Nixon-Foster Serv. Co. v. Morrow.

• Decision Date: 21 December 1936
• Docket Number: No. 4233.,4233.
• Citation: Nixon-Foster Serv. Co. v. Morrow, 41 N.M. 67, 64 P.2d 92, 1936 NMSC 68 (N.M. 1936)
• Parties: NIXON-FOSTER SERVICE CO.v.MORROW.
• Court: New Mexico Supreme Court

41 N.M. 67

64 P.2d 92

NIXON-FOSTER SERVICE CO.

v.MORROW.

No. 4233.

Supreme Court of New Mexico.

Dec. 21, 1936.Rehearing Denied Jan. 22, 1937.

Appeal from District Court, Colfax County; Livingston N. Taylor, Judge.

Action by Nixon-Foster Service Company against James Morrow.Judgment for plaintiff, and defendant appeals.

Reversed and remanded, with directions.

In suit in which defense was partial failure of consideration for note sued on which was executed as part of compromise agreement when refrigerator and light plant for which note was given were destroyed by fire, written orders and conditional sales contract for refrigerator and light plant held not foundation of such defense, and were therefore admissible in evidence, though not filed with amended answer.Comp.St.1929, § 105-522.

Robert A. Morrow and H. M. Rodrick, both of Raton, for appellant.

H. A. Kiker, of Santa Fé, for appellee.

HUDSPETH, Justice.

This is a suit on a promissory note.The defense is partial failure of consideration.Defendant's amended answer states:

“That the consideration of said note was as follows: (A) That the defendant herein had purchased from the copartnership of Nixon-Foster Service Company a certain electric refrigerator for $301.00 and a certain light plant and equipment, consisting of a generator and batteries, for the sum of $587.00, and that at the time of said purchase it was represented to defendant, and defendant was led to believe, by Nixon-Foster Service Company, acting by and through their representatives, and in conjunction with the agent of the Delco Light Company, that said light plant and electric refrigerator and equipment were protected by insurance, and that it was represented that the purchase price of said electric refrigerator, light plant and equipment, included all carrying charges, insurance, and all costs and things to be done and paid by this defendant.

“2.That defendant relied upon said representation as he then and there had a right to do, and that said representation caused him not to procure fire insurance on said property.That thereafter said electric refrigerator, light plant and equipment were completely destroyed by fire and were a total loss to this defendant, the same not being insured at the time of loss.

“3.That at the time of such loss there was an unpaid balance of $273.50 on the electric refrigerator, and $446.40 on the light plant and equipment, and that this defendant refused to pay any of said balances because of the misrepresentations of the said Nixon-Foster Service Company as to said property being insured.”

The amended answer further states that after altercations and negotiations the parties arrived at a compromise agreement for the settlement of the matter; that the plaintiff agreed to deduct $50 from the balance due on the refrigerator and to furnish another light plant as good as the one destroyed by fire; that pursuant to said agreement plaintiff installed a light plant, which it warranted as to quality, whereupon defendant executed the note sued upon and paid the balance due plaintiff in cash; that the second light plant proved to be old and badly worn, and not of the quality represented, and defendant tendered back the plant to plaintiff and demanded credit on the note for the price thereof, $446.The reply was a general denial of the new matter in the amended answer.

The plaintiff proved that no part of the note had been paid and rested.The defendant tendered evidence which tended to prove the first contract, the dispute over the indebtedness, the compromise agreement with reference thereto, the installation of the second light plant, and the failure of the second light plant to meet the specifications of the compromise agreement.Much of this tendered evidence was excluded.From the judgment rendered for the plaintiff upon an instructed verdict, this appeal is prosecuted.The parties will be referred to as plaintiff and defendant.

[1]Defendant tendered the written orders for the refrigerator and light plant and the conditional sales contract covering these items.Upon objection being made that copies thereof were not attached to the amended answer, they were excluded.1929 Comp. § 105-522 provides that when an instrument in writing is the foundation of an action or defense, a copy must be filed with the pleading, and in case of failure to so file a copy, such instrument cannot be received in evidence.Sections 1,2, and3 of the amended answer quoted above, and particularly the statement that defendant had purchased an electric refrigerator and light plant following the first line of section one “that the consideration of said note was as follows,” justified the ruling.It appears from the whole pleading that the defense was partial failure of consideration of the note sued upon which was executed as part of the compromise agreement.Clearly, the documents tendered were not the foundation of this defense.“No contract *** need or should be filed *** which is not the foundation of the action or defense.”Beebe v. Fouse, 27 N.M. 194, 199 P. 364;Laws v. Pyeatt, 40 N.M. 7, 52 P.(2d) 127;Daughtry v. B. F. Collins Inv. Co., 28 N.M. 151, 207 P. 575;Weggs v. Kreugel, 28 N.M. 24, 205 P. 730;Lohman v. Reymond, 18 N.M. 225, 137 P. 375.

