Johnson v. Portwood

The Court of Civil Appeals for the Second Supreme Judicial District, seeking to have this court determine certain questions involved in the above stated case now pending in that court, have submitted for our consideration the following certificate:

"In this cause this court heretofore rendered a decision in which one of the judges thereof dissented to the conclusions of law expressed by the majority ordering that the judgment be reversed and the cause be remanded for a new trial. The grounds for dissent still adhered to are entered in the opinion of the court, a copy of which accompanies this certificate. The questions presented arise upon exceptions to the pleadings of the appellants Henry V. Johnson and R.A. Long, and a copy of the pleadings of the parties, respectively, accompanies this certificate.

"The decision of this court was rendered when Head, A. J., was a member of this court. The questions for adjudication now arise upon a motion for rehearing pending in this court, in which Hunter, A. J., is disqualified. This certificate is made in accordance with an order of this court this day entered upon its own motion, Hunter, J., being disqualified and not sitting therein. Accordingly the points of dissent, which appear fully in the accompanying copy of the opinion, in connection with the accompanying copy of the pleadings of the parties respectively, are respectfully certified to your Honors for decision, under the provisions of art. 1081c, Supp. Sayles' Tex. Civ. Stats.

"Should it be deemed that the certificate does not arise under the terms of said article, the very questions of difference, which appear as already indicated, are certified for decision to your Honors, under the provisions of art. 1081f, Supp. Sayles' Tex. Civ. Stats."

The questions upon which there was a dissent involved the correctness of the ruling of the trial court in sustaining demurrers to the special answer of the defendant and to a plea of intervention of his co-appellant. The certificate is accompanied with a certified transcript of the pleadings in the case, together with the dissenting opinion, which contains as well the grounds upon which the majority base their conclusion.

We think we have no jurisdiction to decide the questions as upon certificate of dissent. The articles of the present Revised Statutes which confer jurisdiction upon this court to determine questions upon which the courts of Civil Appeals may certify their dissent, are as follows:

"Art. 1040. When any one of said Courts of Civil Appeals shall in any cause or proceeding render a decision in which any one of the judges therein sitting shall dissent as to any conclusion of law material to the decision of the case said judge shall enter the grounds of his dissent of record, and the said Court of Civil Appeals shall, upon motion of the party to the cause, or on its own motion, certify the point or points of dissent to the Supreme Court.

"Art. 1041. When a certificate of dissent is sent up by any Court of Civil Appeals it shall be the duty of the clerk to send up a certified copy of the conclusions of law upon which there is a division, and the original transcript, if so ordered by the Supreme Court, and thereupon, if the Supreme Court so direct, the clerk shall set down the same for argument and notify the attorneys of record."

The article first quoted evidently contemplates that the case shall be finally decided, before the dissent can be certified. A case is not finally decided as long as there is a motion for a rehearing undetermined. And, hence, we think our jurisdiction does not attach by reason of the dissent.

But, since the opinion, which accompanies the certificate and which is deemed a part of it, distinctly presents the questions upon which our decision is desired, and since we are requested to consider the same as a certified question, if not as upon a certificate of dissent, we think it our duty to comply.

We are of the opinion, that the exceptions to the pleadings of the defendant were correctly sustained.

In defense of the action, which was a suit upon certain promissory notes given by him to the plaintiffs for the purchase money of a tract of land, the defendant alleges in his answer an agreement entered into between him and the plaintiffs, at a time when a former suit on the notes was pending, for a satisfaction and discharge of the indebtedness. He alleges that, in consideration of a payment of $6566.33, the plaintiffs addressed a letter to one John C. Harrison, who, it seems, was a depositary of the notes, in which they directed him, upon payment of the sum of $4256.40 and interest and the reconveyance to the plaintiffs of a third of the land for which the notes had been given, to deliver up to the attorney of the defendant the notes, together with a release signed by them, which accompanied the letter. The letter of instructions directed, that the money was to be paid in thirty days. A copy of the writing was made a part of the answer. It was not alleged that there was any other writing evidencing the terms of the agreement. The answer avers a tender of the $4256.40 and interest after the thirty days had expired; but practically admits that no tender was made within that time.

