Denman v. Kaplan

• Decision Date: 06 June 1918
• Docket Number: (No. 305.)
• Parties: DENMAN v. KAPLAN.
• Court: Texas Court of Appeals

205 S.W. 739

DENMAN v. KAPLAN.

(No. 305.)

Court of Civil Appeals of Texas. Beaumont.

June 6, 1918.

Rehearing Denied October 9, 1918.

Appeal from District Court, Jefferson County; W. H. Davidson, Judge.

Suit by A. Kaplan against T. F. Denman. Judgment for plaintiff, and defendant appeals. Affirmed.

E. E. Easterling, of Beaumont, for appellant. Sol Gordon, of Beaumont, and G. P. Dougherty, of Houston, for appellee.

BROOKE, J.

This suit was filed in the Fifty-Eighth district court of Jefferson county on the 13th day of February, 1912, by A. Kaplan, as plaintiff, against T. F. Denman, as defendant, to recover upon a promissory note alleged to have been executed and delivered by the defendant to the Morse Timber Company, Limited, on June 3, 1911, for the sum of $2,400, and which was assigned by the Morse Timber Company, Limited, to the plaintiff, A. Kaplan. The case was tried and judgment rendered for the plaintiff on April 18, 1917, and from the judgment defendant has appealed to this court and assigned errors.

There are three questions involved in this appeal, viz.: (1) Was the sale of the 30 shares of stock by the Morse Timber Company, Limited, to T. F. Denman, and the taking of the note as consideration therefor, the "doing of business" within the purview of articles 1314 and 1318? (2) Was the assignment of the note by the Morse Timber Company, Limited, to the plaintiff, Kaplan, sufficient, prima facie, to show title to the note sued on? (3) Did the trial court err in excluding the evidence offered by defendant which he contends shows failure of consideration for the note sued on?

The first assignment of error complains that the court erred in excluding the evidence of defendant, T. F. Denman, because same varied the written contract sued upon, which was objected to by defendant.

The contention is made that a written contract, complete and unambiguous of itself, cannot be added to, altered, varied, or changed by evidence of a contemporaneous parol agreement between the parties, in the absence of allegations and proof of fraud, accident, or mistake. It seems that the defendant pleaded as a defense to the suit on the note, and so testified on the trial of the case, that the consideration for the note sued on was 30 shares of the capital stock of the Morse Timber Company, Limited, which was issued and delivered to him at the time of the execution and delivery of the note, but that at the same time, and as a part of the same transaction, the defendant was employed as agent to sell stock of the Morse Timber Company at Beaumont, and that it was agreed by and between the defendant and the Morse Timber Company at the time of the execution of the note that the defendant was to pay the note from or with commissions on the sales of stock of the Morse Timber Company, and that in the event the defendant was unable to sell sufficient amount of the stock to enable the defendant to pay the note from his commissions, the note was not to be paid, and the 30 shares of stock were to be returned to the Morse Timber Company, and the note sued on was to be canceled and returned to the defendant.

The view we take of this matter is that there was no error in the action of the lower court in holding that the written contract could not be altered or varied by evidence of a contemporaneous parol agreement between the parties in this case. The rule of evidence is elementary. It appears to this court that appellant undertakes to escape the operation of the rule by confusing the application of it with his plea of failure of consideration, and in our opinion, where a plea of failure of consideration is made under such plea, we do not think the court would be authorized to admit evidence showing, not a failure of consideration, but a contemporaneous parol agreement entirely different and contradictory of the written contract. If appellant's pleading in fact raises the issue of failure of consideration, he failed to offer any proof to substantiate the plea, and rather attempted under the plea to introduce evidence varying the terms of the written contract by a contemporaneous parol agreement different from and contradictory of the written contract, the consideration of which he claimed had failed. We are of opinion that it is well settled in this state that the consideration recited in a written contract can be explained or contradicted by parol, except in cases where parol proof of consideration shows an entirely different contract from that shown by the writing.

The evidence in this case shows that the consideration for the note sued on was 30 shares of stock of the Morse Timber Company, and the further agreement that upon a certain contingency the note should not be paid, and that the note should be canceled and surrendered and the stock returned to the timber company. This shows an entirely different contract from that evidenced by the note, and is contradictory of its terms. The fact that the statute required all of the facts to be alleged, and a plea of failure of consideration to be verified, does not change the rule of evidence, and it was never intended that it should. This statute merely requires the defendant to comply with it as preliminary to offering such proof as should be admitted under the settled rules of evidence. Judge Stayton, in Dolson v. De Ganahl, 70 Tex. 622, 8 S. W. 321, says:

"In view of the further disposition of the case, we deem it proper to say that the note sued on evidences the contract of the parties, and under the pleadings all evidence as to parol contemporaneous agreements between the appellant and the deceased affecting the contract evidenced by the note, and tending to vary or contradict it, should be excluded. The note fixes the obligation of the appellant to pay, and his pleadings leave open to him only the defense that it was executed without consideration."

The note sued on in the instant case was an absolute promise to pay. The consideration for the note was 30 shares of stock of the Morse Timber Company. The note was executed and delivered. The stock was issued and delivered. The contract was completed and executed as between the parties. The evidence offered by the defendant and excluded by the trial court does not show, nor does it even tend to show, that the note sued on was without consideration, or that the consideration had failed, but attempts to show that there was a contemporaneous parol agreement between the parties to the note, to the effect upon certain contingencies that might or might not thereafter occur the note should not be paid, the consideration returned, and the entire transaction canceled and held for naught. This does not show a want of consideration, as the 30 shares of stock may have a greater present value than at the time of the execution of the note. This evidence merely shows a contemporaneous parol agreement between the parties to the effect that upon contingencies that might thereafter occur the entire contract was to be rescinded. This does not touch the question of consideration. This is not the case of a note executed with a parol agreement between the parties that the note is not to become a contract until and unless a certain event occurred, and where it is shown that the event did not occur.

In this case, the note was executed and delivered to the payee as a complete contract, and the payee had power to sell or otherwise dispose of the note, and in fact did sell and assign the note. The payee in the note issued and delivered to the maker of the note a certificate for 30 shares of stock. The maker of the note had this stock in his possession with power to sell and dispose of the same, and the written contract took effect and went into operation between the parties with the condition or contingency resting entirely in parol that the entire contract was to be rescinded, the consideration restored, and the note canceled, if a certain event came to pass. In the case of Life Ins. Co. v. Allen, 170 S. W. 131, decided by the Ft. Worth Court of Civil Appeals, an agent of the insurance company agreed with Allen at the time of taking Allen's note for the premium on a life insurance policy that if he (Allen) would assist the agent in procuring other insurance, he (Allen) would never be called upon to pay the note. The insurance company sued Allen on the note. Allen defended the suit and set up the contemporaneous parol agreement, and also offered to prove that he had assisted the agent in procuring other insurance, and that he was therefore not liable on the note. The court held that this evidence was not admissible to defeat liability on the note.

Without going further into the matter, we are of opinion that there was no error in the action of the court in this matter,...