Court Opinion

ID: 9865035
Source: CourtListenerOpinion
Date Created: 2023-09-25 16:21:22.887362+00
Date Added: 2024-06-11T12:36:57.305826
License: Public Domain

Mr. Justice Young,
specially concurring.
I concur in the conclusions of the court and in the reasons supporting them as set forth in the opimon of Mr. Justice Holland, but inasmuch as certain cases were cited on rehearing that were not considered when the former decision was rendered, I deem it proper, as its author, briefly to refer to those cases as additional reasons for my present concurrence in the opimon of the court, wMch in part overrules the holdings of my first written opinion.
In that opinion it was held that the defense interposed by defendant, that is, that the plaintiff agreed to look for payment of the note only to the real property given as security for the note, was insufficient in law. That holding was based on the decision in Faris v. Beck, 74 Colo. 480, 222 Pac. 652, wMch stated a rule, as I read it, contrary to that theretofore announced by our Court of Appeals and subsequently reaffirmed by us in a case which is particularly called to our attention, on this rehearing, namely, Rock River Co. v. Mountain Finance Corporation, 94 Colo. 539, 31 P. (2d) 914, where George v. Williams, 27 Colo. App. 400, 149 Pac. 847, is cited with approval. This latter case was a suitt on a promissory note, and it was held that a contemporaneous parol agreement, that the note was to be paid out of dividends on stock of a certain corporation and not otherwise — no dividends being paid — was a good defense to a smt ón the note. The point was decided on the authority of the case of Roberts v. Greig, 15 Colo. App. 378, 62 Pac. 574, which was a suit on a promissory note given by certain part*476ners for a copartner’s interest in a mine. It was there held that a contemporaneous parol agreement, that the note was to be paid only out of the proceeds from operating the mine, and that there had been no proceeds, was a good defense to the suit on the note.
Faris v. Beck, supra, as I view it, without mentioning the Court of Appeals cases, by implication overrules them. One of the defenses in that case was that “both notes were delivered upon the express condition that defendant would not be required to pay them except out of dividends of the stock so purchased.” (Italics mine.) On this the court said: “A provision that the note shall not be paid except out of a certain source, varies the note in its paramount and most vital respect. The agreement was oral. As to this defense, therefore, we think the court was right. Wigmore on Evidence, §2443 et seq.; Mumf ord v. Tolman, 157 Ill. 258."
In Rock River Co. v. Mountain Finance Corporation, supra, one of the defenses was that: “The note was given and delivered on condition that it' should be paid only by and out of certain dividends which thereafter might be declared and paid to the defendant by the Central Savings Bank and Trust Company of Denver and not otherwise ; and that no such dividends were ever declared or paid to the defendant and that said note was so accepted by the plaintiff with knowledge of such condition.” In discussing that defense the court said: “Plaintiff’s counsel, though apparently not placing much reliance upon his contention, does, however, question the validity of the alleged parol agreement as to the payment of this note. He cites, among other cases, Randolph v. Helps, 9 Colo. 29, 10 Pac. 245, and Morgan v. Howard Realty Co., 68 Colo. 414, 191 Pac. 114, as holding that a written contract may not be varied by parol, but the cases he cites are actions upon contracts in general, not actions upon promissory notes. As to contracts of the latter character, ever since 1897, by section 3833 C. L. 1921, as between immediate parties to a promissory note, as is the case now before *477us, the delivery may be shown to have been conditional or for a special purpose only, though the rule is otherwise as to other kinds of contracts. This section has been construed by this court and our Court of Appeals in several cases. In George v. Williams, 27 Colo. App. 400, the note there considered was absolute in form but Williams pleaded conditional delivery in that there was a parol agreement contemporaneously with the execution of the note to the effect that this instrument would be paid from the maker’s share of the dividends of a corporation and not otherwise. This is quite like the condition in this case. The court held the conditional delivery valid and cites many of our previous decisions.”
The opinion in the Rock Eiver case cites among other cases Wheelock v. Hondius, 74 Colo. 400, 222 Pac. 404, as authority for its holding. This case recognizes the rule in these words: ‘ ‘ Section 3833 C. L. 1921, provides that as between the immediate parties to a promissory note, delivery may be shown to be conditional, or for a special purpose. It may be shown by oral testimony, but the oral agreement constituting delivery must have been made contemporaneous with, not prior to, physical delivery of the instrument. ’ ’ But the final disposition of that case did not involve either an approval or disapproval of the rule, as the case was determined on the question of sufficiency of evidence. The court held that the judgment of the trial court involving a finding that there was an absolute and unconditional delivery of the note was supported by the evidence.
The statement is made in the Rock River opinion that there is no conflict between the rule as announced in that case and the one stated in the Faris-Beck case, and as recognized in the Wheelock-Hondius case. To support this statement the following is quoted from the opinion in the Faris-Beck case: “Even if valid between him [the defendant] and the company [immediate parties], a point which we need not decide, it could not be valid between him [defendant] and the receiver, who repre*478sents the creditors of the company.” This quotation is used as though applicable to the note in suit, when in fact it refers to the question of the validity of an agreement between a corporation selling its own stock and the purchaser thereof, that the stock shall be paid for only out of dividends of the corporation. That it was quoted in the Rock Eiver case as applicable to the note is evident from the brackets inserted in the quotation by the writer of the opinion in that case; while a reference to the case of Bernard v. Sweet, 74 Colo. 302, 221 Pac. 1093, which is cited by the author of the Faris-Beck opinion as his authority for the statement, shows that the quoted words were used by him as applicable to the question of the validity of the agreement for payment of the stock out of dividends, and is not applicable to the admissibility of evidence as a defense in a suit on the note. When so read the opinion in the Faris-Beck case discloses no attempt by the writer to make any point that the receiver of the corporation, Beck, as the holder of the note, stands in any different position from that of the corporation itself if it were suing on the note. That the receiver, as holder of the note, stands in a different position from that of the corporation is the implication read into it by the Rock River opinion in attempting to show that the Faris-Beck case does not constitute a departure from the rule laid down in the Rock River case and theretofore by the Court of Appeals. As I read the Faris-Beck case, and as I have heretofore stated, it is a departure from such rule. On this point it was overruled by implication by the Rock River case and in my opinion should now be expressly overruled. It may be conceded that there is no sound basis in logic for our holding that parol evidence is admissible to show that payment of a note is to be made out of a special fund, and that it is not admissible to show it is not to be paid at all, as we held in Welles v. Colorado Co., 49 Colo. 508, 113 Pac. 524. Such distinction as there is between these holdings is one in degree or extent rather than in kind, but since that dis*479tinetion has been recognized over a long period of years and rights may have come into existence in reliance on such recognized illogical distinction, it should stand and not be changed by a different judicial construction that may jeopardize, but cannot save, existing rights. I am persuaded to this view because the rule as laid down by the Court of Appeals, and in the Bock Biver case by us, if not technically a rule of property, is analogous thereto. In reliance on such rule, notes may have been executed and delivered, and parol agreements made to their payment out of special funds or on special conditions only, and such persons, if such there be, should not have their rights impaired by the announcement of a contrary rule. If a rule, based on judicial construction of a statute, of long standing and such recent recognition — the abolition of which may be fraught with such consequences — is to be abrogated, it should be done by the legislature, which by appropriate provisions can save such rights as already may have accrued in reliance thereon.
For the additional reasons herein stated, I concur in the opinion of the court.
I am authorized to state that Mr. Justice Burke and Mr. Justice Butler concur in the views herein expressed.