Court Opinion

ID: 6679454
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:19:22.801623+00
Date Added: 2024-06-11T16:00:48.047413
License: Public Domain

The opinion of the Court was delivered by
Mr. Chiee Justice McIver.
The plaintiff, Whitmire, being the owner of the tract of land described in the complaint — subject, however, to a mortgage held by one McDowell — some time in the fall of 1894, entered into a verbal contract with one A. R. Fowler, for the sale of the land, upon which Fowler paid to Whitmire the sum of $200 on account of the purchase money, and went into possession of the'land. In December, 1894, Fowler, representing himself to be the owner of the land, agreed to sell the land to the defendant, H. Y. Boyd, and put him in possession. On the 22d of January, 1895, this agreement was consummated, and the said Fowler made a deed for the land to the said Boyd, for the consideration therein expressed of $2,000, which was made up of the amount due on the McDowell mortgage — $1,200—and the note under seal of Boyd to Fowler for $800, secured by a mortgage on the land, which note and mortgage were, on the day last named, delivered by Boyd to Fowler. On the 19th of February, 1895, Fowler borrowed from the defendant, McGee, the sum of $400, for which he gave his note, indorsed by M. J. Harris and J. D. Harris, and also transferred to and deposited with McGee, as collateral security for the payment of said notes, the $800 note above mentioned, which Boyd had given to Fowler, together with a mortgage purporting to have been executed, by Boyd to secure the payment of the said note for $800, but which proved to be a forgery — the said Fowler retaining the genuine mortgage, which he afterwards assigned to another party, whose claim thereunder has been rejected, and as he does not appeal, nothing further in relation to that transfer need be stated. Matters remained in this condition until the 22d day of May, 1895, when the plaintiff and *337the said Fowler entered into -the following written agreement in reference to the land described in the complaint: “This agreement made between T. B. Whitmire and A. R. Fowler, whereby it is agreed that the said A. R. Fowler shall have the use of a certain tract of land belonging to-said T. B. Whitmire during the year 1895 (here describing the land), and shall pay the said T. B. Whitmire, on or before December 1st, 1895, $150 for the use of the same. And the said A. R. Fowler shall have, as his own, all the tools left on said place belonging to said T.'B. Whitmire. It is further agreed, that if the said A. R. Fowler shall pay to the said T. B. Whitmire, on or before December 1st, 1895, $500, with interest from January 1st, 1895, at eight per cent, per annum, including the above $150, and shall execute to the said T. B. W7hitmire a mortgage for $500, payable January 1st, 1898, on said land, bearing interest from January 1st, 1897, at eight per cent, per annum, then the said T. B. Whitmire shall execute and deliver to the said A. R. Fowler a warrantee deed to said 188 acres of land.” In the fall of 1895, Boyd, who was in possession of the land, discovering that Fowler had no title when he conveyed the land to him on the 22d of January, 1895, and being told that if he remained on the land he would have to pay rent for the same to the plaintiff, went to see plaintiff upon the subject, and as to what passed between them there is a conflict of testimony. The result, however, was that, on the 16th of November, 1895, the parties — Boyd, Whitmire, and A. R. Fowler, together with a brother and brother-in-law of said Fowler — met in the city of Greenville for an adjustment of the matter, when the following occurred: Boyd paid to Fowler $235 in cash, and delivered to him a mortgage on some other property, to secure the payment of $100 accepted by plaintiff as cash, which was soon after-wards paid by another person, which money and mortgage were immediately turned over to plaintiff by Fowler, and at the same time Fowler transferred to the plaintiff a note and mortgage for $800, purporting to have been executed *338by Boyd, but which were proved to be forgeries on the trial of this case, to secure to the plaintiff the balance of the purchase money of the land under the contract with Fowler, and thereupon the plaintiff, at the instance of Fowler, executed a deed to Boyd for the land. There was direct conflict of testimony as to what passed between the plaintiff and Boyd when this transaction was being consummated— the plaintiff claiming that the said Boyd assured him that the note and mortgage transferred to plaintiff by Fowler were good and valid papers before he executed the deed to Boyd, while Boyd insisted that he knew nothing about those papers, but .that aftpr the deed was executed, the plaintiff showed him a paper, so folded as to conceal everything but the signature, and asked him if that was his signature, to which he replied, “It looks like it,” and that plaintiff then asked: “Do you know whether or not it is yours?” to which he replied: “No, sir, but it looks like it.” It appears that after this transaction took place, but at what particular time does nott appear, the cash paid to Fowler by Boyd on the 16th of November, 1895 — $235—was credited ou the genuine note of Boyd to Fowler for $800, which was then held by McGee by his consent. The plaintiff having made several demands upon Boyd for the payment of the interest on the $800 note transferred to him on the 16th of November, 1895, which were not complied with by Boyd, this action was commenced on the 10th of September, 1897, to foreclose the mortgage to secure the payment of the note for $800, which purported to have been executed by Boyd to Fowler on the 16th November, 1895, and by Fowler assigned to plaintiff on the same day.
