Holmes v. Farris

• Decision Date: 24 June 1902
• Citation: 71 S.W. 116,97 Mo. App. 305
• Parties: HOLMES et al. v. FARRIS.
• Court: Missouri Court of Appeals

71 S.W. 116

97 Mo. App. 305

HOLMES et al. v. FARRIS.

Court of Appeals at St. Louis, Missouri.

June 24, 1902.

ACTION ON NOTE — FAILURE OF CONSIDERATION — BURDEN OF PROOF — PAROL EVIDENCE — APPEAL — REVIEW — HARMLESS ERROR.

1. In an action between payee and maker of a note, defendant sought to prove that the paper was given upon the conveyance of title to land of the payee on agreement by defendant to attempt to sell the same for account of the payee, failing in which, the land was to be reconveyed. Held, that these facts, in the circumstances stated in the opinion, tend to show a failure of consideration.

2. A promissory note, in Missouri, imports a consideration, until the contrary is shown (Rev. St. 1899, § 894); and the burden of proof is on defendant to prove a want of consideration.

3. A promissory note may not be contradicted by oral evidence of a contemporary agreement that it is not to be paid according to its terms, but this rule does not forbid proof of want or failure of consideration. Rev. St. 1899, § 645.

4. In a suit upon a note whose execution is admitted, the payee makes out a prima facie case by the production of the note.

5. In cases where the appellate court has authority to review the facts, it may discard incompetent evidence without reversing the judgment on that account; but in an action at law, tried by the court, the admission of incompetent evidence is reversible error unless the appellate court is convinced that no prejudice resulted therefrom to the party appealing.

6. Error is presumed to be prejudicial, until it is clearly shown to be harmless.

(Syllabus by the Judge.)

Appeal from circuit court, Laclede county; L. B. Woodside, Judge.

Action by Rufus E. Holmes and others against J. W. Farris. Judgment for defendant, and plaintiffs appeal. Reversed.

White & McCammon, for appellants. J. W. Farris, in pro. per.

BARCLAY, J.

Plaintiffs brought this action by a petition in the ordinary form upon a promissory note, expressed to be for value received, whereby defendant promised to pay to plaintiffs or bearer, November 1, 1899, $400, with interest, etc. The note was dated, "Kansas City, Mo., October 23, 1896." The answer of defendant admits the execution of the note, alleges that it was given "without any consideration whatever," and then sets up a special defense to the effect that plaintiffs conveyed to defendant a certain tract of land, to be sold for them by him, and that defendant executed to plaintiffs a note for $400, secured by deed of trust on the land, — neither deed nor note to be binding unless the land was sold, which it was not, — and that when the note became due, and the land remained unsold, defendant tendered back to plaintiffs a deed to said land, which they refused to accept, but foreclosed the deed of trust and recovered the land. The cause was tried by the court, a jury having been waived. Plaintiffs introduced the note, with indorsements showing that a credit of $25 had been given defendant on the note by the last foreclosure sale of the land to plaintiffs, June 25, 1900. Defendant was then sworn on his own behalf. Plaintiffs objected to any evidence by him on the ground that he sought to contradict the written instrument by parol evidence, and that the statute of frauds was a bar on the ground that the note was not to be performed within a year, and hence that any oral modifications or additions thereto must be shown by writing. These objections were made preliminary to any testimony of the defendant. The substance of defendant's testimony is that he had been a loan agent for Holmes & Co., of Kansas City, and that they afterwards became Holmes Bros. He had made a loan upon some land (120 acres) near Richland, Mo. The loan becoming due, the mortgage was foreclosed, and Mr. Ed. Holmes, in consequence, bought in the land at the sale. Mr. Holmes complained that the loan had been a bad one, whereupon defendant said that he thought the land was easily worth the debt. Mr. Holmes then desired defendant to take it for the debt. Defendant declined to do so, but said he would try to sell it for them. It was then agreed between Mr. Holmes and defendant that the land should be deeded to the defendant, and the latter would give to plaintiffs the note in suit, secured by deed of trust on the land. It is to be inferred that this was to be the purchase price in event of a real sale, and meanwhile defendant was to pay interest to plaintiffs at 6 per cent. per annum while the note ran, namely, for three years. This he did, and he also paid the taxes for the same period. In case the land was sold, the note was to become effective; but, if it was not sold, then plaintiffs were to make no claim on account of the principal thereof. It does not seem essential to narrate the full particulars of the evidence. It certainly tended to show a want of consideration for the paper sued upon, in the failure of the sale, the prospect of which was the moving inducement to the making of the note. But in the progress of the trial, and against the earnest objection and repeated exception of counsel for plaintiffs, the defendant was permitted to state that it was part of the agreement that the note should not be paid in case the land was not ultimately sold. Plaintiffs put in evidence all the documents appertaining to the original transaction, including a quitclaim deed to defendant, and his deed of trust to their trustee, securing the said note. No other contradiction of defendant's version of the affair was given in evidence. No instructions were asked or given on either side. The trial court found for the defendant, and plaintiffs appealed, after the usual formalities.

1. The precedents in Missouri are firmly anchored to the rule of law that a promissory note, even in the hands of the original payee, may not be contradicted by oral evidence of the maker to the effect that the note was not to be paid according to its terms. The reasons of this rule have been so often stated that we do not consider it necessary to go over that ground again. Jones v. Jeffries, 17 Mo. 577; Smith's Adm'rs v. Thomas, 29 Mo. 307; Jones v. Shaw, 67 Mo. 667; Gardner v. Mathews, 81 Mo. 627; Sigler v. Booze (K. C.) 65 Mo. App. 555.

2. The foregoing rule, however, does not forbid the appropriate application of the Missouri statute concerning proof of want or failure of consideration. The law on that subject is expressed by a section, the greater part of which has been for many years in force, as follows: "Whenever a specialty or other written contract for the payment of money, or the delivery of property, or for the performance of a duty, shall be the foundation of an action or defense in whole or in part, or shall be given in evidence in any court without being pleaded, the proper party may prove the want or failure of the consideration, in whole or in part, of such specialty or other written contract." Rev. St. 1899, § 645; Rev. St. 1845, c. 136, art. 7, § 21. It is competent for a maker of a note, as against the payee, to show that there was no consideration, in whole or in part, for the instrument sued upon, with a view either to defeat or to reduce the recovery claimed thereon, as the case may be. Upon the facts disclosed by this record, we are of opinion that there was testimony from which a court might reasonably find there was a failure of consideration for the paper which was the foundation of the action. Trust Co. v. Brady, 165 Mo. 197, 65 S. W. 303. At the same time, we hold that several items of evidence which the court admitted conflicted with the principle of law declared in the first paragraph of this opinion. We cannot know what weight or influence the court gave to the incompetent facts which were so gleaned from defendant as a witness at the last trial. It is now a settled doctrine of our procedure that, where error appears, it is presumed to be prejudicial, unless the appellate court can clearly see that it was harmless. State v. Taylor, 118 Mo. 153, 24 S. W. 449. The learned trial judge sat as a jury in this case. As he permitted the incompetent facts aforesaid to be given in evidence, it is fair to assume that he gave weight to those facts in forming his judgment. Where an appellate court has lawful authority to pass upon the facts on appeal, it may discard incompetent evidence, and pronounce its conclusion upon the legal testimony remaining, as is often done in equity cases. Padley v. Neill, 134 Mo. 375, 35 S. W. 997; Supreme Lodge v. Schworm (St. L.) 80 Mo. App. 64. But this is an action at law. We cannot be sure that the incompetent testimony was disregarded by the...