186 N.W. 112 | S.D. | 1921
Action on a promissory note given by defendant as a consideration for a contract of subscription to the stock of the Independent 'Harvester Company, Plano, Ill. The note was dated 'September 23, 1912, and became due and payable on or before November 1, 1913. The note and subscription contract were executed the same day, and delivered to one M’oore, agent of the corporation, and by him forwarded to the corporation at Plano, Ill. /
“The Independent Harvester Co.
“Date Sep. 23, 1912. No. 44446.'
“I hereby subscribe for and agree to take one share of the preferred machinery discount stock of the Independent ’Harvester Co., Plano, Ill. (fully paid and nonassessable) and hereby acknowledge a consideration for this agreement, and agree to pay for said stock the sum of one hundred and fifteen dollars, terms to be cash, or my note of even date for $115.00, due Nov. 1, 1913, bearing interest at the rate of eight per cent, from the date hereof, said note to be made payable to the Independent Harvester Co. and stock certificate for the amount of my subscription to be sent to my address 'by registered! mail.
“This agreement executed in duplicate, and my note as described above being delivered to the representative of the Independent Harvester Co., named below.
“Name, J. M. Anderson, [Seal.]
“Post Office, Dell Rapids, .S. D.”
“R. F. D. No. 6, Box.
“J. A. Moore.
“(All contract obligations other than expressed above must be approved and executed by the officers of the company.)
“This form” to be sent to the company.”
The defendant admits receiving a certificate of stock, namely “A preferred discount certificate,” etc., on November 26, 1912.
At the trial defendant, under appropriate allegations in the answer, sought and was permitted to prove by oral testimony, over proper objections, certain representations, statements, and
It is shown that the company wholly failed to perform such agreement. The plaintiff offered no evidence in rebuttal, but at the close of all the evidence moved for a directed verdict thereupon defendant also moved for a directed verdict. The court granted defendant’s motion, and thereafter made and filed findings of fact, to the effect that because the payee named An the note had failed to perform the conditions upon which the defendant’s subscription for a membership share of the stock was based, and of the loss of the benefits thereunder, the consideration of said note had wholly failed. Appellant, by its assignments of error, questions the competency of this oral evidence upon the sole ground
“Absence or failure of consideration is a matter of defense as - against any person not a holder in due course, and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise.”
That the plaintiff is “not a holder in due course” is clear. It follows that the sole and decisive question upon this appeal is the competency of the oral evidence offered and received at the trial.
This court in De Rue v. McIntosh, 26 S. D. 42, 127 N. W. 532, construing section 1239, Civil Code (section 860, R. C. 1919), which provides that:
“The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter, which preceded or accompanied the execution of the instrument.”
—says:
“One of the exceptions seems to be that agreements or representations made prior to the written contract under which the party was induced to sign the contract may be shown: In other word's, where the parol contemporaneous agreement * * * forms part of the consideration for a written contract, and where he executed the written contract upon the faith of the parol contract or representations, such evidence is admissible.”
In Corn v. Bergmann, 145 App. Div. 218, 129 N. Y. Supp. 1049, where defendant had “agreed in writing to execute a lease as soon as presented, it was held that he might show an oral agreement that if he were not notified of an acceptance of the offer by a certain time the contract for a lease should have no effect. See Nightengale v. Eagle, 141 App. Div. 386, 126 N. Y. Supp. 339; Trademan’s National Bank v. Curtis, 38 App. Div. 240, 57 N. Y. Supp. 121.
In Benton v. Martin, 52 N. Y. 570, it was held that instruments not under seal may. be delivered to the one to whom upon their face they are made payable, upon conditions the observance of which is essential to their validity.
We do not consider the decision in Bank v. Klaveness (C. C. A.) 264 Fed. 40, as applicable in this case.
We think, as was said by Justice Harlan in Burke v. Dulaney, 153 U. S. 228, 14 Sup. Ct. 816, 38 L. Ed. 698, that—
“The exclusion of parol evidence of such an agreement could be justified only upon the ground that the mere possession of a writen instrument, in form a promissory note, by the person named in it as payee, is conclusive of his right to hold it as the absolute obligation of the maker.”
In Leighton v. Bowen, 75 Me. 504, Judge Barrows states the rule as follows:
“Where the suit [on a promissory note] is between the original parties the inquiry is: Has the plaintiff established' the existence of a completed contract entered into upon a valid and still subsisting consideration? If so, the writing must speak for itself, and contemporaneous parol agreements, inconsistent with it, are inadmissible to affect the liability thereby assumed. But in determining whether the contract was complete, and founded upon such consideration, the transaction out of which it grew is open to investigation, and the testimony of competent witnesses bearing upon either of those points is relevant. This must include the acts and conversation of the parties at the time, so far only as they have a bearing upon the question of the completion of, and the consideration for, the alleged contract.”
The limitation upon this exception to the general rule appears to be that oral evidence is not admissible which will have the effect of invalidating the written contract itself as evidence of the transaction between the parties. But this limitation does not exclude evidence of failure of considerations, even though the consideration is recited in the writing, unless such oral evidence would Change the legal effect or character of the written contract. 22 C. J. 117C §§ 1558, 1569.
The order and judgment of the trial court are affirmed.