Dargan v. McSween

11 S.E. 1077, 33 S.C. 324, 1890 S.C. LEXIS 153

• Court: Supreme Court of South Carolina
• Decided: October 1, 1890
• Status: Published

Opinion

The opinion of the court was delivered by

Mr. Justice McGowan.

This was an action to foreclose mortgages under the following circumstances: Mrs. Julia E. McSween owned a tract of land (750 acres) in Darlington County, which was encumbered as follows: February 15,1884, mortgage to the “Dundee Mortgage and Trust Co.,” to secure a debt of $2,500. January 19, 1885, mortgage to Smith, Mclver &' Co., to secure advances to about $1,300. September 15, 1886, judgment of James Allen against J. E. MeSween. December 19, 1886, Mrs. McSween had executed to H. S. Rose a lease of the land for the term of five years,-commencing January 1, 1887.

About being pressed on the senior mortgage, Mrs. McSween desired to sell the land at private sale, to pay off the liens, &c. Mr. George W. Dargan desired to purchase it for his wife, Ida L., as a substitute for another tract, which belonged to his wife, but titles to which, by mistake, had been made to him. There were long negotiations as to the price to be paid for the land, principally by written correspondence, which is all printed in the “Brief.”

The following is a condensed outline of the facts: The price finally agreed upon was $7,400 cash. On December 27, 1887, the parties met by agreement to consummate the trade, Mrs. McSween, with her attorney, Mr. Brunson, being present. It was found that the amount of the encumbrances could not be accurately ascertained, and that Mr. Dargan did not have the purchase money oil that day; so that the parties ■ could do no more than put the contract formally in writing, which was done. Mrs. McSween signed a deed in the usual form, with warranty, to Mrs. Ida L. Dargan (to be held as an escrow by Mr. Brunson for 30 days) in consideration of $7,400; and Mr. Dargan executed to Mrs. McSween his bond, conditioned for the payment within 80 days of $7,400, after first deducting from said sum ($7,400) “the full amount of every mortgage, debt, or judgment that is, or may be, a lien upon the aforesaid tract of land,” &c. (The deed and bond should be printed in the report of the case.) At the expiration-of the 30 days, the amount of the encumbrances was ascertained and deducted from the $7,400, and the amount left, $3,118.43, was paid to Mrs. McSween, and the deed previously executed by her to Mrs. Dargan, and left with Mr. Brunson, was delivered.

Afterwards, Mr. Dargan paid the encumbrances. He did not,however, have them marked “satisfied,” as paid with the balance of the purchase money due by him to Mrs. McSween, but had them assigned to himself as purchased with his own money ; and failing to induce Rose to surrender his lease", commenced this action to foreclose the assigned mortgages against Mrs. McSween, his wife, Ida L. Dargan, and the lessee, II. S. Rose. No judgment for deficiency was asked against Mrs. McSween, but it was alleged that she had sold and conveyed to Mrs. Dargan only her equity of redemption in the premises, leaving the mortgages still open against the land, and that Rose was still in possession of the land under the lease to him by Mrs. McSween, which was junior to the mortgages, and prayed a sale of'the land under the mortgages senior to the lease. Neither Mrs. McSween nor Mrs. Dargan answered, but Rose answering, denied that Mrs. McSween had conveyed to Mrs. Dargan only her equity of redemption; alleged that the land had been sold for a price agreed upon; that Mr.' Dargan had retained of this sum an amount sufficient to pay off the encumbrances on the property, and had paid the balance to Mrs. McSween ; that he had paid up the encumbrances with the money of Mrs. McSween, and they were thereby “satisfied”; that he had brought this action solely to deprive him of his lease, which Mrs. McStveen had promised to protect, and had protected, and asked for a dismissal of the complaint, &c.

The case was referred, to take the testimony, and Mr. G. W. Dargan testified, among other things, that on the day the papers were drawn, he explained that he was buying nothing but the equity of redemption; that $7,400 was put in the deed as the consideration, because the amount to be paid to Mrs. McSween, viz., the difference between that amount and the encumbrances, could not be ascertained that day, he saying that it made no difference, as the true consideration could be proved by parol. He said, however, “I don’t know that the words, equity of redemption, was used that day when discussing the consideration to be expressed in the deed. I am inclined to think it was not.” Mr. W. F. Dargan concurred as to what was said that day. He said he drew the bond almost in the words of Mr. G. W. Dargan, and that it expressed the understanding between the parties. He said Mr. G. W. Dargan declared that he bought subject to the encumbrances, but not Rose’s lease.

