Dittmar v. Frye, 27562.

• Decision Date: 08 September 1939
• Docket Number: 27562.
• Citation: 93 P.2d 709,200 Wash. 451
• Parties: DITTMAR v. FRYE.
• Court: Washington Supreme Court

93 P.2d 709

200 Wash. 451

DITTMAR v. FRYE.

No. 27562.

Supreme Court of Washington

September 8, 1939

Department 2.

Action by the Seattle-First National Bank, as executor of the estate of Augusta Erye, deceased, against Charles H. Frye on a note. From a judgment for the plaintiff, the defendant appeals. Marion Dittmar was substituted as respondent when subsequent to the appeal a decree was entered distributing the estate and the plaintiff executed an assignment transferring the judgment to her.

Affirmed.

Appeal from Superior Court, King County; Robert M. Jones, judge.

Eggerman & Rosling, Walser S. Greathouse, and Joseph J. Lanza, all of Seattle, for appellant.

Todd Holman & Sprague, William M. Allen, and Lowell P. Mickelwait all of Seattle, for respondent.

MILLARD Justice.

Emma Frye and Augusta Frye were sisters. Charles H. Frye president of Frye & Company corporation, and Frank F. Frye, an employee of that corporation after sale of his interest therein to Charles H. Frye, were brothers. Emma Frye, who died in February 1934, was the wife of Charles H. Frye. Augusta Frye, who died October 20, 1937, was the wife of Frank F. Frye, who died in November 1935.

Emma Frye signed as maker a promissory note dated October 31, 1930, in the amount of forty thousand dollars, payable, ninety days after notice of demand for payment, to the order of Augusta Frye. On February 11, 1931, the following endorsement was written by Charles H. Frye on the back of the note:

'As of Feby 11th 1931

Chas. H. Frye.'

After the death in 1934 of Emma Frye (maker of the note) demand for payment was made by Augusta Frye upon Charles H. Frye, as executor of his deceased wife's estate. A claim in that estate was duly filed and allowed. In October, 1936, the note was unpaid, whereupon the attorneys representing Augusta Frye, who was then alive, wrote the following letter to the attorneys representing Charles H. Frye:

'October 9, 1936

'Eggerman & Rosling

'1824 Exchange Building,

'Seattle, Washington.

'Attention: Mr. Greathouse.

'Gentlemen:

'You are familiar with the fact that our client Augusta Frye is the owner and holder of a certain promissory note dated October 31, 1930, in the principal amount of $40,000, with interest, and that as Executrix of the Estate of Frank F. Frye, deceased, she is likewise the owner and holder of a promissory note of the same date for $60,000, with interest. Both of the above notes were signed by Emma Frye as maker, were endorsed by Charles H. Frye, personally, and were payable ninety days after notice of demand for payment. Although claims based upon these notes have been filed in the probate proceedings of the Estate of Emma Frye, deceased, and were recently allowed, the notes remain unpaid.

'In order to avoid any contention by Mr. Frye that after October 31, 1936, the Statute of Limitations will serve as a bar to his individual liability as an endorser on these notes, we request that you cause the enclosed forms of acknowledgment of debt to be signed by Mr. Frye and returned to us.

'In the event that these acknowledgments of debt are not executed and returned to us by October 20, 1936, it will then be necessary for us to institute actions against Mr. Frye, individually, to enforce collection on these notes.

'Yours very truly,

'Todd, Holman & Sprague.'

One of the attorneys representing Augusta Frye testified that shortly after the foregoing letter was written he had a conversation by telephone with one of the attorneys representing Charles H. Frye respecting the consequences that would ensue if Mr. Frye refused to sign the requested letter of acknowledgment; that Mr. Frye's counsel was informed action would be brought, as stated in the letter, in the event of Mr. Frye's failure to sign the acknowledgment; that if Mr. Frye signed and returned the requested letter of acknowledgment 'we will not bring suit for a while.'

The opposing attorney admitted that a telephone conversation was had concerning the letter, but he could not recall any conversation like that remembered by Mrs. Frye's attorney. Both attorneys testified, however, that subsequent to the telephone conversation and prior to October 21, 1936, Mr. Frye's attorney was granted permission to examine the note which he conceded was endorsed by Charles H. Frye. On or about October 21, 1936, the requested letter of acknowledgment, signed by Mr. Frye, was delivered to Mrs. Frye's attorneys. That letter, in which Mr. Frye wrote the amount of interest paid on the note, reads as follows:

'October 21, 1936

'Mrs. Augusta Frye

'c/o Todd, Holman & Sprague

'1006 Hoge Building

'Seattle, Washington

'Dear Madam:

'You are the owner and holder of a certain promissory note signed by Emma Frye as maker, dated October 31, 1930, for the principal sum of $40,000, and payable ninety days after notice of demand for payment.

