Dunn v. Chapman ( 1929 )

The complaint which is the subject of this appeal is as follows:

"AMENDED COMPLAINT "The amended complaint of the above-named plaintiff, by leave of the Court had and obtained, respectfully shows to the Court:

"1. That the plaintiff is a resident and citizen of the county and state aforesaid, and on information and belief he alleges that the defendant H.M. Chapman and J.M. Abbott have been appointed and are now acting as receivers of Liberty Bank, a corporation created and existing under the laws of this State, with its principal place of business at Liberty, in the County and State aforesaid; and on information and belief plaintiff further alleges that G.R. Gilstrap, a former defendant in this action, died intestate at his home in the State of Alabama on the 2nd of July, 1926, after the commencement of this action, leaving surviving him as heirs at law and distributees all the defendants named above, except the receivers, the first named Lizzie Gilstrap being his widow and the others his children, some of whom plaintiff believes are minors but as to which ones he is not informed. The plaintiff further alleges on information and belief that the said G.R. Gilstrap left no estate and there has been no administration.

"2. That on the 5th day of January, 1921, the plaintiff purchased from G.R. Gilstrap a tract of land situated in the County and State aforesaid, containing 58.8 acres, but by a survey thereafter made was found to contain 55.6 acres, and took a deed of conveyance thereto which reference is hereby made recorded in Book III, page 18; and on the same day the plaintiff executed and delivered to the said G.R. Gilstrap his note and a mortgage covering said tract of land in the sum of $8,240.37 to secure the balance of the purchase money due thereon to which reference is also made as shown recorded in Book 33, page 314.

"3. That in order to pay and settle the said mortgage debt to the G.R. Gilstrap the plaintiff procured a loan from the Federal Land Bank in the sum of $1,600.00 and a further loan from defendant Liberty Bank $1,995.42, and in order to secure the payment of said sum the plaintiff on the 16th day of January, 1922, executed and delivered to said Federal Land Bank his note and a mortgage of the said 55.6 acres of land to which reference is hereby made as recorded in Book V.V., page 107, and on the 27th day of February, 1922, executed and delivered to the Liberty Bank his other note and mortgage of the said 55.6 acres of land to which reference is hereby made as shown recorded in Book W.W., page 103, and the sums so obtained from these two banks were used and applied in full payment and satisfaction of the mortgage debt to Gilstrap referred to in Paragraph two hereof, whereupon said Gilstrap canceled the record of said mortgage.

"4. That soon after the execution of the mortgages referred to in the last paragraph above negotiations between the plaintiff and said Gilstrap culminated in an agreement whereby the plaintiff agreed to convey to the said Gilstrap one-half or 27.5 acres of said tract of land upon the promise and agreement that the said Gilstrap would assume and pay one-half of the $1,600 to the Federal Land Bank and all of the $1,995.42 to the Liberty Bank with interest on each of said sums; and in order to carry out their agreement the plaintiff and the said Gilstrap on the 28th day of February, 1922, went to the Liberty Bank, at Liberty, S.C. and after explaining their agreement to C.E. Bush, the cashier of said bank, requested said Bush to prepare a deed which he did and which the plaintiff signed and the same was delivered to the said Gilstrap, which deed conveyed one-half or 27.5 acres of the said tract of land first above referred to, and which deed is recorded in Book LLL, page 203, to which reference is hereby made.

"5. That hereafter, to wit, on the 17th day of February, 1923, the said Gilstrap further incumbered the said tract of 27.5 acres of land by giving to the defendant Liberty Bank a mortgage thereon as appears by the record thereof as shown in Book XX, page 8; and later, to wit, on the 17th day of December, 1923, the said Gilstrap executed and delivered to the said Liberty Bank a deed of conveyance to the said 27.5 acres of land as appears by the record thereof in Book GGG, page 137.

