Jerman & Flynn, of Phoenix, for appellant.
Frank W. Beer and Curtis E. Weland, of Phoenix, for appellee.
Phelps, Justice. La Prade, C. J., and Udall, Stanford and De Concini, JJ., concur.
[69 Ariz. 316] This cause of action arises out of the dissolution of a partnership, the membership of which consisted of Joseph A. Bridges, appellant, Jaro J. Pejsa, appellee, M. B. Morgan, Earl Davis and Frank Walters.
The facts are that the partnership agreement was in writing and was executed on February 1, 1945. It provided in so far as material here: that it was to be operated under the name of J. A. Bridges, Painting Contractors; that it was created for the purpose of engaging in contracting [69 Ariz. 317] for and doing painting of every kind and character. The partnership operated in several states including Arizona and had its principal place of business in Phoenix. The
volume of business done by the partnership and its successor in interest ran into something in excess of $ 300,000 during the year 1945. On June 30, 1945, said partners entered into a written agreement dissolving the partnership. By this agreement appellant purchased the interest of all the other partners agreeing to pay to the appellee for his interest the sum of $ 3,000; to M. B. Morgan, $ 2,000; to Frank L. Walters the sum of $ 1, and to Earl L. Davis the sum of $ 1, in consideration of which the partners agreed to and did in said instrument, assign, transfer, and set over unto appellant herein, all the right, title, interest, claims and demands of whatever kind and character they had in and to the property and assets of the partnership and the appellant herein assumed and agreed to pay the liabilities of the partnership on account of all partnership activities with certain exceptions which are here immaterial for the reason that they were not raised by the pleadings.
Appellee acknowledged receipt of $ 100 which he applied on the indebtedness and brought this action against appellant on the contract to recover the balance of $ 2,900.
Appellant admitted the execution of the written agreement dissolving the partnership but says that it was wholly without consideration and therefore void, and by way of cross complaint against appellee alleges that under the original partnership agreement the parties were to receive certain profits and to assume a proportionate share of the losses. He further claims that during the period the partnership was in existence it sustained a loss of at least $ 39,000 which appellant paid and at the time of the execution of the dissolution agreement appellee had nothing to assign but on the other hand was indebted to appellant in the sum of $ 7,419.17 for which appellant sought judgment on a cross complaint. Appellee in his answer to the cross complaint, denied any indebtedness to appellant. The cause was tried to the court sitting without a jury and judgment was entered for appellee on the complaint in the sum of $ 2,900 and costs. From this judgment and the order denying appellant's motion for a new trial, an appeal is prosecuted to this court.
Appellant has assigned as error the ruling of the trial court in denying him the right to prove by parol evidence a total failure of consideration for the written agreement dissolving the partnership and in rendering judgment for appellee.
We have held in Boyle v. Webb,54 Ariz. 188, 94 P.2d 642, and in Yuma National Bank v. Balsz,28 Ariz. 336, 237 P. 198 (and we believe it to be the universal rule) that in a suit on a promissory note parol evidence is admissible to prove a failure of consideration or that the note was not delivered to the payee with the [69 Ariz. 318] intention ...