Talmadge v. West Orleans Beach Corp.

HIGGINS, J.

This is a suit for the rescission of a contract and tbe return of certain money paid to tbe defendants in accordance with its terms. The petitioner alleges that on February 23, 1926, be entered into a. written contract to purchase certain land, agreeing to pay tbe sum of $1,650 therefor; that be obligated himself to pay 10 per cent, upon tbe acceptance of the offer, 15 per cent, witbin sixty days, and tbe balance in three equal annual payments bearing 6 per cent, interest; that tbe defendants agreed to sell tbe land, to gravel Harvard avenue on which some of tbe lots fronted, to execute a bond for deed when 25 per cent, of tbe purchase price was paid, to execute a warranty deed to the plaintiff for tbe property when 50 per cent, of tbe purchase price was paid, to pay all taxes, and further agreed that at tbe time .of tbe last payment 'if tbe conditions of tbe contract were not carried out, defendants would refund tbe entire amount plus taxes and interest at tbe rate of 6 per cent.; that when 25 per cent, of the purchase price was paid a bond for deed was issued to plaintiff on June 10, 1926, and when 50 per cent, of tbe purchase price was paid a warranty deed was executed in authentic form on May 11, 1928; that tbe vendor’s lien note securing tbe balance of the purchase price was negotiated to an innocent third person; and that at tbe time of tbe last payment, tbe defendants bad failed to gravel ' Harvard avenue and, under the provisions of tbe contract, plaintiff requested that his money be refunded offering to reeonvey title to tbe land to defendants.

Defendants filed a plea of oyer for tbe written documents which were produced by plaintiff and filed in tbe record. Both defendants then filed exceptions of no right or cause of action on tbe ground that tbe provision, in the original contract giving plaintiff the right to request tbe refund of tbe entire purchase price in tbe event the avenue was not graveled at the time of tbe last payment, was not incorporated in tbe bond for deed or tbe warranty deed and, therefore, was waived and abandoned by plaintiff; the original contract having become merged in tbe warranty deed. The exceptions were referred to tbe merits, and defendants answered presenting tbe same issues.

On the trial of tbe case on its merits there was judgment in favor of plaintiff as prayed for, and defendants have appealed.

Tbe record shows that plaintiff was solicited to buy lots of ground in a subdivision which was owned by tbe West Orleans Beach Corporation, Inc., one of the defendants. Johness Realty & Security Company, Inc., the other defendant, was acting as agent promoting tbe sale of the real estate. When the original contract was presented, plaintiff refused to sign it unless the clause as to graveling Harvard avenue was inserted therein. Plaintiff and the real estate salesman who sold the lots both testified that plaintiff would not sign the original contract until the provision was placed in it. Plaintiff carried out his portion of the contract, but defendants did not have Harvard avenue graveled at the time of the last payment or at the time of the trial of the case. It is undisputed that the provision in question was not incorporated in either the bond for deed or the warranty deed.

The clause in question reads as follows:

“This agreement to purchase is accepted by the Johness Realty & Securities Co. Inc. Agents for the West Orleans Beach Corporation, Incorporated, with the understanding that at the time of the last payment, if the conditions contained herein are not carried out by the vendor,- — the West Orleans Beach Corporation, Incorporated, — the Johness Realty & Securities Co., Inc., agree to refund to the purchaser the entire amount paid plus taxes and interest at the rate of six per cent, per annum, if so requested.”

The law on the subject is stated in Corpus Juris, vol. 18, p. 271, verbo “Deeds,” as follows:

“Merger of Previous Agreements. As a general rule a deed made in full execution of a contract of sale of land merges the provisions of the contract therein, and this rule extends to and includes all prior negotiations and agreements leading up to the execution of the deed, all prior proposals and stipulations, and oral agreements, including promises made, contemporaneously with the execution of the deed. This is true even where the grantor is not a party to the original contract, provided the deed is made in compliance therewith. Where, however, the deed constitutes only a part performance of the preceding contract, other distinct and unperformed provisions of the contract are not merged in it. And where a contract of sale provides for the performance of acts other than the conveyance, it remains in force as to such other acts until full performance, so also independent and collateral agreements are not merged, nor are a vendor’s or a purchaser’s covenants necessarily merged or discharged. The question of merger has also been declared to be one of construction, to be gathered from a consideration of the entire contents of the instruments, and the agreement upon which the deed is founded may be admissible or referred to to explain an uncertainty or ambiguity in the latter. But a person claiming under other representations and agreements than those embodied in the deed must make out. his case by clear and certain proofs. Again the general rule is subject to the further limitation, qualification, or exception that there has been no fraud or relievable' mistake, no misconception of the deed by either party, and no intent to the contrary. The merger does not -take place until the deed is delivered and the consideration furnished..”

