Oakland Medical Building Corp. v. Aureguy

TRAYNOR, J.

Plaintiff brought this action against the administratrix of the estate of Eugene Aureguy to enforce payment of a negotiable promissory note for $5,000 executed by decedent and made payable to plaintiff. The note was executed on November 5, 1948, and by its terms was payable on February 5, 1949. Judgment was entered on the pleadings for plaintiff, and defendant has appealed. The only question presented is whether an alleged oral agreement made contemporaneously with the execution of the note would, if proved, constitute a defense to the action. Defendant’s answer alleged the following facts. Edmund Herscher was an officer and principal stockholder of both plaintiff and Andrew Williams Stores, Inc., and was the duly authorized agent of both corporations in their dealings with decedent. On November 5, 1948, Andrew Williams Stores owed decedent $10,000 for services rendered, and ‘ ‘ Edmund Herscher, representing to said decedent that he was acting on behalf of both corporations . . . promised and agreed that the sum of $5,000.00 would be advanced to said decedent by the Oakland Medical Building Corporation, to be repaid to said corporation by said decedent only upon receipt by said decedent of the $10,000.00 then owing to decedent from Andrew Williams Stores, Inc. . . . [P]ursuant to said representation, promise and agreement, and in reliance thereon, said decedent accepted said sum of $5,000.00 and executed a note therefor.” No part of the $10,000 has been paid.

[523]

Ordinarily, in the absence of fraud, mistake, or a lack or failure of consideration, a prior or contemporaneous oral agreement that a promissory note is not to be payable according to its terms constitutes no defense to an action on the note.

(Bank of America

v.

Pendergrass,

4 Cal.2d 258, 263 [48 P.2d 659] ;

Alameda County Title Ins. Co.

v.

Panella,

218 Cal. 510, 513-514 [24 P.2d 163] ;

Pierce