¶1We overrule the defendant's demurrers to the eleventh and twelfth counts of plaintiff's amended declaration, because in our opinion said counts sufficiently set out a legal cause of action.
¶2Plaintiff's demurrer to defendant's first amended plea is sustained upon the ground that even conceding that the defendant had the right to have the note renewed, yet he made no effort to demand or procure a renewal, as disclosed by the pleadings.
¶3Plaintiff's demurrer to defendant's second amended plea is sustained, because the new contract set up by the defendant wasnudum pactum, — void for want of consideration.
¶4Pursuant to the aforesaid judgment the defendant filed his amended pleas, and on February 4, 1908, the trial of the cause proceeded before Associate Judges SPRUANCE and BOYCE.
¶5BOYCE, J., charging the jury:
¶6Gentlemen of the jury: — Edward W. Pyle seeks by this action to recover from Edward H. Gallaher the sum of $8,678.37, the balance of the debt and interest alleged to be due upon a certain promissory note, in words and figures, as follows:
¶7"$7,600.00 Wilmington, Del., July 10, 1902.
¶8"One year after date I promise to pay to the order of Edward W. Pyle, at the Central National Bank of Wilmington, seventy-six hundred dollars, with interest at the rate of five per centum per annum, without defalcation. *418
¶9Value received.
¶10"Provided, that if the said Edward H. Gallaher, shall pay to the said Edward W. Pyle, on account of said note, at least one-fourth of his interest in the net profits of the business of `Gallaher and Pyle, Incorporated' during the year this note has to run, said Edward W. Pyle is to renew said note from year to year upon like conditions until the debt represented by said note be fully paid. The said Edward H. Gallaher has deposited with the said Edward W. Pyle, as collateral security for the payment of the debt represented by this note or by any note given in renewal thereof, 149 shares of the Capital Stock of `Gallaher and Pyle, Incorporated.'
¶11Edward H. Gallaher."
¶12There is endorsed on the margin of said note the following: "I agree to the conditions named in this note. Edward W. Pyle."
¶13It is admitted that the defendant has made the following payments on said note: July 31, 1903, $304.00, which it was agreed between the parties should be in full of the interest for one year at a reduced rate; September 6, 1904, $304.00; and July 11, 1906, $354.00.
¶14The plaintiff and the defendant, the only persons called to testify before you, have each detailed the circumstances under which the note was given by the one to the other. Briefly, the uncontroverted evidence is that the parties agreed in the month of June, A.D. 1902, to engage in the shoe business in this City. The plaintiff was to furnish the amount of money necessary to buy out the store and stock of Hayes and Company, and the defendant was to give his experience and personal attention to the management of the business. The defendant, acting for both parties, and with the money furnished by the plaintiff, bought the stock and business of Hayes and Company, paying them therefor nearly $19,000.00. Gallaher and Pyle went into business about the first of July, A.D. 1903. Pyle's share and interest in the stock and business was to be sixty per cent, thereof. Gallaher's share and interest was to be the remaining forty per cent. thereof. Pyle was to receive twenty-five dollars and Gallaher was to receive *419 thirty-five dollars, each per week as salary. They were to share in the net profits of the business in proportion to their respective holdings therein. It is conceded that the parties subsequently incorporated the business under the name and style of Gallaher and Pyle, and that having procured a certificate of incorporation, they organized, on the 18th day of July, 1902, whereupon the stock and business were transferred to the corporation. And that in a few days Gallaher delivered to Pyle the said note, sued upon in this action. It is admitted that 149 shares of the capital stock of said corporation were, at the par value of $50, issued to the defendant, and that three shares of said stock were issued to Mrs. Gallaher, the wife of the defendant; and that the 149 shares of stock issued to the defendant were assigned to said Pyle as collateral security for the payment of the said note, according to the terms thereof.
