Boynton v. Twitty

McCay, Judge. That this promissory note is secured by mortgage, does not, in-our judgment, alter the rules of evidence upon the existence or amount of the debt. On the trial of the issue,' which the statute provides for, the defendant may setup any defense he might set up in an ordinary suit instituted on the debt secured. We think, too, that the evidence sufficiently shows that the note secured is the same $1,800 00 note the witness alludes to,- to allow the evidence to go to the jury, if it be otherwise unobjectionable. We think it very clear, too, that the witness is competent to testify notwithstanding the death of Cochran. He is not the other party to the cause of action on trial. True he says the defendant made a note to him, on the same consideration as he made this note to Cochran, but the contract was a distinct thing with each, and the witness did not have, and does not have, any interest in the defendant’s note to Cochran. At last, therefore, the only question is, -was the evidence competent? Was it an effort by parol, to alter or vary the terms of a written instrument? The evidence affirms the terms of the note, except that whilst the note professes to be'for value received, the parol evidence says that no cash or property passed; that no debt existed, but that the note was given to indemnify Cochran to the amount of $1,800 00 against a contemplated loss, by reason of the anticipated failure of Boynton. Is this varying, the terms of the note? Is this within the meaning of the rule, that parol evidence is not admissible to vary or explain a written instrument? By the common law, the burden was always on the plaintiff to prove the contract sued on was for a legal consideration. If the suit was on a written contract, and the consideration was set out, then the proof of the execution of the writing was sufficient; but if there was no acknowledgment of the consideration in the writing, it was necessary for the plaintiff to show it by proof, and so settled was the rule that in cases coming within the statute of frauds, where the agreement was 217 required to be in writing, the courts held that the writing must express what the consideration was. But promissory notes and bills of exchange, under the Statute of Ann, and the custom of merchants, stood on a different footing. In them no consideration was required to be shown; they imported, prima fade, a consideration. Even the words value received are not necessary. But this presumption was only prima fade, and might be rebutted by showing the truth of the case: See Chitty on Bills, where the subject is fully discussed, and the authorities cited. The acceptor of a bill of exchange or the indorser of a note, are presumed, the one to have funds of the drawer, and the other to have received value for the note on a transfer of it; and yet it has long been well settled that they both may show by parol the contrary, and that they became parties to the paper as security, and for the accommodation of the maker. It is no contradiction. A note or bill rarely does set forth the consideration; it is either silent on the subject or is in general words, as on account or for value received. And the authorities are uniform that the true consideration may be shown. The case where an acceptor of a bill, or indorser of a note, is alloAved to shoAv that he got no value, and was only an accommodation acceptor or indorser, is a familiar one. Ami yet this is, in substance, the very case at bar. A accepts a bill of exchange. The laAV assumes that he has funds of the drawer in hand. That is the legal effect of his contract, and yet he is allowed to show that he did not have funds; that he Avas only a surety, and if the holder kneAv the facts he will be liable for any act in violation of the rights of the surety. The case of Soley, executor, vs. Hind, executor, 6 Car. & Payne, 316, Avas very like the case at bar. There a man had given his promissory note in the usual form for £100 00. It was pleaded and proven that the note -Avas given in consideration of certain services that the maker expected the payee to render in executing his (the maker’s) will, he having appointed him executor; it was then proved that the payee died before the maker, and that the consideration had thus failed. It is sometimes difficult to say 218 when the parol evidence offered is a mere explanation of the consideration, and when it is an attempt to attach a condition to the contract, and it is hard to reconcile all the cases for this reason. The line of distinction is often so dim that one mind sees the case on one side of it, and another mind sees it on the other. Without doubt, you may always, in the case of a promissory note, show by parol what was the true consideration; that is, what the maker got, or the payee suffered or lost, or what was the motive that led to the making of the paper. If this motive was not, in law, a valid consideration, or has failed, or if the payee has, on his part, violated some undertaking, expressed or implied by law on his part, so that the consideration has failed, or has proved to be no consideration, then the whole facts may be shown by parol. But if the thing proposed to be proven attaches a condition to the note, as that in a certain event it is not to be paid, or is to be paid at a different time from the time stated, or ■ not to be paid in money, etc., then parol evidence is inadmissible. In the case of Lester, the consideration was the services of the attorneys; and it was attempted to be shown that it was agreed that the note s.hould not be paid unless the services proved effective. In the Sewing Machine ease, the consideration was the sewing machine, but it was proposed to show that the note was to be given up if the defendant’s wife should object. So in the cases at the last term against Thompson and others. The note was, on its face, given for the premium on an insurance policy actually issued, and it was attempted by parol to alter not only the note but the contract of insurance, by showing that the defendant was to have the right, at his pleasure, to withdraw from the bargain. But the case at bar stands on a different footing. Here the parties feared loss, and it was agreed that the'loss might go as high as $1,800 00, ánd this note was given and secured to protect the plaintiffs.’ intestate against that loss. The consideration was good. But it turned out no loss has accrued. The consideration has failed. It stands on the footing of a note or acceptance placed .as collateral to cover future advance, in which case the courts 219 hold that the note or acceptance is good only for the amount of the advances. If this testimony is true, this note was never intended for negotiation, and as between the parties this fact may always be inquired into. Judgment reversed.