Planters Nat. Bank v. E.G. Heflin Co.

• Decision Date: 12 March 1936
• Citation: 166 Va. 166
• Parties: THE PLANTERS NATIONAL BANK OF FREDERICKSBURG, VIRGINIA, A CORPORATION, v. E.G. HEFLIN COMPANY, INC.
• Court: Virginia Supreme Court

Page 166

166 Va. 166

THE PLANTERS NATIONAL BANK OF FREDERICKSBURG, VIRGINIA, A CORPORATION, v. E.G. HEFLIN COMPANY, INC.

Supreme Court of Virginia, Richmond.

March 12, 1936.

Present, All the Justices.

1. ISSUES TO THE JURY — Discretion of Chancellor — Presumption that Discretion Was Properly Exercised. — In ordering an issue out of chancery, the presumption is that the chancellor properly exercised the discretion vested in him.

2. APPEAL AND ERROR — Affirmance — Decree Supported by Credible Evidence. — If there is credible evidence to support the chancellor's judgment the Supreme Court of Appeals must accept it.

3. CONTRACTS — Consideration — Mere Failure of Consideration Will Not Invalidated Executed Contract. — Mere failure of consideration or want of consideration will not ordinarily invalidate an executed contract.

4. RESCISSION, CANCELLATION AND REFORMATION — Failure of Consideration — Gross Inadequacy of Price. — Where inadequacy of price is such as to shock the conscience equity is alert to seize upon the slightest circumstance indicative of fraud, either actual or constructive.

5. FRAUD AND DECEIT — Evidence — Proof Must Be Clear and Convincing — Rule Not Applicable on Appeal Where Evidence Heard Ore Tenus. — It is true that fraud must be established by clear and convincing evidence, but that rule applies to the trial court and not to the Supreme Court of Appeals when it comes to consider the verdict of a jury approved by the trial court, the judgment of the court itself when all matters of law and fact are submitted to it, or the judgment of a chancellor who saw the witnesses and heard them testify.

6. RESCISSION, CANCELLATION AND REFORMATION — Failure of Consideration — Nonfulfillment of Guarantee to Provide Transportation Facilities Which Induced Purchase — Case at Bar. — In the instant case, a suit seeking cancellation of a deed and deed of trust, complainant was induced to purchase a lot from defendant for a factory site upon defendant's guarantee that a spur track would be built to furnish adequate transportation facilities. Part of the purchase price was paid before execution of the deed and the balance evidenced by a note payable on or before three years from date and secured by a deed of trust. The truck, which was to be built within the three years, was never built, and just prior to the expiration of the three year period complainant instituted suit because of failure of consideration. The lower court cancelled the deed and deed of trust and directed that payments made be refunded.

Held: No error.

7. APPEAL AND ERROR — Record — Evidence Heard Ore Tenus — Necessity for Authentication. — Evidence heard ore tenus must be properly authenticated or identified by the trial judge.

Appeal from a decree of the Corporation Court of the city of Fredericksburg. Decree for complainant. Defendant appeals.

The opinion states the case.

C. O'Conor Goolrick, for the appellant.

F. M. Chichester and S. Bernard Coleman, for the appellee.

HOLT, J., delivered the opinion of the court.

In 1929 the Planters National Bank of Fredericksburg, Virginia, was the owner of a small parcel of land in that city, and sold a part of it to the Richmond, Fredericksburg and Potomac Railroad. The preliminary negotiations which led to this sale were carried on for the bank through Mr. A. B. Young, its real estate agent. Formal authority for the execution of a deed was given by resolution of the board of directors on March 4, 1930. For reasons unimportant here, there was some delay. The deed itself bears date the 4th of July, 1930, and was acknowledged on July 14th of that year.

Between this lot and the main industrial line of said railroad lay another lot, also owned by the bank. It, too, had been placed for sale in the hands of Mr. Young.

The E. G. Heflin Company was operating a wood-working plant. Mr. Young tells us that:

"After the Richmond, Fredericksburg and Potomac Railroad Company had brought the lower end of it, I had in mind that Mr. Heflin wanted to move his shop. It was reported he wanted to move. I went in to see Mr. Goolrick and asked him if he wanted to sell the upper end. I am not positive about this, but am rather inclined to think Mr. Goolrick stated Mr. Heflin had already asked him the price of it."

Mr. William K. Goolrick was president of the bank, and Mr. E. G. Heflin was president of the Heflin Company.

