Gladden v. Keistler

140 S.E. 161, 141 S.C. 524, 1927 S.C. LEXIS 96

• Court: Supreme Court of South Carolina
• Decided: October 31, 1927
• Docket: 12302
• Status: Published

Opinions

The opinion of the Court was delivered by

Mr. Justice Stabeer.

The appeal in these cases was originally heard by the Court composed of Mr. Justice (now Chief Justice) Watts, Associate Justices Cothran and Marion, and Acting Associate Justices Purdy and Ramage, and a majority opinion was filed on January 4, 1927, reversing the lower Court. Subsequently, upon petition of the respondent a rehearing was granted, and the cases were argued at the June, 1927, term.

The two cases are identical in all respects except as to the names of the plaintiffs, and were tried together in the Circuit Court and heard together in this Court.

The plaintiffs alleged in their complaints that they sold and delivered to the defendant their respective one-third interests in the capital stock of the Keistler Company, a corporation ; that the defendant agreed, in consideration of such transfer, to pay them $7,000 in cash or its equivalent, to convey to them certain real estate, and to pay to each of them one-third, or an amount equivalent to one-third, of the net proceeds of certain fire insurance claims of the corporation then in litigation; that the defendant had paid them the $7,000, and had conveyed to them the real estate in accordance with the agreement; that the insurance litigation had been concluded; that the net proceeds recovered therein amounted to $4,229.72; and that the defendant had refused to pay to them their respective one-third portions thereof. Each plaintiff demanded judgment for such one-third portion, or $1,409.90, with interest.

The defendant by his answers alleged that the contract under which he purchased the plaintiffs’ holdings in the Keistler Company was in writing; that he had fully complied with its terms; and that it did not provide for the payment by him to them of any part of the insurance proceeds.

The written instrument set up by the defendant is as follows:

“Received, Chester, S. C., June 3, 1921, of Messrs. W. B. and C. B. Gladden, their several stock certificates covering eighty (80) shares of the capital stock of the Keistler Company, also the certificates for the forty (40) shares of said stock still standing on the books of said company in the name of J. D. Bankhead, but owned by said gentlemen and myself in the proportion of one-third each, which said stocks, together with the two-thirds interest of the said Messrs. Gladden in the stock standing in the name of J. D. Bank-head, I have bought from them at and for the sum of seven ■thousand dollars ($7,000.00) ^nd one-half of the five (5) contiguous lots owned by the Keistler Company at Great Falls, S. C. I have this day given to said Messrs. Gladden in settlement of this transaction my check for four thousand dollars ($4,000.00) and my two (2) notes in the sum of fifteen hundred dollars ($1,500.00) each, with interest from June 1, 1921, at the rate of eight per cent, per annum, and payable one on July 1, 1921, and the other on August 1, 1921, and I hereby promise and agree that the Keistler Company shall convey by a good and sufficient deed to the said Messrs. W. B. and C. B. Gladden the one-half of our real estate above described just as soon as same can be surveyed and platted, which I agree to have done right away. Our real estate above described is made up of lots Nos. 4, 5, 6, 7, and 8 of the Mrs. S. M. Gladden property, as platted by Jas. McLarnon, C. E., in May, 1916, and the one-half thereof the Keistler Company is to convey to Messrs. W. B. and C. B. Gladden is the western half of said property, the dividing line to begin at the point on the front of said property so as to divide the frontage equally and to run to a point on the northeastern boundary of said property so as to divide the said property into two equal parts.

A. N. KeistrEr.

“In presence of R. B. Caldwell.

“R. H. Gladden.”

At the trial of the cases this instrument was placed in evidence. Parol testimony for the plaintiffs was admitted tending to show that, prior to the execution of the writing, the plaintiffs and the defendant entered into an oral agreement whereby it was agreed that the plaintiffs would sell to the defendant their stock in the corporation for $7,000 cash, or its equivalent, the conveyance of certain real estate, and two-thirds of what might be realized from the insurance claims then in litigation. The plaintiffs also introduced testimony as to what took place in connection with the execution and delivery of the written instrument. This evidence tended to show that on the 3d day of Jun'e, 1921, the Gladdens and Keistler went to the Commercial Bank, of which R. B. Caldwell was president, and the Gladdens signed a transfer of their stock and delivered it to Keistler, and Keistler signed the written instrument, and a copy was delivered to W. B. Gladden, who was also acting for C. B. Gladden. Caldwell, who seems to have given some assistance in the matter, testified as to what took place at that time:

“Mr. Banks .Gladden, I think it was, asked me if I didn’t think he ought to have some sort of a little paper, as he expressed it, with reference to the division of those lots they had there.”

