Court Opinion

ID: 6814454
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:58:53.295817+00
Date Added: 2024-06-11T16:03:47.971827
License: Public Domain

Burks, J.
(after making the foregoing statement), delivered the opinion of the court.
This is a suit for the specific performance of a contract for the sale of real estate. The contract is set forth in the statement preceding this opinion. There was a demurrer to the original bill, which was sustained by the trial court, with liberty to the complainant to amend. The amendment was made and the bill as amended was demurred to. This latter demurrer was overruled. The parties took evidence pro and con, and submitted the case on its merits, and there was a decree for the specific performance of the contract, and from this decree the present appeal was taken.
[1, 2] The granting of the equitable remedy of specific performance is not a matter of right but of discretion, not an arbitrary or capricious, but a sound judicial discretion controlled by established principles of equity, and exercised upon a consideration of all the circumstances of each particular case. 3 Pomeroy’s Equity (2d ed), sec. 1404. Moreover, in order to justify a court of equity in compelling the specific performance of a contract, “the contract must be distinctly proved and its terms clearly ascertained. It must be reasonable, certain, legal, mutual, based upon valuable consideration, and the party seeking performance must not have been backward in enforcing his rights, but ready, desirous, prompt and eager.” Darling v. Cumming's Ex’r, 92 Va. 521, 23 S. E. 880.
*526In the case in judgment, it is insisted, in the first instance, that the contract under consideration is not a contract for the purchase of land, but an option contract; a privilege extended to the appellant to purchase if he so desired. In the preamble to the contract it is stated that the appellant was willing to guarantee the payment for certain improvements, “provided an option is given him to purchase the said property” at a price mentioned, and in the body of the contract it is stated that, “for and in consideration of the option to purchase the property hereinbefore mentioned the said E. W. Scott, Jr., guarantees to pay” for certain improvements to an amount not exceeding $1,800. The contract then proceeds to declare that the Albemarle Horse Show Association “hereby agrees and binds itself to sell to the said E. W. Scott” the property mentioned in the contract, “and said Scott agrees to take said property at said price in accordance with the terms of this contract.” While Scott declares in his testimony that he knew nothing of the preparation of this contract or its terms until he was called upon to sign it, the clear weight of the testimony is that it was prepared by counsel employed by him, and that he paid the attorney’s fee for its preparation.
[3-5] The contract is to be construed as a whole, and effect given to every provision thereof if possible. No word or paragraph can be omitted in construing the contract if it can be retained and a sensible construction given to the contract as a whole. If, however, there is an inconsistency between the obligatory part of the contract and the recitals therein, effect will be given to the obligatory part rather than to the recitals, as this is regarded as the more vital and important of the two, but the recitals are often helpful in the construction of contracts and throw light on the meaning and intent of the parties. Dick Co. v. Sherwood Letter File Co., 157 Ill. 325, 337, 42 N. E. 440. The *527appellant insists that he never intended to do anything except take an option to purchase the property, and that the contract was prepared for that purpose. Looking to the obligatory part of the contract alone no option to purchase appears to have been given to the appellant, but an option is given to the Horse Show Association to recede from the contract under given conditions and within a given time. The provision in the preamble, “that an option is given him to purchase,” and, in the contract, that “in consideration of the option to purchase the said property hereinafter mentioned,” are apparently inconsistent with the obligatory part of the contract by which the Horse Show Association agreed to sell the property to Scott, and Scott agreed to take the property at the price mentioned in the contract. Hence, according to the ordinary rules of construction in the absence of explanation, the obligatory part of the contract would be binding and we should be compelled to hold that Scott had agreed to purchase the property, and not merely taken an option upon it.
But it is manifest from the terms of the contract as a whole that it was the intention of the parties to give to Scott an option to purchase the property. It is not only mentioned in the preamble, but is also expressly mentioned as the consideration of the contract, and Scott insists that such was the agreement of the parties. Color is given to Scott’s interpretation of the contract as one of option by the testimony of Mr. Shepherd, president of the Horse Show Association, and one of its chief witnesses. He was asked in his examination in chief this question: “Do you recall, Mr. Shepherd, having discussed this matter with Scott between the day the Horse Show was held and the 18th of September, 1916?” To which he replied: “I recall a general conversation with Mr. Scott the day the papers were signed at Judge Duke’s office wherein he expressed the expectation of completing his purchase, and *528while an effort was to be made to sell stock in the Horse Show Association, he did not expect that it would result in the ability of the association to exercise the right reserved of paying off the indebtedness on the property, and that he finally expected to take it. I do not specifically recall any other conversation prior to the day you name.” (Italics supplied.) This same idea is further expressed in his cross-examination on that subject.
