Knighton v. Desportes Merc. Co.

112 S.E. 343, 119 S.C. 340, 1922 S.C. LEXIS 73

• Court: Supreme Court of South Carolina
• Decided: April 18, 1922
• Docket: 10870
• Status: Published

Opinions

The opinion of the Court was delivered by

Acting Associate Justice I. H. Hunt.

The facts are set out in the “case” as follows:

“This action was commenced .by the service of a summons and complaint on the defendant on the 9th day of March, 1918. The action was brought by the plaintiff against the defendant, a mercantile corporation, to recover the sum of $612.94, being double the amount of usurious interest alleged to have been collected and received by the defendant from the plaintiff on two certain notes given by the plaintiff to the defendant, to wit: Upon one note for $274, dated the 7th day of April, 1905, and payable on the 1st of November, with interest after maturity at the rate of 8 per centum per annum, and upon another note given by plaintiff to defendant for $230, dated March 19, 1907, and payable on the 1st of November after date, with interest after maturity at the rate of 8 per centum per annum, payable annually. The answer of the defendant set up as first defense: First, a general denial; second, that the subject-matter of said suit had been compromised and settled between the parties as part of the consideration of a deed of conveyance of a tract of 150 acres of land conveyed by the defendant to the plaintiff. The case came on for trial at the September, 1919, term of the Court for Fair-field County 'before Judge Sease and a jury. Testimony was offered by the plaintiff and the defendants, and after Fearing the charge of the presiding Judge the jury returned a verdict in favor of the defendant. Upon the verdict so rendered judgment was entered on the-day of February, 1920. Notice of appeal to the Supreme Court was duly served. The only issues in the case arise upon the rulings of the presiding Judge in allowing certain testimony to be introduced with reference to an alleged compromise and settlement of plaintiff’s claim for usury, which said testimony was duly objected to (1) upon the ground, among others, that such parol testimony was incompetent, because it tended to vary, add to, or contradict the terms of a written instrument, to wit: the deed from the defendant to the plaintiff, mentioned in defendant’s answer, and (2) upon his charge with reference thereto.”

The exceptions will be reported.

The issues raised on the appeal in this,case present no new question to this Court. The general principles involved have been decided time and time again. Decisions from the early days of our judiciary to the present, clearly, and positively draw the line of demarcation between admissible and prohibited testimony pertaining to written instruments. While the decision in each case was dependent and grounded upon the peculiar facts and expressed language in the written instrument at that time before the Court, fixed general rules and' established precedents have been adhered to in each case. A review of the long list of decisions will reveal the fact that it is an irrevocable rule that, when parties put their agreements and contracts in writing, they are legally bound thereby and cannot repudiate, contradict, vary, add to, modify, or alter the expressed terms and conditions therein, unless they come within certain. exceptions which are' controlled by well-defined rules and established legal principles. Real and personal property rights of the citizen would be jeopardized were the terms and conditions of a written instrument, solemnly executed, dependent upon the slippery memories and the individual consciences of the parties to the transaction. Therefore the law has directed, and the Courts have provided, certain well-defined rules, and exceptions thereto, wherein the rights of the parties are held inviolate and the contract enforced in conformity to its expressed terms and conditions.

The consideration in a deed of conveyance is neither an essential nor a vital element therein, unless it be of ia contractual nature. It has no legal status ex cept to estop the grantor from alleging that, it was without consideration and to prevent a resulting trust in the grantor. The validity of a deed does not depend upon the real consideration being expressed therein. The expressed consideration is the least important of all the elements of that instrument. It, in itself, grants no right, vests no title, and warrants no promise. Its purpose and function' is complete when it fixes and identifies itself as either a “good” or “valuable” consideration. The law and the Courts are not concerned as to the actual or real consideration of the instrument. The question' is: Is it of such character as to vest the title to the property therein described? It is a fact of general knowledge, and a practice well known to the Courts, that the real consideration of a deed is often withheld for secret reasons and business purposes. A consideration, to be sufficient, need not be adequate; it need only be a valuable consideration, however small.

“A deed is also valid in law, whether the consideration has been actually paid or not, where there is a .recital of its payment.” Corpus Juris, Vol. 18, p. 162.

“Where a deed is based on a valuable consideration, it is immaterial whether it be wholly paid in money, or partly in other things of value.” Corpus Juris, Vol. 18, p. 164.

