City Deposit Bank of Columbus v. Green

• Decision Date: 09 April 1906
• Citation: 130 Iowa 384,106 N.W. 942
• Parties: CITY DEPOSIT BANK OF COLUMBUS, OHIO v. GREEN ET AL.
• Court: Iowa Supreme Court

130 Iowa 384

106 N.W. 942

CITY DEPOSIT BANK OF COLUMBUS, OHIO

v.GREEN ET AL.

Supreme Court of Iowa.

April 9, 1906.

Appeal from District Court, Calhoun County; F. M. Powers, Judge.

Action upon defendants' joint and several promissory note for the sum of $1,000. Verdict for plaintiff in the sum of $730.30, interest, and costs. From a judgment on the verdict, plaintiff appeals. Reversed.

See 103 N. W. 96.

J. M. Toliver and M. R. McCrary, for appellant.

Hutchinson & Jacobs, for appellees.

DEEMER, J.

The note in suit which was given to McLaughlin Bros., is negotiable in form, and was signed by each of the defendants, 13 in number. Thereby defendants jointly and severally promised to pay to the payees or bearer, $1,000, two years after date, with interest at the rate of 6 per cent. This note with others was given in performance of a contract for the purchase of a stallion by these defendants from McLaughlin Bros., the material parts of which contract read as follows: “McLaughlin Bros. agree to sell the above-named stallion for $3,000.00 to the undersigned subscribers, who wishing to improve their stock agree to pay McLaughlin Bros. $200.00 for each share in said stallion. Capital stock, $3,000.00. No. of shares, 15. Payments to be made in cash, or one-third in two years, one-third in three years, one-third in four years after July 1, 1901, secured by joint and several notes with interest.” Other provisions of the contract will be found in McArthur v. Board, 119 Iowa, 562, 93 N. W. 580, to which reference is made. When time arrived for performance defendants did not pay cash, but instead made the note upon which suit is brought with others, according to the terms of the contract. To this action on the note defendants pleaded that they were severally and not jointly liable, and that the note was obtained through fraud. They further pleaded that plaintiff was not a good-faith holder of the note.

To establish their claim that they were severally and not jointly liable, they introduced the contract for the purchase of the stallion, and some parol testimony, claiming that these matters should be taken into account in ascertaining the extent of their liability on the note. If the action were upon the contract there would be no doubt of the soundness of defendants' contention. McArthur v. Board, supra. The action is not upon that instrument however, but upon one of the notes executed in performance thereof. There is no ambiguity in the note, and it is expressly provided in the contract, that if payment is not made in cash, the purchase price shall be secured by joint and several notes with interest. Defendants were obligated in the event they did not pay in cash to secure the purchase price by joint and several notes. There is no ambiguity in this expression unless it be found in the use of the term “notes.” That is to say should there be 15 or more joint and several notes, or three, due respectively in two, three, and four years. In any event defendants were to be jointly and severally bound, and it is largely immaterial we think which construction should be put upon this contract for the parties have given it their own construction, and have executed three joint and several notes each for the sum of $1,000, representing the purchase price of the animal. Having placed their own construction upon the contract we need not speculate on the proper interpretation thereof. The notes and the contract were not executed at one and the same time and as a part of the same transaction; for the notes were given in fulfillment of the contract obligation, and in performance of the promise therein made. After the execution of the notes the contract became functus officio; and as there is no ambiguity in the note there is no occasion so far as this issue is concerned to refer to the contract for any explanation thereof.

Defendants' attempt to ingraft conditions and limitations upon their absolute liability on the note clearly offends against the rule forbidding the introduction of extrinsic or parol evidence to vary, change, or modify the terms of a promissory note. Were there doubt or ambiguity on the face of the note, or had the contract been executed at the same time as the note and as a part of the same transaction, we might refer back to the contract and perhaps receive oral testimony for light whereby to solve the difficulty; but that is not the situation here. There was ample consideration for the notes in any event; and the question reduced to its last analysis is: May parol or extrinsic evidence be received to contradict change or vary the terms thereof? Under the peculiar circumstances of this case we think such testimony was inadmissible...