Mr. W. A. Brunson testified, among other things, “that he had considerable correspondence with Mr. Dargan as to the purchase of the land, and afterwards, upon meeting him at Florence, they agreed upon a price. * * * The difference between the amount paid Mrs. McSween and the value of the plage was .left in Mr. Dargan’s hands for the purpose of paying off all encumbrances,, in .order to get Mrs. McSween entirely out of the transaction. There was no actual money left, but he regarded it as money because it was part of the purchase price. There was no positive agreement on the part of Mr. Dargan to pay those encumbrances in express language. * * * There was no special mode of settling the encumbrances. Mrs. McSween was to receive the difference between the encumbrances and the value of the land, and Mr. Dargan was to settle the encumbrances when and how he pleased,” &c.

Upon -this testimony the Circuit Judge held that “there was no agreement that G. W. Dargan should pay Mrs. McSween the estimated value of the land, or reserve part of the contract price, with which to pay the outstanding mortgage: but that it was agreed that Dargan should pay Mrs. McSween a sum to be ascertained by deducting the amount of the encumbrances from the agreed value of the landthat the encumbrances were not extinguished by the assignment to George W. Dargan; and he decreed that th.e-mor-tgage. be-foreclosed, and the premises sold for payment of the mortgage debt, and that each party pay his own costs — incurred by his own proceedings.

From this decree the appeal comes to this court upon the following grounds, viz.:

“First. That his honor erred in holding as a conclusion of fact, ‘That there was no. agreement that G. W. Dargan should pay Mrs. McSween the estimated value of the land, or reserve part of a contract price with which to pay the outstanding mortgages, but that it was agreed that Dargan should pay Mrs. McSween a sum to be ascertained by deducting the amount of the encumbrances from the agreed value of the land.’ His conclusion being expressly, in large part at least, founded upon incompetent parol evidence given to vary the terms of a written instrument, admitted by plaintiff to contain the agreement of himself with Mrs. McSween, and said conclusion being against the overbearing weight of the testimony.

“Second. That his honor erred in finding ‘as a conclusion of law, that when Mrs. McSween received $3,118.43, she had received all she had bargained for, and no money of hers was reserved.’

• “Third. That his honor erred in holding that ‘as the contract in the case under consideration was not an agreement to pay Mrs. McSween a particular sum, as purchase money for land encumbered by a mortgage, but rather an agreement to pay Mrs. Mc-Sween a sum to be ascertained by deducting the amount of the mortgage from the estimated value of the land, the sum so paid was a complete execution of the contract,’ it being respectfully submitted that even if the contract had been as stated, after the payment of the money, Mrs. Dargan was still bound to indemnify Mrs. McSween and those holding under her from the mortgages, to the extent at least of the value of the land.

“Fourth. That his honor erred in holding that ‘Mrs. Ida L. Dargan holds the fee conveyed to her by Mrs. McSween, and G. W. Dargan is in no sense the agent of his wife in the transaction — the assignment of the mortgage to him, therefore, could not possibly merge the lien of the mortgage in the title,’ it having been admitted, and his honor having so found in the first part of his decree, that Mr. G. W. Dargan had transacted the whole affair as the agent of his wife, and otherwise as acting for himself in making a present to his wife, and that the true question at issue did not involve the doctrine of merger.

“Fifth. That his honor erred in regarding the legal question involved in the issue as the question of the merger of a mortgage, when purchased by the owner of the land; whereas the true question is, whether G. W. Dargan and his wife, purchasing in the manner they did, did not bind themselves to pay the encumbrances.

“Sixth. That his honor erred in holding that the encumbrances described are not extinguished by their assignment to G. W. Dargan, it being submitted that under the correct theory of the transaction it was the duty of Mr. Dargan to pay up the mortgages, and that therefore they became extinguished when purchased by him.

“Seventh. That his honor erred in adjudging that the mortgages should be foreclosed, and that each party pay the costs incurred by his own proceedings.