¶15Counsel for the defendant, by certain of his prayers presented to the Court, has requested the Court to give you certain instructions touching an original alleged partnership entered into between the parties to this action for the purpose of engaging in said shoe business. And he contends that the said alleged partnership was of such a character as that Pyle, in consideration thereof, gave to Gallaher forty per cent. of thecorpus of the stock and property, admittedly bought with and paid for by the money of the said Pyle. And that when the said Gallaher gave the said note to Pyle, he gave it without any consideration, it being contended that the said Gallaher was at the time the owner, under the alleged partnership agreement, of forty per cent. of the said stock and business of Gallaher and Pyle, and for which the plaintiff claims the note was given. The evidence adduced in this case does not warrant the Court in giving you the instructions requested, and we, therefore, decline to charge you as requested by his first, second and third prayers. His fourth prayer. "That the principal and interest on the note together constitute one sum due upon the note, and any payment thereon whether applied to meet the interest or to meet the principal, is, in either event, *420 a partial payment on account of the note;" and his fifth prayer, "That the interest of a stock-holder in the net profits of a corporation means his dividends declared and paid by the corporation on his shares of stock; that a shareholder in a corporation has no property interest in the profits of the business carried on by the corporation until a dividend has been declared out of such profits," — are substantially correct.
¶16A promissory note, such as sued upon in this action, although the proviso annexed thereto destroys its negotiability, purports a valuable consideration. But the consideration may, as between the original parties to the note, be attacked. And if a total failure of consideration be shown as between them, a recovery cannot be had upon the note. And in this case you are to determine from all the evidence whether or not the note given by Gallaher to Pyle was given to secure the re-payment of the money advanced by Pyle to Gallaher to purchase the said forty per cent. share and interest in the said business of Gallaher and Pyle. If you so find, you may then, and should, dismiss the question of consideration for the note from your minds. If, however, you find that there was, in fact, no consideration given or received for the note, the plaintiff will not be entitled to a recovery.
¶17Counsel for the plaintiff has presented several prayers to the Court. As to them we think it sufficient to say that if you find there was a valuable consideration given for the note, then the legal effect of the proviso, annexed to the note, upon Gallaher's liability on the note, so far as you are concerned with it, was, under the terms therein mentioned, to secure to Gallaher a renewal of said note by Pyle, from year to year, until the debt represented by the note should be fully paid. And the renewal of the note by Pyle was conditioned upon the payment by Gallaher to Pyle on account of said note, at least one-fourth of his interest in the net profits of the business of Gallaher and Pyle, incorporated, during the year the said note had to run. If you find that Gallaher gave the note to secure the payment of $7600.00, as claimed by the plaintiff, and that Gallaher failed to conform to the terms *421 upon which the note was to be renewed, Pyle in that event was not legally bound to renew the note, and might in his discretion institute legal proceedings for the recovery of the amount secured by the note at the end of the year after the note was given. The uncontradicted evidence shows that the terms of the proviso which relate to the renewal of the note were not complied with, and not having been complied with, Gallaher forfeited his right to have the note renewed. The only way to renew a note is by making and tendering a new note for the old. There is a total absence of any proof on the part of Gallaher that he ever made or tendered a renewal note to Pyle for the first note given, sued upon in this action; or that Pyle ever in any manner waived the making and tendering of such note by Gallaher.
¶18It is claimed by the defendant that Pyle has Gallaher's stock — meaning that Pyle is the owner of the stock which was issued to Gallaher. This is not in accordance with the evidence, which is that Pyle holds said stock only as collateral security for the payment of the note sued on. Pyle's right in said stock is therefore merely to have the value of said stock applied to the payment of the note.
¶19The chief question for your consideration and determination is whether, under the evidence produced, Gallaher made and delivered the said note to Pyle for a valuable consideration — that is, upon the consideration and for the purpose of securing the repayment of $7600, which Pyle claims he advanced to Gallaher to enable him to have the said forty per cent. share or interest in said business. If you so find, your verdict should be for the plaintiff for the balance which you may find due upon said note, after the proper allowance of the payments made thereon by Gallaher.
¶20If you find there was no valuable consideration given for the note, your verdict should be for the defendant.
¶21Verdict for plaintiff for $8,677.84.