Van Tassell v. Lewis

222 P.2d 350, 118 Utah 356, 1950 Utah LEXIS 187

• Court: Utah Supreme Court
• Decided: September 28, 1950
• Docket: 7340
• Status: Published

Opinions

WOLFE, Justice.

This action was commenced to set aside a warranty deed executed by the appellants, Carl Van Tassell and Elda Van Tassell, his wife, plaintiffs below, to to C. Ed. Lewis and Lucille M. Lewis, his wife, on the ground that there had been a failure of consideration for the conveyance.

C. Ed Lewis, a realtor with his place of business in Salt Lake City, Utah, advertised for sale a dairy farm located at Meridian, California, which the plaintiffs and their nephew, Gail Van Tassell, became interested in purchasing. On November 28, 1947, Carl and Gail Van Tassell offered to purchase that farm for $150,000 and made an earnest money payment of five hundred dollars. They then endeavored to raise additional funds by selling the plaintiff’s ranch in Duchesne County, Utah. Mr. Lewis proposed purchasing the ranch for $10,000 and assuming the payment of an $8,000 note and mortgage then existing upon the property in favor of Arvin and Robert H. Moon. The plaintiffs agreed to Lewis’s proposal and on December 26, 1947, they executed a warranty deed to their ranch to Lewis and his wife. Carl Van Tassell signed the deed in Duchesne, but his wife signed the deed in Peoa, Utah, where she was temporarily living with her father. That same day Lewis presented to Carl a check for $10,000 drawn on the account of the C. Ed Lewis Company in the Walker Bank and Trust Company in Salt Lake City. The check was payable to Carl and Elda Van Tassell. Carl indorsed his name and his wife’s name on the check and handed it back to Lewis. Carl and Gail Van Tassell then prepared to fly to California with Lewis to further negotiate for the purchase of the dairy farm. The check and the deed were put in escrow by Lewis with a written agreement that if Carl Van Tassell were killed on the trip to California, Lewis was to return the $10,000 to Carl’s wife. Lewis took with him to California a $10,000 check drawn on Lewis’s account payable to Ward and Luetha Meister, who supposedly were the owners of the dairy farm. Upon arrival at the Meister farm on December 27, 1947, a purchase agreement was entered into between Carl and Gail Van Tassell and the Meisters, in which the property was simply described as the “Meister Dairy Farm, located near the Tisdale Weir, near Meridian,” Sutter County, California. The total purchase price was to be $150,000. This agreement, according to the plaintiffs, was a temporary agreement and was to stand only until their wives came to California, at which time a permanent agreement was to be drawn up in which the property, both real and personal, would be described and detailed specifically. This purchase agreement of December 27, 1947, recited the receipt of $20,000 from the purchasers and the district court found that the check for $10,000 which Lewis had drawn payable to the Meisters was given to them and was credited by them upon the $20,000 payment made by the Van Tassels. The Meisters indorsed the check which had been handed to them by Lewis and returned it to Lewis in partial payment, at least, of his commission for handling the sale.

Thereafter, Lewis returned to Salt Lake City and within a few days deposited in the account upon which they were drawn the two checks payable to the Van Tassells and the Meisters, which they had respectively indorsed and returned to Lewis. The depositing of these checks had no effect, of course, whatever upon the balance in Lewis’s account. Subsequently, Lewis recorded his deed to the ranch in Duchesne County and discharged the mortgage upon that property by executing a new mortgage to one Thomas M. Hill, thereby relieving the plaintiffs of all liability under their note and mortgage to the Moons. Lewis contracted to sell the Duchesne property and the purchaser went into possession in January of 1948.

Carl and Gail Van Tassell entered into possession of the Meister farm after the agreement of December 27, 1947, was executed and stayed there for several months. After their wives came to California in February, the Van Tas-sells went to the county seat and endeavored to get a description of the property they were purchasing and an abstract of title to the real estate. While they were continuing their efforts the Bank of America in Yuba City, California, foreclosed a lien or a mortgage which it held upon the cattle on the Meister farm and as a result all the cattle were sold by the bank. Also, the Federal Land Bank commenced proceedings to foreclose a mortgage it held upon the real estate. The Meisters paid to the Van Tassells $9,000 which they received out of the sale of the cattle. The Van Tassels surrendered possession of the farm and returned to Duchesne.

