
    In re Estate of Mary A. Smith. Julius W. Fischer, executor, appellee, v. Harold L. Fischer, appellant.
    No. 48279.
    (Reported in 58 N.W.2d 378)
    
      May 5, 1953.
    Charles E. Swanson, of Council Bluffs, for appellant.
    Peterson, Smith, Peterson, Beckman & Willson, of Council Bluffs, for appellee.
   WenneRSTRum, J.

Julius W. Fischer, executor of the estate of Mary A. Smith, deceased, filed an application in the probate proceedings of the estate asking for instructions whether two notes bearing notations should be listed as part of its assets. Decedent, tbe payee of tbe notes, died before tbeir maturity. Tbe maker of tbe notes filed a resistance to tbe application and later an amendment thereto alleging that a contract for cancellation of tbe notes existed by reason of the notations placed on them and represented tbe terms and conditions on which they were executed. It was also asserted tbe memoranda on the notes were intended by tbe parties to be construed as a part of tbe contract and were founded upon valid and subsisting considerations. Tbe maker asked that tbe notes be delivered to him in conformity with tbe conditions set forth on them.. Tbe trial court found that tbe statements on tbe notes did not constitute a binding contract upon tbe decedent or her estate, that tbe endorsements were not sufficient to change tbe legal effect of said notes and did not result in a cancellation of them on tbe death of Mary A. Smith. Tbe court held that tbe notes were valid and binding obligations of tbe maker and should be included as assets of tbe estate. It directed tbe executor to seek tbe enforcement of tbeir payment. Tbe maker has appealed.

Among tbe papers found by tbe executor in decedent’s safe-deposit box were two notes executed by tbe appellant, Harold L. Fischer, which were payable to Mary A. Smith. One of tbe notes in tbe amount of $3000 was dated December 30, 1949, and was due one hundred eighty days after date. Tbe other note in the amount of $10,000 was dated January 12, 1950, and was payable on or before July 12, 1950, or on demand. At tbe extreme left of each of tbe notes there was typed tbe following notation: “This note is executed under conditions as outlined on tbe other side of tbe note.” On the reverse side of each of the notes and to tbe extreme left there was typed the following: “If payee departs this life before this noté is paid same is hereby fully can-celled and executor instructed to deliver same to payor.” Underneath each of these last endorsements is a line but there is no signature on it on either of the notes.

Mary A. Smith, the payee on the notes, died April 17, 1950. It was stipulated that neither 'of the notes had been paid prior to her death. There is uncontradicted evidence that tbe notations and endorsements to which reference has been made were on the notes at tbe time they were executed.

It is tbe appellant’s contention tbat a marginal notation on a note or a notation on tbe back of a note made at tbe time of tbe execution of it with tbe intention of making it a part of tbe contract constitutes a part of it and must be construed witb tbe body .of tbe instrument; tbat in construing a written instrument it is a cardinal rule of, construction to give effect to tbe intention of tbe parties as expressed by tbe language of tbe entire instrument at tbe time of its execution; tbat a condition subsequent, incorporated in a written instrument at tbe time of its execution, is effective to cancel an obligation on tbe happening of a contingency as provided in tbe instrument.

I. It was pleaded by tbe appellant it was tbe intention of botb the payee and payor tbat the notations typed on tbe contract be construed as a part of tbe contract and tbat they were founded upon a valid consideration. Tbe executor, tbe applicant, asserts tbe contract for cancellation failed for want of consideration. We later bold tbe notations were a part of tbe instrument. Tbe. statutory presumption of consideration would apply to all portions of tbe instrument and there is no requirement of separate consideration for its different parts. See 5 U.L.A., section 24; section 541.24, 1950 Code.

II. It is a general rule that marginal' notations placed on a note at tbe time of tbe execution thereof witb tbe intention of making them a part of the contract must be construed witb tbe body of tbe instrument to arrive at tbe true agreement existing between tbe parties. 7 Am. Jur., Bills and Notes, section 53, page 816; 10 C. J. S., Bills and Notes, section 44(a) (b), pages 480-484; annotations 13 A. L. R. 252; annotations 155 A. L. R. 218, 219; see also State v. Stratton, 27 Iowa 420, 423, 1 Am. Rep. 282; Nylander v. Nylander, 221 Iowa 1358, 1360, 268 N.W. 7; Heaton v. Ainley, 108 Iowa 112, 113, 78 N.W. 798. In tbe absence of anything to tbe contrary, tbe presumption is that memorandum endorsements are made at tbe time when tbe instrument is executed and as a part thereof. 7 Am. Jur., Bills and Notes, section 53, page 817; 10 C. J. S., Bills and Notes, section 44(a), page 481. Parol evidence is admissible as a rule to show that a memorandum outside the body of an instrument was there when the instrument was executed. 7 Am. Jur., Bills and Notes, section 53, page 818; Brock v. Lueth, 141 Neb. 545, 553, 4 N.W.2d 285, 289. In the instant case there was nndenied evidence the notations in question were on the instruments at the time of their execution. In Elmore v. Higgins, 20 Iowa 250, 254, this court held:

“That the cotemporary indorsement on the back of the note became part of it,- binding upon the parties and qualifying and restricting their contract (2 Pars. on N. & B., 539, et seq., and cases), and that in construing the contract, the note and indorsement and mortgage are to be taken by the corners, and effect given to every expression,- it this can fairly be done (Id., 542; Chitty on Cont., 70), are propositions elementary in their character and not controverted by counsel.”

