Davey v. Kelly

• Decision Date: 21 September 1886
• Citation: 66 Wis. 452,29 N.W. 232
• Parties: DAVEY v. KELLY.
• Court: Wisconsin Supreme Court

66 Wis. 452

29 N.W. 232

DAVEY

v.KELLY.

Supreme Court of Wisconsin.

September 21, 1886.

Appeal from circuit court, Florence county.

McIntosh & Keyes, for respondent, E. C. Davey.

Webster & Brageau, for appellant, George F. Kelly.

TAYLOR, J.

The respondent brought an action against the appellant upon a promissory note executed by the appellant, and payable to the order of R. B. Webb, for the sum of $1,500. The complaint alleges that said note was transferred by said Webb to the plaintiff for a valuable consideration before due. There was also a claim in the complaint for work and labor for $100. Upon the claim for work and labor there is no controversy on this appeal.

The defendant answered, first admitting the making, execution, and delivery of the note to Webb, but he denies “that Webb, in any way or manner, for any consideration or otherwise, ever sold or delivered said note to the plaintiff, and he denies that the plaintiff is or ever was the owner, or in his own right the holder, of the said note;” and for a further answer the defendant set up the facts below in this opinion stated. Upon the trial in the circuit court, the learned circuit judge, on the objection of the respondent, excluded all evidence concerning the origin or consideration of said note, and decided that the defendant's answer did not state facts sufficient to constitute a defense or counter-claim on the ground of fraud in its inception or connected with the consideration for the same. To this ruling the defendant excepted, and, after hearing some evidence in the case as to the transfer of the note from Webb to the plaintiff, the learned judge directed a verdict in favor of the plaintiff for the whole amount of the note. To this direction the defendant also excepted. Upon this appeal the learned counsel for the appellant alleges as error these rulings of the circuit judge on the trial.

We are of the opinion that the learned circuit judge was right in holding that the defendant's answer did not state facts sufficient to constitute a defense or counter-claim on the ground of fraud in its inception. The substance of the answer is that the note in question was given as the consideration for a transfer of the undivided half of a stock of goods by R. B. Webb to the defendant. The allegations are that R. B. Webb, at and before the transfer, held the apparent title to said goods as his individual property, but that in fact he held the undivided half of said goods in trust for one George Travis; that said Travis and B. E. Webb had theretofore been partners doing business as such, and were largely indebted, and that they conveyed the stock of goods to R. B. Webb with intent to defraud their creditors, and that said Webb held them in trust, one-half for said Travis; that Travis became dissatisfied with the manner in which Webb carried on the business, and he procured said Webb to make a formal sale of one-half of said goods, together with one-half of the assets and good-will of the business, to the defendant in trust for said Travis, so that Travis' interest thereafter might be represented by the defendant in the further prosecution of the business; and that the business be prosecuted in the name of Webb & Kelly, and that the business was thereafter prosecuted in the name of Webb & Kelly. The answer further alleges that the defendant in fact had no interest in said goods, and paid no consideration therefor, but, in order to give color thereto as a bona fide transaction, the defendant made and delivered to said Webb, as apparent considerationfor such transfer, his three notes for $1,500 each, and each payable to the order of the said R. B. Webb, all of which notes the said R. B. Webb was, by the terms of said agreement, immediately to indorse over to the said George Travis, who was then to destroy them all, and never assert them against this defendant; that said Webb did then and there, immediately, and in the presence of this defendant, indorse all of said notes to said George Travis, in the following form, on the back of each in writing, viz:

“Without recourse pay to the order of George Travis.

R. B. WEBB.”

--And then and there delivered all of said notes to the said George Travis, and that the notes mentioned in the plaintiff's complaint is one of said notes. The answer further alleges that no consideration passed to the defendant for any of said notes, and that the said George Travis, with knowledge of all the facts, in order to compel the defendant to pay said notes, has procured the plaintiff in this action to take the said note, and institute this action thereon in his own name, in order to defraud the defendant, and compel him to pay the same; and further alleges, upon information and belief, that the plaintiff's possession of said note is in trust for the said George Travis, and not in his own right, and that the plaintiff never paid any consideration therefor.

If it be admitted that the sale of the undivided half of the stock of goods by R. B. Webb to the defendant was a valid contract as between the contracting parties, then it is apparent that there was a sufficient consideration for making the note upon which the action is founded, and the claim that there was no consideration for the making of the note is contradicted by the facts set up in the answer. It seems to be equally clear that, if the whole transaction is not void as between the parties, then the other facts stated in the answer constitute no defense to the note, because it is not admissible to show a contemporaneous parol agreement between the parties to the notes that it was not to be in force as between the parties. The statements in the answer are substantially that, although the notes were to be given and executed by the defendant, payable to the order of Webb, yet it was understood and agreed that they were not to be of any force against the defendant, but were to be immediately transferred to Travis, and then destroyed. This evidence is clearly in contravention of the well-established rule of law that parol evidence of matters which take place before or at the time of making a written contract cannot be received to nullify or vary the written contract made by the parties. This rule has been applied by this and other courts to promissory notes. Cooper v. Tappan, 4 Wis. 362;Gregory v. Hart, 7 Wis. 532;Racine Co. Bank v. Lathrop, 12 Wis. 466;Jones v. Keyes, 16 Wis. 563;Peterson v. Johnson, 22 Wis. 21;Charles v. Denis, 42 Wis. 56;Eaton v. McMahon, Id. 484; Hunt v. Adams, 7 Mass. 518-522;Erwin v. Saunders, 1 Cow. 249;Payne v. Ladue, 1 Hill, 116;Brown v. Hull, 1 Denio, 400. As we understood the argument of the learned counsel for the appellant in this case, they do not contend that the answer stating the facts as to the consideration of the notes shows any defense to the action, unless it be held that the transaction, as set out therein, shows that the note is void in law, because it was given upon a transfer of the property of Travis, made for the purpose of defrauding his creditors.

The suggestion made in the brief of the learned counsel for the appellant, that the facts set up in the answer show that there was no delivery of the note to the payee therein named, it seems to us is wholly unsupported. The allegations are that the note was delivered to Webb, and that he immediately indorsed it payable to Travis, and delivered it to him.

The point mainly relied upon by the learned counsel for the appellant was that the note is void because given as a part consideration for a transfer of property made to the defendant for the purpose of defrauding the creditors of the owner of the property so transferred. The point was, we think, decided by this court against the appellant in Clemens v. Clemens, 28 Wis. 637. In that case, after mature consideration, it was held that a sale of property made by a debtor for the purpose of defrauding his creditors, although void as to the creditors who should seek to subject such property to the payment of their debts, was valid as between the parties to such fraudulent contract. This decision is in strict accord with the language of the statute. Section 2320, Rev. St. 1878. This statute declares such contracts void as to creditors only, and not void as to all parties and for all purposes. The case of Clemens v. Clemens is sustained by a large preponderance of the decisions of other courts upon similar statutes. The following cases fully sustain the ruling of this court in that case...