As stated at the outset of this opinion, the plaintiffs commenced this action against the defendants to set aside the deed to the Duchesne property on the ground that there had been a failure of consideration. The court below found that Lewis paid to the Meisters $10,000 for and on behalf of the plaintiffs and at their request, and that they received full credit and satisfaction for the same on the purchase price of the Meister farm. It was further found that Lewis discharged the mortgage upon the Duchesne property, and thus that the defendants completed every act required to be performed by them by the terms of the sale. A judgment of “no cause of action” was entered in favor of the defendants.

The plaintiffs initially contend that the method by which Lewis procured possession of the deed to the Du-chesne property was fraudulent from the inception in that there were not sufficient funds in the account upon which the two $10,000 checks were drawn from which the checks could be paid if presented by the payees. The complaint, however, contains no allegation of fraud. Assuming that there were insufficient funds in Lewis’s account to pay these two checks on the days they were delivered to the respective payees, we are unable to see how the plaintiffs have been damaged or prejudiced thereby. Had the payees presented the checks for payment and discovered that there were insufficient funds to cover payment of the checks, there would be merit in the plaintiffs’ contention. The checks, however, were not presented for payment by the payees, but were indorsed and returned to the drawer for full considerations. In consideration for the indorsement and return of the Van Tassell check, the lower court found that Lewis paid to the Meisters $10,000 for and on behalf of the plaintiffs and at their instance and request, and that the Meisters credited that amount on the purchase price of the Meister farm. What consideration the Meisters received for their indorsement and return of the check presented to them does not clearly appear from the record, although the trial judge, as indicated in his memorandum of decision, was of the opinion that the in-dorsement and return of the check was, partially at least, in payment of Lewis’s commission for handling the sale of the Meister farm. At any rate, that question need not concern us in this action if the Meisters credited the Van Tas-sells with $10,000 upon the purchase price of the farm.

The plaintiffs deny that Lewis paid $10,000 to the Meisters for and on their behalf and at their request, and assert that the lower court erred in so finding. The trial judge arrived at that finding because he was unable to find from the evidence that $20,000 had been paid to the Meisters as recited by the agreement of December 27, 1947, exclusive of the $10,000 payment allegedly made by Lewis on the Van Tassells’ behalf. The written agreement of December 27th as originally drawn provided for a payment of $25,000 to be made by the purchasers upon execution of the agreement. However, that provision was altered and by interlineation it was provided that $20,000 was to be paid upon execution of the agreement and that payments of $2,500 were to be made on January 5, 1948, and on May 5, 1948, in addition to monthly payments of $1,000, which were to be made commencing on February 1, 1948. Carl Van Tassell testified that the Meisters received: (1) a personal check for $500 from himself; (2) $4000 which Carl received from the sale of certain hay to Lewis; (3) $5500 which Gail Van Tassell paid in cash; and (4) $2500 which the Van Tassells borrowed from Lewis and gave a personal note therefor. It appears, however, from Gail Van Tassell’s testimony that this latter amount was paid sometime in the middle of January and that it was the January 5th payment of $2500 referred to in the written agreement. Thus it appears that on December 27, 1947, the Meisters did or had received Carl’s check for $500, the $4000 from the sale of hay and the $5500 which Gail contributed. These sums total $10,000 and it is reasonable to infer that the remaining $10,000 which the Meisters acknowledged receiving was the $10,000 which Lewis claims to have paid the Meisters on the Van Tassells’ account.

In order for the plaintiffs to prevail in this action brought by them to cancel their deed to the Duchesne property on the ground that there has been a failure of consideration for the conveyance, it is incumbent upon them to demonstrate that they have not received everything that they bargained for as 'payment for that property. Let- us assume for the sake of this discussion that if it can be found from the evidence that there remains a promise unperformed on the part of Lewis, which promise constituted a part of the consideration for which the plaintiffs made the conveyance, then the plaintiffs are entitled to judgment in their favor.

