Schmittler v. . Simon

21 N.E. 162, 114 N.Y. 176, 23 N.Y. St. Rep. 160, 69 Sickels 176, 1889 N.Y. LEXIS 1081

• Court: New York Court of Appeals
• Decided: April 23, 1889
• Status: Published

Opinion

Bradley, J.

Upon the review of a former trial, where the question presented had relation only to the legal import of the terms of the instrument in question, it was held that it was a bill of exchange and that the defendant was, upon his acceptance, personally liable to the plaintiff as indorsee of the paper. (101 N. Y. 554.) This is the review of the succeeding trial, and the admissibility of evidence offered by the defendant is now the subject of inquiry. The defendant was executor of the will of Begina Scharen, deceased. She was the mother of the drawer of the draft. There is some evidence tending to prove that the draft was taken by the payee for the plaintiff, who was his wife, or with a view to transfer it to her. The defendant offered evidence tending to prove that it was understood by the plaintiff and her husband, that the draft should be taken upon the security of the drawer’s "interest in the estate of his mother; that when the draft was drawn it was understood between the drawer, payee and the plaintiff that it was to be paid out of such interest in the estate; also, that the defendant then said, in the presence of all those parties, that he would not accept the draft or become liable upon it personally, and that it was then agreed or said between them that the defendant would accept the draft in his capacity as executor, to be paid only out of the drawer’s interest in his-mother’s estate. This evidence was offered in various forms on inquiry, and upon objection of plaintiff’s counsel, was-excluded and exceptions taken. The general rule is, that when an agreement is reduced to writing it; as between the parties,is deemed to merge and overcome all'prior or contemporaneous1 negotiations and declarations upon the subject, and that no- oral evidence is admissible to vary, explain or contradict its terms. But it may be that it would have been admissible for the defendant to prove, if he could, that his acceptance was not to take effect as such until a certain event, then in the future, and that when the payee and the plaintiff received it they were advised of an arrangemement to that effect.' (Seymour v. Cowing, 1 Keyes, 532; S. C., 4 Abb. Ct. App. Dec. 200; Benton v. Martin, 52 N. Y. 570; Reynolds v. Robinson, 110 id. 654; Wilson v. Powers, 131 Mass. 539; Wallis v. Littell, 11 C. B. [M. S.] 369.) In this connection reference may also be made to the proposition that the purpose for which a written contract is made /nay rest in a collateral oral arrangement, which may be shown to the effect that the design of it is different from that which its terms aloné may indicate. (Grierson v. Mason, 60 N. Y. 394; Juilliard v. Chaffee, 92 id. 529; Chapin v. Dobson, 78 id. 74.) These propositions are not applicable when the conclusion is required that the writing contains the final consummation of the entire agreement between the parties. While the evidence so offered may bear the construction that there was an understanding between the parties to the draft that the liability of the defendant on the acceptance was dependent upon an ascertained- interest of the drawer in the estate of his mother, and, in that event, to be incurred to the extent only of such interest, not exceeding the amount of the draft, we think such evidence cannot fairly be construed as tending to prove a collateral agreement suspending the inception or operation of the acceptance until some future event, or as tending to show that it was made for a purpose independent of the import of its terms, within the rule before mentioned. And, therefore, it is unnecessary to consider the question of the applicability of those propositions to negotiable paper. The consideration of a contract, in whatever form it may have been, may, as between the immediate parties to it, be the subject of inquiry. And in an action by the payee, upon a note made by an executor or administrator, on account of a debt which his testator or intestate left unpaid, guch fact and that the assets of the estate were insufficient to pay the note, may be shown as a defense, wholly or partially, as it may appear that there was an entire or partial want of assets to pay the debt represented by the note. (Bank of Troy v. Topping, 9 Wend. 273; S. C., 13 id. 557.) The question in such case is one of consideration for the promise, evidenced by the note supposed to have been founded wholly upon the assets of the estate which the maker represented. While the maker and payee of a promissory note and the drawer and acceptor of a bill of exchange are immediate parties to the paper, that relation of privity does not exist between the payee and acceptor; and as between them alone, the want of consideration is no defense; but the acceptor, for the purpose of his defense in that respect, must go further and prove that there was no consideration as between the drawer and payee. There was no purpose indicated in the evidence offered, to do that, and, therefore, it does not seem to have been competent for that purpose. The question now is, whether the evidence so offered was admissible for any purpose. On the former review, in referring to the contention that the ' draft was drawn upon a specific fund, the court said : “ Considering the question, as we are compelled to do, from the language of the instrument alone, we- are unable to agree to the interpretation that the draft was payable only from a particular fund,” and added : “While the point is not free from doubt, we think a reasonable construction of the draft favors the conclusion that it (the fund) is mentioned only as a source of reimbursement; ” and “ if the language of the paper could be considered at all ambiguous, it was the duty of the defendant to limit his liability by apt words of acceptance when it was presented to him; but, as it is, he has unqualifiedly promised to pay a fixed and definite sum at a specified time, and, we think, should be held to the contract which other parties were authorized, by his acceptance, to infer he intended to make.” It does not appear what view the court may have taken of the admissibility of evidence of the fact, and of the fact itself, if it had then appeared, that the payee and the plaintiff, when they received the draft, had been advised that it was drawn and accepted to be paid out of the drawer’s interest represented by the defendant as executor. The question there was solely one of construction of the instrument as represented by its terms. And all that the court there necessarily determined was, that it did not appear by the terms of the draft that it was drawn upon a particular fund. That character would not be given to the draft upon doubtful construction as against the plaintiff, who was presumed to be a ~bona fide holder of it. The fact that the drawee was, in the draft, designated as executor, and that he added the like designation to his name subscribed to the acceptance, would not of itself import any other than a personal relation of the defendant to the instrument, as the word “executor” annexed to his name would presumptively be treated as merely descriptive df the person. But it might be given some substantial significance by other provisions, if those were such as to require it, in the instrument, and, in a proper case, this might be aided by extrinsic facts. The defendant, as executor, represented whatever interest the drawer of the draft had in the estate of Mrs. Sellaren, deceased, and such interest must be obtained by him or whomsoever should become entitled to it, through the executor. That situation would have rendered a draft upon the latter for that purpose, and his acceptance, so qualified, legitimate. In that view it would seem that if the understanding of the parties to the draft, and the holder of it, was such, the prima facie import of the word “ executor ” might be overcome by evidence to the effect that it was used to qualify the liability of the defendant, and to show that it was assumed in his representative capacity only. This rule is applicable to other relations of a representative character, in like manner indicated, although the contract does not, in its terms, purport to have been made by or for the principal otherwise than by way of designation of the representative character of the person making it. The like presumption exists in that, as in this case, that the added designation is desoriptio personae, and the right to show the fact to be other wise is dependent upon the knowledge of the other party to the contract that such was the purpose when it was made. (Brockway v. Allen, 17 Wend. 40; Paddock v. Brown, 6 Hill, 530; Hicks v. Hinde, 9 Barb. 528; Horton v. Garrison, 23 id. 176; Auburn City Bank v. Leonard, 40 id. 136; Bowne v. Douglass, 38 id. 312; Lee v. M. E. Church, etc., 52 id. 116; Babcock v. Beman, 11 N. Y. 200.)

