New Orleans Great Northern R. v. Belhaven Heights Co.

84 So. 178, 122 Miss. 190

Opinion

Stevens, J.

delivered the opinion of the court.

Appellee sued in equity to cancel a .certain deed executed by it to the New Orleans Great Northern Railroad Company for a, strip of land two hundred! feet wide in the northeast part of the city of Jackson, Miss., as described in the deed, to be used as a right of way. The bill avers that one Anderson, as the agent and representative of the railroad company, stated and represented to Mr. Coman, secretary of appellee company, that if the complainant, would donate or sell to the railroad company the strip of land in question, the railroad company would within a reasonable length of time construct a steam railroad for the transporation of passengers and freight over and along the said strip of land, and that the construction and operation of the road would enhance the value of the appellee’s adjoining lands in that vicinity; that, acting upon the said representations and promises of appellee’s authorized agent, the complainant executed the deed for a stated consideration of ten dollars; that no part of the consideration had been paid; that the railroad company, although an unreasonable length of time had elapsed, has failed to build the said railroad at any point on or along the said strip, but has leased a portion of the lands for farming purposes; that the promises and representations of appellant’s agent were false and misleading1 and made for the purpose of inducing complainant to donate the right of way at a grossly inadequate price. The bill further contains allegations of fraud. The prayer of the bill is that the deed be canceled, or that complainant be awarded a decree for the fair value of the land as damages. Those recitals in the deed material to the present inquiry are as follows:

“Whereas, the New Orleans Great Northern Railroad Company desires' to acquire for its railroad purposes the hereinafter described property, now, for and in consideration of the sum of ten dollars, cash in hand to it paid by said New Orleans Great Northern Railroad Company, a railroad corporation of the state of Mississippi and Louisiana, the receipt of which is hereby acknowledged, I, Belhaven Heights Company, a corporation duly chartered, organized, and existing under the laws of the state of Mississippi, do hereby sell, convey, and warrant unto the said New Orleans-Great Northern Railroad Company, its successors and assigns,”1 etc.

“Also hereby, for the consideration aforesaid, acknowledge satisfaction for and hereby release said railroad company, its successors and assigns, from all damages to me, and to any and all of any .abutting property from the construction and operation of its railroad upon, over, and across said hereby conveyed land, and over and across any of the streets of said city.”

General and special demurrers were interposed to the bill and overruled. Thereupon appellant filed an answer, and the cause proceeded to trial upon bill, answer, and proof. Mr. Coman, as a witness for the complainant, testified that Mr. Anderson, approached him, stated that he had observed that all attempts to build the railroad had been a failure, and that he had made trips to New York City and was authorized to state that the road would be built and that work would commence within less than ninety days after the right of way through this property was obtained. Negotiations led to the definite agreement stated in the deed; that is that Belhaven Heights Company a corporation agreed to execute a general warranty deed in consideration of ten dollars; the deed was accordingly executed, and a voucher for the ten dollars was given and paid. At the same time Mr. Anderson asked for and received an option upon other lands owned by the Belhaven Heights Company, and for this option appellee received five hundred dollars. The lands covered by the option “immediately adjoined this land where the right of way was.” When the parties" came to write the deed, Mr. Coman asked for a provision to be incorporated in the deed expressly providing that the “land would revert to me if the road was not built in five years., ’ ’ and in response to this Anderson ‘ ‘ said that they did not want to take the deeds that way,” and said further “that he had instructions not to take any deeds with strings to them.” Mr. Coman at one place in his testimony admits that the deed “speaks for itself.” The option was introduced in evidence, and recites, among other things that “whereas, said Belhaven Heights Company has by a deed of even date herewith conveyed to' the New Orleans Great Northern Railroad Company a strip of land in the county of Hinds, state of Mississippi, described,” etc., and furthermore bound the company, in event the railroad company exercised its option to buy, to execute a deed which “shall be in the same form [description excepted] and contain the same covenants as are contained in the deed this day executed to said railroad company. ’ ’

