Colvin v. Goff

• Decision Date: 19 December 1916
• Citation: 82 Or. 314,161 P. 568
• Parties: COLVIN v. GOFF ET AL.
• Court: Oregon Supreme Court

161 P. 568

82 Or. 314

COLVIN v. GOFF ET AL.

Supreme Court of Oregon

December 19, 1916

In Banc.

Appeal from Circuit Court, Grant County; Dalton Biggs, Judge.

Action by Ben Colvin against Lester Goff and another to recover the amount of a promissory note. Judgment for the plaintiff, and defendants appeal. Affirmed.

This is an action upon a promissory note. The note is in the usual form, payable upon demand, with the ordinary provision for interest and for attorney's fees in case of suit. The answer, which is too lengthy to be inserted, admits the execution of the note, and sets up the following affirmative defense: That in May, 1913, plaintiff, defendants, and J. B Gingles and Monard Fix were jointly indicted by the grand jury of Grant county for cattle stealing; that plaintiff and defendants were arrested upon said charge on May 24, 1913 that on November 22 the defendant Goff was duly convicted and that on the 23d of November the indictment was dismissed as to the defendant Clark; that thereafter, in December 1913, the defendant Goff being desirous of appealing to the Supreme Court from the judgment of conviction against him, the plaintiff agreed to advance to the defendants, Goff and Clark, the sum of $600, to be applied by the defendant Goff to the payment of the expenses of said appeal, and to further advance to defendants the sum of $400, making $1,000 in all which the defendants were to repay share and share alike, and it was further mutually agreed in the event that the judgment of the circuit court should be affirmed that the said sum of $600 was not to be repaid to plaintiff; that in August, 1912, plaintiff delivered to defendant Jim Clark $100, with instructions to deliver said sum to J. B. Gingles and Monard Fix, the codefendants with plaintiff and defendants in the criminal action, and that defendant delivered the $100 as directed; that on May 16, 1914, the defendants and plaintiff entered into a final contract whereby it was agreed that these defendants would make, execute, and deliver to plaintiff the promissory note sued upon, conditioned by said contract that said promissory note would become a binding contract on the part of defendants only in the event that the Supreme Court would reverse the judgment of the circuit court against defendant Goff, and it was then mutually agreed that, if said judgment should be affirmed, the said note should become void and of no effect, and that defendants, in pursuance of said agreement, executed the note in suit, and that the $700 mentioned therein is the same $600 advanced to defendants by plaintiff, together with the $100 delivered by plaintiff to Clark; that on June 9, 1914, the Supreme Court affirmed the judgment against defendant Goff; that in accordance with the agreement between plaintiff and defendants the note became null and void and of no effect and the consideration thereof failed; and that at no time since its execution has the same been a binding contract upon the part of defendants to pay plaintiff the sum of $700 or any sum. The new matter being denied by a reply, the case came on for trial. The plaintiff introduced the promissory note and rested. The defendants offered evidence tending to prove the new matter alleged in the answer, but upon objection the testimony was excluded by the court upon the ground that such matter did not constitute a defense. There was a verdict for plaintiff, and defendants appeal.

A. D. Leedy, of Canyon City, for appellants. J. Roy Raley, of Pendleton (Errett Hicks and Otis Patterson, both of Canyon City, on the brief), for respondent.

McBRIDE J. (after stating the facts as above).

While the amount involved here is comparatively small, the question presented is interesting by reason of apparent variance in the decisions of many of the courts, although these seeming contradictions disappear upon a close analysis of the decided cases. It is an elementary general rule that parol evidence cannot be introduced to contradict or vary the terms of a written instrument, and this rule applies as well to promissory notes as to other written contracts. Burnes v. Scott, 117 U.S. 582, 6 S.Ct. 865, 29 L.Ed. 991; Kelsey v. Chamberlain, 47 Mich. 241, 10 N.W. 355; Whitwell v. Winslow, 134 Mass. 343; Cooper v. German Nat. Bank of Denver, 9 Colo. App. 169, 47 P. 1041; Davis v. Stout, 126 Ind. 12, 25 N.E. 862, 22 Am. St. Rep. 565; Prescott v. Hixon, 22 Ind.App. 139, 53 N.E. 391, 72 Am. St. Rep. 291; Graves v. Clark, 6 Blackf. (Ind.) 183; Getto v. Binkert, 55 Kan. 617, 40 P. 925; San Jose Savings Bank v. Stone, 59 Cal. 183. See note to section 81a, Daniel, Neg. Instruments. This rule has been applied in cases very similar to the one at bar. Thus in Foster v. Jolly, 1 Cromp. M. & R. 703, which was a suit to recover against the maker of a promissory note payable 14 days after date, the defense was that the defendant's brother-in-law contracted the debt for which the note was given as agent for a certain co-operative society, and was sued for the amount. The brother-in-law gave the names of certain members of the society who were sued for the debt and a judgment obtained. The brother-in-law also confessed judgment, and was put in jail upon a ca. sa., and gave the note in question upon an alleged promise that its payment should not be enforced in case the plaintiff should recover a verdict against the other members of the society. This was held not a good defense; Lord Abinger, C. B., saying:

