Court Opinion

ID: 9559401
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:28:35.389167+00
Date Added: 2024-06-11T09:10:52.922435
License: Public Domain

*190Thompson, J.,
concurring in result:
I agree only with the result. The defendant (appellant here) failed to make an adequate record to permit appellate review of the assigned error. The record shows that the defense asked a witness the following preliminary question: “Q. Mr. Link, at this get together or gathering on September 23rd, did Mrs. Clough show the other members of the board of directors any evidence of these advances or loans?” Counsel for plaintiff interposed an objection based upon the applicability of the parol evidence rule. The court sustained the objection. Clearly, the question was preliminary. A “yes” or “no” would answer it. The objection should not have been sustained at that time. Perhaps the defense should have pursued the subject further. It did not. In any event, if the defendant wished to make a record for later appellate review, an offer of proof was required. The record would then disclose what testimony would have been given had the court permitted further questioning. Such an offer of proof was not made. Accordingly, I do not believe that we are at liberty to guess what the evidence might have been and rule on the admissibility of such supposed evidence. Alamo Airways, Inc. v. Benum, 78 Nev. 384, 374 P.2d 684; NRCP 43(c). Thus, I would affirm the judgment below because the record does not contain the information necessary for us to rule upon the assigned error.
However, were I to assume that the witness, if permitted to testify, would show an absence of consideration for the notes, I would consider such evidence admissible and not touched by the parol evidence rule. In this regard my view is directly contrary to the majority opinion.
The promissory notes here involved are negotiable instruments. All requisites are present. NRS 92.008. Accordingly, they are deemed to have been issued for a valuable consideration. NRS 92.031.1 The Negotiable *191Instruments Law recognizes that the defense of absence of consideration is available to defeat the claim of anyone who is not a holder in due course. NRS 92.035. In the nature of things this defense, and others which are available to defeat an action on the note by the payee, must rest in parol. Dixon v. Miller, 43 Nev. 280, 184 P. 926; Britton, Bills and Notes, p. 202. This truism is recognized by NRS 52.060(2) dealing with conclusive presumptions. It provides that the “truth of the fact recited, from a recital in a written instrument between the parties thereto” is conclusive, except that “this rule does not apply to a recital of consideration.” Thus a recital of consideration may be impeached by parol. The parol evidence rule is not involved where the maker seeks to show that the paper record which, on the surface, looks like a promissory note, is not such in law or fact because an indispensable element, consideration, is absent. Mills v. Bonin, 239 N.C. 498, 80 S.E.2d 365; First State Bank v. Miller, 118 Okl. 49, 246 P. 591; Herrman v. Combs, 119 Md. 41, 85 A. 1044; Haase v. Ramsay, 10 Wis.2d 220, 102 N.W.2d 226.
Professor Corbin, in commenting upon the parol evidence rule as it applies to contracts, makes this pointed statement: “The first issue to be determined is, has a contract been made? One party asserts a contract and asks its enforcement; the other denies the contract asserted by the first, and may also deny that any contract whatever has been made. If the court is convinced that no contract has been made, it will not be necessary to determine the later issue of complete integration in writing. These two issues may sometimes be so interrelated that it is easier to deal with them jointly; but, whether they are or not, it is certain that we need not begin excluding parol evidence until we know that a contract has been made." 3 Corbin, Contracts § 577, at 385. (Emphasis added.)
It is equally certain that parol evidence should not be *192excluded to show that the promissory notes are legally nonexistent because of the lack of consideration. Absent consideration, enforcible promissory notes (in the hands of anyone not a holder in due course) do not exist as a matter of law.
Nevada has recognized that the parol evidence rule does not apply to exclude evidence which goes to the very existence of the contract and tends to show that no valid or effective contract ever existed. Child v. Miller, 74 Nev. 223, 327 P.2d 342; Western National Insurance Co. v. Trent, 69 Nev. 239, 247 P.2d 208. On the other hand, it does apply where both parties, admitting the existence of a valid document, seek to vary or change some of the writing by extrinsic evidence. Sims v. Grubb, 75 Nev. 173, 336 P.2d 759, is illustrative. There, in an action upon a promissory note, the court correctly excluded parol evidence when its purpose was to show a different or additional consideration than expressed in the note. The existence of a valid note was admitted, and the attempt to vary its terms was not allowed. Gunter v. Hindman, 175 S.C. 436, 179 S.E. 494; Collins v. Shaffer, 66 Colo. 84, 179 P. 152; Burke v. Walton, 337 Mo. 781, 86 S.W.2d 92, cited in the majority opinion, are also cases in which the existence of all elements essential to a valid promissory note was admitted. Consequently, parol evidence to alter or vary terms was not permitted.
I cannot accord validity to the distinction drawn in the majority opinion between a “recital of consideration” and “contractual consideration” for two reasons. In the first place, the language used is no more than “a statement of the transaction which gives rise to the instrument.”2 NRS 92.010 (2). One searches in vain for words *193of promise. The words used are no more than a recital of an executed consideration. Annot., 14 A.L.R. 1126; 33 A.L.R. 1174; Beck Electric Constr. Co. v. National Contracting Co., 143 Minn. 190, 173 N.W. 413; Hubbard Bros. & Co. v. Southern Pacific Co., 5 Cir., 256 F. 761. Second, if one were to assume that some kind of an integrated contract or agreement was created by the words employed, nonetheless the parol evidence rule would not preclude evidence to show that what appears to be a contract does not, in fact or law, exist. 3 Corbin, Contracts § 577; Child v. Miller, supra; Western National Insurance Co. v. Trent, supra.
In short, the maker of a negotiable instrument is not foreclosed by the parol evidence rule from defeating the claim of the payee by showing that consideration is absent. Dixon v. Miller, 43 Nev. 280, 194 P. 926. In Rein-hart v. Echave, 43 Nev. 331, 187 P. 1006, on rehearing, we recognized that a negotiable instrument, intended as a gift, is without consideration and imposes no liability upon the maker to the payee. See also, Evans v. Cook, 11 Nev. 69, where it was recognized that, in an action upon a promissory note, it is a good defense to show that the consideration for which the note was given was money won by gambling, i.e., an illegal consideration.
If the defenses granted the maker of a negotiable instrument by NRS 92.035 of the Negotiable Instruments Law cannot be established by parol evidence, the statute becomes meaningless. For the reasons given, I express my disagreement with the majority opinion’s discussion of the parol evidence rule.

 Ie the ordinary contract the party seeking to recover must prove consideration for the promise he is seeking to enforce, while in the case of a negotiable instrument consideration is presumed. Thus, the absence of consideration is a matter of defense. NRS 92.035. In other words, one seeking to recover on a negotiable instrument *191need not show that he gave consideration. The other party must hear the burden of showing the absence of consideration (if such is his defense). If he does so, the defense will prevail against anyone not a holder in due course. NRS 92.035; Dixon v. Miller, supra.

 The relevant parts of the two notes state:
(a) “This note is issued to the payee in consideration of amounts of money advanced and loaned to the maker over a period of several years past, the receipt whereof is specifically acknowledged, and the acts of the maker in borrowing' and receiving said amounts is hereby specifically approved and ratified.”
(b) “This note is issued to the payee in consideration of amounts of money advanced and loaned to the payee since September 1, 1957 until May 22, 1958, the receipt whereof is specifically acknowledged, and the acts of the maker in borrowing and receiving said amounts is hereby specifically approved and ratified.”