Opinion
No. 32885.
November 15, 1937.
1. MORTGAGES.
Under agreement between lumber company, as assignee of a trust deed, and grantor thereof, for payment of the trust deed notes by sale of timber from a tract in which the lumber company released the timber rights to the grantor with the understanding that grantor would sell all the lumber therefrom to the lumber company and that lumber company would pay reasonable market value therefor, lumber company was required to take the lumber shipped to it by grantor, and to take it at a fair market price.
2. MORTGAGES.
Under agreement between lumber company, as assignee of trust deed, and grantor therein, for payment of the trust deed notes, by which the lumber company was required to accept lumber shipped to it by grantor from tract in which lumber company released its timber rights and to credit grantor with the fair market price thereof, grantor was entitled to credit for the value of lumber shipped, notwithstanding lumber was damaged and rendered worthless by neglect of lumber company after due notice to take lumber and sell it, and, such facts being true, lumber company could not forfeit the agreement and resort to the original notes.
3. MORTGAGES.
Trust deed grantor's agreement to cut and sell timber exclusively to or through lumber company from which timber rights had been acquired, in quantity sufficient to liquidate grantor's indebtedness to lumber company as assignee of the trust deed, was supported by sufficient consideration to preclude lumber company from recovering full amount due under the trust deed notes, in absence of any breach of contract by grantor.
APPEAL from the circuit court of Alcorn county. HON. JAS. A. FINLEY, Chancellor.
Bramlett Roberts, of Oxford, for appellants.
The court erred in overruling the objection of appellants to the introduction of the note.
In the original transaction, appellants executed two promissory notes in favor of the Corinth Bank and Trust Company, and by a series of transfers, the Jackaw Lumber Company, the appellees, got possession of both notes. Appellees sued on one of the notes, but in the bill of complaint filed in this cause the note sued on, or the copy thereof, was not annexed to or filed with the bill of complaint.
Section 527, Code of 1930.
The lower court not only denied appellants their rights under Section 527 of the code, but motion of appellants for continuance was denied.
Section 527, Code of 1930; Thomas v. Rosenberg, 153 Miss. 314, 120 So. 732.
The court erred in overruling the objection of appellants in the introduction of letter marked "Exhibit One," to the testimony of L.C. Gann.
A statement otherwise objectionable as hearsay does not become competent because it has been reduced to writing.
22 C.J. 207, par. 168; I.C.R.R. Co. v. Langdon, 71 Miss. 146, 14 So. 452; 10 R.C.L. 1150, par. 352; Houston v. Keith, 100 Miss. 83, 56 So. 336.
The admission of Exhibit Four violates the best evidence rule. A copy of a copy of a letter cannot be sued as evidence over objections.
Carey v. Fulmer, 74 Miss. 729, 21 So. 752.
The highest degree of proof of which the case is susceptible must be produced if the same is accessible.
Storm v. Green, 51 Miss. 103.
The letter from the Pioneer Lumber Company, dated June 1, 1935, to the Jackaw Lumber Company is hearsay evidence, about fourth-hand hearsay evidence. When the court permitted this letter to become a part of this record, it thereby permitted R.G. Houghlin to give evidence of the condition of a carload of lumber about which even Houghlin knew nothing except the information which he had gained by a letter from the Fry-Fulton Lumber Co. of St. Louis, Mo.
Carey v. Fulmer, 74 Miss. 729, 21 So. 752; 22 C.J. 214, par. 174; Barclay v. Smith, 36 So. 449.
A witness will not be permitted to testify to facts of which he has no knowledge and of which he is informed by the statements of others not parties to the suit. Nor may a party introduce a letter written by himself in evidence where his verbal declaration to the same effect would be inadmissible.
Melius, Currier Sherwood v. Houston, 41 Miss. 59; 10 R.C.L. 906, par. 59.
The court erred in taking judicial knowledge of the rules and regulations of the Southern Pine Association and predicating its decision thereon.
The only hint in the record of the existence of the Southern Pine Association is contained in letters which are hearsay. However, if there were such an association there is not one scintilla of evidence in this record to show that its regulations were enjoined upon defendants.
Luckett v. La. Oil Corp., 171 Miss. 570, 158 So. 199; 23 C.J. 62, par. 1812; Carey v. State, 142 Miss. 894, 108 So. 298.
It is evident that the lower court predicated its decision, at least in part, on some knowledge that the court had, real or apparent, of the rules and regulations of the Southern Pine Association.
Familiarity of the trial judge with the facts of the case being tried before him does not render unnecessary the introduction of evidence.
Panama Elec. R. Co. v. Moyers, 249 Fed. 19; Brown v. Piper, 91 U.S. 37, 23 L.Ed. 200; Weatherton v. Taylor, 124 Ark. 579, 187 S.W. 450.
The lower court entertained two inconsistent theories of this suit, both of which were highly prejudicial to the appellants. The first theory of the court, during the trial of this cause, was that there had been no breach of the contract between Gann and the Jackaw Lumber Company, and that the contract was not limited as to the time of its performance.
