Fowle v. Lane *

• Citation: 104 S.E. 252
• Court: Supreme Court of Virginia
• Decision Date: 16 September 1920
• Parties: WHITAKER & FOWLE. v. LANE et al.*

104 S.E. 252

WHITAKER & FOWLE.

v.LANE et al.^*

Supreme Court of Appeals of Virginia.

Sept. 16, 1920.

Appeal from Circuit Court of City of Williamsburg and County of James City.

Suit by Whitaker & Fowle against L. W. Lane, Jr., and others, to enjoin the prosecution of actions at law. Demurrer to bill sustained, and bill dismissed on its merits, and complainants appeal. Reversed and remanded.

Williams & Tunstall and T. J. Wool, all of Norfolk, for appellants.

C. V. Meredith, of Richmond, and Ashton Dovell, of Williamsburg, for appellees.

BURKS, J. On October 15, 1917, the appellants entered into a written contract with L. W. Lane, Jr., to purchase of him his tract of land near the city of Williamsburg at the price of $12,500, of which $12,500 was to be paid five days after the date of the contract, and the residue in installments specified in the contract. This contract was complete on its face, and set forth in detail all the essentials of a written contract for the sale of real estate. Notes were executed by the appellants in accordance with the terms of the written contract, and an action was instituted on the note for $12,500 in January, 1918. Another action was also instituted against the appellants by the firm of Land & Christian to recover for money furnished by them for supplies and labor used on the said tract of land. In February, 1918, the bill in the present suit was filed to enjoin the prosecution of the two actions at law aforesaid. The injunction was granted as prayed for, and at a subsequent date the defendants' demurrer to the bill was sustained and the bill dismissed. The correctness of that ruling is dependent upon the allegations of the bill.

The case made by the bill is as follows: The appellee, L. W. Lane, Jr., was president of the Peninsula Bank & Trust Company, hereinafter called the bank. Sometime in the year 1917 the bank desired to increase its capital stock from $100,000 to $500,000, and to change the location of its principal office from the city of Williamsburg to the city of Newport News, and retain a branch office at Williamsburg. The bank entered into an agreement with the appellants, under the style of the Peninsula Finance Corporation, of which they owned all the stock, to sell and dispose of the additional $400,000 of capital stock as soon as its charter had been amended; Lane undertaking to procure the necessary amendment. Acting upon the assumption that the amendment to the charter to the bank would be granted, tentative arrangements were considered with reference to the sale of the additional stock, and the removal of the principal office to Newport News, in accordance with the tentative agreement which had been entered into between the bank and the appellants. During these negotiations it developed that in order for Lane to continue as president of the bank, it would be necessary for him to remove his residence to Newport News, where the principal office was to be located when the proposed amendment became effective, and he then stated to the appellants that his interest was so great in and near Williamsburg that he did not see how he could change his residence from Williamsburg to Newport News unless he could dispose of his farm near Williamsburg, and so important did the appellants consider it that Lane should continue as president of the bank that a conditional agreement was entered into between the appellants and Lane, whereby the appellants were to purchase his farm at a fair and reasonable price and upon terms agreed upon, and Lane was to obtain the necessary amendment of the charter and subscribe to $25,000 of the additional stock of the corporation and make payments therefor as agreed on. Lane was to continue as president of the new bank, and also to assist in the sale of the additional stock without further compensation. This agreement was only to have force and effect when proper authority had been granted by the State Corporation Commission to increase the capital stock of the bank, and when the stock had been actually subscribed. Accordingly the agreement for the purchase of the farm of Lane by the appellants was reduced to writing, and promissory notes were executed in accordance with the terms thereof, and Lane subscribed, through the appellants, to 800 shares of the increased capital stock of the said bank, and gave his promissory note for the sum of $4,000 to represent the first payment thereon. It was understood and agreedat the time the contract for the farm was executed and delivered and when Lane subscribed for the stock that they were parts and parcels of one single contract, and that the contract should only be effective and binding when the amendment of the charter was granted and the stock subscribed for, and, should the said Corporation Commission refuse to grant the amendment, that the contract for the purchase of the farm and the subscription to the stock should be null and void, and that the same, together with the promissory notes given by the parties, were to be canceled and returned with no obligation upon either party. It is also averred that the contract for the purchase of the farm was executed and delivered so as to set forth the terms upon which the farm was to be purchased in the event that the amendment to the charter was obtained, the plan for removal carried out, and Lane made his subscription as aforesaid.

