Smith v. Davis

• Decision Date: 13 March 1970
• Docket Number: No. 17095,17095
• Citation: 453 S.W.2d 340
• Parties: Truman SMITH et al., Appellants, v. Ollie B. DAVIS, Appellee.
• Court: Texas Court of Appeals

Page 340

453 S.W.2d 340

Truman SMITH et al., Appellants, v. Ollie B. DAVIS, Appellee.

No. 17095.

Court of Civil Appeals of Texas,

Fort Worth.

March 13, 1970.

Rehearing Denied April 17, 1970.

Nelson, Montgomery & Robertson, and Charles A. Hotchkiss, Wichita Falls, for appellants.

Nelson, Sherrod, Carter & Oldham, and Charles Oldham, Wichita Falls, for appellee.

OPINION

BREWSTER, Justice.

Plaintiff, Ollie Davis, sued Truman Smith, Coy Smith, Edward Herles and wife, Shirley, and William T. Nolan and wife, Lois Ann, for the unpaid balance of principal and interest owing on an installment note that was originally in the amount of $6,450.00, for a reasonable attorney's fee, and for foreclosure of a deed of trust lien on a house and lot.

The note was executed by Edward and Shirley Herles on September 10, 1962, and was given to plaintiff as part payment for the purchase price of a house and lot. The deed of trust lien was given on the house and lot to secure the payment of the note. A recovery was sought against the other defendants by plaintiff on the theory that in later transactions they had agreed to assume the payment of the unpaid balance of the note and had thus become personally liable on such note.

A jury trial was had and at its conclusion judgment was rendered that plaintiff recover of and from Truman Smith, Coy Smith, and Edward Herles and wife, Shirley, jointly and severally, the sum of $12,610.29 together with 10% Interest from date of judgment until paid, costs of suit and for foreclosure of the deed of trust lien on the house and lot that was security for the note. Three thousand one hundred dollars ($3,100.00) of this judgment was for a reasonable attorney's fee, as provided for in said note.

The judgment also decreed that Edward T. and Shirley Herles have judgment over against Truman Smith and Coy Smith for indemnity for the amount of judgment recovered therein against Mr. and Mrs. Herles . Both Nolans were dismissed from the case.

From this judgment the defendants, Truman and Coy Smith, have appealed. Mr. and Mrs. Herles have not appealed.

After Mr. and Mrs. Herles acquired the house and lot from the plaintiff, Ollie Davis, and gave the note in question as part payment for such house and lot, they later traded such house and lot to defendants, Truman and Coy Smith.

The deed transferring title to the house and lot to the Smiths contained the following provisions:

'* * * and the further consideration of assumption by the said Truman Smith and Coy B. Smith of the unpaid balance Due and Owing on that certain Deed of Trust Note * * *. It being understood and agreed that the Grantees in this Deed shall and do become personally liable for the payment of the balance Due the said Ollie B. Davis on the above described note and lien; * * *.' (Emphasis supplied.)

The Smiths' deed was recorded and they later sold the house and lot to the defendants, Mr. and Mrs. Nolan, and this last deed had in it the identical provisions that were in the Smith deed relative to those grantees assuming the note.

The Smiths' first and second points on this appeal are that the trial court erred in overruling (a) their motion for instructed verdict and (b) their motion for judgment notwithstanding the verdict.

The basis of the contention of the Smiths under their first two points is that a proper construction of the words used in the deed to them is that they agreed to assume and pay only that part of the note in question that was Past due and Unpaid at the time the deed to them was executed. They urge that since on the date of such deed all installments of the note that had accrued and become due up to that time, including both principal and interest, had been fully paid, that the legal effect of the words used in the deed to the Smiths was to create no liability whatever of the Smiths to anyone under the express wording of the assumption agreement. The trial judge construed the agreement as one by which the Smiths assumed the payment of all the unpaid balance of the note .

We overrule the Smiths' first and second points.

The assumption agreement in question is ambiguous because it is susceptible of more than one meaning.

A contract contains ambiguous language if the language used is susceptible of more than one meaning. See Jones v. Dumas Development Co., 229 S.W.2d 936 (Amarillo Civ.App., 1950, ref., n.r.e.) and 64 Tex.Jur.2d 48.

