GARTHOFNER v. EDMONDS (1946)

District Court of Appeal, Third District, California.

GARTHOFNER v. EDMONDS.

Civ. 7235.

Decided: February 27, 1946

Harry W. Falk, of Eureka, for appellant. Irwin T. Quinn, of Eureka, for respondent.

The plaintiff appealed from a judgment which was rendered pursuant to an order sustaining a demurrer to the amended complaint without leave to amend the pleading. The complaint is founded on an alleged oral agreement of Amanda B. Carter to personally assume and pay a joint and several obligation of herself and her deceased husband on a promissory note for $495, due ‘on the very day’ or when ‘J. F. Carter receives his thousand dollar inheritance, from William Carson's Will.’ The trial court held that the oral agreement did not constitute a novation of the original obligation under Sections 1530 and 1531 of the Civil Code.

The respondent contends that the amended complaint fails to allege a novation because it appears therefrom that all of the parties to the original indebtedness on the promissory note did not consent to the alleged oral agreement that Amanda B. Carter would personally assume and pay the debt since her husband was then dead and his representative did not accept that new obligation; that there was no consideration for the new obligation since the note created a joint and several liability of the makers thereof and the wife was bound by the terms of the note to pay the entire amount and that the note was not yet due, nor was the obligation created by the alleged oral agreement to pay it, according to the terms of the note, due until ‘J. F. Carter receives his thousand dollar inheritance, from William Carson's Will,’ which the amended complaint alleges he never received. It is also asserted that if the alleged oral agreement for the new obligation was a substitution for the obligation created by the promissory note which extinguished the obligation created thereby, this action based on the new oral agreement is barred by the statute of limitations, which was pleaded in the demurrer.

The amended complaint alleges that plaintiff held the note of J. F. and Amanda B. Carter, husband and wife, for payment of the sum of $495, dated in January, 1938, ‘on they very day (or soon thereafter) that J. F. Carter receives his thousand dollar inheritance, from William Carson's Will’; that said inheritance was never received; that the makers of the note were jointly and severally liable therefor; that J. F. Carter died November 21, 1943; that subsequent to the death of J. F. Carter, his widow orally agreed to and did cancel the note and she agreed to become solely and individually responsible for the payment of that obligation; that Mrs. Carter died May 17, 1944, and the administratrix of her estate was thereafter duly appointed and qualified; that a claim for the obligation incurred by the oral agreement was filed with said administratrix and rejected. The complaint asks for judgment for said sum of $495 and interest, amounting to $702.40 against the estate of Mrs. Carter, to be paid in due course of administration. A demurrer to the amended complaint was sustained without leave to amend. Judgment was accordingly rendered that plaintiff take nothing by his said action. From that judgment this appeal was perfected.

We are persuaded the amended complaint fails to allege an action against the estate of Amanda B. Carter, deceased, founded on the oral agreement, chiefly because there was no valid consideration for the alleged novation and cancellation of the promissory note of Mr. and Mrs. Carter, since they were severally liable as makers of the note and she was legally obligated to pay the entire amount thereof regardless of her new alleged oral agreement to do so. It follows that the demurrer was properly sustained without leave to amend.

This suit is not based on the promissory note. It is specifically alleged that note was canceled, and that the obligation was substituted by the subsequent oral agreement of Amanda B. Carter to assume and individually pay that debt upon the terms provided for in that instrument. The oral agreement was not a contract to substitute a new debtor, nor was it Mrs. Carter's agreement to pay the debt of another person. It was her agreement to pay her own debt which she was already legally obligated to pay in full. Either the husband or wife, having the statutory right to enter into any engagement or transaction with another person, was authorized to bind himself to pay the promissory note. When a married woman joins with her husband as maker of a note, the liability thereon becomes joint and several. McClintick v. Frame, 98 Cal.App. 338, 343, 276 P. 1033; Civil Code, sec. 158; 41 C.J.S., Husband and Wife, p. 664, § 185 b. Section 158 of the Civil Code provides: ‘Either husband or wife may enter into any engagement or transaction with the other, or with any other person, respecting property, which either might if unmarried; * * *.’

The text in 41 Corpus Juris Secundum, Husband and Wife, § 185 b, supra, provides that: ‘In a jurisdiction in which the wife has power to make a note, * * * a married woman who joins with her husband in making the note is personally liable thereon. In such case both spouses become liable on the note jointly and severally; and both are liable primarily.’

In the present case, since the wife was already under legal obligation to pay the entire note, her subsequent alleged oral agreement to personally assume and pay the debt was without consideration. Parrino v. Rallis, 116 Cal.App. 364, 2 P.2d 515; Tipton v. Tipton, 133 Cal.App. 500, 506, 24 P.2d 525; Marinovich v. Kilburn, 153 Cal. 638, 642, 96 P. 303; Rietz v. Hovden Food Products Corp., 49 Cal.App.2d 376, 382, 121 P.2d 775; Gordon v. Green, 51 Cal.App. 765, 768, 197 P. 955. Contracts of novation are not different from other contracts in that they must be based on sufficient consideration to constitute a valid enforceable agreement. 39 Am.Jur. 267, § 22. It has been held that if the novation contains the promisor's agreement to pay the debt of a person other than the makers of the original contract, in consideration of the promisor's discharge from the original debt, no new consideration is required. Leslie v. Conway, 59 Cal. 442; 39 Am.Jur. 267, § 22. But in this case the promisor was not merely agreeing to pay the debt of another person. She was promising to pay her own debt for which she was already liable on the joint and several obligation of the note.

