Opinion
No. 3696.
Decided January 6, 1948.
Evidence offered by one party to a written agreement as to his intent and understanding thereof at the time the agreement was entered into and undisclosed to the other party is inadmissible. Where incompetent evidence considered by the Trial Court may have influenced its findings of fact and without which findings there is not a sufficient basis for the Supreme Court to construe the written agreement in question a new trial is necessary.
SPECIAL ASSUMPSIT, to recover $1,500 under the terms of an agreement contained in a letter written by the defendant bank to the plaintiff's attorney. The following facts are admitted by the parties:
The plaintiff had sued one Marsh and Lake Winnisquam Company and attached a large tract of land owned by Marsh. This property was subject to two mortgages to the defendant which were duly recorded prior to the attachment. At the time of the attachment there was approximately $19,000 due on these mortgages. In November, 1938, Marsh wished to place a third mortgage on the property to raise additional funds to pay for the removal of timber blown down in the hurricane of September, 1938, so that the property could be divided into lots and sold. At the time all the parties thought that by the sale of lots sufficient money could be realized to pay all the mortgage indebtedness.
In order to enable the bank to make a third mortgage the plaintiff through its attorney agreed to discharge its attachment in accordance with a letter dated November 22, 1938, and written by the duly authorized president of the bank to the plaintiff's attorney. This letter provided in substance that the bank would pay to the plaintiff a certain percentage of' the selling price of the property covered by the mortgages that might be sold, provided the selling price of the property came into the hands of the defendant. It further provided that none of the proceeds of the blown down timber should be paid to the plaintiff "because the bank is investing more money in the property than it ordinarily would because of the damage caused by the recent hurricane." The plaintiff accepted this agreement, released his attachment and the bank advanced some $11,000 on a third mortgage. No sales were made and finally on August 9, 1940, the defendant itself bought the property at a foreclosure sale at which no one was present or bidding except the bank, for $20,000. Marsh's indebtedness at this time to the defendant was approximately $25,000. The $20,000 was credited in the bank's books towards Marsh's indebtedness.
The plaintiff was notified on July 29, 1941, that the defendant was going to hold a foreclosure sale and the next day the plaintiff by its attorney wrote the defendant that it expected to be paid its share of the selling price. After the sale the bank wrote the plaintiff concerning the details of the foreclosure but denied liability under the agreement.
The Trial Court rendered a verdict for the defendant, finding that the parties did not intend the bank to be liable in the event of a foreclosure sale for less money than the actual indebtedness of Marsh to the bank and ruled in substance as a matter of law that the foreclosure sale was not a sale nor did any money come into the hands of the bank within the meaning of the agreement.
The plaintiff duly excepted to these findings and rulings, to the refusal of the Court to return a verdict for the plaintiff and to the admission of certain testimony introduced in behalf of the defendant. Further facts appear in the opinion. Transferred by Wheeler, J. upon the plaintiff's bill of exceptions.
Maurice A. Broderick (by brief and orally), for the plaintiff.
Sulloway, Piper, Jones, Hollis Godfrey (Mr. Piper orally), for the defendant.
Much evidence was introduced through the bank president, subject to the plaintiff's exception, as to the intent of the defendant and its understanding of the agreement, both of which were undisclosed to the plaintiff at the time the agreement was made. Under these circumstances this testimony was inadmissible. Shelby c. Co. v. Lynch, 89 N.H. 510, 513; Pettee v. Chapter, 86 N.H. 419, 430, 431; Stevens v. Insurance Co., 84 N.H. 275, 278; McConnell v. Lamontagne, 82 N.H. 423, 425; Smart v. Huckins, 82 N.H. 342. It therefore appears that unless the agreement itself, in the light of such competent evidence as was before the court, must be held to mean what the defendant contends that the plaintiff's exceptions will be sustained. Although the defendant does not categorically admit this to be so it does not seriously dispute it.
While the question of the final interpretation of a written instrument is unquestionably for this court, nevertheless the finding of facts in the light of which the writing is to be construed is for the Trial Court and, only those facts found upon competent evidence or admitted by the parties can be considered here. Pettee v. Chapter, supra. It is apparent from the record that much incompetent evidence was received at the hearing and it is obvious that this may have substantially influenced the Trial Court's findings of fact. Without these findings it appears that there is not a sufficient basis for us to construe the writing. Considering only the letter and admitted facts, plausible arguments may be made for either side. The defendant contends that the bank would never make such a disadvantageous arrangement when it held two prior mortgages, and this is so improbable as a matter of law that the construction claimed by the bank is the only reasonable one and must be adopted. The plaintiff claims that an instrument must be construed most strongly against the party drawing it, in this case the defendant. Furber v. Caverly, 42 N.H. 74, 76; 17 C.J.S., Contracts, s. 324. It also points out that the defendant twice protected itself in the agreement, first with reference to blown down timber, and again, in the event that no money came into its hands, and could easily have done the same with reference to the foreclosure sale had the parties so intended. Stevens v. Company, supra, 278. The plaintiff can further point to the fact that the defendant's president in answer to a question of its own attorney stated that the bank felt it necessary to advance the money on the third mortgage to "salvage what you [the bank] had in it." This statement falling within the principles of Harlow v. Leclair, 82 N.H. 506, must be taken as true and furnishes a strong argument that the bank was sufficiently anxious for the arrangement to go through as to be willing to gamble on the $1,500, especially as it then appeared to involve little or no risk.
Considering the whole situation the fair thing to both parties seems to be to order a new trial at which all relevant facts can be found from competent testimony and the contract then construed in the light of these facts.
New trial.
DUNCAN, J., did not sit: the others concurred.