Osborn v. American States Ins. Co.

• Decision Date: 23 January 1970
• Parties: Ted R. OSBORN et al., Appellants, v. AMERICAN STATES INSURANCE COMPANY et al., Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 769

449 S.W.2d 769

Ted R. OSBORN et al., Appellants, v. AMERICAN STATES INSURANCE COMPANY et al., Appellees.

Court of Appeals of Kentucky.

Jan. 23, 1970.

William H. Beck, Lexington, for appellants.

Robert H. Measle, Thomas E. Harris, Fowler, Rouse, Measle & Bell, Lexington, for appellees.

STEINFELD Judge.

Appellee, Martin Petty, brought suit against appellants, Ted R. Osborn, John Sutterfield and Mack Walters to recover $25,000, interest and costs on their promissory note dated May 24, 1963. Appellee, American States Insurance Company, intervened alleging Petty had assigned the note to American. Pursuant to a jury verdict for the amount sued for, judgment was entered for American against the three defendants. From that judgment only Osborn and Sutterfield appeal, claiming that the court erroneously refused to give an instruction they tendered and failed to curb improper argument by appellees' counsel. We affirm.

Nearing the end of the primary campaign for the Democratic nomination for Governor of Kentucky in May 1963, certain men favoring the candidacy of A. B. Chandler were using promissory notes to raise money to finance the campaign. At least three times there was borrowed the sum of $25,000 on promissory notes usually signed by five citizens with the understanding among them that the signatories would equally share the obligation and payment of said notes. There was no agreement or understanding as to what would happen if less than five signatures were obtained after some had signed. It appeared that Martin Petty was active in raising the funds and the evidence was uncontradicted that the $25,000 raised on the note reached the intended destination and was distributed in the campaign.

Osborn and Sutterfield admitted signing the note but contended that the understanding was that there would be five signers. There was conflicting evidence. They claim that when they signed the note it was payable to First Security National Bank & Trust Co. but that later without their authority it was altered by obliteration through the bank's name and the name Martin Petty was substituted as the payee. They also contend that there was failure of the agreed consideration in that three instead of five persons signed.

The trial court ruled that neither Petty nor American was a holder in due course and submitted the case to the jury on the single issue of whether or not the note had been altered after it was signed by Osborn and Sutterfield. The appellants insist that the court also should '* * * have submitted the issue of consideration as supplied by mutual donations.' An instruction was offered and refused which read:

'If the jury believes from the evidence that at the time the defendants signed the note sued on that the plaintiff had not and did not transfer any valuable consideration to the defendants, then the law is for the defendants and you shall so find.'

Appellants say 'The consideration for the subject note would have been incorporeal in nature. The proceeds secured * * * were to be several donations to a political campaign * * * but the legal consideration for each of the signatures was to be the donation of each of the other signatories.' They insist that Petty had the duty '* * * to get the proper signatures and have in hand a properly drawn instrument according to the agreement of the parties * * *' that having failed and '* * * there being no other tangible or intangible property to be given up or received, then consideration was lacking and Petty turned over the sums he gathered from three different sources on his own responsibility.' Appellants offered no instruction which encompassed the theory of the claimed missing signatures. The tender of such instruction was a prerequisite to raising that issue here.

We may observe also that the issue which the appellants are seeking to argue is really one of conditional delivery which their offered instructions did not include. They presented only the issue of lack of consideration and the trial court reasoned '* * * that all that was necessary was to show a detriment to the promisee' and the money having been loaned on the note the detriment was apparent. To sustain the ruling rejecting the tendered instruction appellees cite American Law Institute's 'Restatement of the Law of Contracts', Section 75(1) which says that:

'(1) Consideration for a promise is an act other than a promise, or a forbearance, or the creation, modification or destruction of a legal relation, or a return promise, bargained for and given in exchange for the promise. (2) Consideration may be given to the promisor or to some other person. It may be given by the promisee, or by some other person.'

Illustration number six in that work is:

'A makes a promissory note payable to B in return for a payment by B to C. The payment is consideration for the note.'

Appellees also refer us to Williston on Contracts, 3rd Edition, Section 102, at page 375 which states:

'The requirement ordinarily stated for the sufficiency of consideration (sometimes referred to as the 'reality' of consideration) to support a promise is, in substance, a detriment incurred by the promisee or a benefit received by the promisor at a request of a promisor.'

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