pletion or cost of buildings; 128 the establishment of branch offices or

a contractor who had installed a heating and plumbing system for the defendant, inducing the latter to agree to an account stated that he, the contractor, would correct defects existing in the system. FOSTER V. DWIRE (reported herewith) ante, 21. See also note 139, infra.

And so, if there is no intention of performance, fraud may be predicated on a promise by a seller of steam-plow outfits to supply at once any defective or missing parts (Geiser Mfg. Co. v. Lunsford (1911) Tex. Civ. App. 139 S. W. 64); or on a promise to complete an elevator according to plans and specifications, inducing the giving of a note in settlement of a disputed matter (Lockney Farmers' Co-op. Soc. v. Egan (1925) Tex. Civ. App. 275 S. W. 732, affirmed in (1926) Tex., 284 S. W. 937).

128 See note 3, supra, and note 145, infra.

As to representation of cost of manufacture of patented device on sale of rights therein, see note 115, supra.

Representations by contractor that he would complete a building within a certain time, Crossways Apartments Corp. v. Amante (1925) 213 App. Div. 430, 210 N. Y. Supp. 346 (it may be observed that the court does not seem, in this instance, to give proper weight to the allegations in the complaint of a fraudulent intent in making this promise without purpose of performance); representations made by one who obtained an option to purchase certain lots from an improvement company, that buildings which he would construct on the lots would cost a certain sum as shown by certain plans and specifications which he produced, Hight v. Richmond Park Improv. Co. (1918) 47 App. D. C. 518. See also Sweney v. Davidson (1886) 68 Jowa, 386, 27 N. W. 278 (representation as to what a house would cost to build held merely an expression of opinion).

Estimates of this kind as to the probable cost of, or time required in, the construction of buildings and other works, can scarcely be regarded as belonging to the class of cases under consideration, for the reason that they are obviously merely matters of computation or judgment, and not promize or statements that an event will

-

129 McCoy v. Bankers' Trust Co. (1918) Tex. Civ. App. —, 200 S. W. 1138 (representation that trust company would open branch office for handling loans in that section of state, inducing stock subscription; see also note 79, supra); Kny-Scheerer Co. v. Chandler (1903) 2 Ont. Week. Rep. 215 (representation by by wholesale dealer to retailer as to intention of former, which was not then untrue, to establish a branch at a certain place convenient for the latter to obtain supplies); Guarantee & C. Co. v. Mayer (1891) 141 Pa. 511, 21 Atl. 665 (representation that offices would be established immediately in certain cities by a company, inducing subscription to shares of stock in same). See case also under note 79, supra.

130 The general rule applies to

representations by law publishers to one engaged to write a legal article, that he could perform the work in a certain time, Chamberlayne v. American Law Book Co. (1906; C. C.) 148 Fed. 316;

-representation by agent of publisher of law books issued at stated periods, to induce one to subscribe therefor, that the publisher would continue to publish the books so long as another concern published certain of its books, there being no bad faith on the part of the agent or intention to deceive the subscriber, Bigelow v. Barnes (1913) 121 Minn. 148, 45 L.R.A. (N.S.) 203, 140 N. W. 1032;

- representation by salesman inducing contract for purchase of legal encyclopedia, as to the time within which the entire work would be published and delivered, American Law Book Co. v. Fulwiler (1920) Тех. Civ. App. 219 S. W. 881;

Where a sales agent of a law publishing house, in order to induce one to purchase from it a law encyclopedia, represented to the purchaser that it would continue to publish and deliver to him annual supplements for a period of not less than fifteen years, or for so long a time as he lived or continued to practise law, knowing at the

representations or promises regarding notes 181 (cases of the kind being set

time that the company would not be able to issue such supplement, and intending by the statement to deceive the purchaser, who relied thereon, it was held in Edward Thompson Co. v. Sawyers (1921) 111 Tex. 374, 234 S. W. 873, that the case was a proper one for the application of the rule that fraud may be predicated on promises made. without intention of performance, and that the purchaser was entitled to a rescission of the contract and recovery of the payment made, or to damages for the injuries sustained.

131 Cases like Murray v. Beckwith (1868) 48 Ill. 391, on the question as to what constitutes fraud within the negotiable instruments acts, although the fraud alleged consisted in violation of a promise, are not generally included.