[2] Both parties agree that it was necessary to prove enough of the facts relating to the former transaction out of which the dispute grew to disclose the basis for a compromise agreement.The courts are liberal in receiving evidence of the circumstances leading up to and surrounding the transaction constituting an alleged settlement.Frank v. Heaton, 56 Ill.App. 227;Mead v. White, 8 A. 913, 6 Sad.(Pa.) 38;McLendon v. Wilson, 57 Ga. 438;City Elec. R. Co. v. Floyd County, 115 Ga. 655, 42 S.E. 45;Duflo v. Juif, 63 Mich. 513, 30 N.W. 105.

In the last case cited the Supreme Court of Michigan held: “Where, in an action on a promissory note, defendant pleads that it was without consideration, as given for an alleged balance of old transactions, which included two notes actually paid in a settlement, in which a farm was deeded to plaintiff in full liquidation of all debts, leaving a balance coming to defendant of any excess obtained on sale, it is competent for defendant to introduce the deed in evidence, not as conclusive proof of the consideration for the farm, but as an element of the settlement relied upon in determining the question whether the notes which were the consideration of the note sued on were included in the settlement made when the deed was given.”(Italics ours.)

12 C.J.p. 366, § 80, states:

“On the issue of good faith in making the settlement, evidence of collateral facts relevant to such issue may be admitted.

“Documentary evidence.Documentary evidence that is relevant to any issue in the case is admissible under the same conditions that such evidence is admitted in other cases.”

“Where the question at issue is as to whether or not a settlement was had between the parties, evidence of all the matters comprised in and of the circumstances leading up to and surrounding the transaction constituting the alleged settlement is admissible.”3 Encyc. of Evi. p. 251.

The learned trial court ruled and appellee maintains, that the defendant could not prove by oral evidence that there was a dispute-that the allegation of the specific elements of the fraud relied upon, i. e., representation that the chattels sold were protected by insurance, confines the defendant to the written contract by the terms of which the purchaser expressly assumes responsibility for the insurance.

Plaintiff's able counsel says: “Without showing his original contract, under the issues tendered by him, he could not show a dispute.Without a dispute he could not show a compromise.”

The Supreme Court of Iowa in the case of Jacobsen v. Moss, 268 N.W. 162, 164, lately commented upon the rule which plaintiff maintains is applicable to this case, as follows:

“Under the written lease there was no dispute about the amount of the rent agreed to be paid, and under the evidence there was no dispute as to the amount of cash which had been paid.All allegations with reference to the previous oral agreement for a lesser amount were properly stricken by the court.Defendant's plea of accord and satisfaction cannot be sustained as against count 2 for the rent due under the written lease for the year 1932, for the reason that under the written lease there was no dispute as to the amount due and no dispute as to the amount that had been paid upon the rent under the terms of the written lease.The plea of accord and satisfaction can only apply where there is a settlement of a disputed claim.Unless the defendant was entitled to introduce evidence of his alleged oral contract in contradiction of the written contract, there was no disputed amount in controversy.Before there would be any dispute as to the amount due, there would have to be proof of the alleged oral agreement, and no competent proof was possible under the parol evidence rule.There could be no goodfaith dispute as to the rent of 1932.There is no claim that there is any ambiguity in the terms of the written lease.The dispute only arises under the claimed oral agreement between the plaintiff and the defendant, which the court properly held could not be proven, and the exclusion of this testimony and the striking of the allegations of the petition in reference to such matters eliminated the dispute and hence the court was justified in striking the allegations in reference to accord and satisfaction as to the balance of the rent due for the year 1932.‘Without an honest dispute an agreement to take a lesser amount in payment of a liquidated claim is without consideration and void.’1 C.J.p. 554;Walston v. F. D. Calkins Company, 119 Iowa, 150, 93 N.W. 49;Rauen v. Prudential Insurance Co., 129 Iowa, 725, at page 740, 106 N.W. 198.

“There is no claim by defendant that the $65 item...