Brokaw v. McElroy

Decision Date22 November 1913
Citation143 N.W. 1087,162 Iowa 288
PartiesBROKAW v. MCELROY.
CourtIowa Supreme Court

OPINION TEXT STARTS HERE

Appeal from District Court, Jasper County; K. E. Wilcockson, Judge.

This is an action on four promissory notes. It is brought on behalf of the Kansas City University against the administrator of John W. Murphy, deceased, the maker of the notes. The administrator answered with a general denial and set up also three affirmative defenses. One of the affirmative defenses was that the notes were without consideration. To the affirmative defenses a reply was pleaded by the plaintiff. At the close of the plaintiff's evidence, the trial court directed a verdict for the defendant, on the ground that there was no consideration for any of the notes. Judgment was entered against plaintiff for costs, and he appeals. Reversed.Seerley & Clark, of Burlington, and O. P. Myers, of Newton, for appellant.

McElroy & Cross, of Newton, and Parker, Parrish & Miller, of Des Moines, for appellee.

EVANS, J.

Four notes are involved. The first note was for $2,000, dated September 24, 1904. The second was for $4,000, dated July 24, 1908. The third was for $4,000, dated October 22, 1908. The fourth was for $10,000, dated June 18, 1909. The following is a copy of the first note: “For value received by me, and for the purpose of securing a fund for the endowment of the Kansas City University, of Kansas City, Kansas, I hereby bind myself, and my heirs, executors, and administrators, to pay to the order of the treasurer of said Kansas City University, of Kansas City, Kansas, the sum of two thousand dollars, with interest thereon at the rate of 1/10 of 1 per cent. per annum from the date hereof. The principal sum hereby secured shall be due and payable on or before the expiration of one year after my decease. Date: September 24, 1904. Post office: Murphy, Jasper County, Iowa. [Signed] John W. Murphy.” The others were all drawn in like form. These notes were each delivered at or about the date thereof and were accepted by the payee. The purpose of the maker was to contribute the amounts named to the payee to carry out the purpose of its organization as a university. The special purpose for which such funds were to be used was indicated upon the face of the notes, and to some extent by letters. This was that the proceeds of the first three notes should be used for the purpose of securing an endowment fund. The proceeds of the fourth note were to be used for “erecting a building on the campus.” Other subscriptions were subsequently solicited by the university and received from other contributors. Previous gifts, including those of Murphy, were made public as an inducement to subsequent contributions. This was done, to some extent, at least, with the express consent of Murphy.

[1] In view of the directed verdict below, we are only concerned now with the question whether the evidence in the record affirmatively discloses want of consideration so as to justify the trial court in taking the case from the jury. We reach a conclusion contrary to such ruling of the trial court. The notes themselves, being promises in writing, imported a consideration. Furthermore, a recital of consideration received appeared in express terms upon their face. The burden was on the defendant to show a want of consideration. The plaintiff, however, chose to introduce in his main case considerable testimony in anticipation of the defense. The defendant was, of course, entitled to avail himself of such testimony. Such testimony, however, did not warrant a directed verdict for the defendant. Much of it tended to show a sufficient consideration. Inasmuch as the case must be remanded for a new trial, we deem it appropriate to avoid a discussion of the evidence. The defendant has had no opportunity to introduce his testimony. Much of his argument here in support of the judgment below is predicated upon plaintiff's alleged failure to prove consideration; but the burden is upon him to show the want of consideration in support of his affirmative plea to that effect. This feature of his argument therefore, is not available to him.

[2] A sufficient consideration in such a case as this may assume various forms. It is not necessary that the benefit accrue to the promisor. It is frequently, if not usually, true that written promises of this kind are made for the purpose of assisting in the maintenance of the beneficiary institution within the scope of the purpose for which it was organized. Other assistance from other sources is expected. A contribution by one naturally operates as an inducement to contributions by others. It is not unusual that publicity is given to contributions already made as an inducement to others. If it is within the contemplation of a contributor that the fact of his contribution may be announced to others as an inducement to contributions by them, and if additional contributions be made by reason of such inducement even in part, it operates as a sufficient consideration for the promise of the first contributor. It is not essential, in such a case, that the additional contributions thus induced should be devoted to the same fund or to the erection of the same building. If the original promise, when made, was intended to induce activities and expenditures by the beneficiary in pursuance of the purpose of its organization, and if such activities and such expenditures were induced thereby even in part, it is a sufficient consideration. In either case, it is not necessary that such promise be the sole inducement either to additional contributions by other contributors or to burdensome activities and substantial expenditures by the beneficiary and its appropriate officers. It is not indispensable that direct evidence be had that such activities and expenditures or additional contributions were thus induced, or that such inducement was within the contemplation of the parties. If these facts can be found by fair inference from all the circumstances in evidence, it is sufficient at least to make a jury question.

Such an institution as the beneficiary herein is necessarily supported by the co-operation of many people who have a common and unselfish interest in its success. Ordinarily, one man could not carry the load alone. Cooperation is usually within the contemplation of each contributor. His gift would become mere waste if it must stand alone. A contribution, therefore, may be in the nature of a response to a previous contribution by another, or it may be in the nature of an invitation to future contributions by others, or it may partake of the nature of both. All this may become a question of fact in a particular case. It would be manifestly unjust to permit a promisor of a contribution to withdraw his promise after it had served the function of inducing other contributors to incur obligations to the same beneficiary and for the same general purpose. We think that notes of this kind rest upon a somewhat different foundation from a note executed in a transaction, in contemplation of a pecuniary benefit to the maker or to some other person selected by him, other than the payee. Such notes are frequently, if not usually, executed, not as evidence of a promise to make a future gift, but for the specific purpose of creating a present asset for its beneficiary. A very substantial part of the assets of such institutions exist in this form. To lightly withhold judicial sanction from such obligations would be to destroy millions of assets of the most beneficent institutions in our land, and to render such institutions helpless to carry out the purpose of their organization. Unfortunately, authorities are in conflict at this point, and some courts have applied a very narrow rule to this class of obligations. We think the trend of modern judicial opinion is in the other direction. Various phases of the question have been before this court in the following cases: Simpson College v. Bryan, 50 Iowa, 293;University v. Livingston, 65 Iowa, 202, 21 N. W. 564;Presbyterian Church v. Baird, 60 Iowa, 237, 14 N. W. 303;Simpson College v. Tuttle, 71 Iowa, 596, 33 N. W. 74;Church v. Donnell, 110 Iowa, 5, 81 N. W. 171, 46 L. R. A. 858;King v. Carroll, 129 Iowa, 364, 105 N. W. 705.

In all the foregoing cases save one, the sufficiency of the consideration was sustained. The exception was Simpson College v. Tuttle, 71 Iowa, 596, 33 N. W. 74. That case turned upon the correctness of a ruling on demurrer. The ruling of the trial court was sustained. To such holding, however, the following saving paragraph was added: “To this doctrine, however, there must be added the qualification that the benefits to be derived from founding a school, church, or other institution of similar character, may furnish a good consideration for a promise. It must also be remembered, in the case before us, that such consideration is not advanced by plaintiff, and the only reference to its existence is contained in the paragraphs of the answer assailed by the demurrer; the other paragraph setting up a total want of consideration.” The discussion in each of the above-cited cases is somewhat cautious, and is confined strictly to the particular question therein involved.

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