If there is no intention of performance, fraud may be predicated on-promise by payee of note, inducing its execution and indorsement, that he would renew it on its maturity, Beaumont Carriage Co. v. Price (1907) -Tex. Civ. App. -, 104 S. W. 499; -promise by lender of money for construction of building that, when the notes therefor matured in sixty days, he would renew them for a period of years, inducing the holder of a vendor's lien on the property to agree to subordinate his lien to a mechanic's lien of such lender, Clem v. Evans (1926) Tex. Civ. App. —, 286 S. W. 273, reversed on other grounds in (1927)-Tex. - A.L.R., 291 S. W. 871; -representation inducing payee of a note to execute a release to the maker, that, on the happening of a certain future event, the latter would, notwithstanding the release, pay the note, Comstock v. Livingston (1912) 210 Mass. 581, 97 N. E. 106;

-

-representation inducing parties to sign notes, that they would be signed by other responsible parties, the person making such representation then knowing that this was not true, and having no intention of procuring the other signatures, City Deposit Bank v. Green (1908) 138 Iowa, 156, 115 N. W. 893;

-promise, inducing execution of contract, that if the promisee would sign the same, the promisor would procure for it an extension of time on a note then due to a bank of which the

out also in other parts of the annotation; 132 the use to which money realpromisor was president and manager, International Land Co. V. Parmer (1909) 58 Tex. Civ. App. 70, 123 S. W. 196.

Fraud may not generally be predicated on statement by seller's agent to maker of note given for purchase price of property, that he (the agent) would secure a reduction in the amount of the note (Virginia-Carolina Chemical Co. v. Cooley (1923) 206 App. Div. 67, 200 N. Y. Supp. 393); or on a promise inducing the giving of a note, to adjust disputed items later (Homewood People's Bank v. Simon (1924) 279 Pa. 118, 123 Atl. 726).

And fraud may not ordinarily be predicated on representations made to an agent to induce him to give notes and execute a mortgage in settlement of his account with his principal, that, if the amount represented by the notes and mortgages were not correct, on examination of the principal's books, he would receive a credit, and would be charged only with the true debt, such a defense to an action to foreclose the mortgage being an effort to vary a written contract by parol and to avoid the consequences of negligence. Dyar v. Walton (1887) 79 Ga. 466, 7 S. E. 220. (The court said that as a case of fraud there was nothing but the making and breaking of the parol agreement, no artifice or device to deceive being shown.)

132 As to notes given as bonus to railroad corporation, see VII. g, supra. As to promises combined with misrepresentations of fact, inducing the execution of note, see V. supra.

Attention is called also to Kennedy v. Spilka (N. Y.) note 26, supra; Overdeer v. Wiley (Ala.) note 32, supra; Thomson v. McLaughlin (Ga.) note 35, supra; Sherman v. Smith (Iowa) note 64, supra; Hansen v. Daniel Hayes Co. (Minn.) note 68 (representation by vendor that it would hold purchasemoney notes).

As to promise of employment to aid in discharging note, see Moore v. Cross (Tex.) note 96, supra.

As to liability on a note given by a husband to his wife on her fraudulent promise to return and live with him, see Kennedy v. Howell (Conn.) note 100, supra.

As to promises to pay, or statements that notes will be paid, see note 101,

supra.

ized from a note would be put; 133 representations that one would indorse a for

note

134

135

See notes 104, 105, 107, supra, as to representations with regard to payment of notes given for insurance.

133 Spielman v. Herskovitz (1922) 78 Ind. App. 131, 134 N. E. 909; Dickinson v. Atkins (1902) 100 Ill. App. 401 (representations by means of which a note was obtained, regarding the use which would be made of the proceeds, viz., that they would be used to pay off taxes and overdue interest upon the maker's mortgage debts).

134 The view has been taken (although subsequent decisions seem to nullify the authority of the case) that, even if there is an intent not to perform the promise, fraud may not be predicated on a representation that, if the plaintiff would sell goods to a third party, he, the defendant, would indorse such party's note for the purchase price. Gallager V. Brunel (1826) 6 Cow. (N. Y.) 346.