We take it from the defendant's averments, that while the plaintiffs may, upon defendant's compliance with the terms of the letter of instructions, have been bound thereby, the defendant was not bound either to pay the sum therein mentioned or to convey the land. In the absence of some memorandum of the agreement, signed by him, he could not be compelled specifically to perform what the contract gave him the option to do. (Morris v. Gaines, 82 Tex. 255; Brock v. Jones,8 Tex. 78; Crutchfield v. Donathon, 49 Tex. 691 [49 Tex. 691].) The agreement does not evince that anything but an option on his part was intended. He could do or not do, as it pleased him. In an ordinary contract for the conveyance of land, in which the purchase money is to be paid at a future day, time is not usually held to be of the essence of the contract. But when the transaction is in the nature of an unilateral contract — where a party is given an option to acquire a right by doing a certain thing within a specified time — it is held that time is essential, and that, in order to secure the right, he must comply within the specified period. This is settled law.

In addition to the authorities cited in the dissenting opinion, the following are also referred to as affirming the doctrine announced: Coleman v. Applegarth, 68 Md. 21; Harding v. Gibbs, 125 Ill. 85; Mason v. Payne, 47 Mo., 517; Stembridge v. Stembridge's Adm'n., 87 Ky. 91; Estes v. Furlong, 59 Ill. 298; Kerr v. Purdy, 51 N.Y. 629; s. c., 50 Barb., 24; Potts v. Whitehead, 20 N.J. Eq. 55; Brooke v. Garrod, 3 Kay J., 608; s. c., 2 De Gex J., 62; 3 Pomeroy's Eq., 2d Ed., sec. 1408, n. 1.

But the defendant, in a trial amendment, also avers that the time expressed in the letter of instructions to Harrison is not the time actually agreed upon between the parties; and that in fact he was to be allowed ninety days in which to make the payment of the $4256.40. As before stated, the agreement involved a conveyance by the defendant of his interest in one third of the land to the plaintiffs. The promise to convey the land is within the statute of frauds. The conveyance of the land was a part of the consideration for the defendant's promise. If neither promise be in writing, neither can be enforced. Morris v. Gaines, supra; Brock v. Jones, supra. It follows that, if the letter is not evidence of the contract on part of the plaintiffs, the defendant has no contract which he can enforce. If the letter be relied upon as a memorandum of the plaintiffs' promise, enforceable under the statute of frauds, then it is a written instrument, the terms of which cannot be varied by parol evidence. If the defendant can show that ninety days was allowed, under the actual agreement, in which to make the payment, why may he not prove that only $400 was to be paid instead of more than $4000, or that in fact no land was to be conveyed? This we think clearly an attempt to vary the terms of a written instrument by parol evidence, and cannot be permitted. The skillful pleaders who drew the answer of the defendant, probably made the most of his case. They did not allege a mutual mistake in drawing the writings and seek to reform it, for the reason, in all probability, that the plaintiffs made no mistake. It would not have availed them to allege fraud, because the proof of that allegation would have destroyed the effect of the instrument for any purpose, and would have left them without any contract which could have been enforced.

But we think that the trial court erred in sustaining the demurrer to the plea of intervention. Briefly stated, the case alleged in the plea of intervention is in part that the intervenor acted as agent of the defendant in making the agreement with the plaintiffs; that they were anxious to secure a payment upon the notes; that the defendant was insolvent and had no money, as they well knew; that he agreed with the defendant to advance the money to make the cash payment, with the understanding that two thirds of the lands were to be released from the plaintiffs' claim, and that defendant was to convey to him the land so released or a sufficient amount thereof to secure him for the loan; that this was also known to the plaintiffs, and that the agreement as actually made was that the defendant was to have from sixty to ninety days, if he so desired, in which to pay the $4256.40. He also alleges in effect that the agreement was entered before the letter of instructions to Harrison was signed, and before the signing of an agreement between the plaintiffs and defendants dismissing the first suit, and that he was not present when they were signed. He also adopts the answer of the defendant.

