Hafford v. Smith

• Decision Date: 19 June 1963
• Docket Number: No. 8148,8148
• Citation: 369 S.W.2d 290
• Parties: Curtis B. HAFFORD and Virginia L. Hafford, his wife, Plaintiffs-Appellants, v. Wayne L. SMITH and Connie Smith, his wife, Dave R. Ashmore and Lillian R. Ashmore, his wife, and Joplin Federal Savings and Loan Ass'n., Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 290

369 S.W.2d 290

Curtis B. HAFFORD and Virginia L. Hafford, his wife Plaintiffs-Appellants, v. Wayne L. SMITH and Connie Smith, his wife, Dave R. Ashmore and Lillian R. Ashmore, his wife, and Joplin Federal Savings and Loan Ass'n Defendants-Respondents.

No. 8148.

Springfield Court of Appeals, Missouri.

June 19, 1963.

Max Patten, A. H. Garner, Joplin, for plaintiffs-appellants.

Emerson Foulke, Joplin, for defendants-respondents.

PER CURIAM.

In this case, the appellants (plaintiffs below, and to whom we shall sometimes refer as the plaintiff, or plaintiffs) and respondents Smith (to whom we shall sometimes refer as the defendant, or defendants) exchanged property. In return for a credit toward the purchase of a house trailer, the defendants conveyed their interest (or 'equity') in a small tract of land, and their furniture, to the plaintiffs. The real property, at the time, was subject to two encumbrances, a first deed of trust held by the defendant Savings and Loan Association, which was foreclosed prior to the trial and does not concern us here, and a second deed of trust (to which we shall refer as a mortgage) held by the defendant Ashmore (to whom we shall sometimes refer as the mortgagee). As the conveyance from defendants to plaintiffs was finally recorded, it contained an assumption clause, or 'covenant of assumption,' the effect of which was to make plaintiffs liable for the mortgage debt. The plaintiffs brought this action as an action in equity, seeking to avoid, or be relieved of, any liability under the assumption clause, and joined the Smiths, their grantors, as defendants, along with both lienholders. The trial chancellor has found that plaintiff Curtis Hafford is personally liable, and the plaintiffs have appealed.

The facts are in dispute, and some aspects of the case were not developed in testimony as fully as they might have been. However, from the record before us, it appears that in September 1960, Smith, who was then the operator of a drive-in restaurant, approached Hafford, a dealer in real estate and automobile trailers, about the possibility of exchanging the Smiths' interest in a parcel of real property, and their furniture, for a house trailer. They discussed the proposed transaction on a number of occasions, usually at Hafford's office, and, although the plaintiff vigorously denied having done so, there is evidence indicating that the plaintiff, during these preliminary discussions, had agreed to assume both the mortgage debts, and had called Ashmore to ascertain the amount of Ashmore's lien, asking if the Ashmore note could be purchased at a discount. Plaintiff's testimony in this respect was that he had been aware that there were two encumbrances against the realty but was not aware of the amount due on either. Defendants' evidence, on the other hand, was that they had insisted on Hafford's assuming the outstanding debts against the property, and that his agreement to do so had been a condition of their agreement. Ashmore's testimony tended to confirm this.

On September 15, the parties decided to conclude their transaction, transfer the real property, and deliver the trailer. The parties have laid considerable stress, both during the trial of this action and here, upon the manner of preparation of the deed. While in our opinion the manner in which the assumption clause was inserted in the deed is not controlling, the deed (filed here as an exhibit) does plainly show that the four lines following the description, which constitute the assumption clause or phrase, were inserted on a typewriter different from that used to prepare the rest of the deed, with the exception of the acknowledgment. Following the description, there are words indicating that the deed is executed subject to a deed of trust by the grantors to the defendant Savings and Loan Association, and the deed further recites '* * * subject also to a deed of trust to Dave R. Ashmore and Lillian R. Ashmore, which buyer assumes and agrees to pay.' The deed further shows that it was executed on September 15 and recorded on October 28, 1960.

