Johnson v. Portwood , 89 Tex. 235 ( 1896 )

Suit brought April 2, 1892, in debt and for foreclosure of a vendor's lien, by D. Portwood, P.A. Huffman, and D.J. Nelson, against Henry V. Johnson. November 21, 1893, R.A. Long intervened, making common cause with the defendant, praying for specific relief. November 25, 1893, judgment for plaintiffs Portwood and Huffman against defendant Johnson for amount of their debt as sued for, less certain credits, and for foreclosure of their lien; for defendant Johnson against the plaintiff Nelson (on account of a settlement between them pending suit), and against the intervener Long. From this judgment the defendant and intervener appeal.

On August 19, 1890, D. Portwood, P.A. Huffman, and D.J. Nelson conveyed by deed to H.V. Johnson 236 acres of land, described by metes and bounds, out of the John Thornhill 640 acre survey in Tarrant County. In consideration of this conveyance, the grantee, Johnson, at that date executed and delivered to the grantors six promissory notes, each retaining the vendor's lien, maturing, three of them in one year and three in two years. Two of these notes, for the sum each of $4216.66, drawing interest at ten per cent from date, and providing in the event of suit for ten per cent of the whole as attorney's fees, became the property of D. Portwood. Two of them, for the sum of $2108.33 each, with similar provisions as to interest and attorney's fees, became the property of P.A. Huffman. The remaining two, each for $2108.33, with similar provisions, became the property of D.J. Nelson. The note of Portwood first maturing bears a credit of date January 19, 1892, of $3283.16. The note of Huffman first maturing bears a credit, of same date, of $1641.58, and the note of Nelson first maturing bears a similar credit.

On January 7, 1892, the plaintiffs herein instituted suit in the District Court of Tarrant County upon these notes against the defendant. On January 28, 1892, a payment of $6566.33 having been made by defendant and credited upon the notes in the manner above indicated, the plaintiffs addressed the following letter to John C. Harrison, of Fort Worth, Texas:

"Fort Worth, Texas, Jan. 28, 1892.

"John C. Harrison, Esq.,

"Fort Worth, Texas.

"Dear Sir: — On final payment to you of $4256.40 and $6.85 interest; on old notes, and interest from the 19th of January, 1892, please deliver to Robt. McCart, for account of H.V. Johnson, all notes held by you for account of D. Portwood, P.A. Huffman and D.J. Nelson against said H.V. Johnson. And turn over to said Robt. McCart the release deed hereto attached, upon delivery to you of a deed from H.V. Johnson to said Portwood, Huffman and Nelson for one-third of said real estate. Said H.V. Johnson is to have abstract brought down to date, of said property, showing that there has been no liens or incumbrances upon said lands since the same was purchased by said H.V. Johnson. Said money is to be paid by H.V. Johnson within thirty days from this date.

"(Signed.) P.A. Huffman,

D.J. Nelson,

D. Portwood."

Accompanying this agreement or letter of instructions was a release deed of two-thirds of the land, signed by the payees of the notes, to be delivered to Johnson by Harrison, on compliance with the conditions named in the agreement.

On January 29, 1892, the parties to the suit brought January 7th signed the following agreement of dismissal:

"Portwood, Huffman Nelson } } Suit pending in District vs. } } Court, Tarrant County. "H.V. Johnson }

"The above case is to be dismissed at the cost of the plaintiff.

"(Signed) D. Portwood,

P.A. Huffman,

D.J. Nelson.

"Wynne, McCart Booty, "Attorneys for Defendant."

The suit was accordingly dismissed.

The conditions named in the foregoing letter of instructions not having been complied with by the defendant Johnson, the plaintiffs, after the lapse of the thirty days there provided for, viz., on March 3, 1892, withdrew the letter of instructions and the release deed accompanying it, and instituted this suit, as already indicated. Pending the suit, and before the trial, the defendant settled with the plaintiff Nelson, the former paying in the settlement the two notes held by Nelson, and reconveying to the latter an undivided one-twelfth interest in the land.