The circumstances under which this contract was prepared and executed do not show any great amount of deliberation either about its preparation or execution, and it is to be observed that by the change of a single word in the contract it will conform in all respects to the claims made by the appellant. The substitution of the word “if” for the word “and” in the latter part of the paragraph beginning “Witnesseth,” would make the contract conform to the claim of the appellant. If this substitution were made, the paragraph would read, “Witnesseth, that for and in consideration of the option to purchase the property hereinafter mentioned, the said E. W. Scott, Jr. guarantees * * * and the said party of the first part hereby agrees and binds itself to sell to the said E. W. Scott, Jr., its property * * * at the price of thirteen thousand, five hundred dollars ($13,-500) cash, plus any amount paid for said improvements not in excess of eighteen hundred dollars ($1,800), if said Scott agrees to take said property at said price in accordance with the' terms of this contract.” We do not mean to say that anyone is authorized to make this change, but such prominence was given to the phrase “option to purchase the property” that Scott might well have overlooked the slight difference in the phraseology of the obligatory part of the .contract, and have signed it as an, option contract instead of a contract of sale. There is no testimony on the subject except that of Scott who says he understood it to be. an option to purchase, and of Cochran who says he *529told the attorney for Scott, when drawing the contract, that it “was absolutely binding on Mr. Scott to buy this property at expiration of the sixty days” if they did not pay the repair bills within that time. Cochran gives no satisfactory interpretation whatever of the meaning of the phrase, “option to purchase the property,” or of the reasons for its insertion in the contract. Indeed, if his statement of what he said to the draftsman of the deed be correct, the phrase ought not to have been inserted in the contract. Under the circumstances, it may be well doubted whether the contract possesses that certainty and precision which a court of equity demands before it will decree its specific performance.
[6] The further defense is made by the appellant that the Horse Show Association covenanted and agreed to convey the land to him “by deed with general warranty and covenants of title,” and that, when they came to tender a conveyance, the deed contained numerous restrictive provisions with reference to the use of the property, which is not a compliance with the contract. He insists that the-covenant for a deed with general warranty and covenants of title is not fulfilled by a deed containing onerous building restrictions. It is insisted on behalf of the Horse Show Association that Scott was fully informed of the terms of the deed under which the association held its property, and that when this covenant was made he had full knowledge of these restrictions, and hence that the covenants had no application to the restrictions contained in the deed to the association; that what the association contracted to sell, and Scott agreed to buy, was the association’s title to the twenty acres of land, subject to the building restrictions, but free and exempt from any encumbrances or liability for anything placed upon the land by the association. In-other words, that we are to look to what the parties had in mind in making the contract, and that as these building re-*530strictions were put upon the land by the grantor of the association, and could not be removed by the latter, the parties never intended their contract to be affected by said building* restrictions, but that Scott bought the title of the association, subject to the restrictions. For this position great reliance is placed on the cases of Riner v. Lester, 121 Va. 563, 93 S. E. 594, and Sachs v. Owings, 121 Va. 162, 92 S. E. 997; and these cases furnished the foundation of the opinion of the trial judge that the contract should be specifically enforced.
Riner v. Lester, supra, was a case of an easement of a public road. In the course of the opinion in that case it is said, that “mere knowledge of an encumbrance at the time of contract * * * does not necessarily cut off the defense against the specific execution of a contract for the sale of real estate; but where the circumstances and the conduct of the parties show that the existence of an open, visible, physical encumbrance of the property must have been taken into consideration in fixing the price of the property, the purchaser can neither refuse to complete the purchase nor require an abatement of the purchase price."
In Sachs v. Owings, supra, the land sold was subject to an easement of a telephone line. Here too, the easement was an open, obvious and physical encumbrance on the property and the purchaser was required to complete his purchase on the ground that the easement must have been taken into consideration in fixing the price.