The second theory of the lower court was that the Jackaw Lumber Company was not amenable to the terms of the contract, and the court awarded the complainants (appellees here) judgment for the full amount of the notes and interest thereon at the rate of 8%, less the amounts admittedly paid.
The fact that the Jackaw Lumber Company could not supply orders on account of the depression created no legal excuse for its breach of the contract.
Herman v. Fleming, 25 Miss. 135; Jenison v. McDaniel, 28 Miss. 83.
Party who enters into contract must perform obligations created thereby, though performance subsequently becomes unexpectedly burdensome, or even impossible.
Piaggio v. Somerville, 119 Miss. 6, 80 So. 342.
That performance of contract is rendered merely difficult or burdensome or unprofitable does not excuse promiser from performance on ground of "intervening impossibility."
Marionneaux v. Smith, 163 So. 206, 164 So. 456.
Chester L. Sumners, of Corinth, for appellee.
There was no error on the part of the lower court in permitting amendment to the bill to show copy of the note sued on and in denying continuance to the defendants.
Section 391, Code of 1930; Tanner v. Hicks, 4 S. M. 294; Truly v. Lane, 7 S. M. 325; Smith v. Harrington, 49 Miss. 771; Field v. Middlesex Banking Co., 77 Miss. 180; Hartford Fire Ins. Co. v. Green, 52 Miss. 332; Gibson v. Carr, 91 Miss. 773, 45 So. 864; Continental Ins. Co. v. Brown, 142 Miss. 199, 106 So. 633; Tonnar v. Wade, 153 Miss. 722, 121 So. 156.
The bill of complaint gave the names of the parties, the date of the notes, amounts, terms, maturity and rate of interest, and in fact every material point for defendant to answer. The fullness with which the note was set out in the bill was in effect a substantial copy within itself.
Palmetto Fire Ins. Co. v. Allen, 148 Miss. 97, 114 So. 145.
There was no error in admitting letter marked exhibit 1 to the evidence of L.C. Gann.
Appellants can claim no prejudicial error with reference to the admission of the letters, when Gann definitely instructed Jackaw Lumber Company by letter to "go ahead and get adjustment best way possible."
We respectfully submit that the Chancellor did not take judicial knowledge of the Southern Pine Association rules and regulations, but that he ruled only on facts before him. The record clearly shows that the Southern Pine Association is not a mythical association, and there is more evidence than mere hearsay.
The order constituting the contract provides that "Southern Pine Association weights and grades guaranteed by the shipper." This is from the order contract and not from hearsay.
The decision of the lower court is supported by the evidence. It is the well settled rule of this court that the findings of the Chancellor on the evidence will not be disturbed on appeal unless it is clearly erroneous.
Interstate Cattle Co. v. Lipsley, 24 So. 532; St. Paul Fire Marine Ins. Co. v. McQuaid, 114 Miss. 430, 75 So. 255; Gulf Transp. Co. v. Fireman's Fund Ins. Co., 121 Miss. 655, 83 So. 730, 9 A.L.R. 1307; Mutual Life Ins. Co. v. Herron, 79 Miss. 381, 30 So. 691.
Where a contract for the payment of money is to be performed within a year and the obligee voluntarily extends the time, and the obligor accepts the benefits of the extension as a novation, he waives any defenses to the first contract.
Tallahatchie Home Bank v. Aldridge, 169 Miss. 597, 153 So. 818; Gay v. First National Bank, 172 Miss. 681, 160 So. 904.
Where a shipper of lumber with inspection at destination to govern is notified of complaint on grade by commission dealer, and notifies such dealer by letter to settle on best terms possible, he is estopped to deny settlement made.
10 R.C.L. 689, sec. 19.
An agreement to take a lesser sum in full settlement of a larger sum is without consideration and cannot be enforced as an executory contract.
Clayton v. Clark, 74 Miss. 499, 21 So. 565.
If it is agreed to accept a lesser sum in satisfaction of a debt and the lesser sum is not paid within the time provided, the whole debt is due and payable.
Sussman, Wormser Co. v. Sea Food Co., 127 Miss. 420, 90 So. 116; Foster v. City of Meridian, 150 Miss. 715, 116 So. 820; Fultz v. House, 6 S. M. 404.
He who seeks equity must do equity and he who comes into equity must come with clean hands.
Appellee, the Jackaw Lumber Company, filed suit in the circuit court of Alcorn county against appellants, L.C. Gann et al., on certain notes payable six months after date and providing for attorneys' fees etc. These notes were assigned, without recourse, by the Corinth Bank Trust Company, the payee therein, to J.E. Potts who, in turn, assigned same, without recourse, to the appellee, Jackaw Lumber Company.
