Case ID: sd_34/html/0158-01.html
Source: Caselaw Access Project
Author: {"author": "SMITH, P. J..", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BARNES, Appellant, v. HILL CITY LUMBER COMPANY, Respondent.
    (147 N. W. 775.)
    1, Contract — Tender—Offer ofi Performance — Extinguishment of Obligation — Conditions Outside of Contract.
    Under Civ. Code, Sec. 1160, concerning an offer of performance, and Sec. 116 6, concerning the extinguishment of an obligation, held, that an offer by defendant, in an action upon contract, to pay a certain amount upon performance by plaintiff, of a condition which plaintiff was not bound to perform, does not extinguish the obligation to pay money, no deposit having been made of the amount so offered, but does entitle plaintiff to recover the amount admitted by defendant to be due.
    2. Contract — Written Contract — Oral Contract, Not Collateral— Intermingling Contracts in Finding.
    Where a written contract required defendant to pay an indebtedness due from W. to plaintiff, in consideration of plaintiff releasing a mortgage upon certain ties and other personalty which W. had agreed to sell to defendant, held, that an oral contract, whereby defendant agreed to pay W.’s indebtedness to another upon certain, of the ties ¡being delivered to defendant, was not collateral • to the written contract, but was independent thereof; and it was error for trial court, in an ?ction on the contract, to intermingle in its finding the • terms of the two contracts.
    
      3. Contract — Collateral Executory Oral Contract, Independent Contract — Written Contract Unaffected by — Parol Evidence.
    A valid oral contract, collateral to a written contract, exists as an independent contract, even though the consideration be found in some terms or conditions of the written contract, but an unexecuted oral contract cannot modify or change the terms of the written contract to which it is collateral.
    4. Contract — Construction1—Delivery of Released Mortgaged Property by Mortgages — Limit of Obligation to Deliver-
    Where plaintiff mortgagee, agreed with mortgagor and defendant to release the mortgage upon certain ties which mortgagor had sold to defendant in consideration of defendant’s promise to pay for the ties in an amount sufficient to cover plaintiff’s indebtedness, held, that, if the contract required plaintiff to deliver any of the ties, it was only of a sufficient quantity to pay the debt.
    5. Appeal — Error—Ambiguous Contract — Amount Due — Insufficiency of Evidence — Reversal.
    Where trial court erroneously held that plaintiff was not entitled to recover anything under a written contract which was ambiguous as to amount defendant owed, and plaintiff’s mortgage on certain ties and other personalty, released in consideration of defendant’s promise to pay the mortgage debt, was also uncertain as to the amount due thereunder, and there was no evidence from which the intention of the parties can be ascertained, the judgment will -be reversed with directions to ascertain the amount due.
    (Opinion filed June 8, 1914.)
    Appeal from; Circuit Court, Custer County. Hon. Levi McGee, Judge.
    Action by James B. Barnes against the Hill City Lumber Company, to recover money under a written contract. From a judgment'for defendant, and from an order denying" a new trial, plaintiff appeals.
    Reversed, and new trial ordered.
    
      Eastman &Dudley, and E. W. Sellers, for Appellant.
    
      Frank D. Bangs, and Lazvremce H. Hedrick, for Respondent.
    (3) Under point three of the opinion, Appellant cited:
    Section 1287, Civil Code; Manufacturing Co. v. Galloway, 5 S. D. 205; Barton v. Roon, 20 S. D, 7.
    Schriner v. Dickinson et al., 20 -S. D. 433.; Kimm v. Welters, 28 S. D. 255; Steel Safe -Company v. First State Bank, 28 S. D.-426.
    
      Respondent cited:
    Michaels v. Armstead, 14 Fed. 219; Bragg v. Hilton, 99 N. Y. 517; Mobile Railway Go. v. Jurley, 11 U. S. 585; Unger v. Jacobs, 14 N. Y. Supp. 2209 Julliard v. Chaffee, 92 N. Y. 529.
    Tims testimony, even if treated as a variance of the terms of the written contract, is still admissible as establishing the consideration o<r inducement for the written agreement. DePue v. McIntosh, 127 N. W. 532 (S'. D.).
    (4)- Under point four of the opinion, Appellant submitted:
    That defendant has taken under said 'contract, ties which it admits it has not paid for, for some $40.00 more than enough to settle plaintiff’s claim. It has, according- to its own admissions, received in lumber and ties' under said contract at an agreed price, upwards of $650 more than enough to pay both the plantifFe and Hanley’s claim and all the claims against Walker.
    Plaintiff did deliver, or cause to be delivered, at the Burlington side track at Custer, all of the ties upon the Meeker homestead, something- like 5,500.
    Respondent submitted:
    The contract of ¡September 27th contemplates that all of the ties held by Barnes as security under his bill of sale, were to be released from his lien and delivered over to the defendant corporation in consideration of its agreement to pay the indebtedness of Walker to- him.
    (5) Under point five of the opinion, Appellant submitted:
    That it stands admitted of record that the balance due Barnes from Walker is $1,072.82.
   SMITH, P. J..

