White v. Fisheries Products Co.

• Decision Date: 29 March 1922
• Docket Number: 107.
• Citation: 111 S.E. 182,183 N.C. 228
• Parties: WHITE v. FISHERIES PRODUCTS CO.
• Court: North Carolina Supreme Court

111 S.E. 182

183 N.C. 228

WHITE v. FISHERIES PRODUCTS CO.

No. 107.

Supreme Court of North Carolina

March 29, 1922

Appeal from Superior Court, Bertie County; Calvert, Judge.

Action by O. F. White against the Fisheries Products Company. From judgment for plaintiff, defendant appeals. New trial.

Civil action to recover damages for an alleged wrongful conversion and negotiation of plaintiff's promissory notes in violation of the understanding and agreement between the parties that same should remain in escrow and not become operative or effective unless and until the plaintiff sold his farm for $35,000, which he never did.

In a maker's action for damages for negotiating notes contrary to an escrow agreement in which plaintiff alleged that defendant's agent procured the notes by false and fraudulent representations, and that he sought to recover for damages occasioned by the deceit, a refusal to submit the question of fraud to the jury was error.

Rountree & Carr, of Wilmington, and O. H. Guion, of Newbern, for appellant.

Winston & Matthews and Gillam & Davenport, all of Windsor, for appellee.

STACY J.

Plaintiff alleges that, on June 17, 1920, he gave to the defendant's agent three promissory notes, aggregating the sum of $11,410, due June 1, 1921, the same to be placed in the Bank of Colerain for safe-keeping, and, in the event the plaintiff sold his farm in Chowan county before the maturity of said notes, it was understood and agreed that he would take them up by paying the principal sum, with interest, and receive 761 shares of the capital stock of the Fisheries Products Company; provided, further, that should the plaintiff fail to sell his farm, as above stated, the notes were to be returned and all negotiations abandoned. Instead of depositing said notes in accordance with the above understanding and agreement, it is alleged that defendant's agent wrongfully, fraudulently, and with intent to cheat the plaintiff, negotiated said notes to the Bank of Colerain, which became an innocent purchaser thereof for value, and that the plaintiff was thereby forced to pay the same at maturity, although he had not been able to sell his farm, as contemplated, and the contingency upon which the notes were to take effect, as between the original parties had not occurred.

The law relating to conditionally delivered contracts has been sanctioned and approved by us in a number of carefully considered decisions, and it is now very generally recognized, applied, and followed in this as well as in other jurisdictions. Farrington v. McNeill, 174 N.C. 420 93 S.E. 957; Bowser v. Tarry, 156 N. C., 35, 72 S.E 74; Gaylord v. Gaylord, 150 N.C. 222, 63 S.E. 1028; Hughes v. Crooker, 148 N.C. 318, 62 S.E. 429, 128 Am. St. Rep. 606; Aden v. Doub, 146 N.C. 10, 59 S.E 162; Pratt v. Chaffin, 136 N.C. 350, 48 S.E. 768; Kelly v. Oliver, 113 N.C. 442, 18 S.E. 698, and Ware v. Allen, 128 U.S. 590, 9 S.Ct. 174, 32 L.Ed. 563. It is said in Anson on Contracts (Am. Ed.) 318:

"The parties to a written contract may agree that until the happening of a condition, which is not put in writing, the contract is to remain inoperative." And again, in Wilson v. Powers, 131 Mass. 539:

"The manual delivery of an instrument may always be proved to have been on a condition which has not been fulfilled, in order to avoid its effect. This is not to show any modification or alteration of the written agreement, but that it never became operative, and that its obligation never commenced."

These excerpts are quoted with approval in Garrison v. Machine Co., 159 N.C. 285, 74 S.E. 821, where the same doctrine is announced by Walker, J., in an elaborate review of the authorities on the subject now in hand.

But defendant contends that the foregoing principles are not applicable to the facts of the instant case; or, at least, that the evidence tending to bring them into operation cannot be admitted without violating other equally well-known and established rules of procedure. On the back of each note, over the signature of the plaintiff, appears a printed indorsement in the following words:

"To Any Bank or Banker Anywhere: This is to certify, that this note is given as a cash consideration. Therefore it will be satisfactory to me for the holder to cash this note before it is due. And I will pay

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