McCaffrey v. Mitchell

56 P.2d 926, 98 Colo. 467, 1936 Colo. LEXIS 318

• Court: Supreme Court of Colorado
• Decided: April 6, 1936
• Docket: No. 13,536.
• Status: Published

Opinions

Mr. Justice Holland

delivered the opinion of the court.

The plaintiff in error will herein be referred to as plaintiff, and the defendant in error as defendant.

In May, 1929, plaintiff sold to the defendant certain real property, and as a part of the transaction, defendant gave plaintiff his promissory note for $200 due in two years, secured by a second deed of trust on the premises conveyed, which note is the subject matter of this litigation. Prior to maturity of the note, plaintiff placed it with Feigel, a practicing attorney of Boulder, Colorado, for collection. Defendant sold the property to one ShinMe who on the trial testified that he assumed the indebtedness, and it appears that prior to the maturity of the note, he paid plaintiff’s husband $15 as interest thereon. The note here involved not being paid upon maturity, Feigel, acting for plaintiff, instituted suit thereon in the justice court. Defendant made no appearance, the suit was not prosecuted, and in February, 1933, plaintiff then being represented by another attorney, a letter was addressed to the justice of the peace by the latter requesting its dismissal.

Defendant’s Exhibit 1 is an assignment prepared by Feigel in June, 1931, whereby defendant assigned to plaintiff his claim against ShinMe based on the covenant contained in the deed of conveyance from defendant to Shinkle, whereby the latter assumed and agreed to pay the note herein involved. Defendant contends that this assignment was taken by Feigel and accepted in full satisfaction of the note. Feigel testified that the assignment was taken subject to .the approval of plaintiff who refused to accept it, whereupon Feigel declined to proceed further and returned the note to plaintiff, who then placed it for collection with Lewis, another attorney, who filed the present suit in the county court of Boulder county in July, 1932. Trial there resulted in a verdict for plaintiff. On appeal by defendant to the district court a verdict was returned in his favor and to review the judgment entered thereon this writ of error is prosecuted.

The pleadings are not complicated. The complaint is in usual form for recovery on a promissory note. The answer set up three separate defenses, namely: That plaintiff orally agreed to look for payment of said note only to the real property; that plaintiff accepted the assignment herein mentioned as payment; and that the prior suit in the justice court was still pending. The replication contained a denial of these defenses. At the trial, upon the evidence, the court dismissed the first and third defenses and submitted the ease to the jury upon the question of the acceptance of the assignment. In so doing it gave as instruction No. 2, the following:

“If you find and believe from a preponderance of the evidence that the plaintiff accepted the assignment, exhibit No. 1 in evidence, in consideration of dismissal of the justice court action and a release of defendant Mitchell from liability upon the note, exhibit A, then and in such case the defendant would not be liable to the plaintiff, and your verdict should be for the defendant. And on the other hand, if you do not find from a preponderance of the evidence that plaintiff accepted said assignment and intended thereby to release defendant from liability on the note, the defendant would still be liable as provided in the note, and your verdict should be for the plaintiff.

“In determining whether or not there was a release of liability on the note, you are instructed that the plaintiff’s attorney Feigel had authority, by reason of being such attorney, to dismiss the justice court case, but he would not, in the absence of authority from the plaintiff, have any power to release or discharge the obligation of defendant upon the note. Further, an acceptance by the plaintiff might be either express or implied — express acceptance if she voluntarily accepted the assignment under the conditions it was offered, and implied if from all the circumstances it appears that she intended to ratify the assignment and accepted it as a satisfaction or release of the,- note. ’ ’

Plaintiff objects to the last sentence of the second paragraph on the ground that there is no evidence in the case upon which it could properly be based. We so conclude, hence the judgment must be reversed and the cause remanded for a new trial. This being true we deem it advisable to briefly discuss other phases of the case upon which defendant offered proof, denied by the court, and upon which cross-error is assigned.

Defendant was the only witness on the facts of the transaction in his behalf. He offered to testify: That plaintiff’s husband, acting in the capacity of her agent, offered to sell the real property to him for the sum of $1,600 ; that he made arrangements with the bank to borrow $1,600, and then was advised by the husband that plaintiff would not sell at that price, but wanted $1,800, and it was proposed to defendant that he give the additional note for $200 secured by a second deed of trust on the property; that defendant objected to signing the additional note; that plaintiff’s husband, as her agent, agreed with defendant, that plaintiff would not hold defendant personally liable on the note and would look only to the real estate for its payment; that plaintiff had listed the property for sale at $1,600; that defendant signed the $200. note only upon the agreement that he was not to be held personally responsible. This offer was rejected by the court and the defense upon which it was predicated, dismissed. Defendant contends that the assignment herein mentioned was unconditionally accepted by Feigel, the attorney for plaintiff. But it does not appear that any special authority from plaintiff to Feigel was pleaded or that proof was offered of any authority other than that of general authority to collect. Defendant further contends that because neither plaintiff nor Feigel advised him that the assignment had been rejected by plaintiff that an acceptance by plaintiff was implied and defendant’s release from liability on the note thereby established. Counsel for plaintiff retained possession of both the original and copy of the assignment from its date until the case was tried in the county court some two years later. This assignment was never delivered to plaintiff and of course she could not be charged with failure to return it. Defendant made no effort to regain possession of his note.

