De Olazabal v. Mix

WHITE, J.

This is an appeal from a judgment in favor of the defendant in an action at law brought on five promissory notes. Briefly, the facts are that at the time of the execution of the notes in question, the plaintiff and defendant were wife and husband, and the parents of a minor daughter. The parties subsequently divorced, and both have remarried. On July 9, 1928, defendant Tom Mix made and executed the five promissory notes, payable at staggered dates, to the order of plaintiff, each in the sum of $10,000. The notes were presented for payment after the due date which appeared on each of them respectively, and were dishonored by the defendant, resulting in the commencement of this action to enforce collection.

Defendant’s amended answer amounted to a general denial of the allegations contained in the complaint, and also set forth separate and affirmative defenses alleging fraud and

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duress; that the notes in question were executed and delivered to plaintiff in trust for the benefit of the minor daughter of the parties; that the trust is impossible of performance and indefinite in its terms; that the trust is void and unenforceable under the provisions of section 715 of the Civil Code. During the course of the trial the court permitted defendant to file an amendment to his amended answer to conform to the proof, by which he sought to raise two affirmative defenses based on his oral testimony (1) that at the time the notes were executed it was agreed between the parties thereto that the notes would not be payable until defendant sold all three houses then owned by him; (2) that the notes were given to plaintiff upon an oral understanding that she was to use the proceeds thereof to provide a home for herself, defendant, and their minor daughter; and (3) that plaintiff could not prevail because she sued in her individual name and not in the capacity of trustee.

On the question of fraud and duress the court found in favor of appellant, but sustained the last two mentioned defenses, and based thereon, rendered judgment in favor of respondent.

Appellant first. assails the judgment on the well-settled rule of law that a contemporaneous oral agreement is not competent to contradict or vary the terms of a written instrument. However, this universally recognized rule is subject to equally recognized exceptions. (Sec. 1856, Code Civ. Proe.) Notable among such exceptions to the rule is fraud, as well as trusts in personalty. No citation of authority is necessary for the assertion that such testimony was admissible under the allegations of fraud (which the court found did not exist), and it is equally well settled that a trust in personal property need not be in writing, and that no set form of words is necessary to create a trust