Marine Midland Bank-Eastern National Association v. Danker, 48 N.Y.2d 823 (1979)
Parol evidence is inadmissible to prove a condition precedent to the legal effectiveness of a written agreement if the condition contradicts the express terms of the agreement, especially in the context of a negotiable instrument with an explicit waiver of defenses.
Summary
The New York Court of Appeals held that parol evidence was inadmissible to demonstrate that the defendants, who signed a promissory note as makers, were not intended to be personally liable, because such evidence would contradict the unqualified terms of the note and its explicit waiver of any defenses. The court affirmed the order of the Appellate Division, granting summary judgment to the plaintiff bank.
Facts
The defendants signed a promissory note as makers. The note contained an explicit waiver of “the right to interpose any defense, set-off or counterclaim whatsoever.” The bank, Marine Midland Bank-Eastern National Association, sought to enforce the note against the defendants personally. The defendants claimed there was an oral agreement that they would not be personally liable on the note, and attempted to introduce parol evidence to support this claim.
Procedural History
The plaintiff bank moved for summary judgment to enforce the promissory note. The defendants opposed, arguing the existence of a prior oral agreement. The lower court denied the motion. The Appellate Division reversed, granting summary judgment to the plaintiff. The defendants appealed to the New York Court of Appeals.
Issue(s)
Whether parol evidence is admissible to prove a condition precedent (an oral agreement) to the legal effectiveness of a promissory note, where the condition contradicts the express terms of the note, including a waiver of defenses.
Holding
No, because the alleged condition precedent (that the defendants would not be personally liable) was inconsistent with the unqualified form of the negotiable instrument and its explicit waiver of defenses.
Court’s Reasoning
The Court of Appeals reasoned that while parol evidence can be admissible to prove a condition precedent to a written agreement, it is not admissible if the condition contradicts the express terms of the agreement. The court cited Hicks v Bush, 10 NY2d 488, 491. In this case, the defendants’ claim that they were not to be held personally liable directly contradicted their role as makers of the note and the explicit waiver of any defenses. The court emphasized the importance of the written terms of the negotiable instrument. The court stated, “The allegedly unexpressed condition to the promissory note — that defendants, despite their having signed as makers of the note, were not to be held personally liable — was clearly inconsistent with not only the unqualified form of this negotiable instrument, but with its explicit waiver of ‘the right to interpose any defense, set-off or counterclaim whatsoever’ as well”. The court distinguished this situation from cases where the condition precedent does not directly contradict the written terms, thus upholding the integrity and reliability of written contracts, especially in commercial transactions involving negotiable instruments.