Case Name: T. M. THOMAS et al. v. CARTERET COUNTY et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1921-11-09
Citations: 182 N.C. 374
Docket Number: 
Parties: T. M. THOMAS et al. v. CARTERET COUNTY et al.
Judges: Stacv, J., not sitting.
Reporter: North Carolina Reports
Volume: 182
Pages: 374–397

Head Matter:
T. M. THOMAS et al. v. CARTERET COUNTY et al.
(Filed 9 November, 1921.)
1. Contracts- — Writing—Conditions Precedent — Parol Evidence.
Where a contract is reduced to writing to be held subject to the performance of a condition precedent by one of the parties, the existence of the contract depends upon the performance of the condition, and the failure of its performance may be shown by parol, as such does not tend to vary, alter, or contradict a written Instrument.
2. Same — Written in Part.
The principle upon which the parol part of a contract may be shown in evidence, when the other part thereof has been reduced to writing, is inapplicable when the law requires a writing in relation to the subject-matter which is sought to be shown by parol.
3. Contracts — Writing—Conditions Subsequent — Parol Evidence — Waiver —Mortgages — Deeds and Conveyances — Embezzlement— Criminal Daw.
Where the plaintiffs have made a note secured by a mortgage on their lands, given on condition that a pardon be unconditionally granted by the Governor to a relative who has embezzled county funds, and the pardon was delivered and the note and mortgage delivered to the proper county officials, and the plaintiffs in their action seek to show by parol as a condition precedent to the validity of the written instruments that the county should first collect from the bondsman of the defaulter, the allegation of a conditional delivery is waived by an admission of the plaintiffs on the trial that the defendant county was entitled, to a judgment on their note and mortgage.
4. Contracts— Writing— Admissions — Conditions Precedent — Parol Evidence.
Where a valid delivery of a binding, written contract has been established, or admitted upon the trial, neither a condition subsequent nor a reservation or eotemporaneous trust in favor of the grantor resting in parol, may be shown, in direct contradiction to the written terms.
5. Judgments — Statutes—Mortgages—Deeds and Conveyances — Sales— Confirmation of Sales — Courts—Appeal and Error.
A judgment appointing commissioners to sell land under mortgage and apply the proceeds to the defalcation of a county official of county funds, which the mortgage was given to secure, will be modified on appeal to provide for a report and confirmation of the sale by the court, when this provision of the statute has not been incorporated therein.
Stacy, J., not sitting; Walker, J., dissenting.
Appeal from Horton, J., at June Term, 1921, of Oabteeet.
Action to determine tbe extent of plaintiffs’ liability on a certain note and mortgage, executed and delivered to Thomas Thomas, and by him given as security to the county of Carteret. A brief history of this litigation is set out in the judgment of the Superior Court, entered at the June Term, 1921:
“Tbis cause coming on to be beard before J. Lloyd Horton, J., and a jury, and it appearing to tbe court that at tbe June Term, 1920, of said court, tbis cause bad been tried before bis Honor, Connor, J., and a jury, and at said term tbe following issues, witb tbeir answers, were submitted and found by tbe jury as follows, to wit:
“1. In wbat amount, if any, is Tbomas Tbomas, trustee of tbe courthouse bond sinking fund, indebted to Carteret County? Answer: ‘$13,-236.49, witb interest.’
“2. What sum, if any, is Carteret County entitled to recover of tbe United States Fidelity & Guaranty Company as surety for Tbomas Tbomas, treasurer of Carteret County? Answer: ‘Nothing.’
“3. "Wbat sum, if any, is Carteret County entitled to recover of W. A. Mace, administrator of Alonzo Tbomas, deceased, on tbe bond of Tbomas Tbomas, trustee? Answer: ‘$5,00-0.’
“4. Were tbe note and mortgage of T. M. Tbomas and wife, Laura, executed to Tbomas Tbomas and assigned to Carteret County, taken and accepted witb tbe understanding and agreement that tbe same should be used only after tbe other securities, held by tbe county for Tbomas Tbomas, trustee, bad been exhausted, as alleged in tbe complaint? Answer : ‘No.’
“5. Wbat sum, if any, is Carteret County entitled to recover of T. M. -Tbomas and wife on account of tbe note for $13,500 secured by mortgage assigned to said county by Tbomas Tbomas? Not answered.
