
    Marvin Preston v. Clark J. Whitney.
    
      Promissory note. An instrument in the form of a promissory note payable on demand after date with interest, containing at its foot a memorandum, as follows, viz u This note is to be valid as part pay for a piano-forte of me at retail price,” is prima facie and without any explanatory evidence aliunde a promissory note for the payment of money, with the option to the payee to apply it as part payment on the purchase of a piano of the maker at retail price. This memorandum contains nothing repugnant to, or inconsistent with, the promise' to pay in money contained in the note itself.
    
      Consideration of promissory note: Effect of certain evidence considered. Evidence, that the payee of said note had entered into a written contract with the maker thereof to purchase a piano of him, and had paid one hundred dollars towards said purchase, and had had the piano three months, when he returned the piano, at his own expense, to the defendant, who deducted thirty dollars for the use of the piano and gave said promissory note for the residue of said, one hundred dollars; that when the note was made it was understood between the parties that if said payee should wish to buy a piano he should buy it of said maker, but that he was not bound to do so, or to lose the value of the note, if he did not choose to take a piano; and that he bad made no demand of, or application to, said maker in any way to have said note, or the amount thereof, applied on the purchase of a piano, — if admissible at all, does not tend to show that the real intention of the parties was substantially different from that expressed by the instrument itself.
    
      Contract of sale! Forfeiture: Payments received, to be accounted for in absence of stipulation to the contrary. A contract in writing for the sale of a piano, to be paid for in installments therein specified, with a provision that said piano shall remain the property of the vendor, even while in the possession of the vendee, until the full payment of the purchase price according to the terms of said contract, and that in case the vendee fails to make any payment, as specified in said contract, at and from the time of such failure, the vendor shall be entitled to the possession of said piano, and said agreement to sell the same shall become void, does not give the vendor the right to retain, as a forfeiture, on the vendee’s failure to pay according to said contract, all the money-received by him on said contract. Such vendor would be bound to account upon just and equitable principles to said vendee for the moneys received upon said contract, deducting a fair compensation for the use of the piano while in the vendee’s possession (or perhaps, at his option, the interest of its price for that period), as well as for any reduction in value from injury beyond that arising from its legitimate use, and for any incidental expenses in regaining possession.
    
      Provision for retaining payments made¡ as stipulated damages on forfeiture. Whether it would be competent to provide in such a contract for the forfeiture of all the several installments which might have been paid prior to default, or whether such a provision would be treated as a penalty, according to the principles which distinguish penalties from stipulated damages: — Qpicere?
    
      Promissory note: Consideration: Irrelevant testimony. In an action by the payee against the maker, upon such promissory note, the defendant offered in evidence such written contract for the sale of such piano, and proposed in connection with it to show, by other testimony, ** that the same was forfeited by the plaintiff on account of non-compliance with its terms as to payments, and the piano returned; that plaintiff proposed, afterward, to purchase another piano. of defendant, and urged defendant, in the event of such purchase, to allow him seventy dollars to apply on such purchase, when made; that in pursuance-thereof said note was drawn up; and that nothing passed to the defendant for said seventy dollars except what was paid on said contract;” which offer was refused and the testimony excluded:
    
      Held, That if there was any thing in said contract, and the facts proposed to he shown in connection with it, which would materially change the nature of the obligation created by the note and the other evidence introduced, or which would constitute a defense to the action, or any part of it, the rejection thereof was error.
    
      Held further, That the evidence so offered could have had no such effect, and the defendant was not injured by its exclusion.
    
      Heard May 10.
    
    
      Decided July 7.
    
    Error to Wayne Circuit, to which this cause was brought by certiorari to a justice of the peace, to test the correctness of his rulings excluding certain evidence offered by the defendant. The judgment in the justice’s court was for plaintiff, which was reversed by the circuit court. The ■facts upon which the questions decided arise are sufficiently set forth in the opinion.
    
      Levi L. Barbour, for plaintiff in error.
    The justice was correct in admitting the note to be read in evidence under the pleading. Even if it were a note payable in specific articles, it might be declared on as a promissory note, set forth according to its terms, and the recital held a sufficient allegation of consideration. — Jerome v. Whiting, 7 Johns., 321; Saxton v. Johnson, 10 id., 418; Walrad v. Petrie, 4 Wend., 575; Odiorne v. Odiorne, 5 N. H., 315; the principle and cases cited with approval in Kean v. Mitchell, 13 Mich., 207. In such case it might have been admitted under the common counts to prove consideration. — Crandal v. Bradley, 7. Wend., 311.
    
    This is, however, a promissory note; has all the requisites ; is payable in money, at a time certain, and to a payee named; and there is no promise to pay it in any other way; no agreement, except inferentially, to sell a piano and take this note in part payment. The clause at the bottom is mere surplusage. At most it gives to the payee a privilege of applying' it in a certain way, and which he might waive if he saw fit. — Hodges v. Shuler, 22 N. Y., 114, and 24 Barb., 68; Hosstatter v. Wilson, 36 Barb., 307.
    
