Coal Riv. Coll. v. Eureka Coal Co.

• Decision Date: 18 March 1926
• Parties: COAL RIVER COLLIERIES v. EUREKA COAL AND WOOD CO., ETC.
• Court: Virginia Supreme Court

Page 263

144 Va. 263

COAL RIVER COLLIERIES v. EUREKA COAL AND WOOD CO., ETC.

Supreme Court of Virginia, Richmond.

March 18, 1926.

1. BILLS, NOTES AND CHECKS — Parol Evidence — Liability of President of Corporation Signing a Note of a Corporation without any Words to Indicate that He Signed in a Representative Capacity — Case at Bar. — In the instant case, an action on a note signed by a corporation and the president of the corporation, without anything to indicate that he signed it as an officer of the corporation, the corporation made no defense and the president defended on the ground that he signed the note as president of the company and was not personally bound thereon. There was a judgment against the company and in favor of the president. The judgment in favor of the president was assailed on appeal because the trial court admitted parol evidence on his behalf to show that he intended to only sign officially and was not bound personally. There was nothing on the face of the instrument or in the manner of the signature of the president to create an ambiguity or uncertainty as to the liability of the party signing.

Held: That the admission of the parol evidence was error, both at common law and under section twenty of the negotiable instruments law.

2. BILLS, NOTES AND CHECKS — Liability of Signers of Note — Note of Corporation. — The general rule is well supported that when it clearly appears, either in the body of the note or by appropriate words added to the signatures themselves, that a corporation is the party making the promise, there is no liability on the part of the signers.

3. BILLS, NOTES AND CHECKS — When Maker not Personally Bound — Signing as Agent — Section Twenty of the Negotiable Instruments Act. — Section twenty of the negotiable instruments act (section 5582 of the Code of 1919) applies in all cases where there is annexed to the signature some word which creates an ambiguity, but where the maker does not add to his signature any word indicating or suggesting that he is not to be personally bound or that he signed otherwise than in a personal capacity, and the instrument does not contain any words indicating that he is not to be personally bound, section twenty does not apply.

4. BILLS, NOTES AND CHECKS — Signing as Agent — Section Twenty of the Negotiable Instruments Act. — Under section twenty of the negotiable instruments act (Code of 1919, section 5582), where the instrument contains the words "designated in the section," the party signing is not personally liable if he was duly authorized to sign, the descriptive words need not appear in the body of the instrument, but the "instrument contains" the words if they appear anywhere on the face of the instrument, whether top, bottom, or side.

5. BILLS, NOTES AND CHECKS — Signing as Agent — Section Twenty of the Negotiable Instruments Act. — Section twenty of the negotiable instruments act (Code of 1919, section 5582) deals with the subject of the admissibility of parol evidence to explain ambiguities, the presumption is that the intention was to cover the whole field and that such evidence is receivable only in the cases enumerated in the section.

6. PAROL EVIDENCE — Rule Strictly Adhered to in Virginia. — In no jurisdiction is the parol evidence rule more often invoked and more strictly adhered to in its integrity, than in Virginia.

7. PAROL EVIDENCE — Where there is no Ambiguity. — Parol evidence cannot be offered first to create an ambiguity and then to remove it.

8. CONTRACTS — Delivery — Necessity of Delivery — Conditional Delivery. — Delivery is essential to the binding effect of every written contract, sealed or unsealed, and such delivery may be absolute or conditional, and certainly, between the immediate parties thereto, it may be shown that the condition upon which the delivery was made has not been complied with. The circumstances of delivery may be shown.

9. PAROL EVIDENCE — Construction of Contract — Position of the Party. — In case of a doubtful construction, it is permissible to place the expositor in the shoes of the parties to a bilateral contract to ascertain the meaning of the words used, but not to contradict their plain meaning.

10. BILLS, NOTES AND CHECKS — Personal Liability — Unexpressed Intention. — The unexpressed intention of the maker of a note not to be bound personally cannot be permitted to vary the legal effect of his express contract evidenced by his individual signature.

11. BILLS, NOTES AND CHECKS — Personal Liability — President of a Corporation — Case at Bar. — In the instant case a note was signed by a corporation and its president, there was nothing to indicate that the president signed in a representative capacity. The corporation was indebted to the payee of the note who was pressing for payment. The president testified that he sent his note because he had no money at the time.

