White v. Smith

98 P. 766 | Kan. | 1908

The opinion of the court was delivered by

Smith, J.:

This case has been in this court before, and upon the same pleadings' {Smith v. White, 73 Kan. 607, 85 Pac. 588). On the first trial, which was without a jury, the cause was submitted to the court, upon, the plaintiff’s petition and his oral opening statement. It was stated in the opinion in that case:

“All facts pleaded as defenses were denied, and there was no evidence offered to sustain any of them. The only fact admitted by the plaintiff was that he had entered into the written agreement to release Wicks, and it must have been concluded by the court that the voluntary release of one maker of a promissory note by the payee will, in law, operate as a release of all makers.” (Page 608.)

The court below having rendered judgment for the. defendants upon'this misapprehension of the law, the judgment was in this court reversed, and on that ground alone.

The answer alleged that the contract between Wicks and the plaintiif was made at the time Wicks signed the note, although the copy of the contract attached to the answer is dated two days after the date of the note. It will be observed that on the first trial the plaintiff’s attorney did not admit this allegation of the answer, and in the absence of any proof this court of course assumed that,the contract of release was in fact made at the time it was dated, subsequent to the execution of the note, and was in fact, as it purported to be, the release of one of the joint-and-several obligors, and that such release did not operate to release all of the obligors except as to their proper proportion of the debt, as provided in section 1194 of the General Statutes of 1901.

On the second trial a jury was impaneled, and the defendants’' attorney in his statement to the jury said that he expected to prove that the contract of release between Wicks and Smith was made at the very time Wicks signed the note, so that Wicks in fact never became a maker or joint obligor on the note. Objection was made to this statement, and the court in ruling thereon said:

“Well, in the judgment of the court the answer shows the release of Wicks to have been a matter occurring subsequent to the execution of the note, if that would be a defense at all, and the answer is not sufficient to entitle the defendants to make such proof, and the statement is not to be admitted.”

In this we think the court erred to the prejudice of the defendants. ■ The defendants in setting forth the contract were not bound by the respective dates of the note and contract, and they expressly pleaded that the note dated two* days previously was signed by Wicks on the day that the contract was made and dated.

This error was repeated in the introduction of evidence. The plaintiff, having introduced in evidence the note, and also the paper called a contract, marked “Exhibit B” and attached to the petition, .the purport of which is set forth in the statement of the case, rested his case. Thereupon the defendants, among others, introduced Wicks as a witness and asked him whether or not he had an understanding with J. D. Smith’s agent concerning his liability in case he should take a share in the horse. An objection by the plaintiff was sustained by the court. The defendants then offered to prove by Wicks that the agent, at the time he asked Wicks to take a share in the horse, stated that if Wicks would sign his name to the note he (the agent) would give Wicks a private and written contract, by which he was to be held harmless and not to be liable for any money whatever, provided he would give notice that he did not want to be held within eleven months; also, that Wicks and Skinner did thereupon enter into the written contract, and at the same time, and before signing the note, Wicks wrote in the note the words “this note is subject to a contract,” and that these words referred to the last-named contract, and not to “Exhibit B,” attached to the petition. All this offered proof was objected to by the plaintiff and the objection sustained by the court. The defendants also offered to prove by Wicks that he never made mention to the other defendants of the fact that he held the secret contract until after this case was called in court, which offer of proof was also refused on the objection of the plaintiff. The defendants also offered to prove by a witness, Ready, that he heard a conversation between the agent and defendant Dodson at the time Dodson was solicited to take an interest in the horse and sign the note, and that Dodson said to the agent, Skinner, that he would not take any interest in the horse until Mr. Wicks did, and that Skinner then said that he was going out to Wicks’s and would have him sign the note and contract, and if Wicks did not sign the note it would be returned to Dodson and not be delivered.This evidence was also excluded on the objection of the plaintiff. This, also, we think was prejudicial error.

The- name of Wallace W. Wicks appears next to the last signature on the note pleaded, and we are not to be understood as saying that it would be competent to prove that the words “this note is subject to a contract” were written therein by Wicks after all but one of the defendants had signed the note for the purpose of proving that the note had been changed after it had been signed. The defendants expressly admit in their answer the execution of the note—that is, the execution of the note as pleaded; and they can not be heard to say that these words were not in the note at the time of its execution. In Kurth v. Bank, 77 Kan. 475, 94 Pac. 798, 15 L. R. A., n. s., 612, it was said:

“A verified denial of the execution of a promissory note is sufficient to put in issue the execution as well as alterations of indorsements Of credits written on the back of the note contemporaneously with its execution and before its delivery.” (Syllabus.)

Conversely, it must be said that the admission in an answer of the execution of a promissory note, declared upon and copied in a petition, admits that it was executed as set forth.

Any material alteration in a promissory note, made after its execution and without the consent of the maker, changes the contract, and the maker may well say he never executed it as changed; and this even if the change seems to be for the maker’s benefit, as, for instance, changing the interest from-a higher to a lower rate.

The evidence offered and excluded tends to prove fraud on the part of the plaintiff in procuring the note, and fraud vitiates all contracts. The proffered evidence tends to prove that defendant Dodson, at least, delivered the note, after signing it, to the agent, Skinner, only on the condition that Wicks should purchase an interest in the horse and sign the note and become a joint-and-several obligor thereon; also that Wicks affixed his signature to the note under a secret contract, which, while apparently complying with, was an evasion of, the condition. Dodson had the right to impose any condition he pleased to the delivery, and any subterfuge evading such condition was fraudulent.

The same, in substance, may be said with reference to the representations tendered in evidence by which other defendants were induced to sign the note. And it is no answer thereto to say that the defendants were not injured by the alleged subterfuge for the reason that if Wicks had become a party to the transaction, and- had become fully obligated on the note, as contemplated, the plaintiff could thereafter have released him from all obligations thereon. Parties are held by the courts to the full performance of their contracts freely and fairly made. On the other hand, a party is not allowed to reap the benefits of a contract procured from another through deception and fraud. This rule applies to non-negotiable promissory notes and to negotiable notes acquired by the indorsee with knowledge of the fraud, as well as to other contracts. (1 Dan. Neg. Inst., 4th ed., § 177, and cases there cited; 8 Cyc. 38; 4 Wig. Ev. § 2410, and cases there cited.)

The judgment is-reversed, and the case remanded for a new trial.