Amalgamated Sugar Co. v. Murdock

Decision Date26 April 1928
Docket Number4792
Citation268 P. 12,46 Idaho 157
PartiesAMALGAMATED SUGAR COMPANY, a Corporation, Respondent, v. JOHN MURDOCK and CATHERINE W. MURDOCK, His Wife, Appellants
CourtIdaho Supreme Court

MORTGAGES-FORECLOSURE-REFUNDING AGREEMENT-CONSTRUCTION.

1. Contracts executed at the same time as execution of mortgage and as part of the same transaction and providing that mortgagee would expend balance after paying indebtedness of drainage district in construction and reconstruction of irrigation system held not to require mortgagee to construct a complete irrigation system without further expense to mortgagors, but only that money equal to security given should be advanced to discharge indebtedness of district and repair and reconstruct irrigation system so far as possible with money remaining.

2. Power of canal company operating irrigation system to issue bonds or execute notes and mortgages is not a matter which can be litigated in action to foreclose mortgage on land within district to which canal company was not a party.

3. Agreement executed at time mortgage was given whereby mortgagor agreed to deliver to mortgagee all sugar-beets that might be grown on lands at the current and prevailing prices did not constitute an agreement to allow mortgagors to pay their indebtedness with sugar-beets.

APPEAL from the District Court of the Fifth Judicial District, for Franklin County. Hon. O. R. Baum, Judge.

Action to foreclose two mortgages. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

E. M Holden, for Appellants.

Fraud in the sense of a court of equity, properly includes all acts, omissions and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed and are injurious to another, or by which an undue and unconscientious advantage is taken of another. (City of Clay Center v. Myers, 52 Kan. 363, 35 P. 25; Black's Law Dictionary, 517; 3 Words and Phrases, p. 2944.)

Where a party by misrepresentation draws another into a contract, he may be compelled to make good the representation if that be possible; but if not, the other party may avoid the contract. And the same principle applies although the party making the representation believed it to be true, if in the due discharge of his duty he ought to have known the same. (Pulsford v. Richards, 17 Beav. 87, 53 Eng. Reprint, 965.)

The respondent came into court setting forth in its complaint and disclosing only the notes and mortgages given to it by the appellants, thus giving the impression that the usual and ordinary relation of mortgagors and mortgagee only was involved; there was a total and complete failure on the part of the respondent to allege the existence of the "refunding agreement," the lease and agreement or the escrow agreement; no hint in the complaint of the respondent that it had indirectly saddled approximately $ 29 per acre upon the appellants, in excess of the provisions of the contract, and that it had taken mortgages upon the irrigation system to make absolutely sure of getting the money or the system. He who comes into equity must come with clean hands. He must be frank and fair with the court, nothing about the case under consideration should be guarded, but everything that tends to a full and fair determination of the matters in controversy should be placed before the court. (1 Story's Equity Jurisprudence, 14th ed., sec. 98.)

He who has acted in bad faith, resorted to trickery and deception, or been guilty of fraud, injustice or unfairness, will appeal in vain to a court of conscience, even though in his wrongdoing he may have kept himself strictly "within the law." (1 Story's Equity Jurisprudence, 14th ed., sec. 99.)

Clark, Richards & Bowen and P. M. Condie, for Respondent.

Appellants rely upon alleged fraudulent representations in inducing the contract here sued upon. But the trial court found against appellants upon said issues. The evidence adduced by appellants was contradicted by direct testimony. This court will not disturb the findings and decree of the trial court rendered on conflicting evidence. (Cowden v. Finney, 9 Idaho 619, 75 P. 765; Singh v. McKee, 38 Idaho 656, 225 P. 400; Walling v. McMillan Sheep Co., 40 Idaho 513, 234 P. 152; Markam v. Davey, 42 Idaho 545, 247 P. 12; Taylor v. Taylor, 79 Colo. 487, 247 P. 174; Jackson v. Coon, 118 Okla. 221, 247 P. 27.)