Later Caldwell went into his private office and dictated the instrument above set out, and brought it back into the room where Keistler and W. B. Gladden were; C. B. Gladden having left the room. To quote further from Caldwell’s testimony :

“I knew about the suit they had pending for the insurance. I asked them what was to be done about the insurance. Mr. Banks Gladden, I think, was the one that answered me. He said, Tf we get that, it will be in money. We have an understanding .that it is to be divided among us in accordance with our holdings in the Keistler Company.’ I asked them if that was to be put in this paper I had drawn. * * * Mr. Banks Gladden said: ‘Well, it doesn’t make any difference; we all understand one another, and we have never had any trouble; if we get that, it will be in money, and it will be divided.’ ”

Mr. Caldwell further says that Keistler was present, “and then I laid this receipt on the table, and my recollection is that I asked Mr. Keistler if that was satisfactory to him. He said it was, and he read over this receipt and signed it. * * * Mr. Gladden just said he wanted some little paper with reference to this real estate, and, when I drew this paper, I set out the facts that had been mentioned, to show a consideration for Mr. Keistler to convey the lot.” On cross-examination Caldwell stated that he knew about the insurance before he drew the paper, but that he did not put anything about it in the written contract, and said:

“I don’t recall a single thing Mr. Keistler said; Mr. Keistler is not a man that talks much; I don’t know that he said anything at all; I don’t recall. I certainly understood that he accepted Mr. Gladden’s statement about the insurance.”

The defendant duly objected to the parol testimony tending to show that he agreed to turn over to the plaintiffs a part of the insurance proceeds, upon the grounds that the parties had reduced the entire agreement to writing, and that such testimony tended to vary the terms of such written agreement and was incompetent, but the testimony was admitted over his objection. In his testimony he denied that he had made any such agreement. At the close of all the testimony, he renewed his objection through a motion for a directed verdict; the Court overruled the motion and submitted the cases to the jury, who found for each of the plaintiffs the amount claimed, without interest.

In due time the defendant made a motion for a new trial on the ground, as stated in his motion for a directed verdict, that the parol testimony objected to was erroneously admitted. The Court, after consideration, granted the motion by the following order:

“The above cases were tried before me and a jury (the two cases by agreement were tried together) at the last term of the Court of Common Pleas for Chester County, and verdicts were rendered in favor of each plaintiff. Motions for new trial in each case were made by defendant on the minutes of the Court, and were marked ‘Heard,’ and written arguments have been filed with me by each side. The main ground of the motion is that the Court erred in admitting parol testimony to impeach the written contract introduced in evidence in the case and error in refusing to strike out such parol testimony after the written instrument was introduced. The matter has given me much concern, and is not without difficulty. I have, after careful study and thought, reached the conclusion that I was in error in refusing to strike out the parol testimony that tended to con tradict and add to the written paper. It is true that it has been repeatedly held that the consideration of a written deed or contract may be inquired into, but in cases where the consideration is a mere recital. In the cases here the consideration referred to was more than a mere recital; it was contractual in its nature, and was executory in its nature.

It was a paper in which the defendant acknowledged the-receipt of the stock purchased, and agreed to pay for it in the express manner expressed in the paper.

“To allow parol testimony to show that, in addition to what the paper shows he agreed to pay for the stock, a part of which at least is executory, he agreed to pay something in addition, seems to me to be in violation of the rule that parol testimony cannot be introduced to vary the terms of a written instrument. I therefore deem it my duty to set the verdicts aside on account of this error of law on my part, and to grant the defendant a new trial in each of the cases, and it is so ordered.”

Thereafter the plaintiffs appealed to this Court upon exceptions involving the question of the admissibility of the parol testimony in controversy.

It is suggested that the written instrument involved is signed by only one party, and is not a contract within the contemplation of the parol evidence rule.

