First Nat. Bank of Hailey v. Bews

• Decision Date: 23 December 1897
• Parties: FIRST NATIONAL BANK OF HAILEY v. BEWS
• Court: Idaho Supreme Court

51 P. 777

5 Idaho 678

FIRST NATIONAL BANK OF HAILEY v. BEWS

Supreme Court of Idaho

December 23, 1897

PROMISSORY NOTE-MORTGAGE-PAROL EVIDENCE TO VARY TERMS OF CONTRACT.-Certain parties holding a mortgage upon property upon which there existed prior mortgages, entered into agreement with the mortgagors, which agreement was evidenced by two instruments in writing, one signed by the mortgagors and the other by the mortgagees, bearing even date, that signed by the mortgagors containing a provision that said mortgagors did thereby turn over to the mortgagees the possession of the mortgaged premises upon the condition that said mortgagees should "apply all rents and profits in leasing or using it on actual expenses, taxes, insurance and interest and principal of their mortgage note," there being at the time some $8,000 of insurance on the property for the benefit of prior mortgagees. No mention of insurance was made in the instrument signed by the mortgagees. Held that the statement in the instrument signed by the mortgagors was insufficient to charge the said mortgagees with a duty to keep said property insured for the sum of $25,000, their mortgage being for the sum of $10,000, and, further, held that parol evidence was not permissible to establish such contract.

(Syllabus by the court.)

APPEAL from District Court, Blaine County.

A. F Montandon and Brown & Henderson, for Appellant.

Where an instrument does not express the entire agreement, and does not appear to do it, parol evidence is competent to show the omitted part, whether contemporaneous or antecedent, if it does not conflict with the instrument. (Browne on Parol Evidence, sec. 50, p. 125, and authorities cited; Greenleaf on Evidence, sec. 282, n. 2; Wharton on Evidence, secs. 926, 942, 944, 946, 947, 956, 961, 971; Rice on Evidence, 219, 262, 264, 275, 318, 320; Auezrais v. Naglee, 74 Cal. 60, 15 P. 371; Toomy v. Dunphy, 86 Cal. 639, 25 P. 130.) Where a contract is partly in writing and partly by verbal agreement, parol evidence is admissible to show the portion of the contract not reduced to writing. (Peterson v. Chicago etc. R. R. Co., 80 Iowa 92, 45 N.W. 573.) At bar the written contract provided for insurance, but omitted to state to what amount--a clear omission--and parol evidence to explain and supply the omission was admissible, not to vary, contradict, add to or take off, but to make it intelligible, and carry it into effect as made by the parties.

R. F. Buller and Texas Angel, for Respondent.

In considering the question as to the supposed liability of the plaintiff under the alleged contract to insure, it must not be forgotten that, as a matter of fact, the plaintiff never made any contract at all, and was not even in existence at the time when the contract to turn over the rents and profits of the hotel to McCornick & Co., and Willman & Walker, was made. There is no date to the paper introduced by defendant Young as a copy of the agreement, but he testified that it was made sometime in May, 1888. It is the established law that an indorsement in full of a promissory note implies certain contract liabilities and no others, unless expressed therein, and that it cannot be varied by parol evidence. (Daniel on Negotiable Instruments, 3d ed., sec. 719, and cases cited; Doolittle v. Ferry, 20 Kan. 230, 27 Am. Rep. 166, and cases cited; (Brewer, J.).) The cashier has no power to contract for the bank. (Story on Agency, sec. 115.) Neither the president nor cashier have power to bind the bank, except in the discharge of their ordinary duties. (United States Bank v. Dunn, 6 Pet. 57; United States v. Bank of Columbia, 21 How. 356; Jenkins v. National Village Bank, 58 Me. 275, 278.) The defendant can get no help from the doctrine of ratification, for where a party claims ratification of an unauthorized contract of an officer he must show that the directors, or a majority of them, actually knew of the contract and its terms, and with such knowledge acquiesced in it. There is no such evidence in this case. (4 Ency. of Law, 247, note 1; Murray v. Lumber Co., 143 Mass. 250, 9 N.E. 634.)

