Opinion
04-05-1877
CARTER, Trustee, & c. v. MCARTOR & als.
Brooke & Scott and Mosby, for the appellant. Wm. H. Payne, for the appellees.
Absent, Anderson, J.
I. For the principles on which a court of equity will act on an application to correct a mistake in a deed, see the opinion of Staples, J.
II. In March 1844, bye an agreement in writing, D sells a tract of land to M, for which M is to transfer to D bonds of K, secured by a deed of trust on real estate, and gives his bond for the balance of the purchase money, payable in ten years with interest; and M is to convey the land in trust to secure the payment of the bonds of K, and the balance of the purchase money. In December 1844, M conveys the land in trust to secure to D a bond of $6,000, payable in ten years with interest, but no reference is made in the deed to the bonds of K. The real estate on which the bonds of K are secured diminishes in value, and when sold by D in 1852, brings only one-third of the amount due on the bonds. In 1858 C, trustee, claiming under D, files his bill against M and others, claiming that by mistake the deed of trust executed by M omitted to secure the K bonds. A witness who drew the agreement, but was not present when the deed was drawn and executed, says he in 1845 called attention to the mistake, and was told the agreement was sufficient to bind the land--HELD:
1. The presumption is, that the intention to secure the K bonds by the deed was relinquished before the deed was drawn and executed; and the evidence is insufficient to rebut that presumption.
2. The parties having known, as early as 1852, that the real estate on which the K bonds was secured was not sufficient to discharge them, and they having delayed until 1858 before they filed their bill, they are precluded by their laches from any relief.
By a memorandum of agreement under seal bearing date the 12th of March 1844, between Daniel Hitt of the first part, Robert McArtor of the second part, and Richard De Butts of the third part, all of the county of Fauquier, it was witnessed that De Butts had sold to Hitt and McArtor, to be equally divided between them, two parcels of land containing three hundred and nineteen acres, at $50 per acre. And De Butts agreed to purchase of Hitt a tract of two hundred and thirty-five acres, at the same price, and to pay Hitt the difference. And for the moiety of the land, of one hundred and fifty-nine acres, purchased by McArtor, he was to pay as follows: six bonds of W. A. Kerchival, supposed to amount in all to $1,150 or $1,200; also one negro woman and two children at $600, and the balance in ten years, with interest payable semi-annually. And McArtor was to guarantee the prompt payment of the Kerchival bonds, and to give a deed of trust upon the land to secure the payment of the whole purchase money, including the amount of the Kerchival bonds.
The Kerchival bonds and the negro woman and children were delivered to De Butts, and he having conveyed the land to McArtor, McArtor and wife by deed bearing date the 18th of December 1844, conveyed the land to Thomas N. Latham, in trust to secure the payment to De Butts of a bond of $6,000, bearing date April 1st, 1844, and payable with interest in ten years. In this deed no allusion is made to the Kerchival bonds.
In May 1855, Richard De Butts conveyed to Edward Hall this bond for $6,000, with other property, in trust for the separate use of Mrs. Sarah M. C. De Butts; and Richard H. Carter was subsequently substituted in the place of Hall.
In March 1858, Richard H. Carter, as trustee for Mrs. De Butts, instituted a suit in equity in the circuit court of Fauquier county, against Robert McArtor, Mr. and Mrs. De Butts, Latham and Kerchival. In his bill he set out the agreement and deed of trust aforesaid, and says that from some mistake, omission, accident, or some other cause, McArtor failed to secure on the said land the ultimate payment of the said Kerchival bonds, with the interest on the same, which, by the terms of said agreement, he bound himself to do. That after his appointment as trustee as aforesaid, De Butts assigned and delivered to him the said bonds. That when McArtor assigned them to De Butts they were secured by deed of trust on certain property in the village of Paris, executed to L. P. Payne as trustee, under which an informal sale was made, when the property was bid in by McArtor at $450. But this sale proving invalid, another sale of the property was made under a decree of the court in a suit brought by De Butts, at which sale, on the 20th of December 1852, the said De Butts became the purchaser at $500, leaving a large balance, which he states, still due upon the bonds. That at the time of the delivery by McArtor to De Butts of the said bonds, Kerchival was utterly insolvent, and so continues; that it would have been vain to attempt to coerce the payment of the money mentioned in the bonds by process of law when they fell due; and the property conveyed in the deed of trust was wholly inadequate to secure them.
