Gibbs v. Wallace

• Court: Colorado Supreme Court
• Writing for the Court: HILL, J.
• Citation: Gibbs v. Wallace, 58 Colo. 364, 147 P. 686 (Colo. 1915)
• Decision Date: 05 April 1915
• Docket Number: 7495.
• Parties: GIBBS et al. v. WALLACE et al.

147 P. 686

58 Colo. 364

GIBBS et al. v. WALLACE et al.

No. 7495.

Supreme Court of Colorado, En Banc.

April 5, 1915

Error to District Court, Rio Grande County; Charles C. Holbrook Judge.

Action by George A. Gibbs and another, as Gibbs & Son, against Robert B. Wallace and another. Judgment for defendants, and plaintiffs bring error. Reversed and remanded, with instructions.sufficient.

Jesse C. Wiley, of Del Norte, and Horace N. Hawkins and Stephen W. Ryan, both of Denver, for plaintiffs in error.

Jesse Stephenson, of Monte Vista, and Goudy & Twitchell and J. H Burkhardt, all of Denver, for defendants in error.

HILL J.

This action was by the Gibbses to compel the Wallaces to accept a certain sum as due from the Gibbses on a note payable to the Wallaces, and to surrender the note, also to reassign and deliver a certain contract for the purchase of land by the Gibbses from a railroad company assigned to the Wallaces as security for the payment of this note.

The complaint alleges the execution of sundry instruments and conveyances between the parties and the facts following whereby it was alleged that the Gibbses were entitled to this relief. In their answer, the Wallaces admit the execution of these instruments, but allege that, regardless of the language in the contract and the deed to certain Kansas land given by the Gibbses to the Wallaces, it was agreed, in the event this land was taken by the Wallaces as part payment of their indebtedness, the amount of an incumbrance existing thereon at the time the deed was executed should be deducted from the price at which it was to be taken. The deed states that the grantees assume and agree to pay this incumbrance, but the Wallaces, in their answer, allege that by mutual mistake this portion of their contracts, by which this deduction of the Kansas incumbrance was to be made, was omitted from the instruments, etc. They also allege that the Kansas land, as well as the railroad land which is in Colorado, was taken for security only. They ask for an accounting, for reformation of the instruments, and that both tracts of land be ordered sold, etc. Trial was to the court, which found that all the property had been pledged as security only for the debt; that the deed for the Kansas land was intended as a mortgage; that the debt had never been paid; that the amount due was $15,319.96. On this finding decree was entered which provided that the Kansas land, as well as the contract for the railroad land, be sold. The sheriff of Rio Grande county was appointed to make the sale. The decree commands that the Gibbses should also execute and deliver a quitclaim deed to the Kansas land to the grantee named in the sheriff's deed. The Gibbses bring the case here for review.

The contract, under which the deed to the land was executed, sets forth that the Gibbses had conveyed the Kansas land to the Wallaces and had executed their note to them for $10,750, due in three years, with interest at 6 per cent.; that the Gibbses should have possession during said period or until sold as therein stipulated. Also it, in part, reads:

'But in case said parties of the second part (the Gibbses) fail to either sell said lands or pay their said promissory note as aforesaid, then in that case the title of said above-described lands shall be and remain in the said parties of the first part (the Wallaces) and said parties of the second part shall be credited on their said promissory note the sum of eleven thousand two hundred dollars.'

The Wallaces urge that this was an attempt to fix the rights of the parties in the event that the Gibbses should fail to either sell the land or pay their note; that the deed was in fact intended as a mortgage; that the clause in the contract, whereby the Gibbses agreed to cut off their right of redemption, was invalid. Assuming that this is correct, it should not defeat that portion of the contract whereby the Wallaces agreed that, in case this land was not sold prior to the expiration of the three years, they would take it, and credit the Gibbses with $11,200 upon their note when the Gibbses were not seeking to take advantage of that clause, and when their action in tendering to the Wallaces an amount in payment of the balance after this credit is given and their demand for the credit and the cancellation of the note would be a consideration for the subsequent transaction sufficient to vest the title in the Wallaces. Wynkoop v. Cowing, 21 Ill. 570. These acts would also estop the Gibbses from claiming that the deed did not convey a good title to the property. 16 Cyc. 802-805; volume 2, Jones on Mortgages (5th Ed.) § 1050.

We cannot agree that the declaration of absolute title at a certain date was the real or any material consideration for the execution of the instruments by the Wallaces; but, to the contrary, the record discloses that, at the time of the execution of these instruments, the Wallaces were anxious to secure the title to this land as security for the amount then owing them by the Gibbses, and, as one of the inducements to thus pledge it, they agreed, in case the Gibbses failed to pay the note, that they would take the land at $11,200 and credit this amount upon the note. This was a material inducement for the Gibbses to enter into the contract because at the time of its execution they had never seen the land, but one of the Wallaces had inspected it for them, and it was upon the strength of his report and recommendation that they accepted it in a trade. Under such circumstances, in order to get it pledged to them as security, the Wallaces agreed that, under certain conditions which might arise, they would take it and credit the Gibbses $11,200 on their note, and we see no reason why they should not be held to the terms of their contract in this respect. The real consideration for this agreement to purchase and indorse was the pledging of the security. This consideration has not failed and did not lack mutuality. As sustaining this conclusion, we call attention to the following authorities: 9 Cyc. 327; volume 1, Page on Contracts, § 302; Bryant v. Gale, 5 Vt. 416; Spear v. Orendorf, 26 Md. 37; Turpie v. Lowe, 114 Ind. 37, 15 N.E. 834; Montgomery L. & P. Co. v. Montgomery Traction Co. (C. C.) 191 F. 657; Hayes v. O'Brien, 149 Ill. 403, 37 N.E. 73, 23 L.R.A. 555.

We further call attention that the record discloses that this alleged lack of mutuality was not the reason why the Wallaces refused to comply with this provision. Neither did they object because the Gibbses had failed to tender a quitclaim deed when demanding that the indorsement be made, and no such deed was ever requested, but, to the contrary, the ground for their refusal was the contention which had arisen over the $2,500 first mortgage. In commenting upon this, counsel for the Wallaces, in part, say:

'The Gibbs, to use a slang phrase, tried to 'put one over' on the Wallaces by having them assume the $2,500 mortgage in the deed. If this trick had not been played on the Wallaces, or if the Gibbs had not tried to overreach them, there would never have been any question in this case. The Wallaces would have taken the land at $11,200, free from the mortgage, and have credited that amount on the Gibbs note, upon the Gibbs giving to them a subsequent deed for their equity of redemption. * * * The Wallaces have always stood ready and willing to take over the Kansas land for $11,200, clear of the mortgage, and are now ready and willing to do so, but, instead of so doing, the Gibbs are insisting, contrary to the terms of the contract alone, but relying upon the clause in the deed, improperly put there by the attorney for the Gibbs, that the Wallaces should take over the Kansas land at the excessive price of $13,700, or, in other words, by crediting the Gibbs $11,200 and assuming and paying the mortgage of $2,500.'

In the former opinion, upon account of the error in refusing to recognize as valid the clause to purchase, etc., we reversed the judgment and remanded the cause for a new trial upon this issue of mutual mistake. Upon account of conditions which have...