"6. That the said Gilstrap failed to keep and perform his agreement as set forth in the fourth paragraph hereof whereby he promised and agreed to pay and discharge the mortgage debts therein stated, but as plaintiff is informed and believes soon after making the deed conveying the 27.5 acres to the Liberty Bank as set forth in the last paragraph above he left the State and has not at any time paid any part of said debts; on the contrary upon the insistence, and at the instance and request of Liberty Bank, and believing that the same was necessary to protect, release and save the other half of said tract of land from sale under said mortgages the plaintiff paid to said bank the said sum of $1,995.42 with all accrued interest thereon and has each year since 1922 paid to the Federal Land Bank the annual payments due to said bank as each matured with interest thereon, and after final payment had been made to the said Liberty Bank on the $1,995.42 mortgage the cashier of said Bank, C.E. Bush, on December 31, 1925, canceled and marked satisfied the record of said mortgage and delivered to the plaintiff the note which it secured but refused to deliver the said mortgage.

"7. That the defendants H.M. Chapman and J.M. Abbott, as receivers of said Liberty Bank, are in possession of the said 27.5 acres of land and claim to own and hold the same by virtue of the said deed of conveyance of G.R. Gilstrap, but plaintiff alleges that said defendants cannot so hold said land and also retain the use and benefit of the money paid by plaintiff on its mortgage debt; that the deed of conveyance by the plaintiff under the agreement with the defendant Gilstrap amounted in law to a conditional sale of which bank had notice, and the said Gilstrap having failed to perform his said agreement the said deed as well as that of the said Gilstrap to the said bank are null and void; that the plaintiff had such equity in the said 27.5 acres of land as entitled him to redeem and have the said tract of land reconveyed to him or he is entitled to be subrogated to the rights of said bank under said mortgage.

"Wherefore the plaintiff prays:

"First. That he be permitted and allowed to redeem the said tract of 27.5 acres of land and that the defendants, as Receiver, be required to re-convey the same to him.

"Second. Failing in this that the mortgage for $1,995.42 be foreclosed and the plaintiff subrogated to the rights of the bank for the amount of said debt paid by the plaintiff with interest and costs and attorney's fees and that the deeds made by the plaintiff to said Gilstrap and by said Gilstrap to Liberty Bank be declared void and delivered up to be canceled.

"Third. And for such other and further relief as to the Court may seem meet and just."

We next quote a portion of Judge Bonham's order, in which he overrules the demurrer.

"This is an action by James Dunn against Chapman and Abbott as Receivers of Liberty Bank, and the other defendants as the widow and children and heirs at law of G.R. Gilstrap, a former defendant in the case who has died since the commencement of the action. The matter came before me at Pickens at October, 1927, term of Court of Common Pleas on a demurrer to the complaint and decision reserved. * * *

"Defendant, Liberty Bank, demurs to the complaint on the ground that it does not state facts sufficient to constitute a cause of action, because it appears on the face of the complaint that all the transactions complained of were regular and in the ordinary course of business; that Gilstrap, having a deed to the land and being in possession, had a right to give to the Bank a mortgage and had the right to convey the premises to the Bank in payment of the debt, and the Bank had the right to accept the mortgage and deed; that there is no allegation in the complaint of fraud, nor of collusion between Gilstrap and the Bank; that this sale by Dunn to Gilstrap was not a conditional sale, but was a direct sale in fee simple; that plaintiff has no right of subrogation in the premises.

"The case is an interesting one and has engaged my earnest attention and consideration.

"Clearly this is not a conditional sale; it has none of the elements of such sale. A conditional sale is one in which the transfer to title to the buyer, or his retention of it, is made dependent upon the performance of some condition. The term is used in this country most frequently with reference to that class of cases where the seller reserves, or retains the title — though the possession is delivered to the buyer — until some condition is performed, usually the payment of the purchase money. 24 R.C.L., 739.

"Here is no reservation save the contract to pay, which is the necessary incident of every sale. The buyer was given a deed in fee simple, and put in possession of the premises upon his assumption of the mortgage debts; he thus became the absolute owner of the land in fee, and the seller relied upon his promise to pay. There is not here any incident of a conditional sale."

