Jones v. Higgins

• Decision Date: 05 October 1882
• Citation: 80 Ky. 409,4 Ky.L.Rptr. 390,4 Ky.L.Rptr. 346
• Parties: Jones, & c., v. Higgins, & c.
• Court: Kentucky Court of Appeals

80 Ky. 409

4 Ky.L.Rptr. 390, 4 Ky.L.Rptr. 346

Jones, & c., v. Higgins, & c.

Court of Appeals of Kentucky.

October 5, 1882

1. There was no privity of contract between Jones and Gano except such as the law created by reason of the latter's undertaking, upon the consideration moving from Jones, to pay the Higgins debt.

2. The law implies a promise in such a case, but the agreement may be canceled by the act of the parties creating it before its acceptance by the party for whose benefit it was made.

3. There is no reason why the parties who made the contract should not speak as to its terms, and their action in reference to it before its acceptance by the creditor of Jones, and if they show that the contract did not exhibit the true meaning of the parties to it, they had the undoubted right to abandon it before its acceptance by the appellee.

APPEAL FROM GARRARD CIRCUIT COURT.

BRECKINRIDGE & SHELBY, BURDETT & HOPPER, W. G. WELCH, AND A. DUVALL FOR APPELLANT.

1. That the deed between Jones and Gano did not correctly state the contract in reference to the debt due to appellee Higgins, as clearly pleaded and proved.

2. The sole object of the record of a deed or mortgage is constructive notice of its contents to all subsequent purchasers and mortgagees. (Jones on Mortgagees, sec. 557.)

3. The decision of the court below gives appellee, by substitution what he is not entitled to. Neither subrogation nor substitution has any application to this case. (1 Story's Eq., sec. 635.)

4. There is no privity between Gano and Higgins. (Wortly v Tuggle, 4 Bush, 169; 1 Johnson's Ch'y, 585; 8 Otto, 88, 91; Ib., 82, 83; Winlock v. Hardin, 4 Litt., 274; Bigelow on Estoppel, 289; 2 Bouv. Dic., 556; Gen. Stat., chap. 22, sec. 1; 47 N.Y. 491; Wash. on Real Prop., 590; 2 J. J. Mar., 2; 8 Otto, 123.)

W. O BRADLEY AND WM. LINDSAY FOR APPELLEES.

1. Gano did not agree with Higgins to pay Jones' debt, but with Jones to pay his debt to Higgins, and therefore the agreement was not within the statute. (North v. Robinson, 1 Duv., 93; 7 Bush, 457.

2. The case of Conway v. Bank of U. S. has no bearing upon this case. It was overruled in Moberly v. Smith, 10 B Mon., 270; Ward v Bank of Ky., 14 B. Mon., 253.

3. The proof is clear that there was no mistake. (Williams v. Jones, 3 Mar., 302; Bigelow on Estop., 267, 300, 301; 5 B. Mon., 323.)

4. The record shows that the deed between the parties is fraudulent. (7 Mon., 482; 3 Dana, 510; 8 Dana, 80; 9 Ib., 450; Litt. Sel. Cas., 461; 5 J. J. Mar., 554.)

5. It shows that the deed was fraudulent and void because of a secret trust entered into between Gano and Jones. (White v. Graves, 7 J. J. Mar., 522; Trimble v. Ratcliff, 9 B. Mon., 513; 17 Ib., 307; 3 Mon., 4.)

6. In this state of case Gano should be postponed until appellees' debt is paid. (White v. Graves, 7 J. J. Mar., 526; 4 Mass. 357; 2 Pick., 137; Wright v. Wright, 2 Litt., 12; 4 Barb., 280.)

7. Gano being a non-resident, a return of nulla bona was not necessary. (1 Litt., 508.)

8. The deed is absolutely void. (Gen. Stat., 488; Worland v. Hatten, 3 Dana, 478.)

OPINION

PRYOR JUDGE:

This case was once affirmed by a divided court, and a rehearing granted, the case again argued, and is now under submission for the second time. One of the appellants, B. M. Jones, being desirous of raising money to relieve him from pecuniary embarrassment, applied to his friend, R. M. Gano, to assist him in borrowing the money. The amount needed was ten thousand dollars, and by a negotiation began by the appellant, R. M. Gano, and concluded by both Gano and Jones, the money was obtained from the appellee Higgins for the period of three years, the note, however, to mature sooner upon the failure of Jones, the borrower, to pay the annual interest. The note of Jones was executed for the money on the 2d of November, 1874, and a mortgage executed on a portion of what was known as the home farm of Jones to secure the debt. The home farm contained over six hundred acres, and was made up of smaller tracts purchased by the mortgagor. One of the tracts was known as the Mullins tract, and the other as the Turner tract, the entire quantity of the land mortgaged being four hundred and thirty-four acres, and described by metes and bounds.

