*1 HARVEY, a BANK OF The NATIONAL Association, Banking Plaintiff Appellee, PAULY, P. d.b.a. Don
Donald
Cheese, Inc., and Don
Inc., Corporation, a Wisconsin Defend Appellant.
ant
Civ. No. 9563. Dakota.
Supreme Court of North
9,May 1979. *2 Schaefer, Larson,
Lamb, McNair & Far- argued by go, plaintiff appellee; for Jr., Stenehjem, Fargo. Leland M. Schmitz, Bismarck, Schlosser & for de- appellant; argued by D. fendant and Orell Schmitz, Bismarck.
SAND, Justice. The issue involved in this case concerns admissibility vary evidence to the terms of a written notation contained appellant, on the face of a check. The check, argued drawer of the it was error on of the trial court to allow the admission of evidence to establish an agreement varying the terms of a nota- tion which stated the for which the check was issued. We affirm. Harvey, appellee, Bank complaint August filed a summons and on 3 seeking judgment against Donald P. Cheese, Pauly, individually, Pauly and Don Inc., corporation, payment a Wisconsin $30,000 promissory plus on a interest. answered, appellant The defendant assert- ing as an affirmative defense that the note been satisfied as evidenced a draft on the account dated of Don $30,000 pay- 26 July 1975 in the amount of Harvey. A able to the National Bank of April bench trial was held on 7 1978. Find- fact, law, ings of conclusions of and order Har- judgment shipment, filed account of were district shipped dismissing party vey court as a Donald P. Cheese for of cheese individually, ordering entry but otherwise to Don Cheese. Don judgment the National Bank in favor of after it received was to off the notes Judgment was entered and its customers. for the cheese from Pauly, individually, Donald P. and Don Pau- the new ar- The first note issued under *3 Cheese, Inc., ly timely a notice filed $25,000 rangement, amount of was appeal judgment. had a due date of dated 5 June 1975 and Pauly (Pauly), P. Donald a resident of a August paid 1975. This note was for with engaged operation Wisconsin in the of a the nota- July carrying check dated 23 manufacturing cheese and wholesale busi- tion, 1.” “REPAYMENT OF NOTE NO. ness, stockholder, principal became a $25,000 promissory Another note dated directors, member of the board of and the Sep- July having a due date of 1 1975 and president Harvey (a Inc. cheese paid by for check dated tember 1975 was manufacturing plant Harvey, located following no- September carrying Dakota) Pauly North in 1973. Don Cheese tation: subsequently principal purchas- became the products produced by er of the cheese Har- 25,000.00 “principal vey Cheese. int. 388.36” Pauly In June 1975 concluded the finan- $25,000 stamped notes were Both of Harvey cial future of did not war- Cheese Harvey by “PAID” the National Bank of operation rant its continued and that Pauly and returned to Don Cheese. plant conveyed should be closed. He case, dated 27 The note in issue in this plan Lewis, president to James of the. Na- the amount of June was in Harvey. requested, Lewis August 1975. The date of 1 due however, that he be opportunity, well as the two proceeds from this note as in the community, interests of the to at- deposited directly into notes were tempt reorganization with a continued checking account Harvey Cheese operation plant. Pauly agreed the direction of National Bank of at operation plant allow the continued Pauly. arrangement but indicated a financial was necessary point that problem to solve cash flow It should be noted at this by Harvey maintained experiencing. Cheese was account Bank of Cheese with the National In an effort to overcome the cash flow the two relationship between only was the problem, Pauly and Lewis at an arrived not indebt- Harvey Cheese was businesses. arrangement whereby Harvey Cheese officers, The shareholders ed to bank. would payment receive faster the cheese for in a not serve of the bank did and directors shipped to Don Cheese. Prior to at this Harvey Cheese capacity like agreement, general- Don Cheese Lewis, president, testified the bank time. ly payment purchased issued for cheese af- in the involvement the bank officers’ only from Cheese after it had re- only was Harvey Cheese fairs of ceived for the same cheese from than in community rather interest of result, its approximately customers. As a bank. any special interest of the days ten elapse would between the time drawn shipment 1975 a check was July was made from Cheese On 26 in Manito- on its account was received the same Don $30,000, Wisconsin, woc, company. arrangement in the amount Under the new Harvey as naming Bank of Harvey agreed to lend the National appears of which money exchange payee. copy This Don Cheese in for the Na- below, mailed to promissory subsequently notes. *4 in the conference participated who NFO call, during phone conver- testified that effect, stated, a check that sation way the National Bank was on its $30,000 note but from the check should that deposited in the Cheese instead be making pay- checking for use in account that he ment testified NFO. the check in deposit did not authorize but rather Cheese bank account effect, stated, was on its that a check note, payment of the way to the bank in loan could make its own and that if it so desired.1 Cheese following the day July On 30 call, of Har- the National Bank conference $30,000 deposit- check and vey received into the funds therefrom ed the account. The bank there- Cheese $30,000 payment on the requested after note, by Don request which was denied payment, that on basis $30,000 had been the form followed. made. The suit before us set forth the issues appeal: on
(1) varying the Was evidence contained terms of the written notation admitted; properly on the check (2) vary Are oral orders sufficient the tender of a check. addition, by Harvey Although quently
1. In
testified
received
he told the other
bearing
immediately
particular
to the
information has no
call that he would
shipment
opinion,
provide
send
the reader
out a
check
our
it is recited to
to cover a
by Harvey
complete
events sur-
cheese to be
information of the
delivered
Cheese on
with
July
rounding
question.