135 The general rule that fraud may not be predicated on promises or representations as to future events has been applied or recognized as applicable with regard to—

w

- representation to maker of notes given for a scholarship in a university, that he would not be required to pay the principal of the note, but only the interest thereon, Beaver v. Hartsville University (1870) 34 Ind. 245; Hartsville University v. Hamilton (1870) 34 Ind. 506;

-oral representation or agreement inducing one to sign a note as surety, that the signatures of certain other parties as sureties would be procured, that the note was desired merely for use as collateral, and the surety would never have to pay the same, Klemm v. Weil (1922) 194 Iowa, 1073, 190 N. W. 388;

oral agreement with the makers of a note, that the payee would look entirely to the mortgage security for payment of the note, and not hold the makers personally liable thereon, Smith v. Breeding (1923) 196 Iowa, 670, 195 N. W. 208 (the court said that a conditional delivery of the note was neither pleaded nor proved, and that the claim was simply an attempt to vary and contradict the terms of the written instrument by proof of a contemporane

ous parol agreement; and that the alleged breach of the agreement did not constitute fraud in the inception of the note);

promise inducing one to sign a note, that the same should be regarded merely as a matter of form, and that he should not be bound according to the terms of the note (see Grocers' Bank v. Murphy (1881) 9 Daly (N. Y.) 510; the question is here considered from the standpoint of admissibility of evidence, the court apparently assuming that fraud could not be predicated on such a representation);

parol agreement that a note was a mere matter of form, and was not to be an obligation of the maker, as it purported to be, for a definite sum of money, but merely an undertaking to furnish the payee with a satisfactory horse in place of one which the latter had returned, the transaction involving an exchange of horses, Ziegler v. McFarland (1892) 147 Pa. 607, 23 Atl. 1045;

agreement by a bank that the defendant would not be required to pay a note given by him to it, but that, if he would sign the note for a short time until a third person went through bankruptcy proceedings and obtained a discharge, the bank would then take a note signed by such third person alone, and release the defendant from liability, First State Bank v. Kelly (1915) 30 N. D. 84, 152 N. W. 125, Ann. Cas. 1917D, 1044;

v. Spangler (1922) 121 Wash. 267, 209 Pac. 521;

- representations inducing one to sign a note as surety for the initial payment of land, to the effect that the property would be sold in a very short time at a profit in which the representee was to share, Spence v. Geilfuss (1895) 89 Wis. 499, 62 N. W. 529;

-representation or promise by payee to signer of note that he would be free after the date it was payable, the contention of the signer being that he executed the instrument merely as surety, and that his obligation was then to terminate, Security Sav. Bank v. Raker (1926) S. D.. 208 S. W. 786.

In Kulenkamp v. Groff (1888) 71 Mich. 675, 1 L.R.A. 594, 15 Am. St. Rep. 283, 40 N. W. 57, in which it was held that a signer of a note could not, under a claim of fraud in procuring it, show that his signature was obtained by an oral agreement that he was not to be liable upon it, the court said: "As far as the claim of fraud is concerned, it is not tenable. The signature of Groff was not procured by false pretenses, by the statement of any fact as existing which did not exist, but upon false promises which have not been performed. It is no more nor less than the nonperformance of an oral agreement made at the time the note was signed, and which oral agreement was totally at variance with the terms of the written contract as set forth in the note. This cannot be considered such a fraud as would nullify the note. If proof of this unperformed agreement not to hold Groff upon this note, in plain contradiction to its terms, can be admitted to destroy his liability upon it, then any unperformed oral agreement made at the time a written contract or note is executed may be admitted, under a claim of fraud, to defeat the terms and purpose of the written agreement."

And in Johnson v. Benham (1925) 163 Minn. 31, 203 N. W. 444, an action on promissory notes, it was held that the answer was demurrable, which admitted the execution of the notes and their nonpayment, and attempted to set up a contemporaneous parol agreement making them due and payable only when a sufficient net profit was produced from the sale of certain land, but which alleged neither mutual mistake in not incorporating the parol

agreement into the notes, nor fraud practised by the payee, nor inequitable conduct inducing the defendant to sign the note in reliance on the oral agreement.

It was held, also, in People's Bank v. Baker (1917) Mo. App. -, 193 S. W. 632, that an indorser on a note could not avoid liability on the ground of fraud consisting merely in an alleged promise of the indorsee that he (the indorser) should not be held liable on his indorsement, and that the indorsee would record a mortgage securing the note. The court said that, since the indorsement was a written contract, which the indorser could not be permitted to vary, contradict, or annul by parol evidence, he could not be allowed to accomplish the same result by designating the same as a procurement of the indorsement by fraud or fraudulent representation; that, when the court instructs in such a case, as it should, that the indorsement is binding on the indorser, this settles the matter. And see, as illustrative, First Nat. Bank v. Henry (1918) Mo. App. —, 202 S. W. 281 (representation that note was not to be paid unless the money was secured through the sale of certain land), on parol evidence rule, apparently assuming rule that fraud cannot be predicated on unperformed promise.