    The testimony put in by the defendant substantiates this theory, and corresponds exactly with the wording of the note, i. e., it was to be paid in money, and if the plaintiff should want a piano he was to buy of the defendant. “ This note is to be valid as part pay for a piano,” — not valid only, — not payable in a piano. This indicates plainly and only that the plaintiff might use it for that purpose. The justice was correct in refusing to permit the contract to be read in evidence. It was not contemporaneous with the note, not referred to in it, and did not bear any marks which would have indicated that there was the remotest connection between them. The contract did not, in itself, show any relevancy to the note. When last offered, in connection with the proposition of the defendant, to show certain facts, the contract was not rendered more admissible than before. No new proposition was made in connection with it, except that it had been forfeited. But it had already been shown by defendant’s witness that it was not forfeited, but abandoned by mutual consent.
    But, if it be. admitted that the justice did err in refusing to admit the contract, at any time when offered, the judgment should not have been reversed, unless the defendant was injured by such error. By the contract, which is now before the court, it appears, that though all the facts had been shown as the defendant claimed, yet the conclusion of law which was supposed, would not have'followed, viz: that upon the forfeiture of the contract, any agreement by the parties, concerning the one hundred dollars paid thereon, would have been without consideration and a mere gratuity. The usual clause, providing that, upon default, any sum which, may have been paid shall be forfeited, or considered as paid for the use or rental of the instrument, is omitted in this contract. It does not result from a failure to comply with the provisions of a contract not containing any forfeiting clause, that the party in default loses whatever he may have paid or done upon it, when such acts or payments have been to the material advantage of the other party, and when it is not shown that he has suffered any loss by the failure to' complete. There is no reason why the same rule of law should not be applied to this class of cases as to the converse. — See Clark v. Moore, 3 Mich., 55.
    
    The piano was returned and received by Whitney; no evidence of any demand on Preston to complete his contract: no evidence of any loss by Whitney arising from Preston’s failure to complete. Before the note was given, Preston had a good claim against Whitney for some portion of this one hundred dollars; and such claim was sufficient consideration for the note. From the existence of such a state of facts it follows that defendant woxxld have been ixi no better condition with the contract in evidence than without it.
    
      Levi T. Griffin, for defendant in error.
    The instrument declared on in this cause is not a promissory note. Effect must be given to the latter sentence of the instrument. It is placed there as an express qualification of the instrument, for the very purpose of stripping it of the character of a promissory note. If there is uncertainty as to its construction, evidence of the surrounding circumstances are admissible to aid the mind in the determination of that question. If the instrument is not a promissory note, a refusal to comply with its terms must be shown before an action accrues to plaintiff.
    
      At all events, the contract was admissible as bearing upon the question of consideration. — Bowker v. Johnson, 17 Mich., 42. If the contract was forfeited, plaintiff in error had lost the amount of money paid upon it. — Haynes v. Hart, Barb., 59. It was intended, however, by the defendant, to waive that forfeiture so far as to allow plaintiff the amount in the purchase of another piano.
   Ohristiancy, J.

The instrument, upon which Preston sought to recover before the justice, was in the following words:

“ $70. Detroit, Nov. 25th, 1869.

“On demand after date, I promise to pay to the order of M. Preston, seventy sollars, value received, with c (ten erased)’ 7 per cent, interest.

“This note is to be valid as part-pay for a piano-forte of me at retail price. C. J. Whitney.”

Prima facie and without any explanatory evidence •aliunde, we think this instrument must be regarded as a promissory note for the payment of money, with the option to the payee to apply it as part-payment on the purchase ■of a piano of the maker, at retail price. The note itself, independent of the memorandum at the. foot, is clearly a promissory note in the ordinary form, for payment in money. ‘The memorandum contains nothing repugnant to, or inconsistent with, this promise. It does not declare that the note is to be valid only as part-payment for a piano, nor declare that it shall be payable only in that way. How far it "was legally competent to explain the intent of this memorandum by evidence aliunde, we need not decide. Admitting such evidence to be entirely competent, the only evidence actually introduced for the purpose of such explanation, was the testimony of Preston, who was called as a witness by the defendant, and whose testimony tended tó show that the real intention of the instrument and of the parties, was substantially in accordance with the construction which we have derived from the instrument itself. From this evidence, it appears that the note was given for money due Preston, which he had paid to defendant on a piano, under an agreement to purchase, which agreement was in writing, and identified by the witness when shown to him in court, on which he had paid one hundred dollars; that he had had the piano three months, and that defendant had deducted thirty dollars for the use of the piano, and had given this note for the balance, the piano having been returned to, and sold by, defendant;' that when the note was made, it was understood between the parties that if Preston should want to buy a piano he should buy it of defendant, but that he was not bound to do so, or to lose the value of the note if he did not choose to take a piano; that plaintiff had not made a demand on the defendant, or applied to him in any way, to have this note or the amount of it applied on the purchase of a piano. .

