Wait v. Williams ( 1917 )

March 26, 1917. The opinion of the Court was delivered by This action was brought on a written contract, dated February 25, 1915, in which it is recited that plaintiff had sold and conveyed to defendant a tract of land, the consideration being various sums and lands in exchange, "together with the satisfaction and payment of a note and chattel mortgage executed to said Wait by L.P. Hendrix, on which said note there is considerably more than $1,000.00 due," but that it was inconvenient then to pay the same; and therefore, in consideration of the premises and the extension of time for payment, defendant agreed to pay plaintiff $1,000.00 on November 1, 1915, which was to be in full satisfaction of the note and mortgage, or, if defendant preferred, the same were to be assigned to him by plaintiff, without recourse.

The first paragraph of defendant's answer was a general denial, except as thereinafter admitted; and the remaining paragraphs were as follows:

"(2) That defendant admits the execution of the contract specified in the complaint, but alleges (as will be shown by said contract) that it was in simple words merely to guarantee to plaintiff the payment of a note and mortgage due plaintiff by L.P. Hendrix. That defendant was informed and believed by plaintiff or his agents that the said note and mortgage was perfectly good, and that there were no defenses to the same. That defendant has himself called upon L.P. Hendrix for the payment of the said note and mortgage, and alleges that the said L.P. Hendrix claimsthat the same is unjust, and that he is not due plaintiff anythinglike $1,000.00. Defendant alleges that the said L.P.Hendrix is an ignorant man, and plaintiff is a minister of thegospel, and that the said L.P. Hendrix declares that the saidplaintiff induced the said L.P. Hendrix to sign the said noteand mortgage under misrepresentations, and was charginghim for a lot of fertilizers which plaintiff of his own accordshipped to Greenville to sell two or three years ago. Thatthe said L.P. Hendrix denies the said note and mortgage,and sets up the defense of failure of consideration against the same. That defendant has served notice upon the saidL.P. Hendrix to appear and defend the complaint in thiscase.

"(3) That by reason of the defense entered by the saidL.P. Hendrix against the said note and mortgage, whichdefendant believed to be absolutely good from statementsmade to him when the trade referred to was made, defendant alleges that there has been a failure of consideration for the contract set forth in the complaint."

On plaintiff's motion, the Court struck from the answer the parts italicized. Plaintiff proved tender of the note and mortgage assigned to defendant, without recourse, and defendant's refusal of payment. Defendant testified that some of the property described in the mortgage is not in existence, some of the stock having died, but did not say whether it died before or after he signed the contract with plaintiff. L.P. Hendrix, the mortgagor, testified "that he did not consider that he owed anything on the note and mortgage," and that "he would fight the note and mortgage in Court." The Court excluded the details of his transactions with plaintiff, to which no exception was taken. There was other testimony, which is not relevant to the points decided. Defendant appeals from judgment on verdict directed for plaintiff, and raises the issues herein considered.

There was no error in striking from the answer the matter italicized. It states no defense or issuable fact. It states only what defendant says Hendrix told him, or what he says Hendrix claims with regard to the note and mortgage and his liability thereon. Defendant does not allege, even on information and belief, that what Hendrix told him, or what Hendrix claims, is true.

But there was enough left in the answer to admit evidence of the failure of consideration of the contract sued on, which could have been shown by proving the want or failure of consideration of the note and mortgage prior to the date of the contract sued on, or the existence at that time, of defenses to the note and mortgage which would have defeated in whole or in part the recovery of a judgment for what was called for on the face of those papers.

The contention of defendant that the contract is only a guaranty of the payment of the note and mortgage is too untenable to require discussion. In language too plain to admit of doubt, defendant agreed to pay plaintiff $1,000.00 for an assignment of the papers without recourse.

An assignment of a chose in action, without recourse, relieves the assignor of the general liability of an endorser; but, in the absence of any further limitation of his liability, he is liable upon the implied warranties of a vendor, who impliedly warrants that the thing sold is what it purports to be — in this instance, that the note and mortgage were valid subsisting legal obligations for the amount called for by the note, and the property described in the mortgage. Strange v. Ellison 18 S.C.L. (2 Bail. 385); Hall v. Latimer, 81 S.C. 90, 61 S.E. 1057; Bank v.Speegle, 91 S.C. 13, 74 S.E. 40. But there is no implied warranty of the solvency of the mortgagor, or of the value of the property described in the mortgage. The law is stated in 2 R.C.L., at page 627:

"Even where the words `without recourse' are added in an assignment of a chose in action, there still remains an implied warranty that the right transferred is what it purports to be, namely, that it is a valid and genuine obligation of the parties, based on adequate and sufficient consideration, and that the amount of money it calls for was owing and unpaid at the time of the assignment."

The authorities cited in the note fully sustain the text. See especially the case of Trustees v. Siers, 68 W. Va. 125, 69 S.E. 468, Ann. Cas. 1912a, 924, and the authorities cited in the principal case, and the note reviewing the authorities.

There is no exception to the exclusion of the testimony of Hendrix with regard to his transactions with the plaintiff, which might or might not have shown the want or failure of consideration of the note and mortgage; therefore, the judgment cannot be assailed on that ground; but there was enough in his testimony and in that of defendant to warrant a reasonable inference that, at the date of the contract sued on, the amount called for on the face of the note and mortgage was not due and owing by the mortgagor; and that some of the property described in the mortgage was not then in existence. True, the testimony upon these points is very vague and indefinite, and therefore unsatisfactory and inconclusive, and we do not intimate any opinion as to whether the inferences suggested should or should not have been drawn from it, but, as it was susceptible of those inferences, the Court erred in directing the verdict.

Judgment reversed.