“Although a deed ordinarily states the consideration, and the expression of a valuable consideration is essential to a deed of bargain and sale, yet a conveyance may be operative and of binding effect even though the consideration is not expressed therein, and a bargain and sale deed is good, although it does not express that the consideration money has been paid. . Nor need the amount of the consideration be stated in the conveyance in order to make it a valid one and pass title. Nor does a false statement of the consideration operate as a nullification. The recital in a deed that the consideration thereof had been paid as of the same date, when in fact it has been previously'received as a loan, is not such a variance of fact as to discredit the deed.” Corpus Juris, Vol. 18, p. 177.

The consideration expressed in a deed must be either “good” or “valuable.” The rule is that, when either is expressed, parol evidence cannot be admitted to show the other, but it may be admitted to show a greater or less of the same character. That rule, however, is subject to the qualification that, where fraud is alleged, it is competent to show by parol that a deed purporting tO' be based upon a valuable consideration was, in fact, based upon a good consideration. Latimer v. Latimer, 53 S. C. 484, 31 S. E. 304.

Among the earlier decisions of this Court on this question may be noted the case of Curry v. Lyles, 2 Hill, 404, decided in 1834. The decision in that case seems to have so impressed the judiciary of this State that it has been cited and ¡approved by this Court time and again from the date of its filing to the present. The opinion of the Court was delivered by Judge Johnson and received the concurrence of Judges O’Neall and Harper. The opinion of the Court was, in part, as follows:

“The authorities cited by .the counsel for the motion sustain very fully the position taken in the ground of the motion, that parol evidence was admissible to show that the true consideration agreed to be paid by the defendant for the land conveyed to him by the plaintiff, was $1,150 instead of $1,100, as expressed in the conveyance. The general rule certainly is, that parol evidence will not be admitted to contradict, alter or vary the terms of a written contract; and the reason of it is, that the writing is supposed to express the true intention of the parties, and is not subject to the frailties of memory. It cannot, therefore, apply to these formulas which enter into almost every deed, and which are unnecessary to its validity and binding effect. In framing the contract, the intention of the parties is necessarily directed to the thing that is to be done or grant ed, and with respect to these it will be supposed that they have expressed precisely what was intended; but with respect to things that are immaterial, and without which the contract would be binding, it will not be supposed that these are always stated with reference to the precise state of the facts. A deed, for example, takes effect from the delivery, without reference to the date which it bears, and would be binding, although it had no date. So a deed without any consideration, one merely voluntary, is binding on the grantor, and so whether it expresses a partial or the full consideration paid. It was not necessary, therefore, to the full and perfect operation of the deed from the plaintiff to the defendant, that it should express the precise consideration agreed to be paid, and it will not be inferred that it was intended to be so expressed.

“The King v. The Inhabitants of Scammonden, 3 Term Rep. 474, is directly to the point. An agreement for the purchase of an estate expressed the consideration to be £28, and the question was whether parol evidence was admissible to show that £30 was the true consideration, and Lord Kenyon said it was clear that the party might prove other considerations than those expressed in the deed, and he referred to the case of Filmer v. Gott, 7 Bro. P. C. 70, where the considerations mentioned in the deed were £10,000 and natural love and affection; and an issue at law was directed, to try whether natural love and affection formed any part of the consideration, the estate being worth £30,000; and on ian appeal to the House of Lords this was confirmed; and upon the finding of the jury that natural love and affection did not enter into the consideration, the Lord Chancellor set the deed aside. So, in the case of Sheppard v. Little, 14 Johns. 210, where a consideration of $500 was expressed in a lease and acknowledged to have been received, the party was let into proof .that the money was not in fact paid. The case of Garrett v. Stuart, 1 McCord, 514, is decisive of this. There the consideration expressed in a bill of sale of a negro was $1,000 and in an action on a warranty of soundness contained in it, the Court held that the defendant might give in evidence 'that another negro given in exchange was the true consideration.”

In Barmore v. Jay, 2 McCord, 371, 13 Am. Dec. 736, it was held that the principle that parol evidence is inadmissible to- add to, vary or contradict a written instrument only applies to the essential and substantial parts of the writing and not to those that are merely formal. The opinion is, in part, as follows:

“The first ground of this motion is advocated on the broad and well established principle that parol evidence is inadmissible to add to, vary or contradict ia written instrument. But when associated with the reasons on which it is founded, it is apparent that it only applies to the essential and substantial parts of the writing, and not to those that are merely formal. Thus, in Goddard’s case, (2 Rep. 46 Phillips 428), it was held that the delivery of a deed may be shown by parol on a day different from that on which it bears date; from which time alone it can take effect. On this principle alone, in the case of Jackson ex dem v. Shoomaker (2 Johnson’s Rep. 230), the Court admitted parol evidence to show that a deed bearing date in 1714 was not executed until 1717, and Chief Justice Kent remarks that the date is no part of the substance of the deed, and not necessary to be inserted. The real date is the time of delivery.”

