Court Opinion

ID: 8807699
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:53:33.447037+00
Date Added: 2024-06-11T17:04:09.879222
License: Public Domain

BATTS, Circuit Judge
(dissenting). I regret that I cannot entirely concur in the conclusion reached by my Brethren. William Hurt, ap-*35pellee, hereinafter called plaintiff, on December 1, 1906, sold to W. H. Garrett, by warranty deed, 85,844.95 acres of land in Bailey county, Tex. Subsequently the title was placed in W. H. Sulflow, and the business of selling the land was conducted in the names of two corporations, the O. W. Kerr Company and the Texas '& Southwestern Colonization Company. These parties will be called the purchasers. The land, or most of it, was' sold in smaller tracts in 1907, and the purchasers of these tracts will be called the subpurchasers. The recited considerations of the sale to Garrett were as follows: (1) The assumption by Garrett of notes due by Hurt to his vendor, to the amount of $106,058.80; (2) the payment of $50,000 cash; (3) the payment of notes aggregating $187,321. This deed provided for a lien to secure the purchase price. Contemporaneously with the execution of the deed, a deed of trust was executed which specifically referred to and expressed a lien on the land to secure the payment of the notes last mentioned. In the deed of trust was the following provision:
“Tills conveyance in trust is made with, the express agreement and understanding that a full release of this trust, as well as a full release of the vendor’s lien, will be executed and delivered to the said W. H. Garrett, his heirs and assigns, as to any quantity or parcel of land embraced in this conveyance, not less than 610 acres, npon payment of such part of the entire unpaid purchase money as is pro rata owing and unpaid on the land for which such release may be demanded.”
In the contract under which Hurt had purchased the land was a like provision. The circumstances under which the sales were made indicate the reason for the provision. It was contemplated that the land should be sold in small tracts, and it was realized that it would be necessary that releases be provided for, in order that a good title might be given to the purchaser. By the terms of the provision, its benefits could he secured by the heirs and assigns of the purchaser.
The appellants insist that the provision quoted fixed on each tract of land sold a definite amount of $2.19 per acre, upon payment of which the purchaser is to have his land released. This contention is upon the assumption that the release is to be had upon payment of the proportionate part of the amount secured by the 'deed of trust. Taking into consideration the original provision in the deed to Hurt, and the clause in the provision quoted, to the effect that the release is to be had upon payment of such part of the entire unpaid purchase money as is pro rata clue upon the particular tract, the conclusion is reached that, primarily, and alter payment of the $50,000, the payment to be made to secure a release was, instead of $2.19, $3.41 per acre, or the total purchase price remaining unpaid, divided by the total acreage.
The provision required the payment, in order to secure a release, of such part of the unpaid purchase money “owing and unpaid on the land for which such release may be demanded.” It was contemplated, of course, that the land would be paid for in accordance with the terms of the deed and of the notes given as part of the purchase price, and it was contemplated that, to secure a release, the purchaser would be in position to demand the release upon payment of the “pro rata part” remaining unpaid “on the land for which such release may be de*36manded.” Whenever, by payment on the part of the vendee (purchaser) under the deed, the amount unpaid was reduced, a new status resulted, and each subpurchaser’s “pro rata” on his land was correspondingly reduced. The provision was made for the benefit of each subpurchaser, and, whenever any right arose to him by virtue of any payment made, no action on the part of the vendee (purchaser) from whom he bought, or on the part of the plaintiff, could injuriously affect these rights.
The evidence indicates that releases were made upon such a basis that, if all of the acreage had been released on the same basis, the payments for releases would have beep insufficient to have discharged the entire indebtedness. The seller of the land, the plaintiff, had, of course, the right to release any tract that he might choose to release; and if, as was the case, his vendee joined in the request for the release at this inadequate price, both of the parties would be bound by the action, and the release would be in all respects .effective. This, not by virtue of the contract, but because the vendor would have a right, notwithstanding the contract, to give away his property if he wanted to. Such a release, however, could not have the effect of placing a subpurchaser in a less favorable position than prior to such release. If, to illustrate, there had been outstanding so much of the unpaid purchase price as would have required a payment of $3 per acre for its discharge, and the plaintiff, at the request of his vendee, had released certain of the lands at $2 per acre, whereby there would be due upon what was left a larger amount than $3 per acre, subpurchasers, whose rights had been fixed prior to that time, would nevertheless have the right, by paying the $3 an acre, to secure releases.