In Jackson v. Chemical Nat. Bank (1898) - Tex. Civ. App. —, 46 S. W. 295, the court applied the general rule that fraud cannot be predicated on a promise to be performed in the future, to an action on a note, where the alleged false representations set up by the maker as a defense were that the cashier of the payee (a bank) represented to the maker that the payee owned large quantities of land which it could not well carry on its books as assets, that he desired notes to the amount of this land, and that the notes would only be used by the payee for the purpose of showing assets of the bank in place of the land, which would be charged off the books, and that the notes would not be put in circulation or used for any other purpose. The court does not discuss the effect of the allegations that these representations were fraudulently made to induce the execution of the note in order that the payee might realize thereon, the promisor at the time knowing that they were false.

It was held in Stevens v. Inch (1916) 98 Kan. 306, 158 Pac. 43, that, to defeat liability on a note because obtained by fraud, the fraud must consist in something else than oral representations and promises that the note need not be paid, or that it should be considered as a mere form, or that it should be paid out of a certain business, and that the makers would not be called on to pay the same. Evidence of the contradictory oral agreement was held inadmissible. The court said: "It does not help the defense to call the statements and promises of Stevens fraudulent. The books teem with cases involving oral promises that notes need not be paid, or are mere memoranda, or will be surrendered without satisfaction, or may be paid out of the profits of a business venture if successful, and need not be paid otherwise. In all such cases the promise is made to induce the maker to sign the note, and if the promise be not kept it works a fraud. The theory of the law is that more fraud would result if all notes were open to qualification and contradiction by parol evidence, than if the door were closed and locked against such evidence."

It may be noted that cases involving the question merely of the admissibility of parol evidence to contradict the terms of a negotiable instrument, and not discussing the question from the standpoint of fraud, where the parol evidence consists in promises that the note is not to be paid or is to be paid in a certain way, indirectly support the doctrine that such future promises do not constitute fraud. Among other cases of this kind, see Commercial Nat. Bank v. Hutchinson Box Board & Paper Co. (1916) 98 Kan. 350; 158 Pac. 44, holding that a parol contract made at the time of or previous to the execution of a negotiable promissory note cannot be pleaded or proved to show that the note was not to be paid at maturity, but was to be extended for a definite period; Van Fossan v. Gibbs (1914) 91 Kan. 866, 139 Pac. 174, holding that an unconditional promise in writing to pay a certain sum of money at a fixed time cannot be defeated by parol evidence of a prior or contemporaneous oral agreement that the obligation was to be paid out of profits of a business to be launched by the use of money for which it was given; Dominion Nat. Bank V. Manning

(1899) 60 Kan. 729, 57 Pac. 949, holding that, in an action by a bank against the maker of a note, parol evidence is inadmissible to prove that it was executed for the purchase of stock in the bank, under an agreement that the transaction should be merely colorable, and that the stock, although issued to the purchaser and retained by the bank as apparent collateral security to the note, should never in reality belong to the maker of the note, nor should he ever be called on to pay the indebtedness represented by it; Thisler v. Mackey (1902) 65 Kan. 464, 70 Pac. 334, holding that, where a promissory note imports on its face an absolute obligation, oral evidence of a contemporaneous agreement to surrender the note without payment is inadmissible; Knote v. Bense (1915) 94 Kan. 294, 146 Pac. 363, holding that oral testimony was inadmissible that a note which, on its face purported to be payable in cash, was not to be so paid, but was to be paid by the delivery of certain property; German American State Bank v. Watson (1917) 99 Kan. 686, 163 Pac. 637, holding that the maker of a note cannot defend an action thereon by showing an oral agreement made at the time of its execution that he should not be held liable; Underwood v. Viles (1920) 106 Kan. 287, 187 Pac. 880, holding that recovery on a note given as payment for shares of stock in a company, which on its face purported to be an absolute and unconditional promise to pay on demand, could not be defeated by evidence of an oral agreement to the effect that the note was to be paid out of the profits of the corporate business, and not otherwise; Naftzger v. Buser (1920) 106 Kan. 115, 186 Pac. 997, holding that, where a note expresses an absolute obligation to pay money, parol evidence is inadmissible to show that the understanding was that the makers were not to be liable thereon except on the happening of a certain contingency, and that the note was a mere memorandum and receipt to cover the terms of an oral agreement; Hangen v. Pinkston (1922) 110 Kan. 463, 204 Pac. 675, holding that a promissory note in the usual form cannot be contradicted by evidence of an oral agreement that it was to be paid only out of the profits of a certain business carried on by the payee.

The above cases, among possibly