In delivering an affirmative opinion of the Court in the case of Rountree v. Lane, 32 S. C. 160, 10 S. E. 941, Mr. Justice McGowan said, in part:

“Eor the purpose of explaining why they had all (including himself) signed the deed to Blanton, W. D. Bane was called, and he was allowed to say that he received no part of the consideration. Mr. Greenleaf, in ia note to Section 26, says: ‘Though the party is estopped from denying the conveyance, and that it was for a valuable con sideration, yet the weight of American authority is in favor of treating the recital as only prima facie evidence of the amount of the consideration paid,’ etc., citing many authorities, and among them our own cases of Garrett v. Stuart, 1 McCord, 514, and Curry v. Lyles, 2 Hill, 404.”

In the case of Latimer v. Latimer, 53 S. C. 484, 31 S. E. 305, the Court sustained the Circuit Judge in excluding parol evidence upon the ground that the consideration in the wife’s deed was natural love and affection, a good consideration, and that it was inconsistent with the terms of the deed to change it by the proposed testimony into a valuable consideration. The late Chief Justice Mclver, in delivering the opinion of the' Court, said in part:

“There can be no doubt that the general rule is that parol evidence is not admissible to contradict or vary the terms of a valid written instrument. 1 Greenleaf on Ev. § 275. It is true that this rule, like most others, is subject to certain exceptions, one of which is that such evidence may be received to vary the amount of the consideration mentioned in the deed. 1 Greenleaf on Ev., § 36, note 2; but as is said 'by the same distinguished author in Section 285 of the same volume: ‘Evidence may also be given of a consideration not mentioned in a deed, provided it be not inconsistent with the consideration expressed in it’; and again in Section 304: ‘A further consideration may also be proved by parol; if it is not of a different nature from that which is expressed in the deed.’ As well said by that wise and able Judge, Johnson, J., in Garrett v. Stuart, 1 McC., at page 516: ‘Legitimate considerations are either good or valuable; and after some attention to the subject my mind inclines to the conclusion suggested by one of my brethren, that the distinction is, that where one of these is expressed, parol cannot at law be admitted to show the other, but that it may be admitted to show a greater or less of the same character.’ While it is true that this was not the point decided in that case, yet it seems to us a correct expression of the rule, or rather the exception to the general rule, and we adopt it as such, with this qualification, that where fraud is alleged, it is competent to show by parol that a deed purporting to be based upon a valuable consideration was, in fact, based upon good and not upon valuable consideration —was a voluntary deed.”

The general rule is also held and approved in the case! of Whitman v. Corley, 72 S. C. 410, 52 S. E. 49. A deed was introduced and was found to express only a consideration of $200. Special Judge R. H. Welch, presiding, allowed the plaintiff to introduce evidence to the effect that the real consideration was not the payment of $200, but the promise of support set out in the complaint. This evidence was objected to as an attempt to vary the terms of a written instrument by parol, and the alleged error in its' admission was the basis of the appeal. Associate Justice Woods, in delivering an affirmative opinion of this Court, said:

“The case of Latimer v. Latimer, 53 S. C. 483, 31 S. E. 304, is authority of the proposition stated in the syllabus: ‘Except in cases of fraud, it is not competent to show by parol that a deed, purporting to be based on good consideration, and executed for a specific purpose, was based on valuable consideration, and executed for an entirely different purpose.’ But that case recognizes and affirms the rule that where a deed expresses a certain valuable consideration, an additional * * * valuable consideration may be proved by parol. In Garrett v. Stuart, 1 McCord, 514, the consideration expressed in a bill of sale of a slave was $1,000. In.an action on a warranty of soundness in the bill of sale it was held competent to show that the exchange of another slave was the real consideration. Curry v. Lyles, 2 Hill, 404; Rountree v. Lane, 32 S. C. 160, 10 S. E. 914; Rice v. Hancock, Harper, 393; 2 Devlin on Deeds, 823.”

