Werner, J.
On the 28th day of February, 1901, the defendant executed and delivered to the plaintiff a promissory note for $3,740, payable in six months. When this note became due it was renewed by the four notes in suit which were dated August 28, 1901, and payable in six months from that date. These renewal notes were not paid at maturity, and the plaintiff brought this action upon a complaint in the
usual form. Upon the trial the plaintiff introduced evidence to show that the original note was given in payment of premiums upon two life insurance policies issued to the defendant by the John Hancock Life Insurance Company through the plaintiff as its general agent.
The defendant interposed an answer, denying that the notes were given for value received and that the plaintiff was the lawful holder and owner thereof, and alleging 'an oral agreement under which neither the notes nor the insurance policies were to become valid and enforceable obligations unless the plaintiff should secure for the defendant a certain loan of money. The defendant’s testimony in support of these allegations was to the effect that in February, 1901, he was visited in Olean by two insurance brokers named Marvin and Larabee who solicited him to take some life insurance; that he at first replied that he did not want any; that he afterwards called Larabee into his private office in the Dotterweich Brewery and told him that he had an option to buy the stock of the brewing company and wanted to raise $70,000' to pay for it; that if he could get a loan for that amount on the life insurance and the brewing company’s stock as collateral he would take tile insurance; that Larabee assured him that it could be done and cited instances in which certain department stores in Buffalo had made loans under similar conditions. The defendant further testified that a week later the plaintiff, Larabee and Marvin called; that after he had been introduced the plaintiff said :
“
The boys have been talking, Mr. Larabee and Mr. Marvin have been talking to you about taking out an insurance for a loan,” and I said “Yes.” He says,
“
Do you want it ? ” I said, “ I do providing you can make the loan.” “ And Mr. Smith said that if I would take out an insurance he could-make the loan for me, and that this company could take at least fifty thousand and he knew where he could place the other twenty. They even advised me to split up the policy so that they wouldn’t have any trouble making the loan.” The defendant further testified that he met the plaintiff in Olean about ten days later at which time
the latter produced the policies; that he then told the plaintiff
“
that under no consideration could I take out a policy of that kind without he could guarantee to make me a loan ; ” that when the plaintiff handed the original note to the defendant, “ I told him there was no use of mv signing that note for a policy at the wages I was getting. I was getting $75 a month and I couldn’t pay no one hundred thousand dollars insurance on $75 a month, and he said,
‘
You sign this note, and I will hold it in my safe until this deal is closed, and if it is not closed I return you the note and you return me the policy. I will hold this note in my safe and won’t try to sell it.’ He was to loan me seventy thousand dollars at five percent for five years or ten and with the privilege of having it longer. He said, ‘I can get you the seventy thousand dollar loan and I can get it for you at five per cent for five years or ten with the privilege of having it longer.’ He said, unless I would sign the note to show that everything was in good faith he couldn’t make me the loan on the policy. He said there wouldn’t by any effect in the policy, the policy would be null and void if he didn’t get me the-loan, that they would take the same chance as I.”
These are the circumstances in which the defendant says he executed the original note and delivered it to the plaintiff, receiving at the same time two policies issued by the John Hancock Life Insurance Company for $70,000 and $30,000 respectively, together with receipts showing that the premiums for the first year had been paid.
The defendant sought to show what took place in August, 1901, between Marvin and himself regarding the renewal of the original note, but the learned trial court excluded the proffered evidence upon the ground that Marvin’s declarations and admissions could not bind the plaintiff, as there was no proof that Marvin had authority to do anything except to get an unconditional renewal. Then the defendant further testified that the plaintiff never procured the loan for him; that soon after the notes in suit became due, and before this action was commenced, he went to the plaintiff’s office in Buffalo,
and asked for a return of the notes and tendered back the policies.