An inspection of the complaint will show that plaintiff relies first on the idea of a conditional sale, or, failing in that, on subrogation. There are no allegations of fraud or collusion on the part of the Liberty Bank. Fraud must be alleged, in order to be invoked in any case.

Mr. Justice Watts, following a long line of decisions in our State and elsewhere, has this to say about pleading fraud in the case of Donaldson v. Temple, 96 S.C. at page 242, 80 S.E., 438:

"`But where the acts set forth in a bill in equity do not themselves constitute fraud, charges that the acts set forth are fraudulent do not present sufficient grounds of equity jurisdiction.' 9 Ency. of P. and P., 695; Van Weel v. Winston,115 U.S. 228 [6 S.Ct., 22, 29 L.Ed., 384].

"`Whether the fraud be alleged in the declaration, complaint or bill, or set up by way of defense in pleas, answer or replication, it is essential that the facts and circumstances which constitute it should be set out clearly, concisely and with sufficient particularity to apprise the opposite party of what he is called upon to answer.' State v. Jaques, 65 S.C. 184,43 S.E., 515; Gem Chemical Co. v. Youngblood, 58 S.C. 56,36 S.E., 437.

"Nowhere in the complaint do we find any general or special allegation of fraud. There was no allegation that the defendant was overreached or deceived. By the allegation of the complaint the defendant was advertised that he would have to answer a cause of action for recklessness, wilfulness, and wantonness, not one for deceit and fraud. We do not think under the pleadings in this case that there was any allegation of fraudulent breach of contract and that being the case no punitive damages could be recovered. Prince v.Insurance Co., 77 S.C. 192, 57 S.E., 766."

In view of the authorities, we do not see how plaintiff can stand on any ground in the complaint save either conditionalsale or subrogation.

His Honor Judge Bonham has very clearly and completely disposed of the position as to conditional sale, and his views thereon are perfectly satisfactory to this Court.

The above quotation from the opinion of Mr. Justice Watts shows very conclusively that no fraud or collusion has been set up in the complaint; and it only remains to consider whether or not a proper case of subrogation had been set out in the complaint.

Under the clearly established law in this State, subrogation cannot be set up by one who has simply paid his own note, as was done by the plaintiff in the case at bar. Plaintiff was primarily liable, and no amount of argument can get us away from that fact. There is no escaping the conclusion that plaintiff was simply paying his own note and mortgage, and no amount of sophistry can wipe this fact out of the case. McLure v. Melton, 34 S.C. 377, 13 S.E., 615, 13 L.R.A., 723, 27 Am. St. Rep., 820; Breedin v. Smith et al.,126 S.C. 346, 120 S.E., 64; Walker v. Queen Ins. Co.,136 S.C. 144, 134 S.E., 263, 52 A.L.R., 259; 37 Cyc., 374; Gadsen v. Brown, Speers Eq., 37. Such being the case plaintiff cannot stand on subrogation and his complaint must necessarily fall.

It will not do to confuse Gilstrap's liability, so far as Dunn is concerned, to Dunn with the liability of Dunn, so far as the Liberty Bank is concerned. In other words, there is no allegation that Liberty Bank agreed to substitute Gilstrap for Dunn on the note, or to look to Gilstrap primarily for the payment of the note and mortgage. The complaint alleges: "* * * Went to the Liberty Bank at Liberty, S.C. and after explaining their agreement to C.E. Bush, cashier of said Bank, requested said Bush to prepare a deed which he did." Not a word in there that the bank agreed to any change or modification of its note and mortgage signed by Dunn. No matter what relationship subsisted between Gilstrap and Dunn, between Dunn and the Liberty Bank there was no change, and that is what we are concerned with here. Dunn's primary liability to the Liberty Bank continued up to the time he paid off his note and mortgage.

The judgment of this Court should be that the order of the Circuit Judge overruling the demurrer be reversed; that the demurrer be sustained, and the complaint dismissed.

MR. CHIEF JUSTICE WATTS concurs.