Wise v. Boyd ( 1924 )

I find myself unable to agree with the majority upon the material question involved in this appeal which is the effect of that section of the Negotiable Instruments Law incorporated in the statutes of Texas as article 6001 — 16, V. S. C. S. Shorn of all verbiage inapplicable to the question at issue in this case, that article reads as follows:

"Every contract on a negotiable instrument is incomplete and ineffectual until delivery for the purpose of giving effect thereto. As between immediate parties, * * * the delivery may be shown to be conditional or for a special purpose only."

I think the majority opinion is incorrect in the holding that evidence of the parol agreement to the effect that King should be liable only in the event of the death of Boyd is inadmissible, because of the parol evidence rule. It is my opinion that the Legislature, by incorporating in the statutes of this state the Negotiable Instruments Law intended and has made an exception to the parol evidence rule as it affects negotiable instruments in contests between the immediate parties. That it was within the power of the Legislature to do so is not debatable, since, as in usury cases, it has exercised such power and has declared instruments tainted with usury invalid to that extent, even in the hands of innocent purchasers.

While the language of the article under consideration is plain, there is a woeful want of harmony in the decisions, both in England, where the Negotiable Instruments Law had its birth, and in this country, in applying the act to the facts of the cases. The importance of the question to the financial and commercial interests of the state demands that it be authoritatively settled one way or the other by the Supreme Court. I have not been able to find that our Supreme Court has ever passed upon the question. The learned judge who wrote the opinion in Chalk v. Daggett (Tex.Com.App.) 257 S.W. 228, made no direct reference to the Negotiable Instruments Law, and since no decision which he cited considered the effect of that statute upon negotiable instruments, I feel justified in voicing my dissent. The question was discussed pro and con at some length by this court in Waters v. Byers Bros. Co., 233 S.W. 572, but that case never reached the Supreme Court. In that case this writer attempted "to give his reasons for the faith that is within him," and by at least a supreme physical effort and with the expenditure of much nervous energy collated a multitude of authorities from many jurisdictions in which the Negotiable Instruments Law operates which sustained him in his views. His opinion in that case — to which he "points with pardonable pride" as a legal classic — is for the sake of brevity hereby made an exhibit to this dissent.

Since negotiable paper is the lifeblood of our commerce and because so many of the ablest courts of the country have differed as to what effect should be given the act, the writer feels that the Supreme Court of this state should have an opportunity of definitely settling the matter. My position briefly stated is that if Showers agreed at the time King signed the note, "that he would not hold said King liable on said note, nor expect him to pay it, and would not sue him or try to hold him liable thereon, except in the event the said Boyd should die before the maturity of the note," and if King signed it relying upon that promise, then there was such a conditional delivery, and a delivery for such special purpose as brings the case within the provisions of section 16 of the act. As shown by numerous authorities cited in the Waters Case, supra, there may be aside from the Negotiable Instruments Law, a manual delivery of a note, even to the payee, upon conditions which take the case out of the parol evidence rule.

In this case we are not concerned with the mere manual delivery made by Boyd to Showers, nor its effect under the law merchant generally, but the issue is: Was there a delivery by King "for the purpose of giving effect thereto" and "for a special purpose only"? We are not considering a case of absolute delivery of a note with the understanding that it shall become void upon the happening of some future event. Here the condition affects the very existence of any obligation whatever, notwithstanding its mere manual delivery, and if effective, negatives the idea of absolute delivery of the note for the purpose of giving effect thereto. By a solemn contract of the parties, the death of Boyd is expressly made a condition precedent to the "delivery of the instrument for the purpose of giving effect thereto" as between Showers and King. If Boyd should live until the maturity and collection of the note, then the condition or contingency which could alone vitalize it as to King, has not happened, and as to him the obligation is "incomplete and revocable," since his delivery of it was not for the purpose of giving effect thereto according to its tenor and reading. As between Showers and King it was not a complete contract until the death of Boyd. That the note was a valid obligation against Boyd is conceded, but I insist that Showers and King had the right to so contract as to limit and postpone the beginning of the latter's liability to any date in futuro, and to predicate it upon the happening of any event which they might determine, not inconsistent with public policy or express statute. I think that section 16 clearly recognizes this right and respects it when exercised by the parties, and the courts should not arbitrarily disregard the agreement.

I believe the statute means what it says and says what it means. It is not the prerogative of the court to make or unmake contracts for competent parties, but their duty is discharged when they bind such parties exactly as they have bound themselves. If Showers and King were willing that the latter should become liable only in the event of the death of Boyd, and the note was, as between them, delivered for the purpose of giving effect thereto solely upon that condition and for that special purpose only, and that no contract existed between them until the death of Boyd, then, in my opinion, the courts, even aside from the issue of fraud, must under the plain letter of the statute respect the agreement, regardless of the effect of the parol evidence rule generally, and I think the tendency of the decisions elsewhere sustains that contention. I feel that I am amply supported by a formidable array of decisions cited in the Waters Case, supra, and in the following: Eng. Ruling Cases, pp. 194-210; 20 A.L.R. 421-502; L.R.A. 1917C, 306; L.R.A. 1916B, 1048; 33 L.R.A. (N. S.) 892; 18 L.R.A. (N. S.) 289; Rev. Ed. Rose's Notes (U.S.) to Burke v. Dulaney, 153 U.S. 228, 14 S. Ct. 816, 38 L. Ed. 698; Security Savings Bank v. Hambright, 195 Iowa 1147, 193 N.W. 576; Gardner v. Gardner (R.I.) 121 A. 385; Ricords v. Mead, 45 S.D. 617,189 N.W. 703; Witte v. Broz (Neb.) 197 N.W. 121; Dickson v. Protzman,123 Wash. 247, 212 P. 249; Silva v. Gordo (Cal.App.) 224 P. 757.

If the extension and renewal note was executed with the understanding that King's liability was predicated upon the condition of the death of Boyd before the maturity of the second note, then the extension was no more a consideration to King for executing the second note than existed at first.

For the reasons stated, I think the judgment should be reversed and remanded.