In Jordan v. Eve, 31 Gratt. (72 Va.) 1, there was an easement of a public highway. After citing certain New York and Pennsylvania cases, the opinion proceeds: “We are of opinion that these views of the New York and Pennsylvania courts are in accord with the general understanding and usage in Virginia on this subject. With us it has never been, supposed that the vendor in conveying his land is required to make an express reservation or exception with *531respect to highways upon the tract of land, or submit to an abatement of the purchase money. A public highway is generally regarded as a benefit to the land, and whether it was or not the purchaser is presumed to have taken it into consideration, and to have fixed the price with reference to its supposed advantages or disadvantages. If it was once understood as a doctrine of this court that the purchaser is entitled to an abatement, or damages for an'easement or encumbrance of this kind, in the language of the New York court, it would open the flood gates of litigation in this State. Besides, it is difficult to say how the damages in such case can be properly estimated. A public highway is a mere easement. It does not take away the right of freehold in the soil; that continues in the owner in the same manner as before the highway was established, subject only to the easement. The owner still retains his property in the mines, quarries, springs of water, timber and earth, not incompatible with the public right of way. He may maintain trespass, ejectment, or waste, in respect to the same, and upon the abandonment or discontinuance of the way, the property and right of enjoyment revert to the proprietor of the soil. Washburn on Easement and Servitude, 228; Warwick & Barksdale v. Mayo, 15 Gratt. (56 Va.) 545.”
[7] It will be observed from the foregoing citations that we have gone no further than to hold that easements which are- open, obvious and physical encumbrances upon the property are not within covenants against encumbrances. Even this proposition has not met with universal approval in all of its aspects. Fossume v. Requa, 218 N. Y. 339, 113 N. E. 330. We are not disposed, however, to recede from our views on this subject, and, besides, the doctrine as to public highways has been so long settled in this State as to become a rule of property. In all of the cases cited above, the encumbrance was physical, open and obvious, and knowledge of its existence was either shown by deeds under which *532the grantee claimed, or was, for some reason, presumed, so that resort to parol evidence was unnecessary, and the vendor did not have to rely “on the uncertain testimony of slippery memory,” which is the basis of the exclusion of such testimony. .
[8] We are now asked to go further, and to hold that it may be shown by parol evidence that, at the time of the purchase of the real estate, the vendee had knowledge of the existence of building restrictions imposed on the property in the deed to his vendor, and hence they were not within the covenant against encumbrances stipulated for in the written contract of sale. While no specific exception to the parol evidence was taken by the appellant, counsel for the Horse Show Association do not deny the existence and scope of the parol evidence rule, and the right of the appellant to rely thereon, but deny its application to the facts of this case. They have urged upon us with great earnestness and ability that the purpose of this evidence was not to vary, alter or contradict the terms of the written contract of the parties, but to show what was the subject matter of the sale and upon what subjects the minds of the parties met; that to identify and show what the parties had in mind in bargaining is not to set up a parol agreement. It is insisted that the subject of the sale is to be determined by the contemplation of the parties, and that this is not dependent upon or derived from the physical condition of the premises but from the bargain, of the parties, which may be shown in many ways, ignoring the rule that the bargain of the parties is best ascertained from the written memorial which, as a rule, is to be taken as the sole evidence thereof. It is further said that “to treat the contract in the casé at bar as requiring of the association a deed free of restrictions is to say that these parties consciously and solemnly negotiated a bargain which they knew was wholly abortive.” In support of their position they cite and quote as follows from the following cases:
*533Wilson v. Cochran, 48 Pa. St. 107, 112, 86 Am. Dec. 574-576: “But it has been suggested that this mode of ruling the case is virtually impairing a written covenant by parol evidence. Not at all. The subject matter of the conveyance, its condition and peculiarities, may be explained by parol without any contradiction of a deed. Do we contradict the conveyance of a tract of land when we permit it to be proved by parol that it is covered with timber, is an improved farm, or contains a water-power, or has a private road upon it? If a vendee means to exclude proof upon such subjects, he should take a more special covenant than a general warranty of title. But had he taken, in this instance, a covenant against private ways, it is he who would want the parol evidence to establish the breach Indeed, it is he who opens the door for parol evidence under the general covenant, for he proves the Shultz road by parol, and the plaintiff proves that the defendant bought subject to the road. We see no impeachment or contradiction of the conveyance by such evidence.”