Plaintiff who is appellant here, sued to recover $1073.74, a balance alleged to be due under a written contract, of date, of Sept. 27, 1911, which will be hereinafter referred ro. Trial to the court. The following facts may be taken as conceded on the record before us.

One Meeker was the owner of a homestead near the town of Ouster, on which was situated a considerable quantity of logs and timber. About the 7th of July, 1911, one Roy T. Walker, by a written contract, purchased the log-s and timber. Walker who was then attempting to operate a sawmill on the Meeker homestead, was indebted to Meeker in the sum of $1175.00, as stump'age for logs cut on Meeker’s homestead, and was also indebted to plaintiff Baines, in the .sum of $515.50, on account of the purchase price of the sawmill. Walker had 'become financially embarrassed, and was unable to proceed with the cutting and manufacture of the timber. He applied to the plaintiff Barnes for financial assistance. Barnes agreed to and did pay Meeker the $1175 stumpage due from Walker. Walker thus became indebted to him in the total sum of $1690.50. Barnes -also orally agreed with Walker to advance further sums to' cover the cost of cutting and manufacturing the timber. As security for this indebtedness, Walker -agreed to .and did execute and deliver to Barnes, a bill of sale which was signed by defendant, upon request of Barnes, covering all the lumber, logs-, ties and timber on the Meeker homestead. It is conceded that ¡this 'bill of sale was a mortgage. Walker, being desirous of obtaining the lumber for shipment to fill a contract he had made with the Rapid City Lumber Go., Barnes and defendant, on Sept. 27, 1911, entered into a written contract whereby Barnes in legal effect, released his mortgage and agreed “to allow the said parties of the second .part to have said R. T. W.alker ship the said lumber to complete a certain contract with the said Rapid City Lumber Co., and take the payment of the said amount $1750, more or less, and1 interest, at such time as ¡said lumber can be moved and the ties hauled to the track.”

This contract recites that the lumber 'consists of “some 180 to 200 M. ft. B. M.,” together with- “some 5,500 ties,” and further provides: “In consideration of- the foregoing, the panties of the second part herein, agree to- take up and pay for all the No. 1 eight ft. railroad ties in the above 'amount of ties, (5,500) ¡sufficient to. cover the amount due and owing" to the said party of the first part, amounting to¡ $1750, more or less, and interest, just as soon as the said lumber can be hauled out and the contract with the Rapid City Lumber, Go. * * * can be filled, and the money released that is in escrow in the Pennington Bank of Rapid City, S. D.; it is further agreed in and between the parties herein named, that the clear lumber in this cutting is not included in the above permit to sell, but the party of the first part (Barnes) has the right to. sell said clear lumber and apply the proceeds as a credit on the above indebtedness of $1750, 'and interest. The value of the'-lumber ten be turned to the Hill City Lumber Co-, is mutually agreed and placed alt $10 per M. ft. B. M. at the sawmill; it is further agreed that the ties are to be paid for at die landing 'before being shipped, to the amount of 'the above indebtedness, said ties to be delivered on the Burlington track at Ouster, S. D.” The trial court found ■that pursuant to this contract, plaintiff sold the clear lumber and ’received therefor, the sum of $417.20; that all the lumber referred to in said contract was released to- and shipped by Walker, and that 3973 -railroad ties were delivered to the defendant, at ;tbe Burlington railroad -tracks at Custer. The undisputed evidence shows that the ties delivered were of the value and were accepted at the price of 46^ cents per tie. It appears to be undisputed that at a later settlement. between Walker and Barnes a® to the total amount of Walker’s indebtedness to Barnes for payment for stumpage, for money due on purchase price of sawmill, and money advanced for wages of men, and expense of operating sawmill, the sum of $2224.54 was found due to Barnes. It is undisputed that plaintiff received 'the sum of $417.20 for the clear lumber sold, and also $734.52 realized from two shipments of ties, which credits aggregated $1151.72, leaving a balance due as claimed' by Barnes-, of $1072.82 exclu- ’ sive of interest. These facts appearing, it becomes necessary to consider other matters alleged -in the answer, upbn- which defendant predicates its defense.