The prayer of the bill is, that McArtor may be decreed to pay the amount due upon said bonds, and in default of payment, that the land aforesaid, upon which he bound himself to secure the payment, may be decreed to be sold for the satisfaction thereof; and for general relief.
McArtor demurred to the bill for want of equity, and he also answered. He admits he passed to De Butts the Kerchival bonds, in part payment of the purchase money of the land purchased by him; but he denies that " from mistake, omission, accident, or some other cause," there was a failure to secure by the deed of trust which he executed to Latham upon the land purchased by him, as is alleged in the bill, the ultimate or any payment of the Kerchival bonds. On the contrary, respondents distinct recollection is, that Latham, the trustee, who wrote the deed, prepared it in the presence and under the direction of the parties, with the contract between the parties before him; and he insists that if there had been an agreement to embrace the Kerchival bonds, which he does not admit, it was at the time of executing the deed of trust abandoned.
He further says, that a short time before he transferred the Kerchival bonds to De Butts, he had sold the property, on which they were secured by deed of trust, to Kerchival for $1,200, and Kerchival had put upon it, prior to the transfer, valuable repairs, greatly enhancing its value. That De Butts, about the year 1845, caused a sale of the property to be made, at which sale respondent being liable, as assignor of said bonds, attended and bid in the property at $650, instead of $450, as stated in the bill; at which sum respondent was well content to keep the property, and pay De Butts the balance due upon the bonds; but the sale having been made without the presence of the trustee, it was deemed to be void, and was not consummated for six years afterwards. The said De Butts took no steps to collect the said bonds, either by a sale of the real estate or proceedings against Kerchival; during all which time the real estate was constantly diminishing in value. It was subsequently sold, as stated in the bill. And he relies upon the statute of limitations as a bar to the claim.
A number of witnesses were examined in the case; but the only evidence in relation to the difference between the agreement and the deed of trust, is that of Edward Hall, who wrote the agreement. His testimony is sufficiently stated by Judge Staples in his opinion.
The cause came on to be heard on the 2d of February 1872, when the court held that there was not sufficient evidence to reform the deed of trust to Latham, so as to charge the same with the Kerchival bonds; and therefore dismissed the bill with costs. And Carter thereupon applied to this court for an appeal; which was allowed.
Brooke & Scott and Mosby, for the appellant.
Wm. H. Payne, for the appellees.
OPINION
STAPLES, J.
The court is of opinion, that although a deed or other instrument may be reformed, when through mistake or accident it does not accurately represent the agreement of the parties, it is necessary that both the agreement and the mistake shall be made out by the clearest and most satisfactory testimony. Where the mistake is established by other preliminary written agreements, equity more readily interferes than in cases where the mistake is to be established by parol evidence. But even where there is a preliminary article of agreement or settlement, it must be made plainly to appear that the parties intended in their final instrument merely to carry into effect the control or arrangement set forth in the prior agreement. The very circumstance that the final instrument of conveyance differs from the preliminary contract, affords of itself some presumption of an intentional change of purpose or agreement, unless there is some recital in it, or some other attendant circumstance, which demonstrates that it was merely in pursuance of the original contract. Story's Eq. Ju., § 160; Leas' ex'or v. Eidson, 9 Gratt. 277; Mauzy v. Sellars, 26 Gratt. 641.
In leading cases in equity, vol. II, part I, page 980 (E. 1877), the rule is thus expressed. The burden of proof is throughout on the complainant, who must rebut the presumption that the writing speaks the final agreement by the clearest and most satisfactory evidence. It must not only appear that the parties entertained a different intention in the first instance, but that it was not changed at or before the execution of the instrument; for otherwise, the legal and natural inference is, it was laid aside for that expressed in the writing.
