Albert Steinfeld & Co. v. Tew

• Decision Date: 04 March 1929
• Docket Number: Civil 2788
• Citation: 274 P. 1047,35 Ariz. 147
• Parties: ALBERT STEINFELD & CO., a Corporation, Appellant, v. MARTIN E. TEW, Appellee
• Court: Arizona Supreme Court

274 P. 1047

35 Ariz. 147

ALBERT STEINFELD & CO., a Corporation, Appellant, v. MARTIN E. TEW, Appellee

Civil No. 2788

Supreme Court of Arizona

March 4, 1929

APPEAL from a judgment of the Superior Court of the County of Pima. Dave W. Ling, Judge. Reversed and remanded, with directions.

Mr Charles Blenman, for Appellant.

Mr John B. Wright, for Appellee.

OPINION

ROSS, J.

In 1916, the exact date not shown, the defendant executed and delivered to the plaintiff his certain promissory note or notes, and thereafter, on, to wit, March 17, 1920, such notes were renewed by the four promissory notes in this suit. The renewal notes were in form negotiable, and were for the sums of $1,079, $1,000, $1,000, and $211, each bearing interest at eight per cent per annum and payable twelve months after date. They were not paid when due, or at all, and on December 9, 1927, plaintiff brought this action upon a complaint in the usual form.

Defendant demurred to the complaint on the ground that it appeared upon the face thereof that the notes were barred by the six-year statute of limitations; answered that the original notes were given by defendant to take up and pay a debt owed plaintiff by three of defendant's sick, aged and insolvent friends with the agreement of plaintiff that he would not be required to pay notes unless defendant realized the money out of some mining claims, a sale of which was then pending; that such sale was not made; that the renewal notes were given by defendant and accepted by plaintiff with the understanding and agreement that defendant's obligation to pay renewal notes was contingent upon his realizing out of another pending sale of said mining claims; that, if such was not consummated, the notes would not be sued upon or considered of any value; that said sale was not effected, and by reason thereof the notes were void and of no force and effect, and totally without any consideration whatever. The demurrer was overruled.

At the trial, plaintiff introduced in evidence the notes and rested. The defendant was then permitted to testify in detail to the facts contained in his answer, over objection of plaintiff that such evidence was incompetent, as it tended to vary and contradict the terms of the written notes. The plaintiff's motion for a directed verdict was overruled, and the issue made by the answer was submitted to the jury under instructions that, if defendant sustained the allegations of his answer by a preponderance of the evidence, the verdict should be for him. The jury's verdict was in favor of defendant, whereupon judgment was entered.

The assignments are based upon the admission of defendant's testimony in support of his answer and in the refusal to direct a verdict in plaintiff's favor. We are satisfied both these assignments are good. The notes are unconditional promises by the maker (defendant) to pay to the payee (plaintiff), at a time certain, a definite sum of money, and upon their face import a consideration. Par. 4169, Civ. Code 1913 (Negotiable Instruments Law). They are none the less binding upon the maker because he gave them to the plaintiff to accommodate the original debtors, and that they were for an antecedent or pre-existing debt does not change the situation. Par. 4170, Id. The accommodation maker of a negotiable instrument is liable to the holder for value, notwithstanding such holder, at the time of taking the instrument, knew him to be only an accommodation party. It is not necessary that such a party receive anything of value for his signature. Par. 4171, Id. Since an accommodation maker need not receive anything of value for his signature, the defense of want of consideration is not available to him. Central Bank v. Perkins, 43 Idaho 310, 251 P. 627; Neal v. Scherber, 207 Mass. 323, 93 N.E. 628; Lowell v. Bickford, 201 Mass. 543, 88 N.E. 1; Metzger v. Sigall, 83 Wash. 80, 145 P. 72; 8 C.J. 260, §§ 410, 411 and 412.

The agreement pleaded in the answer, to the effect that notes were to be paid out of moneys realized by defendant from the sale of mines, and, if no sale was consummated, the notes should not be sued upon or considered of any value, appears to have been entered into at the time of making note or before.

"The general rule, that evidence of what was said between the parties to a valid instrument in writing, either prior to or at the time of its execution, cannot be received to contradict or vary its terms, applies to promissory notes and bills of exchange." Jamestown, etc., v. Allen, 172 N.Y. 291, 92 Am. St. Rep. 740, 64 N.E. 952. See, also, Pleasant v. Arizona Storage etc. Co., 34 Ariz. 68, 267 P. 794.

There are exceptions to this rule, and one is where the instrument has been conditionally delivered and the conditions have not occurred. It is this character of cases upon which defendant relies. Two such cases are Burke v. Dulaney, 153 U.S. 228, 38 L.Ed. 698, 14 S.Ct. 816, and Fidelity Title Guaranty Co. v. Ruby, 16 Ariz. 75, 141 P. 117. on was given in payment of some interest in mines belonging to the payee, but conditioned upon the maker's being satisfied with the property after an investigation and examination thereof. It was held the maker should have been permitted to show this agreement, and that he elected, after investigating and examining property, not to take it. The learned court said of the evidence that it "tended to show that the written instrument was never, in fact, delivered as a present contract, unconditionally binding upon the obligor according to its terms from the time of such delivery, but was left in the hands of Dulaney, to become an absolute obligation of the maker in the event of his electing, upon examination or investigation, to take the stipulated interest in the property in question. In other words, according to the evidence offered and excluded, the written instrument, upon which this suit is based, was not -- except in a named contingency -- to become a contract, or a promissory note which the payee could at any time rightfully transfer. Evidence of such an oral agreement would show that the contingency never happened, and would not be in contradiction of the writing. It would prove that there never was any concluded, binding contract entitling the party who claimed the benefit of it to enforce its stipulations."

The facts in the other case were that the maker and the payee of the note and another person were partners. On the dissolution of the partnership the maker of the note was constituted the agent of the other partners to wind up the partnership business. He sold the assets and took the purchaser's note in payment thereof. He then gave his personal note (the one sued on) to the payee to the amount of the latter's interest, as represented in the note taken for the assets, with the agreement that it "should be merely a memorandum of the debt due from the maker" upon the collection of the firm note. We held the facts brought it within the rule announced in the Burke-Dulaney case. In the same class is Sayre Leonard, 57 Colo. 116, 140 P. 196, cited by defendant.

We do not think the rule of these cases is the one that should apply to the facts of this case. In Washington Savings Bank v. Ferguson, 43 A.D. 74, 59 N.Y.S. 295, the defense on the note was that it was signed by defendant to accommodate the maker and at the request of the plaintiff, who agreed that, if the maker defaulted in payment, it would first look to certain collateral and then to...