Bacot v. Fessenden, 64 Misc. Rep. 422, 119 N. Y. Supp. 464: “It may further be observed that where parties have expressly contracted that the vendor shall convey free from encumbrances, the vendee might ordinarily be entitled to insist upon the terms of his contract, notwithstanding the fact that at the time of the making of the contract he had notice of the existence of the encumbrances which are urged as ground of rejecting them. But this rule would be subject to the important qualification that: Tf the encumbrance be óf a kind which the vendor cannot remove,' such as an easement, it is not to be presumed that the purchaser, knowing of the existence of the easement, intended the insertion- of a vain provision in the contract. Maupin, Marketability of Titles, sec. 85a.’
“The defendant asks for equitable relief. He seeks a rescission of the contract, and an equitable lien upon the *534property for the amount paid by him under the contract. A court of equity will give no heed to the appeal of one who knew, when he signed the contract, that the easements and covenants to which he now objects existed, and were incapable of removal by the other party to the contract.”
Egle v. Morrison, 27 Ohio Cir. Ct. R. 497, affirmed 73 Ohio St. 388, 78 N. E. 1133: “But we think the evidence shows that so far as this building restriction was concerned, Mr. Morrison had knowledge of it. More than that it does not appear that this building restriction was any damage to the property, but rather a benefit, if it were to be used for residence purposes; and Morrison was intending to use it for residence purposes and there was a valuable residence upon it at the time, and in the absence of evidence to the contrary it would be presumed that a restriction of this kind would be a benefit to him. Upon this proposition we cite Riggs v. Pursell, 66 N. Y. 193, 202, 203, where that question is discussed: But in any event, the fact that he had notice of it deprives him of the right to set it up as a defense. He had notice of it before the contract was signed, and therefore waived any right to complain of this restriction. He took the property and signed the contract with full knowledge that this restriction was upon it. We think this notice can be established by parol evidence * * * Parties cannot defeat contracts of this kind by a mere captious objection. The court cannot help* out a party who is simply striving by some technical objection, to defeat the right of the vendor to require him to carry out his contract; there must be some substantial objection, and- if under .a contract of this kind, a good title is tendered — a marketable title — it is sufficient.”
[9] At last, however, view the case as we may, it always comes back to the proposition of proving a parol waiver, at the time of entering into the contract, of an •express term of the written contract. The subject matter *535of the contract of sale was clearly defined in the contract. It was the twenty acres of land which the Horse Show Association had purchased of the Redland Land Company. The character of title that the purchaser was to receive was also stipulated for in the contract. He was to have a deed “with general warranty and covenants of title.” The subject matter upon which the minds of the parties met, the twenty acres of land, and the terms of purchase are best gathered from the written contract of the parties, which is the sole repository of their agreement. This cannot be varied, altered, or contradicted by parol evidence of any prior or contemporaneous oral waiver or agreement. This subject is reviewed at length, and with great ability by Judge Allen, in the leading case of Towner v. Lucas Ex’r, 13 Gratt. (54 Va.) 705, which has been consistently followed ever since the opinion was delivered. The principle there announced is applicable to the present case. In that case Towner held bonds executed by Reynolds and others upon which he wished additional security. He time and again sought to get Lucas to sign as surety, and pledged his honor that if Lucas would sign said bonds he should never be required to pay any part of the debt, and that he would give Lucas his written indemnity so as to save him harmless. Lucas finally yielded to the importunities of Towner and signed the bonds. As these bonds became due Towner instituted suits on them, and Lucas, relying on Towner’s promise, put in no plea, and consequently Towner obtained judgment against him by default. After suit was instituted on the first bond Lucas applied to Towner for the in-* demnity he had promised, and Towner advised him to keep quiet and wait awhile. Afterwards Lucas called again in company with his son and demanded the promised indemnity, and was assured by Towner that he would fulfil his promise, but that he could not commit himself, and that Lucas had nothing to fear but his death. After the *536judgments were obtained Towner refused to give Lucas the written indemnity or to,release him from the judgments. Lucas died and suit was brought by his executors to compel Towner to execute and deliver the promised indemnity and release, and in the meantime to enjoin him from proceeding to enforce the judgments. Towner demurred to and answered the bill. In his answer he said that he was not a party to and had no knowledge of any condition before the complete execution and delivery of the bonds. He denied the alleged promise to Lucas that he should never be required to pay