Weirton Sav. & Loan Co. v. Cortez

• Decision Date: 25 March 1974
• Docket Number: No. 13109,13109
• Court: West Virginia Supreme Court
• Parties: WEIRTON SAVINGS & LOAN COMPANY, a corporation v. Patsy CORTEZ.

Page 468

203 S.E.2d 468

157 W.Va. 691

WEIRTON SAVINGS & LOAN COMPANY, a corporation v. Patsy CORTEZ.

No. 13109.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 26, 1972.

Decided Jan. 15, 1974.

Rehearing Denied March 25, 1974.

Syllabus by the Court

1. An accommodation maker of a promissory note in default is primarily liable to a holder for value if the note is proven to have been properly executed and unconditionally delivered.

2. It is a general rule that where a promissory note is no longer in the possession of the maker, it shall be presumed to have been effectively delivered until the contrary is proved; however, where it is alleged and proved that the instrument was incomplete when it left the hands of the maker, and where the holder completed the instrument in a manner materially unauthorized by the maker, ineffective or conditional delivery is a valid defense to an action on the note.

3. In an action between immediate parties to a note, conditions precedent to the effective delivery of the loan contract are recognized by commercial law as valid defenses.

4. Where a case has been fairly submitted to a jury, and a verdict fairly rendered, it should not be set aside unless manifestly wrong and unjust, or unless the verdict is plainly not warranted by the evidence.

5. When the basic facts of a case, though undisputed, are such that reasonable men may draw different logical conclusions from them, it remains the peculiar and exclusive province of the jury, and not that of a trial or appellate court, to weigh and resolve the factual questions.

6. In an appeal by one who seeks reversal of a judgment entered on a jury verdict, the reviewing court is inhibited by the rule that not only must the evidence of the prevailing party be most favorably considered, but also, all conflicting testimony and all inferences that may be drawn therefrom must be resolved in favor of the prevailing party.

7. Parol evidence is competent and admissible to demonstrate either the nonexistence of a contract or the conditions precedent to the efficacy of a contract, where the parol introduced does not contradict the writing but merely supplements or explains it.

8. Parol evidence is admissible to explain and prove a conditional delivery of a written contract.

McCamic & McCamic, Jeremy C. McCamic, Wheeling, for appellant.

Petroplus, Bailey, Byrum & Hesse, A. W. Petroplus, Wheeling, for appellee.

HADEN, Justice:

This is an appeal by Weirton Savings & Loan Company from a final order of the Circuit Court of Hancock County, refusing to set aside a judgment entered on a jury verdict in favor of Patsy Cortez, who was the defendant in the civil action below, which had been instituted to effect a money recovery for nonpayment of a promissory note executed by Cortez.

At the trial, the loan company proved documentary evidence which included the loan application, the promissory note, the loan voucher for the proceeds of the loan, and the loan payment record. This evidence was introduced by an executive officer for the loan company who had taken no part in the original transaction, but who merely testified as to the correctness of the records and their contents. The uncontradicted proof of the loan company was that on April 17, 1962, Patsy Cortez executed a note in the amount of Three thousand, seven hundred fifty dollars ($3,750.00), payable to the loan company as holder, in return for which a check was drawn on the loan company in the amount of Three thousand, five hundred dollars ($3,500.00), payable to Cortez. This check was endorsed by Cortez and by a Tony Leon, who was paid the proceeds by the loan company. The proof also demonstrated that only two payments in amounts of Fifty-two dollars and fifty cents ($52.50) were made on the loan balance and these payments were made by a person other than Cortez. By the terms of the note, the loan then became in default. After demand was made by the loan company on Cortez to pay the note, and upon his refusal, this civil action was instituted. At the date of the trial there was due and owing on the note the amount of Four thousand, five hundred three dollars and fifty-one cents ($4,503.51).

The sole defense offered by Cortez in the trial was that the note sued upon had been conditionally delivered by him to the loan company. Cortez testified that he had agreed to execute the note in 1962 as an accommodation to a friend, Anthony Leon who was to be the principal borrower, on the condition that Leon and a John Camilli, a second accommodation maker, also were to sign the note. Leon and Camilli did not sign the note.