Opinion. — 1. The court sustained seven specific objections urged by the plaintiffs as special exceptions, on the ground of alleged defects in the answer and trial amendment thereto filed by the defendant, Johnson. Of this action, as upon a general demurrer, complaint is made by the appellant Johnson in three assignments of error. Without setting out these assignments at length, it may be said that they assert the contention that the pleadings of the defendant condemned by the court present a defense to the plaintiffs' action in a two-fold aspect: (1) that they show that on January 28, 1892, the defendant paid to the plaintiffs the sum of $6566.33 in cash, and agreed to pay them within thirty days the sum of $4256.40, "besides certain interest," and to execute a deed for an undivided one-third of the land in question, and that this agreement or promise, and not the performance thereof (Railway v. Harriett, 80 Tex. 80), was accepted by the plaintiff's in full discharge and payment of the notes sued upon; (2) that in any event the defendant's averments show that at the date named the terms of settlement were agreed upon between the plaintiff and defendant, and that the latter had complied with these terms and the obligations thereby imposed upon him; in other words, that there had been an accord and satisfaction with respect to the notes sued upon.

In the opinion of the writer, the pleadings of the defendant, measured by the legal effect of the averment of the facts therein stated, and not by the mere conclusions of the pleader, negative the existence of either of these defenses. It is deemed unnecessary to detail the numerous allegations of the pleadings referred to. Suffice it to state that the instruments set out in our conclusions of fact, viz., the letter of instructions to Harrison, termed an agreement, and the dismissal of the suit of Portwood v. Johnson are, as exhibits A and B, made the basis of the defenses relied upon. Thus, it is alleged that, "The two papers, copies of which are hereto attached, together with those referred to in same, all have reference to the same matter and constitute parts of each other, and all together constitute the agreement of the parties for the settlement of said law suit as hereinbefore stated."

Looking, then, to the terms of the written agreement embodied in the letter to Harrison, does it appear therefrom that the plaintiffs agreed to accept any promise of the defendant in payment of the notes sued upon? Assuredly not, because it is plainly indicated that these notes are not to be surrendered until the performance within thirty days by defendant of certain conditions. The acceptance of the mere promise of the defendant as a payment of the obligations referred to is incompatible with the very terms of the instrument thus relied upon.

The writer is also of opinion that the defendant's averments, in the light of the terms of this written instrument, present at most the case of an accord without satisfaction. The agreement directs the surrender of the notes, provided that within thirty days the defendant will pay the sum of $4256.40, besides certain interest; that he will execute a deed to one-third of the land; and that he will present an abstract of the title to the property, showing that, since his purchase from the plaintiffs, no liens or incumbrances had been placed upon it. The defendant's allegations show that he failed to comply with these conditions within the period stated. They show a tender of performance (with a refusal by the plaintiffs) for the first time on the 30th day of March, quite a month after the expiration of the stipulated term.

In Overton v. Conner, 50 Tex. 113, it is held that, to be operative, "The accord and satisfaction must be finally and fully consummated by the parties in accordance with its terms and stipulations." This case is approved and followed in Railway v. Gordon, 70 Tex. 80.

The writer sees no escape from the conclusion that, having failed to pay the money and otherwise to comply with the terms prescribed in the agreement, the defendant is entitled to no relief thereunder. Had a tender of compliance been made and refused during the period provided by the contract, this, it seems, under the doctrine prevalent here, would have been equivalent to a satisfaction of the award. Bradshaw v. Davis,12 Tex. 336. But a tender after the lapse of that period should not in this instance suffice. Here it was within the option of the defendant to make or abstain from making the stipulated payment. His failure to exercise the option or privilege growing out of the agreement of the plaintiffs was attended by the creation of no cause of action in favor of the plaintiffs against him on account of the contract. The payment of $6566.33 at the date of the execution of the agreement was but the payment of less even than he then owed. If he deemed the agreement advantageous to him, it was his duty to comply with the conditions on which rested the exercise of his privilege.

Obligations were imposed by the contract upon the plaintiffs alone, a choice or a privilege arising out of it in behalf of the defendant. If the land involved had enhanced in value, so as to render it of advantage to the defendant to dispose of it on the day after the execution of the agreement by the plaintiffs, no reason is perceived why the appellant (as far as the plaintiffs are concerned) could not have conveyed it, unincumbered save by the vendor's lien retained in the notes herein sued upon. The agreement on its face was unilateral; time was of its essence, and after the lapse of thirty days from its date the defendant could not avail himself of it. Mining Co. v. Bullis, 68 Tex. 581; Houston v. Newsome,82 Tex. 80; Shuffleton v. Jenkins, 1 Morr. (Ia.), 427; Jones v. Noble, 3 Bush (Ky.), 694.

It is contended, however, that other allegations of the defendant's answer require an interpretation of the pleadings different from that above indicated.