But in addition to the foregoing, the pleading also contains the following averments:

"Intervener also told plaintiffs that it was understood between him and Johnson that the latter was to secure him in the repayment of said money by conveying to him the said two thirds interest in said land, or so much thereof as would compensate intervener for the $6566.33 advanced by him at the time of said settlement and for the sum of money for which he would have to become responsible in order to raise the sum of money thereafter to be paid; and intervener distinctly told plaintiffs that unless the settlement indicated in the exhibits attached to defendant's answer was to be a full and complete satisfaction of said notes, then he would pay no money and they could proceed with their suit against Johnson. Whereupon plaintiffs agreed with him that said settlement should be in full satisfaction of said notes if intervener should pay the sum of money he was then offering to pay, and that the suit then pending against Johnson should be dismissed, and it was further distinctly understood that intervener and Johnson should have, if they desired it, from sixty to ninety days to raise the sum of money now tendered by Johnson.

"Intervener further shows that, influenced by the said settlement and the assurances given by plaintiffs to intervener that a two thirds interest in said land should be the absolute property of defendant, he paid, of his own means, the sum of money paid at the time of said settlement, and has since then paid three fourths of the sum of money tendered by defendant to plaintiffs as shown in said answer and as is now tendered by him.

"Intervener further shows that, while defendant has not made him any deed to any portion of said land, or given him any lien thereon, that defendant is ready and willing at any time to secure intervener in the sums of money so advanced by him, either by a conveyance of said land or by giving him a lien thereon.

"Intervener further shows that at the time of said settlement it was well known to plaintiffs that Johnson was insolvent, and that said land would not if condemned to sell bring the amount of money due upon said notes, nor would it bring the sum of money which intervenor was offering to pay, and did pay, in order to effect said settlement."

The prayer is: "That it be adjudged by the court that the settlement made on to-wit, January 28th and 29th, 1892, as indicated in Exhibits 'A and B,' part of defendant's answer, be adjudged to be in full satisfaction of the notes herein sued upon; that it be also adjudged that the sum of money now tendered by defendant is the only balance due upon said land; that it be adjudged that defendant is the owner in absolute title of an undivided two thirds interest in the whole of said land; and that it be further adjudged that plaintiffs Portwood and Huffman are entitled to three twelfths interest in said land (plaintiff Nelson having accepted, in pursuance of the terms of said settlement, from defendant, a deed to a one twelfth interest in said land); and that said notes be canceled and held for naught — that plaintiffs take nothing by this suit. Intervener further prays that, in case it be held that said settlement was not a satisfaction of said notes, and that plaintiffs Portwood and Huffman still have a vendor's lien upon the whole of said land for the balance due thereon, that they, Portwood and Huffman, be adjudged to be indebted to intervener in the sum of three fourths of the money paid by him at the time of said settlement, with interest thereon from the time said was paid, and that intervener be subrogated to such a lien as said Portwood and Huffman had upon said land at and prior to the time of the payment of said money; and that it be adjudged that the said sum of money, in case said land should be condemned to sale to pay the balance due thereon, be adjudged to be sold subject to the prior lien of this intervener for three fourths of the sum so paid by him; and that it be also adjudged that said sum of money be paid to intervener before any portion of the proceeds of said land are paid to plaintiffs Huffman and Portwood; and intervener prays for all such other and further relief as, under the facts herein stated, he may be entitled to."

In so far as the intervener attempts to claim under the contract between the plaintiffs and the defendant, he is in no better position than the latter. Our decisions hold that an equitable mortgage cannot be created by an agreement not in writing. Castro v. Illies, 13 Tex. 229; Boehl v. Wadgymar,54 Tex. 589. But had the intervener taken a mortgage from the defendant, he would, as to the right so acquired, have been in privity with the defendant, and would not be permitted to introduce parol evidence to vary the terms of the written memorandum. If the writing is to be discarded, then, as before said, the defendant had no contract which could be enforced under the statute of frauds, and hence the intervener, to the extent that he claimed through him, would have been in the same predicament.