Negotiations were begun and in February, 1930, Mr. Heflin agreed to purchase at the price of $6,500. Of this $50 earnest money was paid in cash. Sale was formally authorized by resolution of March 4, 1930. The deed itself bears date July 29, 1930, was acknowledged October 18, 1930, and recorded on January 31, 1933.

The consideration expressed was "$1,500 cash in hand paid and other valuable consideration." This other valuable consideration defendant claims was $5,000 to be thereafter paid. Plaintiff contends that it was to pay $5,000 at the end of three years and when adequate railroad facilities had been installed, which installation the bank itself promised and guaranteed. This balance due was evidenced by note of July 30, 1930, payable on or before three years from date, and secured by trust deed of even date acknowledged on October 18, 1930, and recorded on January 31, 1933. Of this $1,500 item, $50 had already been paid; for the residue a note of $1,450 was given and in a short time thereafter paid.

Both Young and Goolrick knew the purpose for which the lot was purchased — to be used as a factory site. This Heflin explained to Young and made it plain. He said: "That is the only thing I told him it could be used for."

When the deed was presented to him he found there no provisions about this spur track and consulted counsel. The matter remained in abeyance until Mr. Goolrick obtained from the railroad this letter, which Mr. Heflin read:

"September 9, 1930. "Mr. Wm. K. Roolrick, President, "The Planters National Bank, "Fredericksburg, Va. "Dear Mr. Coolrick:

"Replying to your favor of the 6th instant, this is to confirm understanding had between your bank and this company during the negotiations whereby this company purchased from your bank a piece of property in Fredericksburg conveyed by deed bearing date the 14th day of July, 1930, namely, that the railroad company is obliged to build within three years from the date of the said conveyance a spur track connected with its industrial track and reaching the remainder of the property still owned by your company just north of the property acquired by the railroad company, the location of the said track being substantially as shown on the print attached to the deed of conveyance.

"The building of this track across the several city streets will, of course, depend upon our ability to secure consent of the city of Fredericksburg and the necessary authority therefor.

"Will you kindly acknowledge receipt of this letter and oblige?

"Yours very truly,

"NORMAN CALL, Vice-President."

This letter was shown to Heflin on October 18, 1930, and thereupon the deed and deed of trust were executed.

On his cross-examination this appears:

"Q. If Mr. Young had given you this so-called guarantee in February, 1930, why did you wish anything else?

"A. I wished something else showing that they had this agreement with the railroad company, the guarantee from the bank.

"Q. Was the letter of September 9, 1930, acquired in order to show you?

"A. Yes, sir.

"Q. You acted on that letter?

"A. Yes, and the guarantee of the bank that they would see that the obligation would be carried out.

"Q. You were familiar with the contents of the letter long before you concluded the deal and signed the deed of trust?

"A. No, sir. The letter was given to me the date the deed was signed.

"Q. You read it before you signed it?

"A. Yes, sir.

"Q. You never saw the latter of September 9, 1930, until the day you executed the deed on October 18, 1930?

"A. That is right.

"Q. Where were you when you read it?

"A. As I stated, I don't know whether in Mr. Goolrick's office or in Mr. Frank Chichester's office.

"Q. Did Mr. Goolrick make any representations to you?

"A. He said the bank had received that letter and would see that it was carried out."

Heflin further tells us that Young from the beginning had promised that this side track would be built. The bank in answer says that he had no authority to make such a promise, but Goolrick, its president, did, and Heflin more than once testifies that he also as a major inducement made a like promise.

The railroad did not build this spur track nor attempt to build it, and there is fair reason to believe that it either abandoned its purpose or postponed its execution for an indefinite time. The three-year period was drawing to a close. On January 30, 1933, Heflin wrote to the bank asking what had been done. The bank made no answer. On February 3, 1933, he again wrote, complaining of the delay, and called attention to the fact that the deed and trust deed had been recorded on January 31st of that year. Still no answer was made. On June 7, 1933, the bank wrote to Heflin calling attention to unpaid interest due January 30, 1933, in amount $150. This letter he did not answer, and on June 27, 1933, the bank again wrote, said that its last letter had not been answered and threatened suit. Heflin replied: When you answer my letter to you dated January 30th, and February 3rd, I will then answer yours of June 27, 1933."

On July 28, 1933, he wrote to the bank demanding return of payments made. This was about the time of the termination of the three-year period. Had the original plans been carried out this balance due would not have been due until the spur track had been built. Until built Heflin tells us that this lot was worthless to his company for the purpose of its purchase and that the bank must have known. We have seen that the deed and deed of trust were not recorded until January 31, 1933. Goolrick said that this delay was...