From further uncontradicted testimony introduced by Cortez, it appears that after Cortez agreed to sign the note for his friend Leon, he went to the Weirton Savings & Loan building, and by prearrangement asked to see Mr. Lydick, an officer of the loan company who was to handle the transaction. At the bank, Cortez was informed by the receptionist that Mr. Lydick was not available and was referred to a Mr. Higenbotham, another executive of the loan company. After Cortez told Higenbotham of the purpose of his visit, Higenbotham told Cortez that he knew all about the transaction and produced papers showing Cortez where to sign.

According to Cortez, he signed all the papers without reading them but noticed that several, including the note, were in blank, or were otherwise incomplete at the time he affixed his signature to the instruments. Before Cortez signed the papers he inquired as to the whereabouts of Tony Leon and John Camilli and he testified that he informed Higenbotham that 'I would sign the note with the understanding that Anthony Leon and John Camilli would be in there to sign this note.' Cortez also inquired as to the absence of the signatures of these two men and was told by Higenbotham that everything was taken care of and arranged. Cortez elaborated upon Higenbotham's statements to him to the effect that Leon and Camilli would be in to sign the note and that Cortez didn't have to worry because they would be in to take care of their part. Higenbotham attempted to persuade Cortez to deliver the loan proceeds check to Leon, but Cortez declined.

On cross-examination, Cortez admitted that he had previously given deposition testimony to the effect that he did not recall making any condition on the note prior to affixing his signature to it. Cortez also admitted that the information on the loan papers was correct with regard to his wife's name, his employment, his income, the worth of his real estate, and other matters relating to credit.

Other testimony from Cortez showed him to be a retired millworker, who had little or no acquaintance with financial transactions involving credit or banking. He had no checking account or other account with a banking institution and paid all of his bills in cash. He had never borrowed from banks or other lending institutions. In fact, he had not financed the construction of his home, testifying that he had built the same on an intermittent basis by subletting contracts, paying cash for each small part of the construction completed. He also testified that he had never been in the Weirton Savings & Loan building at any time prior to the transaction involved in this appeal and was there only at Leon's request.

The loan company did not introduce the testimony of either Lydick or Higenbotham, the two loan officers who conducted the transaction in 1962. Apparently both had left the employ of the loan company and were not subpoenaed to give testimony in the trial. No rebuttal of the evidence introduced by Cortez of conditional delivery was made by the lending institution.

The case was submitted to the jury on a charge which, in summary, instructed it that the loan company had proved the execution of a loan, a distribution of proceeds in accordance with the terms of the loan, a default in the loan payments, and Cortez's liability for the obligation as an accommodation maker. Based on the foregoing, the court told the jury that if it also believed there was no condition precedent to the efficacy of the loan contract, then the verdict would have to be for the plaintiff loan company.

Then, stating the defense offered by Cortez, the court charged that if, however, the jury believed that the note was executed by Cortez and delivered to the loan company as holder on the condition that it was not to be effective unless and until it was also signed by Leon and Camilli, and if the jury further believed this condition to be a part of the loan transaction, then its verdict should be for the defendant.

In summary, the court said that the issue to be determined by the jury was whether a preponderance of the evidence demonstrated the presence or the absence of conditional delivery of the note sued upon.

The jury returned a verdict in favor of the defendant Cortez and the court entered judgment thereon. Upon consideration of a Rule 50(b) motion to set aside the judgment and award a new trial or enter judgment in favor of the plaintiff loan company, the trial court affirmed its previous ruling by the order which resulted in this appeal.

Although the Uniform Negotiable Instruments Law has since been replaced and superseded by the passage of the Uniform Commercial Code, the former code provisions were applied in the case disposition by the trial court and, insofar as defining the relationship of the parties and the efficacy of the loan transaction, the Negotiable Instruments Law is the technical commercial law applicable on this appeal. See West Virginia Code, Chapter 46, Article 1, Section 101 et seq. (Michie 1966) and statutory history annotated therein.

The appellant contends here that the trial court committed reversible error in its refusal to direct a verdict for it. After making proof of the promissory note duly signed and regular on its face and demonstrating that the note was in default by its terms, coupled with the refusal...