The First National Bank of Grundy Center v. Snyder Bros.

79 Iowa 191 | Iowa | 1890

Given, J. — I.

Appellants’ contention is that said several instruments were executed as parts of one transaction, and must therefore be construed together; that thus construed they show that the consideration for the deeds and bonds was the extension of time on the twenty-seven hundred dollars indebtedness, and as security therefor, thus constituting an equitable mortgage; and that the consideration for the lease was the extension of time for the balance of the indebtedness due to plaintiff, and as security therefor. Appellants also contend that, as a part of the same transaction, it was orally agreed between the parties that such were the considerations and purposes of said instruments. Appellee contends that the agreement was that payments on the lease would be applied in discharge of the two-thousand-dollar note, and not upon any other of the indebtedness. On the hearing appellee was permitted, over appellants’ objections, to introduce evidence tending to show an oral agreement, as claimed by appellee, and appellants introduced evidence tending to show that the oral agreement was as claimed by them.

II. It is a familiar rule that written contracts shall not be changed, varied or contradicted by contemporary or prior oral agreements. Lormer v. Allyn, 64 Iowa, 727; McClelland v. James, 33 Iowa, 578; De Long v. Lee, 73 Iowa; 54. In Day v. Lown, 51 Iowa, 366, it was held “that parol evidence is admissible to prove that the consideration is other and different from that stated in the deed.” College v. Bryan, 50 Iowa, 294, was an action upon a promissory note to the college for five hundred dollars, “for value received, with eight per cent, interest, payable at the office of the treasurer of said college on the first day of January and July of each year.” One of the defenses pleaded was that- the amount promised was a gift to the endowment fund, and promised in consideration of an agreement that all the funds donated for the endowment should be used exclusively for that purpose, and that the fund contributed had been diverted from that purpose. This court, after quoting from Atherton v. Dearmond, 33 Iowa, 353, say : “In the case before us the contemporaneous contract — namely, the agreement for the preservation and proper use of the endowment fund, pertains to the consideration of the note in suit, and reaches no further.” In De Long v. Lee, 73 Iowa, 54, it is said that the parol agreement pleaded as a defense, and supported by proof, did not pertain to the consideration of the note; thus implying that a different rule applies when the defense is as to the consideration. Courtwright v. Strickler, 37 Iowa, 382, was a promise to pay “two hundred dollars ten days after the complete construction of its railway, and the running of the cars over the same, to a point within three-quarters of a mile of the corporate limits of the town of Centerville.” The principal contention was whether the conditions on which payment was to be made had been complied with, — the defendant contending that it was on the completion of the road to its terminus, Kansas City; the plaintiff contending that it was to Centerville only. The defendant proposed to prove what the consideration was, but was not permitted to do so. This court says : “The considerations are expressed in the instruments in unmistakable language, and parol evidence is not necessary in order to understand it, and inadmissible to vary or differently apply it. The evidence was rightly rejected.”

