Edwards v. City Nat. Bank of Mcalester

• Decision Date: 13 September 1921
• Docket Number: Case Number: 10188
• Parties: EDWARDS v. CITY NAT. BANK OF McALESTER.
• Court: Oklahoma Supreme Court

1921 OK 313

201 P. 233

83 Okla. 204

EDWARDS v. CITY NAT. BANK OF McALESTER.

Case Number: 10188

Supreme Court of Oklahoma

Decided: September 13, 1921

Syllabus

¶0 1. Evidence--Parol Evidence Varying Writings. The rule that a written contract cannot be altered, changed, or terms varied, in the absence of allegations and proof of mistake, fraud, or failure of consideration, by parol proof, does not apply invariably and without exceptions, and one of those exceptions is that where a transaction is entered into between parties the terms of which are yet to be carried out, in other words, are executory, as future covenants and promises, some of the provisions of which are verbal and some one or more are in writing, the above rule as to varying the terms of a contract does not apply, and the parol terms and provisions of said contracts may be proved. And this is upon the theory that the main transaction rests in parol and the written portion being an incident connected with the main transaction.

2. Same--Action on Note by Bank--Defenses -- Parol Agreement to Protect Maker. Where E. executed promissory note to a bank of which C. was president, and before E. executed the note, C., representing said bank, as an inducement to E. to sign the note to said bank, represented to E. that a business concern in which E.'s son-in-law was a partner, was in a failing condition and that the bank had advanced all the money to said concern that it could do legally and that the bank was liable to lose a certain security held by it on the property of said concern by reason of bankruptcy proceedings if settlement with the creditors of said concern was not carried through, and that it would be necessary for said bank to advance a certain amount of money to consummate said settlement, and that it was desired that E. sign a note to the bank to cover the amount of said advancement, and that if E. would sign said note, the bank would supervise and carry through said settlement and see that the concern was sold out and that the proceeds of said sale would be applied in liquidation of the debt and note which it was sought that E. execute before any of said fund would be applied to any debt owed to the bank, and other promises were made as to the handling of said settlement that would safeguard and procure the liquidation of the note by E., and upon said promises and assurances E. signed said note, and afterwards the consummation of said plan was carried out and the bank and C. came into possession of the funds from said sale of the business and had charge of the disbursement of the same--held, that E. could prove the terms of said agreement; and held, further, that the bank was in a position, in the nature of a trustee for E., and that E. can hold the bank to a faithful performance of the terms of said agreement.

O. A. Keach and A. C. Markley, for plaintiff in error.

Fuller, Porter & Fuller and J. S. Arnote, for defendant in error.

ELTING, J.

¶1 This action was brought by the City National Bank of McAlester against the defendant, Sarah J. Edwards, on a promissory note, and was filed on March 28, 1916, and prayed for judgment against the defendant in the sum of $ 3,087.33, together with interest thereon at 10% per annum from the first day of February, 1916, until paid. The plaintiff, at the same time, filled an affidavit for attachment, asking for same upon the grounds that the defendant was a nonresident of the state of Oklahoma and resided at Wichita, state of Kansas, and caused an attachment to be issued and levied upon a residence of the defendant in the city of McAlester, Oklahoma, and afterwards caused service to be had by publication. On the 20th day of December, 1916, the defendant filed an answer in said cause. Said answer contained a general denial of the allegations of the plaintiff's petition, except such allegations as were admitted in the answer. The allegations of said answer, in substance, as follows:

That J. F. Craig was president of the plaintiff bank at the time the transaction and incidents hereinafter set forth took place, and that he was the agent of the said bank in said transaction. That during the year 1912, Ben Durfee, a son-in-law of the defendant, was engaged in a mercantile business in the city of McAlester, and that said business was conducted under the name of Ben Durfee & Company and was a partnership composed of Ben Durfee and another party. At the close of 1912, the said concern became insolvent; owed more debts than it could pay and was in bankruptcy. And that the plaintiff bank undertook, through J. F. Craig, to make a settlement, and did make a settlement with the creditors of said concern, at 30 cents or the dollar. That it was estimated by J. F. Craig that it would take something like $ 6,500 to make the settlement, and that said bank had already advanced to Ben Durfee & Company all the money it could legally, which amount so advanced was in the sum of $ 6,500. That on or about the third day of April, 1913, the said president of plain tiff bank, J. F. Craig, appeared at the home of the defendant, Sarah J. Edwards, in company with Ben Durfee, and the defendant, talking through and being represented by her daughter, Mrs. Durfee, had a transaction with J. F. Craig--if not with the specific consent of Ben Durfee, representing Ben Durfee & Company, it was at least by his implied assent thereto--and as a result of the negotiations this defendant signed the note sued on herein.