And it further appearing to tbe court that tbe presiding judge of said court in bis discretion set aside tbe answer to tbe fourth issue and failed to answer tbe fifth issue, which be instructed tbe jury tbe court would answer after they bad answered tbe other issues, and permitted tbe plaintiffs to file a reply and further pleading upon which tbe following issues were submitted and answered at tbis, tbe June Term, 1921, of Gartebet, before bis Honor, Horton, J., and a jury, as follows, to wit:
“4. In wbat amount, if any, is W. A. Mace, administrator, etc., of Alonzo Tbomas, indebted to Carteret County on account of tbe term of said Alonzo Tbomas as treasurer of Carteret County, beginning on tbe first Monday in December, 1914, and ending at tbe death of said Alonzo Tbomas on 18 November, 1915 ? Answer: ‘$5,000, and interest.’
“5. Wbat amount, if any, is Carteret County entitled to recover of defendant United States Fidelity & Guaranty Company as surety for said Alonzo Tbomas as treasurer of Carteret County for said term, beginning on tbe first Monday in December, 1914? Answer: ‘$8,236.49, and interest.’
“6. Were the note and mortgage given to Thomas Thomas by plaintiff given as an accommodation paper to said Thomas Thomas, as alleged by plaintiffs? Answer: ‘Yes.’-
“7. Is the defendant, Carteret County, a holder for value as between it and the plaintiffs of the $13,500 note and mortgage made by plaintiffs ? Answer: ‘Yes.’
“8. Were the note and mortgage of plaintiffs executed to Thomas Thomas and assigned to Carteret County taken and accepted with the understanding and agreement that the same should be used by the county only after the bonds of said Thomas Thomas and of said Alonzo Thomas had been exhausted, as alleged by plaintiffs, and then applied to the balance unpaid due said county on account of the Thomas Thomas trusteeship of the sinking fund and the treasurership of said Alonzo Thomas? Answer: ‘Yes.’
“9. What sum, if any, is Carteret County entitled to recover of plaintiffs on account of the note for $13,500, secured by mortgage assigned to said county by Thomas Thomas ? Answer: ‘$13,234.49, with interest from 1 October, 1916, to be credited with $5,000 and interest on same from 13 June, 1921, due by the estate of Alonzo Thomas as surety for Thomas Thomas, trustee of the courthouse bond sinking fund,’ the last issue having been answered by the court by consent of all parties that the court might answer same after verdict as a matter of law.
“It is now considered and adjudged by the court that the answers to the issues number 4 and 5 be, and are on motion of defendants, other than Carteret County, set aside as a matter of law for the reason that the jury found, at the June Term, 1920, by its answer to the first issue, that Thomas Thomas, trustee of the courthouse bond fund received and misappropriated the funds.
“It is further ordered and adjudged by the court that Carteret County recover nothing against United States Fidelity & Guaranty Company as surety, and that said defendant United States Fidelity & Guaranty Company go without day and recover its costs.
“It is further considered and adjudged by the court that Carteret County recover of W. A. Mace, administrator of the estate of Alonzo Thomas, deceased, the sum of $5,000, with interest from 13 June, 1921, as surety on the bond of Thomas Thomas, trustee of the courthouse bond sinking fund, said Mace, administrator, having tendered judgment for said amount in open court, said amount to be credited on the amount due Carteret County by T. M. Thomas and wife, Laura P. Thomas.
“It is further considered and adjudged by the court that Carteret County recover of T. M. Thomas and wife, Laura Thomas, the sum of $13,236.49, with interest from 1 October, 1916, at the rate of 6 per cent per annum, to be credited witb the sum of $5,000, and interest on same from 13 June, 1921, due by Mace, administrator of Alonzo Thomas, deceased, the said Alonzo Thomas having been surety on the bond of Thomas Thomas, trustee of the courthouse bond sinking fund.
“It is further considered and adjudged that the note and mortgage given by T. M. Thomas and wife, Laura P. Thomas, to Thomas Thomas, and assigned by Thomas Thomas to Carteret County, be foreclosed to pay said indebtedness, and that Luther Hamilton and Leslie Davis be, and are appointed commissioners to sell the lands described in the mortgage of T. M. Thomas and wife, Laura P. Thomas, to Thomas Thomas, recorded in the office of the register of deeds of Carteret County, in Book 22, page 339, after due advertisement and in accordance with the law governing sales of real estate under execution.
“It is ordered that such advertisement shall not be made until sixty days after the adjournment of this court, and then only in the event plaintiffs shall not have fully discharged the liability of this judgment.
“It is further adjudged that defendant Mace, administrator, pay the costs of the action, to be taxed by the clerk.
