Court Opinion

ID: 6897136
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:51:01.145079+00
Date Added: 2024-06-11T16:06:02.333687
License: Public Domain

PHILLIPS, Circuit Judge
(dissenting).
The majority opinion reverses the judgment below upon an issue not pleaded in the answer and not raised at the trial, and presented for the first time on a motion to vacate the judgment below and enter a judgment for Rabón and Simon.
While the written documents, that is, the note, the declaration of trust, and the contract, were dated July 1, 1940, the transaction was actually closed and the note and stock delivered on September 30, 1940. On the latter date, Ross T. Warner executed a declaration of trust which recited the purchase of the preferred stock by Curd, the promissory note executed by Curd, as principal, and endorsed by Rabón and Simon, and the delivery of the preferred stock to Warner, as trustee. It provided that, if and when Curd should pay such note in full, and such endorsers had been released from all liability thereon, the trustee should transfer and deliver the stock to Curd. It recited that it was contemplated that Curd would pay off and satisfy such “obligation” by payments over a five-year period and provided that, in the event such payments should be made, the trustees should assign and deliver to Curd shares of such stock as follows:
For first $2,000............... 60 shares
For next $8,000............... 240 shares
For next $8,000............... 240 shares
For next $8,000............... 240 shares
For next $8,000............... 240 shares
For next $3,000............... 80 shares
It further provided that, in the event any portion of such obligation should remain outstanding at the expiration of the five-year period, the shares of stock remaining in the hands of the trustee should be assigned and transferred to Rabón and Simon on the payment by them in full of the balance of such obligation.
Contemporaneously with the delivery of the note and stock, H. W. Putnam, Jr., John Putnarn, and Jones executed and delivered to Warner a letter, which was approved in writing by Curd, reading in part as follows:
“This is to advise that we have today sold to Mr. O. L. Curd Eleven Hundred (1100) shares, amounting to One Hundred Ten Thousand Dollars ($110,000.00) par value of the preferred stock of the Producers Lumber Company, for a consideration of Thirty-seven Thousand Dollars ($37,000.00). Mr. Curd has given us his note for said sum of Thirty-seven Thousand Dollars ($37,000.00), payable in five years, and endorsed by E. R. Rabón and H. A. Simon.
“We have this day, also, entered into a contract with Mr. Curd, providing a suggested manner for the payment of said obligation and for the delivery of said stock, a copy of which is attached hereto. Regardless, however, of the provisions of this contract, we agree that the obligation shall not be in default except as provided for in said note.
“We are assigning the said Eleven Hundred (1100) shares of stock to you as Trustee and delivering the same over to you herewith. We ask that you have the ownership of this stock transferred on the books of the company from us to you, as *86said Trustee. Upon payments made by Mr. Curd on the above obligation, you will please assign, transfer and deliver over to him the pro rata number of the above shares of stock, as set out in the attached contract; and, upon payment of said total obligation at any time within the five-year period, as provided in said note, you are authorized and directed to assign, "transfer and deliver all of said shares of stock over to Mr. Curd, or as he may direct, the same to be free and clear of any and all claims or demands whatsoever on our part.
“In the event any portion of the above obligation shall remain outstanding and unpaid by said O. L. Curd at the expiration of said five-year period, the shares of said stock then remaining in your hands as such trustee, shall be delivered over pro rata to the endorsers of said note upon payment by them of the balance of said obligation to us.” (Italics mine.)
While the evidence shows that the contract was executed at a subsequent date, the trust agreement and the letter show clearly that its terms had been agreed to and were in the minds of the parties when the declaration of trust and letter were executed and when the note and the stock were delivered. A copy of the contract was attached to the letter. Moreover, the contract refers to the note and recites, “that said note was given as further security on the part of the second party [Curd] to carry out the terms of this written obligation.”
The testimony established that the arrangement for installment payments was entered into solely to effect savings in income tax liability.
It is clear from the recitals in the letter and the contract that Curd was not obligated to make the payments otherwise than in accordance with the terms of the note and that he would not be in default unless, at the maturity of the note,'the whole or some portion thereof remained unpaid.
It is well settled that in order for an agreement between the holder and principal debtor to constitute a modification which will discharge the party secondarily liable, such agreement must be founded on a valid consideration, and must be otherwise valid and enforceable,1 *and must manifest an intent, by the parties, to effect a modification.2
Here, it seems clear to me that the trial court was warranted in concluding from the evidence that the parties did not intend by the contract to in anywise alter or modify the terms of the note or extend the time for the payment thereof.
We must assume from the fact that the trial court denied the motion to vacate the judgment, it concluded that the defense raised by the motion came too late or that,, under the evidence, the parties did not intend to in anywise modify the terms of the note.
For the reasons indicated, I respectfully dissent

 Stetler v. Boling, 52 Okl. 214, 152 P. 452, 454; Note, 85 A.L.R. 327.

 Berkowitz v. Kasparewicz, 121 Conn. 140, 183 A. 693, 696, 104 A.L.R. 1326.