It is not always necessary, in order to give validity to a contract, that it should be sighed by both parties; it may be sufficient if it be signed by one party and accepted, held, and acted upon by the other. See Bulwinkle v. Cramer, 27 S. C., 376; 3 S. E., 776; 13 Am. St. Rep., 645.

In 6 R. C. L. at page 641, it is said:

“But the fact that one of the parties has signed the contract does not require that the other party should do likewise. A written contract, not required to be, in writing, is valid if one of the parties signs it and the other acquiesces therein. Acceptance of a contract by assenting to its terms, holding it and acting upon it, may be equivalent to a formal execution by one who did not sign it. * * * If a person accepts and adopts a written contract, even though it is not signed by him, he is deemed to have assented to its terms and conditions and.to be bound by them.”

See, also, Hudson v. State, 14 Ga. App., 490; 81 S. E., 362, and Oliver v. U. S. F. & G. Co., 176 N. C., 598; 97 S. E., 490.

Again, it is said that the writing is merely a receipt, and may be explained or contradicted by parol testimony.

In Heath v. Steele, 9 S. C., 86, the Court said:

“In itself a receipt does not express the terms of any contract or uniting of the minds of the parties between whom it has passed, hut merely evidences by way of admission the fact stated in it; consequently it is not governed by the rules that prescribe the effect of instruments adopted by parties as the special means of evidencing some compact or understanding had between them, but, like evidence, not enjoying any special privilege, it is capable of being contradicted or modified by other classes of evidences.”.

In that case, however, the writing was a receipt for money paid, and the quoted language shows by its terms that it did not contemplate a receipt contractual in its nature.

The reason for the rule is stated in Bulwinkle v. Cramer, supra:

“There is no doubt that a mere receipt, although in writing, may be explained by parol; but that goes on the ground that a receipt does not necessarily import á contract.”

A writing in the form of a receipt, however, may import a contract, and as to such writings the general rule is well stated in 22 C. J., at page 1138, as follows:

“Where a writing, although in the form of a receipt, also embodies the elements pf a contract, it is, in so far as it expresses the contract or is contractual in its nature,^ subject to the same rules as any other contract, and is not open to variation or contradiction by parol; and, of course, the mere fact that a contract, as part of its terms, acknowledges the receipt of certain money or property, does not render the entire writing a mere receipt, subject to be contradicted by parol evidence.”

See, also, Harris v. Dinkins, 4 Desaus., 60, where the Court refused to admit parol evidence to extend the meaning and operation of a receipt by showing that it was the intention of the parties to release their interests in certain real estate, where such intention did not appear on the face of the receipt itself.

In Tuley v. Barton, 79 Va., 387, the Court says (quoting syllabus):

“Receipts are either mere admissions of payments or delivery, or they may contain a contract to do something in relation to the thing delivered. So far as they are mere admissions of delivery, they are only prima facie, and may be contradicted by parol testimony, but, so far as they are evidence of a contract, they stand on the footing of other written contracts.”

Unquestionably, a writing may be called, and may be in form, a receipt, and still be in nature and effect a contract, and to such writings the parol evidence rule applies. It cannot' be successfully contended that the writing in the present case it not contractual in its nature.

Again, it is urged that the parol evidence was admissible for the purpose of showing a different consideration from that expressed in the writing. In Gill v. Ruggles, 97 S. C., 278; 81 S. E., 519, and 104 S. C., 461; 89 S. E., 503, this Court, as said in Knighton v. Desportes Mercantile Co., 119 S. C., 340; 112 S. E., 343, distinctly draws the line of demarcation between admissible and prohibited parol testimony in so far as it relates to the con sideration expressed in written instruments. In the first decision in the Ruggles case the Court said:

“Parol testimony is admissible to show a different consideration from that expressed in a written instrument when it was intended as a mere recital, as this would not otherwise change the terms of the written agreement; but it is not admissible when the consideration is contractual, as in that event such testimony would alter the force and effect of the writing in other respects.”