It is insisted by appellants that the course of conduct between the plaintiff and the purchaser in the giving of releases to a number of the subpurchasers at $1.90 and less created a condition which authorized other subpurchasers to secure releases for like amounts. As suggested, the limit of the restriction upon the plaintiff was that he could not execute a release that would injuriously affect persons whose rights had already been fixed. He did not, by taking less than he had a right to demand, do anything that he did not have a right to do. But this action on his part could not take away rights which had already been fixed in other people, nor did it give them new rights. The clause was executed for the purpose of making it practicable for the vendee (purchaser) to resell the land, by making it possible to give good titles to the subpurchaser, without taking up the notes executed for the purchase price before they were due. If a construction is given to it which would authorize the plaintiff, the original vendor, to accept releases for an amount less than he had a "right to demand, with the effect of adding this deficit to the amount which subpurchasers subsequently demanding releases would have to pay, the value of the clause would be entirely destroyed.
The actual course of events in this case illustrates, as well as any facts which might be imagined, the effect of such a construction. The evidence shows that releases were accepted as low as $1.63 per acre. At a subsequent date, and at a time when the appellants in this case *37were undertaking to secure releases by the payment of a proper release price, the plaintiff wrote: “I can’t release the land until I am paid $4 per acre.” Subsequently he wrote: “You will have to pay $5 per acre to get releases.” At one time Hurt wrote the purchaser that there was $30,929.85 “you are due me without any further releases.” In other words, according to his statement, on May 26, 1911, he had executed releases, receiving by $30,929.85 less than he had a right to demand. No complaint can be made against the execution by him of such releases, but to charge the persons whose lands had not been released with an additional $30,929.85, and require its payment, before releases to them would be executed, would be to entirely destroy the rights which the provision under consideration undertook to fix.
The sales to appellant were made in 1907 and early in 1908. Subsequent to these sales their vendors (the purchasers) paid off the notes to Garrett, aggregating $106,058.80, which they had assumed when the land was purchased from Hurt. It is insisted that this payment did not reduce the amount which appellants would have to pay in order to entitle them to releases. It is suggested that the status is the same as if they had contracted to pay a fixed and certain sum before they were entitled to releases, and that they were not entitled, under any circumstances, to have this amount reduced by payments by somebody else. These subpurchasers have warranty deeds from the persons who paid off the notes executed by Hurt, and which they had assumed. The payment of these notes made their obligations to their vendees (the subpurchasers) good pro tanto. If they had paid off all their obligations to Hurt, the warranties of the deeds would have been made good. If they had paid, as they contracted, not only would the amount required for the releases have been reduced, but would have been wiped out entirely. Indeed, the necessity for individual releases would have been eliminated. It could just as well be said that the purchasers (from Hurt) could recover from the subpurchasers amounts paid by them which reduced the amount required to be paid to secure releases for subpurchasers as to suggest that payments made by the purchaser did not have the effect of reducing the amount required to be paid by the subpurchaser for releases. The obligations were the obligations of the purchaser. It was contemplated that they should be paid. It was contemplated that the subpurchaser should make his payments to the purchaser. The release clause was made for the convenience of the purchaser and the safety of the subpurchaser.
