Hale v. Lipham

The contract sued on was not within the statute of frauds. The evidence authorized the verdict for the plaintiff.

DECIDED MARCH 12, 1941. ADHERED TO ON REHEARING APRIL 4, 1941. On September 20, 1938, W. M. Lipham filed suit against W. B. Hale, alleging, that the defendant was indebted to him in the sum of $500, with interest from July 30, 1936, "upon an open account;" that on or about the latter date F. M. Freeman executed to the defendant a deed to certain real estate, that the plaintiff claimed title to such real estate at the time, and it was agreed between the plaintiff and the defendant that the defendant would pay $500 to the plaintiff "as part of the purchase-price of said property," which the defendant has never paid, although payment thereof has often been demanded. On November 29, 1938, the defendant filed a plea and answer in which he admitted that on July 30, 1936, he purchased the property from F. M. Freeman. He denied indebtedness to the plaintiff, further alleging as follows: "Answering plaintiff's petition . . defendant hereby especially pleads the statute of frauds, and says that the contract sued upon in plaintiff's petition is a contract that is required by the statute of frauds [Code, § 20-401(4)] of the State of Georgia to be in writing; that said contract is not in writing, and that defendant is not bound and is not liable upon the same." By an amendment filed on January 5, 1939, the plaintiff alleged that at the time of the execution of the deed from Freeman to the defendant Freeman claimed title to the property under an "alleged deed from petitioner, which at said time petitioner was claiming was obtained through fraud, and that if he had ever executed the same that it had been executed at a time when he was not mentally capable of executing a deed" (the foregoing constitutes paragraph 1 of this amendment); that this claim of the plaintiff was known to the defendant, and it was agreed between the defendant, the plaintiff, and Freeman, that the consideration to be paid by the defendant for the property was $1000, and that if the plaintiff would not file a suit to recover the property, and would permit Freeman to complete the trade with the defendant and execute a deed to the defendant, such consideration was to be divided, and plaintiff was to receive $500; that in accordance with this agreement the plaintiff did not file a suit to recover the property, and was present and consented to the execution of the deed from Freeman to the defendant; that thereupon the defendant paid to Freeman $500, and stated to the plaintiff that he needed "such other money as he had in the bank," and requested the plaintiff to wait "for a few days on him for the payment" to the plaintiff of the other $500, which the plaintiff agreed to do; that the defendant "has repeatedly admitted said indebtedness and promised to pay" the plaintiff; that "but for said promise and statement on the part of said defendant" the plaintiff "would have brought suit to recover said lands;" and that the transaction has been fully executed, with the exception of the payment to the plaintiff of such $500. Attached to this amendment as an exhibit is a copy of the warranty deed from Freeman to the defendant referred to, which recites a consideration of $500.