Appellants moved to transfer the cause from the circuit to the chancery court, which motion was granted, and the answer in the chancery court set up a contract between the Jackaw Lumber Company and L.C. Gann, dated August 8, 1933, reciting, among other things, the giving of the notes and deed of trust to the bank; the assignments thereof; and that, "The Jackaw Lumber Company, as first party, hereby agrees to release to L.C. Gann the right to cut the timber from said land, (referring to the land conveyed in the trust deed securing the notes sued on). The second party agrees to cut and saw or manufacture the lumber at his own expense and sell all lumber sawed from the land to, or through, the first party. The first party agrees to pay fair and reasonable market value for said lumber according to grade. The first party will give orders and prices, and give shipping instructions to second party as in ordinary course of business between sawmill operator or owner and a lumber company engaged in selling lumber. The second party agrees to give first party notice of amounts and grades of lumber that will be ready for sale from date to date. The party shall have a reasonble time in which to sell the said lumber." It was also agreed that should the first party not offer a satisfactory price, the second party could refuse to sell, and should not cut any more timber until that already cut is sold through the Jackaw Lumber Company; and that the lumber should be shipped with invoices payable to the Jackaw Lumber Company, and out of the net proceeds the lumber company was to deduct $4 per thousand feet to be credited on the notes, and remit the balance to L.C. Gann, and credit further amounts on his order. It was further agreed that when the credits from the sale of the lumber should total $2000, with interest from date at 8 per cent. per annum, the said $2000 and interest was to be in full payment of the notes of L.C. Gann, and the Jackaw Lumber Company was to surrender said notes to Gann. It was further agreed that the second party was to cut, saw, and sell enough timber within 12 months to pay the $2000 and interest. It was also agreed that the second party was to pay all taxes on the land, and redeem it from tax sales already made, at least 45 days before the expiration of the redemption date, and that, in event of a breach of this contract, the original notes and trust deed would hold and not be canceled.
There was cutting of the timber and sale of same during the period, but it was contended by Gann, and he so testified, that he sawed 75,000 feet of timber during the early part of the year the contract was in existence, and notified the lumber company thereof, but it did not buy or give shipping orders, and, as a consequence thereof, the timber rotted and was so damaged as not to be saleable. He said he gave similar notices from day to day as to the timber cut from said tract.
A member of the Jackaw Lumber Company testified that no such notice was given to the company.
There was one shipment of pole stock made on the required invoice in the name of the Jackaw Lumber Company which appeared to be defective and was rejected when it reached the point of shipment.
By the contract under which this shipment was made, it was provided that the grading of the lumber was to be at destination, but if shipper was dissatisfied with the grading, it could have the lumber graded by the Southern Pine Association. It is shown by the testimony that this pole stock was of an inferior grade, and the Jackaw Lumber Company so notified L.C. Gann and requested him to go to St. Louis and inspect it, or put on an inspector from the Southern Pine Association, which he refused to do, but authorized the Jackaw Lumber Company to settle as best it could.
There was a good deal of conflict in the testimony; some corroborating that in favor of the contentions of the Lumber Company, and some corroborating the contentions of L.C. Gann.
The court below held that the contract did not bind the Jackaw Lumber Company to buy the lumber, and that it was only a sales contract, saying that: "While under the contract, the Jackaw Lumber Company could buy direct, from Mr. Gann, taken as a whole, it clearly shows they are the selling agents, or at least, there is nothing compelling them to buy direct. The fourth paragraph of the first page reads, `The second party agrees to cut, the second party being Mr. Gann, agrees to cut and manufacture the lumber at his own expense and sell all lumber sawed from the land to or through the first party.' There is no binding agreement on the part of the Jackaw Lumber Company to buy. He agreed to sell it to them or through them."
We think the court below was in error as to its construction of the contract. It is expressly provided therein that, "The first party agrees to pay a fair and reasonable market value for said lumber according to the grades," and it was further stipulated that the second party agreed to cut and saw lumber from the land to be sold to or through the first party. The provision in the contract that the first party agrees to pay a fair and reasonable market value binds the party to pay such price, and binds the second party, Gann, to sell to the first party, providing that he could not sell to a third party without forfeiting his rights under the contract. We think the contract forced the first party, the lumber company, to take the shipments at a fair market price, and, if it did not sell to others at a fair market value, to pay therefor; and if Gann's testimony is true, he was entitled to a credit on his indebtedness for the value of the lumber, and that its value was damaged and it was rendered worthless, by the neglect of the lumber company, after due notice, to take the lumber and sell it, or pay Gann for it, and that if these facts existed, the lumber company could not forfeit the contract and resort to the original notes. It seems that, at the end of the year, neither party to the contract terminated it, but continued to have dealings in reference thereto during 1935 and 1936.
It is urged by appellee, the lumber company, that the contract entered into on August 8, 1933, was without consideration and was insufficient to reduce the amount due under the notes and deed of trust. The arrangement was to have the timber cut, marketed, and sold to or through the Jackaw Lumber Company, and such an arrangement constituted a valuable consideration, and if the contract was not breached by L.C. Gann, the Jackaw Lumber Company could not recover the full amount due under the original notes.
The judgment of the court below, therefore, will be reversed and the cause remanded.
Reversed and remanded.