The case was referred to the master, “to take the testimony and report his conclusions of law and fact, together with any special matter.” At the close of the testimony, some of which tended to show that the note and mortgage which constituted the basis of the action were forgeries, the plaintiff moved to amend his complaint by alleging that he accepted in good faith the note and mortgage as a part of *339the purchase money of the land conveyed by him to the defendant, Boyd, with the knowledge and consent of said Boyd, and upon his assurance that said papers were genuine, and alleging that Boyd is thereby estopped from disputing the validity of the same. Further: “That in any event this plaintiff has an equity in the said land to the extent of the balance due him on account of the purchase money thereof, and he asks that the land be sold, if his debt is not otherwise paid, and that out of the proceeds of said sale that his debt and the costs of this action be paid first, before any of the other parties are entitled to share in the distribution of the same; and the defendants be allowed to amend as they may be advised.” These amendments were allowed by the master, to which counsel for the defendant, McGee, excepted. The defendant, Boyd, also moved to amend his answer, at the close of the testimony, by adding thereto the following allegations: “That he purchased the premises described in the complaint from one A. R: Fowler, who represented himself to be the owner thereof, and plaintiff also represented to defendant that the title to said premises was in said A. R. Fowler, and is thereby estopped from claiming any interest in the premises on account of the alleged default of said A. R. Fowler in paying the purchase money. That this defendant took possession of the said premises upon the representations made to him as aforesaid, and assumed incumbrances to the amount of $1,200, and has since paid the sum of $335 to plaintiff, and received his conveyance or deed to said premises. That defendant stands read)' and willing to pay into Court the sum of $465, with such interest as is now due, being the balance due by defendant in full on account of his said ■ purchase. Defendant further alleges that if it shall be held that he is liable on any papers except the genuine note admitted by him to have been executed on the day of January, 1895, that said papers are without consideration, and defendant prays that the same be delivered up to be cancelled.” These amendments were *340likewise allowed by the master, and his action therein was excepted to. The case came before his Honor, Judge Al-drich, for a hearing upon the report of the master and the exceptions thereto, and he rendered his decree, which is set out in the “Case,” and should be incorporated in the report of this case. To-this decree the plaintiff and defendant, Boyd, filed numerous exceptions, and the defendant, McGee, gave notice of additional grounds upon which he would ask this Court to sustain the decree. These exceptions and additional grounds should likewise be incorporated in the report of this case.
