Kansas City Breweries Co. v. Haffey
| Decision Date | 06 March 1916 |
| Parties | KANSAS CITY BREWERIES COMPANY, a Corporation, Appellant, v. PATRICK HAFFEY, Respondent |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. Jos. A. Guthrie, Judge.
AFFIRMED.
Judgment affirmed.
Cowherd Ingraham, Durham & Morse and A. A. O'Brien for appellant.
I. J Ringalsky and M. L. Friedman for respondent.
--Plaintiff, in one count, sued to recover $ 2568.54, being the aggregate amount of interest claimed to be due on three promissory notes executed by defendant to plaintiff. Said notes on the face bore six per cent per annum. It was conceded that defendant had paid the principal of all three of said notes, so that whether or not there was any interest due is the only question in controversy. (In addition to the answer, defendant set up, by way of counterclaim that he had overpaid plaintiff on the principal of said notes to the extent of $ 157.50; but, as plaintiff admitted during the trial that defendant had overpaid on the principal to the extent of $ 126.05 and the court in its finding fixed the overpayment at said last-named amount, the question of overpayment is not now one of the contested issues in the case.)
In order to get the matter disposed of on its merits, defendant at the trial waived all objections because the petition sought in one count to recover interest on three separate notes, and because the first two of said notes, or copies thereof, did not accompany the petition, or their absence was unaccounted for.
The three notes were dated December 21, 1909. The first was for $ 7000 due one year after date, the second was for $ 6500 due two years after date and the third was for $ 6500 due three years after date. The amount of interest sued for was made up of the following sums: $ 581.70 on the $ 7000 note, $ 540.13 on the second note and $ 1446.71 on the third note. When defendant paid the principal of the $ 7000 note it was delivered to him and no interest was demanded of him, and when he paid the next note it likewise was surrendered without exacting interest thereon. But when defendant paid the principal of the third note and asked that it be surrendered to him, plaintiff refused and demanded payment of interest thereon and also on the two surrendered notes. Plaintiff's explanation of why the first two notes were delivered up without interest being paid thereon is that it considered the aggregate of the notes as only one transaction, namely a loan of $ 20,000; and plaintiff's secretary and treasurer says he had a verbal understanding with defendant that no interest would be paid until a final settlement was made on the account, that is, until the last of the $ 20,000 was paid. It would seem that this explanation involves as much of an oral variation of a written contract as is that charged by plaintiff against defendant when the latter asserts that no interest is due from him? According to the terms of the notes the interest on each was due when the notes fell due and there was no provision therein for a postponement of the payment of interest until the last note was paid.
In order to understand the contention between the parties as to the interest claimed it is necessary to state certain facts.
Plaintiff is a corporation engaged in the manufacture and sale of beer and has at least two breweries in Kansas City, one known as Heim's and the other as the Rochester Brewery.
James Flanagan was a director in said plaintiff company and also owned and was conducting, in December, 1909, a saloon at 1724 West 9th street in said city. He had been in business there for many years and desired to sell both his business and the building in which he was located, of which he was also the owner. The defendant Haffey had been his faithful employee in said saloon for years. J. J. Heim was president of plaintiff, the Kansas City Breweries Company. Mr. Carpenter was its secretary, and R. L. Melton was one of its directors and a member of the executive committee. As Flanagan was unable to find a purchaser for his saloon, it was suggested that he sell it to Haffey. Flanagan's price for the location and good will was $ 20,000. Haffey had saved about $ 2500 which would be needed by him to stock up and operate the business, so he had to borrow the $ 20,000.