The appellants failed utterly to prove the alleged or any fraud. Fraud is never presumed, but must be proved by clear and convincing proof. (Nelson v. Hudgel, 23 Idaho 327, 130 P. 85; Southern Development Co. v. Silva, 125 U.S. 247, 8 S.Ct. 881, 31 L.Ed. 678, 15 Morr. Min. Rep. 435; Virginia Fire Ins. Co. v. Hogue, 105 Va. 355, 54 S.E. 8; Bannon v. Insurance Co., 115 Wis. 250, 91 N.W. 666; Schmeisser v. Albinson, 119 Minn. 428, 138 N.W. 775.)

An unambiguous contract completely reduced to writing cannot be added to by showing a prior or contemporaneous oral warranty or guarantee. (Seitz v. Brewers Refrigerating Mach. Co., 141 U.S. 510, 12 S.Ct. 46, 35 L.Ed. 837; Wilson v. New U. S. Cattle Ranch, 73 F. 994, 20 C. C. A. 241; Ehrsam v. Brown, 64 Kan. 466, 67 P. 867; Debold Safe & Lock Co. v. Huston, 55 Kan. 104, 39 P. 1035, 28 L. R. A. 53; D. M. Osborne Co. v. Wigent, 127 Mich. 624, 86 N.W. 1022; Thompson v. Libby, 34 Minn. 374, 26 N.W. 1.)

Where the parties have reduced a contract to writing, no parol evidence of matter collateral which does not relate to a subject distinct from the contract can be admitted. (Wiener v. Whipple, 53 Wis. 298, 40 Am. Rep. 775, 10 N.W. 433; McCray Refrigerator etc. Co. v. Woods, 99 Mich. 269, 41 Am. St. 599, 58 N.W. 320.)

The foregoing rule applies also to mortgage and lease contracts. (Nally v. Long, 71 Md. 585, 17 Am. St. 547, 18 A. 811; Baker v. Flick, 200 Pa. 13, 49 A. 349; Stevens v. Pierce, 151 Mass. 207, 23 N.E. 1006; York v. Steward, 21 Mont. 515, 55 P. 29, 43 L. R. A. 125.)

TAYLOR, J. Budge, Givens and T. Bailey Lee, JJ., concur.

OPINION

TAYLOR, J.

The Amalgamated Sugar Company, plaintiff-respondent, brought this action to foreclose two mortgages. The defendants, John Murdock and wife, answered admitting the execution of the mortgages, but alleged three other agreements executed as a part of the same transaction, and that they had been induced to execute the mortgages and agreements by fraudulent representations, alleged an election to rescind, and asked that the instruments be canceled and the action dismissed. This appeal is from a judgment of foreclosure.

The contracts involved are conceded and are:

(1) Two mortgages, securing the payment of two promissory notes representing amounts equal, in the aggregate, to $ 60 an acre for the land of defendants.

(2) A refunding agreement, by which plaintiff agreed to pay the outstanding indebtedness of the district, and--"expend in the investigation, construction and reconstruction of said irrigation system an amount equal to the difference between the said indebtedness of said district . . . . and the principal represented by the aggregate amount of the mortgages of the second parties hereto (defendants) and the mortgages of others who are to remain in said district, or so much of said difference as may be necessary, said construction and reconstruction to be done in accordance with the plans outlined and to be outlined by W. D. Beers, the engineer investigating said work, and said work to be carried on and completed under his direction, or under the direction of such engineer as the first party (plaintiff) may designate."

(3) An agreement and lease whereby defendants agreed to sell to plaintiff all beets grown on their lands at the prevailing price in the locality.

(4) A supplemental agreement providing that all papers executed between the plaintiff and defendants should be placed in escrow, to be delivered to plaintiff upon the approval of the sufficiency of the water supply by the state engineer of Idaho, and interpreting parts of the refunding agreement which had "not appeared to (defendants) as entirely clear."

Defendants alleged that they were induced to execute the mortgages and agreements by false and fraudulent representations: (1) That the plaintiff would construct and enlarge the irrigation system in question for not to exceed $ 60 per acre; and (2) that defendants could pay the mortgages by delivery of sugar-beets; and specify as error that the proof established these false and fraudulent representations, and...

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