Knighton v. Desportes Merc. Co. , 119 S.C. 340 ( 1922 )

I think that there was no error in the admission of testimony or in the charge of the Circuit Judge, as assigned by the appellant, and that the judgment of the Circuit Court has attained the justice of this case and should be affirmed.

This is an action for $612.94, double the amount of usurious interest collected by the defendant from the plaintiff upon two notes executed and delivered by the plaintiff to the defendant, the dates, maturities, amounts, and rates of interest being as follows: (1) April 7, 1905, November 1, 1905, $274, 8 per cent. per annum. (2) March 19, 1907, November 1, 1907, $230, 8 per cent. per annum. Both notes were paid by the plaintiff on March 13, 1912, the amount of interest, calculated at 10 per cent. compounded annually, paid by the plaintiff upon both notes to the defendant, was $306.47. This action is brought under Section 2519, Vol. 1, Code of Laws, A.D. 1912, for double that amount — $612.94. It is conceded that the defendant violated the provisions of that section and at one time was liable to the plaintiff for the penalty stated. The defendant contends however, that, in a subsequent real estate transaction between itself and the plaintiff, his claim for said penalty was incorporated and compromised, conceded, and released. To sustain that contention the defendant offered parol evidence that the release of that claim was a part of the consideration of a certain deed, which will be more fully explained, executed, and delivered by the defendant to the plaintiff on November 28, 1916. Over the plaintiff's objection the testimony was admitted by the Circuit Judge, and the jury rendered a verdict in favor of the defendant. The plaintiff has appealed, assigning error in the admission of that testimony and in the charge of the Circuit Judge.

The facts of the case, which appear to be conceded on all sides, are these:

The "case" is singularly barren of dates, and so far as they are concerned the statement herein must of necessity be exceedingly indefinite. Prior to the year 1916, possibly as far back as 1903, the plaintiff was the owner of a tract of land containing 364 acres. He had bought it for $1,000, paid part of the purchase price, and given his note secured by mortgage for the remainder. This note and mortgage were assigned to the defendant. Subsequently the plaintiff gave a second mortgage to the defendant. In 1916 the defendant instituted foreclosure proceedings against the plaintiff upon both mortgages. That suit resulted in a decree of sale, and the property was advertised for sale. Pending the sale the plaintiff conveyed the tract of 364 acres to the defendant in satisfaction of the debt (the date of this deed is not stated, though it is assumed to have been in the year 1916, prior to November 28th). Thereafter the defendant leased the place to the plaintiff for five years. On November 28, 1916, a short time after the conveyance of the 364 acres to the defendant, the plaintiff, anxious to recover a part of his old home, purchased from the defendant 150 acres of it, including the home site. Accordingly, a deed was executed by the defendant conveying the 150 acres to the plaintiff, upon a stated consideration of $1,000.

There the parties diverge: The plaintiff testifies that the purchase price of the 150 acres was $950; that he secured $800 from one source and 150 from another and paid both sums to the defendant; that nothing was said in reference to a settlement of the usury claim of which he was at that time fully advised and which he held against the defendant. The defendant offered testimony to the effect that the plaintiff's demand on account of the usury was flagrant at that time; that, when the plaintiff came to get back the 150 acres, he was told by the defendant, "We would not sell him one foot unless he had the usury charge against us withdrawn;" that he could have the land for $950. "If he would drop the usury charge against us;" that "he agreed to do that." "We told him we would not let him have any back unless he withdrew this usury charge against us, but in settlement we would sell him back 100 acres" (afterwards changed to 150 acres). All of this testimony was objected to by the plaintiff upon the grounds:

"That it was a collateral agreement adding to the consideration of the deed, and as being a different kind of consideration from that expresed in the deed by DesPortes Mercantile Company to Knighton; and incompetent, because intended to add to, vary and contradict the deed."

The admissibility of this testimony is the main point in this appeal.

This Court recognizes the force and wisdom of the rule which, after parties have solemnly incorporated the terms of their agreement in a written instrument, forbids the introduction of parol evidence which has a tendency to contradict, vary, or add to those terms. The rule of necessity applies to the essential elements of the agreement which the parties intended to crystallize in the writing; it does not extend to the formal, nonessential features of the contract writing, nor to independent agreements which do not contradict, vary, or add to the contract, and which are not inconsistent with it. It has been said that there are exceptions to the rule stated. Rather should it be said that there are certain conditions which do not come within the rule.