Held: That having signed just as he would have signed if he had intended to bind himself personally, and the note having been accepted by the payee, the president could not be heard to say that he did not intend to be bound personally.

12. PAROL EVIDENCE — General Rule — Writing Presumed to Contain Whole Contract. — The parol evidence rule in effect declares that where parties have reduced their contract to a writing which imposes a legal obligation in clear and explicit terms, the writing shall be the sole memorial of that contract, and it is conclusively presumed that the writing contains the whole contract. The writing alone is the evidence of the contract and no other will be received.

13. BILLS, NOTES AND CHECKS — President of a Corporation — Personally Liable — Case at Bar. — In an action against the president of a corporation on a note signed by him individually and the corporation, it was contended that the letterhead of the corporation showed that the party jointly signing the note was the president of the corporation. There was no evidence that the payee knew or had its attention called to the fact that the signatory was the president of the corporation. However, that was wholly immaterial as nothing is more common than for officers of a corporation to endorse, or go security on, its paper, and when their names, without more, appear on such paper there is no presumption that they were acting merely officially and only to bind the company.

14. CORPORATIONS — By-Laws — Notice. — Persons dealing with a corporation are not chargeable with notice of its by-laws limiting the power of its agents to make the customary contracts pertaining to the business they are authorized to transact.

15. BILLS, NOTES AND CHECKS — Consideration — Extension of Time of Payment. — Where there was an existing debt past due from one joint maker of a note to the payee, and the time of payment thereof was extended by the contract, evidenced by the delivery and acceptance of the note, there was sufficient consideration for the promise of the other joint maker.

16. SURETYSHIP — Extension of Time of Payment. — An agreement for the extension of the time of payment is a sufficient consideration for the promise of a third person as surety to pay the debt. Mere forbearance to sue, however, is not sufficient, there must be an agreement to forbear, express or implied, but such agreement may be implied from the conduct of the parties and the nature of the transaction.

17. NEGOTIABLE INSTRUMENTS — Consideration — Antecedent Debt. — Both before and since the adoption of the negotiable instruments act an antecedent debt has always been deemed a valuable consideration for a promise to pay.

Error to a judgment of the Circuit Court of the City of Norfolk, in an action on a note. Judgment for defendant. Plaintiffs assign error.

The opinion states the case.

Swink & Fentress, for the plaintiff in error.

Herman A. Sacks, for the defendants in error.

BURKS, J., delivered the opinion of the court.

This was an action by the payee against the makers of the following note: "$552.60

Norfolk, Virginia, July 19, 1924.

" Sixty after date we promise to pay Coal River Collieries Co. or order, without offset five hundred fifty-two dollars 60/100 dollars. Negotiable and payable at Merchants and Planters Bank of Berkley. Value received. The drawer and endorser of this note hereby waive the benefit of homestead exemption as to this debt. "No. A39791.

Due 9-17-24.

"EUREKA COAL AND WOOD CO., INC.

"J. LIEBMAN, Treasurer, N. Orleans."

The coal company made no defense. Orleans defended on the ground that he signed the note as president of the company and was not personally bound thereon, and further that there was no consideration for his signature thereto. There was a judgment against the coal company and in favor of Orleans. The latter judgment is assailed here because the trial court admitted parol evidence on behalf of Orleans to show that he intended only to sign officially, and was not bound personally.

The facts of the case are as follows: The Eureka Coal and Wood Company was incorporated in November, 1923, and had but three stockholders, all of whom were officers of the company, and their names as such appeared on the letterheads of the company used in its business correspondence. This letterhead showed Orleans as president, a Mr. Foy as vice-president, and Liebman as secretary-treasurer. Sometime thereafter it purchased coal of the plaintiff, and after the account had been standing some time, the plaintiff wrote to the Eurkea Company, on July 17, 1924, a courteous letter requesting it "to make some arrangement to take care of this balance not later than the 28th of this month," or as Orleans testified, "they have asked us to send them some money," and Liebman testified that the note in suit "was sent in response to a request for money." The letter enclosing the note, after expressing appreciation for the indulgence shown and speaking of the company's bright prospects in the near future, says: "Enclosed please find note for $552.60,...