But the averments which we have quoted from the plea of intervention present a different case. If it was agreed between the plaintiffs, the defendant, and the intervener, that the intervener should advance the $6566.33 for the defendant, and that upon defendant's paying the $4256.40 and interest, and conveying to the plaintiffs one third of the land within a specified time, the plaintiffs would release their claim upon the remaining two thirds, and that the intervener should have a lien upon such two thirds to secure the repayment by the defendant of the money so advanced, and if the defendant tendered the money and the deed to the third interest in the land, within the time so specified, then the intervener should be held subrogated to the lien of the plaintiffs as to the two thirds interest. Fievel v. Zuber, 67 Tex. 275; Dillon v. Kauffman, 58 Tex. 696; Flanagan v. Cushman,48 Tex. 241; Harris Co. v. Campbell, 68 Tex. 22 [68 Tex. 22]. Besides, the intervener was under no obligation to the plaintiffs to part with the money. The advancement of the $6566.33 upon the defendant's debt was a sufficient consideration to support the plaintiffs' promise, and if the statute of frauds for any reason should be held applicable to his contract, we think the payment of the money by him under the circumstances alleged was such a part performance as entitled him to its enforcement, so far as his rights are concerned. It is settled law in this court that, in case of oral contracts for the sale of land the payment of the purchase money alone is not such part performance as will take the case out of the statute. The ground upon which a specific performance is enforced in such cases when there has been a part performance, is that the refusal of the defendant to perform would operate a fraud upon the plaintiff. When there has been nothing more done than the payment of the purchase money, the courts say that the vendee has a remedy by suit to recover it back. But in this case, unless the intervener be allowed his lien, he is without remedy for the recovery of his money. It was lent to the defendant, who is alleged to be insolvent. It has been paid to the plaintiffs upon a debt of defendant that was due, and they cannot be compelled to pay it back. It would be a fraud for them not to carry out their contract, at least in so far as it is necessary for the intervener's protection. In Malins v. Brown, 4 Comst. (4 N.Y.), 403, the plaintiff bought a tract of land, which, with other lands of his grantor, was subject to a mortgage. However, before the purchase, he demanded from his vendor, who was the mortgagor, that he should procure a release of the mortgage. It was thereupon agreed between the plaintiff, the mortgagor, and the mortgagee, that $700 of the purchase money should be paid to the mortgagee, and that he should release the mortgage as to the land to be sold. The $700 was paid to the mortgagee, and a conveyance taken from the mortgagor. The contract to release the mortgage was not in writing. The court waived the question whether the promise to release was within the statute of frauds of not, and held that if it was, the payment of the money under the circumstances was such a part performance as entitled the plaintiff to a performance of his contract. The case we think was correctly decided and is in point here.

That the intervener, in so far as he does not claim under the letter of instructions to Harrison signed by the plaintiffs and delivered to the defendant's agent, is not bound by that instrument, and can show that the real contract was for ninety days' time, is well settled by the authorities. The text from Greenleaf on Evidence quoted in the opinion of the majority of the Court of Civil Appeals is supported by the following cases: Krider v. Lafferty, 1 Whart. (Pa.), 303; Reynolds v. Magness, 2 Ired. (N.C.), 26; Cunningham v. Milner, 56 Ala. 522; Talbot v. Wilkins, 31 Ark. 411; Hussman v. Wilke, 530 Cal. 250; Edgerly v. Emerson, 23 N.H.], 555; Langdon v. Langdon, 4 Gray (Mass.), 186; McMaster v. Ins. Co., 55 N.Y. 222. In the case last cited Mr. Justice Folger says: "The parties to a written instrument have made it the authentic memorial of their agreement, and for them it speaks the whole truth upon the subject matter. It does not apply to third persons, who are not precluded from proving the truth, however contradictory to the written statements of others. Strangers to the instrument, not having come into this agreement, are not bound by it, and may show that it does not disclose the very truth of the matter."

In determining the sufficiency of the pleadings in this case, we have not lost sight of the rule that it is not necessary to allege that a contract within the statute of frauds was made in writing. Here both the defendant and the intervener aver that the two certain instruments, which were made part of the pleadings, were in writing and duly signed, and do not allege that the previous agreement was written. The inference is that that agreement was merely oral; and it has been so treated both by the parties and the courts below.

Reversed and remanded.