The defendant introduced no evidence tending to show that the consideration of the note, or the understanding of the parties, was other than that above stated;' and offered no such evidence except that connected with, and as a part of, his offer to introduce the written contract, and to prove its forfeiture. But he offered the written contract in reference to sale of the piano mentioned by plaintiff in his testimony, and proposed, in connection with it, to show by the witness and other testimony, that the same was forfeited Toy the plaintiff on account of non-compliance with its terms as to payments, and the piano returned; that plaintiff proposed, afterward, to purchase another piano of defendant, and urged defendant in the event of such purchase to allow him seventy dollars to apply on such purchase when made, and that, in pursuance thereof, this note was drawn up, and that nothing passed to the defendant for said seventy dollars, except what was paid on said contract.

The justice refused this offer; and if there was anything in the contract, and the facts proposed to be shown in connection with it, which would materially change the nature of the obligation created by the note and the other evidence introduced, or which would constitute a defense to the action or any part of it, then the justice erred, and the circuit court did right in reversing the judgment; but if the evidence offered could have had no such effect, then the defendant has not been injured aud the justice’s judgment should be affirmed.

It is important to look to the nature of the contract itself, a copy of which is set out, as the whole question raised by the proposed evidence depends upon the question of its forfeiture, and the effect to be given to such forfeiture if any. The contract is in the words:

“Mr. C. J. Whitney hereby agrees to sell the following described property, to wit: One piano-forte, manufactured by the New York Union Company, New York, No. 7522, to Marvin Preston, of the city of Detroit, state of Michigan, who agrees to take the same upon the following conditions; the said Preston to pay therefor three hundred and fifty dollars, as follows: Twenty-five dollars on the delivery of this agreement, the receipt of which is hereby acknowledged; and the sum of twenty-five dollars every thirty days thereafter, until the first day of September, 1870, when the full sum of three hundred and fifty dollars, with interest as above named, shall be paid; it being expressly understood that the said piano-forte remain the property of said Whitney, until the full payment as herein agreed shall be paid, and that it shall remain at 210 Second street, in Detroit, unless the written assent of said Whitney is given to move the same. In case the said Preston fails to make any payment as specified, at, and from, the time of such failure, said Whitney shall be entitled to the possession of said piano, and said agreement to sell said instrument shall become void. Witness our hands this first day of July, 1869.” (Signed by respective parties.)

The first payment and three subsequent payments of twenty-five dollars each had been made upon this contract, and in the present aspect of this case it must be admitted that Preston then failed to make the fifth payment called for, within the time specified, and that the agreement to sell became void, or rather that it was terminated according to one of its own provisions. It is obvious that this agreement is one for a conditional sale only, the property remaining in the vendor, as owner, until paid for; that the property never passed to the vendee; and while it is expressly provided that, for non-payment of any one of the several installments, Whitney might take possession and said agreement to sell should become void, no provision is made for the forfeiture by Preston, or the retention by Whitney, of' any sum or any portion of the sum which might have been paid upon it before forfeiture. From the time of the taking of possession, then, the agreement for the sale may be treated as void, or more properly as terminated. The defendant, having received one hundred dollars of plaintiff’s money, paid only in consideration of the proposed purchase, and having taken back the property which constituted the consideration, and having terminated the contract upon which it was paid, has so much of the plaintiff’s money in his hands, for which he should account upon just and equitable principles. He would doubtless have the right to deduct from the amount a fair compensation for the use of the piano during the period it remained in the plaintiff’s possession (or perhaps, at his option, the interest of its price for that period), as well as for any reduction in value from injury beyond that arising from its legitimate use (of which there appears to have been none in this case), and for any incidental expenses in regaining possession (which, however, in this case, were shown to have been paid by plaintiff). But he would have no right, under the terms of this agreement, to claim any forfeiture of all the money which might have been paid, beyond such reasonable compensation; for, as to such excess, he has given, and the plaintiff has received, no equivalent or consideration. The defendant, therefore, after taking back the property, being liable for the excess to the plaintiff, and it appearing from the evidence that thirty dollars was deducted from the one hundred paid, for the use of the piano, and no evidence having been given or offered, to show that the deduction of thirty dollars was made for any other purpose than the compensation above alluded to, or that the defendant was justly entitled to any thing more, the proposed evidence, if given, would not have changed the legal effect of the note, nor constituted any defense to the- action.

Whether it would be competent to provide in such a contract for the forfeiture of all the several installments which might have been paid prior to default, or whether such a provision would be treated as a penalty, according to the principles which distinguish penalties from stipulated damages, is a question upon which we express no opinion.

There was no error in the proceedings before the justice, which could operate to the prejudice of the defendant. The judgment of the circuit court must be reversed and that of the justice affirmed. And the plaintiff in error must recover his costs in all the courts.

The other Justices concurred.  