“Eighth. That it being admitted that the plaintiff regarded his wife as owing him nothing, and that she was not to b,e injured by the action, and that he had agreed to protect Mrs. McSween against the mortgages, his honor should have held that there was no ground for the action to foreclose, and should have dismissed the complaint; and it was error not to have so held and adjudged.

“Ninth. That it being admitted that the sole purpose of the action was to deprive the defendant Rose of the benefits of his lease, which could and should have been protected in the sale, the complaint should have been dismissed for want of equity ; and it was error not to have so adjudged.

■ “Tenth. Thai as it appears from the written testimony in th.e case that the parties, after long negotiation, had agreed upon $7,400, not as the estimated value of the land, but as its purchase price, and the amount remaining after deducting therefrom the amount of the encumbrances having been paid to Mrs. McSween, the law implied an agreement to apply the sum so reserved to the satisfaction of the encumbrances; and his honor erred in not so holding,”-&c.

The controlling question in the case is as to the contract between the parties — whether there was a contract, and if so, what was its scope and import — and that being a question of fact, we must, in an equity suit, consider the whole evidence. Wc have read it carefully, and, difficult as it may be to reconcile the different impressions of witnesses — all alike honest and truthful— we must give our interpretation of it taken as a whole. The principal finding of fact by the Circuit Judge naturally divides itself into two parts, and for the purpose of promoting clearness, we will so divide it.

First. The Circuit Judge found “that there was no agreement that G. W. Dargan should pay Mrs. McSween the estimated value of the land,” &c.; that is to say, that he only agreed to purchase her equity of redemption, leaving the encumbrances open. We cannot concur in this finding. It appears that the principal object of Mrs. McSween, in offering her land for sale, was to sweep off the encumbrances. All the parties had notice of them, but it was well known that the land was worth more than enough to satisfy them, and therefore there was no necessity, in the negotiations about the trade, to.consider the encumbrances. If there is any one fact in the case clear beyond all doubt, it is that the whole negotiation was conducted with exclusive reference to the purchase price to be paid for the land — not the mere equity of redemption, but the land itself — no reference being made to any of the encumbrances, except that in the correspondence Mr. Dargan speaks once or twice of his inability to give more for the land, on account of the existence of the lease to Rose, which he spoke of as “a most serious complication.” We think it plain from the evidence that Mr. Brunson, attorney of Mrs. McSween, and Mr. Dargan, upon meeting at Florence, “agreed upon a price for the land;” that Mr. Dargan agreed to purchase the land for $7,400 cash, which, as he said, was a large sum for him to borrow. From what appears, prior to December 27, 1887, there can be little doubt that if Mr. Dargan had been in condition to pay the purchase money, he would have paid the whole of it on that day to Mrs. McSween, wdio would have paid off the encumbrances and afterwards executed and delivered her absolute warranty deed to Mrs. Ida L. Dargan.

Second. The Circuit Judge further found “that there was no agreement that G. W. Dargan was to reserve part of a contract price with which to pay the outstanding mortgages, but that Dargan should pay Mrs. McSween a sum to be ascertained by deducting the amount of the encumbrances from the agreed value of the land,” &c. We think the finding just made must also determine the question. There was some parol testimony as to conversation and discussion said to have taken place on the occasion (December 27, 1887) when the parties met to consummate the trade; but certain papers were then drawn and signed, and we think it safer to rely on those papers (deed of Mrs. McSween and bond of Mr. Dargan). These papers contain the formal written statement of the agreement, and, of course, must be considered as the best evidence of its terms. Mrs. McSween signed a deed, conveying the land in the usual form, with warranty of title, to Mrs. Ida L. Dargan, “in consideration of the sum of $7,400 to me in hand paid at and before the sealing of these presents” (which was to be kept as an escrow for 30 days). And Mr. Dargan executed to Mrs. McSween his bond, conditioned to pay to her “the full and just sum of $7,400,” mentioned in'Mrs. McSween’s deed, within 30 days “after first deducting therefrom the full amount of any mortgage, debt, or judgment that is or may be a lien upon the aforesaid tract of land, and upon the delivery of the aforesaid deed to Ida L. Dargan the above obligation to be void,” &c.