See, also, Ruling Case Law, vol. 8, par. 74, verbo “Deeds.”

In the case of Delogny v. Mercer, 43 La. Ann. 205, 8 So. 903, it appears that the owner of the land issued a prospectus, setting forth the terms of credit and the conditions of the sale. The Supreme Court held that the terms of the prospectus were to be read into the deed.

In the case of Louisiana & A. Ry. Co. v. Winn Parish Lumber Company, 131 La. 307, 59 So. 403, 409, the Supreme Court of this state cited with approval the cases of Delogny v. Mercer, supra, and Taylor v. N. O. Terminal Co., 126 La. 420, 52 So. 562, 139 Am. St. Rep. 537, in the following language:

“It has, moreover, already been sanctioned by this court, in a case in which Bermudez, O. J., as the organ of the court, referring to certain language advertising the sale of real estate and expressing the intention of the owner to leave a certain space in front of the property advertised for the use of the purchasers, held that it constituted ‘a covenant running with the land.’ Delogny v. Mercer, 43 La. Ann. 205, 8 So. 903. In a later case, in which it appeared that a railroad company had acquired land with the obligation to fence and drain it and construct crossings thereon, it was held that a servitude was thereby created in favor of the adjacent land, and that the right to enforce it passed with the title, which was about the same thing as to hold that it was covenant running with the land. Taylor v. N. O. Terminal Co., 126 La. 420, 52 So. 562, 139 Am. St. Rep. 537.”

Returning then to the original contract and' construing it in connection with the bond for deed and warranty deed¡ we observe that the original agreement contemplates certain successive steps of performance at future intervals or periods of time. After the plaintiff had paid 10 per cent, of the purchase price upon the acceptance of the offer and an additional 15 per cent, within sixty days, defendants were obliged to issue a bond for deed to him. When plaintiff paid in 50 per cent, of the purchase price, he was entitled to a warranty deed which was executed in his favor. The plaintiff was then required under the express terms of the original contract to pay the other half of the purchase price in three equal annual installments bearing 6 per cent, interest. Defendants had this period of time in which to construct a gravel road on Harvard avenue. The contract specifically provided that when the last payment was made if the defendants had not constructed the road, plaintiff would have the right to request a refund of the -entire purchase price and any taxes that he might have' paid, with interest at the rate -of 6 per cent, per annum.

Taking these three documents into consideration, it appears to us that the execution of the bond for deed and warranty deed were not subsequent agreements intended by the parties to cover the entire subject-matter and merge everything into one agreement. The execution of the bond for deed and warranty deed were simply acts of performance at different intervals in carrying out the terms of the original agreement. The original contract did not become an executed contract when the bond for deed and the war--ranty deed were signed and delivered,, but remained an executory contract because there were other acts of performance to be done in the future by both parties. Therefore, the failure to put the stipulation in question in the bond for deed or warranty deed could not be construed as an abandonment or waiver of it or a merger of the entire subject-matter into a final agreement in the form of the warranty deed.

Counsel for defendants have cited a number of cases which in effect hold that all preliminary negotiations and agreements are to be deemed merged in the final, instrument executed by the parties and that a warranty deed to land, without exception or reservations when delivered and accepted is deemed, in the absence of fraud or mistake, a complete relinquishment of conflicting reservations in any prior executory contract. Van Ness v. Mayor of Washington, 4 Pet. 232, 7 L. Ed. 842; Mott v. Richtmyer, 57 N. Y. 49-64; French v. Burnett McMillion, 79 W. Va. 639, 91 8. E. 538, L. R. A. 1917D, at page 229; Clifton v. Jackson Iron Company, 74 Mich. 183, 41 N. W. 891, 16 Am. St. Rep. 621; Horner v. Lowe, 159 Ind. 406, 64 N. E. 218; McMaster v. State, 108 N. Y. 542, 15 N. E. 417; Gayton v. Day (C. C. A.) 178 E. 249; Carr v. Miller-Morris Canal Company, 105 La. 239, 29 So. 715.

These cases are not in point because in each instance the court found from the documents before it that it was the intention of the parties to merge all preliminary matters, provisions, agreements, and contracts into the final contract or deed which was delivered and accepted. In the present case the docu- . ments convince us that such was not the intention of the parties, because the original contract contemplated future acts of performance after the execution of both the bond for deed and the warranty deed.

We do not believe that there is any merit in the contention of the Johness Realty & Securities Company, Inc., one of the defendants, that as it only acted as agent for a. disclosed principal it is not liable, because under the above-quoted provision of the contract it is .clear to us that it bound itself equally with the principal to return the purchase price in the event the road was not constructed. Thus the mandatary guaranteed the faithful performance of this provision in the contract and is liable. Civ. Code, art. 3012.

For the reasons assigned the judgment appealed from is affirmed.

Affirmed.