Lewis contends that in consideration for the conveyance of the Duchesne property he promised to do the following and nothing more: (1) pay $10,000 to the plaintiffs, and (2) discharge by payment an $8000 note and mortgage on the property upon which the plaintiffs were obligated to Robert and Arvin H. Moon. The lower court found that Lewis had performed these two promises, and as it has been heretofore pointed out, there is competent evidence to support that finding. On the other hand, the plaintiffs contend that in addition to the above two promises, Lewis promised them in consideration for the conveyance that he would see to it that they received a “permanent” or final contract, to purchase the Meister farm, along with abstracts of title, and that the “permanent” contract, with the deeds to the Meister prop-ery, would be placed in escrow in a local bank in California. By a “permanent” or final contract, the plaintiffs have reference to a contract in which all the real and personal property comprising the “Meister farm” would be specifically enumerated and described. Lewis did not deny making the plaintiffs this promise, but contends that it formed no part of the consideration for the conveyance of the Duchesne property.

Assuming only for the purposes of argument that Lewis promised the plaintiffs that they would receive a “permanent” contract of purchase to the Meister farm and that the “temporary” contract of purchase which they entered into with the Meisters on December 27, 1947, would not have been specifically enforceable in equity because the property to be bought and sold was not adequately described in the contract, we are convinced that the failure of Lewis to perform that promise did not constitute a failure of consideration for the conveyance of the Duchesne ranch.

There is no evidence, nor can it be inferred from any evidence, that the conveyance of the Duchesne property to Lewis was in consideration of Lewis’s promise to secure for Carl and Gail Van Tassell a “permanent” contract of purchase to the Meister farm and abstracts of title thereto. On the contrary, it conclusively appears that the contract for the sale and purchase of the Duchesne property between the plaintiffs and Lewis had been made and partly performed before Gail and Carl Van Tassell went to California with Lewis to negotiate for the purchase of the Meister farm, at which time Lewis purportedly made his promise. The most that can be said in favor of the plaintiffs is that the sale of their farm in Duchesne County was in anticipation or in contemplation of the purchase of the Meister farm. They needed the money derived from the sale thereof to meet the down payment on the Meister farm. But “in anticipation of” and “in contemplation of” are not synonomous with “in consideration of.” The latter has a technical meaning in contract law denoting that which supports or gives validity to the contract; that which supports the meeting of the minds.

As has been seen, on December 26, 1947, the plaintiffs executed the deed to their Duchesne ranch and delivered it to Lewis. Lewis, in accordance with the contract of sale, presented Carl Van Tassell with a check for $10,000. Carl thereupon indorsed his name and his wife’s name upon the check and handed it back to Lewis. In consideration for the return of the check indorsed by the payees, Lewis drew another check for $10,000 upon his account, making it payable to the Meisters. With this check in his possession, Lewis, with the Van Tassell men, flew to California to close negotiations for the purchase of the Meister farm. Lewis was acting as a holder of the $10,000 for the plaintiffs. Lewis recognized that the $10,000 of which he had the possession did not belong to him, but to the plaintiffs, because prior to leaving for California, he placed the $10,000 check which he had drawn payable to the plaintiffs and which Carl had endorsed back to him, along with the deed to the Duchesne property, in escrow with an agreement signed by Carl and himself that if Carl were killed in the airplane flight to California, the $10,000 of which Lewis had possession should be returned to Carl’s wife. The trial judge in his memorandum of decision stated that it was not clear whether the escrow agreement provided that the $10,000 or the deed to the Duchesne property was to return to Carl’s widow in the event of Carl’s death. The only evidence on that point is found in the deposition of Lewis which was taken prior to the trial wherein Lewis stated twice that it was the $10,000 which was to be returned to Carl’s wife in the event of his death en route to California. There is no evidence that it was the deed. Thus it is clear that it was the intention of the parties that if Carl were killed in an airplane disaster on the way to the Meister farm, Lewis should pay to Carl’s wife the $10,000 of which he held possession, but which belonged to the plaintiffs, and that negotiations for the purchase of the Meister farm would be abandoned. Nothing more can be found in the evidence to have been embraced in that agreement.