1 We do not propose to consider the exceptions seriatim, but rather to consider what we understand to be the controlling questions presented by the exceptions and these additional grounds. The claims set up by those of the defendants who do not appeal from the Circuit decree need not be stated or considered, as they have been' eliminated from the case, having been finally disposed of by the decree of the Circuit Judge, from which those defendants have not appealed. Our inquiry, therefore, is only as to the rights of the plaintiff and the defendants, Boyd and McGee. In considering the rights of the plaintiff, it will first be necessary to determine whether there was error in allowing the amendment to the complaint above set forth after the testimony was closed. The object of the action unquestionably was to obtain payment of the balance due on the purchase money of the land described in the complaint by subjecting the land to the payment thereof. The plaintiff, holding what he undoubtedly supposed to.be the genuine note and mortgage of the person who had acquired possession of the premises from the original vendee, very naturally framed his complaint upon these evidences — the note and mortgage — of his claim; but when the testimony, for the first time, disclosed the fact to him that these supposed evidences of his claim were forgeries, and, therefore, nullities, he then asked leave to amend his complaint, not by changing his original claim, but by sim*341ply alleging other evidences of the same claim found in the terms of the original contract of sale. The Code makes liberal provisions for amendments of the pleadings, so as to effect substantial justice, by allowing the insertion of other allegations material to the case; and the only limitation seems to be that such amendments will not be allowed, during or after the trial, where such amendments “change substantially the claim or defense.” See Code, sec. 194; Hall v. Woodward, 30 S. C., 564. Accordingly, we find that in Tarrant v. Gittelson, 16 S. C., 231, the plaintiff was allowed, during the trial, to amend his complaint, which was based upon a claim for work and labor, by inserting, an allegation that the work and labor was done under a special contract. So in Sibley v. Young, 26 S. C., 415, a complaint based upon sealed notes, calling them promissory notes, was allowed to be amended by basing the claim upon an open account for which the notes were given, for the reason that there was no substantial change in the claim. The Court, in that case, used this language: “It is the same debt which is sought to be recovered by the same plaintiffs from the same defendants, and the only difference is in the ground upon which the liability is based.” That case was recognized and followed in the subsequent case of Moore v. Christian, 31 S. C., at page 341. These authorities, with others that might be cited, clearly show that there was no error in allowing the amendment in question, for there was no change, certainly no substantial change, in the claim of the plaintiff. Especially was this so when, as in this case, the order allowing the amendment also allowed the defendants to amend their answer, if so advised. The relation between the plaintiff and Fowler must, therefore, be regarded as that of vendor and purchaser under an executory contract of sale upon which only a part of the purchase money has been paid, and such a relation is practically that of mortgagor and mortgagee (Lynch v. Hancock, 14 S. C., at page 86) — that is to say, the vendor continues to hold the legal title as security for the payment of the *342balance of the purchase money, and the vendee, while he has no legal title, does acquire an equitable title, subject to the payment of the balance due on the purchase money, which he may sell or mortgage, although it is not subject-to the lien of a judgment. Roddy v. Elam, 12 Rich. Eq., 343, cited with approval in Lake v. Shumate, 20 S. C., at page 30; Richards v. McKie, Harp. Eq., 184. Hence, when Fowler conveyed the land to Boyd, he only conveyed this equitable title, subject to the McDowell mortgage, about which there seems to be no dispute, and also subject to the claim of the plaintiff for the balance of the purchase money; and when Boyd mortgaged the land to Fowler, such mortgage only covered this equitable title, subject to the same incumbrances; and, of course, whqn Fowler assigned this mortgage (for it cannot be questioned, under the authorities cited by the Circuit Judge, that the assignment of the note carried with it the mortgage given to secure its payment) to the defendant, McGee, he took it subject to the same incumbrances.