III. Another familiar rule which it is proper to notice is that the circumstances under which a contract is made may be developed for the “purpose of arriving at the intention of the parties, when such intention does not clearly appear on the face of the instrument. But the intention of the parties cannot be enforced unless consistent with the language used, and the intention cannot be ascertained, except in case of latent ambiguity, by bringing forward proof of declarations or conversations which took place at the time the instrument was made, or before or after.” McClelland v. James, supra. Several cases are cited holding that it is competent to show by parol that there was in fact no consideration, but, as no such claim is made in this case, we need not notice these authorities. Our conclusion is that parol evidence is never admissible to alter, vary or contradict the written contract; yet that it is admissible to show what the consideration was, unless the consideration is expressed in the instrument in such unmistakable language that parol evidence is not necessary to understand it. Taken separately, the several instruments under notice express unmistakably the consideration upon and the purpose for which they were executed; but taken together, as parts of the same transaction, not so. Taken together, without explanation, and we have Mr. Snyder conveying his real estate by absolute deeds, and taking back title-bonds, and joining in a lease to himself and brother of the same property. Such transactions never occur without some peculiar circumstances to call them forth. Looking, as we may, to the circumstances under which the parties acted, and learning, as we have, of the indebtedness to plaintiff,, and plaintiff’s desire to secure the same, we begin to understand why this combination of instruments; but even yet it is not clear what the considerations were for the different instruments. Taking the instruments separately, and as independent of each other, the considerations are expressed in each in unmistakable language; but taken together, as parts of one transaction, it is otherwise. Taken as one transaction, it is clear that the plaintiff did not pay the considerations named in the deeds that it might simply resell the property to the Snyders on the terms named in the bonds, while the making of the lease is wholly unaccounted for, as, by the bonds, Snyders became the conditional owners, and entitled to the possession of the property. Taken together, as they must be, it is evident that the considerations named in them are not the true considerations, and therefore the case comes within the rule that permits parol proofs as to the true consideration.

Each party alleged and introduced testimony tending to show parol agreements made at the time of the execution of the instruments, to the effect claimed by them. It will be a sufficient answer to appellants’ objection to the testimony introduced by appellee, that they joined issue and introduced evidence with respect to parol agreements.

IV. As to the consideration upon which the lease was executed, there is a direct conflict of testimony. Mr. Schuler, cashier, and Mr. Wolf, vice-president of the plaintiff bank, who alone negotiated for the bank, testified directly to an agreement that the payments on the lease were to be applied to the indebtedness, other than the twenty-seven hundred dollars evidenced by the two notes then executed. Mr. J. M. Snyder, who alone conducted the negotiations on behalf of Snyder Bros, and himself, testifies as positively that the payments on the lease were to go in satisfaction of the two-thousand-dollar notes executed at that time. The negotiations were not witnessed by any other person. Schuler and Wolf are corroborated by the fact that a much .larger indebtedness than twenty-seven hundred dollars was due, or about to become due, to the bank, and by their desire and J. M. Snyder’s willingness to secure the indebtedness. The value of the real estate was not more than sufficient security for the twenty-seven hundred dollars and five years’ interest. Snyder’s refusal to give a chattel mortgage is another corroboration of their testimony. Mr. Snyder is corroborated by the fact that in plaintiff’s original petition and answer to defendant’s cross-bill, and in the claim filed with the assignee, all verified by Schuler, the ■ lease was treated as such, and no recovery asked for rent; and by the further fact that the Snyders were charged with rent upon the books of the bank. These circumstances, however, are explained by the nature of the instrument upon which the original petition, answer and claim were predicated.

The decided weight of the testimony is in favor of the conclusion that the consideration for the deeds and title-bonds was the extension of time to the Snyders on twenty-seven hundred dollars of the indebtedness, for the purpose of securing the same, and that the consideration for the instrument called a “lease,” and the giving thereby of a lien upon the personal property, was the extension of time on the remaining indebtedness, and the promise to make further advances of money, and as a security therefor; but that the security was put in this form because of Snyder’s refusal to give a chattel mortgage on account of the fact that it would have destroyed their credit. The deeds and title-bonds had the effect of a chattel mortgage, and left the Snyders entitled, to the possession of the property; hence that could not have been an inducement to the execution of the lease. It is a notorious fact that the giving of a mortgage by a merchant on his stock of goods is the end to credit, and generally to business. The lease, creating a lien, as it did, had the same effect upon the property that a mortgage would have had; yet it would not be so likely to disturb the credit of Snyders as the giving of a mortgage.

Among the several complaints urged by the appellants against the decree is the one that it exacts full payment without securing to the assignee of Snyder Bros, the unexpired term of the lease. There is nothing in the decree to deprive them of the full term, if payments are made according to the agreement. We have examined the decree as to all the objections urged thereto, and are of the opinion that it should be affirmed in all respects. Affirmed.