Court Opinion

ID: 6418763
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:58:09.109032+00
Date Added: 2024-06-11T15:51:41.396546
License: Public Domain

Endicott, J.
For the purposes of this decision the averments of the answer are to be taken as true, and the question is whether, if proved, they constitute a defence to the action.
It appears that the plaintiff’s intestate, Kimball C. Gleason, and the defendant, lent to one Johnson, the owner of a patent right, five thousand dollars; Gleason contributing one thousand, and the defendant four thousand dollars. Johnson gave his note therefor to the defendant, payable in four months, and assigned to him the patent right as collateral security; and also gave him an agreement to convey an interest in the patent right for the benefit of himself and Gleason. This arrangement was in pursuance of an agreement between Gleason and the defendant, and it was further agreed that they should be jointly interested in the loan, the collateral security and the agreement to convey an interest in the patent, in the proportion of one to four. At the same time the defendant gave the note in suit to Gleason as evidence of his interest in the loan and security, with the express *438agreement, that it should not be demanded or paid until the defendant should receive payment of the loan to Johnson.
How far these agreements made at the inception of the note, if construed together, would furnish a defence to this action, and how far such defence would be open to the objection that it introduced paroi evidence to vary and control the terms of a written instrument, we do not think it necessary to consider. The subsequent transactions and agreements of the parties, in the opinion of the court, constitute a good defence.
Johnson did not pay his note at maturity, and, with the consent of Gleason, the patent right was sold by the defendant, at auction, to one Thomas for an amount equal to the sum with interest for which it was held as collateral security; and, at the request of Gleason, the defendant took Thomas’s note for the amount, with the agreement that the defendant should hold it as the joint property of himself and Gleason, and that a company should be formed to use and work the patent. This was in effect carrying out and executing the agreement previously made, that the defendant should not be called upon to pay his note till Johnson’s note was paid, by substituting, for payment in cash, an interest to the same amount in the note given by Thomas. This agreement is not inconsistent with the terms of the note. It was made when the note was due, after the sale of the collateral security, when Gleason had the right to enforce the payment, and when the defendant could have paid it from the proceeds of the sale, instead of taking the note of Thomas. It was a mode of payment agreed upon between the parties. Ward v. Winship, 12 Mass. 480. The agreement had a sufficient consideration in the fact, that the defendant took the note instead of cash at Gleason’s request.
An additional agreement was made at the same time, which was part of the foregoing, as to the use the defendant might make of the note, which he held for their joint benefit. And it was agreed that if the defendant would subscribe to the stock of the company, and pay for the same with the note held for their joint benefit, the note in suit might remain and the defendant should not be called upon to pay it until the profits of so much of the stock as equitably represented the amount of the note sh ould be sufficient to pay it. Relying on this agreement, the *439defendant afterwards subscribed to the stock, paid for the same with the note of Thomas, instead of demanding a cash payment from Thomas, and he has never received any profits whatever.
The fair construction of the whole agreement is, that the parties being jointly interested in the note held by the defendant, if the defendant, acting for their joint interest, subscribed for the stock in the manner provided, then Gleason, instead of receiving payment for the amount put in by him from the proceeds of Thomas’s note, should receive it from a proportional share of the profits, if there were any; if there were none, then he should not be paid. Another method of payment was thus substituted. They were jointly interested in the original loan, and in the arrangements which they entered into for securing payment. If the defendant did not subscribe to the stock, Gleason could not have enforced the note in suit against him, for, having agreed to substitute the note of Thomas therefor, he must look to the proceeds of the note in the defendant’s hands for his payment. If the defendant did subscribe, then Gleason could be paid only in the event of profits. In other words, if the enterprise was successful, both might be paid the sums they originally put in; if not successful, both would lose.
Gleason having agreed to this method of payment, his administratrix cannot recover on this note, in violation of his agreement.- Case to stand for trial.