McArthur v. Johnson

California Supreme Court Oct 25, 1932 No. Docket No. L.A. 13154.Published

Before: Preston

AI Brief

AI-generated · verify before citing

Holding. Parol evidence is inadmissible to contradict the express terms of an unconditional promissory note by showing it was payable only out of a specific fund, as such evidence does not constitute a conditional delivery under the Negotiable Instruments Act.

Issues

Whether parol evidence is admissible to show that a promissory note payable on demand was intended to be paid only out of a specific fund.
Whether an agreement to restrict the source of payment of a promissory note constitutes a conditional delivery under Civil Code section 3097.

Disposition. Affirmed in part, reversed in part, and remanded.

Quotations verified verbatim against the opinion

“The parol evidence received was in direct contradiction of the express terms of said note. It tended to establish that said note was not payable on demand, but, on the contrary, was payable only out of a particular fund.”

“By the use of the phrase “and not for the purpose of transferring the property in the instrument” is clearly meant the right to set up by parol conditions that will defeat the passage of the beneficial interest in the instrument”

PRESTON, J.

Upon re-examination of this cause, we desire to adopt as a part of the opinion of this court herein practically the entire opinion written by Mr. Justice

pro tem.

Harden of the District Court of Appeal, Fourth Appellate District, hereinafter set' forth as follows, to wit:

“Plaintiff sued upon a' promissory note made by defendant and payable on demand to the order of plaintiff in the sum of $2',000.00. The note was free from uncertainty or ambiguity. The defense interposed was that said note had been made for the accommodation of plaintiff and without consideration to defendant. No issues of invalidity, illegality, fraud, accident or mistake were tendered. Defendant also filed a pleading denominated a counterclaim and cross-complaint, alleging several causes of action against plaintiff for money. Parol evidence was received which tended to establish that it was agreed by the parties thereto, at the time of the making and delivery thereof, that said note was to be paid only out of defendant’s share of commissions earned jointly by defendant and plaintiff in the sale of real estate. No express findings were made upon the defense that defendant was an accommodation maker. Judgment was- entered crediting defendant with the payment of $400.00 thereon and adjudging that said note was payable only out of defendant’s share of said commissions. Defendant was also given judgment upon his counterclaim and cross-complaint for $1,118.49 and interest.

“Plaintiff appeals from the judgment and from the denial by operation of law of his motion for a new trial. The only

[582]

point raised on the appeal is that said .parol evidence was incompetent.

“ The note was an unconditional promise to pay money on demand. The parol evidence received was in direct contradiction of the express terms of said note. It tended to establish that said note was not payable on demand, but, on the contrary, was payable only out of a particular fund. Said evidence was not admissible. (Secs. 1856, Code Civ. Proc., and 1625, Civ. Code.) Said sections lay down rules of substantive law

(Harding

McArthur v. Johnson

AI Brief

PRESTON, J.

More from California Supreme Court

Related research

AI Brief