Trites v. Abbott , 125 Or. 362 ( 1928 )

In Banc. This suit was brought to foreclose a mortgage made to secure a promissory note for the principal sum of $500. The defendants resisted the suit on the ground that the money constituting the consideration for the note was a gift. From a decree of dismissal, plaintiff appeals. REVERSED. REHEARING DENIED. The plaintiff, Robena Trites, is the administratrix of the estate of her mother, Maggie May Murphy, deceased. Defendant Mary G. Abbott is likewise a daughter of decedent and is the wife of her co-defendant, A.O. Abbott. On June 24, 1923, Maggie May Murphy delivered $500 of her money to the defendants, and as a part of the same transaction defendants executed and delivered to her their promissory note for $500 payable two years after date, with interest at 6 per cent per annum, payable semi-annually. This note was secured by a mortgage on defendants' real property. The mortgage was recorded by the mortgagee, and as the interest became due it was promptly paid by defendants and received by the mortgagee.

The only issue to be tried here is an affirmative defense pleaded by the defendants, to the effect that, at the time the note and mortgage were executed and delivered to the payee therein named, the parties thereto made a contemporaneous agreement which, in substance, provided that defendants would never be compelled to pay the note, "except in the event" that the payee became ill and needed the money, and that no such contingency ever occurred. The answer also avers that, after the execution of the note and mortgage, the payee therein named "told said defendant Mary G. Abbott that she would never have to pay said $500 and that she desired the note destroyed."

The affirmative allegations of the answer were put in issue by the plaintiff's reply.

There was evidence admitted at the trial tending to substantiate the defendants' allegations relating to the contemporaneous oral agreement set out above. To all such testimony plaintiff objected on the ground that it was incompetent, in that it tended to vary and contradict the terms of the written instruments. This objection is supported by numerous decisions of our court.

In the early case of Portland National Bank v. Scott,20 Or. 421 (26 P. 276), this court held that, in an action upon a promissory note, where no illegality or fraud is charged, it is not competent to allege or prove a contemporaneous parol agreement for the purpose of changing, varying or in any manner altering the legal effect of the note.

Again in Wilson v. Wilson, 26 Or. 251 (38 P. 185), it was held that, where a promissory note is given for a definite sum and made payable on a day certain, it cannot be shown by verbal testimony that such note was intended merely as a memorandum and was not to be paid until the amount thereof could be realized out of a certain business venture. In support of its holding, the court there cited the case of Portland National Bank v. Scott,supra.

To like effect are Edgar v. Golden, 36 Or. 448 (48 P. 1118, 60 P. 2); Colvin v. Goff, 82 Or. 314 (161 P. 568, L.R.A. 1917C, 300); Farmers' State Bank v. Forsstrom, 89 Or. 97 (173 P. 935); Nickell v. Bradshaw, 94 Or. 580 (183 P. 12, 11 A.L.R. 623); McFarland v. Hueners, 96 Or. 579 (190 P. 584).

The money in question in this case appears to have been given in consideration of the execution and delivery to Maggie May Murphy of a promissory note for $500, with a pledge of real property as security. Hence it was not a gift to the defendants. The note is written evidence of a promise to repay. Neither was there a gift of the promissory note or of the mortgage to defendants. In order to constitute a valid gift, either intervivos or causa mortis, the property must have been delivered to the donee: Liebe v. Battmann, 33 Or. 241 (54 P. 179, 72 Am. St. Rep. 705); Grignon v. Shope, 100 Or. 611 (197 P. 317); Allen v. Hendrick, 104 Or. 202 (206 P. 733). There is evidence to the effect that decedent intended to release defendants from their obligation to pay the note. She so expressed herself upon her deathbed. She undertook to prepare a will, whereby the defendants would be released from the payment of the note; but so far as the record shows, she never executed the will, nor did she carry out her intention to release defendants from their obligation to pay. A case singularly in point isCardoza v. Leveroni, 233 Mass. 310 (123 N.E. 672). The consideration for the note was not conditional, but consisted of the sum of $500, in coin of the realm: Colvin v. Goff, supra;Vincent v. Russell, 101 Or. 672 (201 P. 433, 20 A.L.R. 417).

We regret that this case must be reversed and a decree entered foreclosing plaintiff's mortgage. It is so ordered.

Neither party will recover costs in this court or in the court below.

REVERSED AND DECREE ENTERED. REHEARING DENIED.