Ellis J. Gomez & Co. v. W. W. Hartwell

• Decision Date: 03 October 1923
• Citation: 122 A. 461,97 Vt. 147
• Parties: ELLIS J. GOMEZ & CO. v. W. W. HARTWELL
• Court: Vermont Supreme Court

122 A. 461

97 Vt. 147

ELLIS J. GOMEZ & CO. v. W. W. HARTWELL

Supreme Court of Vermont

October 3, 1923

May Term, 1922.

ACTION OF CONTRACT. Plea, the general issue and special plea. Trial by jury at the September Term, 1921, Washington County Moulton, J., presiding. Verdict and judgment for the plaintiff. The defendant excepted.

Reversed and remanded.

Plumley Plumley & Campbell, and John W. Gordon, for the defendant.

Theriault & Hunt for the plaintiff.

Present WATSON, C. J., POWERS, TAYLOR, MILES, and SLACK, JJ. MILES, J., having retired took no part in the disposition of the case.

OPINION

TAYLOR

The action is brought on a check for five hundred dollars drawn by the defendant and payable to the order of the plaintiffs. Trial was by jury with verdict and judgment for the plaintiffs. The execution of the check was conceded, and, having been admitted in evidence, the plaintiffs rested. The defense relied upon was a conditional delivery of the check and consequent failure of consideration. The case is here on exceptions saved by the defendant.

There was evidence tending to show the following facts: The defendant, who resides in Northfield, Vermont, F. S. Dyke, also of Northfield, and Dr. F. H. Davis of Lyndon, Vermont, became interested in acquiring the exclusive right to sell an automobile accessory called "signal light" in certain territory. The appliance was manufactured by the Standard Auto Parts Company of America, a corporation, and the Standard Sales Corporation had the exclusive right of selling the lights. The corporations occupied the same offices in New York City with the plaintiff, and one Fred J. Miles was the president of both corporations. The plaintiffs are brokers engaged in selling securities, including stocks and bonds, with offices in New York City, Boston and elsewhere, and had the exclusive right to sell the stock of the Standard Auto Parts Company. Early in July, 1920, Dyke and a son of Dr. Davis had a talk with plaintiff Gomez at his Boston office respecting the "signal light" proposition. The latter told Dyke that if he was interested in getting territorial rights he should see Miles, as he was the head of the concern that was distributing the device. Accordingly, they accompanied Gomez to New York where they met Miles and also a Mr. Hurtel and a Mr. Halpern who were introduced by Gomez as his stock salesmen. Later (July 13, 1920) Mr. Davis, Dyke, and the defendant met Gomez and Miles at their New York office. Hurtel and Halpern were present. The defendant and his associates were told that in order to obtain the territorial rights it would be necessary to purchase some of the stock of the Auto Parts Company; and Miles said in Gomez presence that they might have the rights in Vermont and Maine on condition that they purchase $ 5,000 worth of such stock--that the contract for territorial rights was dependent upon the contract for stock. Gomez referred them to Halpern and Hurtel as the men who were to "take care" of them and explain the proposition. The negotiations that followed were in part conducted by Halpern or Hurtel and in part by Miles in Gomez presence. Defendant's evidence tended to show that he and his associates represented that they were unable to carry out the proposition alone, whereupon a sale contract was submitted and an agreement for the purchase of $ 5,000 worth of the stock and a note for $ 2,500 were prepared; that it was agreed that checks dated ahead aggregating $ 2,500 should be given and Dyke and the defendant should return to Northfield, submit the contracts to their attorneys for approval and undertake to secure the signatures of two other responsible persons; and that completion of the contracts depended upon the approval of the attorneys and the procurement of the additional signatures. The agreement for the purchase of stock was signed by the defendant and his associates and had blanks for two additional signatures. There was a conflict in the testimony whether they had signed the note. Certain of the papers not including the checks were given to Dyke who took them to Northfield. The proposition was disapproved by the attorneys and the New York parties were so notified. Miles came to Northfield with a view to bringing about an agreement, but failed to do so; and the defendant and his associates were unable to secure the desired assistance. As a result the sales contract was never consummated but the plaintiffs insisted and still insist that the agreement for the purchase of stock was an independent contract and binding upon the defendant and his associates, regardless of the failure of the negotiations for the sale rights. The plaintiffs' evidence tended to show that there was no such an agreement as the defendant claims, that the sale of the stock was without any condition, and that the check was given in part payment therefor.

