Martineau v. Hanson

• Decision Date: 08 February 1916
• Docket Number: 2790
• Citation: 47 Utah 549,155 P. 432
• Court: Utah Supreme Court
• Parties: MARTINEAU v. HANSON

155 P. 432

47 Utah 549

MARTINEAU v. HANSON

No. 2790

Supreme Court of Utah

February 8, 1916

Appeal from District Court, First District; Hon. C. W. Morse, Judge.

Action by L. R. Martineau against Soren Hanson.

Judgment for plaintiff. Defendant appeals.

REVERSED AND REMANDED with directions.

M. E Wilson, for appellant.

APPELLANT'S POINTS.

It may be shown by parol that at the time a note was made it was agreed that it should be held for nothing, on the happening of a certain event or on the non-fulfillment of a certain condition. Where such event operates as a failure for consideration there seems to be no conflict in the authorities. Under the circumstances of this case the happening of the event, namely, the payment of the Fifty-five Hundred Dollars ($ 5500), was prerequisite to a consideration for the note and without it so happening, said note was without consideration. (Clark v. Ducheneau, 26 Utah 97; McFarland v. Sykes, 54 Conn. 250, 1 Am. State Rep. 111; Burt v. Dulaney, 153 N. S. 228; Howell v Ware, 175 F. 742.)

Before a broker can recover commissions for selling property it must appear that he procured a purchaser of sufficient pecuniary ability to make a purchase. Though the person procured by the broker enters into a contract of purchase, yet if he is not able to comply with his contract, and the seller, in accepting him as the purchaser, did not rely upon his own judgment, but rather upon that of the broker, the later is not entitled to commissions. The production by the broker of a person as a purchaser is an implied representation on his part that such person is able financially, as well as ready and willing, to purchase. (Butler v. Baker, 17 R. I 532, 33 Am. State Rep. 897; McGavok v. Wacdlief, 20 How. 221; Barnard v. Monnot, 1 Abb. App. 108; Simonson v. Kissick, 4 Daly 143; Duclos v. Cunningham, 102 N.Y. 678; Kimberly v. Henderson, 29 Md. 512; Sievers v. Griffin, 14 Ill.App. 63; Leahy v. Hair, 33 Ill.App. 461; Zeidler v. Walker, 41 Mo.App. 118; McLaughlin v. Wheeler, (S. Dakota), 47 N.W. 816.) Before there could be a recovery it must be established, either by means of a presumption or by means of evidence, that there was a legal and sufficient consideration for the note, and when once the presumption was destroyed the burden remained upon Martineau. This rule has been definitely and unequivocally established by the Supreme Court, in a recent case. (Hudson v. Moon, 42 Utah 377; 130 P. 744.)

Ray Van Cott, for respondent.

RESPONDENT'S POINTS.

Parol evidence of an undertaking between the parties to a note is not admissible in an action brought thereon to show that the note was given to the payee, himself, as an escrow to take effect upon a condition, or to show delivery upon the condition that it was not to have any binding force at all. (Guice v. Thornton, 76 Ala. 466; Massmann v. Holscher, 49 Mo. 87; Clannin v. E. H. Machine Co. et. al., (Ind.) 3 L. R. A. 863; Stewart v. Anderson, 59 Ind. 375; Benoit v. Schneider, 47 Ind. 13.)

The rule is firmly established that where a promissory note for a certain amount, payable at a certain time, is delivered into the hands of the payee or to take effect presently as the obligation of the defendant, parol evidence to introduce conditions or modifications of the terms is not admissible. (Cent. Sav. Bank v. O'Connor et al. (Mich.), 94 N.W. 11, 12; Hyde v. Tenwinkel, 26 Mich. 93; Moseley v. Handford, 10 Barn. & C. 729; Woodbridge v. Spooner, 3 Barn. & Ald. 235; Joyner v. Turner, 19 Ark. 690; Foy v. Blackstone, 31 Ill. 538; Curtice v. Hokanson, 38 Minn. 510; Western Mfg. Co. v. Rogers, 54 Neb. 456; Aub. v. Magruder, 10 Calif. 282. See also case of Torpey v. Tebo (Mass.), 68 N.E. 223; Joyce on Defenses to Commercial Paper, Sec. 320; Converse v. Moulton, 2 Root (Conn.) 195; Neely v. Lewis, 10 Ill. 31; Stewart v. Anderson, 59 Ind. 375; Porter v. Pierce, 22 N.H. 275.)

