Santa Ana Sugar Co. v. Smith

This is an appeal from a judgment covering two cases—Nos. 162,584 and 171,792—which two cases were consolidated for trial and were tried together upon the same evidence.

The first of these actions was brought to recover on twenty-five promissory notes, the complaint alleging that the defendant for a valuable consideration waived any right which he (the respondent here) thereafter had to plead the bar of the statute of limitations against any and all actions which might be commenced on said indebtedness evidenced by said promissory notes, provided action should be commenced within one year from the date of the- agreement of November 13, 1924. It was further alleged that, although the defendant had paid the plaintiff certain amounts on account of said promissory notes, there was still due on such notes the sum of $45,190.38, together with interest at eight per cent per annum from the date of the notes, and reasonable attorney’s fees, costs, etc.

In the second action—No. 171,792—the complaint alleged that the defendant guaranteed the payment of seventeen promissory notes (other and different than those sued on in the first action) which notes were executed by the defendant’s wife.…

I concur in the judgment. ■There are two principal questions in the ease. The first •relates to the admissibility of testimony offered by defendant to prove that he was not legally obligated on the notes signed by him. The second relates to the validity of defendant’s guaranty of his wife’s notes, these notes having been outlawed at the time when the guaranty agreement of defendant was made.

The notes executed by defendant were promises to pay money, “in gold coin of the United States”. Each note contained this further statement: “All amounts hereafter coming due to me from said Santa Ana Sugar Company are 'hereby assigned to it to be applied in payment of this note until it is fully paid.” Defendant’s answer admits that 'the moneys received by him were advances made to him for the purposes of planting and cultivation of his beets “Until the crop was ready for marketing, when the plaintiff would purchase such crop from the defendant”. It is thus established that the oral evidence received by the court, to the effect that in certain contingencies the defendant would be excused from liability, was testimony received for the purpose of modifying the express provisions of the notes.…

I dissent. In the first action it appears that, based upon a proper pleading which was supported by sufficient evidence, the trial court made specific findings of fact which constituted fraud on the part of the plaintiff in inducing defendant to sign and to deliver physical possession of each of the instruments upon which such action was founded. In addition thereto, as expressly provided by the terms of section 3097 of the Civil Code, as between the immediate parties to a negotiable instrument, “the delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument”. Numerous authorities fully support the conclusion that, having established either fraud in the inducement of the execution of the asserted instrument, or that no legal delivery thereof was either intended or had by its maker, no recovery of a judgment may be had on such instrument by its immediate payee.

As to the second action, since it appears that the assumed guarantee by the defendant of each of the promissory notes in question was made after an action on each of such notes was barred by the statute, it is clear to my mind that…