The bond bound Mr. Dargan to pay so much of the purchase money to Mrs. McSween as was over after paying the encumbrances, but it was silent as to the payment of the encumbrances; did not in express terms declare that Mr. Dargan was to pay them; but we cannot doubt that such was the necessary result of the whole transaction. As it seems to us, this is the only interpretation consistent with all the facts of the case. If not, to whom did the remainder of the purchase money belong ? to Mrs. McSween or Mr. Dargan ? The land had been sold for $7,400 cash — after deducting the encumbrances the purchase money was paid to Mrs. McSween, and thereupon leaving the equivalent of the encumbrances in the hands of the purchaser, she delivered her warranty deed, previously signed, to Mrs. Dargan, who ac-cepted the same. The deed was expressed to be in consideration of the whole purchase money, $7,400. We do not see how Mrs. McSween could admit in her deed that she had received the whole purchase money, except upon the assumption that the remainder of the purchase money had been paid in extinguishment of the encumbrances, or howr the deed could be accepted by Mrs. Dargan except on the same assumption. These papers are, as we think, inconsistent with the view that Mrs. McSween conveyed only her equity of redemption — leaving open and unpaid the encumbrances, already, as she thought, provided for — open and unpaid, to be purchased possibly by a stranger and enforced against her donee and herself by foreclosure and resale of the premises at auction. Surely this could not have been the intention of Mrs. McSween or of her attorney.

Considering all the facts and circumstances of the case together, 'we cannot resist the conclusion that an obligation on the part of Mr. Dargan to apply the purchase money left in his hands in extinguishment of the encumbrances was necessarily involved, and that this was Mrs. McSween’s understanding ,of the arrangement. “When one purchases land expressly subject to a mortgage, the land conveyed is as effectually charged with the encumbrance of the mortgage debt as if the purchaser had expressly assumed the payment of the debt, or had himself made a mortgage of the land to secure it. The amount of an existing mortgage having been deducted from the purchase money of the encumbered property, the grantee in effect undertakes to pay the amount of the purchase money represented by the mortgage to the holder of it.” Jones on Mortgages (late edition), sec. 736.

“An agreement that the amount of a mortgage upon the granted premises shall be paid as a part of the purchase money is, in effect, an assumption to pay the mortgage, and not merely a taking of the property subject to the mortgage. The mortgage in such a case is charged upon the purchase money and not upon the land merely. So much of the consideration as is required to pay the mortgage is taken from the consideration and appropriated by the parties to the payment of the mortgage, and equity raises upon the conscience of the purchaser an obligation to indemnify the mortgagor against the mortgage debt. * * * There is an implied promise on the part of the purchaser to pay the mortgage when it is due, or. if it be already due, to pay it forthwith, or within a reasonable time.” See 1 Jones Mort., § 749; Pom. Eq. Jur., §§ 1203, 1208; Boone Mort., § 125; Heid v. Vreeland, 30 N. J. Eq., 591. In this last case cited it was said: “There can be no doubt at this day that where the purchaser of land encumbered by a mortgage agrees to pay a particular sum as purchase money, and on the execution of the contract of purchase the amount of the mortgage is deducted from the consideration, and the land conveyed subject to the mortgage, that the purchaser is bound to pay the mortgage debt, whether he agreed to de so by express words or not. This obligation results necessarily from the very nature of the transaction. Having accepted the land subject to the mortgage, and kept back enough of the vendor’s money to pay it, it is only common honesty that he should be required either to pay the mortgage or stand primarily liable for it,” &c.

Besides, Mr. Dargan was the agent of his wife in the purchase of this land. There was no evidence that the agency was at any time withdrawn, and it seems to us that he continued to be her agent throughout the whole transaction, including not only the execution of the deed of conveyance directly to his wife, but also the assignment of the mortgage to himself, which, of course, was for her benefit. As was said in the case of Lamar v. Wright, 31 S. C., 76, “we think we are bound to consider that he (the husband) was still acting for his wife. * * * It is not uncommon for the husband (accustomed to outdoor business) to act in such matters as the agent of his wife. But we cannot doubt that such agency, being'once established, it should, as in ordinary cases of agency, continue until the particular business is ended, or the agency revoked,” &c.

The judgment of this court is, that the judgment of the Circuit Court be reversed, and the complaint dismissed.