When Lewis and Carl and Gail Van Tassell arrived in California, they met with the Meisters and the Meisters’ attorney, and a contract for the purchase of the Meister farm was entered into. In this contract, the property was referred to generally as the “Meister Dairy Farm” and no attempt was made to specify or describe the realty and personalty with detail which was to be transferred by the sale. According to the plaintiffs, Carl and Gail signed this agreement only after Lewis assured them that when their wives came to California later on, a “permanent” contract would be drawn up between the parties in which the property comprising the Meister farm would be specifically described and enumerated, that abstracts of title to the realty would be furnished to the Van Tassels, and that the “permanent” contract, along with the deed to the Meister farm, would be placed in escrow in a local bank. Contemporaneously with the signing of this “temporary” contract, Carl and Gail Van Tassell paid the Meisters $20,000 to apply on the purchase price of the farm. The Van Tassels were credited with payment of this amount in the “temporary” contract. Included in the $20,000 payment was the $10,000 of which Lewis held possession for the plaintiffs. Lewis presented to the Meisters the $10,000 check which he had drawn payable to them, and after giving the Van Tassels credit therefor on their contract, the Meisters endorsed the check and handed it back to Lewis, presumably to apply on the payment of his commission.

Was the promise made by Lewis to obtain for Carl and Gail Van Tassell a “permanent” contract, accompanied by necessary abstracts of title, and to place the contract in escrow with deeds to the Meister farm, any part of the consideration for the sale of the Duchesne property? It is evident that it was not. As has been seen, Lewis purchased the Duchesne property from the plaintiffs in order that they could raise the funds necessary to make a down payment on the purchase price of the Meister farm. When Lewis left Utah for California with Gail and Carl, the contract for the sale and purchase of the Duchesne property was made and had been performed in part. The plaintiffs had executed and delivered the deed to Lewis and Lewis had given the plaintiffs a check for $10,000. All that remained to be done to complete performance of the terms of the sale, was the discharge of the $8000 note and mortgage upon which the plaintiffs were obligated. Lewis paid and discharged that obligation when he returned from California. The sale of the Duchesne property was not even so much as subject to a condition subsequent. There was no agreement that in the event of Carl’s death en route to California, the sale of the Duchesne property would be canceled and that Lewis would return the deed to Carl’s widow. As has been pointed out, the only agreement made after the contract for the sale of the Duchesne property had been made was that if Carl were killed in flight to California, Lewis would give to his widow the $10,000 of which he held possession, but which belonged, of course, to the plaintiffs. This was a very natural agreement. If Carl were killed, Carl did not wish Lewis to continue negotiations for the Meister farm, but desired that the proceeds from the sale of the Duchesne property be given to his widow. In no event was Lewis under a duty to return the deed to the Duchesne property to the Van Tassels. That contract of sale was made and performed in all respects except for the payment of the note and the mortgage to the Moons.

It may be true that Carl instructed Lewis to pay the Meisters the $10,000 on his behalf only after Lewis promised them that he would see to it that they obtained a “permanent contract” and abstracts of title and an escrow arrangement. But under no theory can this promise of Lewis relate back and become part of the consideration for the sale of the Duchesne property to Lewis. The contract for the purchase and sale of that property had been made and acted upon by the parties before they ever left Utah. Nothing promised by either party after that contract was made could become part of the consideration for the conveyance of the Duchesne property. Promises which Lewis made to the Van Tassels in California are enforceable only if the Van Tassells furnished some new consideration therefor. When Lewis allegedly made his promise, the plaintiffs were under contract to convey to him the Duchesne property for an agreed price. Under no conceivable theory can the doing of an act which a party is already obligated to do, constitute the consideration for a new promise on the part of the other party. When the parties left Utah the contract for the purchase and sale of a Duchesne property was made and partially performed. It cannot be said that it was the intention of the parties at that time that if for any reason no contract of purchase of the Meister property was entered into, the deed to the Duchesne property would be returned to the plaintiffs and the $10,000 returned to Lewis. On the contrary, as has been pointed out, it was the parties’ intention even in the event of something as disastrous as Carl’s death on the way to California, that the sale of the Duchesne property was not to be canceled, but Lewis was simply to give Carl’s wife the money which he held belonging to them.