Each appellant has already paid to the purchaser a sum largely in excess of that required to pay his proportionate part of all the liens upon the land, including the notes of Hurt, which were assumed, and the notes to Hurt, for a part of which judgment is now rendered. To illustrate: The proportionate part of the original lien chargeable against the section sold to appellant Eorkenbrock was $2,176. He has already paid $4,560 on his land, and he is now called upon, in addition, to pay $2,176 and interest and attorney’s fees. The money which he paid was used in the discharge of the $106,058.80 lien, but he is not to get any benefit, so far as a release is co’ncerned, from the payment. The appellants in this case were subpurchasers of about 12,000 acres of *38land, less than one-seventh of the whole; They have already paid $92,808, more than six-sevenths of the total amount required to take up the assumed notes of Hurt. This lien was discharged, and they ought no longer to be called upon to make payments measured by it. It having been paid, not more than the $187,000 of notes given to Hurt remained unpaid. They had the right to releases by paying their proportionate part of this amount remaining unpaid. It was the obligation of the purchaser to pay the assumed notes. It was the right of the subpurchaser that they be paid. ' The status created for them by its payment could not be injuriously affected' by any person other than themselves.
To further elucidate the views expressed: After the payment of the $50,000 there remained unpaid the notes due to Garrett, $106,-058.80, and the notes due to Hurt, $187,321, a total of $293,379. To have secured a release at that time, the required amount per acre would have been determined by dividing the $293,379 by the total acreage, 85,844, and the result would have been $3.41 per acre. About December 1, 1908, the $106,058.80 was paid. Other payments to that time reduced the debt (according to the auditor whose report was the basis of the judgment) to $129,617. There had been released to this time (according to the list furnished by plaintiff) 35,642 acres, leaving a balance of 50,202 acres. The debt, divided by the acreage, would give as a result 2.58. At that time the subpurchaser would have had to pay, to be entitled to a release, $2.58 per acre. Between December 1, 1908, and December 1, 1912, the debt was reduced $63,102, leaving unpaid $66,515 (auditor’s figures). During this period 34,020 acres of the land were released. The persons securing releases, instead of paying $2.58 per acre, paid on an average $1.85 (interest excluded in both cases). After December 1, 1912, in order to secure a release on the balance of the land, 16,182 acres, it would have been necessary to pay $4.16 per acre, the result of dividing $66,515 by 16,182. The increase from $2.58 to $4.16 resulted from giving releases for less than could have been demanded. The interest for the period between December 1, 1908, and December 1, 1912, would have been 24 per cent., and would have increased the $2.58 to $3.20. To the date of the decree, March 5, 1917, 8 years and 3 months, the interest would have increased the $2.58 to $3.85. Appellants, instead of paying $3.85 per acre, are compelled by the decree to pay more than $6 per acre.
Appellants’ contention that the amount to be paid by them was to be determined without adding interest to the purchase price is entirely without merit. The interest provided for is a part of the purchase price. While nothing could be done by any one else to injuriously affect their status, and while they were entitled to get the benefit of any payment which the purchaser might have made, if, the amount payable to secure a release having become fixed, the subpurchaser fails then tó demand a release, the amount payable necessarily increases with the accruing interest. The evidence indicates that the appellants, before suit was instituted, were undertaking to discharge whatever amounts might be necessary for them to pay in order to secure releases. They made- tender of the amounts which they thought due. The plain*39tiff refused to accept it, making demands in excess of what was in fact due. Under the circumstances, it would be inequitable to charge up against the subpurchasers the attorney’s fees for which the purchaser became responsible. The conclusion is reached that each one of the appellants should, in order to secure a release, pay such an amount as would now be necessary for him to pay, including interest, if each of the subpurchasers who secured releases had, for such release, paid to the plaintiff the entire amount which the plaintiff could have demanded.
Appellants claim that the amount of the judgment is excessive. The transactions ran over a period of years, and involve many separate payments of money. The court permitted the introduction of a statement made by an auditor, which became the basis for the judgment which was rendered. In addition to this there was introduced the day-book (in the form of a journal) and ledger of the plaintiff. There was also introduced a statement as to releases made by him as a part of an answer to an interrogatory. The daybook and ledger were made by the plaintiff contemporaneously with the transactions from which he received money. lie testifies:
“These hooks, my journal and ledger, are my records as I kept them regarding lands I released. When I would give a release, I would enter It on my daybook here, showing what a man paid, and the section of land and the number of acres, and- then I transferred those items into the ledger.”