It was further averred in the bill that all of the details of the mutual undertakings of the parties as hereinbefore set forth were fully agreed upon between the appellants and Lane, but that only that part which referred to the purchase of the farm had been reduced to writing, and that the residue had not been put in the contract for the sale of the farm, or in any other writing, upon the express request of Lane because he thought it might in some way affect deleteriously the sale of the stock; that the appellants had suggested and requested that the whole should be set up in one writing, but that the omission was made at the special instance and request of Lane for the reasons aforesaid.

The bill then avers that the Corporation Commission refused to grant the desired amendment to the charter, and that the appellants had returned to Lane his subscription to the increased stock and his note for $4,000, and had requested him to return the contract and notes given for the farm, which he had refused to do, and that he is now seeking to enforce the contract for the sale of the farm and the note given for the cash payment thereon, in contravention of the express agreement of the parties, and the bill asked that the contract for the sale of the farm should be rescinded and declared void, or else that the contract should be so reformed as to set forth the true agreement entered into between the parties, and that in the meantime Lane be enjoined and restrained from further prosecuting his action on the note for $12,500. Lane demurred to and answered the bill at length, denying in detail every material allegation of the bill, and the parties took full proof on the subject. The grounds of the demurrer were: (1) That the bill was multifarious, because it attempts in one suit to enjoin two actions at law in which there were different plaintiffs; (2) because it attempts to vary and contradict by extraneous testimony the terms of the note and of the contract under which the note sued on was given.

In the written opinion, made a part of the record, the trial court sustained the demurrer, and directed that the bill be dismissed and the parties left to their remedy at law. The decree appealed from, based on said written opinion, states:

"Upon consideration whereof, the court being of opinion for reasons stated in writing and filed in the record as a part thereof that the injunction heretofore awarded in this cause should not have been granted, and that the complaint set forth in the bill of complaint is without merit, and that the demurrer be sustained, and the bill dismissed upon its merits, and the parties left to their remedy at law, doth so adjudge, order, and decree, and doth further adjudge and decree that said injunction be, and the same is hereby, dissolved."

It appears from the written opinion aforesaid that the trial court excluded all of the parol testimony of the appellants, and for that reason, not only sustained the demurrer, but dismissed the bill on its merits.

The contract for the sale of the real estate was under seal; the notes given for the deferred payments were not. The complainants, Whitaker & Fowle, do not deny the execution and delivery of the contract and notes aforesaid, but charge that it was agreed that the contract "should only be effective and binding" when the bank was authorized to increase its capital stock to $500,000, and that "should the proper state authorities refuse to grant the amendment * * * the said contract should be null and void, and the same, with the promissory notes given respectively, were to be canceled and returned without any obligation upon either party." If the complainants are permitted to show a delivery of the contract on such condition, and that the condition has not been fulfilled, they will be relieved from liability under the contract without violating the parol evidence rule. The evidence of the alleged conditional delivery was excluded by the trial court. The question, therefore, with which we are confronted is whether or not a contract for the sale of real estate can be delivered by the purchaser to his vendor on condition, and whether or not parol evidence may be received to show that the condition on which it was delivered has not been complied with.

The courts have held, with singular unanimity, that a sealed instrument, and especially a conveyance of land, cannot be delivered to the obligee or grantee upon condition; that words of condition at the time of delivery are inconsistent with the act of delivery, and are as ineffective as if they had never been uttered. The cases...