The court is further of opinion, that applying these principles to the case before us, there is no error in the decree of the circuit court. According to the memorandum or articles of agreement, entered into on the 12th March 1844, it was provided that the deed of trust to be executed by the appellee, McArtor, to secure the payment of the purchase money due his vendor, Richard De Butts, was also to include the amount of the Kerchival bonds. That deed was not executed until the 18th of December 1844. It does provide for the payment of $6,000, part of the purchase money, but it makes no provision for the Kerchival bonds. It makes no reference whatever to them. Whether this omission was accidental, or whether the parties were satisfied the Kerchival bonds were already amply secured by deed of trust, it is impossible to say. As has been already said, the presumption is, that the deed speaks the final agreement of the parties. It devolves upon the appellant to rebut that presumption by satisfactory evidence. It is incumbent upon him to show that the intention expressed in the memorandum was not changed before the execution of the deed. As one or the other must be held to express the true agreement, the legal and natural inference is, that the one last executed is the proper one. There is nothing in the deed to rebut this inference. Had the recitals therein made disclosed a purpose to provide for the payment of the purchase money, there would be greater reason to conclude the omission was accidental. But nothing is said about purchase money. All the provisions relate to a bond of $6,000; the date, time and mode of payment of which are minutely stated. From all which it may be fairly concluded that the parties in preparing and executing the deed had reference to the original agreement, were then fully apprized of all its terms, and waived the provision touching the Kerchival bonds.
The only testimony adduced by the appellant, to controvert the correctness of this view, is found in the deposition of Edward Hall, the father-in-law of De Butts. This deposition was taken in the absence of the opposing party and his counsel, upon three days' notice given to a daughter of McArtor in his absence, without explanation, and all the interrogatories and answers alleged to be wholly in the handwriting of counsel. The deposition was excepted to upon these grounds. Whether the exceptions were ever called to the attention of the court below, or were passed upon, does not appear. Waiving any inquiry upon those points, and giving to the appellants the benefit of the evidence, it is altogether insufficient to establish the alleged mistake, especially against the positive denials of the answer. The deposition was taken twenty-two years after the date of the contract, and relates to transactions, the most material of which occurred in the absence of the witness, and of which he had no personal knowledge. He does not pretend that McArtor's attention was called to the mistake, or that the latter had ever admitted a mistake was committed in the preparation and execution of the deed of trust. He does say that when he, the witness, saw the deed of trust, shortly after its execution, he called attention to the omission, and was told it made no difference, as the contract was a sufficient guarantee for the payment of the Kerchival bonds. If this be so, it may serve in some measure to explain the reasons influencing the parties in confining the deed as a security for the $6,000 bond.
Notwithstanding the appellants, or those under whom they claim, had actual notice of the alleged mistake as far back as January 1845, no suit was brought, and no claim was ever asserted to have it corrected until the year 1858, a period of fourteen years, when this bill was filed. No excuse is given or attempted for this long delay. This is the more surprising, because, as early as 1852, the property conveyed to secure the payment of the Kerchival bonds was sold, and an amount realized from the sale sufficient to pay only about one-third of the debt. And yet with full knowledge of this deficiency the parties delayed the assertion of this claim for nearly six years. There is but one satisfactory theory upon which such conduct can be explained. At the time the deed of trust was executed, the property pledged for the payment of the Kerchival bonds was, on all hands, regarded as sufficient for that purpose. As by the contract of sale and assignment De Butts became the owner of the bonds, and entitled to the deed of trust, with the privilege of enforcing the same at his pleasure, it might well be that he was content with the security thus given him, while McArtor, on the other hand, was unwilling to subject his own property to the hazards of any delay on De Butts' part in collecting the Kerchival bonds. When, therefore, the deed of trust was to be given, no provision was inserted in it for their payment. If such was the view taken, the result fully justified the caution of McArtor. The Kerchival property was at the time amply sufficient for the payment of that debt; and yet in consequence of De Butts' delay in enforcing the collection, the property, from mismanagement or other causes, became so impaired in value, that when the sale was made in 1852, De Butts himself being the purchaser, it brought but one-third of its original value. This of itself would be sufficient to prevent the interposition of a court of equity in correcting the mistake, even if clearly established. A party having a just claim to invoke the jurisdiction of that court upon equitable grounds, must exercise reasonable diligence in the assertion of his demands. If by his laches injustice may be done the defendant the court declines to interfere. And this principle is justly applied to bills to reform contracts on the ground of mistake as to other cases.
The court is therefore of opinion there is no error in the decree of the circuit court, and the same must be affirmed.
DECREE AFFIRMED.