The defendant filed a trial amendment in which he averred that, "At the time of the execution of said agreement, it was understood by and between the plaintiffs and defendant that defendant was in truth and in fact to have as much as ninety days within which to pay the money, execute the deed and prepare the abstract mentioned in said agreement, exhibits A and B, should he require so much time."

This trial amendment was assailed by special exception as defective, because it "seeks to alter and contradict the legal effect and the terms of the written agreement as set out by defendant."

It is questionable, in the writer's opinion, whether any assignment of error covers the action of the court on this special exception; but, if so, he is of opinion that it was properly sustained, on the familiar principle that evidence of a parol contemporaneous agreement will not be heard to contradict the terms of a contract in writing. As we have seen, the instrument described as exhibit A is treated emphatically, by the appellant himself, as an agreement in writing signed by the parties to be charged therewith. As such the defendant relies upon it as a basis for his prayer for specific performance of the contract to execute a release deed in accordance with the accord which it embodies, or which it is supposed to embody. Thus treated by the defendant himself, the writer is unable to regard this instrument as a mere memorandum made by one of the parties, but signed by nobody, and relating to the terms of a parol contract. Were it such a memorandum, it would of course be readily admitted that oral evidence could be heard, because, after all, there would be question only of a parol agreement. Lathrop v. Bramhall, 64 N.Y. 365; 1 Wharton on Evidence, sec. 77. But the averments of the defendant exclude, it would seem, the view that the instrument should be regarded as of no higher dignity than a verbal agreement.

The court also correctly overruled the motion of the appellant to reform the decree of foreclosure, so that it should apply to three-fourths, instead of eleven-twelfths, of the land. Title free of incumbrance to one-twelfth of the land had, pending the suit, vested, as all parties agree, in Nelson. Title to the remaining eleven-twelfths was therefore in the defendant, subject to the vendor's lien retained in the notes sued on. The lien extended to the entire eleven-twelfths interest, and was therefore properly foreclosed as to that quantity.

2. R.A. Long, intervener and appellant, assigns as error the action of His Honor in sustaining a general demurrer to his petition in intervention. It is contended that the averments of the intervener's petition show that, having advanced the money to the defendant to enable him to make the payment of $6566.33, and this under agreement with the plaintiffs that they would release an undivided two-thirds interest, which should thereupon be used as security for Long, the latter became thereby subrogated, as to the specified interest, to the lien of the plaintiffs, or that the transaction wrought an equitable assignment to the intervener of the claim of the plaintiffs against Johnson of their security upon the interest covered by the agreement.

The writer thinks that these propositions, if otherwise sound, are not applicable under the facts shown by the intervener's plea. The latter in terms adopted the averments of the defendant's answer. His cause became thereby tied to the case of the defendant. A common fate attended them. If the intervener was not a party to the agreement relied upon by the defendant, he was a beneficiary thereof only through the appellant, for whose direct advantage the contract was made. To the intervener's plea, as to the defendant's answer, setting up a contemporaneous parol agreement to extend the time of performance beyond the term of thirty days, the court properly (as the writer thinks) sustained a special exception. Any agreement between the plaintiffs and the intervener was, as shown by his pleadings, dependent upon the terms of the contract made with the defendant. According to these, as interpreted by the writer, the defendant — and therefore the intervener — could expect no release of the two-thirds interest, the alleged security of Long, save upon the condition of the payment within thirty days of $4256. If time was of the essence of the agreement as to the defendant, it was necessarily so as to the intervener. To enjoy the proposed security, it devolved upon the latter to see that the defendant complied with the conditions on which the release was dependent. Neither alleged such a compliance.

With this interpretation of the pleadings of the appellants, the majority of this court do not concur. They are of the opinion that the court erred in sustaining the demurrers, and that the judgment should be reversed and the cause remanded. The reasons for their conclusion are stated by them in the following language:

"A majority of the court are of opinion that there was error in sustaining appellees' exceptions to the pleading of appellants Johnson and Long. They construe Johnson's answer as alleging in substance an agreement to cancel the previous trade by letting appellees (his vendors) have back one-third of the land upon his paying for the other two-thirds in the manner named, which required a payment of a portion of the sum earlier than it otherwise would have become due. There can therefore be no question as to the sufficiency of the consideration for this agreement. The letting appellees have back a part of the land, and the payment of a part of the sum agreed upon for the remainder before it otherwise would have been due, were each and both sufficient considerations to support a contract based thereon. Kirchoff v. Voss, 67 Tex. 320.

