Storey v. Storey

• Decision Date: 14 April 1914
• Docket Number: 2009.
• Citation: 214 F. 973
• Parties: STOREY v. STOREY.
• Court: U.S. Court of Appeals — Seventh Circuit

214 F. 973

STOREY v. STOREY.

No. 2009.

United States Court of Appeals, Seventh Circuit.

April 14, 1914

Ole J Eggum, of Whitehall, Wis., and L. W. Storey, of Toledo, Ohio for plaintiff in error.

Gustavus Ohlinger, of Toledo, Ohio, and S. T. Swansen, of Madison Wis., for defendant in error.

Before BAKER, SEAMAN, and KOHLSAAT, Circuit Judges.

BAKER Circuit Judge.

Defendant in error, plaintiff below, alleged that he was the owner and holder of 22 promissory notes, past due and unpaid, executed by defendant.

Defendant answered, in substance, that he is a son of plaintiff; that in 1900 at his father's home in Ohio they entered into an agreement that his father should give him a medical education by making from time to time as requested gifts of money as advancements in anticipation of his share of his father's estate and that upon receiving the advancements he should give into the possession of his father papers in the form of promissory notes for the special and sole purpose of evidencing the amount of the advancements, and that his father should receive and hold and use the papers only as such evidence; that from time to time sums of money were given by his father and accepted by him as advancements and not otherwise; and that he gave and his father received the manual possession of the papers, sued on as promissory notes for the purpose of evidencing the amount of said advancements and not otherwise.

Plaintiff's demurrer to this answer was sustained, and judgment for $3,520 followed.

Judgment was rendered by applying to the admitted facts the rule that parol evidence is inadmissible in an action at law to contradict the terms of promissory notes as written contracts of debt. As the parol evidence rule is indisputable, the error was in the application. And probably nowhere is the basis of the error more clearly and simply stated than in Pym v. Campbell, 6 El. & Bl. 370: 'The distinction in point of law is that evidence to vary the terms of an agreement in writing is not admissible, but evidence to show that there is not an agreement at all is admissible.'

Delivery is an act. Whether the act has been accomplished cannot be told by reading the paper. Therefore, when a declaration on a written contract is met by a plea of no contract, the application of the rule against varying the terms of a written contract by parol to the inquiry whether there is a contract, is a plain begging of the question, is a tour de force assumption of the very issue to be solved.

Delivery is a composite act. There must be both a manual transfer, actual or constructive, and an operation of minds intending to enter into the contract. In the ages-old strife for predominance between objective or external and subjective or internal measurements of conduct, evolution has been away from symbolism toward the inner truth. And in the law of commercial paper, between the original parties, the animus contrahendi has become the predominant element. This is shown by a provision of the Uniform Negotiable Instruments Act, which as been adopted in nearly all of the states.

Section 16 of that act, in force in Ohio since January 1, 1903 (Ohio Code, Sec. 8121), reads as follows:

'Every contract on a negotiable instrument is incomplete and revokable until delivery of the instrument for the purpose of giving effect to it. 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 a party making, drawing, accepting, or indorsing, as the case may be. In such case, the delivery may be shown to have been conditional, or for a special purpose, and not for the purpose of transferring the property in the instrument. But when the instrument is in the hands of a holder in due course, a valid delivery of it by all parties prior to him, so as to make them liable to him, is conclusively presumed.'

Plaintiff by his demurrer admits that in truth the pretended notes are 'incomplete' because there was no 'delivery for the purpose of giving effect' to them as contracts of debt, and because the manual transfer was 'for a special purpose and not for the purpose of transferring the property in the instruments.'

Several of the papers were signed and manually transferred prior to January 1, 1903. But we apply the same rule to them all, for in our opinion section 16 of the Negotiable Instruments Act is merely a codification of the general law in that respect as established by preponderant and sound authority. Burke v. Dulaney, 153 U.S. 228, 14 Sup.Ct. 816, 38 L.Ed. 698; Michels v. Olmstead, 157 U.S. 198, 15 Sup.Ct. 580, 39 L.Ed. 671; White v. Kahn, 103 Ala. 308, 15 So. 595; Alabama Coke & Coal Co. v. Gulf Coal & Coke Co., 165 Ala. 304, 51 So. 570; Scaife v. Byrd, 39 Ark. 568; Drinkwater v. Hollar, 6 Cal.App. 117, 91 P. 664; Denver Brewing Co. v. Barets, 9 Colo.App. 341, 48 P. 834; Schindler v. Muhlheiser, 45 Conn. 153; McFarland v. Sikes, 54 Conn. 250, 7 A. 408, 1 Am.St.Rep. 111; Hartman Stock Farm v. Henley, 8 Ga.App. 255, 68 S.E. 957; Dowden v. Wood, 124 Ind. 233, 24 N.E. 1042; Hager v. Sidebottom, 130 Ky. 687, 113 S.W. 870; Leppoc v. National Union Bank of Maryland, 32 Md. 136; Whitaker v. Salisbury, 32 Mass. (15 Pick.) 534; Ruggles v. Swanwick, 6 Minn. 526 (Gil. 365); Barrett v. Davis, 104 Mo. 549, 16 S.W. 377; Roberts v. Jackson, 1 Wend. (N.Y.) 418; Juillard v. Chaffee, 92 N.Y. 529; Reynolds v. Robinson, 110 N.Y. 654, 18 N.E. 127; Waters v. Security Life & Annuity Co., 144 N.C. 663, 57 S.E. 437, 13 L.R.A. (N.S.) 805; Morris v. Faurot, 21 Ohio St. 155, 8 Am.Rep. 45; Hudson v. Wolcott, 39 Ohio St. 618; Branson v. Oregonian Ry. Co., 11 Or. 161, 2 P. 86; Koester v. Northwestern Port Huron Co., 24 S.D. 546, 124 N.W. 740; Wheeler & Wilson Mfg. Co. v. Briggs (Tex.) 18 S.W. 555; McCartney v. McCartney, 93 Tex. 359, 55 S.W. 310; Webster v. Smith, 72 Vt. 12, 47 A. 101; Curry v. Colburn, 99 Wis. 319, 74 N.W. 778, 67 Am.St.Rep. 860.

Many of the foregoing authorities have to do with other purported written contracts than promissory notes; but, inasmuch as we believe that the rules peculiar to commercial paper are concerned only with the travel of negotiable instruments along the ways of commerce as 'couriers without luggage,' we conclude that all the cases are applicable between the original parties in support o the plea of no contract when alleged promissory notes are counted on, as fully as when other forms of contract are involved.

Plaintiff argues that, because the answer discloses that the papers in the form of promissory notes were to have some effect, the notes must be given effect according to their terms. That assumes that the purported notes are in fact notes, and is merely another way of begging the same question. The answer shows that the papers were passed with the mutual intent and for the sole purpose of being held as evidence of the amounts of advancements. Receipts are not contracts.

While plaintiff ultimately concedes that there may be cases where the truth respecting delivery of a purported written contract may properly be discovered by parol evidence, the contention is made that this is...