"I am of opinion that the evidence tendered by the defendant went to vary the contract appearing on the face of the note. It is not a question of consideration or collateral security. The consideration of the instrument was not impeached, nor was it given as a collateral security, but the defense attempted to be established was in direct contradiction of the terms of the note. The maker of a note payable on a day certain cannot be allowed to say, 'I only meant to pay you upon a contingency;' that is at variance with his own written contract. The case must be governed by that of Rawson v. Walker."

In Central Savings Bank v. O'Connor, 132 Mich. 578, 94 N.W. 11, 102 Am. St. Rep. 433, which was an action upon promissory notes, the defendant pleaded a collateral agreement very similar to the defense here:

"That the notes were given for the amount of a chattel mortgage which plaintiff held upon the property of the J. R. Pearson Company, which property defendant O'Connor had purchased; that the title to said notes never passed to said plaintiff; that the notes were delivered to plaintiff upon the clear and distinct understanding and condition agreed to by plaintiff that in case the said J. R. Pearson Company should thereafter be forced into bankruptcy by any of its creditors, upon proceedings instituted by them for that purpose, and adjudicated a bankrupt, said notes would thereupon, in the event of the happening of such contingency, become and be null and of no effect, and were not to be paid, and that it was upon said condition said notes were delivered to said plaintiff." The court said:

"The meritorious question is whether the defense set out in this notice is one which can be established by parol testimony. It is doubtless true, as contended by the appellants' counsel, that it may be shown that a promissory note, unconditional in terms, was conditionally delivered; that is to say, that it was placed in the hands of the payee, but with the distinct understanding that it was not to be operative or to become a binding obligation until the happening of some event. Brown v. St. Charles, 66 Mich. 71, 32 N.W. 926; Burke v. Dulaney, 153 U.S. 228, 14 S.Ct. 816, 38 L.Ed. 698. On the other hand, the rule is firmly established that, where a promissory note for a certain amount, payable at a certain time, is delivered into the hands of the payee, to take effect presently as the obligation of the defendant, parol evidence to introduce conditions or modifications of the terms is not admissible. The case of Hyde v. Tenwinkel, 26 Mich. 93, illustrates this rule. It was there held that an attempt to show a verbal contemporaneous agreement to reduce a note from an absolute and specific promise to a defeasible engagement was inadmissible. The same rule has been followed; one of the recent cases being Phelps v. Abbott, 114 Mich. 88, 72 N.W. 3; Burns & Smith Lumber Co. v. Doyle, 71 Conn. 742, 43 A. 483, 71 Am. St. Rep. 235. We think it clear that the present case falls within that line of cases which precludes parol evidence offered to vary the terms of a written instrument. If we adopt the testimony of the defendant as correctly stating the transaction, and more certainly if we adopt the terms of the notice of defense by which the defendant was bound, these notes were delivered to take effect presently, but upon the alleged parol agreement that they were to become void in the event that a certain contingency should happen. This is no more than averring that plaintiff entered into a contemporaneous parol agreement that, while the defendant's obligation bound him to pay absolutely the sums of money at specified times, yet in a certain contingency this sum should not be payable at all, and the notes be redelivered. It is suggested also that there was a total failure of consideration. This cannot be held, for the reason that there was transferred to the defendant, in consideration for the notes, the chattel mortgage and promissory note of the J. R. Pearson Company, which note had indorsers against whom it would be enforceable. There was no absolute and total failure of consideration, and no defense of partial consideration was noticed under the general issue."

Other cases tending more or less to support the doctrine announced in the case last cited are Stoddard v Nelson, 17 Or....