The appellants and the respondent agree that this is a correct statement of the law, but the appellants urge that the admission of the parol testimony in controversy would add only to the formal or “recital” part of the instrument, contending that all the contractual words in the writing are found after the words “I hereby promise,” and that the admission of the testimony would not serve to change that portion of the instrument. We cannot agree with this contention. The first part of the instrument, that is, the part preceding the words “I hereby promise,” contains what appears on its face to be a statement of the entire transaction; and, whatever may be said as to an executed consideration, certainly, if Keistler agreed to pay to each of the plaintiffs one-third of the insurance proceeds — an obligation to be performed after the execution of the writing— the parol testimony establishing his agreement to make such payment would vary and add to the obligations imposed upon him by the latter part of the instrument, that is, the part including and following the words, “I hereby promise,” and would in effect superadd the requirement for such payment after those words. The admission of the parol testimony as to the insurance proceeds, therefore, would necessarily change the contractual portion of the writing, in contravention of the parol evidence rule.

In McCracken v. Ansley, 4 Strob., 1, the Court well said:

“The rule is, that a written contract, that is, the obligatory part of it, what the party undertook to do or pefform, shall not be varied by parol evidence.”

The following cases have been cited in support of the appellants’ contention as to the admissibility of the parol testimony to vary the consideration: Garrett v. Stuart, 1 McCord, 514; Curry v. Lyles, 2 Hill, 404; Whitman v. Corley, 72 S. C., 410; 52 S. E., 49; Knighton v. Desportes, 119 S. C., 340; 112 S. E., 346.

An examination of these cases discloses that all of them have to do with deeds! On various grounds, such as, that the consideration expressed in a deed is not contractual, or does not express the promise of the parties (Scott v. Wiggins, 113 S. C., 88; 101 S. E., 113, Knighton v. Desportes, supra), or that the deed, in so far as it acknowledges payment of the consideration, is only a receipt (Daniels v. Moses, 12 S. C., 130), or that the consideration is one of those formulas which enter into almost every deed, and which are unnecessary to its validity and binding effect, and as to which it will not be supposed that the parties have expressed precisely what was intended (Curry v. Lyles, 2 Hill, 404), the Courts appear to have been more liberal in admitting parol testimony to vary or contradict the consideration expressed in deeds than in the case of some other forms of contracts. A particular application of the rule is found in cases where parol evidence is admitted to show a different consideration of the same nature expressed in the deed, for instance, where the deed expresses a certain valuable consideration, parol evidence is admitted to show a different valuable consideration, Garrett v. Stuart, Whitman v. Corley, Knighton v. Desportes, supra.

As to the writing involved in the present case, it cannot be said either that the consideration is not contractual, or that the writing is only a receipt, or that the consideration is immaterial so that the Court would be justified in assuming that the parties may not have stated it precisely as intended. Therefore the cases cited are not in point and are not controlling.

The appellants also contend that the testimony in controversy is admissible to show a contemporaneous parol agreement between the parties, basing their contention upon the ground that the respondent practiced a fraud on them by inducing them, through the making of the parol agreement, which he never intended to perform, to enter into the written contract.

The record justifies no inference of fraud on the part of Keistler in procuring the written agreement. In fact, Keist-ler did not seek or procure the written agreement; apparently being entirely willing for the contract to rest in parol. As the contract was fully performed on the part of the appellants, there was no necessity for a writing. The writing was prepared entirely at the suggestion of the appellants, who seemed to think it necessary for their protection, and Keistler merely signed the paper which they had prepared and submitted to him.

Again, the appellants contend that the parol testimony in dispute is admissible to show that the parties did not constitute the writing as the sole memorial of their agreement and to show what was the entire contract • between them.

In 22 C. J., 1283, it is said:

“Where a written instrument, executed pursuant to a prior verbal agreement or negotiation, does not express the entire agreement or understanding of the parties, the parol evidence rule does not apply to prevent the introduction of extrinsic evidence with reference to the matters not provided for in the writing.”

The authorities are divided on the question as to how the incompleteness of the written agreement may be shown, some cases holding that, in the absence of fraud or mistake, parol evidence can be admitted only when the contract or writing shows on its face that it does not express the entire agreement of the parties, and others holding that the omission of a portion of the agreement may be shown by parol. As to this point we express no opinion, but, in whatever way the fact that the writing does not express the entire contract is shown, it is true, as said in 22 C. J., at page 1290, that:

“The parts of the agreement proposed to be proved by parol must not be inconsistent with, or repugnant to, the intention of the parties as shown by the written instrument; for, to receive parol proof of a part not reduced to writing, which is directly repugnant to the intention of the parties as expressed in the written instrument, would contravene the rule that parol evidence cannot be received to contradict or vary the terms of a written agreement.”

