Edgerton v. Power , 18 Mont. 350 ( 1896 )

De Witt, J.

We are satisfied that the denial in the answer that £ ‘the amount of stock’ ’ had been delivered was a negative pregnant, for the reason set forth by the district court, and quoted in the statement preceding this opinion. The court was therefore justified under such a denial, in refusing to allow testimony as to the nondelivery of the stock. The court offered to allow counsel to amend this denial so that it would be well pleaded. Counsel refused to (Jo so unless they were also allowed to allege in their proffered second amended answer that certain matters mentioned in the statement above, other than the delivery of the stock, were also part of the consideration for the note. The court held that this was an attempt to vary the terms of a written instrument, viz, the contract of December 30th. This matter is the gist of the whole case. The note was given December 30th, 1889, and it was given in connection with the contract of the same date. Appellants contend that it is not varying the terms of a written instrument, to wit, the promissory note, to show, aliunde the note, what the real consideration was. Their counsel cites many authorities upon this point. This may be conceded. Then he proceeds to show the real consideration by pleading the contract of December 30th. This contract is admitted by the respondent. Then the next question is, what is the real consideration for the note, as shown by the written •contract? If the real consideration be shown by the contract of December 30th, then we have that contract as a written instrument in which to find the consideration. (Pitts v. Allen, 72 Ga. 69.)

We must therefore look to the contract of December 30th to ascertain the real consideration. Was that consideration the delivery of the stock, or was it the delivery of the stock and the performance of all the other terms of that contract? The district court said it was the delivery of the stock only. This point was raised in several ways during the trial, and is the gist of this controversy. We must therefore proceed to construe the contract.

The contract says, “In consideration of the premises and the sum of one dollar to each in hand paid, it is agreed, ’ ’ etc. Appellants make the point that all the agreements of the contract are in consideration of the premises. The premises are set forth in the recitals preceding the contractual portion of the instrument. Referring to the contract as set out in the statement of the facts preceding this opinion, it is observed that the recitals consist of statements of some facts, and of some desires of the parties. The facts recited are that Edgerton is the owner of 555-1,- shares of the railroad stock, and Sanford and Evans of 112-J- shares, and that it had been agreed that Power and Sullivan shall purchase of Edgerton one-half of his said shares, at the price of $8,000. After stating these facts, the recitals then set forth that it is desired by all parties that the stock owned by Edgerton and Sanford and Evans, and the stock purchased by Power and Sullivan, shall be voted as a unit, and that all of the parties shall act together and in harmony in the management of the railroad, etc. These facts and these desires of the parties being recited as premises, the contract goes on to state that in consideration of the premises the parties agree to certain things. What they agree to is set forth in a series of eleven paragraphs, numbered consecutively from first to eleventh. The first is as follows:

1 ‘ That said party of the second part agrees to sell to the said parties of the first part, and said parties of the first part agree to purchase of the said party of the second part, one- • half of said five hundred and fifty-five and one-half shares of capital stock at and'for the price or sum of eight thousand dollars, for which sum said parties of the first part shall give their note, payable to the order of the said party of the second part six months after the date hereof, with interest thereon at the rate of eight per cent, per annum from date until paid. ’ ’

Then the contract goes on and sets forth the ten other-paragraphs, containing the other agreements which the parties made. Paragraph 1. certainly very plainly sets forth in writing that the consideration of the note is the delivery of the one-half of the 555-J- shares of the stock of the railroad company. It has already been recited that such agreement had been made. The fact that it had been made is one of the premises of the contract, as above noted. The other premises were the desire of the parties to operate the railroad in harmony, etc. If the premises, as the appellants argue, are part of the consideration of the note, then the only premise, other than the contract for the delivery of the stock, is what we have noted as the desires of the parties. Those desires were to pool the stock, run the road over certain lands, pay a stock dividend, etc. By reason of such premises, including what we call the ‘ ‘ desires of the parties, ’ ’ they go on and state what they shall do; and, first, Edgerton and Power and Sullivan, in the first paragraph, make their contract as to the sale of the stock for $8,0'00. Passing this paragraph as complete in itself, we come to the other paragraphs, as to pooling the stock, etc. We are of opinion that the agreements contained in this contract are clearly separable. The first paragraph is complete in itself, and is independent of the others. It is observed that there is no time set when this pool shall be formed. The contract of pooling and operating the stock as a unit, and handling the road in harmony, is to run for ten years, but the note is payable in six months. Therefore, how can the performance of further agreements following paragraph 1. be a consideration for the note, and how can their nonperformance be a defense, when the note is payable absolutely nine and one-half years before the other acts contracted for are to be fully performed ? The parties could not have contemplated such an anomaly.

W e are of opinion that the consideration of the note was the delivery of the stock, and perhaps, also, the entering into the further agreements, but not' the performance of the same. If the entering into the further agreements were also a part of the consideration of the note, that consideration was performed, because the further agreements were entered into. This branch of the case we will examine.

It is true that it is quite clear that the parties desired the accomplishment of all the matters set forth in the contract of December 30th, and in paragraphs following paragraph 1; and it is true that they also contracted for the accomplishment of their desires in that respect. But these matters could not be accomplished, nor, indeed,0 could they be intelligently contracted for, unless Power and Sullivan obtained the stock to put into the pool. The obtaining of that stock was a prerequisite to the accomplishing of the other matters set forth. To be sure, the accomplishment of those matters was within the. contemplation of the parties when they made the contract as to the stock. It may even be conceded that Power and Sullivan would not have bought the stock unless all the parties had consented that they would make an agreement for the accomplishment of the other matters. But Power and Sullivan did buy the stock, and they, with Edgerton, did make an agreement as to the other matters. It may probably be, indeed, conceded that the consideration of the note was the delivery of the stock, and the entering into the further agreements. Let it be understood that we say the entering into the further agreements, not the performing of them; that is to say, the promising to perform may have been a part of the consideration of the note, but the performing of the same could not. have been. Then the consideration of the note was paid, if the stock was delivered, and the further agreements were made; and on this construction of the situation, if the stock were not delivered or the further agreements were not made, the consideration failed. But the court offered to allow appellants to prove that the stock was not delivered, if they would make a proper allegation of this in cheir answer. That, as above noted, they declined to do, and, they declining to make this denial, the court struck out their proof.

That the further agreements were made was, in effect, in evidence, because the fact was alleged, and not denied by the pleadings. Thus, while the makmg of the further agreements may have been a part consideration of the note, we cannot consent that their 'performance was also a part consideration. The contract, in its whole scope, denies such interpretation. The sale and delivery of the stock were preliminary to the performance of the other agreements, and preliminary, indeed, to a promise to perform, because it was first necessary that Power and Sullivan have said stock before they could make the pooling and other agreements. Again, we observe that no time was set for the performance of any of the other agreements. One of the other agreements as to an option was limited to one year, and the whole pooling contract was to run for ten years. The performance of such acts at such times never could have been intended as a part consideration, or their nonperformance as a defense, to a note payable absolutely in six months. These views do not deny to defendants a remedy for any breach of the contract of December 30th, as to any agreements therein other than the sale of the stock, if any such breaches exist. All we hold is that any nonperformance of such agreements is not a defense to the note, because the performance was not, by the terms of that contract, a consideration for the note.

By reason of these views the j udgment and order of the district court must be sustained.

Affirmed.

Pembekxon, C. J., and Hunt, J., concur.