When the defendant rested his case the learned trial court granted the plaintiff’s motion for the direction of a verdict and to this ruling the defendant duly excepted. The defendant also asked the court to submit to the jury the question whether the insurance policies were accepted by the defendant and the original note was delivered to the plaintiff, upon condition that the same should be returned in case the plaintiff did not within a year procure a loan of $70,000 for the plaintiff with the insurance policies and the brewery stock as collateral. This motion was also denied and the defendant took an exception.
We have quoted or cited only such parts of the evidence as bear directly upon the question whether the learned trial court erred in directing a verdict for the plaintiff. The case is characterized by a number of peculiarities which may, or may not, be influential in determining the ultimate result, but with these we have no present concern. The question now before us is whether the testimony of the defendant, supplemented by such legitimate inferences therefrom as are most favorable to him, is of sufficient weight and probative force .to create a question of fact for the jury; and that question obviously depends upon the nature and effect of the oral agreement to which lie testified. If that agreement, which for present purposes must be assumed to have been made, created a condition precedent, without the performance of which the notes never became valid obligations in favor of the plaintiff, then there is a question of fact for the arbitrament of a jury. The converse of the proposition is equally simple. If the effect of that agreement was to engraft upon a valid contract a condition subsequent, the learned trial justice was right in ruling that the issue was one of law for his decision. A careful analysis of the defendant’s testimony has convinced us that he is right in the contention that the case should have been sent to the jury. He testified that he told the plaintiff that under no consideration would he take the insurance
unless the plaintiff would guarantee to make him the loan; that the plaintiff told him to sign the note which would be held in the plaintiff’s safe until the deal was closed; that if it was not closed the note would be returned to the defendant and the policy would be returned to the plaintiff; that the policy would be null and void if the plaintiff did not get the loan for the defendant and that both of them would be taking the same chance.
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Werner, J.
On the 28th day of February, 1901, the defendant executed and delivered to the plaintiff a promissory note for $3,740, payable in six months. When this note became due it was renewed by the four notes in suit which were dated August 28, 1901, and payable in six months from that date. These renewal notes were not paid at maturity, and the plaintiff brought this action upon a complaint in the
usual form. Upon the trial the plaintiff introduced evidence to show that the original note was given in payment of premiums upon two life insurance policies issued to the defendant by the John Hancock Life Insurance Company through the plaintiff as its general agent.
The defendant interposed an answer, denying that the notes were given for value received and that the plaintiff was the lawful holder and owner thereof, and alleging 'an oral agreement under which neither the notes nor the insurance policies were to become valid and enforceable obligations unless the plaintiff should secure for the defendant a certain loan of money. The defendant’s testimony in support of these allegations was to the effect that in February, 1901, he was visited in Olean by two insurance brokers named Marvin and Larabee who solicited him to take some life insurance; that he at first replied that he did not want any; that he afterwards called Larabee into his private office in the Dotterweich Brewery and told him that he had an option to buy the stock of the brewing company and wanted to raise $70,000' to pay for it; that if he could get a loan for that amount on the life insurance and the brewing company’s stock as collateral he would take tile insurance; that Larabee assured him that it could be done and cited instances in which certain department stores in Buffalo had made loans under similar conditions. The defendant further testified that a week later the plaintiff, Larabee and Marvin called; that after he had been introduced the plaintiff said :
“
The boys have been talking, Mr. Larabee and Mr. Marvin have been talking to you about taking out an insurance for a loan,” and I said “Yes.” He says,
“
Do you want it ? ” I said, “ I do providing you can make the loan.” “ And Mr. Smith said that if I would take out an insurance he could-make the loan for me, and that this company could take at least fifty thousand and he knew where he could place the other twenty. They even advised me to split up the policy so that they wouldn’t have any trouble making the loan.” The defendant further testified that he met the plaintiff in Olean about ten days later at which time
the latter produced the policies; that he then told the plaintiff
“
that under no consideration could I take out a policy of that kind without he could guarantee to make me a loan ; ” that when the plaintiff handed the original note to the defendant, “ I told him there was no use of mv signing that note for a policy at the wages I was getting. I was getting $75 a month and I couldn’t pay no one hundred thousand dollars insurance on $75 a month, and he said,
‘
You sign this note, and I will hold it in my safe until this deal is closed, and if it is not closed I return you the note and you return me the policy. I will hold this note in my safe and won’t try to sell it.’ He was to loan me seventy thousand dollars at five percent for five years or ten and with the privilege of having it longer. He said, ‘I can get you the seventy thousand dollar loan and I can get it for you at five per cent for five years or ten with the privilege of having it longer.’ He said, unless I would sign the note to show that everything was in good faith he couldn’t make me the loan on the policy. He said there wouldn’t by any effect in the policy, the policy would be null and void if he didn’t get me the-loan, that they would take the same chance as I.”
