Farmers' Bank of Roff v. Nichols
| Citation | 106 P. 834,25 Okla. 547,1910 OK 10 |
| Parties | FARMERS' BANK OF ROFF v. NICHOLS. |
| Decision Date | 11 January 1910 |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
A negotiable promissory note was executed in payment of the premium on some life insurance policies. At the time of the delivery of the note to the payee, who was agent for the insurance company, the payee executed a written agreement that if the maker of the note, within a stipulated time investigated the company and found it not satisfactory or as represented, the note or the amount thereof in cash would be refunded to the maker by the payee. Held, that the contemporaneous agreement did not constitute the delivery of the note a conditional delivery or deny to the payee the right to transfer the same, and that one who purchased the note in due course of business, before maturity, for a valuable consideration, could recover in an action thereon although at the time of the transfer he had notice of the contemporaneous agreement.
To "refund" a thing does not necessarily mean to return the identical property received. To "refund" means to return in payment or compensation for what has been taken; to repay; to restore.
Error from Pontotoc County Court; Joel Terrell, Judge.
Action by the Farmers' Bank of Roff against I. D. Nichols. Judgment for defendant, and plaintiff brings error. Reversed and remanded.
Clinton A. Galbreath and Tom D. McKeown, for plaintiff in error.
Duke Stone, for defendant in error.
This is an action upon a promissory note for the sum of $438.20 executed by defendant in error on the 20th day of August, 1907, to one R. M. Carter, a life insurance agent, in payment of a premium on a policy of life insurance, the same being payable on January 1, 1908. After the execution of the note and before maturity thereof, it was assigned by the payee to the Farmers' Bank of Roff, plaintiff in error, who brought this action and alleged in its petition in substance the foregoing facts, and that the note is due and unpaid. The defense relied upon by defendant in substance is: That at the time of the execution and delivery of the note by him a contract in writing was executed and delivered by the payee of said note to defendant as follows: That defendant investigated the insurance company and found the same not as represented and not satisfactory to him, and that before January 1, 1908, he gave notice of these facts to the payee. That prior to the purchase of the note by plaintiff he notified the officers of the plaintiff bank of the foregoing contract relative to said note, and exhibited said contract and the contents thereof to the officer of the bank, who conducted the transaction for it, by which the note was purchased from the payee. The verdict of the jury and the judgment of the lower court was in favor of defendant. Several assignments of error have been made by plaintiff in his petition and urged in its brief, but they present in substance but one question, and that is whether the plaintiff is a bona fide holder of the note sued upon. The written contemporaneous agreement relied upon by defendant in his answer is not denied. The note is negotiable in form, and that the same was assigned to plaintiff before maturity in the due course of business for value is not questioned. Whether plaintiff had notice of the contemporaneous agreement and its contents the evidence is in irreconcilable conflict, but, for the purpose of this proceeding, it must be considered that plaintiff had knowledge at the time of its purchase of the note of the contents of the agreement. The sole question to be determined is: What is the effect of the contemporaneous agreement upon the rights of plaintiff who acquired the note with knowledge of such infirmity of payee's title, if any, as existed by reason of said agreement?
It is contended by defendant, and it appears that the trial court proceeded upon the theory, that by the terms of the contemporaneous agreement the delivery of the note by defendant to Carter was conditional, and that Carter could not become the absolute owner of the note until January 1 1908, and not then if defendant, after having investigated the insurance company, found same not as represented and not satisfactory. The authorities hold that where the maker of a note delivers it to the payee with the agreement that it shall not take effect until the happening of a certain contingency or the performance of a certain condition, and where neither the contingency has occurred nor the condition been performed, the note never becomes operative, and an action thereon by the payee or his assignee with notice cannot be maintained. Johnson v. First National Bank of Morrison, 24 Ill.App. 352; Mendenhall v. Ulrich, 94 Minn. 100, 101 N.W. 1057. See, also, Myrich v. Purcell et al., 5 Am. & Eng. Ann. Cas. p. 148. [1] And this is true although the contemporaneous agreement be parol. Graham et al. v. Remmel, 76 Ark. 140, 88 S.W. 899; Mehlin v. Mut. Res. Fund Life Ass'n, 2 Ind. T. 396, 51 S.W. 1063; Joyce on Defenses to Com. Paper, § 310. But we are unable to concur with the trial court in construing the contract in this case as imposing a condition upon the delivery of the note made by defen...
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