On April 10, 1940, the plaintiff filed another amendment, in which he struck paragraph 1 of the amendment of January 5, 1939, and alleged in lieu thereof as follows: "Petitioner shows that at the time of the execution of said deed from petitioner, that the said Freeman claimed title to said property under a deed from petitioner, and that said Freeman had never paid purchase-price therefor, and at said time owed petitioner the sum of $1000." On the trial before a jury the plaintiff testified, in part, as follows: "On or about July 30, 1936, I was present in the office of Mr. W. B. Hale, . . together with F. M. Freeman. . . I had a transaction with Mr. Hale and Mr. Freeman there on that day. I sold it to F. M. Freeman, and Freeman was to pay the $1000, and later on . . he sold it to W. B. Hale, and he was making a payment of $500. Freeman was making it to me, and he trusted Hale with the $500 to make the payment, and I never did get it. Mr. Hale asked me to wait a day or so, and he would sell the place and pay me the $500. That morning Hale agreed to pay the $500. . . We went to his office that morning to fix up the deeds, whereby Freeman was selling to Hale. There had been no dispute between me and Freeman about the title to that property, who it belonged to. At that time, I think that Freeman had agreed to pay $1000, and Hale bought it . . from Freeman, and Freeman made him a deed. The agreement as to the purchase-price that Mr. Hale was to pay was $1000. I did not see him pay Mr. Freeman there that morning; they went to the bank to get the money . . . He came back to the office and asked me to wait a day or so for my money, that money matters was a little scarce, and he would sell the place and hand me my money in just a day or so. I asked him to give me a note, and he said it wouldn't be necessary to do that . . . I went back there for twelve months afterwards, and he told me he never sold the place. He never did give me my money but stated he merely hadn't sold it. . . That is the only excuse he ever gave me. . . He has never paid me. . . I had previously sold this lot to Mr. Freeman, and Mr. Freeman had agreed to pay me $1000 for it, and had not paid me. Mr. Freeman told me that he was going to sell it to Hale, and I went with him to Mr. Hale's office. When I got to Mr. Hale's office the transaction was concluded there . . . The agreement with me was that Hale told me that he would see that I got my $500 then from Freeman, that Freeman was making the deed, and he went over to the bank with Freeman for the purpose of paying Freeman $500. Freeman did not turn that $500 over to me. He was to leave it with Hale. . . He owes me $500 yet, and $500 he left with Hale. Freeman never paid me anything. He still owes me $1000. . . I was not settling with Freeman; that is the payment Freeman was making, the $500; and Hale told me that when he sold it he would pay the $500; and that was the only conversation that occurred in the office there that morning, . . except that Hale told me there that morning, before the transaction was closed and the deed made, that he would pay . . that he would pay, before I give Freeman leave to sell the place. . . I gave Freeman leave to sell it. When I told Freeman to go ahead and sell it, Hale told me verbally he would see I got my money. . . I wouldn't let him sell it until he did do that."

F. M. Freeman testified for the plaintiff, in part, as follows: "Along in about June 30, 1936, I had a transaction with Mr. Hale with reference to property over on Branham Avenue. It was the agreement that he was to give me $1000 for the property, . . and he called to the bank, . . and he asked them could he get some money, and I went over there with him to get the money, and we come back out to . . Hugh McCrary's office. It was right above the place of business Hale was in, and signed the deeds, and he gave me $500, and he says `I will go and straighten up with Mr. Lipham.' It was agreed with Hale he was to give me . . $500 and he was to straighten up with Lipham for the rest of it, and at that time Mr. Lipham was to get $500 because he was letting him have $500, and I was to get $500 myself. I owed Mr. Lipham $1000. That had not been discussed about my owing Mr. Lipham $500. That wasn't explained to Mr. Hale why we were doing that, but he made that statement that he would go and straighten up with Mr. Lipham. He counted out $500, and he taken the deeds, and he says `I will go and straighten up with Mr. Lipham.' . . He simply counted me out $500, and I signed the deed, and I don't know what become of the $500 so far as Mr. Lipham was concerned. I had a conversation with Mr. Hale about this $500 last summer. He said Mr. Lipham was suing him for $500, and I said, `You owe him and ought to straighten it up.' and he says, `I will go back down to see him and try to make a settlement with him.' . . I don't remember I had seen Mr. Lipham that day or not, not before him and Mr. Hale came to see me. Before I went to the bank I did not talk with Mr. Lipham and Mr. Hale together, nothing only they come over home after me and said to come and sign the deeds, and I told them I would be over there in a little while. . . I went to Mr. Hale's office. Mr. Lipham was there then. I did not sign the deed there, not then. They wanted me to sign the deed there then, and I says, `Where is the money?' And he says . . he didn't have the money, and he called up at the bank and asked them if he could get it. . I owed Mr. Lipham $1000. That was for this lot and the house he sold me, and Mr. Lipham and Mr. Hale came to my house and they told me they wanted me to sign a deed to it, and it was agreed with Mr. Lipham to let Mr. Hale have it, and he was to pay $1000 on it. I sold it to Hale for $1000. . . I came to Mr. Hale's office, and when I got there Mr. Hale was after me to sign the deed. There wasn't anything else said before I got the payment. That was my first transaction in the business, and I didn't want to take any check, and I told him . . I had to have some money. . . I went to the bank and got the money and came back, and he counted the money and then I signed the deed. Mr. Hale counted out $500 after I signed the deed, and that was all that was said to me at that time. . . As to what was said, if anything, about the other $500, the only thing he said he would go and straighten up with Mr. Lipham for the other part."

