Apple v. McCullough

• Decision Date: 01 May 1931
• Citation: 239 Ky. 74
• Parties: Apple et ux. v. McCullough et ux.
• Court: United States State Supreme Court — District of Kentucky

239 Ky. 74

Apple et ux. v. McCullough et ux.

Court of Appeals of Kentucky.

Decided May 1, 1931.

1. Evidence. — Generally, written contracts may not be varied by contemporaneous parol testimony.

2. Evidence. — Consideration recited in written contract may be contradicted by parol (Ky. Stats., sec. 472).

3. Contracts. — In broad sense, everything each party to contract agrees to part with is a "consideration" for contract.

4. Evidence. — Time for performance of written contract may be varied by contemporaneous parol testimony.

5. Evidence. — "Subject-matter," as distinguished from "consideration," of written contract may not be varied by parol (Ky. Stats., sec. 472).

6. Evidence. — Patent ambiguity in description of subject-matter in written contract may be explained by parol, but parol proof to show different subject-matter from that plainly expressed in contract is inadmissible (Ky. Stats., sec. 472).

7. Evidence. — Promise to pay $500, in addition to expressed consideration of release from outstanding indebtedness, was "consideration" for sale of interest in business within rule permitting parol proof of consideration varying written contract (Ky. Stats., sec. 472).

Appeal from Boyd Circuit Court.

DYSARD & TINSLEY and VINSON & MILLER for appellants.

W.D. O'NEAL for appellees.

OPINION OF THE COURT BY CHIEF JUSTICE THOMAS.

Affirming.

The legal question involved in this case is the proper construction and application of section 472 of our present Kentucky Statutes, saying: "The consideration of any writing, with or without seal, may be impeached or denied by pleading verified by oath." It is in a measure at least, but declaratory of the common-law rule, as is illustrated by the text in 22 C.J. 1157, sec. 1555, saying: "As a general rule, the recitals of a written instrument as to the consideration are not conclusive, and it is always competent to inquire into the consideration and show by parol or other extrinsic evidence what the real consideration was. Thus it may be shown that the real consideration was in fact greater than that which is expressed in the instrument, or that there was some other consideration in addition to that set forth, especially where the consideration set forth is only nominal, even though the additional consideration rested upon the happening of a contingency." To the same effect is the text in 10 R.C.L. 1042, sec. 236, and which common-law rule is in accord with all text-writers and adjudications dealing with the subject of varying written contracts by contemporaneous parol testimony. The general rule is that it is not competent to do so; but an exception exists with reference to the consideration, and which exception is embodied in the section of our statutes supra. Having stated the involved legal principle, we will now state the facts as disclosed by the record, and then determine the propriety of the judgment appealed from.

In the spring of 1926, appellants and defendants below, W.L. Apple and wife, and appellees and plaintiffs below, George McCullough and wife, formed a partnership and embarked in business at Ashland, Ky., which they conducted in the firm name of "Suzanne Soda Shoppe," and which consisted in serving light lunches, cold soft drinks, ice cream, etc. They had no money to begin with, but they jointly executed a note to a bank for $800 and purchased a soda fountain, and other necessary equipment for conducting the business, on the installment plan, and opened the establishment in the firm name. The two husbands were engaged in other business, but evenings and other times when they were away from their work they usually spent in assisting in conducting their partnership business, and Mrs. McCullough was a valiant soldier throughout business hours in looking after and assisting in carrying forward the partnership affairs. Mrs. Apple contributed her services to the extent of her physical ability, though at times she was ill and unable to do so. The best of feeling and close co-operation prevailed, and, while the patronage of the partnership was considerably in excess of original calculations for prophesied success, the overhead expense and accumulating interest on the investment was likewise greater than had been anticipated, and no surplus profit was realized, but the two couples forming the partnership largely lived from supplies obtained from the stock.

Some time prior to August 6 of the same year Mr. Apple suggested to his other associates the fact that they were realizing no profit and that he thought one couple ought to buy out the other and for one family to own and operate the concern. Discussions of that proposition finally resulted in defendants agreeing to buy out the interest of plaintiffs in consideration of defendants assuming all outstanding indebtedness of the partnership and releasing plaintiffs therefrom, and paying to the latter, twelve months thereafter, the sum of $500. Mr. Apple procured an attorney to prepare a written contract to that effect and which in its entirety says:

"This agreement, made this 6th day of August, 1926, by and between George McCullough and Mary E. McCullough, parties of the first part, and W.L. Apple and Susie A. Apple, parties of the second part, Witnesseth, That the parties of the first part have this day sold to the parties of the second part, all their interest, of every kind and character, in the business conducted under the name Suzanne Soda Shoppe, at No. 2121 Winchester Avenue, Ashland, Boyd County, Kentucky; the parties of the second part to have all the assets of the concern, collect all debts due the concern; and from and after this date, to conduct the business; the parties of the first part to have no interest in any sums due the concern and no obligations as to any debts now owed by the firm, from and after this date. For their interest therein, the parties of the second part agree to pay them the sum of Five Hundred Dollars, on August 6, 1927. In testimony of all which the parties hereto have hereunto set their hands, this 6th day of August, 1926."

That contract was not subscribed by either of the parties to it at that time, but defendants immediately took charge of the business and plaintiffs ceased to participate in its operation, except on one or perhaps two occasions when Mrs. McCullough, upon being requested, gave her assistance for a short while when neither Mr. Apple nor his wife were able to do so. There is some little conflict as to why the contract was not signed at that time, but it is really immaterial. Plaintiffs testified that the reason was that they demanded a release from the partnership debts by the defendants before signing the contract, which they say the latter agreed to; that some time in February, 1927, it was manifested to them that such releases had been obtained and a meeting was had to complete the contract by all parties subscribing it; that Mr. Apple then stated that he had found the indebtedness of the firm larger than he had thought (although he was the bookkeeper from the beginning), and that he did not believe he would be able to pay the $500 at the time stipulated when the transfer was made (and as embodied in the prepared writing), and he asked that the time for the payment of that sum be extended so as to permit him to make payment after he had discharged the indebtedness, or when he sold the business, if he did do so, and which he was then endeavoring to do; that this request was then agreed to, and by mutual consent an ink line was drawn through this clause of the originally prepared contract, "For their interest therein, the parties of the second part agree to pay them the sum of Five Hundred Dollars on August 6, 1927," but the date of the contract was left as of the time it was drawn, i.e., August 6, 1926, and as thus altered it was then executed. That version, we think, is clearly established by the testimony in the case.

Matters ran along with defendants as sole proprietors and...