Opinion ID: 877001
Heading Depth: 1
Heading Rank: 2

Heading: Is parol evidence admissible to prove the actual consideration?

Text: The question of whether a deed constitutes a contract founded upon a written instrument within the meaning of the 8 year statute of limitations has not been specifically settled in Montana. In general, deeds are seen as contracts in writing to which the longer statute of limitations applies. It is established that the acceptance of a deed by the grantee named therein makes it a written contract, and the obligations created by the deed are therefore evidenced by a writing and are not governed by the limitation respecting verbal contracts. 51 Am.Jur.2d Limitation of Actions § 97. A summary of cases so holding appears in Annot. 3 A.L.R.2d 809 § 26. We recently recognized this rule in dictum, S-W Co. v. John Wight, Inc. (1978), Mont., 587 P.2d 348, 357, 35 St.Rep. 1674, 1687, and we adopt it as the law in Montana. On the parol evidence question both the law of contracts generally and the law relating specifically to deeds allow parol evidence on the issue of consideration when the recital in the instrument is, as here, merely a receipt (for value received). In a case in which the consideration for a written contract is mentioned merely by way of recital or as a receipt, the parol evidence rule does not preclude the admission of extrinsic evidence to show the true consideration ... 17 Am.Jur.2d Contracts § 90; to the same effect, 30 Am.Jur.2d Evidence §§ 1056 and 1057. The tendency of modern times has been to regard the consideration clause in a deed merely in the light of a receipt and to allow parol evidence to explain the consideration for almost every purpose except to allow the grantor to avoid the deed where no fraud or mistake is shown. 23 Am.Jur.2d Deeds § 71. As a general rule, and in line with the modern tendency ... parol or extrinsic evidence ... is admissible to show the actual consideration for the conveyance ... 23 Am.Jur.2d Deeds § 73. Where a deed is the only instrument involved in a controversy, the stated consideration (one dollar and other considerations) can be explained by oral testimony. Warner v. Johns (1949), 122 Mont. 283, 201 P.2d 986. Accordingly, we hold that plaintiffs' claim is not barred by the 5 year statute of limitations and that they are entitled to a judgment for the balance of the indebtedness. Since the evidence on the issue of the purchase price was conflicting and the trial judge chose to believe plaintiffs, defendant has no grounds for challenging the finding of fact that the agreed price was $25,000 rather than $15,000. The standard of review in a nonjury case is simply to determine if there is substantial evidence to support the findings of the trial court. This Court will not reverse such findings of fact unless there is a clear preponderance of evidence against the findings. Hayden v. Snowden (1978), Mont., 576 P.2d 1115, 1117, 35 St.Rep. 367, 369. [T]he credibility and weight given to the witness, especially where the evidence is conflicting, is a matter for the District Court's determination in a nonjury case. Olson v. Carter (1977), Mont., 572 P.2d 1238, 1239, 34 St.Rep. 1539, 1541, citing Miller v. Fox (1977), Mont., 571 P.2d 804, 34 St.Rep. 1367. Plaintiffs have asked us to assess interest on any judgment in their favor from April 20, 1970, the date of the sale. This we decline to do. During oral argument it was established that there had been no agreement whatever between the parties as to whether interest would accrue on the obligation if it were not promptly paid. The issue of interest did not arise during the trial of this case and the District Court made no findings of fact in that regard. No interest was demanded or paid on the first $15,000, although the deed was executed on April 20, 1970 and the payment was not made until June 26, 1970. Because the record is silent on this matter, we hold that interest shall be assessed from a reasonable time after demand was made on defendant for payment of the outstanding $10,000, to be determined by the District Court on remand. The judgment of the District Court in favor of defendant is reversed and the cause remanded with instructions to enter judgment for plaintiffs in the sum of $10,000, together with interest as may be determined in accordance with this opinion. Costs to plaintiffs. We decline to award attorney fees for trial or upon appeal. DALY, HARRISON, SHEA and SHEEHY, JJ., concur.