Godfrey v. Central State Bank , 5 S.W.2d 529 ( 1928 )

It is the opinion of a majority of the court that the motion of the appellee for a rehearing should be overruled. The writer, by his study of the case, reaches a different conclusion, and is of the opinion that the motion should be granted, the former judgment set aside, and judgment be rendered affirming the judgment of the trial court.

It was the contention of appellant upon the original submission of the case that Godfrey's letter of June 3, 1926, and the bank's reply of June 4, 1926, constitutes a contract of the purchase and sale of two-sixteenths of one-eighth royalty in the three sections of land, and that the subsequent correspondence are but matters of detail incident to a final closing of the deal. The argument is persuasive, and I am convinced that, if in all the correspondence a contract is to be found, it in fact consists of these two letters. In the letter of June 3d, Godfrey proposes to pay $650 for two-sixteenths of the royalty in the three sections, and that much of the offer is clearly and unqualifiedly accepted in the bank's letter of June 4th. The offer or proposition, however, was a little broader than merely naming the consideration and the subject-matter of the negotiations. A part of Godfrey's proposition besides that mentioned is as follows:

"And you to furnish one abstract showing good and marketable title covering the three sections."

In a sale of real estate, there is no implied obligation to furnish an abstract at all. Sangfroid v. Bovines (Tex. Iv. App.) 225 S.W. 867, and authorities cited. There is, of course, then no implied obligation to furnish an abstract of any particular characteristics, as, for instance, one showing good and marketable title. If this part of Godfrey's offer was accepted unconditionally and without qualification, I am of the opinion that there was a meeting of the minds and resultant contract. If accepted, such acceptance is to be found in that part of the reply, which reads:

"I will furnish you one complete abstract covering amount of royalty in the three sections, which will be exactly the same as the abstract that you now hold on section 41, as that abstract covers the six sections and just certifies to for one section. I will give you a letter guaranteeing the abstract to be a duplicate of the one you have, so that you may pay on this amount, and which will protect you, so that you may recover the amount paid for this royalty in case the abstract is not as represented."

Stated in other words, the question is whether or not an offer that is conditioned upon being furnished a complete abstract showing good and marketable title is accepted by an agreement to furnish an abstract, which is an exact duplicate of an abstract at the time in possession of the offered, and in lieu of immediate delivery of such abstract a letter to be given guaranteeing that such abstract will be furnished.

Appellant's proposition as to being furnished an abstract was not accepted, unless it can be said that an agreement to furnish one complete abstract "exactly the same as the abstract" Godfrey "had on section 41" is exactly equivalent to an agreement to furnish "a complete abstract showing good and marketable title." Whether this be so or not is not disclosed by either of the two letters. The letters and the circumstances, however, strongly suggest that such is not the fact. The question would arise why Godfrey was insisting upon "a complete abstract showing good and marketable title" to the three sections which he proposed to purchase, if he already had such an abstract. But, conceding that it is possible that he would want another abstract of the character mentioned, certainly other evidence than the two letters must be looked to determine if the agreement of the bank constituted an acceptance of the offer with respect to the furnishing of an abstract with the required characteristics. Conceding, provisionally, that it is not necessary that the identity of the offer and acceptance be shown by the letters themselves, and looking to other available evidence, we find that in Godfrey's letter of July 12th that his former offer to be furnished an "abstract showing good and marketable title" was not accepted by the agreement to furnish an abstract "exactly the same" as the one on section 41, because, as to the abstract then owned by Godfrey and covering section 41, there were, according to this letter, "quite a number of the documents set out therein, particularly all records from the General Land Office, cover only section 41, and a number of these documents set out therein cover only those sections embodied in block B-5, and do not cover section 46, which is in block 26." From this it is apparent that, if Godfrey was furnished an abstract, an exact duplicate of the abstract he had on section 41, it would not be a complete abstract of the sections he was purchasing, to say nothing of whether or not it showed good and marketable title. Without going outside the correspondence alleged to constitute the contract, it is apparent, then, that the letters of June 3d and June 4th do not of themselves constitute a contract, because the bank did not therein agree to furnish an abstract showing good and marketable title to the interest proposed to be purchased in the three sections of land. Under the well-settled rule, what was said relative to furnishing an abstract in the bank's letter of June 4th must be construed as a rejection of appellant's offer, and constitutes a new offer to substitute something else for the obligation to furnish an abstract showing good and marketable title. Godfrey did not propose to pay $650 for two-sixteenths royalty except as a part only of a proposition that included the furnishing to him of a complete abstract showing good and marketable title. A failure to accept a part of the proposition was, so far as the making of a contract is concerned, the rejection of all. This view disposes of all of the propositions urged in the original brief of appellants.