'For value received I endorsed the above promissory note. You have requested my acknowledgment of my liability as endorser of this note in order to avoid the bar of the Statute of Limitations.

'Please be advised that I hereby acknowledge my personal liability as endorser of said note and agree to pay the same.

'There is now due and owing on said note the principal sum of $40,000, together with interest thereon at the rate of 6 0/0 per annum from November 1, 1933, less the sum of $4,154.40 paid upon accrued interest since January 27, 1936.

'Very truly yours,

'Charles H. Frye

'Individually.'

The next step to enforce the liability of Charles H. Frye as an endorser was service upon him May 14, 1937, of summons and complaint, which were not filed, in action by Augusta Frye against Charles H. Frye to recover upon the note in question. Nothing further was done until April 1938, when summons and complaint in this action by Seattle First National Bank, as executor of the estate of Augusta Frye, deceased (Mrs. Frye died October 30, 1937), to recover upon the note against Charles H. Frye were filed. The affirmative defenses were that no consideration passed to Charles H. Frye for his endorsement, which was placed on the note subsequent to its execution and delivery, and absence of consideration for the letter of October 21, 1936, in which defendant Frye acknowledged his personal liability as endorser and agreed to pay the note. Upon the grounds that 'it was either incompetent or not material,' or that the defendant was estopped by his letter of October 21, 1936, from urging such defense, the trial court excluded evidence of lack of consideration for the endorsement and directed a verdict in favor of the plaintiff. From the judgment entered on that verdict, the defendant appealed.

Subsequent to the appeal a decree was entered distributing, and respondent executed an assignment transferring, the judgment to Marion Dittmar. Pursuant to stipulation and motion of the appellant and the respondent, we have entered an order substituting Marion Dittmar herein as respondent in place of the Seattle-First National Bank.

Appellant contends that he should have been permitted to show that his indorsement upon the note subsequent to its execution and delivery was without consideration, hence not binding; that, as the endorsement was invalid, his letter of October 21, 1936, acknowledging personal liability as endorser of the note and promising to pay same was, also, without binding effect in the absence of a new and independent consideration; and that 'It is no consideration to delay bringing action on an endorsement that is ineffectual, in any event.'

The trial court refused appellant's offer to prove by his own testimony and by entries in the books kept for appellant and his deceased wife that appellant did not receive anything for his endorsement, that all of the money received from Augusta Frye in this transaction was placed to the credit of Emma Frye, and that none of the borrowed money was ever received by appellant. Appellant was not permitted to testify that Frank F. Frye, acting for Augusta Frye, took the note February 11, 1931, after execution and delivery of same by Emma Frye October 31, 1930, to the office of appellant, who, on request of Frank F. Frye, signed the note at that time. The court also rejected appellant's offer to show by his own testimony the relations between the parties, that the loans were not made to each other on a commercial basis, but were made as one member to another member of the family at a low rate of interest and '* * * that the borrowing of this money was made at the behest of Emma Frye, who had always been on close and intimate terms with her brother-in-law and sister up to that time, and who was concerned about Mr. Frank Frye's health and who asked Mr. Charles Frye to see if some arrangement could not be made to handle this money, and that Emma Frye individually agreed to the handling of the money and gave her note to August Frye and executed a mortgage to secure the indebtedness; that Mr. Charles H. Frye received nothing for his endorsement on the note, the endorsement being made at the request of Frank Frye acting for Augusta Frye just previous to a trip that Mr. Frye made on on business back east, and at a time subsequent to the original delivery of the note; that Frank Frye brought the note in and asked Mr. Charles H. Frye to endorse it, which he did, writing on there 'As of February 11, 1931'; that the transaction was throughout primarily for the accommodation of Augusta Frye under the circumstances I have stated.'

A person whose signature appears upon a promissory note is presumed to have become a party to the note for value. Such person has the burden of establishing lack of consideration, even if he signed the note after its execution and delivery.

'Every negotiable instrument is...