In the case of McClintick v. Frame, supra [98 Cal.App. 338, 276 P. 1035] under circumstances similar in principle to those of the present case, it was held that the failure of one of the spouses who had joined in a written contract to sell land, to consent to a subsequent oral agreement, was void under Section 1698 of the Civil Code, and that the new agreement did not constitute a novation because it was not acquiesced in by Catherine McClintick, one of the parties to the original written agreement. The judgment was reversed on that account. The court said: ‘Respondents urge that the original contract was modified by the subsequent April agreement, and that new terms in the April agreement take the place of the terms in the February agreement and therefore the old contract stands, with substitution of the new terms for the old terms that were by the new contract modified. Such claim amounts to a substitution of the individual obligation of W. P. Frame for the joint and several obligations of W. P. and Theodosia Frame, and amounts to a claim of novation, Civ.Code, § 1530. A novation contract is subject to all the rules concerning contracts in general. Civ.Code, § 1532. It would require a consideration from Theodosia Frame to support it, and, as the February agreement is in writing, a substitution could only be made by another agreement in writing or by an executed oral agreement. Civ.Code, § 1698. It would have to be joined in by all the parties to the original agreement. California Canning Peach Growers v. Downey, 76 Cal.App. 1, 243 P. 679. The April agreement, not being joined in by Catherine McClintick, can have no binding effect upon her.’

We are of the opinion the amended complaint fails to allege facts constituting a valid novation. The alleged oral agreement to cancel the note and substitute a new obligation was not between all of ‘the same parties' to the promissory note. It is alleged that J. F. Carter, one of the makers of the note was then dead. He did not and could not consent to the novation. Novation is the substitution of a new obligation for an existing one. Civil Code, sec. 1530. It may be consummated by. (1) The substitution of a new obligation between the same parties, or (2) By the substitution of a new debtor in place of the old one, with intent to release the latter. Civil Code, sec. 1531. A novation is made by contract, and is subject to all the rules with relation to contracts in general. Civil Code, sec. 1532. Novation is a new contract to which ‘all of the parties concerned agree.’ Colley v. Chowchilla National Bank, 200 Cal. 760, 770, 255 P. 188, 192, 52 A.L.R. 569; United States Gypsum Co. v. Snyder-Ashe Co., 139 Cal.App. 731, 733, 34 P.2d 767; California Canning Peach Growers v. Downey, 76 Cal.App. 1, 18, 243 P. 679; Young v. Benton, 21 Cal.App. 382, 384, 131 P. 1051; 39 Am.Jur. 262, § 17. In the authority last cited it is said: ‘It is a well-settled principle that an essential element of every novation is a new contract to which all the parties concerned must agree, and in the absence of such agreement or consent a novation cannot be effected.’

It appears from the amended complaint that the obligation to pay the debt under the oral agreement may not have accrued for the reason that it was to be paid only when ‘J. F. Carter receives his thousand dollar inheritance, from William Carson's Will.’ It is affirmatively alleged that he ‘never did receive said inheritance.’ The amended complaint alleges that Amanda B. Carter orally agreed to personally assume and pay ‘said obligation as hereinbefore alleged.’ It was previously alleged that the debt was to be paid on ‘the very day (or soon thereafter) that J. F. Carter receives his thousand dollar inheritance, from William Carson's Will’, and that he ‘never did receive said inheritance.’ The Civil Code, Section 3166, provides that: ‘Every negotiable instrument is payable at the time fixed.’

Ordinarily an instrument made payable by its terms upon the occurrence of a specified event or condition, such as when ‘the balance of the purchase price’ of property is paid, Green v. Robertson, 64 Cal. 75, 28 P. 446, or when real estate ‘because the property of the heirs of the late George Hood’ Egilbert v. Hall, 44 Cal.App.2d 305, 112 P.2d 291, 294, the debt is payable upon the happening of the specified event. If the happening of the event or condition is within the control of the maker of the instrument the debt may become due, after demand, within a reasonable time. 8 Am.Jur. 27, § 281. But in the present case the makers of the promissory note had no control over the time of payment of J. F. Carter's legacy of $1,000 from the Estate of Carson. He inherited that sum of money by the terms of the will of Carson. The note was made payable ‘on the very day’ when that legacy was paid. That was a definite time when, according to the intention of the parties to the note, the debt was to mature. However, in view of what we have previously said regarding the invalidity of the alleged novation, it is unnecessary to determine whether or not the note was payable on demand.

For the reason that the court properly sustained the demurrer to the amended complaint for failure to allege facts sufficient to constitute a valid novation, the judgment against the plaintiff should be affirmed. It is so ordered.

THOMPSON, Justice.

ADAMS, P. J., and PEEK, J., concur.