In 10 R.C.L. 1039, it is said:

"The broad and well-established principle that parol evidence is inadmissible to add to, vary or contradict a written instrument only applies to the essential and substantial parts of the writing, and not to those that are merely formal."

In Barmore v. Jay, 2 McCord, 371, 13 Am. Dec. 736, it is declared:

"But when associated with the reasons on which it is founded, it is apparent that it (the rule as to parol evidence) only applies to the essential and substantial parts of the writing, and not to those that are merely formal."

Among the nonessential features of a deed are its date and the consideration for its execution. The consideration of a deed is so insignificant, so far as its validity between the parties is concerned, that it is perfectly good without any consideration, and an intentional concealment or misrepresentation of it, which often occurs from motives of secretiveness, or purposes of trade and taxation, cannot affect its validity.

"In reference to all instruments acknowledging the receipt of a consideration, it is now well settled that it is competent by parol to show that no consideration was in fact paid or received, or that the consideration was greater or less than or different from the one expressed. This may be done for every purpose except to impeach or destroy the instrument. The amount or kind of consideration is not considered an essential part of the contract, and is open to contradiction or explanation, like a common receipt." 10 R.C.L. 1042.

"Although at one time a different view obtained in some States, it is now well established that the consideration in a deed may be explained, controlled, or rebutted by parol, where the amount paid becomes a material inquiry. The consideration expressed in a deed may be varied by parol to almost any extent, since the estate does not depend upon it, but upon the conditions and limitations descriptive of its quantity and duration expressed in the deed." 10 R.C.L. 1043.

In Bank v. Brown, 2 Hill, Eq. 558, 30 Am. Dec. 380, it was held that parol evidence was admissible to show that the wife's renunciation of her inheritance entered into the consideration of the deed and was a sufficient consideration to sustain the deed against creditors. The Court says:

"And I cannot perceive why, if there are two considerations existing at the time of the execution of the deed, one only of which is expressed, parol should (not?) be admitted to show the other and better. So far from tending to contradict the deed, its object is to support it, and must necessarily be consistent with it — the addition of a circumstance necessary to give it effect."

In Curry v. Lyles, 2 Hill, Law, 404, the Court says:

"The authorities cited by the counsel for the motion sustain very fully the position taken in the ground of the motion, that parol evidence was admissible to show that the true consideration agreed to be paid by the defendant for the land conveyed to him by the plaintiff was $1,150, instead of $1,100, as expressed in the conveyance."

After stating the general rule which excludes parol evidence, the Court declares that the rule does not apply to the nonessential features of a deed, among which is the consideration:

"It was not necessary, therefore, to the full and perfect operation of the deed from the plaintiff to the defendant, that it should express the precise consideration agreed to be paid, and it will not be inferred that it was intended to be so expressed."

In Rice v. Hancock, Harp. 393, a bill of sale of a negro fully stated a consideration already received. Parol evidence was admitted to the effect that there had been no consideration received, but that the bill of sale was executed to enable the grantee to sell the slave for account of the grantor. The Court said:

"The argument used to support this objection is that the Court permitted the evidence to go to the jury, which contradicted the tenor of the bill of sale, which on its face expressed the consideration which the plaintiff had given for the negro. If the evidence which was received had gone to contradict the bill of sale, the argument would be conclusive that the presiding Judge had erred in permitting it to go to the jury; for the law is well settled that parol evidence shall not be admitted to annul or substantially vary a written argument.

"But the object and design of the bill of sale was to transfer the right of property in this negro to the plaintiff, not to stop defendant from any future investigation respecting the consideration agreed to be paid for him.

"The consideration to be paid for the negro might or might not have been inserted in the bill of sale, and the transfer would in law have been as effectual the one way as the other. The insertion is more a matter of form than substance, and in no event can preclude a party from inquiring into it."

And further:

"It is every day's practice to inquire into the consideration of parol agreements and to show a total or partial failure of the same; and as respects deeds, parol evidence may be admitted to prove other considerations than those mentioned therein."

The Court further says in Curry v. Lyles, supra:

"The case of Garrett v. Stewart, 1 McCord, 514, is decisive of this. There the consideration expressed in a bill of sale of a negro was $1,000, and in an action on a warranty of soundness contained in it, the Court held that the defendant might give in evidence that another negro given in exchange was the true consideration."

