Opinion
13385
February 16, 1933.
Before SHIPP, J., Greenwood, July, 1930. Affirmed.
Action by the Federal Land Bank of Columbia against J.P. Summer, Jr., and others. From a judgment for plaintiff, defendant L.M. Lipscomb appeals.
The decree of Judge Shipp, directed to be reported, is as follows:
This matter was marked "Heard" by me at the spring term of the Court of Common Pleas of Greenwood County, 1931. The papers were submitted to me in the fall of 1931 while holding the Courts of Charleston County; hence the delay in filing decree.
The case stated above comes before me on exceptions to the master's report. The action is one for the foreclosure of a mortgage executed by defendant J.P. Summer, Jr., to plaintiff covering the tract of land described in the complaint and in the master's report. L.M. Lipscomb and E.M. Lipscomb Company are parties defendant because said E.M. Lipscomb Company is the holder of a second mortgage and because said L.M. Lipscomb, large stockholder in and president and treasurer of E.M. Lipscomb Company, took a deed to the said J.P. Summer, Jr. The said second mortgage and the said deed are in evidence, the mortgage carrying a consideration of $1,250.00.
The issue in the case is well defined. Plaintiff prays for judgment against defendant L.M. Lipscomb, grantee of said mortgagor, J.P. Summer, Jr., and said L.M. Lipscomb denies any and all liability above the amount the property might bring at judicial sale. In other words, said L.M. Lipscomb denies personal liability under and by reason of any deficiency judgment. This, then, is the question: Must plaintiff rely only and entirely on the property for protection, or can plaintiff proceed against said L.M. Lipscomb for any deficiency?
In order properly to dispose of the question just stated, it becomes necessary to take up first the plea of mutual mistake made by said defendant L.M. Lipscomb. The deed to him from said defendant J.P. Summer, Jr., contains the following clause: "It is understood that there is a mortgage given by me to Federal Land Bank of Columbia, S.C. which is hereby assumed by L.M. Lipscomb." Said L.M. Lipscomb seeks to reform the deed by striking out this clause and inserting therein a provision that he assumes no liability — this on the ground that the clause quoted above was placed in the deed by mistake.
It appears that defendant Summer, who had been making payments to plaintiff on his mortgage, went to defendant L.M. Lipscomb in the fall of 1923 stating that he was unable to make the payments then called for and that he would convey the property to him if it would do him (Lipscomb) any good. Thereupon said L.M. Lipscomb had Mr. R.A. Watson, bank president, draw a deed for said Summer's signature, telling Mr. Watson that he wanted it so drawn as to impose on him no personal liability for Summer's debt. Mr. Watson himself drew the deed, and on the same day said Summer went to the bank and affixed his signature to the instrument without reading it and without any questions about it. There was no conversation between Mr. Watson, the scrivener, and said defendant Summer. The scrivener had the deed recorded without submitting it to Mr. Lipscomb, kept it in the bank, and some time afterwards delivered it to Mr. Lipscomb who filed it away without examination of its contents. The scrivener testified that Mr. Lipscomb instructed him as set out just above, and then stated that he inserted the clause quoted hereinabove because he thought such clause was necessary to fix the title in said L.M. Lipscomb.
Was there such agreement between said Summer, grantor, and said Lipscomb, grantee, as to warrant the plea of "mutual mistake" the testimony does not disclose such agreement. A mutual mistake is just what the term "mutual" implies. The contract must contain sometime contrary to what both parties understood should be in it and not simply what one of them understood. Said L.M. Lipscomb was the only one to give the scrivener instruction, and there is nothing in the testimony to show that said Lipscomb and Summer had any understanding or agreement that the deed was to be so prepared as to relieve Lipscomb of liability. Said Summer said he offered to convey the property subsequent to the mortgage, whatever he meant by "subsequent," and, without further words, Lipscomb accepted the proposition. Even when said Summer went to the bank to sign the deed he asked no questions, but on the other hand affixed his signature without reading the instrument or attempting to ascertain its terms. The mistake here is evidently unilateral, and therefore the plea of mutual mistake cannot avail.
Going further in this discussion, it was some time after the execution and recordation of the deed before said Lipscomb found out what was in it. According to the testimony, it was about a year afterwards. Even then he took no action, but instead, over a period of five or six years, he made payments to plaintiff on the Summer mortgage, and the plea of mutual mistake was not made until made by answer in this proceeding. If there is anything in the presumption that a party knows the contents of a paper he signs or accepts, it would appear that such presumption has immediate application to the issue under discussion. That said L.M. Lipscomb refused to sign an assumption agreement at a later date has no bearing, for he had already accepted a deed containing such assumption. By his own course of action said L.M. Lipscomb is estopped from claiming reformation of the deed on the plea of mutual mistake.
Going further, said Summer, the grantor, surrendered possession of the property at once. He made no more payments to plaintiff. There is no record that plaintiff ever again sent him notice, or ever demanded payment from him. Plaintiff had all subsequent dealings with said L.M. Lipscomb, who for five or six years made the payments, and who during these years had possession and use of the property. Whatever the benefits, they were his; whatever the liabilities, they are his.
Going further, said Summer offered to convey the property to L.M. Lipscomb because he was unable to make the payment due. Had he not made this arrangement, and had plaintiff foreclosed its mortgage, a proceeding not at all unlikely, the land would have brought at sale then much more than it would bring now. But said Lipscomb took it over, made the payments, enjoyed the use of the property — all this in the face of knowledge of the assumption clause in the deed. And even though, because of the tremendous shrinkage of land values since 1923, it will hurt, he cannot escape the liability imposed by the paper which he accepted and under which he acted.