At the conclusion of the evidence the judge directed a verdict for the plaintiff. The defendant moved for a new trial on the general grounds, and by amendment added the following: "1st. That the evidence introduced upon the trial of the above-stated case failed to sustain the allegations of plaintiff's original and amended petition, and made out an entirely different case from that alleged by plaintiff, and there was a fatal variance between the allegations and the proofs. 2d. That the testimony introduced upon the trial of said case shows that the promise of the defendant to pay plaintiff $500 was without consideration, and therefore not binding upon defendant in this case. 3d. That the evidence introduced upon the trial of said case shows that the promise of defendant to pay plaintiff was a promise to pay the debt of another, and that said promise comes within the statute of frauds and is not binding on said defendant, because said promise was not in writing and was not signed by defendant." There was no exception to the direction of the verdict. The motion for new trial was overruled, and the defendant excepted. In his petition as finally amended the plaintiff alleged, in substance, that he had sold the real estate to Freeman for a consideration of $1000, and had given Freeman a deed thereto, but that Freeman had not paid the plaintiff the purchase-money, and was indebted to the plaintiff therefore; that it was agreed between the plaintiff and the defendant, and also Freeman, that the plaintiff would consent to Freeman's selling the property to the defendant for a consideration of $1000, and that the plaintiff would relinquish any claim which he might have against the land for the purchase-money due by Freeman in consideration of the defendant's paying to the plaintiff $500 which represented part of the purchase-money which the defendant had agreed to pay to Freeman. It appears from the plaintiff's evidence, that, as alleged, he had sold the property to Freeman for $1000, and Freeman had not paid him the purchase-price therefore; that it was agreed between the plaintiff, the defendant, and Freeman that Freeman would sell the property to the defendant, and the defendant would pay to the plaintiff $500 of this money; that the plaintiff and the defendant were present when Freeman sold the property to the defendant and executed a deed to him; that the defendant then asked the plaintiff to indulge him in the payment of this $500, and the plaintiff agreed to do this; and that the defendant has never paid the plaintiff this money. While there is no direct evidence to the effect that it was agreed between the plaintiff and the defendant that the plaintiff would relinquish all claims which the plaintiff might have against the property by reason of Freeman's having failed to pay to the plaintiff the purchase-money due to the plaintiff by Freeman, it does appear that the defendant knew that Freeman had not paid to the plaintiff such purchase-money and owed it to him. It is clearly inferable from the evidence that, because of Freeman's indebtedness to the plaintiff, the plaintiff had agreed to the sale of the property by Freeman to the defendant in consideration of the defendant's paying to the plaintiff $500 of the purchase-money which the defendant was to pay to Freeman for the property, and that the defendant agreed to pay to the plaintiff the $500 in consideration of the plaintiff's consenting to Freeman's selling the property to the defendant, which necessarily meant that the plaintiff relinquished any right which he may have had to go against the property for the unpaid purchase-money due by Freeman to the plaintiff.

