C. A. BAILEY
v.
William E. WESTMORELAND and wife, Helen L. Westmoreland.
No. 383.
Supreme Court of North Carolina.
January 29, 1960.*519 Buford T. Henderson and Abner Alexander, Winston-Salem, for plaintiff, appellant.
Clyde C. Randolph, Jr., Winston-Salem, for defendants, appellees.
BOBBITT, Justice.
Assignments of error directed to the overruling of plaintiff's motion to dismiss defendants' alleged affirmative defense, and to the submission of the first issue, are based on plaintiff's contention that the court erred in permitting defendants to establish their affirmative defense by parol evidence.
The parol evidence rule, upon which defendants' contention is based, "prohibits the admission of parol evidence to vary, add to, or contradict a written instrument." Stansbury, North Carolina Evidence, § 251. However, "The parol evidence rule presupposes the existence of a legally effective written instrument. It does not in any way preclude a showing of facts which would render the writing inoperative or unenforceable." Stansbury, op. cit., § 257.
"* * * the rule excluding parol evidence has no place in any inquiry unless the court has before it some ascertained paper beyond question binding and of full *520 effect. Hence, parol evidence is admissible to show conditions precedent, which relate to the delivery or taking effect of the instrument, as that it shall only become effective on certain conditions or contingencies, for this is not an oral contradiction or variation of the written instrument but goes to the very existence of the contract and tends to show that no valid and effective contract ever existed; * * *" 32 C.J.S. Evidence § 935. In accord: 20 Am.Jur., Evidence § 1095; 8 Am.Jur., Bills and Notes §§ 1051 and 1052; Wigmore on Evidence, Third Edition, § 2410; Stansbury, op. cit., § 257.
In Jobbers' Overall Co. v. C. S. Hollister Co., 186 N.C. 208, 119 S.E. 1, 2, Stacy, J. (later C. J.), after stating the parol evidence rule, said: "On the other hand, if defendant's purpose was to show a condition precedent, prior to the happening of which it was agreed the contract should not become effective or operative, the proposed evidence was competent, and it was error to exclude it Summit Ave. Building Co. v. Sanders, 185 N.C. 328, 117 S.E. 3, and cases there cited. `The manual delivery of an instrument may always be proved to have been on a condition which has not been fulfilled, in order to avoid its effect. This is not to show any modification or alteration of the written agreement, but that it never became operative, and that its obligation never commenced.' Devens, J., in Wilson v. Powers, 131 Mass. 539."
In Perry v. First Citizens National Bank & Trust Co., 226 N.C. 667, 40 S.E.2d 116, where Devin, J. (later C. J.), cites numerous prior North Carolina decisions, the rule stated and applied is correctly set forth in the third headnote, viz.: "As between the parties, the maker of negotiable notes under seal purporting on their face to be for `value received' is not precluded from showing that their delivery was conditioned upon a contingency which had not been fulfilled or that they were given upon a condition which failed, or that there was a failure of consideration."
Parol evidence offered by defendants in support of their alleged affirmative defense, to the effect that they signed and delivered the $975 note upon the express condition that it was not to become effective or operative as a binding obligation unless they received $4,000 or more from the sale or collection of the $5,914.25 George (second lien) note and that neither of these contingencies occurred, was not incompetent as violative of the parol evidence rule. Hence, the court was correct in overruling plaintiff's said motion to dismiss and in submitting the first issue.
The parol evidence, in large measure consists of testimony of the defendants, as to what was said and done by plaintiff in their personal transactions with him. This testimony, properly admitted, was amply sufficient to sustain the verdict.
Even so, plaintiff assigns as error the admission, over his objection, of testimony of the feme defendant as to statements made to her by Phillips, in the absence of plaintiff, immediately prior to her signing the $975 note and her delivery thereof to Phillips. The statements made by Phillips in said personal transaction with the feme defendant, according to her testimony, tend to support the testimony given by each defendant at the trial and to contradict the testimony given by plaintiff at the trial.