The answer in part alleges, that during the month of September, 1911, Walker was; indebted- to one Htanley of Custer, in the sum' of $1200; that Walker, being then obligated to deliver certain lumber to fill a contract with the Rapid City Lumber Go., the ’defendant 'entered' i-nto- an -agreement with Walker and plaintiff, whereby p-lainibiff agreed to' release from, the lien of hi-s mortgage ail the timber, lumbar, ties and logs1, and to deliver the lumber to Walker, to the- end that Walker might complete his contract with- the- Rapid City Lumber Co., and particularly agreed to deliver 5,500 ties to the defendant at the Burlington -tra-ck at Custer; that in consideration of said agreement, defendant agreed- to endorse Walker’s note ito Hanky in the sum- of $1,200. -and to pay -the same, and further agreed to- pay to. plaintiff the sum of $1750.00 with -interest thereon due- from Walker to plaintiff, upon .complete delivery of said lumber and ties, less suph sum as -plaintiff should realize from the sale of clear lumber. The trial court found that the parties entered into a contract on the 27th of Sept. 1911, which was to secure to plaintiff the sum of $1750, with' interest thereon less" such sum as the plaintiff should receive from sale of the clear lumber, and' that payment of the balance was to be made to plaintiff by defendant, when said ties were delivered' by plaintiff to defendant, on the landing at the' Burlington railroad track, at Custer, and after 'the said lumber had been shipped, and the. contract with the Rapid City Lumber ,Oo. had been filled, and certain moneys then in escrow in 'the Pennington County "Bank in Rapid City, had .been released-. The bo-urf further found that, defendant as' a part of the consideration of s-aid can tract, agreed', to' endorse •Walker’s'promissory noté of $1200 to Hanley, above mentioned; that the plaintiff did release and surrender all thb lumber, and the same was shipped by Walker, pursuant to' his 'contract with the Rapid City Lumber Co., which -contract was never completed, but on or about the 20th of Sept. 1911, was abrogated by consent of 'the parties thereto, and a new contract substituted in lieu thereof; that the money held in escrow in the Pennington County Bank, was never released, -but continued to be held by virtue of ''the substituted contract above mentioned; that the plaintiff delivered to defendant 3973 ties and no more, but failed and refused to deliver 'the remaining 1527 ties which were 'on •the Meeker homestead at the time of making said contract, and did appropriate and convert the Same to his own use; that t'he defendant did endorse the Walker-Hanley note, and has repeatedly demanded of plaintiff delivery of the remaining 1527 ties -required by said contract, and has offered to pay plaintiff the •amount due under said contract upon delivery to -defendant by plaintiff of the balance of said ties.

The answer alleges that defendant has been at all times, and now is, ready and willing to pay plaintiff the amount of $598.28, 'arid has repeatedly offered to do so, uipo-n plaintiff’s delivering to defendant the remaining 1527 No. 1 eight ft. railroad ties, required by the terms of said contract. These .allegations of the answer -and the'findings'of the trial court, in effect, show an .abandonment of all matter's of defense except die alleged failure of plaintiff to deliver 1527 lies required 'by the contract. The answer in effect, also constitutes an offer of performance on the part of defendant under the contract. Sec. 1160 Civ. Code provides :

“An offer of performance must be free from any condition which the creditor is not bound on his part to perform.”

Such an offer as that alleged in the answer, does not, in any event, extinguish the obligation. Sec. 1166 Civ. Code, provides :

“An obligation for the payment of money is extinguished by a due offer of payment, if the amount is immediately deposited in the name of the creditor with some bank of deposit within this state, of good repute, and notice thereof is given to the creditor.”

The offer of payment was on condition that plaintiff deliver to defendant “the remaining 1527 No. 1 eight ft. railroad ties, as required by the -terms of said contract.” If the defendant under the terms1 -of the contract, had a right to interpose as a condition to performance upon -its .part, the delivery of the number of ties specified, the plaintiff was not entitled to recover even though the amount remaining unpaid be admitted. But if the offer was accompanied by a condition. which Barnes was not bound to -perform under the contract, the -plaintiff was entitled to recover ¡at least the amount remaining unpaid, as admitted 'by defendant. Was the plaintiff obligated by his written contract, to deliver to defendant 5500 ties at the Burlington tracks at 'Custer? If not, the trial court erred in dismissing plaintiff’s action.