The principal question of fact submitted to the jury was whether there was an agreement between the parties to the suit that the check was not to be enforced unless certain contingencies should happen. The jury were in effect instructed that the burden was on the defendant to prove the conditional agreement claimed by him as a defense to the action on the check, to which the defendant excepted. Section 16 of the Negotiable Instruments Act (G. L. 2886) provides: "Where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved." The defendant contends that the production of the check made only a prima facie case for the plaintiffs, shifting the burden of evidence to the defendant; but that the burden of proof remained with the plaintiffs to overcome the evidence produced tending to show that the check was void for want or failure of consideration. But the statute goes further than the defendant admits. It casts upon the defendant the burden of showing the conditional delivery relied upon and failure of such condition. The defense is affirmation and the ultimate burden of sustaining it rests upon the defendant. Among the cases so holding are Mason v. Cater, 192 Iowa 143, 182 N.W. 179; Harder v. Reinhardt, 162 Wis. 558, 156 N.W. 959; Winfrey v. Ragan, 136 Mo.App. 250, 117 S.W. 83; Ellerd v. Ferguson (Tex. Civ. App.) 218 S.W. 605; Madden v. Gaston, 137 A.D. 294, 121 N.Y.S. 951; Lachenmaier v. Hanson, 196 F. 773, 116 C. C. A. 397; Woltzen v. Wieman, 168 Ill.App. 220. Our cases relied upon, distinguishing between the burden of proof and the burden of evidence, are not in point. The question is like that presented when want or failure of consideration is interposed as a defense, as to which it is held the Act Places the burden upon the defendant. Harponola Co. v. Wilson, 96 Vt. 427, 120 A. 895.

As seen, there was a conflict in the testimony whether the note for $ 2,500, given or to be given in part payment for the stock, was signed by the defendant and his associates. The jury were told that whether or not the note was signed or indorsed was important as bearing upon the main question in the case, viz., whether the contract was as the plaintiff claimed, a complete and binding contract for the sale of the stock, or as the defendant claimed, incomplete and conditional; that if the note was completed--signed and indorsed--it would be evidence tending to show that the contract for the sale of stock was unconditional, while if the note was incomplete--made out but not signed or indorsed--it would be evidence which they could consider as tending to show that the defendant's contention that the contract was not an absolute one was true. It appeared in evidence that the note was among the papers brought to Northfield by Dyke and that shortly before the interview with Miles at Northfield it had been destroyed by Dyke in the presence and with the approval of Dr. Davis. The defendant was not present and there was no evidence in any way connecting him with the destruction of the note. The jury were instructed that the wilful destruction of documentary evidence gives rise to the presumption that the document, if produced, would be injurious to the one who destroys it, and were told to consider the presumption in connection with the evidence on the part of the plaintiffs, if they found that the note was intentionally destroyed. The defendant excepted to the charge as given in the absence of evidence that the defendant knew of the destruction of the note or in any way assented to or aided in its destruction. An exception to the failure of the court to charge is aimed at the same objection.

Plaintiffs' counsel criticize the form of the exception but an examination of the transcript indicates plainly that the court ruled understandingly. An intimation that the court might charge that there would be no presumption against the defendant unless he had knowledge of the spoiliation was met by the claim that if one partner commits the spoiliation the presumption arises as to the others engaged in the common business. In spite of the defendant's objection the court adopted this view and permitted the charge to stand. The exception to the charge presents reversible error. That the note was intentionally destroyed was not in dispute. The defendant's responsibility for the spoiliation was assumed, while the evidence was to the contrary. The presumption in any event does not take the place of evidence but is regarded as merely matter of inference in weighing...