It may be observed, however, that, even if the two letters of June 3d and June 4th did constitute a contract, specific performance thereof could not be enforced under the pleadings in this case. It is axiomatic that, in a suit upon a contract, the identical contract alleged must be proved. Padgitt Bros. Co. v. Dorsey (Tex.Civ.App.) 194 S.W. 1124; Gammage v. Alexander, 14 Tex. 418; Bagley v. Brack (Tex.Civ.App.) 154 S.W. 247; Western Union Telephone Co. v. Smith, 88 Tex. 9, 28 S.W. 931, 30 S.W. 549. A provision of the contract alleged is that the bank "did agree therein (that is, in said contract) to execute and deliver to each of these plaintiffs a good and sufficient mineral deed to said interests." If the contract is to be found in the two letters mentioned, then certainly the evidence does not prove a contract containing any such provision as that last quoted. A peremptory instruction would have been required just the same.

It becomes necessary, then, to consider if a contract of the nature or identity alleged in the pleadings can be found in the subsequent correspondence considered alone or in connection with the two letters already discussed, or any other of the correspondence claimed to show a contract. In the determination of this question, no consideration, I think, can be given to the two mineral deeds which the evidence shows were signed and acknowledged, but never delivered. This, because the contract alleged did not include such deeds as a part thereof. According to the pleadings, the contract consists of certain correspondence attached as exhibits, and which do not include the deeds. Besides this, it is alleged "that, thereafter, in pursuance of said contract, etc., the deeds were signed, etc., but not delivered," thus clearly showing that the deeds themselves were not claimed to be a part of the contract.

Godfrey's letter of July 12, 1926, written more than a month after the bank's letter of June 4th, is not an acceptance of the offer of the bank to furnish an abstract exactly like the one Godfrey had on section 41. He calls attention to the fact that such an abstract would not correctly reflect the condition of the title to the three sections constituting the subject-matter of the negotiations. Neither is it a waiver of that part of Godfrey's former proposal that he be furnished an "abstract showing good and marketable title" to the royalty in the three sections of land. This is manifest from the fact that in this letter the demand is repeated for the same character of abstract. This letter, then, must be considered as a rejection on the part of Godfrey of the bank's proposal contained in its letter of June 4th. Godfrey's letter of July 12th, then, must be regarded as a new offer to enter into a contract with the bank respecting the sale and purchase of the royalty in question. It seems to me that as a new offer it supersedes all previous negotiations. Whether this be exactly correct or not is not material. It certainly makes mention of everything discussed in previous negotiations, and on its face appears to contain a full statement of the terms and conditions of the contract appellant is "still willing" to make. In this he offers: (1) That Godfrey will purchase one-sixteenth of the one-eighth royalty for $325; (2) that Eades will purchase one-sixteenth of the one-eighth royalty for $325; (3) that one complete abstract showing good and marketable title in all the sections shall be furnished; or (4) that, in lieu of immediately furnishing such abstract, a letter may be written guaranteeing that the bank will furnish a complete abstract showing good and marketable title; (5) that two mineral deeds (prepared by Godfrey and inclosed in the letter) shall be properly executed and acknowledged and with two drafts attached, each for $325, one upon T. C. Eades and the other upon P. S. Godfrey, shall be sent to the Mercantile National Bank, Dallas, Tex., subject to examination and approval; (6) that both Godfrey and Eades, as soon as they have examined the papers and found them in proper form, will take up the two drafts; (7) it is proposed that a formal contract be dispensed with, and that, in lieu thereof, that the deeds prepared and inclosed be executed and returned in the manner described.

