Gulf South Capital Corp. v. Brown

• Decision Date: 14 March 1966
• Docket Number: No. 43845,43845
• Citation: 183 So.2d 802
• Parties: GULF SOUTH CAPITAL CORPORATION v. M. M. BROWN, Executor of Estate of Selma L. BRYAN, et al.
• Court: Mississippi Supreme Court

Page 802

183 So.2d 802

GULF SOUTH CAPITAL CORPORATION v. M. M. BROWN, Executor of Estate of Selma L. BRYAN, et al.

No. 43845.

Supreme Court of Mississippi.

March 14, 1966.

Harvey H. Hutchins, Long Beach, for appellant.

Morse & Morse, Gulfport, for appellees.

ETHRIDGE, Chief Justice.

This is a suit by the buyer for breach of contract for purchase of a hotel and other real property. It involves, among other issues, whether the buyer committed a material breach and repudiated the contract, so as to justify the seller rescinding it. Appellant, Gulf South Capital Corporation (called Gulf South), brought this action in the Circuit Court of Harrison County against M. M. Brown, executor of the Estate of Selma L. Bryan, deceased, the Estate of Bryan, M. M. Brown personally, and the surety on the executor's bond. The circuit court rendered judgment for the defendants, and we affirm.

Joseph C. Canizaro was president and apparently controlling stockholder in Gulf South. He negotiated with Brown, executor of the estate, and L. C. Corban, Jr., the executor's attorney, for the purchase of the Bryan Motel on the Gulf Coast. Canizaro and Brown thought they had agreed on the terms of the sale of this property by the estate to Gulf South. On June 17, 1964, Canizaro drafted and brought to Corban a sale contract. Brown returned to Texas, and told Corban that, when the contract was prepared and the earnest money put up, he was authorized to sign it for him as executor. The will gave the executor a power of sale. Corban then called Brown and told him that the contract was in accordance with their agreement, so Brown authorized him to sign it. Gulf South executed the contract by Canizaro, and the Bryan Estate under the name of Brown by Corban, attorney for the estate.

The contract is ambiguous in a number of particulars. The estate agreed to sell the property to Gulf South, and the latter would make all payments necessary to a savings and loan association, the first mortgage holder, 'in order to bring the said loan up to date.' Gulf South agreed to 'honor Curro's agreement regarding payment of an additional one and one-half percent interest on whatever balance remains in the estate's escrow savings account.' This was a collateral cash deposit with the first mortgage holder. Gulf South agreed to place its deed in escrow and to execute a $140,000 second mortgage in favor of the Bryan Estate, for the purpose of securing the $140,000 balance retained by the first mortgage holder. The estate reserved the right to approve the assignee of Gulf South, which agreed to close the sale within twenty-four hours after the estate gave notice in writing that it had title and was prepared to execute a deed to the purchaser. It was stated that, if the estate required more time, 'the purchasers agree to close as soon as the Bryan Estate by court approval can execute the said deed.' The underlined phrase was inserted in the typewritten copy in ink. The contract did not provide that Gulf South would assume the first mortgage, and did not state the total purchase price.

The next day, June 18, Corban received from Canizaro Gulf South's check payable to Corban's trust account for the estate, in the amount of $2500. Canizaro had typed on the bottom of the check the following:

Good Faith Deposit on purchase agreement to buy Bryan Motel. This deposit returnable in the event good title cannot be conveyed to Gulf South or its assigns as specefied in agreement dated June 16, 1964 or if suitable agreement cannot be reached on eliminating Materials Lien recorded against property by James J. Curro. It is understood that the mortgage being assumed to be for less than $350,000. and no other obligations other than those mentioned in agreement are being assumed.

The quoted part of the check, made by Canizaro, identified the $2500 as 'a good faith deposit on purchase agreement.' It referred to the first mortgage as 'the one being assumed.' And it added a provision the check was returnable 'if suitable agreement cannot be reached on eliminating materialman's liens' of Curro, a former owner. This recorded lien was in the amount of approximately $50,000. It was a material, substantial condition added by Gulf South to its purchase agreement of the day before.

Corban testified that Canizaro knew the conditions under which Curro filed his lien and agreed to take the property with that defect in title. The contract of June 17 made no reference to it. Corban said that Canizaro agreed to put up $2500 as an earnest money payment. Although Canizaro denied this, the recitation on the check written by him is undisputed documentary evidence that he agreed to that effect. When Corban advised the executor about this additional condition concerning Curro's lien in the check, the executor told him it was not acceptable, and instructed Corban to return the check. Corban did this, and on June 24 he and Canizaro discussed the matter. Corban said that Canizaro told him he had received the check, and that certain financing arrangements of Gulf South had fallen through and 'the transaction would have to be called off.' Canizaro denied this, but admitted that he had to get financing, and there was a delay in obtaining it. Around August 1 M. M. Brown, executor, reached an agreement to sell the property to another company, at which time he found that Canizaro had added an acknowledgment to the contract of June 17 and recorded it. Brown tried to get Canizaro to execute a release, but he refused. This was the first time, according to...