These are the circumstances in which the defendant says he executed the original note and delivered it to the plaintiff, receiving at the same time two policies issued by the John Hancock Life Insurance Company for $70,000 and $30,000 respectively, together with receipts showing that the premiums for the first year had been paid.
The defendant sought to show what took place in August, 1901, between Marvin and himself regarding the renewal of the original note, but the learned trial court excluded the proffered evidence upon the ground that Marvin’s declarations and admissions could not bind the plaintiff, as there was no proof that Marvin had authority to do anything except to get an unconditional renewal. Then the defendant further testified that the plaintiff never procured the loan for him; that soon after the notes in suit became due, and before this action was commenced, he went to the plaintiff’s office in Buffalo,
and asked for a return of the notes and tendered back the policies.
When the defendant rested his case the learned trial court granted the plaintiff’s motion for the direction of a verdict and to this ruling the defendant duly excepted. The defendant also asked the court to submit to the jury the question whether the insurance policies were accepted by the defendant and the original note was delivered to the plaintiff, upon condition that the same should be returned in case the plaintiff did not within a year procure a loan of $70,000 for the plaintiff with the insurance policies and the brewery stock as collateral. This motion was also denied and the defendant took an exception.
We have quoted or cited only such parts of the evidence as bear directly upon the question whether the learned trial court erred in directing a verdict for the plaintiff. The case is characterized by a number of peculiarities which may, or may not, be influential in determining the ultimate result, but with these we have no present concern. The question now before us is whether the testimony of the defendant, supplemented by such legitimate inferences therefrom as are most favorable to him, is of sufficient weight and probative force .to create a question of fact for the jury; and that question obviously depends upon the nature and effect of the oral agreement to which lie testified. If that agreement, which for present purposes must be assumed to have been made, created a condition precedent, without the performance of which the notes never became valid obligations in favor of the plaintiff, then there is a question of fact for the arbitrament of a jury. The converse of the proposition is equally simple. If the effect of that agreement was to engraft upon a valid contract a condition subsequent, the learned trial justice was right in ruling that the issue was one of law for his decision. A careful analysis of the defendant’s testimony has convinced us that he is right in the contention that the case should have been sent to the jury. He testified that he told the plaintiff that under no consideration would he take the insurance
unless the plaintiff would guarantee to make him the loan; that the plaintiff told him to sign the note which would be held in the plaintiff’s safe until the deal was closed; that if it was not closed the note would be returned to the defendant and the policy would be returned to the plaintiff; that the policy would be null and void if the plaintiff did not get the loan for the defendant and that both of them would be taking the same chance. If these statements mean anything, they plainly import a condition which was to be performed before the transaction, witnessed by the delivery of the note to the plaintiff and the delivery of the policies and receipts to the defendant, was to'be regarded as consummated and binding. That condition was the procurement of the loan which, concededly, was never made. Giving to the defendant’s story a fair, natural and unstrained interpretation, we have a case in which there is a failure of the precise condition which must determine the existence or non-existence of any contract between him and the plaintiff. We are not unmindful of the opposing facts and antagonistic inferences which other features of the transaction may suggest. These are not proper subjects for present discussion. We simply emphasize the controlling circumstance that if the defendant’s story is true, there is no binding contract between him and the plaintiff, and the issue of its truth or falsity is for the jury and not for the court.