Plaintiff contends that, since Phillips was dead at the time of the trial, the feme defendant, an interested party, by reason of G.S. § 8-51, was not a competent witness to testify as to such transaction and communication.
The question raised by plaintiff's said contention is complicated by the fact that the $975 note was made payable to both plaintiff and Phillips. In respect of Phillips' original ($325) interest, plaintiff sues as Phillips' assignee.
"Where the statute (G.S. § 8-51) makes express provision for the protection of an *521 assignee of decedent, testimony of an interested witness as against such assignee is excluded." 97 C.J.S. Witnesses § 208 (b); Jones on Evidence, Fourth Edition, § 773, p. 1410; Stansbury, op. cit., § 71; McCanless v. Reynolds, 74 N.C. 301; Blackwell's Durham Tobacco Co. v. McElwee, 100 N.C. 150, 5 S.E. 907; Poston v. Jones, 122 N.C. 536, 29 S.E. 951.
If this were an action on a $325 note, executed and delivered by defendants to Phillips as sole payee and thereafter assigned by Phillips to plaintiff, said testimony of the feme defendant as to what was said and done by Phillips would be incompetent However, plaintiff's action is to recover the full amount of the $975 note; and, in respect of the larger ($650) interest, plaintiff was original payee.
According to plaintiff's testimony: The $975 note was signed by Mr. Westmoreland in the presence of plaintiff and of Phillips. Phillips then took it to Mrs. Westmoreland and obtained her signature thereon. After Mrs. Westmoreland had signed it, Phillips brought the $975 note back to plaintiff.
According to the feme defendant's testimony: When Phillips brought the $975 note to her, she first telephoned plaintiff; and she did not sign the $975 note until she had received assurances from plaintiff (by telephone) and from Phillips in person that defendants would not be obligated thereon except upon the happening of the contingencies heretofore stated.
Thus, the evidence clearly shows that, certainly in respect of plaintiff's original ($650) interest, Phillips, on the occasion of his said personal transaction with the feme defendant, was acting as plaintiff's agent. G.S. § 8-51 does not render an interested witness incompetent to testify "to a transaction between himself and a deceased agent of his opponent." Stansbury, op. cit., § 74; Sprague v. Bond, 113 N.C. 551, 18 S.E. 701; Gwaltney v. Provident Savings Life Assurance Society, 132 N.C. 925, 44 S.E. 659; Walker & Myers v. Cooper, 159 N.C. 536, 75 S.E. 727; Fidelity Bank v. Wysong & Miles Co., 177 N.C. 284, 98 S.E. 769.
Technically, to the extent ($325) plaintiff sues as Phillips' assignee, the feme defendant's said testimony would be incompetent. But this testimony would be competent to the extent ($650) plaintiff sues as original payee.
Plaintiff elected to sue for the full amount of the $975 note. When competent in relation to plaintiff's original ($650) interest, the fact that plaintiff seeks also to recover the assigned ($325) interest is not deemed sufficient ground for the exclusion of the feme defendant's said testimony. Moreover, it is not a "ground of exception that evidence competent for some purposes, but not for all, is admitted generally, unless the appellant asks, at the time of admission, that its purpose shall be restricted." Rule 21, Rules of Practice in the Supreme Court, 221 N.C. 544, 558.
It is noted: Plaintiff testified that Phillips rented an office from him; and that, when he bought Phillips' interest in the $975 note, Phillips gave him "a little discount on it." As stated by plaintiff: "He (Phillips) said he needed some money. I gave him credit on his rent, is what it was; I don't remember just exactly how much credit I gave him."
The admission of said testimony of the feme defendant, under the circumstances disclosed by this record, does not constitute prejudicial error for which a new trial should be awarded.
Plaintiff's other assignments of error, each of which has been considered, do not disclose prejudicial error.
No error.
HIGGINS, J., took no part in the consideration or decision of this case.