See, also, 10 R. C. L., 1030.

The following cases have been cited in support of appellant’s contention: Ashe v. Railway Co., 65 S. C., 134; 43 S. E., 393; Chemical Co. v. Moore, 61 S. C., 166; 39 S. E., 346; Sloan v. Courtenay, 54 S. C., 314; 32 S. E., 431; Willis v. Hammond, 41 S. C., 153; 19 S. E., 310; Bulwinkle v. Cramer, 27 S. C., 376; 3 S. E., 776; 13 Am. St. Rep., 645; Moffatt v. Hardin, 22 S. C., 9; Kaphan v. Ryan, 16 S. C., 352; Knight v. Knotts, 8 Rich., 35.

An examination of these cases will prove interesting.

In the Ashe case, the Moore case, the Courtenay case, and the Hammond case, the fact that the writing involved did not constitute the entire contract was apparent from an examination of the writing itself, and this fact differentiates these cases from the present case.

The Ashe case involved a contract between Ashe and the Railway Company for the hire of certain cars. The Court said:

“The written evidence of the contract being silent as to the time in which the money was to be paid, parol testimony was admissible to show fact, as it did not alter, vary or contradict the writing.”

In the Moore case the Court said:

“It is quite clear that the contract in writing, set out as an exhibit to the complaint, does not contain all .of the terms of the transaction between the parties; and hence if looked at alone, it would not afford plaintiff any cause of action against defendants. * * * The terms of that paper do not show, of itself, any such contract as could become the basis of a cause of action for any specified sum of money. * * * The testimony was competent in order to show the entire transaction between the parties.”

In the Courtenay case the writing did not purport to contain all the terms of the contract, and parol evidence was admitted, without objection, .to show the terms of the contract not specified in the written instrument. The trial Judge charged as follows:

“That if the jury find that the agreement was reduced to writing only in part, it was competent to prove the remainder thereof by parol testimony; but it was not competent by parol testimony to prove that the real contract was different from so much thereof as had been reduced to writing, except in a direct proceeding, having for its object the rescission of the supposed contract, and the restoration of the original status of the parties to the alleged agreement.”

As the parol evidence relating to the contract was admitted without objection, it is evident that the exception referred only to that part of the charge in which it was said that “it was not competent by parol testimony to prove that the real contract was different from so much thereof as had been reduced to writing,” etc., and the Supreme Court, recognizing the exact point involved, sustained the charge in this language.:

“We see no error here, as the proposition there charged is in accordance with the well-settled rule that the terms of a written contract cannot be varied, explained or contradicted by parol evidence unless there is a direct proceeding for the reformation or rescission of the contract; and this is not such a proceeding.”

In the Hammond case the writings showed on their face that they did not express the whole agreement, and the Court held that the way was thereby opened “to testimony showing the precedent arrangements of the parties.”

In the Cramer case the Court disallowed parol.testimony on the ground that “the writing covers the whole field.”

The Hardin case, the Ryan case, and the Knotts case have to do with promissory notes secured in the first named two cases by mortgages — as written evidences of indebtedness.

The Hardin case and the Ryan case both refer for authority to the case of McGrath & Byrum v. Barnes, 13 S. C., 332; 36 Am. Rep., 687. In that case the Court, in the following language, furnished an excellent background for its later discussion:

“That promissory notes and other obligations for the payment of money absolutely are frequently given upon considerations of an expectant character, as upon contracts, calling for acts to be performed by the party to whom the note is given, and are put in an absolute form for the convenience of the parties, is a fact well known. When a party gives his note upon the promise of the payee to perform a certain act, and the payee fails to perform, it is reasonable that the transaction should be considered as a whole for the purpose of ascertaining what is due between the parties. * * * The question is whether such a defense to a promissory note is sanctioned by the principles of law and the adjudicated cases.”

It then proceeded to review a number of earlier cases, affording.an enlightening discussion of the application of the parol evidence rule to the consideration of a promissory-note, and settled upon the Knotts case'as containing a correct statement of the law:

“Knight v. Knotts, 8 Rich., 35, finally settled the cprestion 'by placing the defense upon the true ground, namely, as involving the consideration of the note. The verbal agreement accompanying the note was held to be the consideration of the note, the two constituting but one agreement, and when the contract failed to give support to the note the latter could not justify a recovery.”

