Harrell v. First Union National Bank

334 S.E.2d 109 (1985) A. Floyd HARRELL v. FIRST UNION NATIONAL BANK. No. 847SC38. Court of Appeals of North Carolina. September 17, 1985. *110 Carr, Gibbons, Cozart and Jones by L.H. Gibbons, for plaintiff-appellant. Connor, Bunn, Rogerson & Woodard by James F. Rogerson, for defendant-appellee. WEBB, Judge. This case brings to the Court a question as to whether testimony as to a conversation between the plaintiff and a loan officer of the defendant was properly held to be incompetent under the parol evidence rule. The parol evidence rule is not a rule of evidence but of substantive law. See E. Allan Farnsworth, Contracts, 447 et seq. It prohibits the consideration of evidence as to anything which happened prior to or simultaneously with the making of a contract which would vary the terms of the agreement. The testimony of the plaintiff to the effect that no future advances to his son-in-law would be made without his consent would vary the terms of the Letter of Consent and the court was correct in not letting it do so. The appellant, relying on O'Grady v. Bank, 296 N.C. 212, 250 S.E.2d 587 (1978), Bailey v. Westmoreland, 251 N.C. 843, 112 S.E.2d 517 (1960) and Perry v. Trust Co., 226 N.C. 667, 40 S.E.2d 116 (1946) argues that the parol evidence rule does not prevent the consideration of this testimony. He says this is so because the testimony as to no future advances being made without his consent shows that the instrument was not to become effective until a certain condition was met. In each of the cases cited by the plaintiff there was evidence that the signer of an instrument made its effectiveness conditional upon the happening of some event. Those cases are distinguishable from this case in that the plaintiff in this case delivered the Letter of Consent to the bank and it became effective at that time. The plaintiff's testimony was that he told the loan officer at the time the Letter of Consent was delivered that he would not *111 agree that the stock be used to secure any future loans without his consent. This testimony would have varied the terms of the contract which was in all other respects effective. The parol evidence rule prevents such a variance. The court properly refused to consider this testimony. Affirmed. MARTIN, J., concurs PHILLIPS, J., dissents. PHILLIPS, Judge, dissenting. In my opinion the parol evidence rule does not apply to the evidence referred to. The evidence, as I view it, shows that the pledge of plaintiff's stock was to be effective only upon the plaintiff approving any loan the bank made to Ellis, and the writing and the stock were signed, delivered, and accepted on that condition.