74 Colo. 480 | Colo. | 1924
delivered the opinion of the court.
Faris, defendant below, brings error upon a judgment against him on a verdict directed at the close of the evidence, in an action on a promissory note. He moves for a supersedeas.
Four defenses are pleaded: (1) That the note was a renewal of one given as purchase price of stock which was worthless and was never delivered and so consideration failed. (2) That both notes were delivered upon the express condition that defendant would not be required to
The answer further alleged that defendant was induced by said statements to sign the note.
As to the first defense we think the court was right in holding that it was insufficient. It seems that the fact that stock, the sale of which is the consideration for a note, is worthless, and even known to the seller to be worthless, will not, in the absence of fraud, amount to want of or failure of consideration, if the maker got what he bargained for. Hunting v. Downer, 151 Mass. 275, 23 N. E. 832, and cases there cited; Peck Colo. Co. v. Stratton, 95 Fed. 741; Otis v. Cullum, 92 U. S. 447, 23 L. Ed. 496. Such a case should be distinguished from cases like McCormick Co. v. Brower, 94 Iowa 144, 62 N. W. 700, where the property sold was intended-for a specific purpose. True, the first defense alleged that the stock was never delivered to the
As to the second defense, if the defendant was a subscriber to the stock, the court was right, we think, in its opinion that the agreement that the stock should be paid for out of dividends was against' public policy. Even if valid between him and the company, á point which we need not decide, it could not be valid between him and the receiver, who represents the creditors of the company. Barnard v. Sweet, 74 Colo. 302, 221 Pac. 1093, decided at the September term. If, however, the stock was really treasury stock, that is, stock which had been issued full paid for cash, or for property or services at a reasonable valuation (Barnard v. Sweet, supra), and then donated to the company, it could, we think, be sold by the company on any terms it' saw fit. Yet even then, unless in writing as in Mulford v. Expl. Co., 45 Colo. 81, 100 Pac. 598, there could be no competent evidence of such provision for payment because it changes the terms of the note. A -provision that the note shall not be paid except out of a certain source, varies the note in its paramount and most vital respect. The agreement was oral. As to this defense, therefore, we think the court was right. Wigmore on Evidence, § 2443 et seq.; Mumford v. Tolman, 157 Ill. 258.
As to the third defense we need say no more than we have said.
The fourth defense, however, is good as pleaded, Whitt v. Orchard Prod. Co., 65 Colo. 585, 178 Pac. 570. The statements (a), (b), (c), and so much of (e) as refers to the profits on hand, and perhaps others, if false, are sufficient to defeat the note, and, since there was evidence to support them, the defendant had a right to a verdict upon them. The direction of the verdict by the court was therefore erroneous.
Both sides have asked us to determine the case finally on this motion.
Judgment reversed and cause remanded for a new trial.
Mr. Chief Justice Teller and Mr. Justice Whitford concur.