"The only question that remains then is, Was the stipulation in the letter of instructions to Harrison that "said money is to be paid by H.V. Johnson within thirty days," under the pleadings in this case, so much the essence of the contract as to preclude compliance therewith after that time? It will be observed that this letter is only signed by one of the contracting parties, and does not upon its face purport to be the contract itself, but only the usual instructions given the depositary of an instrument placed in escrow, for his guidance in making delivery; and if it is to be treated as the contract in this instance, so as to prohibit the introduction of parol evidence to add to its terms, it must be because the pleading unmistakably makes it such.

"That ordinary unsigned written memoranda of the general terms of a contract do not preclude the introduction of parol evidence to show the real agreement, seems well settled. Lathrop v. Bramhall, 64 N.Y. 365; Freeman v. Bartlett, 47 N. J. Law, 33; 1 Wharton on Evidence, sec. 77. In appellants' pleading, however, it must be conceded that there are strong references to this instrument as embodying the terms of the contract, but it is distinctly stated in more places than one that it only does this in brief; and both in the amended original answer and in the trial amendment, it is stated to have been a part of the agreement that Johnson was to have as long as ninety days in which to make the deferred payment in case he desired it, and the majority conclude that parol evidence should have been admitted to sustain these allegations.

"What is stated above applies with redoubled force to the pleading of appellant Long. It is true, he adopts the answer of his co-appellant Johnson, but he also avers with distinctness that he acted in this transaction as the agent and friend of Johnson, and that he agreed to raise the money for the latter to make the $6566.33 cash payment, with the understanding that upon the payment of the $4256.40 two-thirds of the land should be released so that he could be secured thereby, and that Johnson should have as much as ninety days in which to make this payment. The majority think this pleading should at least have been held good as against a general demurrer, even though Long had been shown to be a party to the letter of instruction to the depositary of the escrow. It would of course be good if he was not a party thereto, for even in reference to formal written contracts it is said: 'The rule under consideration is applied only (in suits) between the parties to the instrument; as they alone are to blame if the writing contains what was not intended or omits that which it should have contained. It cannot affect third persons, who, if it were otherwise, might be prejudiced by things recited in the writings, contrary to the truth, through the ignorance, carelessness, or fraud of the parties; and who, therefore, ought not to be precluded from proving the truth, however contradictory to the written statements of others.' I Greenleaf on Evidence, 15 ed., sec. 279.

"By what has been said the majority do not wish to be understood as holding that the writing in question upon its face makes time so of the essence of the contract as that a court of equity should not relieve against the forfeiture upon a tender made within a reasonable time after the expiration of the stipulated period. It must be borne in mind that $6566.33 had already been paid under this contract. It is true, this payment was made upon a debt Johnson justly owed, and as to him it may be no injury would result by permitting appellees to retain it; but as to Long the case is different. He advanced the money for Johnson upon the understanding that he was to have security upon the land to be released by the next payment, of which appellees were well aware; and if Johnson is to be held to the exact day, this security must be lost. All the equities would therefore seem to arise in his favor that can be urged by any one who has made a payment and contracted for a conveyance to be made upon the making of another payment at a stipulated time.

"Upon this subject, in Pomeroy on Con., sec. 380, it is said: 'Where the clause provides for a forfeiture upon the nonpayment of the purchase price, at the time or times stipulated, and is, therefore, intended to secure punctuality in the payment, it has been regarded almost a matter of course for a court of equity to disregard it, and to permit a subsequent payment, since interest is treated as a sufficient compensation for the delay.' Also see secs. 387, 388, 392, and 393, in the latter of which it is said: 'American cases hold that the vendor must also, when he elects to rescind the contract on this account (time made essential by stipulation), repay or tender the purchase money received, and return the collateral securities given to him by the vendee.'

"Our own decisions are numerous which require the vendor who retains the superior title to return payments received, before allowing him to rescind for the failure of the vendee to pay the balance due. Evans v. Bentley, 29 S.W. 497, and cases there cited. Also, which recognize the right of a vendee in such case, no matter how great the delay, to prevent a forfeiture by tendering payment with interest when sued for rescission. Tom v. Wollhoefer, 61 Tex. 277; Pierce v. Moreman, 84 Tex. 596. It is not necessary, however, that an authoritative decision be made as to this, and we leave the question open."

In accordance with the opinion of the majority of this court, the writer dissenting, the judgment is reversed and the cause remanded.

Filed October 26, 1895.