In line with this principle, parol evidence was admitted in the Hardin case and the Ryan case to show the whole agreement in which the notes originated and of which they constituted only parts. The reason underlying the greater latitude allowed in the case of promissory notes than in the case of some other forms of contracts is set forth in the quotation first above made from the Barnes case, but that reason does not extend generally to written contracts.

We find nothing, therefore, in the cases cited in support of appellants’ contention to justify the admission of the parol testimony objected to in the present case.

A case, however, that is closely parallel to the present case is Blackwell v. Faucett, 117 S. C., 60; 108 S. E., 295. In that case it was attempted to be shown by parol evidence that a written contract for the sale of land included also a lot of shingles and cement on the premises. The testimony was disallowed, and Mr. Justice Cothran, speaking for the Court, made a very clear statement of the law:

“There is no more wholesome rule of law, in my opinion, than that announced in Lagrone v. Timmerman, 46 S. C., 411 [24 S. E., 290]:

“ ‘When the parties have reduced their contract to writing, the Court can only look to the terms in which the parties have expressed their intention in such writing.’

“And quoting from 1 Greenl. Ev., § 275:

“ ‘When parties have deliberately put their engagements into writing in such terms as import a legal obligation, without any uncertainty ■ as to the object or extent of such engagement, it is conclusively presumed that the whole engagement of the parties, and the extent and manner of their undertaking, was reduced to writing; and all oral testimony of a previous colloquium between the parties, or a conversation or declaration at the time when it was completed or afterwards, as it would tend in many instances to substitute a new and different contract for the one which was really agreed upon, to the prejudice, possibly, of one of the parties, is rejected.’

“ ‘When a writing, upon its face, imports to be a complete expression of the whole agreement, and contains thereon all that is necessary to constitute a contract, it is presumed that the parties have introduced into it every material item and term, and parol evidence is not admissible to add another term to the agreement, although the writing contains nothing on the particular item to which the parol evidence is directed.’ 16 R. C. L., 1030.”

No language more pertinent to the present case can be found. In the light of the 'principles enunciated, we ask ourselves these questions: Have the parties “deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement?” Does the writing, “upon its face, import to be a complete expression of the whole agreement?” Does the writing contain upon its face “all that is necessary to constitute a contract ?” These questions can be answered only in the affirmative. It follows that “it is conclusively presumed that the whole engagement of the parties, and the extent and manner of their undertakings, was reduced to writing,” and that “the parties have introduced into it (the writing) every material item and term,” and hence that “parol evidence is not admissible to add another term (regarding the fire insurance proceeds) to the agreement, although the writing contains nothing on the particular item (the fire insurance proceeds) to which the parol evidence is directed.”

If the provision requiring the defendant to pay over to the plaintiffs a part of the insurance proceeds can be added by parol evidence to the clear contractual obligations of the writing, what would there be to prevent the introduction of parol testimony to add to the agreement any condition or obligation that might seem desirable to either of the parties?

As was well said by Mr. Justice Nott, in McDowell v. Beckly, 2 Mill. Const., 265:

“It is not only a sound and salutary rule of law, but it is equally a rule of common sense, that written contracts should not be controlled by oral testimony. The various conceptions of different minds on the same subject, the liability of all persons to forgetfulness, the influence of passion, prejudice, and interest, renders unwritten contracts, at all times, uncertain. But litera scripta manet. It cannot change with times or circumstances; and when a contract is reduced to writing, the law presumes that the writing contains the whole agreement.”

After a careful examination of the entire record and the law applicable to the facts thereby disclosed, we find no grounds upon which the testimony may be held admissible.

We may add that, in reaching our conclusion, we have given no consideration to the weight of the testimony —that is not a matter for this Court — but have confined ourselves strictly to the legal questions involving its admissibility.

The judgment of the Circuit Court in each of the said cases is affirmed, and both cases are remanded to that Court for a new trial in each of them in accordance with the order of Judge Shipp.

Mr. Chief Justice Watts and Messrs. Justices BeEase and Carter concur.