any part of the debt, and that he would give him written indemnity against it. He denied that in any conversation with Lucas he ever admitted any such promise of indemnity. He admitted that there had been conversations, but not such as alleged in the bill. The court directed an issue to try the question whether there had been such promise of release and indemnity. The jury found in favor of Lucas, and the trial court approved the verdict. From that judgment Towner appealed, the main question being as to whether or not parol testimony was admissible to prove the agreement. In a very able opinion by Judge Allen, it was held that the evidence was not admissible, and the judgment of the lower court was reversed. In the course of the opinion it was said: “It is reasoning in a circle to argue that fraud is made out when it is shown by oral testimony that the obligee, contemporaneously with the execution of the bond, promised not to enforce it. Such a principle would nullify the rule, for conceding that such an agreement is proved, or any other contradicting the written instrument, the party seeking to enforce the written agreement according to its terms would always be guilty of fraud. The true question is, was there any such agreement, and this can only be established by legitimate testimony. For reasons founded in wisdom and to prevent frauds and perjuries, the rule of the common *537law excludes such oral testimony of the alleged agreement, and as it cannot be proved by legal evidence, the agreement itself in legal contemplation cannot be regarded as existing in fact. Neither a court of law nor of equity can go on the hypothesis of fraud where there is no legal proof of it.”
[10, 11] In our view of the case, parol evidence was not admissible to prove an implied waiver, made at the time the contract was entered into, in conflict with the express provision of the written contract. “Proof of knowledge or other proof of the intent of the parties that a particular encumbrance should be excepted from the general terms of the covenant could only be admitted by a violation of the canon of evidence which forbids parol proof to vary the terms of a written contract.” Demars v. Koehler, 62 N. J. Law, 203, 41 Atl. 720, 72 Am. St. Rep. 642. But the result would be the same, even if it were shown tha,t at the time Scott entered into the contract, he had knowledge of the existence of the building restrictions in the deed under which the Horse Show Association held title. “Mere knowledge of an encumbrance at the time of the contract * * * does not necessarily cut off a defense against the specific execution of a contract for the sale of real estate.” Riner v. Lester, supra.
In Demars v. Koehler, supra, which was an action at law to recover damages for a breach of a covenant against encumbrances, occasioned by the existence of an outstanding term of years, it is said: “Mr. Rawle, conceding that, if there be a real encumbrance, the purchaser’s knowledge of its existence will furnish no defense to an action on this covenant, ingeniously suggests that such knowledge may have a material bearing in determining what was the subject matter of the contract.” Rawle on Covenants for Title, 95, 96. With equal ingenuity the opinion below denies the right to recover upon this covenant because such *538an encumbrance, known to the grantee, is not within its terms, and consequently no breach of the covenant. With great respect, I deem the reasoning specious and the conclusion insupportable, for knowledge of the existence of an encumbrance not only does not destroy its inherent character as encumbrance, but may and often does lead to the purchaser’s requiring the grantor to protect him by covenants; Smith v. Lloyd, 29 Mich. 382. When a, covenant is made against all encumbrances, without exception, knowledge of the existence of one encumbrance cannot take that encumbrance out of the general terms of the covenant, unless such was the intent of the parties. But knowledge alone does not prove such intent, for a contrary intent is-consistent with it. Proof of knowledge or other proof of the intent of the parties that a particular encumbrance should be excepted from the general terms of the covenant could only be admitted by a violation of the canon of evidence which forbids parol proof to vary the terms of a written contract.
“It results that a grantor who fails to except from his covenant against encumbrances one which is known to the grantee, cannot defeat recovery upon that covenant by proof of such knowledge. The grantee is not compelled to require for his protection a special covenant against the known encumbrance, but may rely on the general and unrestricted covenant against all encumbrances.”
In the same opinion reference is made to an Indiana case (Kellum v. Berkshire Life Ins. Co., 101 Ind. 455), taking a different view of the admissibility of parol evidence, and •it is said: “It was upon the authority of the last cited case that a late text-writer relies in enunciating the doctrine that the existence of a lease known to the grantee will not, under a statute transferring the constructive possession to the grantee without attornment by the tenant, operate a breach of the covenant against encumbrances: *539Maupin Mar. Tit. 293. But it is obvious that such decisions can have no weight in jurisdictions where the rule forbidding the introduction of parol evidence to vary a written contract is maintained.”
