Lawhead v. Stewart

I cannot agree to an affirmance of the judgment in this case. I think we are bound by the finding of the jury on the question of notice to the bank of the so-called "side agreement," and I concur in the syllabus statement of law. My dissent goes to the application of this law to effect a release of the makers and endorsers of the note in question.

The note sued on is a negotiable promissory note, necessarily contains an unconditional promise to pay, and the original obligation was negotiated before maturity. It is said that at and before the same was negotiated and discounted by the First National Bank of Pineville, the bank had notice of the "side agreement." Conceding this, the question arises, of what did this agreement give notice? This requires an examination of the writing itself.

This agreement, dated October 26, 1926, provides that the land for which the note was executed should be subdivided into town lots and sold, and that the coal therein should be mined, or, if not mined, an additional sum should be paid. This, of course, means that at the date of the negotiation of the note, all parties connected therewith as makers or indorsers knew that it was contemplated and agreed that the land should be sold. This was as much a promise and undertaking as the unconditional promise to pay contained in the note itself. Then follows the crucial provision which, it is contended, required the bank to resort solely to the property for which the note was executed in the collection thereof, and released the makers and indorsers of any personal liability thereon. This provision reads as follows:

"It is further understood and agreed by and between the parties hereto that the party of the first part is to carry said note or notes evidencing said purchase price for such a length of time as may be necessary to sell a sufficient number of lots and collect the sale price thereof so that the share of the party of the second part in such sales amounts to a sufficient sum to pay off and discharge the principal and interest of said purchase money note or notes."

It seems to me apparent that this agreement did not release the original obligation to pay the note. It only provided that the note should be carried until certain sales of property could be made and the proceeds thereof collected. The law would imply an undertaking that these sales should be made within a reasonable time. Certainly refusal to make sale as agreed would have released the payee of the note of the obligation to continue to carry the note, and would have given the owner of the note, in this instance, the bank, the right to enforce the same according to its terms. It would seem inequitable to hold that a person may make a promise to pay a given sum, subject to a condition which can be performed by him only, and that his failure to meet such condition would entitle him to a release from his original promise.

The lots were never sold, nor was any coal mined, because the title to the land failed. In a suit in which all the makers and indorsers were parties, the land was decreed to be the property of C. M. Wikel, and it was sold in such suit to meet the claims of his creditors. A situation arose, through no fault of the bank, when the "side agreement" could not be carried out. There was then no possibility that the note could be paid out of the proceeds of sale of this property. I do not think this operated to release the makers and indorsers of the note. The risk of title was not assumed by the bank; it only took the note with notice that it might be required to carry the same pending the sale of certain specific property, for which it was given, and when the agreement to sell the lots and mine the coal was breached, under the circumstances shown by the record, the bank had the right to enforce the note according to its terms, and it follows that the rights of its assignee are the same. If this be true, then the plea of the defendants did not set up a good defense. Objection to the same should have been sustained, and a verdict in favor of the plaintiff should have been directed.

I do not think the passing reference to the "side agreement," contained in the opinion rendered in this case on a former writ of error (122 W. Va. 80, 7 S.E.2d 350), which refers to this agreement as one "to the effect that the note was to be paid solely from proceeds of sale of this land," should bind us as to the true interpretation of this agreement. That case was decided upon points which did not require a consideration of the true meaning and effect of the agreement, and a decision as to such meaning was not called for upon that submission.

I would reverse the judgment, set aside the verdict and grant a new trial.