In the absence of special authority, Feigel acted beyond the scope of his employment, if, without authority, he accepted anything except money in discharge of the note, and if he so agreed with defendant, as the latter contends, such agreement was void and not binding upon plaintiff. Richardson Drug Co. v. Dunagan, 8 Colo. App. 308, 46 Pac. 227; Garrison v. Kansas City Life Ins. Co., 97 Colo. 149, 46 P. (2d) 902.

It is apparent from the record that defendant stood sqnarely upon the theory that the proposal and acceptance of the assignment by Feigel, and that alone, was binding upon plaintiff. If Feigel was unauthorized in the first instance, and acted beyond the scope of his employment, defendant cannot set up his further unauthorized act — that of retaining the assignment without notifying defendant that it had not been accepted- — as an implied acceptance. He cannot be held impliedly to have done that which he could not have done expressly. During the period of retention, relied upon by defendant, the note was in the hands of the second attorney f5r plaintiff, who attempted collection from defendant. The weight of the evidence clearly is in favor of the contention, which is supported by the testimony of plaintiff, her husband, and Feigel, to the effect that there was no acceptance of the assignment, and this outweighs the suggestion of an implied acceptance advanced and relied upon by defendant. The evidence on behalf of defendant in support of an implied acceptance is so weak as to be considered in law no evidence at all. It was error for the trial court to instruct upon a theory not presented. *

Defendant, by his answer, pleaded a confession and avoidance, and set up the three defenses hereinbefore noted. The substance of the first defense was, that as part of the consideration for the $200 note, plaintiff orally agreed at the time the note was signed by the defendant “that she would look for payment of said note only to the property secured by the said second deed of trust, and would not hold defendant personally liable on said note, but for which agreement defendant would not have entered into the transaction.” The defendant offered proof of this oral agreement which was rejected by the trial court and the defense dismissed. This ruling was based upon the proposition that parol evidence is not admissible to vary tbe terms of a written instrument. We believe, and so hold, tbat tbe ruling was erroneous and requires a reversal of tbe judgment. On another trial, defendant should be permitted to present this question to tbe jury by oral evidence.

The exceptions to tbe parol evidence rule are many and apparently as well settled as tbe rule itself. It is to be first noted tbat tbe controversy here is between payor and payee, tbe original parties to tbe note, as distinguished from tbe case of a bolder in due course. Rulings permitting tbe introduction of evidence under tbe exception are numerous, in cases where men have inconsiderately placed themselves in tbe alleged position of defendant in this case. He makes no claim of mistake in tbe making of bis written promise, and where tbe note on its face bears a consideration, tbe burden of avoidance of payment rests solely upon defendant. According to defendant’s offer of proof, there was neither condition precedent nor subsequent to tbe making of tbe note. Tbe question here raised goes to the existence of tbe note as an actual obligation. Tbe offer is not intended to vary, qualify, contradict, add to or subtract from, tbe absolute wording of tbe contract. As confessed by defendant, tbe note is complete in form, and tbe offer, which, under all tbe authorities is admissible, was to show tbat it bad no validity as a binding contract on defendant, and tbat it never was delivered as an unconditional contract by which defendant was bound according to its terms. It is true tbat ordinarily a note is prima facie evidence of an obligation, enforceable as to its legal import, but when in tbe bands of tbe original payee, tbe way is always open to tbe maker to prove circumstances showing tbat tbe note never was made or delivered with tbe intention tbat it should be binding at all events according to its terms, and be may not be foreclosed from showing tbat tbe note in effect is no contract at all.

Tbe fact as to whether or not a parol promise is tbe inducing cause for tbe execution of a contract generally is an inference to be drawn from tbe evidence by tbe jury. When a party is charged with tbe commission of an act with a particular intent, be may testify wbat bis intention was; but be cannot testify to tbe undisclosed purpose of bis mind, or declare a mental reservation, tbe effect of wbicb would be to nullify tbe express words of bis contract. Tbe thoughts and purposes of tbe maker, not disclosed at tbe execution of tbe contract, may not be given to tbe jury in an attempt to show that tbe instrument means something other than wbat is shown on its face.

The entire contract, when in question between the parties, may always be shown, and its incompleteness does not necessarily have to appear on its face. Evidence disclosing the entire agreement always is admissible in order that the court may be placed in the position of the parties in determining the questions involved. Kessler & Co. v. Parelius, 107 Minn. 224, 119 N. W. 1069. Many decisions on the exceptions to the parol evidence rule, applicable to the situation here briefly outlined, are to be found, among wbicb are the following by the United States Supreme Court: Ware v. Allen, 128 U. S. 590, 9 Sup. Ct. 174; Burke v. Dulaney, 153 U. S. 228, 14 Sup. Ct. 816.

The remaining defense urged by defendant rests upon the allegation of a prior suit pending. This refers to the original suit by plaintiff on the $200 note filed against defendant in the justice court. the transcript from that court does not show a dismissal order. A request for dismissal was made by letter from plaintiff’s counsel to the justice of the peace, now deceased. It is apparent from the record before us, that for a period of nearly one year no action was taken by either party in that case and that the action was legally discontinued by abandonment. No sufficient reason having been shown for the nonappearance of the parties, it was the duty of the justice of the peace to dismiss the case and in the event of Ms failure to do so, a total discontinuance occurred. Yentzer v. Thayer, 10 Colo. 63, 14 Pac. 53.

Judgment reversed and the cause remanded for further proceedings in accordance with the views herein expressed.

Mr. Justice Bouck and Mr. Justice Young specially concur.