2 While, under this view of the case, as it appears upon the face of the papers, there could be no doubt that plaintiff would have a prior equity to enforce the payment of
the balance due him on the purchase money under the written agreement between himself and Fowler, yet it is claimed by Boyd, in his amended answer, that he was induced to buy the land, not only by the representations of Fowler, but also of the plaintiff; that the title to the land was in Fowler, and that upon these representations he went into possession of the land, assumed incumbrances to the amount of $1,200,- has since paid to the plaintiff $335, and received his conveyance of the premises, and that plaintiff is thereby estopped from making any claim upon the land. It will be observed that neither the plaintiff nor the defendant, McGee, excepted to so much of the order as allowed Boyd to amend his answer as above stated, though the defendant, McGee, did except to so much of the order as allowed Boyd to set up the claim that the note and *343mortgage transferred to McGee by Fowler was without consideration. So that Boyd’s claim that the plaintiff is es-topped, set up by his amended answer, is properly before us. It seems to us, however, that the testimony fails to sustain tbe allegations upon which the claim of estoppel rests. Boyd’s own testimony shows that he had bargained for the land with Fowler before he ever approached the plaintiff upon the subject, and was only induced to do so by a report that Whitmire, the plaintiff, was trying to rent the land, and all that Whitmire told him, according to his own version, was that he had sold the place to Fowler, and this was true. Whitmire, the plaintiff, was not asked by Boyd whether Fowler had paid for the land, or whether he had given him a deed, and we do not see that the plaintiff was under any obligation to volunteer information upon these points to Boyd. Indeed, it seems to us that the defendant, in buying the land from Fowler, who was his brother-in-law, relied entirely upon his representations, by which he seems to have been grossly deceived and defrauded; but we do not think that the testimony shows that the plaintiff in any way contributed to such deception and fraud. Nor does the evidence show that Boyd ever assumed the payment of the amount due on the McDowell mortgage, in such a way as to make him personally liable for the payment of that debt, as it only shows that he knew that mortgage would have to be satisfied before he could obtain a title clear of that incumbrance. So, also, as to the cash payment of $335, alleged in the amended answer. That money was paid by Boyd to Fowler, and by him turned over to plaintiff on account of the first payment called for by Fowler’s contract with plaintiff for the purchase of the land; and so much of that amount, $235, as was furnished by Boyd individually was credited by Fowler on Boyd’s genuine note to Fowler for $800, then in the hands of McGee, at the request of Boyd. So that the claim of estoppel set up by Boyd’s amended answer cannot be sustained.
*3443 *343Our next inquiry is as to the effect of the transaction of *344the 16th of November, 1895, for up to that date it is quite clear the plaintiff had never parted with the legal title to the land, and had a right to retain the same as a security for the payment of the balance of the purchase money due under his written contract with Fowler, hereinabove set out, in priority to the claims of any of the other parties to this action, he having done nothing, as we have seen, to impair or destroy his rights. Exactly what occurred on the 16th of November, 1895 — or, rather, all of what occurred — is left in no little doubt and obscurity by the conflict of testimony. This much, however, is certain, that the plaintiff was induced to make a deed to Boyd (who was then in possession of the land by virtue of a' previous purchase of Fowler’s interest) for the said land in consideration of the payment to him in cash, or what was received as cash, of the sum of $335, which with the amount previously paid by Fowler, $200, was near about sufficient to satisfy the first payment called for by the written contract between plaintiff and Fowler, and the assignment by Fowler to plaintiff of a note for $800, secured by a mortgage of the said land, purporting to’have been executed by Boyd to Fowler, either as collateral security for the second payment called for by said written contract or in satisfaction thereof, about which there is some doubt; but, in the view which we shall fake, it makes no difference whether the transfer was made as collateral security or in satisfaction of said second payment. These papers, thus transferred by Fowler to plaintiff, were represented by Fowler to be genuine and so believed to be by plaintiff; but were, in fact, forgeries, and so known to be by Fowler at the time, as there is every reason to believe that he perpetrated the forgeries. From these unquestionable facts it is very clear that the plaintiff was induced to make this deed by the grossest fraud on the part of Fowler, at least; and if he were the party before the Court undertaking to set up such deed or claim any rights under it, there can be no doubt that a court of equity would unhesitatingly declare the deed null