated a failure of consideration, we cannot perceive upon what principle such a view could be taken. The consideration of contracts in writing is in general open to inquiry, and it is not an infringement of the rule excluding parol evidence to add to, vary or contradict writings, to receive parol*328 evidence of the actual consideration for the purpose of determining its validity, or its failure, or that from any cause it is sufficient or insufficient to support the contract”: Daniel, Neg. Instruments, § 81a.
In this view of the law let us consider the defense pleaded in the answer here.
The judgment is affirmed. Ajfpibmed.