¶2 That defendant was not inclined to sign the note, but it was represented by J. F. Craig to Mrs. Durfee, as the agent of her mother, the defendant--and it is alleged that a part of the transaction of which was in the presence of and in the hearing of Mrs. Edwards, the defendant, whereby it was represented by Craig that the bank had advanced all the credit to Ben Durfee & Company that it could legally advance and that it was necessary that a settlement with the creditors be made, and asked the defendant to sign a note covering the amount of $ 6,500, not with a view of collecting the same from the defendant, but the indebtedness would be carried in her name to make it legal. It was further represented to her that the settlement could be made at 30 cents or the dollar, and only such part of the $ 6,500 as was needed to make the settlement would be used, and what was not used would be credited on the note. It was further represented that the bank held a mortgage on property belonging to the concern at Kiowa, Oklahoma, and that they would give credit for $ 4,000 on the debt then due the bank from the concern when a deed was given to said property to the bank. It was further agreed that for the balance of said indebtedness due from the concern to the bank, in the sum of $ 2,500, the bank was not to participate in the 30% settlement. It was further agreed by the bank that Ben Durfee would keep in charge of the business under the control of the bank, and that as soon as the same could be done, said business would be sold; and that the indebtedness of said concern would be paid out of the proceeds of the sale, including the balance of the debt covered by the note, and that the debt of the bank was not to be paid out of said proceeds until the amount covered by the note by defendant was first settled. It was further alleged that on the strength of these representations and assurances, believing that they would be carried out, the defendant signed said note. That settlement was perfected and consummated whereby the debts of the concern were paid and settled at the rate of 30 cents on the dollar, and that the amount of money covered by said note was in excess of what was required to liquidate said indebtedness at 30 cents or the dollar in the sum of $ 961.03, and that this amount was credited by two different credits on said note. This was in pursuance of the agreement made by Mr. Craig, representing the bank, with the defendant. That in breach of one of the agreements made with the defendant, however, the bank permitted the balance of the indebtedness of $ 2,500 due from the concern to the hank to participate in that settlement and receive $ 750 that should have been credited, as the defendant contends, upon her note, in addition to the $ 961.03. That afterwards a deed was made to the property in Kiowa to the bank for $ 4,000, which would cut the debt due by the concern of Ben Durfee & Company to $ 2,500. That about a year after the note was executed, a sale of said concern was consummated to one Joe Bell, who paid something like $ 13,500 for said property. This sale was consummated by J. F. Craig and Ben Durfee acting together and the money was paid into the bank and by it disbursed. That Ben Durfee and J. F. Craig secured a settlement with the creditors at 56 cents on the dollar. That after the settlement with said creditors there was a considerable sum of said proceeds of said sale still remaining in said bank and that J. F. Craig, without consulting this defendant in any particular about the transaction and in breach of his agreement with the defendant, in addition of paying 30% of the debt of $ 1,000 owed to the First National Bank of McAlester, and a note of $ 1,000 owed by Ben Durfee to the bank of Krebs, paid to the first named bank $ 443.27, and to the bank of Krebs $ 418.35, which two amounts should have gone to the liquidation of the debts evidenced by defendant's note under the agreement. That, in addition thereto, this plaintiff bank, through J. F. Craig, had charged up against said fund and liquidated $ 1,759 of debts of the concern in favor of the bank instead of crediting the note upon which defendant was sued, and as it was agreed by J. F. Craig with the defendant and Mrs. Durfee, her agent, would be done if she would sign said note. Then the answer alleges and states that the defendant owed the bank nothing and prays that the defendant be permitted to go hence without day. The plaintiff filed a demurrer to portions of the...