To make a contract binding on the bank of this offer of Godfrey in his letter of July 12th, it was necessary: (1) To wire or write Godfrey that the offer was accepted; or (2)(a) execute the deeds as same were prepared by Godfrey; (b) attach the drafts for $325 each to the deeds as directed; (c) attach to the deeds and drafts a letter stating that the bank guaranteed to furnish a complete abstract showing good and marketable title to the property; (d) forward all to the Dallas bank.

With these requisites in mind, let us examine the contents of the bank's reply dated July 14, 1926. It certainly is not an unconditional acceptance. Up to that time the deeds have not been executed. The letter does not say that the offer is accepted. Is it to be construed as a rejection of Godfrey's offer and the making of a new proposition? It evidences a rejection of the deeds written by Godfrey; for new deeds are proposed with "a little change in the last paragraph." The offer to be "furnished an abstract showing a good and marketable title," or, in lieu thereof, a letter guaranteeing that such an abstract would be furnished, is likewise rejected, and there is substituted the offer to send an abstract to be examined, and the deal to be closed only upon the contingency that Godfrey finds the abstract satisfactory. An obligation to furnish an abstract showing good and marketable title, or an obligation to guarantee that such an abstract will be furnished, is a very different thing from an obligation to furnish an abstract for one to examine and determine, if it is satisfactory. An abstract may be satisfactory which does not show good title. This statement is made with some authorities in mind that may be thought to hold to the contrary. Moot v. Business Men's, etc., Ass'n, 157 N.Y. 201, 52 N.E. 1, 45 L.R.A. 666; Latrobe v. Winans, 89 Md. 636, 43 A. 829. It must be remembered that it is not the character of title that the parties are negotiating, but the character of abstract. Even if the rule in Pennington v. Howland, 21 Rawle I. 65, 41 A. 891, 79 Am. St. Rep. 774, is not exactly applicable, the principle discussed in Maupin on "Title," infra, is sufficient to show a distinction between an abstract showing a good marketable title, and one that upon examination by an individual is found satisfactory. One individual will sometimes approve an abstract which another will disapprove. Maupin on "Marketable Title," p. 770. Individual opinion may differ as to when an abstract shows good and marketable title, From this it results that an abstract may show good and marketable title, and still be rejected under a contract that it must be satisfactory. I therefore conclude that the bank's letter of July 14th must be construed as a rejection of Godfrey's offer of July 12th, and that that letter must be regarded as a new offer.

As a new offer, the letter may be analyzed as proposing: (1) That Godfrey approve or disapprove the two deeds as rewritten with the "little change in the last paragraph"; (2) that, if approved, same will be indorsed (executed we take it), and sent to appellant with all necessary papers, including abstract; (3) the abstract to be examined and closing of the deal conditioned upon same being satisfactory; (4) in the alternative, if changes in deeds not satisfactory, then Godfrey to make or write in such changes as will be satisfactory and return same; (5) in event of such return, promise is made to try to adjust the matter satisfactorily.

This letter proposes terms upon which said contract may be consummated, and also proposes, in case it cannot be so consummated, a basis for future negotiations. To have made a contract of this offer, it was necessary for Godfrey to have assented to the deeds as changed, and, further, to have accepted, in lieu of his proposal that he be furnished a complete "abstract showing good and marketable title," or a letter guaranteeing that such abstract would be furnished, the agreement or proposal of the bank to furnish an abstract to be examined, and the closing of the deal to be contingent upon such abstract being found by Godfrey to be satisfactory. Looking now to Godfrey's reply of July 15th, we see that the changed deeds were not satisfactory, for the letter expressly says so. I do not think it is important that the change may not have varied the legal effect of the deeds. It must be borne in mind there was no duty or obligation to approve the form of the deeds. Godfrey had the right to be capricious or arbitrary. 13 C.J. 297. The important thing was whether or not he approved, and not the validity of any reasons why he disapproved. As to this matter, then, I think there was clearly no acceptance, and therefore no contract, but it is also clear that Godfrey did not consent to accept the proposal of the bank with reference to furnishing an abstract in lieu of Godfrey's offer to be furnished a complete abstract showing good and marketable title, for this demand is again repeated without change. Therefore Godfrey's letter of July 15th must be considered as a rejection of the bank's offer in its letter of July 14th, and must be regarded as a new offer to be accepted or rejected by the bank.