The case of Gill v. Ruggles distinctly draws the line of demarcation between admissible and prohibited parol testimony in connection with written instruments. It clearly differentiates between considerations that are “contractual” in their nature, and considerations that are merely formal in recital, and do not affect or control the terms and conditions of the instrument. The expressed consideration of the written instrument then before the Court was clearly “contractual in its nature,” and, therefore, parol testimony could not be introduced to contradict, vary, add to, or change the amount yarned therein. It was evidenced by the terms of the agreement that certain- acts and doings of the parties to the contract were dependent and based upon the specific sum named in the consideration, and any change or modification of that amount would materially affect the expressed conditions.' This case is first reported in 97 S. C. 278, 81 S. E. 519. In delivering the opinion of the Court, the present Chief Justice said, in part:

“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 authorities-upon which the appellant’s attorneys rely fully sustain this proposition. By reference to the contract between-said parties, dated the 23rd of December, 1908, it will be seen that the sum of $375,000 was agreed upon as the price of the timber lands, and that the defendant, Ruggles, agreed to furnish that amount and perfect the said purchase upon certain conditions; that said timber lands were to be conveyed to Ruggles, who agreed to pay the consideration of $375,000, and take the title to said property; that the parties to the contract were thereupon to proceed to the organization of a corporation, and in such organization provide for two classes of stock, preferred'and common; the preferred stock in the organization was to bear 6 per cent, per annum cumulative dividends to cover the cash investment of said property, etc., for which the said Ruggles was to furnish the money, as hereinbefore stated. There was a provision that the common stock ' should be divided as follows: To the said Ruggles and his nominees, 60 per cent, thereof,, and to the said Gill and Leib and their nominees, 40. per cent, thereof. Upon the organization of the corporation, Ruggles was to convey the property over to it, and the stock, was to be issued and divided in the manner just stated. It will thus be seen that the price of the timber lands, and by whom it was paid, determined the amount of preferred stock, and to whom it should be issued, and that the manner in which the corporation should be organized and controlled was dependent upon these two facts. The parol testimony tended to alter, vary, and contradict the written agreement 'in these material respects.”

In the case of Scott v. Wiggins, 113 S. C. 88, 101 S. E. 113, this Court cites and approves the holding of Curry v. Lyles, 2 Hill Law, 404. Mr. Justice Gage, in delivering the opinion of the Court, says:

“Since 1834, and before, it has been uniformly held that, notwithstanding the circumstances that a deed may recite a consideration, it is competent to prove by parol testimony what the real consideration was. Curry v. Lyles, 2 Hill, 404. Bishop states the case thus: 'The consideration, which is not the promise of the parties, with its special terms and limitations, but merely the thing of value, whereby they were nerved to make the promise, ought always to be open'to inquiry by oral evidence.’ Bish. on Contracts, § 65.”

There are many other reported decisions on this question, some holding one thing and some another, each decision being grounded on the peculiar facts and legal issues at that time before the Court, but all adhering to the fixed rules and general principles announced and set out in the cases cited herein.

An application of the rules and exceptions thereto will lead to a correct legal conclusion in this case. The deed expressed a money consideration of $1,000. The parol testimony sought to establish an additional consideration of $612.94 in settlement of a usury claim that the grantee held against the grantor. The deed expressed a “valuable” consideration. The admitted testimony tended to show a consideration of like character for a larger amount. The parol testimony did not contradict, vary, add to, or alter any other part of the written instrument. It did not affect, in any manner, the granting, habendum, or warranty clauses therein, or tend to change or modify the instrument in any of its' material parts. The expressed intention of the deed was the conveyance of the fee to 150 acres of land. The amount of the consideration expressed therein was, immaterial to the validity of the deed, except in so far as it fixed the character of'the consideration and prevented a resulting trust in the grantor. The admitted testimony was in connection with an independent suit in which the validity of the deed was not in question or in jeopardy. It was in reference to a distinct, independent, collateral contract, which, in no manner, affected the expressed object of the parties in executing! the deed. The expressed consideration was not contractual in its nature. No other part of the instrument was dependent, in any respect, upon the exact amount named as the consideration. The deed was intact and its validity unimpaired after 'the introduction of the testimony.

The admission of the testimony in this case did not conflict with that sound and salutary rule, and established principle, that parol testimony shall not be admitted to contradict, vary, add to, or alter a written instrument. Its admission came within the exceptions to the rule.

The charge of the Circuit Judge was sufficiently full and clear to convey the correct legal principles to the jury.

The appellant' has shown no prejudicial error herein.

Affirmed.