Demars v. Koehler was followed by the later case of Propper v. Colson, 86 N. J. Eq. 399, 99 Atl. 385, involving the very question we now have under consideration. After deciding that a building restriction is an encumbrance, and, coming to deal with the effect upon a covenant against encumbrances of a known building restriction, the court says: “It is further argued on behalf of the respondents that at the time of his purchase Mr. Propper was fully aware of the • existence of the building restrictions upon the land which was bid in by him, and that, therefore, he is to be presumed to have waived any objection to the title because of them. But knowledge by a grantee, at the time of delivery of the deed, that there are outstanding encumbrances upon the property conveyed, is no bar to his right of action on the covenant against encumbrances (Demars v. Koehler, 62 N. J. Law, 203, 41 Atl. 720, 72 Am. St. Rep. 642; DeLong v. Spring Lake Co., 72 N. J. Law, 125, 59 Atl. 1034), and therefore cannot estop him from insisting that he shall receive by the conveyance to him what his vendor contracted to give him; that is, a title free and clear of all encumbrances.”
The reasoning of the court in these cases is so satisfactory that we might well accept it, without further citation of authority.
In Wallach v. Riverside Bank, 206 N. Y. 434, 100 N. E. 50, the vendor agreed to convey by a quit claim deed, and there was an outstanding contingent right of dower. In speaking of the title the purchaser had the right to demand, it was said: “If the plaintiff knew of the defect when the contract was signed, he had the right to presume from its terms that a good title would be made before the law *540day. It is a somewhat common practice to agree to sell land without limitation, although both parties know at the time that some outstanding right must be acquired by the vendor in order to enable him to perform his covenant when the law day arrives.
“The defendant insists that the court erred in refusing to find upon its request that the plaintiff knew what a quit claim deed was and the title it would convey; that before the agreement was executed he had been told by the defendant that the only title it could give was such as it had and no more; and that he knew when he signed the contract that there were existing questions respecting the title.
“Assuming, without holding, that there was sufficient uncorroborated evidence to warrant these findings, the written agreement could not be cut down or limited by such facts. Whatever was said before the instrument- • was signed, being merged therein, became wholly immaterial, and it is not an error of law to refuse to find an immaterial fact even upon uncontradicted evidence.”
In the foregoing opinion there is quoted, with approval, the following language from Moore v. Williams, 115 N. Y., at p. 592, 22 N. E., at p. 234, 5 L. R. A. 654, 12 Am. St. Rep. 844, “a purchaser is never bound to accept a defective title, unless he expressly stipulates to take such title, knowing the defects. His right to an indisputable title, clear of defects and encumbrances, does not depend upon the agreement of the parties, but is given by the law.”
In Mincey v. Foster, 125 N. C. 541, 34 S. E. 644, it was held that specific performance of a contract to purchase mineral interests, where the vendor covenants to warrant the title, will not be enforced where the vendor has no title to a large portion of the land, though the vendee was aware of such want of title when the contract was made. In the course of the opinion it is said that “the mere fact *541that the plaintiffs did not have a good title when the option was given does not necessarily affect the transaction, as both they and the defendants might have contemplated a perfection of the title before the day of payment.” In that case, the vendors had contracted to convey to the purchaser “a good and sufficient title to the mineral interests.”
While conceding the conflict of authority, we think that the cases cited from New Jersey, New York and North Carolina announce the safer and sounder doctrine, certainly on a bill for specific performance.
The Horse Show Association occupies an anomalous position. It comes into a court of equity, asking the specific performance of a written contract for the sale of real estate, and at the same time says that the writing does not correctly express the contract and agreement of the parties thereto. It says, in effect, that the option feature of the contract is meaningless and should be stricken out as surplusage, and that its covenants for title do not mean what they say, but their effect should be construed away by declaring that they had no application to the building restrictions contained in the deed of conveyance to it. We are unable to concur in the conclusion reached by the trial court, and its decree will, therefore, be reversed and the bill of the complainant dismissed, with costs to the appellant in this court and also in the trial court.

Reversed.