There is testimony tending to prove that Belhaven Heights Company conveyed to other parties lands adjoining and with reference to the right of way now sought to be cancelled, and one of these parties intervened in this suit and objected to the cancellation of the railroad right of way; also that the right of way as conveyed was marked out by stakes, and that' the city of Jackson located its pumphouse and filtration plant for the city waterworks on the right of way in controversy and acquired the necessary lands from appellee company with the view ultimately of securing coal over the line of the said railroad company. The testimony further shows that the railroad company encountered obstacles in acquiring the right of way in and through Jackson and that in order to secure the projected right through East Jackson a committee of leading citizens with W. M!. Anderson, president of the Merchants’ Bank ' & Trust Company, as chairman, agreed in writing with the railroad company that the committee would secure the necessary right of way through East Jackson at a total consideration not exceeding eighty thousand dollars and under this agreement the railroad company deposited in the Merchants’ Bank moneys upon which Anderson drew in paying for the deeds. Neither Mr. Coman nor any of the other officers or agents of appellee company participated in the citizens’ committee meetings and both parties to the deed appear to have acted in good faith and believed that the railroad would be constructed within a reasonable time. The chancellor found and held that the complainant is estopped to have the deed to the right of way canceled because of the conveyances to other abutting property owners who have acquired rights in and with reference to the right of way. The chancellor further found that there is no actual fraud shown by the testimony, and that the proof does not show that the railroad company did not intend to build the road at the time the deed was executed. But the chancellor found that in his opinion ten dollars was a grossly inadequate consideration, that the real consideration was benefits to be acquired from the construction of the road, and that on account of the failure to construct “the defendant company now holds and had rented and used and occupied for other than railroad purposes twenty-five acres of land of the complainants for which it has only paid the sum of ten dollars,” and proceeded to render a decree for the value of the property at the time the deed was executed with interest at six per cent, per annum or total sum of one thousand four hundred and thirty dollars with interest. It appears that appellant has in fact constructed a standard gauge railroad into the city of Jackson, but the road has never been constructed through or beyond Jackson, and no assurance is given as to when this can or will he done. The deed was executed April 15, 1910', and the hill was filed in Mkrch, 1918. The appeal challenges the relief granted by the chancellor both upon the law and the facts.

It will be observed that the chancellor denied a cancellation of the deed, but granted the alternative prayer for relief in damages. There is practically no conflict in the testimony. The main inquiry is whether the decree is justified by the law. In Dixon v. Milling, 102 Miss. 449, 59 So. 804, 43 L. R. A. (N. S.) 916, our court expressly held that a failure of the grantee to provide maintenance or support constituting the consideration for a deed absolute in form was not sufficient to support a bill for cancellation, and the court by Judge Reed quoted with approval the following’ observations of Mr. Pomeroy:

“The general rule [is] that-, the mere failure by grantee to perform a promise, which formed the whole or part of the consideration inducing an executed conveyances, gives rise to no right of rescission in the grantor, either at law or in equity, unless such promise amounts to a condition; and it is a rule of construction that, in case the language or intention is doubtful, the promise or obligation of the grantee will be constructed to be a covenant, limiting the grantor to an action thereon, and not a condition subsequent with the right to defeat the conveyance.” Pomeroy’s Equity Jurisprudence. vol. 6, section 686.

This ruling was reaffirmed in Lee v. McMorries, 107 Miss. 889, 66 So. 278, L. R. A. 1915B, 1069, and in Lowery v. Lowery, 111 Miss. 153, 71 So. 309. In the case at bar! there is no condition expressed in the deed. The deed is a general warranty deed with the usual covenants. There is in the deed under review neither a condition subsequent nor an express- covenant to do or perform anything. The sole hope for relief must be based upon a breach of an illegal contemporaneous parol agreement by appellant to build a railroad and in doing so to commence construction in ninety days after the right of way was secured. There is no proof of fraud. The chancellor so held. There is no proof that either Anderson, the agent,, or the officers of appellant company, intended to accept the deed knowing that the road would .not be built. It was evidently within the contemplation! of the parties that the road would be constructed, but this contemplation was in good faith. Appellant expressly refused to accept a deed with any conditions or limitations. This! was expressly brought to the attention of Mir. Coman, and, notwithstanding the contemporaneous discussion on this point and the refusal of appellant to' accept anything but a warranty deed, appellee, thus fully advised and put on notice, deliberately executed the conveyance in question for the actual stated consideration of ten dollars. Can appellee now be heard to say that the consideration is otherwise? If there be a contemporaneous parol agreement, what was in fact the agreement? The officers of appellant company were never confronted with the necessity of stating any agreement whatever in reference to the building or operation of the road. There was no definite agreement to build a road of any kind. If there can be said to be .an agreement at all, it is an oral agree-, ment and unenforceable. If there was any element of fraud, oppression, or in fact the willful intention at the time not to build a railroad, a different case would be made for the complainant. There is perhaps an inadequate consideration, but tins is not at all certain if due consideration is given to the option and other conveyances executed by appellee in prospect or anticipation of the construction of the railroad. The very fact that the right of way had been surveyed and staked and deeds acquired by appellant very probably enhanced the value of complainant’s other lands. The record shows that appellee executed conveyances recognizing the right of way; and the rights of innocent third parties have intervened. If the consideration is grossly inadequate, then equity would lay hold of slight circumstances of oppression to rescind the contract. 9 C. J. 11.76. But the consideration cannot be said to be so grossly inadequate as to shock one’s conscience. Neither is there any element of fraud or oppression. There are other manifest difficulties. The consideration was agreed upon and stated; no other consideration is expressed in the deed. In this respect the case is differentiated from many cases where the deed obligates the grantee to do or perform some contract in the future. In the case of Chicago, etc., R. R. Co. v. Titterington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. Rep. 39, the court refused to cancel the right of way to the railroad company for nonperformance of the grantee’s agreement to construct a railroad and locate a station on the land granted, though the court did strongly intimate that a suit to recover damages and to charge the land with a lien might be upheld. But the deed in that case contained the following recital of consideration, via.:

