Penniman v. Winner

Robinson, J., delivered the opinion of the Court. The appellee, Winner, sold to the Rockland and Venango Coal Oil Company, an oil well and oil lands adjacent thereto for twenty thousand dollars, the purchase money to be paid as follows :—ten thousand dollars cash, note at sixty days for five thousand, and five thousand dollars in the stock of the company. ¹³³ In pursuance of these terms, the sale was duly consummated, and the property was conveyed to the company. The note for five thousand dollars was subsequently délivered to the defendant for collection, and this suit is brought against him for its conversion. At the trial the defendant offered to prove as one of the conditions of the sale and purchase, an agreement on the part of the plaintiff to contribute toward the payment of the purchase money, in proportion to his stock in the company, and that the contribution should be retained out of the amount due on the note.

And also to prove that the note was left with the defendant for the purpose, and with the understanding that when the amount of such contribution should be so ascertained, it was to be allowed as a credit on the note. It was not competent of course for the defendant to prove an oral agreement contradictory of, or inconsistent with, the written terms of sale; but it was argued that such evidence was .admissible to prove a collateral agree-, ment. A party, it is true, may prove a collateral agreement, provided such agreement be not inconsistent with the written contract, and such aré the cases of Basshor, &c. vs. Forbes, 36 Md., 154 , and Fusting’s Ex’rs vs. Sullivan, 41 Md., 162 , and Erskine vs. Adlane, L. R., 8 Ch., 766. But in this case the property was sold for twenty thousand dollars, and the contract of sale provided how and in what manner the purchase money was to be paid.

The note for the conversion of which this suit was brought, is for the payment of five thousand dollars, and it is plain therefore, that the evidence offered by the defendant is not only inconsistent with the written terms of sale, but is also inconsistent with the note itself. It sets up a contract altogether different from the written contract of the parties, and the evidence was therefore clearly inadmissible. The second exception brings up for review the rulings of the Court, upon the several instructions offered by the plaintiff and the defendant. ¹³⁴ The appellant rested his defence mainly on two grounds:—1st. The fraudulent representations of the appellee in regard to the oil-producing capacity of the well, and 2nd, the failure of ■ consideration.

In regard to the first, the Court instructed the jury, that if the plaintiff falsely and fraudulently represented the. oil-producing capacity of the well to he greater than it was, for the purpose of inducing the company to purchase the same, and the company made the purchase upon the faith of such representations, and had not the means at hand of ascertaining whether they were true or false, and upon discovering that such representations were false, offered to re-convey the property to the plaintiff, then the verdict must he for the defendant. No objection is made to this instruction, but the defendant contends that the Court erred in refusing his second prayer. This prayer assumes that if the company was desirous to add to its property an oil well already actively producing oil, with a view of furnishing oil from such well to the market to improve the value of its stock, while engaged in exploring for oil on its property, and that the plaintiff was aware of this purpose, and represented the well in question as an active producing oil well, yielding from six to ten barrels of oil daily, and as such suitable for the purposes of the company; and the company relying upon such representations, purchased the well from the plaintiff, and that the note of $5000 is part of the consideration of said purchase ; and if they shall further find that the well was in fact wholly unfit for the purposes for which the company purchased it, and for which the plaintiff sold the same, and that the company upon so discovering it to he so wholly unfit, offered to re-convey said property and to rescind the contract, and demanded a return of the cash part of the purchase money, and refused to pay said note of $5000, then the plaintiff is not entitled to recover. . This instruction which seems to us to embrace certain elements of both fraud and warranty, is supported ¹³⁵ solely on the ground that the facts therein set forth, if found hy the jury, show an entire failure of consideration of the note now in controversy.

As between the parties to a promissory note, the failure of consideration may no doubt be relied on as a defence. But there is in this respect at least a wide difference between a failure of consideration, and a failure of benefit resulting from it. Where one sells and another buys an oil well, and the purchaser