and void for fraud, and, *345therefore, insufficient to confer any rights whatever. If this be so, then those claiming under Fowler would be in no better position; and both of these defendants, Boyd and McGee, are in this position. Boyd is the alienee of Fowler, having purchased his interest in the land, and only in this way could he claim a conveyance from the plaintiff, and the deed was made to Boyd, at the instance and by the request of Fowler, and he can claim no higher or greater rights than Fowler. The cash payment was. made by Boyd — not to the plaintiff but to Fowler — and the money was paid over by him to plaintiff, and Boyd received credit on his genuine note to Fowler for so much of the cash payment as he individually furnished. As to McGee, he is the assignee of unnegotiable securities transferred to him by Fowler, and, certainly, as to these securities, he stands in no better position than Fowler. Besides, while we do not think that the testimony is sufficient to show any guilty knowledge on the part of Boyd, in the perpetration of the fraud by Fowler upon the plaintiff, whereby he obtained the deed upon which he relies, yet there is much in the testimony well calculated to excite his suspicions, and prompt him to inquiry, which he does not seem to have made. There is no doubt that Boyd knew that he had executed but one note and mortgage, and he also knew that such note had- been transferred to McGee at least two months before the transaction which took place on the 16th November, 1895, for he says he found out in the summer of 1895 that McGee held his note, and McGee says in his testimony: “I notified Mr. Boyd in July or August, 1895, that I had an assignment of this note; he never disputed his liability on the note and mortgage. He came in and said that was the note he had given, and wanted the credit given” — referring to the credit of $235 which was entered on the $800 note held by McGee as above stated. He, therefore, knew both before and after the 16th of November, 1895, that his genuine note — the only one he had ever given — was in the hands of McGee; and yet, when he was shown a paper on the 16th of Novem*346ber, 1895, which plaintiff testified was the forged mortgage, which that day was transferred to him by Fowler, and asked if that was his signature, his only reply was: “It looks like it;” and when again asked the question: “Do you know whether or not it is yours?” he replied: “No, sir, but it looks like it.” Again, when the plaintiff wrote several letters to Boyd, asking for payment of interest on the forged note, which had been transferred to plaintiff by Fowler, to only one of which he replied as follows: “I received your letters, and should have answered promptly, but hardly knew what to say in reply. The note I gave A. R. Fowler is payable January 1st; therefore, I did not know the interest would be due before January 1st.” When Boyd was on the stand, testifying in regard to this letter, he said: “I had seen the genuine no.te before I wrote the letter to Mr. Whit-mire. I don’t know why I did not inform Mr. Whitmire that the paper he held was a forgery.” The plaintiff, on the other hand, testifies that he showed Boyd the note and mortgage transferred to him by Fowler, and asked him as to his signature: “I did not have the mortgage folded so as to conceal1 all except the signature when I asked him about it He said that was his signature. He did not say, ‘It looks like it, but I won’t be certain.’ He acknowledged his signature without qualification; if he had not done so, I would not have taken the papers.” When the plaintiff was recalled as a witness, he said: “I did not refuse to allow Mr. Boyd to have the paper in his hands; I explained the nature of the paper to him.” For the reasons above stated, and in view of all the testimony in the case, we cannot hold that the deed of 16th of November, 1895, from the plaintiff to Boyd, divested the plaintiff of the legal title to the land, and he can, therefore, continue to hold the same as security for the payment of the balance of the purchase money, superior to the claims of che defendants. It is contended, however, by one of the counsel, that this result can only be attained by a rescission of the transaction of the 16th of November, 1895, involving the necessity for a return of the *347cash payment made on that day to the plaintiff, and that no case for the rescission of a contract is stated in the pleadings. We cannot accept that view. Here the deed from plaintiff to Boyd, of the 16th of November, 1895, is set up as a defense to the equitable claim of the plaintiff, and the burden of proof is upon the defendants to sustain such defense, and for this purpose they must show a valid conveyance of the legal title by the plaintiff; and this, as we have seen, they have-failed to do, for the deed relied on has been shown to be void for fraud. So far as the necessity for a return of the cash payment is concerned, it is sufficient to say that this is a matter which concerns Fowler alone, as he made the cash payment to the plaintiff, and he is not a party to this case. Even if he were, it is not likely that a court of equity would pay much regard to the claims of a party whose gross and criminal frauds have given rise to this whole controversy.