J. Lloyd HobtoN, Judge Presiding.”
Upon the second trial the following admission was made in open court, and entered of record:
“Counsel for plaintiffs, having so admitted in open court, the court finds the following facts:
“In this case, the plaintiffs, T. M. Thomas and wife, Laura Thomas, agree that, pursuant to the issues found in the trial of this case before Hon. George W. Connor, judge, at the June Term, 1920, the defendant, Carteret County, is entitled to a judgment against the. plaintiffs, T. M. Thomas and wife, Laura Thomas, in the sum of $13,236.49, with interest, said judgment to be credited for such amounts as had been or would be found by the jury in the case that the defendant Mace, administrator, and others are indebted to said Carteret County,”
His Honor set aside the verdict on the 4th and 5th issues, as a matter of law, and rendered the judgment appearing above. Plaintiffs and defendant Mace, administrator, appealed.
Ward & Ward, H. 8. Ward, and Luther Hamilton for plaintiffs.
Julius P. Duncan for Mace, administrator.
D. L. Ward and J. F. Dunccm for United States Fidelity & Guaranty Company.
No brief filed on behalf of Carteret County.

Opinion:
Glare, C. J.
Tbe ease at bar bas been tried twice in tbe Superior Court, and tbis is tbe second appeal bere. Former opinion reported in 180 N. C., 109. It is doubtful if tbe allegations of tbe complaint and tbe wording of tbe 8tb issue, by correct interpretation, amount to a charge and finding tbat plaintiffs note and mortgage were not intended to take effect absolutely and unconditionally at tbe time of tbeir delivery. It was only upon tbe allegation of a conditional delivery tbat plaintiffs were permitted to sbow tbe "understanding and agreement" upon wbicb tbe note and mortgage were "taken and accepted." Indeed, on tbe facts of tbe present record — tbe mortgage having been. delivered to tbe mortgagee and by him in turn assigned to Carteret County- — -it is not altogether clear or certain tbat tbis position was ever open to tbe plaintiffs. Buchanan v. Clark, 164 N. C., 56; Huddleston v. Hardy, 164 N. C., 210; Bond v. Wilson, 129 N. C., 325; note: 16 L. R. A. (N. S.), 941. But as tbe point is not raised by any specific exception, we shall not pass upon it now. It is unnecessary for us to do so.
Tbe principle applicable to a conditional delivery bas been sanctioned and approved by us in a number of carefully considered decisions; and it is now very generally recognized in tbis and other jurisdictions. Farrington v. McNeill, 174 N. C., 420; Bowser v. Tarry, 156 N. C., 35; Gaylord v. Gaylord, 150 N. C., 222; Hughes v. Crooker, 148 N. C., 318; Aden v. Doub, 146 N. C., 10; Pratt v. Chaffin, 136 N. C., 350; Kelly v. Oliver, 113 N. C., 442, and Ware v. Allen, 128 U. S., 590. It is said in Anson on Contracts (Am. Ed.), 318: "Tbe parties to a. written contract may agree tbat until tbe happening of a condition, wbicb is not put in writing, tbe contract is to remain inoperative." And again, in Wilson v. Powers, 131 Mass., 539: "Tbe manual delivery of an instrument may always be proved to have been on a condition wbicb bas not been fulfilled, in order to avoid its effect. Tbis is not to sbow any modification or alteration of tbe instrument, but tbat it never became operative and tbat its obligation never commenced." These excerpts are quoted with approval in Garrison v. Machine Co., 159 N. C., 285, where thé same doctrine is announced by Walker, J., in an elaborate review of tbe authorities on tbe subject in band.
We are of tbe opinion, however, tbat tbe admission, made in open court, to tbe effect tbat tbe defendant county was entitled to a judgment on tbe note and mortgage in question (though subject to certain credits), takes these instruments out of tbe class of conditionally delivered contracts, if, indeed, they were ever entitled to be styled as such. To admit tbeir present validity and binding force for any purpose, in advance of tbe happening of tbe contingent event upon wbicb it is alleged they were to take effect, is at variance with tbe theory of a conditional delivery, and brings into operation other principles of law.
"It is fully understood tbat although a written instrument purporting to be a definite contract has been signed and delivered, it may be shown by parol evidence that such delivery was on condition that the same was not to be operative as a contract until the happening of some contingent event, and this on the idea, not that a written contract could be contradicted or varied by parol, but that until the specified event occurred, the instrument did not become a binding agreement between the parties." Bowser v. Tarry, supra. The question is controlled very largely by the intention of the parties. Waters v. Annuity Co., 144 N. C., 670. But plaintiffs have abandoned this position (if they were ever entitled to take it) by their admission in open court, for it is only upon the strength and validity of the note and mortgage that any judgment at all could be rendered against them and in favor of Carteret County.