On December 21, 1909, it was agreed between the plaintiff Breweries Company and Flanagan and Haffey that Flanagan make a lease to plaintiff of the building for three years; that the plaintiff advance to Flanagan for Haffey the $ 20,000 (which it did by giving him one-third cash and its notes for the balance); that Haffey assume the lease Flanagan had made to plaintiff and pay the rent due thereunder; and that Haffey give his notes for $ 20,000 to plaintiff evidencing the money it had advanced to Flanagan for the saloon. Flanagan had for years bought his beer of plaintiff at $ 5 per barrel, and it was agreed that if Haffey would pay $ 6 per barrel for beer until the $ 20,000 was repaid and pay the rent for the saloon premises and $ 100 in cash each month to be applied on the $ 20,000 he would not be charged any interest on the $ 20,000 plaintiff was about to advance to Flanagan; that fifty cents, of the $ 1 excess Haffey was to pay per barrel for beer over that paid by Flanagan, was to be applied in payment of the indebtedness and the other fifty cents of such excess was the consideration for not charging any interest on said $ 20,000. This entire agreement and plan was arranged between Flanagan acting for Haffey on one side and Melton acting for plaintiff on the other. Melton was in entire charge of the transaction for the plaintiff with full authority to act.
After the arrangement had been agreed to, Melton had the notes drawn up by the secretary of the company telling him the notes were not to draw interest. The secretary told him he knew that, but that it was a rule of the company that all notes should be drawn as bearing interest. Melton then took the matter up with the company, explaining the arrangement in detail including the agreement about the interest and it was approved and he was given special authority to close it on those terms.
When Melton took the notes to Haffey to sign, he at first objected because they bore interest but Melton told him that was done merely because the company wanted them in that form and the interest clause was inserted merely for the accommodation of the company and that no interest would be charged when the notes were paid. Thereupon, Haffey signed the notes which were the three notes hereinbefore described.
Defendant carried out his part of the agreement in every detail. From December 21, 1909, until May 23, 1914, he bought of plaintiff 28,144 barrels of beer at $ 6 per barrel aggregating $ 168,864. The fifty cents per barrel excess on this number of barrels amounted to $ 14072. In addition thereto, plaintiff by May 23, 1914, had paid the $ 20,000, had paid all the rent due on the lease plaintiff held; paid for all the beer he had bought and had overpaid on the principal of said notes the sum of $ 126.05.
The defendant's answer set up the facts which have been hereinbefore detailed. It also pleaded that the provision in the notes calling for interest at six per cent was inserted without consideration and purely for the accommodation of plaintiff. It further pleaded that defendant carried out its part of the agreement that if defendant paid the excess price for beer no interest would be charged or exacted. The answer further set up that the first two notes, after their maturity, were surrendered to defendant and plaintiff then made an absolute and unconditional renunciation of any and all rights it had in said notes.
Defendant further pleaded that on November 13, 1913, he and plaintiff were in a controversy and dispute over the amount due from him to plaintiff, and that they had an account and settlement thereof, and it was agreed in writing between them that on that date he owed plaintiff $ 2000, and that since that date he paid said $ 2000 and more.
There is no dispute over the fact that the contract and arrangements were made as defendant claims they were. Both Flanagan and Melton testify that way and no one contradicts their testimony.
The testimony of Melton, Flanagan and Haffey as to the oral agreement made between the parties was objected to on the ground that it was inadmissible to vary, alter or in any way contradict the plain and explicit statement in the notes that they should bear interest.
The case was tried by the court without a jury. Plaintiff's objections to the evidence as to the oral agreement were overruled. The court then found for defendant on plaintiff's petition and for defendant on his counterclaim in the sum of $ 126.05.
By declarations 4, 5 and 6 given for plaintiff, the court held that the execution and delivery of the notes were not obtained by fraud, trick, misrepresentation or concealment; that no mistake was committed by the parties in the execution and delivery of said notes; and that oral evidence of any usage or custom on the part of plaintiff relative to the collection of interest on notes held by it was incompetent, irrelevant and immaterial.
By declaration No. 1 for plaintiff the court held that "no oral evidence is admissible to alter or vary the terms of the promissory note declared upon by plaintiff in its petition." But the court refused plaintiff's declaration No. 3 that "no oral evidence may be introduced of any agreement made orally that no interest would be charged to or collected from defendant upon the notes declared upon by plaintiff in its petition, if the supposed oral agreement was made previous to or at the time of the execution of such promissory notes."
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