Opinion
Argued at Pendleton May 7, 1928
Affirmed July 11, 1928 Rehearing denied October 2, 1928
From Umatilla: C.H. McCOLLOCH, Judge.
For appellant there was a brief over the names of Messrs. Raley, Raley Warner, Mr. A.S. Cooley and Mr. John F. Kilkenny, with an oral argument by Mr. Cooley.
For respondent there was a brief over the names of Mr. Edward J. Clark and Mr. A.C. McIntyre, with an oral argument by Mr. Clark.
Defendant appeals from a judgment based upon a verdict. The action grew out of a transaction between Blydenstein and plaintiff. Blydenstein was acting as agent of the defendant bank in liquidating the affairs of Umatilla Flour and Grain Company, a corporation doing business at Pendleton, Oregon. The stockholders of said grain company were said Blydenstein, J.B. McCook and another not interested in this litigation. Said McCook was also vice-president and active manager of defendant bank. Said grain company had become heavily indebted to defendant bank and was also owing numerous other parties which it was unable to pay. For the purpose of paying defendant bank as much of its indebtedness as it could it assigned and transferred to said bank all of its personal property. Thereupon said bank appointed said Blydenstein its agent to wind up the affairs of said grain company, paying him $100 per month for his services. In the process of liquidating defendant, acting through said Blydenstein, exchanged its personal property theretofore assigned to it by said grain company to plaintiff for a tract of land in Union County. The title to the tract of land was taken in the name of said Blydenstein, but was taken in exchange for the property assigned to the bank as security for said grain company's indebtedness to the bank. At the time the Union County land was taken over in trade for the grain company's property said Blydenstein executed his note for $1,500 to defendant bank and executed a mortgage covering the Union County land to secure the payment of said sum. Blydenstein testified that at the same time he executed a quitclaim deed, transferring the absolute title to said land to defendant bank. That deed was dated about a year later and was recorded about the same time defendant bank sold and transferred said Union County land to another party. The deal between plaintiff and Blydenstein was expressed in writing, but defendant bank was not named a party thereto. This action was instituted to collect the difference between the value of the property assigned to defendant bank by said grain company and the net value of the Union County lands as agreed between said Blydenstein and plaintiff; also for the amount of taxes plaintiff was compelled to pay in order to prevent the sale of the property taken by him from defendant, acting through said Blydenstein, being the property assigned to defendant by said grain company. The taxes had become due before the property was transferred to plaintiff by defendant. The principal contention of defendant bank is that the contract for the purchase of said land in Union County was between plaintiff and said Blydenstein for the latter's benefit, was in writing, and defendant was not a party thereto; that the indebtedness of $1,085 was evidenced by the promissory note of said Blydenstein, and that defendant never promised to pay said taxes, nor did anyone having authority from it promise to pay said taxes. The questions are raised by objections to evidence and requests for an instruction to return a verdict for defendant. The case hinges on whether or not parol evidence is admissible to show defendant bank to be the real party in interest.
AFFIRMED. REHEARING DENIED.
There is conflict in the authorities regarding the admissibility of evidence offered for the purpose of showing that a party to the written contract is not the real party in interest but was acting for a principal at the time he entered into and signed the contract. This state, however, early adopted the principle that parol evidence was admissible to show that a party not named in nor a subscriber to a contract is the real party in interest and is bound thereby. This principle was first announced in Barbre v. Goodale, 28 Or. 465, 470 ( 43 P. 378). It is seriously contended by defendant that that principle applies only where the principal was not known to the other contracting party. But in Barbre v. Goodale, above, in pages 470 to 471 of the official Report, the contrary is held. In said page 470 the court, speaking through Mr. Justice WOLVERTON, announced the issue thus:
"The question is here presented whether it is competent to show by parol testimony that a contract executed by and in the name of an agent is the contract of the principal, where the principal was known to the other contracting party at the date of its execution."
In page 471 said late justice wrote:
"Without attempting to reconcile the decisions, we believe the better rule to be that the presumption thus created is a disputable one, and that the intention of the party must be gathered from his words, and the various circumstances which surround the transaction, as its practical effect, is to promote justice and fair dealing. The principal may have recourse to the same doctrine to bind the party thus entering into contract with his agent. * * This doctrine must be limited to simple contracts, and may not be extended to negotiable instruments and specialties under seal, as they constitute an exception to the rule."
This case has never been overruled nor its authority weakened. It was cited with approval in Blomquist v. Jennings, 119 Or. 691, 696 ( 250 P. 1101); Pulkrabek v. Bankers' Mortgage Corp., 115 Or. 379, 385 ( 238 P. 347); Brown Co. v. Duda, 91 Or. 402, 405 ( 179 P. 253). Parol evidence was admissible notwithstanding the contracts were in writing to prove that defendant bank was the real party in interest.
It was not attempted by plaintiff to recover from defendant on the note given by said Blydenstein to plaintiff. The action is based upon the indebtedness which was evidenced by that promissory note. There was sufficient evidence that the indebtedness was the obligation of the bank to submit the controversy to the jury. The jury returned its verdict in favor of plaintiff, which concludes this court on that question.
A promissory note is not payment of a debt unless the parties thereto especially agree that it shall be given and received as payment. This principle was announced in the early case of Black v. Sippy, 15 Or. 574 ( 16 P. 418), which case has been often cited and its authority not weakened by later decisions.
Defendant received the property of said grain company as security for that company's indebtedness to it, but the property was very far from being sufficient to pay that indebtedness. There was no probability at all of there being any surplus after the sale of said property and the proceeds of said sale were applied to said indebtedness.
The taxes levied against that property was not only a lien thereon but was also a personal debt of said grain company: Or. L., §§ 4325, 4383. Defendant could not avoid paying the taxes levied against said property by selling the same. Said Blydenstein testified that the agreement between him and plaintiff required defendant to pay the taxes that were due. There was ample evidence of said Blydenstein's authority as agent of defendant to carry the issue to the jury as to the agreements between said Blydenstein and plaintiff. Defendant admits that for the purpose of the liquidation said Blydenstein was its agent. Other witnesses introduced by defendant and who were directors of the bank testified that the exchange of property between plaintiff and said Blydenstein was discussed by defendant bank's directors and the same approved. The question of whether or not said Blydenstein was acting for defendant bank in these transactions was submitted to the jury with proper instructions. In fact the instructions were so favorable to defendant that no exception was taken thereto. The question of agency, therefore, in said transaction between plaintiff and said Blydenstein was determined by the jury's verdict. We find no error in the record. The judgment is affirmed.
AFFIRMED. REHEARING DENIED.
RAND, C.J., and BEAN and ROSSMAN, JJ., concur.