A valid delivery and binding contract having once been established, or admitted, the plaintiffs may not thereafter be permitted to annex a condition subsequent, resting in parol, and in direct contradiction to the express terms of their written obligation, for this would infringe upon the well settled rule that oral evidence will not be admitted to vary or contradict the terms of a written instrument. Mfg. Co. v. McCormick, 175 N. C., 277, and cases there cited.
This doctrine was well stated by Smith, C. J., in Ray v. Blackwell, 94 N. C., 10, as follows: "It is a rule too firmly established in the law of evidence to need a reference to authority in its support, that parol evidence will not be heard to contradict, add to, take fronl, or in any way vary the terms of a contract put in writing, and all contemporary declarations and understandings are incompetent for such purpose, for the reason that the parties,, when they reduced their contract to writing, are presumed, to have inserted in it all the provisions by which they intend to be bound," citing 1 Greenleaf Ev., sec. 76; Etheridge v. Palin, 72 N. C., 213. And to like effect are many decisions in our Eeports, too numerous to be cited here.
In Walker v. Venters, 148 N. C., 388, it was said: "It is true that a contract may be partly in writing and partly oral (except when forbidden by the statute of frauds), and that in such cases the oral part of the agreement may be shown. But this is subject to the well established rule that a contemporaneous agreement shall not contradict that which is written. The written word abides, and is not to be set aside upon the slippery memory of man." See, also, Moffitt v. Maness, 102 N. C., 457, one of the leading cases on this subject, and Sykes v. Everett, 167 N. C., 600. This last citation contains an interesting and illuminating discussion of a kindred and closely allied subject which supports and is in full accord with our present decision.
Kernodle v. Williams, 153 N. C., 475, and others like it, have no application either to the law or the facts of this case. That case held: "Where a contract is not required to be in writing it may be partly written and partly oral, and in such cases, when the written contract is put in evidence it is admissible to prove the oral part of it." But the instrument here in question a conveyance of land, to be applied to the payment of the defalcation of public funds by the grantor's nephew, is required to be entirely in writing, and no oral agreement or private understanding can years afterwards be written into the contract in order to relieve the grantor of the responsibility he assumed and upon the execution of which he procured the release of his nephew.
In Gaylord v. Gaylord, 150 N. C., 222, the Court held that "the doctrine of engrafting an oral agreement upon a written instrument which is required by the statute of frauds for the conveyance of land cannot be established in favor of the grantor in the deed." That case has been very often cited since with approval. See citations thereto in Annotated Edition.
In Campbell v. Sigmon, 170 N. C., 351, the Court held: "If, notwithstanding the solemn recitals and covenants in a deed, the grantor could show a parol trust in himself it would virtually do away with the statute of frauds, and would be a most prolific source of fraud and litigation. No grantee could rely upon the covenants in his deed," citing, among other cases, Gaylord v. Gaylord, supra.
In Walters v. Walters, 172 N. C., 330, the same matter was fully discussed again, and it was held, "The grantor cannot set up a parol trust in his own favor against the grantee, saying the ruling in Gaylord v. Gaylord, 150 N. C., 222, that a parol trust cannot be set up by the grantor as to the conveyance in fee to his grantee, is not only upheld by the reasoning and authorities therein cited, but that case has since been upheld and reaffirmed in Ricks v. Wilson, 154 N. C., 289; Jones v. Jones, 164 N. C., 322; Cavenaugh v. Jarman, ib., 375; Trust Co. v. Sterchie, 169 N. C., 22; Campbell v. Sigmon, 170 N. C., 351, and Walters v. Walters (when here before), 171 N. C., 313." In very recent cases, Allen v. Gooding, 173 N. C., 96, and Chilton v. Smith, 180 N. C., 472, Gaylord v. Gaylord has been again cited with approval. In the latter case the Court overruled a previous decision of this Court, Fuller v. Jenkins, 130 N. C., 554, which had mistakenly held that a deed absolute on its face could be converted into a mortgage because of an oral agreement between the parties at the time that it should operate as a mortgage, and said that it "stands alone and is expressly overruled."