"Where only one of the parties to an instrument was under a mistake as to the facts or stipulations in the instrument, equity will not reform it except under very strong and extraordinary circumstances showing imbecility or something which would make it a wrong to enforce the agreement." Forrester v. Moon, 100 S.C. 157, 84 S.E., 532.
"In general, to obtain relief against a mistake of law, the evidence of mistake must be clear and convincing; the application for such relief must be prompt; it must be shown the rights of innocent third persons will not be materially affected by any effort of the Court to correct the mistake; it must be possible to put the other party practically in statu quo; and in a case like this it must be made to appear that there was a mistake of law or fact on both sides, owing to which the objects of the parties in making the contract cannot be attained." Hutchison v. Fuller, 67 S.C. 285, 45 S.E., 164, 166.
"Contract on the part of the grantee to assume prior mortgages on the property purchased is shown by the acceptance of a deed reciting such assumption." South Carolina Insurance Co. v. Kohn, 108 S.C. 475, 95 S.E., 65.
"Holder of mortgage could sue mortgagor's grantee, who had assumed payment of mortgage, for deficiency, after such grantee's conveyance of land to third party, in action to which original mortgagor and mortgagee were not parties." Harris v. Rice, 131 S.C. 171, 126 S.E., 754.
It is the judgment of this Court that the assumption clause in the deed from J.P. Summer, Jr., to L.M. Lipscomb must stand, and that the said L.M. Lipscomb, having expressly assumed plaintiff's mortgage, is liable for any deficiency after sale.
Messrs. Mays Featherstone and Grier, Park, McDonald Todd, for appellant, cite: Mistake of scrivener in drawing up instrument failing to carry out previous agreement may be corrected: 34 Cyc., 915; 101 U.S. 577; 25 L.Ed., 965; 67 S.C. 285; 35 S.C. 243; 14 S.E., 496; 106 S.E., 473. As to estoppel: 21 C.J., 1103, 1113, 1119; 139 S.C. 223; 137 S.E., 684; 154 S.C. 424; 151 S.E., 788.
Messrs. Thurmond Daniel, Harry D. Reed and Frank P. McGowan, for respondent, cite: Mistake must be mutual before instrument can be reformed: 21 S.C. 226; 100 S.C. 157; 115 S.C. 67; 115 S.C. 452; 134 S.C. 324; 132 S.C. 295; 23 R.C.L., 327; 53 C.J., 945, 947, 948; 2 Strob. Eq., 148; 2 S.C. 108. Estoppel and laches closely related: 21 C.J., 1059; 79 S.C. 478; 61 S.E., 99; 72 S.C. 47; 51 S.E., 514; 16 Cyc., 679, 680; 27 S.C. 226; 3 S.E., 214; 106 S.C. 310; 91 S.E., 312; 43 S.E., 436. Duty of party to read contract and receipt before signing: 108 S.C. 411; 76 S.C. 561; 42 S.C. 351; 20 S.E., 157; 57 S.C. 507; 115 S.E., 178; 107 S.E., 154; 125 S.C. 91; 118 S.E., 178. Party cannot claim benefits of deed and refuse its burdens: 46 S.C. 15; 93 S.E., 450; 77 S.E., 129; 113 S.C. 282; 102 S.E., 328; 67 S.C. 432; 53 C.J., 100; 23 R.C.L., 347, 349, 350. After mortgagee has acted on contract, mortgagor and mortgagee may not change or annul in absence of mortgagee's consent: 196 S.C. 732; 147 S.C. 9; 33 S.C. 338; 125 S.C. 131; 118 S.C. 189; 108 S.C. 475; 95 S.C. 65; 41 C.J., 815; 125 N.Y., 660; 26 N.E., 732; 48 P., 652; 128 S.W. 642; 142 S.W., 871; 40 L.R.A. (N.S.), 672; 43 A., 1072; 46 A., 1099; 171 Ark. 260; 284 S.W. 739; 47 A.L.R., 332; 179 P., 261; 21 A.L.R., 403; 33 S.W.2d 388; 21 A.L.R., 439; 136 S.C. 144; 134 S.E., 263; 149 S.C. 163; 146 S.E., 818; 108 S.C. 475; 124 S.C. 68; 117 S.E., 356; 6 S.C. 485; 13 C.J., 344; 226 Pac., 344; 91 U.S. 72; 23 L.Ed., 224; 192 U.S. 470; 40 L.Ed., 525; 278 U.S. 269; 73 L.Ed., 322.
February 16, 1933. The opinion of the Court was delivered by
There can be no doubt as to the correctness of the legal principles recognized by his Honor, Circuit Judge Shipp, in his decree in this cause, from which the defendant, L.M. Lipscomb, has appealed.
The duty rests upon the appellant to convince this Court that there was error prejudicial to him in the findings of fact of the Circuit Judge.
A careful reading of the evidence, and all the exhibits introduced in evidence, has not so convinced us.
Accordingly, it is our judgment that the decree on circuit must be, and it therefore is, affirmed.
MESSRS. JUSTICES STABLER and BONHAM concur.
MR. CIRCUIT JUDGE C.C. FEATHERSTONE, ACTING ASSOCIATE JUSTICE, disqualified.