It was Hafford's position at the trial, and he contends here, that the assumption clause was inserted in the deed without his knowledge or permission and was therefore void. The substance of his evidence on this point was that he, the plaintiff, had instructed his attorney to prepare a deed for the Smiths' signatures, without any mention of the encumbrances and without any agreement whatever to assume payment of the obligations secured. The defendants were to call later at his attorney's office and execute the deed, which was then to be delivered to Hafford. Both the plaintiff and his attorney (who did not represent him at the trial) denied that they had authorized the insertion of any language imposing the obligation of either encumbrance on the grantees, and Hafford's testimony was that he had not noticed the assumption clause for some time after the execution of the deed when Ashmore had demanded the interest on his note, at which time Hafford, attempting to repudiate the transaction, had promptly filed suit. On the other hand, both the defendants and Ashmore testified unequivocally that they had received the deed from the scrivener with instruction, or at least permission, to insert an appropriate phrase showing assumption of both mortgages by the grantees, and that Hafford, upon being notified by telephone that there was no provision for assumption of the encumbrances in the deed as originally prepared, had readily consented to the insertion of an assumption clause. It is undisputed that the four lines complained of were inserted by an employee of the defendant Savings and Loan Association, a Mrs. Duffey, but beyond stating that it was customary to draw a deed in that manner where there was a mortgage against the property being sold, Mrs. Duffey could not recall the transaction.

Hafford then took possession of the real property, the trailer having been delivered about that time, and remained in possession for a matter of several months, possibly a year. During that time, both Hafford and Ashmore made several attempts to sell the property; there is some indication that Hafford made improvements, or did some work on the property during that time, and exhibited the house for sale regularly through a local real estate agency. It was shown that during the interval between September 15, 1960, when the exchange was made, and October 23, 1961, when the first deed of trust was foreclosed, Hafford made several payments on the first deed of trust, and, in his words, offered to pay 'his part' of the interest due on the obligation secured by the second deed of trust. The defendants' furniture, which Hafford had stored in a warehouse, was discovered to be encumbered and was consequently redelivered to the defendants, upon their execution of a note for $350.00 to Hafford, and the defendants were still making payments on this note at trial time. During January, 1961, Hafford had repossessed the house trailer, since the Smiths had moved and were 'showing no interest.' The evidence will be further developed in connection with the questions presented.

The appellants first contend that the agreement to assume the mortgages ¹ was violative of the Statute of Frauds, Section 432.010. ² As we understand their brief, the appellants maintain that since the defendants testified to, and their evidence tended to establish, an oral contract to assume the indebtedness, the contract is unenforceable because the statute requires that a promise to assume the debt of another must be in writing. ³

We are not at all sure that this point is germane to this appeal, for there is nothing in the record to indicate that the trial court based its judgment upon a finding of an oral contract to assume the mortgages. However, in our opinion there is substantial evidence in the record to support a finding that during the course of their preliminary negotiations, Hafford and the Smiths agreed that, in exchange for the defendants' conveyance of their equity of redemption in the land, and their furniture, Hafford was to credit the defendants with a down payment on the house trailer and assume the mortgages. The evidence shows and the appellants, in their brief, concede that these preliminary dealings were had between Hafford and the Smiths, and that Ashmore, holder of the second mortgage, came into the matter subsequently.

In these circumstances, an oral promise by Hafford to assume the debts would not violate the Statute of Frauds. While that part of our statute (Section 432.010) which requires that a promise to answer for the debt of another be in writing appears in terms to apply to a promise made to anyone, it has been consistently held that no writing or other memorandum is required where the promise is made to the debtor himself and not to the creditor. ⁴ In this case, since any oral agreement to assume and pay the mortgages ran between Hafford, the grantee, and Smith, the mortgagor, it was not a promise to answer for the debt of another within the meaning of Section 432.010, and was not, as the appellants contend, unenforceable for that reason. ⁵

The appellants next contend that the deed was never delivered or accepted, and as we understand their brief, it is their position that if the deed were delivered to and accepted by the plaintiffs, then the assumption agreement was inserted in the deed without plaintiffs' knowledge, and therefore the plaintiffs are not liable to the mortgage.

As to the appellants' contention that there was never any delivery or acceptance of the deed, the record shows, and the trial court could have found, that the Smiths and the mortgagee, Ashmore, went to the office of Hafford's attorney on September 15, 1960, when the property was finally exchanged, and discovered that the deed made no provision for Hafford's assumption of the mortgages. Ashmore called Smith's...