FRICK, J. STRAUP, C. J., and McCARTY, J., concur.

OPINION

FRICK, J.

The plaintiff sued the defendant to recover judgment upon a promissory note made by the defendant to the plaintiff for the sum of $ 1,750. The defendant answered plaintiff's complaint, admitting the execution and delivery of the note sued on. He, however, pleaded several defenses to the note, which are to the effect that prior to the execution thereof defendant had employed the plaintiff as agent to sell certain lands owned by the defendant, and that for his services or commission for procuring a purchaser for said lands plaintiff was to receive all that he could obtain in excess of the sum of $ 20,800; that the plaintiff produced one John H. Earl who, plaintiff that represented, was willing to purchase said lands, and was financially able to pay the sum of $ 23,300 therefore; that the defendant believed and relied on the representations of the plaintiff that said Earl was financially able to pay said sum of money for said lands, and in pursuance of said representations entered into a contract, whereby the defendant agreed to sell said lands to said Earl for said sum of $ 23,300; that said Earl was to make a payment on said purchase price on or before November 1, 1911, amounting to the sum of $ 5,500; that the promissory note sued on "was delivered to the plaintiff upon the express condition and understanding between the said defendant and the plaintiff that the said note was not to be paid until the said John H. Earl should pay to the defendant the aforesaid sum of $ 5,500; that the plaintiff received the said note from said defendant, and at the time of its receipt agreed to the condition upon which the same was delivered as stated, and agreed with the defendant that the said note should not become due until the said John Earl should make the payment of $ 5,500 which was due on or before the 1st day of November, A. D. 1911, and that said plaintiff further agreed that said note * * * was never to be paid by the defendant unless the said John H. Earl should pay the sum of $ 5,500;" that said Earl never paid the said $ 5,500, or any part thereof; that said Earl was not financially able to pay the purchase price of said lands, which fact was well known to the plaintiff at the time the contract of sale was entered into; that the representations of the plaintiff respecting said Earl's ability to pay for said lands were false; and that the defendant was deceived and misled by plaintiff's representations in that regard, and by reason thereof was induced to execute said note. The defendant also pleaded that the plaintiff made said representations for the sole purpose of inducing the defendant to enter into the contract of sale for said lands, and for the purpose of obtaining the commission evidenced by said note. The case was submitted to the jury under instructions from the court. The jury returned a verdict in plaintiff's favor, upon which the court entered judgment, from which this appeal is prosecuted.

Defendant's counsel has assigned a large number of errors, and we shall consider those deemed material in their order. We shall refer to the evidence only to the extent that it may be necessary to illustrate the points decided.

The first assignment relates to the ruling of the court by which it excluded defendant's parol evidence offered by him for the purpose of proving the agreement between the parties set forth in the answer, namely, that the note was delivered upon the condition therein stated. Counsel for the defendant very forcibly insists that the court erred in excluding the proffered parol evidence. The plea in the answer and the evidence offered in support thereof were based upon Comp. Laws 1907, Section 1568, which, so far as material here, reads as follows:

"Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. As between immediate parties, and as regards a remote party other than a holder in due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making, drawing, accepting, or indorsing, as the case may be; and in such case the delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument. But where the instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him, is conclusively presumed."

The section in question is part of the act relating to negotiable instruments, and is found, with some slight changes, in the statutes of the various states which have adopted said act. The statute adopted by the state of Wisconsin is, word for word, like our own, and the Supreme Court of that state, in passing upon a similar question to that presented here, in the case of Hodge v. Smith, 130 Wis. 326, 110 N.W. 192, says:

"It is familiar law, notwithstanding some conflict in the authorities, that a person may manually delivery an instrument, though it be in the form of commercial paper, to another, on its face containing a binding obligation in praesenti of such person to such other, with a contemporaneous verbal agreement that it shall not take effect until the happening of some specified event; and that the paper as between the parties will have no validity as a binding contract till the condition shall have been satisfied; and that proof of such condition does not violate the rule that a written instrument cannot be varied by a contemporaneous parol agreement; that such evidence only goes to show that the instrument never had vitality as a contract."

To the same effect are the following cases: Hill v Hall, 191 Mass. 253, 77 N.E. 831; McFarland v. Sikes, 54 Conn. 250, 7 A. 408, 1 Am. St. Rep. 111; Burke v. Dulaney...