We are powerless under the pleadings here to help the Van Tassels out of the predicament in which any lack of diligence and misplaced confidence may have placed them. Whether Lewis is liable to the plaintiffs on this promise upon the strength of which they parted with their money before obtaining abstracts of title which would have revealed that the title to the Meister farm was encumbered, or under some theory that he was an agent for the plaintiff in the Meister transaction as well as for the Meisters and that he had failed to perform his duty as such agent, is not before us for decision and consequently we express no opinion thereon. Certain it is that in his deal with the Van Tassells, Lewis was acting not as agent for the Van Tassells, but as a buyer himself. That Lewis may have bought the Van Tassell farm in order to furnish the Van Tassels with funds because he, Lewis, was financially interested in having the Meister deal completed may be admitted, but this does not change the situation. This was not a trade of the Van Tassell property for the Meister property with Lewis acting as agent for both parties in that trade. All we need here decide is that Lewis’s promise to secure a “permanent contract” for the Van Tassells formed no part of the consideration for the conveyance of the Duchesne property.

The plaintiffs further contend that the lower court erred in finding that Elda Van Tassell ratified the endorsement of her name by her husband upon the $10,000 check drawn by Lewis upon which she was a co-payee with her husband. The trial judge found that the indorsement of Mrs. Van Tassell’s name was unauthorized although the defendants produced testimony that Carl represented to Lewis that he had a power of attorney from his wife to indorse her name on the check. The trial judge based his finding of ratification by Mrs. Van Tassell upon the following factors: (1) it is admitted that when she signed the deed to the Duchesne ranch, thereby releasing her statutory interest in the property, she knew her husband was to receive $10,000 and that Lewis was to assume payment of the mortgage thereon, (2) she also must have known that the proceeds for the sale were to be used in acquiring the Meister property because her husband and Gail Van Tassell left immediately after the deed was executed to take possession of the Meister property and she planned to join her husband soon in California, and (3) there is no evidence that at any time she made an inquiry as to the whereabouts of the $10,000, and from February to April, 1948, she lived on the Meister farm with her husband and accepted the benefits of the purchase contract, but made no attempt to repudiate the act of her husband.

We are convinced that the lower court did not err in finding that Mrs. Van Tassell ratified the indorsement of her name by her husband. Before an act can be ratified, the ratifying party must, of course, have knowledge of the unauthorized act. While it may be true, as Carl testified, that he did not tell her that he had indorsed her name on the check until after they returned from California, it is only reasonable to infer that she knew from the inception of the plan that the $10,000 derived from the sale of the Duchesne ranch was to be applied on the purchase price of the Meister farm. Since she had an interest in the $10,000 and it can be fairly inferred that she knew it was to be used in purchasing the Meister farm, a ratification is made out.

There was no error in the lower court’s refusal to adjudicate rights between the parties arising out of Lewis’s purported promise to obtain for the plaintiffs a permanent purchase contract. As indicated by the trial judge, there is no pleading upon which the court could consider that question. The sole question raised by the pleadings was whether there had been a failure of consideration or á failure of performance for the conveyance of the Du-chesne property. That question was properly resolved in favor of the defendants since they had discharged the mortgage upon the ranch and had paid to the Meisters $10,000 for and on behalf of the plaintiffs. We refrain, too, as did the lower court, from expressing any opinion as to the rights of the plaintiffs to recover from the Meis-ters any part of the purchase price of the Meister farm which they have paid.

The judgment below is affirmed. Costs to the respondents.

PRATT, C. J., and LATIMER and McDONOUGH, JJ., concur.