State Bank of Wilbur v. Phillips

• Decision Date: 02 December 1941
• Docket Number: 28469.
• Parties: STATE BANK OF WILBUR v. PHILLIPS et ux.
• Court: Washington Supreme Court

119 P.2d 664

11 Wn.2d 483

STATE BANK OF WILBUR v. PHILLIPS et ux.

No. 28469.

Supreme Court of Washington

December 2, 1941

Department 2.

Action by the State Bank of Wilbur against Emmett Phillips and Dorothy Phillips, his wife, on a written agreement to repay to plaintiff a certain sum of money. From a judgment for defendants, plaintiff appeals.

Affirmed.

Appeal from Superior Court, Lincoln County; E. W Schwellenbach, judge.

Dyar &amp Aten, of Wilbur, for appellant.

Pettijohn & McCallum, of Davenport, for respondents.

SIMPSON Justice.

This action was instituted to recover judgment against defendants upon a written instrument signed by defendant Emmett Phillips.

The complaint alleged that in consideration of the sum of $3,660 paid to W. K.

Deal September 21, 1939, by plaintiff at the request of defendant Emmett Phillips, the defendants promised and agreed to repay that amount to plaintiff; that the agreement was evidenced by a writing signed by Emmett Phillips; and that the whole sum was justly due and unpaid.

In their answer defendants admitted the signing of the contract, but denied that they were indebted to plaintiff.

For a further and separate answer, defendants alleged that September 18, 1939, defendant Emmett Phillips, acting for the community composed of himself and wife, entered into a contract with W. K. Deal by the terms of which Deal promised to build a house for defendants at an agreed price of $3,660. It was further alleged that it was the intention of plaintiff, W. K. Deal, and defendants that defendants would not be obligated to plaintiffs until Deal and completed the building in accordance with the terms of the building contract.

As a second affirmative defense, the defendants alleged that they had never received any consideration for the signing of the instrument, that the plaintiff had not paid any money to W. K. Deal on account of the execution of the instrument, and that if any money had been paid by plaintiff that such payments were made upon the reliance of plaintiff that W. K. Deal would fully perform his contract to build a house and not otherwise.

In reply, plaintiff denied the allegations contained in defendants' separate answers.

The case, tried to a jury, resulted in a verdict in favor of defendants. At the appropriate time plaintiff moved in the alternative for a judgment notwithstanding the verdict or for a new trial. The court denied the motion and entered a judgment upon the verdict. Plaintiff has appealed.

The assignments of error are in the refusal of the court to grant the motion for judgment notwithstanding the verdict or for a new trial, in the giving of two instructions, and in the refusal to give four proposed instructions.

The facts are these: September 19, 1939, W. K. Deal, a building contractor, contracted with respondents to build a house on their farm for the sum of $3,660. Lacking funds to commence work, Deal, a customer of appellant, sought an advance of credit from J. McPherson, president of the bank. Knowing, however, that he was already indebted to appellant, Deal offered to sign over for security his contract with respondents as well as another building contract. Agreeing to this, McPherson prepared the following 'order' or agreement and directed Deal to have respondent sign it.

'State Bank of Wilbur

Capital $50,000.00

Surplus $10,000.00

'Wilbur, Washington.

'J. McPherson, President

'E. L. Farnsworth, Vice-President

'G. Thompson, Cashier

'E. H. Oswalt, Assistant Cashier

'State Bank of Wilbur, September 21, 1939

'Wilbur, Wash.

'Gentlemen:

'In consideration of Mr. W. K. Deal, contractor, giving me credit on our house building contract for the sum of Three Thousand Six Hundred Sixty ($3,660.00) Dollars, I hereby obligate myself to pay this amount to the State Bank of Wilbur, Wilbur, Washington and that I will make this $3,660.00 payment to your bank on or about upon completion about Nov. 15th

'(Signed) Emmett Phillips

Emmett Phillips

'Seq 21 1939 I hereby agree to the above order and acknowledge receipt of above amount.

'(Signed) W. K. Deal'

The exact time when the words in longhand ('upon completion about Nov. 15th'), were written on the instrument is a fact somewhat in dispute. That they were not there when Deal received it from McPherson seems clear. McPherson testified, however, that the blank was completely filled in his office by Deal after the latter's return from acquiring respondent's signature. Deal, unfortunately, could not remember. Phillips, on the other hand, testified that 'my best recollection is that I said I would pay for the house when it was done, and he [Deal] wrote in 'upon completion."

After McPherson prepared the instrument, Deal delivered it to respondent at his farm near Harrington for signing. Respondent testified:

'A. The only conversation there was he asked me if I would sign this order he brought down there so he could draw money to buy materials for my house, and I was to pay the Wilbur State Bank when the house was completed.

'Q. What about the time? A. When he was to complete the house.

'Q. What did you say? A. I said I would pay it when the house was completed.

'Q. Did you have the money right then to pay for that house? A. Yes.'

When Deal returned to the bank with the signed instrument, McPherson wrote the words: 'I hereby agree to the above order and acknowledge receipt of above amount,' and directed Deal to sign it. On receiving the note or order, the bank placed $3,660 to Deal's credit, deducting $1,700 to apply on a past indebtedness of $4,700. Subsequently Deal withdrew the balance.

Upon receiving the credit, Deal commenced work on the house. When only a small portion had been done, the laborers threatened to file liens if they were not paid. Pursuant to McPherson's advice, respondents paid not only the men but also the cost of the materials which Deal had furnished. As Deal later defaulted, respondents completed the house at their expense. October 5, 1940, appellant instituted this action on the written instrument signed by Emmett Phillips.

Appellant contends that the instrument sued on was an unconditional promise to pay as evidenced by the typewritten part, and that the writing in longhand was a time clause, fixing a convenient time for payment rather than creating a condition precedent; that as long as the house was completed at the time of the trial, it was immaterial who undertook the completion; and that even though it had never been completed, the order in any event was payable within a reasonable time. To support this contention, appellant has cited 8 Am.Jur. 27, § 281, Bills and Notes, which reads: 'As a general rule, an instrument made payable upon or after the happening of a specified event, condition, or contingency is payable when the event or contingency happens or the condition is fulfilled. If the debt for which the instrument is given is an absolute liability and is due, however, and the happening of a future event is fixed upon merely as a convenient time of payment and the future event does not happen as contemplated, the instrument becomes due and payable within a reasonable time.'

The authority states the proper rule, but we cannot agree that it applies to the facts of the instant case.

The court submitted the case to the jury on the theory that the provisions of the instrument were ambiguous.

The first question, then, is whether the agreement is ambiguous.

"Ambiguity' is an uncertainty of meaning in the terms of a written instrument.' First Nat. Bank v. Hancock Warehouse Co., 142 Ga. 99, 82 S.E. 481.

Ambiguity is also defined to be 'An uncertainty of meaning or expression used in a written instrument; wanting clearness or definiteness; difficult to comprehend or distinguish; of doubtful import.' San Antonio Life Ins. Co. v. Griffith, Tex.Civ.App., 185 S.W. 335, 337.

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