Pickens County v. Love
| Decision Date | 21 November 1933 |
| Docket Number | 13721. |
| Citation | 171 S.E. 799,171 S.C. 235 |
| Parties | PICKENS COUNTY v. LOVE et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Pickens County; J. Henry Johnson, Judge.
Action by Pickens County against J. L. Love, as receiver of the Easley Loan & Trust Company and others. From a decree confirming a special referee's report and granting plaintiff a judgment against defendants receiver and others they appeal.
Affirmed.
The report of the special referee is as follows:
The undersigned, to whom the above-entitled case was referred as special referee, begs leave to report that he has held a reference and taken the testimony in this case. The reference was begun on January 8, 1932, and continued from time to time until March 3, 1932, and the arguments were made on March 26 1932. The pleadings, testimony, and exhibits are transmitted herewith.
This is an action brought by Pickens county against the defendants herein named for the purpose of reforming a certain bond (Exhibit 1) executed by the defendants to the Maryland Casualty Company, and asking for judgment thereon in the sum of $72,350.18, with interest thereon from November 9 1929. The bond was given by the Easley Loan & Trust Company and signed by Ralph H. Smith, Lloyd H. Smith, A. F. Wyatt, L J. Smith, and Ida H. Smith, as sureties. The name of Jasper Oates appears on the bond as a surety, but in another case it was decided that Jasper Oates did not sign the bond, so he is not interested in this action. The defendants by their answer admitted paragraphs 1, 3, and 4 of the complaint, and at the beginning of the reference before me admitted paragraphs 2 and 7 of the complaint. This leaves before the referee the issue of whether or not the bond should be reformed and judgment given as prayed for in the complaint.
It is admitted that the Easley Loan & Trust Company was placed in the hands of J. L. Love, Esq., as receiver, on the 9th day of November, 1929, and that Ralph H. Smith and Lloyd H. Smith were duly adjudged bankrupt by the United States District Court for the Western District of South Carolina on the 16th day of December, 1929, and that Cothran C. Graves was duly elected and appointed trustee of the bankrupt estates.
The bond sued on in this action (Exhibit 1) is on a printed form which has printed in it "Maryland Casualty Company" as the obligee. The plaintiff contends that this should be reformed to read "Pickens County" according to the agreement and understanding of all the parties, and that said mistake was a mutual mistake by reason of the fact that the blank form of Maryland Casualty Company was used in the preparation of said bond, and that the name "Maryland Casualty Company" was not erased and the name "Pickens County" inserted in lieu thereof by reason of the mutual mistake of the parties and of the scrivener who drafted the bond. The defendants contend that the bond truly represents the agreement of the parties, and that said bond was given to the Maryland Casualty Company to protect said company in the event that it should become liable on another bond in which said Maryland Casualty Company was surety for Jesse D. Gillespie, county treasurer of Pickens county.
It appears from the testimony, and I find, that Easley Loan & Trust Company was the successful bidder on the loan to Pickens county, and that the bank was to receive, and did receive, the deposits of the county as a result of the loan. All the defendants concerned herein were either officers or directors of said Easley Loan & Trust Company. It further appears that Jesse D. Gillespie, county treasurer of Pickens County, gave Lloyd H. Smith, who was at that time president of the Easley Loan & Trust Company, the blank form of bond which was filled out by a Mr. Davenport under the direction of Lloyd H. Smith. It further appears that the said Jesse D. Gillespie did not have any conversation or agreement with the other sureties on the bond, and that Lloyd H. Smith took the bond to the other sureties for their signatures. When the bond was returned to Mr. Gillespie, he states that he did not read it but merely looked at the signatures. Mr. J. T. McKinney, who was county supervisor for Pickens county at that time, also testified that he did not read the bond. There is not very much testimony as to what occurred between Jesse D. Gillespie and Lloyd H. Smith at the time the blank bond was given to Smith, or at the time the bond was returned by Smith to Gillespie. Gillespie's testimony is to the effect that the bond was given for the purpose of protecting the money that Pickens county had in the Easley Loan & Trust Company, and, further, that the agreement was that it be made to Jesse D. Gillespie, county treasurer. (Page 5 of Gillespie's testimony.) On cross-examination (page 9 of Gillespie's testimony) he testified that that form of bond was required by the bonding company, and that he was carrying out its instructions in asking Mr. Smith to fill out the bond that was executed. Lloyd H. Smith testified (page 25 of his testimony) that Gillespie told him that the Maryland Casualty Company required that the bond be made out on its form, and, after his conversation with Gillespie, it was his intention to draw the bond in favor of the Maryland Casualty Company. None of the other defendants were present at the time this conversation took place.
The plaintiff seeks reformation of the bond. Under the authorities, in order to reform a written instrument it is necessary to show that there was a prior agreement which through mutual mistake was not correctly set forth in the written agreement .
In Newsom v. Norwood, 127 S.C. 162, 120 S.E. 846, 847, the court said: "In order to secure the reformation of a contract on the ground of mutual mistake, it must appear that the omission or insertion was of some element material to and affecting the subject-matter or the terms and stipulations of the contract, and inconsistent with those of the parol contract which necessarily preceded it." See, also, Blassingame v. Greenville County, 150 S.C. 167, 147 S.E. 848; Jumper v. Queen Mab Lumber Company, 115 S.C. 452, 106 S.E. 473, 475.
In the case of Jumper v. Queen Mab Lumber Company, supra, the court enumerates those instances in which a contract may be reformed:
I do not find that there was any fraud, deceit, or misrepresentation in the case at bar, and, if plaintiff is entitled to the reformation asked, it must make it out under paragraphs (1) and (2) above.
In order to reform a contract, the evidence must be clear and convincing. The evidence in this case does not convince me that there was a prior agreement such as the plaintiff seeks to establish in this action. The plaintiff has the burden of proving its case, and the evidence produced at the reference does not convince me that it has done so. From the testimony I am satisfied that Gillespie handed Lloyd H. Smith a blank form of bond of Maryland Casualty Company, and, when it was returned to Gillespie, he merely looked at the signatures. There is not sufficient evidence to convince me that Gillespie had a clear understanding about the bond, and what dealings he had were with Lloyd H. Smith, and this certainly could not be held against the other defendants as there is not sufficient proof of the agency of Lloyd H. Smith. On this issue of the case I find that the plaintiff has failed to make out a sufficient case for reformation of the bond, as all of the parties can read and write and entered into a solemn written agreement.
At the close of the plaintiff's testimony, plaintiff moved to amend the complaint to conform to the facts proven by inserting an additional cause of action to the effect that, although the bond was executed to the Maryland Casualty Company, it was a contract which was solely for the benefit of Pickens county, and in which the Maryland Casualty Company has no interest, and seeks to recover on the ground that this action is for the benefit of Pickens county for whose benefit the contract was made.
Under section 494 of volume 1 of the 1932 Code of South Carolina, the court may amend any pleading or process when the amendment does not substantially change the claim or defense by conforming the pleading or proceeding to the facts proved. And, under section 654 of volume 1, 1932 Code, a master or referee had the same right to allow amendments .
In Mason v. Johnson, 13 S.C. 20, the court held that referees have the same power as the courts to allow amendments to the pleading. To the same effect see Beall Co. v. Weston, 83 S.C. 491, 65 S.E. 823.
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