1975. This
the transaction in
latter check was subse-
notation on the
Pauly argued the
a contract in
Pauly contended a check is
writing by
unambigu
which the drawer contracts
completely
check was a contract
bank, upon which the
payee
terms,
therefore
to its
ous on its face as
drawn,
payee
is
will
or
check
by parol evidence.2
could not be altered
order,
designated upon presen-
the amount
9-06-07, NDCC, states:
Section
the notation on
tation. He asserted
writing,
“The execution of a contract
check constituted
requires it to be written
the law
whether
parties.
written contract between
not,
negotia-
supersedes
or
all the
support
argument, Pauly
of his
cited
matter
concerning its
stipulations
tions or
Texas
Plains Devel
decision
Coastal
the exe-
accompanied
preceded
which
opment Corporation
Corpora
v. Tech-Con
cution of
instrument.”
tion,
(Tex.App.1975)
which
S.W.2d 143
was made out
In this instance the check
stated:
time,
before,
in transit at the
and was
$6,300.00
“Tech-Con
may
telephone
place
discussion took
written;
the check and
endorsed
fully applicable.
proceeds. Having accepted
not make the above statute
retained the
contended,
payment,
But,
the benefits of such
may, Pauly
be that as it
any
deemed to have
conditions
prevents the
parol evidence rule
clearly
which are
shown
the draft
to show
admission of
evidence
have constituted
the check
parties intended
parties.
between the
was not
Tech-Con
expressly
purposes
other than
authorized,
ap
Plains’
without Coastal
face of the instrument.
designated by the
*5
proval,
any
to allocate such
Thus,
parties
evidence that
extrinsic
purpose
may
other than that which
applied for some
proceeds be
intended the
designated
been
on the face of
draft.
inadmissible, and
be
purpose
Stetson-Preston Co. v. H.
Dodson &
S.
admitted,
no basis
even
would constitute
if
Co.,
1907,
(Tex.Civ.App.,
103
685
no
S.W.
Routier v.
judgment.
for the trial court’s
writ).
If the written terms of the draft
(1925);
Williams,
793,
plied. v. Harold Hill’s 592; previous di- 30, of a N.D. Lard rection was violation 169 N.W. Stebbins 847; the ner, C.J.S. N.W. rection or even S.D. 643; money 88. so should be proceeds 21 R.C.L. The how the parties as to he, debtor, and there directions property applied. Failure follow fore, right it liability to determine how has could resulted in a applied. plain shall be of the bank. obligations possession tiff of two was in is af- of court judgment the district creditor, debtor, one it as held firmed. other as collector. The debtor had upon right and direct to determine ERICKSTAD, J., and C. and PAULSON payments applied. debt his should WALLE, JJ., concur. VANDE right apply pay The bank had no PEDERSON, Justice, concurring special- ments than as and cannot directed apply upon ly- held liable failure payments which the defendant’s most I results concur upon applied debtor directed his law, but not to be the I do what is stated plaintiff.” indebtedness to First Na Pauly’s face agree that the words on Larsson, Mandan necessarily ambiguous. It would check are (1937). N.D. N.W. outcome, my opinion, if the alter have, duty upon concluded, case was a there as I majority had when unambiguous. it ac words cepted retained check sent apply debtor to directed debtor, regardless whether or not directions. Un consented debtor’s
til was made and debtor,
money property was the
being subject property to his di- Proceeds from notes deposited directly, at the time of tional Bank $30,000 check July while the On it was day and one before was in transit Harvey, a Bank of received the National between two call was conducted conference bank, represent- two representatives of the Organiza- atives of the National Farmers call conference (NFO), Pauly. The tion their by the NFO to discuss was initiated Harvey Cheese. receivable with accounts money to need of urgent was in NFO to, but milk delivered producers by Harvey trial, representatives two At bank, representatives and one of