CURTIS v. McCRORY

CURTIS v. McCRORY
1926 OK 451
252 P. 394
123 Okla. 105
Case Number: 16658
Decided: 05/11/1926
Supreme Court of Oklahoma

CURTIS
v.
McCRORY.

Syllabus

¶0 Bills and Notes--Notes Assigned and Secured by Contemporaneous Assignment of Mortgage Construed as One Contract--Parol Evidence Rule Inapplicable.
The indorsee of promissory notes sued the indorser who indorsed same in blank. The indorser set up a written instrument executed and delivered to indorsee contemporaneously, by which he assigned to the indorsee the security for the notes and the notes without recourse. Held, evidence to support such defense does not contravene the parol evidence rule regarding written instruments, but is admissible, as between the indorsee and indorser, to be construed together with the notes to determine the real contract between the parties, under section 5045, C. O. S. 1921, providing that contracts relating to the same matter, between the same persons, and made as parts of substantially one transaction, are to be taken together.

Commissioners' Opinion, Division No. 2.

Error from District Court, Carter County; W. F. Freeman, Judge.

Action by B. S. Curtis against R. F. McCrory. From a judgment for defendant, plaintiff appeals. Affirmed.

Sigler & Jackson, for plaintiff in error.
Dolman & Dyer, for defendant in error.

ESTES, C.

¶1 Parties appear in the same order as in the trial court. In 1920, Hallett and wife executed and delivered to defendant, McCrory, 17 promissory notes for $ 60 each and one for $ 80, payable consecutively by the month. To secure same, they executed a second mortgage on certain real estate in Ardmore. The first four were paid, and defendant delivered the remaining notes to plaintiff, Curtis, by simple indorsement in blank. Default being made in the monthly payments of such notes, plaintiff sued the Halletts and defendant, setting up said mortgage, seeking judgment against all defendants and foreclosure and sale of the property to satisfy same, on the theory that the assignment of said notes carried also the security. It is conceded that the equity of the Halletts in the real estate was extinguished by foreclosure of the first mortgage, so that there was no security for such notes. Plaintiff had judgment against the Halletts by default on the notes. Defendant pleaded and testified, in substance, that plaintiff as a broker sold to defendant a certain farm belonging to one George, and in closing the negotiations among the three, it was agreed between plaintiff and defendant that plaintiff would accept said notes without recourse against defendant, McCrory, on plaintiff's commission due from George for making the sale of the farm; that is, notwithstanding such indorsement of the notes, that it was agreed in writing at the time, that such indorsement should be for the accommodation of plaintiff and should be without recourse to defendant. In support of such answer, there was introduced in evidence a written assignment from defendant, McCrory, to plaintiff, Curtis, of the said second mortgage reciting that McCrory, "does hereby sell, assign, transfer, set over, and convey unto B. S. Curtis, his heirs and assigns, the within mortgage deed, the real estate conveyed, and the promissory notes, without recourse, debts and claims thereby secured, and conveyance therein contained," etc. Defendant testified that he stated to plaintiff, "I will turn all that stuff (notes and mortgage) over to you, or there will be no trade"; that plaintiff replied, "I will show you how to show that, and I'll not let you suffer by it"; that plaintiff himself dictated the assignment of the notes and mortgage without recourse; that defendant had theretofore shown plaintiff the property on which the mortgage was a second lien, and that plaintiff said he would take the notes without recourse; that the notes were delivered to and accepted by plaintiff at the same time and together with the written assignment. Judgment on verdict was for defendant, McCrory, from which plaintiff appeals.

¶2 Plaintiff assigns that the court erred in admitting the parol testimony on behalf of defendant that such indorsement of the notes should be without recourse, under section 5035, C. O. S. 1921, whereby the execution of a contract in writing supersedes all negotiations preceding or accompanying its execution. He invokes those authorities properly applying such statute. Let it be conceded, as contended by plaintiff, that such notes, if they were the contract, or the only contract, or the complete contract between plaintiff and defendant, would constitute the promise of defendant to pay plaintiff under the rule governing an indorser in blank. In Davis, Receiver, v. Brown et al., 94 U.S. 423, 24 L. Ed. 204, it is held that:

"An indorser of a promissory note is a competent witness to prove an agreement in writing made with its holder at the time of his indorsement, that he shall not be held liable thereon, where the paper has not afterwards been put into circulation, but is held by the party to whom the indorsement was made. An agreement like the one mentioned above and the indorsement, taken together, are equivalent, so far as the holder of the note is concerned, to an indorsement without recourse to the indorser."