Bank of America Nat. Trust and Sav. Ass'n v. Lamb Finance Co.

Citation3 Cal.Rptr. 877,179 Cal.App.2d 498
CourtCalifornia Court of Appeals
Decision Date06 April 1960
PartiesBANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, Plaintiff and Respondent, v. LAMB FINANCE COMPANY, Inc., a corporation, and Leah Lamb Poyet, also known as L. L. Poyet, Leah D. Lamb and Leah Lamb, Defendants. Leah Lamb Poyet, Appellant. Civ. 23997.

S. L. Kurland, Henry F. Poyet, Los Angeles, Otto Jacobs, Santa Ana, for appellant. Earle K. Stanton, Los Angeles, of counsel.

Samuel B. Stewart, San Francisco, Hugo A. Steinmeyer, Robert H. Fabian, W. H. Taylor, Jr., Los Angeles, for respondent.

LILLIE, Justice.

Appellant, Leah Lamb Poyet, sole shareholder and, after May, 1953, president of defendant Lamb Finance Company, Inc., was sued, with the corporation, by the Bank of America for recovery of $48,210.56 plus interest on a promissory note dated October 19, 1953, executed by the corporation and guaranteed by her. The Bank, among other things, attached her residence. Both defendants cross-complained against the Bank seeking relief from liability on the note and damages for fraud. At the trial on the merits the lower court refused defendant Poyet a jury on certain issues and directed a verdict for the bank. She appealed from the judgment but pending the appeal the judgment was satisfied by payment of $50,484.33. Thereafter, this court held she was entitled to a jury trial on all issues (145 Cal.App.2d 702, 303 P.2d 86); and the matter was again heard in the lower court. At the outset of the second trial defendant corporation conceded liability and dismissed its cross-complaint, leaving the only contenders the Bank of America and defendant Poyet. It is from the judgment for the Bank entered on a jury verdict, she appeals. On this appeal she also seeks review of the order denying her motion for new trial.

Most of her testimony has been set forth in appellant's opening brief, but we deem it to be not material to the issues before us. Numerous witnesses testified in the case and various exhibits were received, creating a substantial factual conflict which the jury resolved in the Bank's favor, with which determination we are bound (Berniker v. Berniker, 30 Cal.2d 439, 182 P.2d 557; Gates v. McKinnon, 18 Cal.2d 179, 114 P.2d 576); for it is not our province to analyze or resolve conflicts in the evidence (Berger v. Steiner, 72 Cal.App.2d 208, 164 P.2d 559; In re Estate of Bristol, 23 Cal.2d 221, 143 P.2d 689).

The stricken portion of defendant Poyet's testimony, the subject of appellant's first claim of error, was given by her in support of her contention that she had been induced by fraud on the part of a representative of plaintiff Bank to sign the guarantee sued upon; and it constitutes part of lengthy testimony she gave relative to her dealings with the Bank, which version of the transaction the jury obviously refused to accept. Although sole shareholder, director and then vice president of Lamb Finance Company, Inc., she testified she had no business experience in financing and relied upon the corporation president, Mr. Angione, and Mr. Newton, manager of the Hollywood main office of plaintiff Bank with which she was a depositor. She further testified that on August 6, 1952, not knowing the condition of the Lamb Finance Company account, she signed a guarantee on the reverse side of a promissory note for $50,000 executed by the corporation; that thereafter the corporate note was renewed several times and each time she guaranteed payment thereon believing the corporation to be in good financial condition; and that on October 19, 1952, on the occasion of the fourth renewal of the note, she signed the same guaranteeing its payment in the sum of $48,210.56, the subject of this suit.

Appellant's first contention is that the trial court erred in striking certain of her testimony. After relating a conversation with Mr. Newton wherein he asked her to sign the guarantee on the reverse side of the note of August 6, 1952, executed by the Lamb Finance Company, she testified: 'I said, 'Mr. Newton, if I am guaranteeing with any of my personal property, I sign nothing.' He said 'Mrs. Poyet, you are not.' * * * He told me I was not liable, it was only a corporate note.' This testimony was objected to as violating the parol evidence rule, and the same was stricken on motion of plaintiff Bank.

The written guarantee on the reverse side of the note executed by the corporation, and signed by defendant Poyet (Exhibit 1) states in part: '* * * the undersigned endorse, guarantee, and promise to pay the note on the reverse hereof * * * and agree that the holder may proceed against the undersigned directly and independently of the maker, and that the secessation of the liability of the maker for any reason * * * shall not in any wise affect the liability of the undersigned hereunder.'