The written contract is silent as to- Walker’s indebtedness to Hanley, and contains no reference to an -endorsement of Walker’s note, or payment thereof, by defendant. The trial co-turf however, .permitted oral evidence of such alleged agreement to -be received at the trial, and seems to- have based its findings in part upon this evidence. The terms and conditions of the alleged oral agreement as to the Hanley indebtedness, and the terms -and conditions of -the written contract, are mingled in a single finding by the trial court, as though ’constituting but one -contract. Respondent seeks to sustain this finding upon the theory -that the oral contract was collateral to the -written contract, and the consideration for the oral contract found in bene--fits conferred upon plaintiff, or detriment .to be suffered by defendant, under -the terms of the written contract. The indebtedness 'secured by the bill of sale or mortgage, from Walker and defendant, to plaintiff was independent of and had no connection with, the indebtedness from Walker to Hanley, so far. as the record discloses. Barnes, in consideration of defendant’s agreement to pay the indebtedness due him from Walker, released to the defendant and Walker, the entire security held by him, except that portion described as clear lumber. Upon such release, the entire balance of lumber, logs, and ties was placed within the control and disposition of Walker and defendant, with the single stipulation that ties should lie paid for on delivery at the railroad station at Custer, and before shipment. Whether this stipulation was for the benefit of Walker or the defendant, is not apparent. The contract does not require payment to be made to Barnes, and it is difficult to understand upon what construction such a contention could be founded. Barnes had accepted the written contract in lieu of the former security for Walker’s indebtedness and as consideration- for this contract, the defendant or Walker, or both, were entitled to the money realized from a sale of the ties, for the simple reason that defendant could only reimburse itself cut of such moneys for the amount it had become obligated to pay Barnes. There may, in fact, have been- -an oral agreement between the defendant and Walker, that the defendant, 'Upon receiving the money realized from a sale of the lumber and ties, would also pay Walker’s indebtedness to Hanley, but such agreement, -if it existed, had nothing to do with the written contract between plaintiff and -defendant and was not in any sense, collateral to that contract, even- if it be 'assumed that Barnes’ release of his security would thus 'benefit Hanley. It is clear that no benefit -could inu-re to Barnes therefrom-, even though he assented to such an arrangement between, the defendant and Walker and Hanley.

It is plain, moreover, that such an oral contract should not have been considered by the trial court as collateral to the written contract. A valid oral contract, collateral to a written contract, exists as an independent -contract, even though the consideration therefor • be found in some of the terms or .conditions of the ‘written contract. Nor.can an execu-tory oral contract modify or change the term's anid conditions of a written • contract, to which it is collateral. In the finding by the trial court, t'he terms of the alleged -oral contract are intermingled with those of the written contract, as though the two constituted a single contract. Furthermore, the contract, 'as found by the court, materially changes certain .provisions of -the written contract. It is sufficient -for the purposes of this deoision to say that such a finding by the trial court, cannot be held decisive of the plaintiff’s rights.

The court found that the plaintiff “did deliver to the defendant at the Burlington railroad tracks,'at Custer, S. D., 3973 of the said railroad ties and- no more; that he wholly failed, refused and neglected- to deliver to- the defendant the remaining 1527 ties, which were on the Meeker homestead1, at the time of the making of said contract, and did appropriate ‘and convert the same to his- own use and benefit.”

Those portions of the finding- to the effect that plaintiff failed to deliver certain- ties, and that he appropriated and converted certain ties to his own use and benefit, are wholly unsupported by anything disclosed! in the printed record. It is apparent therefore, that the whole -defense is disclosed in the allegation and finding that plaintiff failed to -deliver to defendant “1527 ties which he agreed to deliver according to the terms of' said contract.” Was defendant entitled to such delivery -as consideration for the obligation assumed to pay Walker’s indebtedness to Barmes? It is true, the written, contract released to Walker and defendant “some 5500 ties,” 'but no provision is found therein obligating plaintiff to deliver )a single tie at any place. The defendant agrees, “to take up and pay for all the No. 1 eight ft. railroad ties in the above amount of ties (5500) sufficient to cover the amount due and owing to the said party of the 1st part, amounting to $1750, more or 'less, and interest, just as soon as said lumber can be loaded but, and the contract with the Rapid City Lumber Co., can be filled, -and' the money released that is in escrow in .the Pennington Bank of Rapid City, S. D.” That is, the defendant agreed “to. take up and pay for” the ties just as soon as certain other things are done, and also that the ¡ties are to be paid for at the landing, before being shipped, to the amount of plaintiff’s indebtedness.