“That for and in consideration of the enhanced value to be given and is contemplated to arise to our lands and other property by the location and construction of the Chicago, Texas & Mexican Central Eailway, and for the consideration of full and complete value accruing to us by this transaction in locating and maintaining a station on the lands hereby granted, we,” etc.

Notwithstanding this consideration expressed in the deed, the court by Mare, Judge, observed:

“But conditions of this character, are not favored by the courts, and in case of doubtful language or intention the promise or obligation of the grantee will be construed to be a covenant limiting the grantor to an action thereon, and not a condition subsequent with the right to defeat the conveyance. Under the authorities, we think that it must be held, and we do hold, that the promises or obligations of the railway company referred to in the deed are in the nature of covenants, not conditions, and therefore the plaintiffs, aside from the other questions in the case, could not reclaim the land itself on account of the nonperformance of the covenants or promises by the g'rantee, but would be required to sue for damages arising from the breach of the contract.”

Counsel for appellee very confidently rely upon the older case of Henderson v. San Antonio, etc., R. R. Co., 17 Tex. 560, 67 Am. Dec. 6751. An examination of the Henderson Case shows that the plaintiff executed two deeds to one Jones in trust for the railroad company when the latter should be fully organized and have .about twenty miles of road under contract and the route so located as to cross a certain’creek, etc. It would appear that the deeds were made upon false representations by an agent, and the stipulated conditions were conditions precedent. This is made certain by the observations of the Texas court in the later case of City of San Antonio v. Lane, 32 Tex. 414, where, in speaking of the Henderson Case, the court said:

“The deeds were executed by appellant to Jones, in trust, to be conveyed in fee to appellee, upon the happening of certain conditions precedent, expressed in the deeds. Jones, it was alleged, in fraud of appellant’s rights, and without the conditions precedent having happened or being complied with, conveyed the land to the railroad company.”

Under this interpretation of the Henderson Case it has no controlling application. In the case at bar there was no condition' stipulated in the deed, either precedent or subsequent. It is the settled rule in this state that equity abhors a forfeiture and will not lend its aid to enforce a forfeiture or divest an estate for breach of a condition subsequent where the vendee is' in possession. Memphis & Charleston R. R. Co. v. Neighbors, 51 Miss. 413; Thornton v. Natchez, 88 Miss. 1, 41 So. 498; Soria v. Harrison County, 96 Miss. 109, 50 So. 443.

The views of this court in Railroad Co. v. Kamper, 88 Miss. 817, 41 So. 513, are suggestive. There the deed expressly provided that the land conveyed was to be used “for railroad purposes only.”

But we are not directly concerned on this appeal with the right of appellee to a cancellation. The prayer for cancellation was denied by the chancellor, and there is no cross appeal. Our views lead to the conclusion that no relief whatever can be granted, and that the decree for damages should be reversed. If an improvident contract has been made by appellee company, it can blame no oné but itself. It is not beyond the realm of possibility for the right of way yet to be utilized for railroad purposes. The decree complained of will be reversed, and the bill dismissed.

Reversed, and decree here for appellant.

Reversed.