The daybook entries are copied into the record, accompanied by memoranda indicating the differences between the daybook and the ledger. These daybook and ledger entries do not correspond with the result of the auditor’s work. It is insisted by appellants that the account books of plaintiff show payments to the amount, exclusive of the payment of the notes assumed by the vendee, of $201,706.89, and they claim that the release statement shows (with items which should be added) payments to the amount of $207,428.73. The amount actually shown by the daybook is $178,685.59. Appellants insist that an item of $21,772.80, dated November 18, 1907, is shown by the clay-book. No credit for this amount is given. It is charged up against the owners of the land for releases, but there is no corresponding credit of payment. It is reasonably apparent, from the circumstances and the entries in the books, that, prior to that time, $50,000 having been paid, the release was demanded and made on account of such payment. This item, together with the item of $1,248, under date of May 1, 1914 (which is also charged up, but for which no- credit is given), constitute the difference between the amount claimed by appellants to have been paid according to the daybook, and the amount which the daybook in fact showed. The release statement, as introduced in evidence, shows only $116,113.66. This statement is entirely valueless in reaching the amount of money due on the debt. It not only omits the amount of payment in cash primarily made, for which no releases were demanded, but also omits 12 or more items of payments for releases that are indicated by the daybook.
While appellants’ insistence that the amount due is either $32,358.61 or $38,070.45 cannot be sustained by the record, a careful examina*40tion of it discloses that the auditor’s statement does not include every payment indicated by the books of the plaintiff. Reaving out of consideration the interest items, the auditor gives credit for $5,630.41 less than is shown by the books. A careful, checking of the two accounts discloses the items not credited in the auditor’s statement. A credit on October 22, 1908, “By draft, $2,416.25,” is not in the statement. On May 14, 1912, a credit is given, “By checks and drafts 6/27, paid 8/26, $4,448.00.” Of the amounts going to make up this $4,488, the release for one tract, amounting to $1,761.24, is included in the auditor’s statement and the balance, $2,727.76, is not. On February 7, 1913, credit is given, “By check, part payment on one-half section 10, Block C, $504.00.” This amount is not credited in the statement. These credits in the day book, for which no corresponding credit in the audit statement is made, amount to $5,648.01. The audit statement shows a payment on July 22, 1907, of $17.60,, which does not appear in the daybook. Subtracting this, the difference between the amounts which the plaintiff states he has recéived by the entries in his daybook exceeds the amounts credited in the auditor’s statement by $5,630.41. The daybook shows on May 30, 1911, a credit of $15,386.-55. It appears that this was originally $21,000 on the daybook, and it still appears as that sum in the ledger. Appellants jnsist that the plaintiff should be charged with the $21,000. The correspondence incorporated into the record shows that on May 30, 1911, the date of the entry, Hurt drew a draft, with release attached, for $21,000. Subsequent letters indicate that this draft had not been paid as late as July 7th thereafter. In the absence of additional proof, it will be assumed that the credit of $21,000 was made when the draft was drawn, and that subsequently, the draft not having been paid, the entry in the dav-book was changed to correspond.
The court suggests that the statement of evidence was not approved by the District Judge. Counsel for appellee, understanding, doubtless, the conditions by which this was brought about, does not undertake to take advantage of this fact. It is also suggested that the principal debtor acknowledged a greater indebtedness than that found due. Such an acknowledgment is apparently in conflict with the facts, and ought not to bind the other defendants.
The defendants John Carson, T. F. Jensen, and F. C. Shoemaker impleaded the First International Bank of South Bend, Wash., reciting that they had purchased certain of the lands in controversy, and that these lands had been conveyed to M. J. Johnson, as trustee for themselves, that .said Johnson had executed a mortgage to the first International Bank, but that he had, in fact, no right to make the mortgage, and that it was of no effect. The First International Bank filed an answer, and disclaimed any interest in the land. The defendants complain at the failure of the judgment to remove this cloud from their title. No reason appears why this should not be done. This would not require a reversal; the necessary modification in the judgment could be made here.
The judgment should be further modified as hereinbefore indicated.