Jones being indebted to Gano in or about the sum of ten thousand dollars, and the latter being desirous of securing his debt, purchased, as is alleged, of Jones the entire home farm, including the boundary mortgaged to the appellee Higgins, for the sum of twenty thousand dollars cash in hand paid, and obtained from Jones a deed. Ten thousand dollars of the consideration expressed in the deed was the debt due by Jones to Gano, and " the remaining ten thousand dollars being money borrowed of Charles V. Higgins, which R. M. Gano shall pay, and release this land of a mortgage held by said Higgins for ten thousand dollars, for which said Higgins holds my note, and receipt of which is hereby acknowledged, & c., do bargain, sell, and convey to R. M. Gano the following tract of land, containing six hundred and sixty-one acres, more or less." This conveyance was made on the 4th of November, 1874, but was not recorded or lodged for record until the 21st of June, 1877. Jones failed to meet his obligation to the appellee Higgins, and the latter, on the 12th of July, 1877, instituted this action in the Garrard circuit court to foreclose his mortgage, and to make Gano personally liable for the amount of the debt, interest, and costs, or for any deficit that might remain after the sale of the land. By an amended petition, subsequently filed, he alleges that, at the time he loaned the money, Gano represented that the brick dwelling on the home farm was embraced by the boundary of the land mortgaged, and that the land was worth forty dollars an acre, and but for these representations made by Gano, and known by the latter to be false, he would not have made the loan; that the land is not worth really more than fifteen dollars an acre. He further alleges that the conveyance to Gano was fraudulent, and asks that his mortgage may be re-formed so as to embrace the brick dwelling, or that he have judgment against Jones and Gano for the difference in value by reason of the brick dwelling being without the boundary. In his original petition he states that he would have enforced payment of his debt at the end of the first year if he had not been satisfied that for any deficiency in said land the said Gano, under the terms of his deed from Jones, was responsible, and by an amended pleading says that Gano promised to sell the lands of the appellant Jones and pay his debts, and that he would be invested with title for that purpose.

Gano filed an answer controverting all the charges of fraud, denying that he made any representation as to the value of the land, or that the brick house was within the boundary, as he did not know what part of the home farm Jones intended to mortgage; that he likely stated that some of the land was worth thirty-five or forty dollars per acre, but advised the appellee to make inquiry in regard to it; says that it was worth at the time thirty or thirty-five dollars an acre. He further denied any liability to the appellee by reason of the conveyance, and for further defense pleaded that his only purpose in obtaining the conveyance was to secure himself, and to aid the appellant Jones in paying his debts; that he purchased really only the balance of the home tract, and the contract in fact was that " he was to pay Jones $10,000 cash for all the land not embraced by the mortgage, and was to have the privilege of paying the debt to the plaintiff Higgins, provided he could raise the money, and he was not to be bound to pay the debt and take the mortgage land, but took the same subject to the mortgage of Higgins; " that by mistake of the draftsman the agreement was omitted, and he notified Jones, before his note fell due to Higgins, that he could not take the land. He asks that the deed be re-formed, and makes both Jones and Higgins defendants to his cross-petition.

The principal question in the case arises with reference to the clause in the deed requiring the payment by Gano of the Higgins debt.

It is evident, from the testimony in the case, that neither Jones or Gano supposed they were creating a liability on the part of Gano to Higgins by which the latter could enforce payment of the ten thousand dollar note, and while the promise to pay the Higgins debt, based on the conveyance to Gano of the land, would authorize the institution of an action upon it by Higgins, it is evident the intention of the parties to the contract or conveyance must be considered for the purpose of determining whether the language used in the deed expresses the real contract between them. There is no ambiguity on the face of the instrument, and the only question here is, did the deed contain the true contract, and was it abandoned, or Gano released from liability before the institution of the action by the appellee?

There was certainly no actual privity of contract between the appellant Gano and the appellee, except such as the law created by reason of his undertaking, upon the consideration moving from Jones to pay the Higgins debt. The law implies the promise in such a case, but the agreement may be canceled by the act of the parties making it before acceptance by the party for whose benefit it was made; and if so, there is no reason why the parties making the contract should not be allowed to speak as to its terms and their action in reference to it before its acceptance. If they act in good faith, and with no fraudulent purpose, we know of none more...