HUSTON, J. Sullivan, C. J., and Quarles, J., concur.

OPINION

HUSTON, J.

This is an action brought by the plaintiff against defendants upon a promissory note, a copy of which is set forth in the complaint, and is in the words and figures following:

"$ 5,000.00. Hailey, Idaho 29th August, 1887.

"One day after date, without grace, for value received, we jointly and severally promise to pay to the order of McCornick & Co., five thousand dollars, negotiable and payable at the house of McCornick & Co., Hailey, Idaho without defalcation or discount, and interest at the rate of one and one-half per cent per month from date until paid, both before and after judgment.

(Signed)

"H. BEWS.

"KATE BEWS.

"O. R. YOUNG.

"J. W. HODGMAN."

The facts, as they appear from the record, are substantially as follows: In the year 1887, the defendants were engaged in the erection of an hotel in the town of Hailey, in (then) Alturas county. In the progress of the erection of said hotel, the defendants found it necessary to borrow a certain sum of money, and, to effectuate that purpose, they executed to the payee therein named the promissory note above set forth, and also at the same time executed and delivered to Willman & Walker a note for $ 5,000, and gave a joint mortgage to said McCornick & Co. and to Willman & Walker, to secure the payment of said notes and interest, which mortgage was subject to a certain other prior mortgage upon the same premises. Some time in May, 1888 (the exact date does not appear), the possession of the said hotel property was turned over to the said McCornick & Co. and said Willman & Walker, and the following paper writing was delivered by the mortgagors to them, to wit:

"We hereby turn over to Willman & Walker and M. McCornick & Co. the property known as the 'Merchants' Hotel,' and the personal property therein, subject to the right of the parties therein interested, on lots 19 and 20, block 40, Hailey, Idaho; they to apply all rents and profits in leasing or using it on actual expenses, taxes, insurance, and interest and principal of their mortgage note.

(Signed)

"KATE BEWS.

"J. W. HODGMAN.

"O. R. YOUNG.

"BEWS, HODGMAN & YOUNG."

It seems that at the same time of the execution and delivery of the foregoing instrument, another, of which the following is a copy, was executed and delivered by the mortgagees to the mortgagors, viz.:

"Whereas, Henry Bews, Kate Bews, J. W. Hodgman, and O. R. Young, have this day, by instrument in writing, turned over to Willman & Walker and McCornick & Co., the premises known as the 'Merchants' Hotel,' situated at northeast corner of Maine and Bullion streets, Hailey, Idaho being lots 19 and 20, of block 40, of Hailey, aforesaid, as further security, etc.: Now, therefore, said Willman & Walker and said McCornick & Co., for themselves, their heirs and assigns, covenant and agree to rent said premises to the best advantage in their power, to use diligence and care in keeping the premises neat, clean, and in good repair, and at any time, on payment of the amounts due them by the said Bews, Hodgman & Young, or either of them, to surrender and deliver up the possession of said premises, subject to any lease or leases in existence from them thereon at the time; or in case of any mortgage or other title, prior to the rights of said Willman & Walker, McCornick & Co., intervene and mature and ripen into title, then the said McCornick & Co. and Willman & Walker shall, on payment of the same due them, execute a quit claim deed thereof to the person or persons paying them. Nothing in this contract shall prohibit said Willman & Walker and said McCornick & Co. from foreclosure of their mortgage, nor from purchasing said premises on any foreclosure or execution sale thereof.

(Signed)

"WILLMAN & WALKER.

"ALEX. WILLMAN.

"McCORNICK & CO.

"By J. M. BURKETT,

"Cashier.

"A. L. WALKER.

"May 10, 1888."

At the same time, certain leases of portions of the property transferred were assigned by the mortgagors to the mortgagees. The mortgagees assumed possession of the premises under the foregoing...