This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the written contract recites a consideration, the question whether such recital of a consideration is conclusive or whether it may be rebutted by showing that there was in fact no consideration, is a question upon some phases of which there is a conflict of authority. The parol evidence rule1 prevents the parties to a written contract from introducing evidence of prior or contemporaneous oral negotiations to contradict the contractual provisions of such contract.2 Accordingly, in cases in which the consideration is a promise, the parties to a written contract can not contradict the terms thereof by showing that such promise was understood by the parties as a mere form and that it was not intended to be an oral contractual provision. On the other hand, the parol evidence rule does not prevent the introduction of evidence which tends to contradict statements of fact in a written contract;3 and, accordingly, if the contract contains a receipt for the consideration, such receipt is a recital of fact and may be contradicted.4 If rights have been acquired under such instrument by the person by whom such money has been paid according to the recital in the receipt clause, such receipt may be contradicted for the purpose of compelling him to pay such part of the consideration as, in spite of the provisions of such receipt, remains unpaid.5 If the question involved is the amount to be recovered in quasi-contract for total failure of consideration, oral evidence is admissible to contradict the recital of the amount paid as consideration and to show the true amount.6
14 S. W. 700; Gulf, etc., Ry. Co. v. Wright, 1 Tex. Civ. App. 402, 21 S. W. 80; Ash v. Beck (Tex. Civ. App.), 68 S. W. 53.
2Vickrey v. Maier, 164 Cal. 384, 129 Ac. 273; Vickrey v. Maier, 164 Cal. 774, 129 Ac. 276; Dackich v. Barich, 37 Mont. 490, 97 Ac. 931.
4 Anderson v. Wickliffe, - Cal. - , 172 Ac. 381.
5 Lane v. Richards, 119 la. 24, 91 N. W. 786.
6 People's State Bank v. Dryden, 91 Kan. 216, 137 Ac. 928.
1 Wheeler v. Hawkins, 101 Ind. 486; Tilden v. Smith, 24 S. D. 576, 124 N. W. 841.
2 Wheeler v. Hawkins, 101 Ind. 486; Tilden v. Smith, 24 S. D. 576, 124 N. W. 841.
3 Wheeler v. Hawkins, 101 Ind. 486; Tilden v. Smith, 24 S. D. 576, 124 N. W. 841.
1 See ch. LXIX. 1 See ch. LXIX.
If no rights have been acquired under the contract by the party by whom such payment has been made, according to the terms of the receipt clause, and such party is the one who seeks to enforce the contract, there is a conflict of authority as to the right of the adversary party to contradict such receipt for the purpose of rendering such inoperative, where a specific consideration is recited. In some jurisdictions such recital of payment of consideration may be contradicted for the purpose of showing that no consideration existed in fact.7 An option which purports to be given in consideration of a certain sum, which sum is never in fact paid, is not given upon valuable consideration.8 In other jurisdictions it is held that the party who has given such receipt as a part of such contract, is estopped to contradict it for the purpose of rendering invalid the contract of which it is a part.9 This result is reached by regarding the recital of a consideration as equivalent to a covenant to pay such named consideration if the fact of payment is not true.10 It has been said that the recital in a contract of the fact that the promisor had adopted the promisee, estops the executor of of this rule if the contract taken as a whole and construed in the light of the surrounding circumstances shows the existence of a consideration.17 A note which is given to a church as a subscription will be presumed to be upon consideration, although it recites that such promise is made "as a bequest"18
3 See ch. LXIX.
4 See ch. LXIX.
5 See eh. LXIX.
6 Queensborough Land Co. v. Cazeaux, 136 La. 724, L. R. A. 191GB, 1201, 67 So. 641.
7Royer v. Kelly, 174 Cal. 70, 161 Ac. 1148; Koppitz-Melchers Brewing Co. v. Behm, 130 Mich. 649, 90 N. W. 676; Stigler v. Jaap, 83 Miss. 351, 35 So.
948; Fargis v. Walton, 107 N. Y. 398, 14 N. E. 303.
8Stigler v. Jaap, 83 Miss. 351, 35 So. 948.
10 Lawrence v. McCalmont, 43 U. S. (2 How.) 426, 11 L. ed. 326; Southern Bell Telephone and Telegraph Co. v. Harris, 117 Qa. 1001, 44 S. E. 885; Kenthe promisor from denying the fact of such adoption; and, accordingly, such relationship has been said to amount to a sufficient consideration.11
The rule that a negotiable instrument imports consideration is prima facie only, at least where the consideration is recited, if at all, in general terms. If it is shown that there is no consideration, in fact, a negotiable instrument which is not in the hands of a bona fide holder for value is unenforceable,13 even if it recites a consideration.14 Consideration is said not to be imported by contracts which, while negotiable in form, are not negotiable in law, such as the promissory note of an imbecile.15 In some jurisdictions, however it is said that in negotiable instruments there is a presumption of consideration which excuses the holder from introducing evidence of consideration, but which leaves the burden of proof upon the holder if consideration is denied and evidence tending to show want of consideration has been offered.16
Ambiguous provisions, which are not in themselves sufficient as considerations and which tend to show that the promise was gratuitous, do not show that there is no consideration wiithin the meaning drick v. Mutual Benefit Life Ins. Co., 124 N. Car. 315, 70 Am. St. Rep. 592, 32 S. E. 728; Watkins v. Robertson, 105 Va. 269, 115 Am. St. Rep. 880, 5 L. R. A. (N.S.) 1194, 54 S. E. 33.
11 Dawley v. Dawley's Estate, 60 Colo. 73, 152 Pac. 1171. (This statement assumes the sufficiency of a good consideration. See Sec. 516 et seq.
12 Huntington v. Shute, 180 Mass. 371, 91 Am. St. Rep. 309, 02 N. E. 380; Kramer v. Kramer, 181 N. Y. 477, 74 N. E. 474.
13 England. Holliday v. Atkinson, 5 Barn. & Cr. 501.
California. Williams v. Hasshagen, 166 Cal. 386, 137 Pac. 9.
Illinois. Heimann v. Hainz, 65 111. App. 316.
Iowa. Meginnes v. McChesney, 179 la. 563, 160 N. W. 50 [sub nomine, Meginnes v. Copeland, L. R. A. 1917E, 1060].
Massachusetts. Mason v. Gardiner, 186 Mass. 515, 71 N. E. 952.
Michigan. Cawthorpe v. Clark, 173 Mich. 267, 138 X. W. 1075.
14 Taylor v. Weeks, 129 Mich. 233, 88 ST. W. 466; Kramer v. Kramer, 181 N. Y. 477, 74 N. E. 474.
15 Hosier v. Beard, 54 O. S. 398, 56 Am. St. Rep. 720, 35 L. R. A. 161, 43 N. E. 1040.
Contra, Holliday v. Atkinson, 5 Barn. & Cr. 501.
16 Small v. Clewley, 62 Me. 155, 16 Am. Rep. 410; Huntington v. Shute, 180 Mass. 371, 91 Am. St. Rep. 309, 62 N. E. 380. (It was said in this case that while the introduction of the note makes a prima facie case, yet if the question is put in issue, the party relying on the note must satisfy the jury of the existence of consideration "by a fair preponderance of the evidence.") Search v. Miller, 9 Neb. 26, 1 N. W. 975.