If a negro or some poor white man is convicted of stealing a side of meat for his starving family the doors of the State's Prison usually lie open before him, but Thomas Thomas, having been convicted of appropriating thousands of dollars entrusted to his care for safe keeping, and sentenced to the State Penitentiary, it was made to appear to the Governor of the State, who has the unrestricted power of pardon, that it was more advisable to secure the return of this money to the taxpayers of Carteret County than that the criminal should be punished, and upon assurance that by this instrument his uncle had insured the payment of this fund to the taxpayers the pardon was granted. That was the consideration for this deed and, according to the custom, this reason was given out to the world as the ground for the pardon. There is no provision in that deed that the grantor therein, who on the faith thereof procured the release of his nephew from the sentence of the law, should be "exempted from payment if some one else could be sued to recover the sum embezzled." There could be no oral agreement in favor of the grantor that notwithstanding, in fact, the public must collect the money, if they could, out of other people. On the written agreement that out of the land conveyed the county treasurer would be reimbursed, the pardon was given and the convict released. The State performed its part of the contract. The written agreement on the other hand was unequivocal that the property conveyed in the deed should be applied to reimburse the county and protect the people of the county from raising additional taxes to make good the loss their treasury had sustained by the defalcation. Upon the facts in the present record the mortgage was delivered to the mortgagee, and by him assigned to Car-teret County in consideration of his pardon, and the conveyance was as unconditional as the pardon which he received.
The admission having been made in open court in this case, to the effect that the defendant county was entitled to a judgment on the note and mortgage in question, takes this instrument out of the class of conditional and conditionally delivered contracts, if indeed it had ever been entitled to be so styled. There was no reservation in the conveyance now sought to be set aside that it was "not to be valid if any one else could be sued for the money." It will not be charged by any one that the Governor in granting the pardon ever understood that this was a part of the instrument executed by the plaintiff. It was absolutely represented to him as an unconditional security to the county that the funds would be replaced by sale of the property conveyed, and in open court in this case it was admitted that the county was entitled to judgment on the note and mortgage.
Instead of that, these funds which were taken out of the public treasury eight to ten years ago are still withheld, and we are asked by the mortgagor to hold that there must be a long, weary chase taking the time of tbe courts at great additional expense to tbe county to ascertain wbetber or not there was some private unwritten agreement witb some one by wbicb other people should first be sued to recover the money which the plaintiff contracted to pay, if his nephew were released.
The pardon was unconditional, based upon the security of this conveyance for the unconditional payment of the money. The property of the citizens of Carteret County may be advertised for the payment of the enhanced taxes caused by the defalcation, but the property pledged for the repayment of that sum is still unsold, and the only visible result so far has been the added cost of the courts in investigating the plea of an oral understanding that the property of the mortgagor is to be exempted from liability, if some one else can be found who can be sued. The public burdens are increased by protracted litigation in the metaphysical round of legal technicalities in the effort by learned counsel to
"Distinguish, and divide a hair between south and southwest side,"
with the ultimate result possible that if any one ever pays anything there will be little, if any, of it that will get into the treasury for the benefit of the people who have lost it.
Applying these principles, his Honor might well have excluded all the evidence offered on the second trial and rendered judgment on the verdict as returned and' left undisturbed at the June Term, 1920. But as the same result has been accomplished, though somewhat irregularly, by the judgment as entered, we have concluded to let it stand, as it is a matter of public interest to all the people of Carteret County that this litigation should be disposed of as speedily as possible. It is their money which has been misused and misappropriated, and embezzled; and, up to the present time, nothing has been refunded or paid back. The note and mortgage in question were given to make good this shortage and to save the county harmless from the defalcations of one of its officers. These transactions occurred in the year 1916. The plaintiffs' obligation matured on 7 February, 1917. Nothing further seems to have been done until-this suit was instituted on 3 February, 1919, to require the commissioners to proceed with the collection of the prior securities in exoneration of plaintiffs' undertaking. Plaintiffs also allege that the county authorities have been negligent in this respect, and they have sought to be relieved from any further liability by reason of such delay and inaction. It would seem that this surreptitiously taken money, to say the least, should have been made good long ago. Public funds belong in the public treasury, and we are unable to find any warrant of law for such indulgences as are disclosed by the present record.
This opinion will be certified to the Superior Court of Carteret County, to the end that the judgment entered at the June Term, 1921, may be modified so as to provide for a report and confirmation of the sale as required by statute; and, as thus amended and changed, the judgment will be
Modified and affirmed.
Stacv, J., not sitting.