The contract provides that Walker shall ship the -lumber, and it may b-e inferred that Walker a-l-so is to- deliver -the ties on the Burlington- track, an-d that the -defendant is to collect from the -purchaser, the price thereof, before the ties shall be shipped. This might benefit Walker in bis dealings with defendant. But even the quantity of ties to be delivered is limited- by the express -ternie of the contract, to the amount of plaintiff’s indebtedness. It is -conceded in -defendant’s answer, that th-e defendant did receive on th-e Burlington track at Custer, 3973 -tie-s, shown to- be o-f the- val-ue -of 43^ -cents, each, aggregating a -sum much greater than the indebtedness due to plaintiff. It m-a-y also be noted that defendant agreed to take- up and -pay -only for “all the No. 1 eight foot ties” in the amount -of about 5500 ties on the Meeker 1-and. This contract -covers none of the inferior ties which might be in the lot. There is no evidence -that the ties not delivered were of the -grade -required by the- contract at all. Presumably the ties delivered an-d accepted -were of that grade.' The defendant had no m-ore right to dem-an-d delivery of inferior ties than plaintiff had to require their acceptance in case the No. 1 ties- in the lot were not -enough to pay hi-s debt. The trial -court was -clearly in error in holding in effect, that plaintiff’-s rights were in. -some way affected by the alleged oral contract .to pay Hanl-ey’s- n-o-te. But -even if it -be -assumed— which we do not decide — that plaintiff was required to deliver the ties ¡at the railroad, it is clear that he was not bound to deliver a greater quantity than would pay the amount du-e him, under -the written -contract. Pie w-as not bound to ¡deliver the ties to realize funds -out of w-hi-ch to- pay the Hanley note. When ties delivered- equalled the amount -due him, under the contract,, an-d such ties w-er-e paid for as agreed, plaintiff’s' -claim w-oul-d’ be- satisfied, and thereafter be w-o-uld have no. -further interest in the remainder o-f the ties or the -lumber. I-t is admitted that the ties actually delivered at the railroad1, amounted in value to-$1857.37, at their agreed price. Under the written -contract,, plaintiff was 'entitled1 to receive tha-t -su-m, or so much thereof, as-, remained due, after application -o-f -the $417.20 received fo-r the-clear lumber. It is conceded that the ties delivered, 'an-d th-e.-clear lumber were more tiran sufficient to pay the full amount claimed by plaintiff. Clearly tiren, the trial court erred in denying plaiiuiff any recovery whatever.

Tire trial court seems to have held that the written contract did not obligate the defendant to <pay any indebtedness of Walker to Barnes for advances made for manufacturing lumber or ties, after the execution of the contract. Even if it be conceded that the original oral agreement between Barnes and Walker preceding the execution of the mortgage, contemplated that the mortgage should stand as security for other money advanced by Barnes, the written contract sued on, which was substituted for. the mortgage security, in that respect, seems to be ambiguous and uncertain in its terms. The written contract contains no specific recital of or references' to advances made 'by Barnes to manufacture the lumber or ties, and if such were intended to be secured thereby, the words “more or less” alone, must cover them. There is no. evidence in the record from which the intent of the panties in that respect, may be satisfactorily ascertained. Again the written contract is ambiguous and uncertain in that it does, not expressly require any act of delivery or otherwise, on the part of Barnes, with reference to the lumber and ties' formerly held by him as security, nor is there any evidence in the record from which a satisfactory conclusion may be drawn.

It is not ascertainable from .the contract itself, whether the indebtedness due Barnes was 'either more or less than $1750.00. In this state of the record, the judgment of the trial court must be reversed, with directions to the trial court te» ascertain and ■determine tíre particular amounts or items of indebtedness intended to be secured by the written contract, and the full amount of such indebtedness remaining unpaid. These matters can only be ascertained' and determined by proper and' relevant oral .and other evidence which, taken in connection with the written contract, may render the intention of the parties and the amount of indebtedness sufficiently clear.

The findings and judgment of the trial court are therefore reversed and a new trial ordered.