As before, we analyze this offer for the purpose of more certainly determining if there was an unqualified acceptance of the entire proposal. The proposition is: (1) That the bank execute the new deeds (the second deeds proposed by Godfrey); (2) that the bank furnish complete abstract showing good and marketable title; (3) that it attach drafts to the deeds (as previously directed); (4) that deeds and drafts attached be forwarded to the Dallas bank (as previously directed).

To constitute a contract enforceable against the bank, it was necessary for the bank:

(1) To write or wire agreement to execute the deeds, attach drafts, and send to the Dallas bank, together with a complete abstract showing good and marketable title. It is doubtful if attaching a letter guaranteeing to furnish an abstract showing good and marketable title would have been sufficient, since this alternative was not contained in the last offer, but, for the purpose of testing the matter, we will assume that, in lieu of sending the abstract of the kind mentioned, the requirement would have been met by attaching a letter guaranteeing that such abstract would be furnished. Or —

(2) For the bank to have actually executed the deeds, attached same to the drafts and have forwarded them to the Dallas bank, together with a complete abstract showing good and marketable title, or to have in lieu thereof attached a letter guaranteeing to furnish an abstract showing good and marketable title. But the bank did not write, wire, or otherwise notify Godfrey that it would execute and forward the deeds (that is, the particular deeds last prepared by Godfrey) with the drafts and abstract or letter, nor did it in fact do so. Therefore neither of the two things necessary to be done to create a contract was in fact done. There was, therefore, it seems to me, never during the entire negotiations a proposal made by one party, all of the provisions of which were unqualifiedly accepted by the other. There was never a proposal made by Godfrey that did not include an obligation on the part of the bank to furnish a complete abstract showing good and marketable title or a guaranty that such an abstract would be furnished. There was never a letter written by the bank that expressly or impliedly agreed to furnish a complete abstract showing good and marketable title or to write a letter guaranteeing that such an abstract would be furnished.

Near the close of the bank's letter of July 14th is the following:

"Please pardon me for making this change (L e., in the deeds), as I thought it would be better, and hope it will be satisfactory to you, butif not will be glad to handle in the way outlined."

The change not being satisfactory as shown by the reply inclosing new deeds, the majority opinion construes the clause underscored as an acceptance of Godfrey's proposition in his letter of July 12th. But Godfrey's letter of the 12th does not suggest any procedure to be followed in case the deeds are not in acceptable form. Indeed, when that letter was written, no such contingency could have been in mind. That letter is a proposition, and not properly referred to as a "way outlined." There is a "way outlined," however — to be followed in the very contingency mentioned. The preceding sentence in the same letter says, in case the change in the deeds is not satisfactory, "please mark or write into it such changes as will be satisfactory and return to me and I will try to adjust the matter satisfactorily to both of us." This is a clear statement of the procedure suggested in case the deeds are not in satisfactory form. Then the writer in a way apologizes, expressing the hope that the changes made will meet with approval, and then says: "But if not will be glad to handle in the way outlined." It seems to me that the "way outlined" could not possibly mean anything else than for Godfrey to again write the deeds to suit himself, return to the bank, and an effort would then be made to iron out the differences.

I am therefore of the opinion that the action of the trial court in peremptorily instructing a verdict for the defendant was correct, that the motion for rehearing should be sustained, and the Judgment of the trial court affirmed.