In Rountree v. Lane, 32 S.C. 160, 10 S.E. 941, the Court quotes with approval the following from Greenleaf:

"Though the party is stopped from denying the conveyance, and that it was for valuable consideration, yet the weight of American authority is in favor of treating the recital as only prima facie evidence of the amount of the consideration paid" — citing Garrett v. Stuart, 1 McCord, 514; Curry v. Lyles, 2 Hill, Law, 404.

In Brice v. Miller, 35 S.C. 537, 15 S.E. 272, parol evidence was admitted for the purpose of showing that the grantee of a deed received it on consideration, not expressed in the deed, that she would pay a certain debt of the grantor's husband. The Court held:

"The testimony objected to was not offered to vary the terms of any written instrument, but simply to show the real consideration of the alleged transfer, which is clearly admissible."

In Ferguson v. Harrison, 41 S.C. 345, 19 S.E. 621, the Court says:

"The cases of Banks v. Brown, 2 Hill, Ch. 558, Hendersonv. Dodd, Bail. Eq. 133, Featherstone v. Dagnell,29 S.C. 45, Brice v. Miller, 35 S.C. 548, abundantly establish the rule that it is competent to show the real consideration of a deed, especially when fraudulent intent is attributed to the parties thereto. And the last case quoted holds that such testimony is not offered to vary the terms of the deed, but to show the real consideration of the alleged transfer."

In this case (Ferguson v. Harrison) the deed was voluntary on its face. The parol evidence offered was to the effect that the real consideration was the assumption by the grantee of certain debts of the grantor. The evidence was admitted. The Court further held that the grantee took the land charged with the duty of paying the debts as agreed. If the grantee had refused to comply with the agreement, unquestionably the creditors, by establishing by parol the true consideration of the deed, could have compelled her to carry out her agreement, and she would not have been heard to interpose the rule against parol evidence.

The case of Latimer v. Latimer, 53 S.C. 483,31 S.E. 304, so far from being opposed to our conclusion, is clearly in support of it. There the deed was a voluntary conveyance to the wife of the plaintiff. The plaintiff sued upon a breach of warranty under another deed which the grantor of the deed to his wife had executed and delivered to him. The executors of the grantor of both deeds endeavored to prove by parol that the consideration of the deed to the plaintiff's wife was the release by the plaintiff of his claim against their testator on account of the breach of warranty sued upon. The Court sustained the Circuit Judge in excluding this parol evidence upon the ground that the consideration in the wife's deed was natural love and affection, a "good" consideration, and that it was inconsistent with the terms of the deed to change it by the proposed evidence into a valuable consideration. The Court quotes with approval the following from Greenleaf: "Evidence may also be given of a consideration not mentioned in a deed, provided it is not inconsistent with the consideration expressed in it." And, "A further consideration may also be proved by parol; if it is not of a different nature from that which is expressed in the deed," and that such evidence may be received to vary the amount of the consideration mentioned in the deed; that "different nature" refers to "good" and "valuable" characteristics of the consideration.

The parol evidence in question was admissible upon the further ground that it tended to establish a separate and independent contract between the parties, contemporaneous and not inconsistent with the deed.

In Chemical Co. v. Moore, 61 S.C. 166, 39 S.E. 346, the plaintiff sued upon a contract in writing for the sale of certain fertilizer. The defendant set up as a counterclaim the breach by the plaintiff of a contemporaneous oral contract, the inducement to his entering into the contract sued upon, by which the plaintiff agreed that the defendant should be the sole agents of the plaintiff in the sale of its goods at that point. The Court held that parol evidence of this oral contract was admissible, for the reason that it did not tend to alter the original written contract, but to establish a distinct agreement entered into by the parties at the same time, which really was the inducement to the contract sued upon.

In Whitman v. Corley, 72 S.C. 410, 52 S.E. 49, the complaint alleged that the plaintiff had conveyed to the defendant a tract of land in consideration of a promise of future support and that the defendant had failed to perform his agreement. The deed expressed only the consideration of $200. The plaintiff offered to prove by parol evidence that the real consideration was not the payment of $200, but the promise of the defendant to support her. The defendant objected to the evidence upon the ground that it was an attempt to vary the terms of a written instrument by parol. The objection was overruled, the evidence was admitted, and the plaintiff had a verdict. Upon appeal this Court sustained the ruling, the Special Judge, Hon. Robert H. Welch, saying:

"Where a deed expresses a certain valuable consideration, an additional or different valuable consideration may be proved by parol."