It is obvious from the face of the record that the stricken portion of defendant Poyet's testimony directly contradicts the written guarantee signed by her; and that such testimony, falling squarely within the parol evidence rule, is clearly inadmissible to vary the terms of the instrument sued upon.

The parol evidence rule providing, subject to several exceptions, that when the terms of an agreement have been reduced to writing it is to be considered as containing all of them and there can be no evidence thereof other than the contents of the writing (Section 1856, Code of Civil Procedure), as applied to contracts is a rule of substantive law based on the principle that 'a certain act, the act of embodying the complete terms of an agreement in a writing (the 'integration'), becomes the contract of the parties' (In re Estate of Gaines, 15 Cal.2d 255, 265, 100 P.2d 1055, 1060), and no extrinsic evidence, oral or written, is competent to vary its terms or provisions (Guerin v. Kirst, 33 Cal.2d 402, 202 P.2d 10, 7 A.L.R.2d 922).

However, several exceptions to the rule are stated in Section 1856, Code of Civil Procedure, and relied upon by appellant is that permitting the introduction of evidence 'to establish illegality or fraud.' She argues that the stricken testimony comes within the so-called 'fraud' exception, citing various authorities which, although pointing up well-defined rules relating to the admission of extrinsic evidence in fraud cases, are not here in point. A distinction has been made by our courts in cases in which the fraud sought to be proved consists of a false promise. They have held that if, to induce one to enter into an agreement, a party makes an independent promise without intention of performing it, this separate false promise constitutes fraud which may be proven to nullify the main agreement; but if the false promise relates to the matter covered by the main agreement and contradicts or varies the terms thereof, any evidence of the false promise directly violates the parol evidence rule and is inadmissible. The court in Newmark v. H & H Products Mfg. Co., 128 Cal.App.2d 35, at page 37, 274 P.2d 702, at page 703, discussed this distinction: 'Parol evidence of fraud to establish the invalidity of a written instrument induced by a promise made without any intention of performing it is only permissible in the case of a promise to do some additional act which was not covered by the terms of the contract and such evidence is not admissible in the case of a promise directly at variance with the terms of the written instrument (Citations).' Abbot v. Stevens, 133 Cal.App.2d 242, 284 P.2d 159; W. Ross Campbell Co. v. Sears, Roebuck & Co., 136 Cal.App. 765, 29 P.2d 910; Shaw v. McCaslin, 50 Cal.App.2d 467, 123 P.2d 102.

The false promise or representation in the instant case is clearly one relating to the identical matter covered by the main agreement and which contradicts its very terms. The main agreement is the written guarantee signed by defendant Poyet on the reverse side of the promissory note; and the oral false promise that no personal liability would attach to her as a result of the transaction, far from constituting some additional act not covered by the terms of the guarantee, covers the very matter of the main agreement; thus her testimony relating to the alleged false promise which contradicted the plain language of the guarantee, was properly stricken as incompetent under the parol evidence rule. The application of the rule is clear, particularly in promissory note cases, and controlling here is Shyvers v. Mitchell, 133 Cal.App.2d 569, 284 P.2d 826, in which a like contention was made that a guarantee on a note was void because its execution was induced by the fraudulent representation of one Partridge of the Bank that the signer would never be liable thereunder. Holding that evidence of this representation violated the parol evidence rule, the court stated, 133 Cal.App.2d at page 573, 284 P.2d at page 830: 'While it may be true that 'where the execution of a contract has been induced by a promise made without any intention of performing it, this constitutes such fraud in obtaining the contract that it may be declared null and void', Cobbs v. Cobbs, 53 Cal.App.2d 780, 783, 128 P.2d 373, 374, yet when that promise which, because it is squarely against the terms of the writing, does by its very nature, if counted on, supersede that writing, then, even though it be made with intent on the part of the promisor that the promise will not be kept, evidence of it can neither be received nor counted upon to support a finding of fraud, Simmons v. California Instit. of Technology, 34 Cal.2d 264, 274, 209 P.2d 581.' The court therein placed reliance on Bank of America National Trust & Savings Ass'n v. Pendergrass, 4 Cal.2d 258, 48 P.2d 659, holding that, in a suit on a note containing an unconditional promise to pay on demand, the defense of fraud arising out of a promise that no payment would be exacted during a particular year, was not available. Holding...

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