Continental Trust Co. v. Witt ( 1924 )

Sims, P.,

after making the foregoing statement, delivered the following opinion of the court:

■' The assignments of error on behalf of the plaintiff present but a single question for our decision, which is, indeed, one of fact, namely:

1. Was the condition, upon which the note sued on was given by the maker, a condition precedent, without the occurrence of which the note was not at any time to become a valid and binding obligation of the maker; or was it a condition subsequent, the occurrence of which was to discharge and put an end to the otherwise valid and binding obligation of the note?

The first branch of the question must be answered in the negative; the last in the affirmative.

There is no conflict in the argument befdre us as to the law of the case. The parol evidence rule as applied to promissory and negotiable notes, which are obligatioxxs in writing to pay money, after they have, by execution and delivery, become, at any time, valid and binding obligations, is well settled. As held in Rector v. Hancock, 127 Va. 101, 102 S. E. 663: “Parol evidence is inadmissible to show that a note, or other obligation, in terms payable in money, was in fact to be discharged in some other way; * This is not true, of course, if, by reason of fraud in the procurement of the paper by the payee, which goes to its validity, or by some breach of confidence by the payee in using the paper, such as fraudulently diverting the paper to another purpose from that for which it was delivered which also goes to its validity, the instrument never had any vitality as a contract. In such case, as uniformly held, the oral evidence tends to prove independent facts, which, if established, avoid the effect of the written agreement by facts de hors the instrument and do not tend to contradict. or vary it. Towner v. Lucas, 13 Gratt. (54 Va.) 716; Solenberger v. Gilbert, 86 Va. 788, 11 S. E. 789; Tuley v. Barton, 79 Va. 392; Hawse v. First Natl. Bank, 113 Va. 590, 75 S. E. 127; Whitaker v. Lane, 128 Va. 317,104 S. E. 252, 11 A. L. R. 1157; Robertson v. Va. Natl. Bank, 135 Va. 166,115 S. E. 536. In such eases, indeed, if they involve a negotiable instrument, the title thereto is “defective” under the provision of section 5617 of the Code; and under section 5578 of the Code, as between, the immediate parties and as regards an indorsee with notice thereof, the delivery may be shown, by parol evidence, to have been upon a condition precedent, or for a special purpose only, and not for the purpose of transferring “the property in the instrument.”

But where the instrument is in fact delivered as a valid and binding obligation, for any moment of time, and it is sought by parol evidence to show an agreement by the obligee (even though the alleged agreement is • said to have been made at or before the delivery of the instrument) to release the ■ obligor from his liability under the terms of the instrument, or to limit such liability, upon the happening Of any subsequent event, or under any subsequent eireumstances whatsoever, the parol evidence rule is applicable and the evidence'is inadmissible: ' And the same is true in an action by an in- ' dorsee with knowledge of such an agreement. See, in addition, to.the cases above cited, 1 Joyce’s Defenses to Commercial Paper (2d ed.), section 519,. page 714; Chamberlayne on Ev., section 3553; 2 Elliott on Con- -■ tracts, 1620, 1621, 1625. .-In-such cases, where a negotiable instrument is involved, “the property in the instrument,” within the meaning of section 5578 of the • Code, is passed by the.delivery of the instrument, and it ' may not be shown by parol evidence, even as between • the immediate parties, that, the delivery of the instrument was conditional, or for. a special purpose. only, • other than what appears from the terms of the instru- ■. ment itself. '

Such being the law of the case, it. is apparent from the reading of the evidence'that, the instant case falls within the parol evidence rule; for it appears.from the • evidence, without conflict therein, that the note involved in the instant case was, at the time of its deliv- • ery by the defendant maker to the payee thereof,, deliv- ■ ered as a valid and binding obligation, to remain such until its maturity, and even at and after maturity it was still to remain a valid and binding obligation of the maker to pay to the payee'or to his indorsee the amount of money stipulated in the note, unless the following subsequent events should happen, namely, unless the automobile, for which the note was given, was not sold for a price equal to the amount of the note, and the unsold automobile was returned to the payee of the note before its maturity, and only upon the happening of such subsequent events was the maker of the note to “be not required to pay the same or any part thereof.”

■ We are, therefore, of opinion that the parol evidence in question sought to set up a condition subsequent to the passing of the property in the note to the payee, and, if given effect, would operate to discharge what was, by its unambiguous terms, for a time at least, a valid existing obligation to pay money, “in some other way,” different from that prescribed by such terms. The parol evidence was therefore erroneously admitted and the case must be reversed, and, under section 6365 of the Code, judgment will be entered for the plaintiff, for the amount of the note, less the credit set out in the petition for the attachment, with interest on such amount from the date of the note until paid, together with costs in this court and in the trial court.

2. The defendant, H. H. Witt, by cross-assignments of error, takes the position that the executor, who was also made a party defendant to the attachment proceeding and sought to be garnisheed, cannot be garnisheed and made to account to a creditor of a distributee of an estate, especially before there is an ascertainment of whether there are any prior liens upon the share of the estate belonging to such distributee; and, hence, contends that the attachment should be dismissed.

With respect to such contention, it is sufficient to say that there is no issue before us with regard to the attachment. Section 6404 of the Code provides that if, in an attachment proceeding, “the plaintiff’s claim be due at the hearing, and the court would otherwise have jurisdiction of an action against the defendant for the cause set forth in the petition, and said defendant has appeared generally, or been served with process, it shall retain the cause and proceed tó final judgment, in like manner as if it had been a motion matured for hearing under section six thousand and forty-six.” In the instant ease the defendant, H. H. Witt, appeared generally.

Reversed and final judgment entered for plaintiff.