Trieber v. Gayne

California Court of Appeal Jul 31, 1956 No. Civ. No. 16796Published

Before: Dooling

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Holding. The court held that the trial court's finding that the issuance of a corporate note to the appellant was not part of the consideration for the appellants' personal note to the respondent was supported by substantial evidence, thereby precluding a claim of failure of consideration.

Issues

Whether the trial court erred in finding that the issuance of a corporate note was not part of the consideration for the appellants' personal note to the respondent.
Whether the failure to receive a corporate note constituted a failure of consideration for the appellants' personal note.

Disposition. affirmed

Quotations verified verbatim against the opinion

“This finding, supported as it is by substantial testimony, that it was no part of the agreement of the parties that the corporation should issue a note to appellant Morris Trieber, is sufficient to support the judgment.”

“it is clear that if the execution of such a note was no part of the promised consideration, as found by the trial court, the failure or refusal to execute it could not operate as a failure of consideration.”

DOOLING, J. Appellants, husband and wife, sought by their second amended complaint to cancel a note given by them to respondent in the principal sum of $1,000 on the ground of failure of consideration. Respondent answered and cross-complained, by. his cross-complaint seeking a recovery on the note. From a judgment in favor of respondent on both complaint and cross-complaint this appeal is taken.

In October, 1952, appellant Morris Trieber and respondent each owned 25 per cent of the outstanding capital stock of Gayne Sales Company, a corporation. One Arian and Jerry Gayne, the respondent’s son, likewise each owned 25 per cent of such stock. At that time Arian and appellant Morris Trieber were in active management of the business of the corporation, Arian being its president and Trieber its secretary.

The corporation was in need of funds and respondent, accepting his testimony (as we must do on appeal), proposed to Morris Trieber that respondent would borrow $2,000 from his bank and advance it to the corporation: “If the corporation will give me a note for $1,000 and if you and your wife will give me a note for $1,000 ... I said that that is the only basis, to borrow the money from the bank and loan the money to the corporation, on that condition ... I said, ‘If you accept my proposition, if you and your wife will give me a personal note for $1,000 and the corporation $1,000, I will then go to the Bank of America and borrow $2,000 from them and help the corporation out by giving the check to the corporation. ’ ”

To this Trieber agreed and thereafter delivered the note for $1,000 dated October 29, 1952, executed by himself and his wife with respondent as payee. Respondent also received a promissory note of the corporation for $1,000 dated the same day and signed by Arian as president and Trieber as secretary. The corporation received respondent’s personal check for $2,000 dated October 30, 1952, and respondent testified that he borrowed the $2,000 from his bank on the same day.

The corporation became insolvent and neither Trieber nor respondent recovered any money from it. It is appellants’ theory that respondent agreed that Morris Trieber was to receive a promissory note from the corporation for $1,000 and that since he did not receive such a note there was a failure of consideration for the $1,000 note executed by appellants to respondent.

[582]Respondent testified flatly that there was no such agreement. He testified:

Trieber v. Gayne

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