Piowaty v. Regional Agricultural Credit Corp.

BARNS, J.: This is a case wherein the appellants were defendants below. The appellee-plaintiff sued the defendants on a contractual obligation which had the form of an ordinary promissory note, together with the following provisions: “The advances represented by this note are made to finance the production of the quantity of essential war crops specified in the makers’ application on Form RACC-RP3, which bears the same identification number (preceded by the letter W) of this note. “The makers shall be personally liable for the full amount of such advances, subject to the condition that, if the United States Departmet of Agriculture War Board of the county identified by the state and county code appearing in the identification'number on this note (or such other agency or person as the Regional Agricultural Credit Corporation of Washington, D. C., may designate to make the certification-herein required) certifies that” —(Here follow the five conditions fully set forth in the opinion prepared by Mr. Justice BUFORD). And plaintiff’s-appellee’s declaration of one count alleges the execution and non-performance of the contract, and further alleges: “That, pursuant to the provision contained in the said note or obligation permitting the plaintiff to designate some other agency or person to make the required certification, Regional Agricultural Credit Corporation of Washington, D. C., on July 2, 1943, designated the District Vice President of the plaintiff corporation to certify, upon the recommendation of the County War Board, as to compliance by the defendant and other borrowers with the conditions set out in *138 the note or obligation herein sued upon and in similar notes and obligations; that thereafter the defendant applies to' the District Vice President of Regional Agricultural Credit Corporation of Washington, D. C., through the County War Board of Orange County, Florida, for cancellation of the balance of his obligation, but after consideration of the defendant’s application, the said County War Board refused to recommend that the balance of the said advances be cancelled, and has not recommended and still refuses to so recommend; and the plaintiff’s District Vice President thereupon refused to certify that defendant had complied with the conditions set out in the said note or obligation and has not certified and still refuses to so certify.” The trial judge overruled a demurrer to this declaration and this ruling is assigned as error. The following provisions of said promissory note, to-wit: “The makers shall be personally liable for the full amount of such advances, subject to the condition that, if the United States Department of Agriculture War Board of the county identified by the state and county code appearing in the identification number on this note (or such other agency or person as the Regional Agricultural Credit Corporation of Washington, D. C., may designate to make the certification herein required) certified that” — are provisions inserted in the note for the benefit of the promissors, defendants-appellants, and the benefits thereof in no wise flowed to the promisee. It was not necessary, yet not improper, for the plaintiff-appellee to plead matters which relate to discharge, and the plaintiff might have denied the discharge thereof generally. The quoted language was not a “condition precedent” to the fixing of liability, but it was a “condition subsequent” for the promissors’ benefit, and relating to discharge or excuse for non-performance, only to be taken advantage of in some affirmative manner by the promissors. Like all other matters relating to discharge, it was for the defendants to plead and prove and the recital thereof and of the acts of the parties relating thereto in no wise affected the quality of plaintiff’s declaration. *139 This assignment of error not well founded. The contract specified that upon the promissors procuring a specified certificate the obligation would be discharged. This contemplated that the named agency which was to determine whether or not the “conditions subsequent” had transpired would determine same fairly and on a rational basis, and the promissors, in making the promise, had a right to rely upon “fair play.” For the promissors not to receive “fair play” would work an implied fraud upon them. Appellant’s second assignment of error complains that: “The Court erred in entering its order dated September 9, 1946, recorded in Minute Book LL, page 305, sustaining the demurrer of the plaintiff to the Third and Fourth Pleas of the defendant, and granting the motion to strike portions of the pleas.” And the question presented in argument of this assignment is: “QUESTION 2. In an action on a special advance made by one party to another an agreement, which provided for the cancellation of the balance due, upon the certification of named conditions by a designated agent, is the lack of such a certificate merely prima, facie evidence of the non-compliance with the conditions, or is it necessary to allege and prove that in addition to compliance with the conditions, the agent acted arbitrarily and capriciously in refusing to execute the certificate.” Appellant states: “This is the heart of the case.” This seems to be correct. For the promisee to perform the “conditions subsequent” and for the agency named to then withhold the certificate, after undertaking to act, would amount to arbitrariness and capriciousness and be an implied fraud upon the promissors, but such is an affirmative defense which must be plead, as the defendants in this case did, by their fifth and sixth pleas. Plaintiff’s declaration alleges that in accordance with the provisions of the contract the promisee designated the “District Vice President of the plaintiff corporation to certify” as *140 to the promissors’ performance of the condition subsequent, but the plea sets up that “the United States Agricultural War Board of Orange County, being the county identified by the State and County Code appearing in the identification number on the note sued on, the same being the agent of the plaintiff herein for such purpose, did wrongfully, arbitrarily, and without justification, fail and refuse to certify that this defendant had, in all respects, complied with the conditions ...” This assignment of error not well founded. The settlement of the issues of fact was for the jury to determine and not a question of law for the court. The act of the trial judge in sustaining a demurrer to the third and fourth pleas, which merely alleged performance of certain “conditions subsequent,” (without excusing absence of certificate) appears not to have been error; the parties to the contract provided more, and, for the defendants to receive the benefit of the contractual provisions relating to discharge, more was required to be plead and proven. This they attempted to do in their fifth and sixth pleas. That part of the assignment of error relating to striking a part of defendant’s pleas is not argued, therefore abandoned. Affirmed. THOMAS, C. J., BUFORD, CHAPMAN and SEBRING, JJ., concur. TERRELL, BUFORD and ADAMS, JJ., dissent.