The Commission of Appeals in Oden v. Gates, 119 Tex. 76, 24 S.W.2d 381 (1930), was construing a Texas Statute and said:

'The word 'due' has a double meaning: (1) That the debt or obligation to which it applies has by contract or operation of law become immediately payable; (2) an existing indebtedness without reference to the time of payment, in which it is synonymous with 'owing,' and includes all debts, whether payable in praesenti or in futuro. 3 Words & Phrases, First Series, p. 2213.

'The words is used on different occasions to express distinct ideas. Its meaning must necessarily depend upon the context and evident purpose intended. United States v. State Bank of North Carolina, 31 U.S. (6 Pet.) 29, 8 L.Ed. 308.'

A number of cases from throughout the nation that recognize the fact that the word 'due' has this double meaning are cited in 28 C.J .S. Due p. 574.

To the same effect is the case of Neblett v. Barron, 160 S.W. 1167 (Fort Worth Civ.App., 1910, no writ hist.).

The Smiths here urge that since the assumption contract is ambiguous that the rule of construction that should be here applied is the one known as 'the rule contra proferentem.' It is to the effect that if words of a contract appear to have been inserted to benefit one of the parties, he will be considered as having chosen the language used. And further, that any ambiguity in such words will therefore be construed most strongly against the person for whose benefit the words were inserted. A part of the rule also is that any ambiguity in a contract will be resolved against the person who prepared the instrument. For a discussion of this rule, see Vol . 4, Page on the Law of Contracts, Sec. 2054, page 3553.

We do not believe that this rule of construction should be applied here in order to determine the intent of the parties.

The following is also from Vol. 4, Page on the Law of Contracts, Sec. 2054, page 3558:

'The rule contra proferentem is not one of the favored rules of construction. Indeed, it is said that it is to be resorted to only when the other rules fail.'

To the same effect see T. M. Sinclair & Co. v. National Surety Co., 132 Iowa 549, 107 N.W. 184 (1906).

In this case, since there is an ambiguity in the contract, the parties were entitled to show the surrounding facts and circumstances that attended the making of the contract. These facts could be considered in determining the intent of the parties to the contract. 13 Tex.Jur.2d 294, Sec. 126.

One such circumstance proven by the undisputed evidence in the case was that on the date of the execution of the deed in question, although there was an unpaid balance on the note, all installments of principal and interest that had fallen due under the provisions of he note in question up to that date had been paid in full.

Under these circumstances, if the assumption agreement was construed as requested by the Smiths, then such assumption agreement would be nullified, meaningless and of no force and effect whatever. The Smiths insist that since the only part of the note that they agreed to assume was that part which was past due and unpaid, and since all accrued payments on the note had been fully paid, that they were not liable for anything under the assumption agreement.

One rule of construction applicable to contracts is that a court is required to presume that the parties to an instrument intended every word in it to have some meaning, effect and purpose. Masterson v. Gulf Oil Corporation, 301 S.W.2d 486 (Galveston Civ.App ., 1957, ref., n.r.e.).

Another rule of construction applicable to contracts is that the court will, if possible, give effect to all parts of an instrument and an interpretation that gives effect to all parts of an instrument and a reasonable meaning to all its provisions will be referred to one that leaves a part of a writing useless. Green Avenue Apartments v. Chambers, 239 S.W.2d 675 (Beaumont Civ.App., 1951, no writ hist.).

We believe that these last two rules of construction just referred to are applicable here. We must assume that both parties to the deed in question knew at the time the deed was executed that no installments on the note were past due and that they intended that their assumption agreement have some purpose, use, and meaning.

Applying these rules of construction to the assumption contract in question in the light of the undisputed facts and circumstances that attended the execution of the deed in question, we are of the opinion that the trial court correctly held that the parties to the transaction intender that the Smiths assume and pay all of the unpaid balance of the note in question, regardless of whether it had become due as of the date of the deed or not.

We believe that under the particular facts of this case that this question of the intention of the parties was a law question to be determined by the court from a consideration of the entire written instrument and the undisputed evidence showing the facts and circumstances in existence at the time the deed was signed.

If we are wrong in holding that this question of intent was a law question under the facts of this case, then such holding matters not, because upon the trial the question was submitted to the jury in the charge and they also answered the question adversely to the Smith.

The Smiths' third point contends that the trial judge erred in refusing to grant their motion to disregard the stipulated answer to Special Issue No. A.

Issue No. A inquired as to what sum of money, including interest, was owed on the note at the time of...