In such case it is open to explanation by evidence to show that the purpose, as understood by the parties to the transaction, was that the party so executing the contract intended to assume no personal liability. (Hood v. Hallenbeck, 7 Hun, 362-365, and cases before cited.) And when aided by such evidence, the fact that a payee in a. note who indorses it, and a drawee in a draft who accepts it, are, as well as in the indorsement and acceptance, in that manner designated, may be entitled to some significance. (Bowne v. Douglass, supra; Babcock v. Beman, 11 N. Y. 200.) The distinction between the cases referred to and the present one, is that there was there a principal whose representative made the contract, which -was a fact essential to the application of such rule upon the question of liability, while here the defendant, as executor, had no principal party to charge with liability upon his contract, and could represent no person as such. But he had duties to perform, as executor, in relation to the estate of his testatrix, amongst which was the duty to render his account and pay over, for the benefit of persons interested, such shares as they were entitled to from the estate; and if it was intended by the draft and acceptance, and such construction can, by aid of extrinsic facts, be allowed, that the defendant should be charged in the fine of his representative duty merely, it would follow that he would be required to pay to the holder of the instrument to the extent of the sum mentioned, from the interest of the drawer in the estate, if it were sufficient for the purpose. That would be a proper liability of the defendant as such trustee, and the drawer and payee might depend upon the existence of that fund for payment. In the case of agency there is no fund but a principal to charge. It is difficult to s.ee any well founded distinction for the application in the two classes of cases of the rule, which permits the introduction of evidence to show the intention and purpose in that' respect, of the parties to and interested in the transaction, who were advised of such purpose when they assumed their relation to the contract.