There is no subtlety of ambiguity in the law of the subject, but there is difficulty in applying it to some cases in which there may be uncertainty as to the effect of oral testimony upon contracts which are wholly or partly reduced to writing. When the oral testimony goes directly to the question whether there is a written contract or not, it is always competent ; but when the effect of the oral testimony is to establish the existence of a written contract, which it is designed to contradict or change by parol, then the spoken word must yield to the written compact.
There are many decided cases upon this branch of the law botli in this state and in other jurisdictions, but we shall refer
to only a few as illustrating the line of cleavage between the case at bar and the case of
Jamestown Business College Assn.
v.
Allen
(172 N. Y. 291), upon which the respondent relies to support his contentions.
In
Benton
v.
Martin
(52 N. Y. 570) this court very clearly enunciated the rule, which has always obtained in this state, “Instruments not under seal may be delivered to the one to whom upon their face they are made payable, or who by their terms is entitled to some interest or benefit under them, upon conditions the observance of which is essential to their validity. And the annexing of such conditions to the delivery is not an oral contradiction of the written obligation, though negotiable, as between the parties to it, or others having notice, It needs a delivery to make the obligation operative at all. and the effect of the delivery and the extent of the operation of the instrument may be limited by the conditions with which delivery is made. And so also, as between the original parties and others having notice, the want of consideration may be shown.” (p. 574.) This quotation sums up the whole of the law applicable to the case at bar in its present state, and outlines comprehensively the rule which has been followed in
Bookstaver
v.
Jayne
(60 N. Y. 146);
Grierson
v.
Mason
(60 N. Y. 394);
Reynolds
v.
Robinson
(110 N. Y. 654);
Schmittler
v.
Simon
(114 N. Y. 176), and other cases, under a variety of circumstances.
The case of
Jamestown Business College Assn. v. Allen (supra)
is a salient illustration of the converse of this rule. There the promissory note was rendered effective and complete by an unconditional delivery. The payee agreed to release the maker, and to cancel the note, upon a future contingency which might or might not arise. That was clearly a condition subsequent which brought the case within the general rule that a contract reduced to writing and complete in its terms., cannot be varied and contradicted by oral testimony.
(Eighmie
v.
Taylor,
98 N. Y. 288;
Thomas
v.
Scutt,
127 N. Y. 133;
Stowell v. Greenwich Ins. Co.,
163 N. Y. 298;
Mead
v.
Dunlevie,
174 N. Y. 108.) Thus, to state the difference
most concretely, the case at bar is one in which the oral testimony tends to show that the writing purporting to be a contract is in fact no contract at all, while in the case of the Jamestown Business College the oral testimony was in direct contradiction of the written contract as to the existence and validity of which there was no controversy.
We think the court erred in excluding the evidence offered by the defendant to show what took place between him and Marvin at the time when the original note was renewed by the notes in suit. It needs no argument to demonstrate that if it was competent for the defendant to show under what conditions he delivered the original note, he must logically be permitted to show that the renewal notes were affected by the same conditions. Quite aside from this there is enough in the record to make it a question for the jury whether Marvin was or was not the
alter ego
of the plaintiff in the dealings with the defendant.
As there must be another trial, we have eliminated from this discussion every thing that is not germane to the questions which are before us on this appeal. We have not referred to the defendant’s counterclaim, which is manifestly inconsistent with his defense, or to the evidence relating to his asserted possession of options for the purchase of the brewery stock. These and various other features of the case may be of importance in determining the verdict of a jury, but they cannot affect our decision.
The judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Cullen, Ch. J., Haight, Willard Bartlett, Hiscock, Chase and Collin, JJ., concur.
Judgment reversed, etc.