4 Again, it is urged that inasmuch as the geuine mortgage executed by Boyd to Fowler on the 22d January, 1895, to secure the note for $800 of that date, now in the hands of McGee, was duly recorded, the plaintiff was thereby affected with notice of that mortgage. But notice of what? the plaintiff knowing that he had not then even formally parted with the legal title, was thereby affected with notice only of the fact that Boyd had mortgaged the equitable estate in the land which he had acquired by his purchase from Fowler, which, as we have seen, was subordinate to the legal title which the plaintiff was entitled to hold as the first security for the payment of the balance of the purchase money. It was analogous to a case in which a senior mortgagee had received notice of a junior mortgage, and such a notice would in no way affect the lien of the senior mortgage.
*3485 *347The second additional ground upon which the defendant, McGee, asks this Court to sustain the decree of the Circuit Judge is based upon the ground that there was error in allowing Boyd to amend his answer by setting up as an ad*348ditional defense to the claim of McGee, “failure of consideration” as to the note and mortgage held by McGee. It will be observed, however, that the amendment allowed was to permit the defendant, Boyd, to set up as a defense to that note — not failure of consideration, but that this note which is under seal and mortgage are '■'■without consideration,” a different defense from that of failure of consideration, for the one may be set up to an action based upon an instrument under seal, while the other cannot, as the seal, of itself, imports a consideration. But waiving this, while we think there was error in allowing the amendment, during the trial, inasmuch as it permitted a distinct and separate defense to be set up, thereby substantially changing the defense set up in the original answer, yet such error -was entirely harmless, for two reasons: 1st. Because the defense rested upon the unfounded assumption that Boyd had no estate whatever in the land which could be the subject of mortgage; whereas, as has been shown above, Boyd did have an equitable estate in the land which was the subject of mortgage. 2d. Because, by the express terms of the order allowing the amendment, it was allowed only upon the contingency that Boyd shall be held liable “on any papers except the genuine note,” and this contingency has not occurred, for he is not held liable on any other papers.
The foregoing views render it necessary that the Circuit decree, in respect to the costs of the plaintiff and the defendants, Boyd and McGee, be modified as will hereinafter be directed.
Having thus disposed of the material questions presented by the several exceptions and the additional grounds upon which this Court is asked to sustain the Circuit decree, it only remains for us to announce the practical result of our conclusions: 1st. Subject to the lien of the McDowell mortgage, which no one seems to dispute, and as between the parties to this case; the plaintiff is entitled to the first lien upon the land described in the complaint, to secure the bal-*349anee due him under the written contract between him and Fowler, hereinabove set out, after deducting all payments made under that contract, to wit: the sum of $535. 2d. That if this lien in favor of the plaintiff shall be extinguished by Boyd within a time to be prescribed for that purpose, then the defendant, McGee, is entitled to a lien on said land to secure the amount due him on the note of Boyd to -Fowler for $400, now held by the defendant, McGee; and if this lien shall be extinguished within a time to be prescribed for that purpose, then the defendant shall be .entitled to hold said land, free of all incumbrances except that of the McDowell mortgage. 3d. If the above mentioned liens in favor of the plaintiff and the defendant, McGee, shall not be extinguished within the time limited for that purpose, then that the land described in the complaint be sold by the proper officer, at such time and upon such terms as shall be prescribed by the order of the Circuit Court, and that the proceeds of the sale be applied, first, to the payment of the costs and expenses of such sale, together with any taxes that may be due on said land; next to the payment of such balance as may be found due to plaintiff under his contract for the sale of the land above referred to; and next to the payment of the amount which may be found due to the defendant, McGee, on the note for $400 now held by him and above referred to; and should there be any balance of the proceeds of the sale, let the same be held subject to the further order of the Court. 4th. That the defendant, Boyd, pay the costs of this case, except those of the defendants, Frank Hammond, W. A. Fowler (called W. P. Fowler in the Circuit decree), J. B. Redwine, and W. A. Hudson, who are therein required to pay their own costs respectively.
The judgment of this Court is, that the judgment of the Circuit Court be reversed in so far as it conflicts with the views above presented, and that in other respects it be affirmed, and that the case be remanded to the Circuit Court *350for the purpose of having the views herein announced carried into effect.
Mr. Justice Gary did not sit in this case.