In Pinney v. Johnson (8 Wend. 500), this question did not arise. There the administrators had been charged by judgment upon their bond to a third party on account of a debt due from their intestate, and which they alleged as a liability of the estate, and a deficiency of assets by way of defense. The replication charged that the defendants had sufficient assets to pay the judgment and the, plaintiff’s claim, etc. The question arose upon the demurrer to the replication. The plaintiff had judgment, with leave to the defendant to rejoin. The court held that the judgment upon the bond of the administrators did not bind the estate, although the bond purported to have been made by them in their representative capacity. It is evident if they had any defense within the case of Bank of Troy v. Topping (supra), it .did not survive the recovery of the judgment upon it. If the presumption arising out of the prima facie relation assumed by the defendant to the draft in question prevail, he must be personally liable within the doctrine of the case last cited. We are not prepared to say that in the present case the defense will be aided by the words “ against me and of my mother’s estate ” in the draft? or any construction which may be put upon them. There is certainly some obscurity as to the purpose for which they were used, and they may be said to present some ambiguity. For the purpose of the construction of the instrument, no words can be added or taken from its provisions, but where the words used, in their application to an instrument of which they are a part, are not entirely intelligible, oral evidence of the circumstances attending its execution may, as between the parties, be admissible to aid in the interpretation, in its application, of the language so used. (Fish v. Hubbard, 21 Wend. 651-662; Field v. Munson, 41 N. Y. 221.)

For the "reasons before given, we think the rejected evidence referred to should have been received, as bearing upon the understanding of the relation and the character of liability the defendant assumed by his acceptance of the draft. It is deemed admissible, in view of the designation which was given to the defendant in the draft, and in his acceptance of it, and by what appears on the face of the draft. (Hicks v. Hinde, 9 Barb. 531; Laflin, etc., Co. v. Sinsheimer, 48 Md. 411; S. C., 30 Am. R. 472.)

This view is taken upon the assumption, as the offered evidence indicated, that the plaintiff and her husband were advised, when they received the draft, of the facts embraced in the offers of proof, otherwise the draft, as to the plaintiff, must, as on the former review, be treated as a negotiable bill of exchange, and no other interpretation can,' by evidence of extrinsic circumstances, be given, nor, for that purpose, will the evidence he admissible. The fact that the draft was payable at a particular time and place, may be a circumstance entitled to consideration upon the merits, but they do not have the conclusive effect claimed for them by the plaintiff’s counsel; and the same may be said in respect; to the payments heretofore made by the defendant of interest upon the amornt of the draft. We do not consider the effect of the acceptance by way of admission of assets in his. hands belonging to the estate, or the force to which it may be entitled as such.

The only question now here, arises upon exceptions to the exclusion of evidence, which seems to have been well taken, and for that reason the judgment should be reversed and a new trial granted, costs to abide the event.

All concur, except Yaw, J., dissenting.

Judgment reversed.