The Court distinguishes the Latimer case and cites with approval the Garrett, Curry, Rountree, and Rice cases, hereinbefore referred to.

In Marshall v. Railroad Co., 73 S.C. 24, 53 S.E. 417 the plaintiff was allowed to prove by parol evidence, as a part of the consideration in the sale of a certain lot to her. an agreement by the seller that a certain area of "Circle" in front of the lot should not be sold for other building lots but should remain open for the benefit of the lots fronting thereon. Upon that evidence, the Court sustained an order of injunction forbidding the seller from violating the agreement. The Court said:

"It (the parol evidence) was also competent as tending to show the actual consideration for the deed."

In Williams v. Salmond, 79 S.C. 459, 61 S.E. 79, the parties entered into a written lease of land. The plaintiff contended that as a part of the consideration of the lease, not incorporated in its terms the defendant, landlord, agreed to make certain improvements and repairs, and sued for a breach of this agreement. The defendant objected, under the parol evidence rule, to the proof of this agreement. The Court held:

"The appeal rests on the proposition that the whole agreement with respect to the land is conclusively presumed to be embraced in the written `agricultural lease and lien' signed by the parties, and, therefore, no parol agreement can be set up by the plaintiff. We think the proposition unsound. A contract to lease land imposes no obligation on either the lessor or the lessee to put the property in repair or to build new houses. Charleston v. Morehead, 2 Rich. 430; Cantrell v. Fowler, 32 S.C. 589,10 S.E. 934; 1 Washburn on Real Property, 567, 167; 18 A. E. Ency. 246. The lessor turns over the property and the lessee takes it as it is turned over to him. Any obligation to put the property in repair or to build houses not only may be but must be imposed by some contract apart from the mere lease of the land for a given term. The parties may incorporate such contract to put in repair or build new houses in the instrument that embodies the lease contract, but it is not necessary for them to do so. The two contracts are separate in their nature, in nowise inconsistent with each other, and one may be in writing and the other parol. The written lease, therefore, was no obstacle to the setting up and proving the distinct and separate agreement to put the place in repair and build new houses."

A similar question arose in Holliday v. Pegram, 89 S.C. 73,71 S.E. 367, Ann. Cas., 1913A, 33, where the Court in an opinion by the present Chief Justice announced:

"If there is a lease in writing, which makes no reference to repairs, the lessee is not precluded from introducing parol testimony to show that, as a part of the consideration of the agreement to pay rent, the lessor promised to make repairs. And if it appears that the lessee suffered damage, by reason of the lessor's failure to make the repairs, he would not be allowed to recover the whole amount mentioned as rent, but only that amount, after deducting such damages, as the lessee may have sustained, by reason of the lessor's failure to make the repairs."

See, also, Hardware Co. v. Gray, 90 S.C. 454,73 S.E. 872, where the same principle is announced and both theWilliams v. Salmond and Holliday v. Pegram cases are reaffirmed.

In Martin v. Bank, 92 S.C. 226, 75 S.E. 404, the defendant was allowed to prove by parol evidence a contemporaneous oral agreement that a certain claim of the plaintiff against another should be applied to the note of the plaintiff to the bank as soon as collected, notwithstanding the fact that it would be collected before the note fell due. The evidence was admitted upon the ground that it did not tend to alter the terms of the writing, but was to establish an independent and separate agreement.

The parol evidence was admissible upon the further ground that the testimony tends to show that the agreement to release the usury charge was an inducement to the execution of the deed; and it would amount to a fraud for the grantee to retain the benefit of the deed and repudiate the agreement without which the deed would not have been executed.

"The existence of a contemporaneous parol agreement between the parties under the influence of which a note or contract has been signed, which is violated as soon as it has accomplished its purpose in securing the execution of the paper, may always be shown when the enforcement of the paper is attempted. It is a plain fraud to secure the execution of an instrument by representations differing in important particulars from those contained in the paper, and, after the paper has been signed, attempt to compel literal compliance with its terms, regardless of the contemporaneous agreement without which it would never have been signed at all." 10 R.C.L. 1059.

The charge of the Circuit Judge was full, clear, and correct; the appellant has shown no prejudicial error therein.