It appears from the testimony of Freeman, that, after this suit had been filed, Hale admitted that he was indebted to the plaintiff the $500 sued for. The evidence, including the defendant's admission, was sufficient to authorize a finding of $500 for the plaintiff. The petition as originally drawn alleged that Freeman claimed title to the property under an alleged deed from the plaintiff, which Freeman had obtained through fraud, and that if the plaintiff had executed the deed it had been executed when he was not mentally capable of executing a deed. It was then further alleged that "this claim," whatever this claim was, on the part of the plaintiff was known to the defendant, and that it was agreed between the defendant, Freeman, and the plaintiff, that if the plaintiff "would not file any suit to recover said lands, but would permit the said Freeman to complete said trade [meaning the sale and conveyance of the land by Freeman to the defendant] and execute a deed to the defendant, that said consideration was to be divided and petitioner would receive the sum of $500." It was further alleged that in accordance "with said agreement" the plaintiff did not file suit to recover the land, but was present when the deed from Freeman to the defendant was made, and consented to the making of this deed. This petition was demurred to on the ground that the contract sued on was unenforceable under the statute of frauds, in that it was not in writing. This demurrer was overruled. This court, in Hale v. Lipham,61 Ga. App. 191 (6 S.E.2d 115), in passing on the exceptions to the overruling of this demurrer held that the contract sued on was not unenforceable as being within the statute of frauds. The court in its opinion, referring to the ground of demurrer which raised the question of the statute of frauds, stated as follows: "Under the contract pleaded, Lipham never undertook to sell, convey, or transfer any land or any interest therein to either Hale or Freeman. He merely agreed `not to file any suit to recover' the land and to `permit . . Freeman to complete said trade and execute a deed to defendant;' and with that obligation he complied. Freeman agreed to execute a deed to the land to Hale, and did so. Hale promised to pay one half of the agreed selling price of the land to Freeman and the other half to Lipham. He promptly paid Freeman, but failed and refused to pay Lipham. It thus appears that the only conveyance of land contemplated by the parties was executed, and that the contract was fully executed with the exception that Hale never paid Lipham as he agreed to do. In these circumstances we are satisfied that Hale's promise to pay Lipham half of the selling price of the land is not within the requirement of Code § 20-401(4), that `any contract for sale of lands, or any interest in, or concerning them,' shall be in writing. We therefore hold that the court did not err in overruling paragraph 3 of the demurrer." The demurrer in that case did not point out wherein the contract came within the statute of frauds. It just alleged generally that the contract was one required by the statute of frauds to be in writing.

Although the petition was afterwards amended by striking the paragraph above referred to, alleging that Freeman procured the deed from the plaintiff by fraud, and substituting therefore a paragraph which alleged that Freeman claimed title to the property under the deed from the plaintiff, and that Freeman had never paid the purchase-price therefore, and at the time of the execution of this deed owed the plaintiff the sum of $1000, there are allegations in the petition as amended, that "this claim" on the part of the plaintiff was known to the defendant, and it was mutually agreed between him and the plaintiff and Freeman that if the plaintiff would not file any suit to recover the land, but would permit Freeman to complete the trade and execute the deed, the defendant would pay the plaintiff $500. There is no difference between the contract as sued on in the former petition and the contract as alleged in the present petition as amended. The alleged contract in both petitions was that if the plaintiff would not file suit to recover the land which the plaintiff had sold to Freeman and for which Freeman had not paid the plaintiff, the plaintiff would let the trade from Freeman to the defendant go through and the defendant would pay the plaintiff $500. It was therefore adjudicated in the former decision, as the law of the case, that the contract sued on is not unenforceable as being within the statute of frauds as contained in the Code, § 20-401(4). Under the law of the case the contract here sued on as alleged in the petition as amended is not unenforceable as being within the statute of frauds.

In the case now before this court there appears no demurrer to the petition raising the question of the statute of frauds, but the defendant in his plea alleges "that the contract sued upon in the plaintiff's petition is a contract that is required by the statute of frauds [Code, § 20-401(4)] of the State of Georgia to be in writing; and the said contract is not in writing, and that defendant is not bound and is not liable upon the same." This raises the question of the enforce ability of the contract sued on only in so far as it might fall within subsection 4 of Code § 20-401 of the statute of frauds. It was particularly with reference to this subsection of the statute of frauds that this court in the former decision referred to held that the contract was not unenforceable. In order to avail himself of the statute of frauds the defendant must specifically plead it. Tift v. Wight, 113 Ga. 681 (39 S.E. 503). Where the question of the statute of frauds is presented for the first time in a ground of the motion for new trial, the defendant having failed to plead the statute, the ground is without merit. Bridges v. Williams, 148 Ga. 276 (96 S.E. 499); Arrington v. Horton, 48 Ga. App. 272 (6) (172 S.E. 677). The defendant, in his motion for new trial, as one of the grounds of error, alleges that under the evidence introduced on the trial it appears that the promise of the defendant was to pay the debt of another; and being an oral promise, it is unenforceable under the statute of frauds. As the defendant's plea did not raise the question of the unenforceability of the contract on the ground that it was an oral contract to pay the debt of another, which is unenforceable under the statute of frauds, the question as to the unenforceability of the contract on this ground is not presented for consideration.