See also Daugherty v. Preuitt, 113 Okla. 66, 242 P. 529, 531.

III. It is one of the contentions of the executor that the appellant failed to prove a contract for the cancellation of the notes inasmuch as there was no meeting of the minds and no mutual assent was shown. It is our conclusion that this claim is not sound. Our comments and holdings in Division II definitely show that there was a valid contract.

It is provided in our statute that, “A negotiable instrument is discharged: * * * (4) By any other act which will discharge a simple contract for the payment of money. * * •*.” Uniform Neg. Instr. Act, 5 U. L. A., section 119'(4); section 541.120(4), 1950 Code.

It is apparent to'us that the notations on the note in question come under this last quoted provision of the act and it cannot be held there was no meeting of the minds and no mutual assent between the parties.

IV. The appellee maintains that even if the contract evidenced by the notations is valid, it is testamentary in character and is void because it fails to meet the formal requirements of a will. This contention is not supported by applicable authorities. In Novak v. Lovin, 33 N. D. 424, 428, 431, 157 N.W. 297, 298, 299, an administrator sought to recover on two promissory notes. There was a contemporaneous agreement executed which was in part: “ * * and further that said note or notes to be hereafter given for said moneys shall be nontransferable and shall be payable to no one but myself, and that in case I should die while said notes are in force they shall at once become null and void and not. collectible.’ ”

It was also therein stated:

“She did not intend, in other words, that the defendants’ obligations on the notes should survive after her death. On the contrary she intended that the notes should have no post-mortem effect or validity.
“The question for decision, therefore, is whether such intent can be given effect. We think this question should be answered in the affirmative. We fail to see * * * how Exhibit ‘A’ can be construed as testamentary in its nature. The authorities which seem to be in any way in point support our view. Bedford v. Chandler, 81 Vt. 270, 69 Atl. 874, 17 L. R. A. (N.S.) 1239, 130 Am. St. Rep. 1057; Blanchard v. Sheldon, 43 Vt. 512; Hackett v. Moxley, 65 Vt. 71, 25 Atl. 898; Green v. Tulane, 52 N. J. Eq. 169, 28 Atl. 9; Sebrell v. Couch, 55 Ind. 122; Hegeman v. Moon et al., 131 N. Y. 462, 30 N.E. 487; Carnwright v. Gray, 127 N. Y. 92, 27 N.E. 835, 12 L. R. A. 845, 24 Am. St. Rep. 424.”

In the case of Twyman v. Wood, 61 Ohio App. 229, 231, 233, 22 N.E.2d 495, 496, 497, the court had under consideration a contract relative to a note sued on. This writing .was in.part, “ * * and in case of my death at any time, the debt is paid in full and they are not to pay any more* * ”

It was also therein stated:

“We have been unable to find any Ohio authority directly decisive of the question here presented but there are a number of authorities by the courts of other states. In Compton, Admr., v. Westerman, Exrx., 150 Wash. 391, 273 P. 524, it was held that an agreement evidencing a loan of money by a mother to her son which provided that the obligation to repay the loan should terminate on the death of the mother if the loan had not been totally paid at that time was not testamentary in its nature but merely conditioned the payment thereof.
“To the same effect in principle are Fiscus v. Wilson, 74 Neb. 444, 104 N.W. 856; Bundrant, Exr., v. Boyce, 47 Ind. App. 253, 91 N.E. 968, 92 N.E. 126, and Bedford’s Exr. v. Chandler, 81 Vt. 270, 69 A. 874, 17 L. R. A., N. S., 1239, 130 Am. St. Rep. 1057.”

It was therein held that this agreement was not testamentary in nature.

In Brock v. Lueth, 141 Neb. 545, 547, 555, 4 N.W.2d 285, 286, 290, the Nebraska court considered a note on which was endorsed:

‘The within note to be delivered to the maker Henry C. Lueth upon my death, and to be canceled by the Executor of my estate before his making delivery of same. No payment of any interest or principal to be made by maker after my death in any event.’
“(Signed) A. W. Lueth
“F. A. Mieras, witness.”

In the cited case the court stated: “In the opinion of this court, the indorsement on the back of the note, signed by the father before he asked his son to sign it, and the note, and the delivery of the deed by the father to his son, the defendant, were all a part of one and the same transaction, and must rightly be construed together as a single contract between the parties. Such contract provided clearly that the son should pay the reserved annuity of $120 so long as the father lived. Having reached this conclusion, we reject the contention of plaintiff that the indorsement on the back of the note was a will or a testamentary .disposition of any kind.”

Under the cited authorities it is our holding that the conditions incorporated in the note were not testamentary in nature. The authorities cited by the appellee are not in point and applicable to the facts in this case.

Y. The facts herein present are not in dispute. We are not required to try this ease de novo but under the pleadings and facts our problem is to decide solely the legal questions involved. The payee by accepting the note with the conditions on it accepted the provisions thereon and her estate is bound by them.

By reason of our conclusions heretofore announced the order of the trial court is reversed with directions that one be entered in the probate proceeding in conformity with this opinion.— Reversed with directions.

All Justices concur.  