Case ID: cal_152/html/0634-01.html
Source: Caselaw Access Project
Author: {"author": "HENSHAW, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Sac. No. 1246.
    Department Two.
    January 20, 1908.]
    WILLIAM MUIR, Respondent, v. GEORGE W. HAMILTON et al., Appellants.
    Negotiable Instruments—Want or Failure of Consideration—Evidence.—As between the original parties to a negotiable instrument, the maker may show an original lack of consideration, or subsequent failure of consideration, and such lack or failure of consideration may be shown by parol.
    Id.—Deed Given as Security—Quieting Title—Cancellation.—As between the original parties, the grantor in a deed given to secure the payment of promissory notes, the consideration of which has failed, may maintain an action to quiet his title to the premises conveyed, and for the cancellation of the deed.
    APPEAL from a judgment of the Superior Court of Placer County and from an order refusing a new trial. Albert G. Burnett, Judge.
    The facts are stated in the opinion of the court.
    J. M. Fulweiler, Chas. Tuttle, L. L. Chamberlain, and George W. Hamilton, for Appellants.
    W. H. Slade, J. D. Meredith and F. P. Tuttle, for Respondent.
   HENSHAW, J.

Plaintiff brought his action to quiet title to certain parcels of land situated in the county of Placer. The gravamen of the action rests upon the following facts which plaintiff alleges, and which the court found upon ample testimony to be true. In the year 1897 plaintiff was engaged, as plaintiff, in a certain litigation with P. P. Tuttle. He employed the defendants, father and son, who were attorneys at law, to prosecute on his behalf this litigation, under an agreement that the defendants were to devote their time and legal services to the prosecution of the action, and in the event that its final determination should be in favor of plaintiff, defendants should receive as compensation for their services the sum of five thousand five hundred dollars, of which sum the defendant George W. Hamilton was to receive two thousand five hundred dollars, and the defendant Joe Hamilton was to receive three thousand dollars. In the event, however, that the action was determined adversely to plaintiff, defendants were to receive no compensation whatever. For the purpose of securing this contingent obligation plaintiff executed and delivered to the defendant Joe Hamilton his promissory note for three thousand dollars, and to the defendant George W. Hamilton his promissory note for two thousand five hundred dollars. Furthermore, for the sole purpose of securing the payment of this contingent fee, so evidenced by the promissory notes, plaintiff executed a deed of all the property here in controversy to defendant George W. Hamilton. At the time it was agreed that this deed should be deposited by way of escrow with the defendant Joe Hamilton, and the defendant Joe Hamilton would hold the same in escrow until the final determination of the action of Muir v. Tuttle. In the event that the action of Muir v. Tuttle was finally decided in favor of plaintiff, Joe Hamilton was to deliver the deed to the defendant George W. Hamilton, who, under these circumstances would take the same as security for the contingent fees. But in the event that the action of Muir v. Tuttle was finally determined in favor of defendant, said Joe Hamilton agreed to redeliver to plaintiff the deed and the promissory notes. The action of Muir v. Tuttle resulted in a final judgment for defendant. The defendant George W. Hamilton delivered his promissory note for two thousand five hundred dollars to plaintiff, but the defendant Joe Hamilton failed, neglected and refused to surrender his note for three thousand dollars with the other securities and documents. The defendant George W. Hamilton secured possession of the deed, and in violation of the agreements caused it to be placed of record in the office of the recorder of the county of Placer.

These findings, which as we have said are amply supported by the evidence, are sufficient to. uphold the conclusions of law to the effect that plaintiff was the absolute owner of the land, and was not indebted to the defendant Joe Hamilton in the sum of three thousand dollars, or in any sum whatever, nor to George W. Hamilton in any sum whatever; that the consideration for which the notes were given had wholly failed, and that plaintiff was entitled to his decree quieting title to the land in the complaint described, as a part of the relief under which decree, it was ordered that the deed of plaintiff to Hamilton be declared void and canceled.

The trial court stated that the vital question in the case was whether the agreement of plaintiff was to pay an unconditional or contingent fee. This, appellants say in their brief, is an illustration and a demonstration that the court has confused the true issue, and that the true issue is, Did the execution and unconditional delivery of the promissory notes create an obligation against the plaintiff, and has that obligation been discharged ? Under the facts of this case, the note still being in the hands of the original payee, we think the distinction that counsel makes is rather of form than of substance. There was not an unconditional delivery of the promissory notes. However closely the lips of the plaintiff might have been sealed under the law governing negotiable paper if his notes had passed into the hands of an innocent purchaser for value before maturity, as between the original parties to an instrument nothing is better settled than that the maker may show an original lack of consideration, or subsequent failure of consideration, which latter was done in this case. And it is equally well settled that such lack or failure of consideration may be shown by parol. (Billings v. Everett, 52 Cal. 661; Braly v. Henry, 71 Cal. 483, [60 Am. Rep. 543, 11 Pac. 385, 12 Pac. 623]; Jefferson v. Hewitt, 103 Cal. 624, [37 Pac. 638]; 4 Am. & Eng. Ency. of Law, 2d ed., pp. 186, 196.)

The deed which plaintiff gave was, in effect, a mortgage, and was given as security for the payment of the promissory notes. The consideration for the notes having failed totally, it was plaintiff’s right, as the court decreed, that the deed itself should be canceled and annulled.

The judgment and order appealed from are,, therefore, affirmed.

McFarland, J., and Lorigan, J., concurred.