Does the evidence show conclusively and as a matter of law that the contract which the jury was authorized under the evidence to find was made between the plaintiff and the defendant was a contract to pay the debt of another, such as would be unenforceable under the statute of frauds, which requires such a contract to be in writing? The evidence authorizes a finding that there was an original obligation to pay the plaintiff for the relinquishment of any claim, either fancied or otherwise, which the plaintiff may have had against the land by reason of Freeman not having paid the plaintiff for the land when the plaintiff deeded it to him. While Hale's promise may have arisen because of the failure of Freeman to pay his debt to the plaintiff, and may have been a promise by Hale to pay what Freeman owed the plaintiff on the purchase-price of the land, Hale himself was purchasing the land and owed a purchase-price therefore. Therefore the promise by Hale was to pay his own debt and obligation to the plaintiff in consideration of the plaintiff's waiving any right to enforce his claim against Freeman out of the land, and in further consideration of Hale's acquiring the land. A considerable benefit flowed to Hale. He obtained the land, and by virtue of his agreement to pay the plaintiff the $500, he was thereby relieved of his obligation to Freeman. The consideration of the trade between Hale and Freeman was $1000. Hale was to pay Freeman $500, and the plaintiff $500. Whether or not as the result of the contract the plaintiff has released Freeman from $500 of the purchase-price is immaterial. The fact that the principal debtor is released where a contract is made between the creditor and another person to pay the obligation represented by the debt of the principal debtor is only one of the tests as to whether or not the contract is to answer for the debt of another. In Holcomb v. Mashburn, 10 Ga. App. 781, 783 (74 S.E. 307), it was stated: "One test is whether the original debtor is still held liable, but this is not the only test; because, if the undertaking be a joint one on the part of the original debtor and the new promisor, the undertaking of the latter would still be an original promise, and not a collateral agreement to become surety for the original debtor." As said in KiserCo. v. Padrick, 30 Ga. App. 642 (8) (118 S.E. 791), "An original undertaking by one person to become primarily liable for the debt of another is not within the statute of frauds." In Thomason v. Pease Co.,47 Ga. App. 776 (171 S.E. 467) it was held: "When a promise to be answerable for the debt of another is based upon a new consideration which moves to and benefits the promisor, the obligation is in fact his own debt, and not within the statute of frauds, although in form a promise to pay the debt of another and its performance would extinguish the liability of the original debtor." The contract in the case sub judice is an original undertaking by Hale to pay to the plaintiff $500 in consideration of the plaintiff's foregoing any claim he may have against the land by reason of Freeman's default in the payment to the plaintiff of the purchase-price which Freeman was to pay, and of Hale's obtaining title to the land by paying only half of the purchase-price to Freeman and obligating himself to pay the other half to the plaintiff. The contract is not one merely to pay the debt of another. It is not a contract of suretyship. The contract is not unenforceable under the statute of frauds as being an oral contract to pay the debt of another.

Moreover, the contract is taken without the statute of frauds (Code, § 20-402) by reason of there having been such performance on the part of the plaintiff, in permitting the land to be sold to the defendant and releasing whatever claim the plaintiff may have had against the land for Freeman's debt to the plaintiff, as would render it a fraud by the defendant to refuse to comply with the contract. An oral contract for the sale of land which has been fully executed is taken without the statute of frauds. Varnell v. Varnell, 156 Ga. 853 (120 S.E. 319). In Holcomb v. Mashburn, 10 Ga. App. 781 (74 S.E. 307), it was held that where there was an agreement with M by which he was to make and pay a loan of $500, provided he would pay a debt due by a third person, and the loan was actually made in pursuance of this agreement, there was such performance on one side and acceptance on the other as to take the contract without the statute of frauds. The evidence authorized the verdict, and the court did not err in overruling the motion for new trial.

Judgment affirmed. Sutton. J., concurs.