Summary
holding a promissory note is not binding unless consideration flows to the maker or the third party
Summary of this case from Prudential v. J and J VenturesOpinion
No. 34038.
April 8, 1940. Suggestion of Error Overruled May 20, 1940.
1. CONTRACTS.
A promise is not binding on the promisor unless an agreed price has been paid for or bargained for in exchange for the promise.
2. BILLS AND NOTES.
Where president and secretary of grocery company each owning one share of stock therein executed a note in favor of creditor for amount due creditor by grocery company, although they owed no part of the indebtedness, were not benefited or promised any benefit for its execution, and although note was not accepted in payment of the indebtedness nor time for payment of the indebtedness extended, note was unenforceable against president and secretary because lacking in consideration.
APPEAL from the circuit court of Coahoma county; HON. WM. A. ALCORN, JR., Judge.
John W. Crisler, of Clarksdale, for appellant.
The instrument was contractual and could not be varied by parole. The provision "For Account of Clarksdale Wholesale Grocery Company, Inc., Clarksdale, Miss." constituted the instrument a solemn contract and not merely a promissory note, so that parole evidence was inadmissible to vary its terms.
Johnson v. Johnson, 74 Miss. 549; Hightower v. Henry, 85 Miss. 476; Hardware Co. v. Peacock, 129 Miss. 129, 91 So. 856; Kendrick v. Robertson, 145 Miss. 585, 111 So. 99; Edrington v. Stephens, 148 Miss. 583, 114 So. 387; McGee, Dean Co. v. Burt, 153 Miss. 851, 121 So. 847; Orgill Bros. Co. v. Polk, 155 Miss. 492, 124 So. 649; Welch v. Grant, 161 Miss. 867, 138 So. 585; Aaronson v. McGowan, 181 Miss. 642, 180 So. 738.
It seems to us that the evidence shows conclusively that the debt was completely novated by the note of the defendants and that the Clarksdale Wholesale Grocery Company was no longer in the picture. How after all that was done could any kind of an action have been maintained against the grocery company! But even if the testimony is not conclusive, there is so much evidence supporting a novation that we shall not argue its conclusiveness, as the case has already been submitted to a jury and verdict rendered for the plaintiff.
American Blakeslee Mfg. Co. v. Martin Son, 128 Miss. 302, 91 So. 6.
It is too well settled for argument or citation of authorities that the promise to pay the debt of another constitutes a legal and binding consideration.
W.W. Venable, of Clarksdale, for appellees.
There was no valuable consideration given for the note.
Sec. 75, Restatement, Contracts; Williston on Contracts (2 Ed.), sec. 100; McGovern v. City of New York, 234 N.Y. 377, 388, 25 A.L.R. 1422; Smith v. Cauthen, 98 Miss. 746; Owen Tie Co. v. Bank of Woodland, 136 Miss. 114; Bancroft v. Martin, 144 Miss. 384.
The note of appellees could not be taken to be a payment on the indebtedness of the Grocery Company.
Security Warehousing Co. v. Am. Exchange National Bank, 103 N Y Supp. 399; Noel v. Murray, 13 N.Y. 167 ; Hansen v. Duvall, 333 Mo. 59, 62 S.W.2d 732, 738.
If construed as collateral security for the debt of Grocery Company, it had to have a consideration.
Tadek v. Forcheimer, 16 Ala. App. 347, 77 So. 941; American Multigraph Sales Co. v. Grant, 135 Miss. 208; Schans v. Henry, 89 N.J.L. 607; Roseman v. Mahoney, 83 N.Y.S. 794; Wedger v. Backster, 190 Mass. 130, 3 L.R.A. (N.S.) 436.
There was no novation.
Corinth S. S. Turnpike Co. v. Gooch, 113 Miss. 50; Restatement of Contracts, sec. 424, comment A.
Appellant brought this action in the County Court of Coahoma County against appellees, Jake Fink and his wife, F.W. Fink, on a promissory note for $750. The trial in the county court resulted in a verdict and judgment in favor of the Godchaux Company. From that judgment, the Finks appealed to the Circuit Court, and there, the case was tried by the circuit judge on the record made in the county court, resulting in a judgment in favor of the Finks, holding that they were not liable on the note. From that judgment, the Godchaux Company prosecutes this appeal.
There is no substantial conflict in the material evidence. The Clarksdale Wholesale Grocery Company, Incorporated, which had carried on its business in the City of Clarksdale, was indebted to the Godchaux Company in the sum of $750. The grocery company, when the note sued on was executed, was insolvent and its affairs were being liquidated. Jake Fink was president of the corporation and his wife was secretary, although each owned only one share of stock in the company. The Godchaux Company called on them to execute a note for the amount due it by the grocery company. They complied by executing the note sued on, which was in this language:
"750.00
Clarksdale, Miss. "April 22d 1936.
"On the 1st day of December, after date, we promise to pay to the order of Godschaux Sugars, Inc., Seven Hundred and Fifty and no/100 Dollars at Coahoma County Bank Trust Co., Clarksdale, Miss. Account of Clarksdale Wholesale Grocery, Inc., Clarksdale, Miss.
"Jake Fink "F.W. Fink"
The Finks owed no part of the indebtedness. They were under no legal obligation to execute the note. They were not benefited or promised any benefit for its execution. It was not accepted by the Godchaux Company in payment, either in whole or in part, of the indebtedness due it by the grocery company; nor was the time of payment of the indebtedness of the grocery company extended by the giving of the note. It is true the note was payable at a future date, but that did not mean an extension of time for the payment of the debt of the grocery company. In short, the Godchaux Company neither paid anything, did anything, nor promised to do anything as a consideration for the note.
A promise is not binding on the promisor unless an agreed price has been paid for or bargained for in exchange for the promise. Vol. 1, Sec. 75, Restatement of Contracts; Williston on Contracts, 1938 Ed., Sec. 100; Smith v. Cauthen, 98 Miss. 746, 54 So. 844; Owen Tie Company v. Bank of Woodland, 136 Miss. 114, 101 So. 292; Bancroft v. Martin, 144 Miss. 384, 109 So. 859, 111 So. 434.
Affirmed.