Trice v. Hewgley

• Decision Date: 14 January 1964
• Citation: 53 Tenn.App. 259,381 S.W.2d 589,18 A.L.R.3d 720
• Parties: , 18 A.L.R.3d 720 Helen Corinne Scales TRICE, Executrix of the Will of Joe W. Scales, Deceased, Appellee, v. L. E. HEWGLEY and wife, Elizabeth H. Hewgley, Appellants.
• Court: Tennessee Court of Appeals

Page 589

381 S.W.2d 589

53 Tenn.App. 259, 18 A.L.R.3d 720

Helen Corinne Scales TRICE, Executrix of the Will of Joe W Scales, Deceased, Appellee, v. L. E. HEWGLEY and wife, Elizabeth H. Hewgley, Appellants.

Court of Appeals of Tennessee, Middle Section.

Jan. 14, 1964.

Rehearing Denied Feb. 28, 1964.

Certiorari Denied by Supreme Court Sept. 4, 1964.

Gullett, Steele & Sanford, Nashville, W. Howell Forrester, Pulaski, for appellants.

Fyke Farmer, Nashville, for appellee.

CHATTIN, Judge.

This is a consolidated case. The complainant, Helen Corinne Scales Trice, Executrix of the Estate of Joe W. Scales, Deceased, filed five original bills in the Chancery Court of Giles County against the defendants, L. E. Hewgley and wife, seeking a recovery on behalf of the Estate of Joe W. Scales, Deceased, for several obligations allegedly due and unpaid at the date of the death of the Testator on April 13, 1959. The suits were consolidated by decrees dated February 15, 1961, and June 5, 1961.

The obligations involved on this appeal are:

(1) A note dated February 18, 1955, in the amount of $10,936.62.

(2) A note dated October 21, 1955, in the amount of $14,000.00, less credits of $4,000.00;

(3) A note dated October 26, 1955, in the sum of $2,259.74; and

(4) A note dated May 12, 1956, in the sum of $2,500.00, less credits of $1,500.00.

The bills sought a recovery of a reasonable Attorney's fee as provided in each of the notes.

The defendants answered the bills and denied they were indebted to the Estate in any sum and pleaded payment of all the obligations sued upon.

The answer averred the defendants had not received proper credits due them on their indebtedness to Scales from certain transactions between Mr. Scales and Mr. Hewgley; and when proper credits were applied to the indebtedness sued on, it would be seen all of the alleged indebtedness had been satisfied.

The answer further averred the defendants were due a credit of $5,000.00 on the note for $10,936.62, which Hewgley had paid to the Union Bank of Pulaski on May 31, 1955, with instructions the amount be credited to the account of Mr. Scales.

A considerable amount of testimony was taken in which it was shown the defendant, L. E. Hewgley, and the Deceased, Joe W. Scales, had entered into an agreement to pool Hybrid seed corn produced on their respective farms during the year 1955 and deliver it to a seed marketing company for sale. The corn was delivered to the marketing company under contract with Scales. Scales on delivery of the corn was advanced the sum of $3.00 a bushel. After the death of Scales, Hewgley filed a claim against the Estate of Scales seeking to recover his pro rata share of the proceeds received by Scales from the marketing company. The claim was tried in the Circuit Court of Giles County and Hewgley was cast in the suit.

On March 13, 1962, the complainant filed an amended bill by leave of the Chancellor in which she set forth the above facts and alleged Hewgley was estopped to insist he was due a credit on the obligations sued upon in this case because of the seed marketing contract since his claim in the Circuit Court was disallowed.

The defendants answered the amended bill and averred that on October 21, 1955, Scales purchased the equity of Hewgley in a feed and seed processing mill, together with seed storage bins and warehouses. Scales, in consideration of this conveyance, agreed to convey a small plot of land of the value of $1200.00 to Hewgley and to forgive or to cancel all the indebtedness due Scales by Hewgley at that time.

The complainant moved to strike this answer on the grounds the matters set up in the answer were inconsistent with the defenses urged in the answer to the original bill; and that the answer was filed without leave of the Chancellor.

The Chancellor overruled the motion.

The cause was heard upon depositions and documentary proof.

The Chancellor filed a memorandum opinion in which he found the complainant was entitled to recover of the defendants the principal due on the four promissory notes with interest and an Attorney's fee of ten per cent.

The defendants admit complainant is entitled to recover the balance due on the note dated May 12, 1956, but insist complainant is not entitled to recover an Attorney's fee thereon.

The defendants prayed and were granted an appeal to this Court and have filed five assignments of error.

The complainant has filed three assignments of error.

We will consider the assignments of the defendants first.

In considering these assignments, it is our duty under authority of T.C.A. Sec. 27-301 to examine the whole matter of law and fact as disclosed by the record upon appeal; but, under T.C.A. Sec. 27-303, there is a prima facie presumption of the correctness of the decree of the Chancellor and we must affirm the decree unless the evidence preponderates against it.

Defendants' first assignment complains of the action of the Chancellor in failing to hold the note of $10,936.62 was not discharged as a part of the consideration for the transfer of the mill property.

It is undisputed in the record this note was executed by the defendants for the following reasons: The defendants became interested in purchasing a farm in Giles County known as the Sugar Creek farm. The defendants were unable to purchase the farm from the owners. Hewgley solicited the aid of Scales in purchasing the farm. Hewgley agreed to pay Scales a commission of $5,000.00 if he would purchase the farm for him. Scales purchased the farm for $35,000.00 and conveyed it to Mrs. Hewgley for that amount. The defendants obtained a loan from an insurance company and after paying a mortgage assumed by Scales on the farm, they executed a first mortgage on the property to secure this loan. They executed the $10,936.62 note to Scales which covered his commission and the balance of the purchase price of the farm he paid himself and executed a second mortgage on the farm to secure this note.

Honorable David Cheatham, a reputable member of the Giles County Bar, testified both Mr. Hewgley and Mr. Scales came to him and employed him to draft the deed to the mill property. They also requested he witness the oral agreement with respect to the mill transfer. He testified it was agreed Scales would purchase the equity Hewgley owned in the mill; that in consideration of the transfer Scales agreed to convey to defendants a small tract of land valued at $1200.00 and to forgive all of the debts owed by Hewgley to Scales prior to the date of the deed. It was also agreed Hewgley would have an option to repurchase the property from Scales within five years of the date of the deed. He further testified no definite amount of debts to be forgiven were agreed upon, but the parties estimated Hewgley's indebtedness to Scales was approximately $30,000.00.

Both Scales and Hewgley testified in other litigation prior to the death of Mr. Scales substantially as Mr. Cheatham. Hewgley did not exercise his option to repurchase the mill property.

It is shown in the record that at the time of the execution of the deed to the mill, Scales loaned Hewgley $16,259.74, evidenced by the notes of October 21, 1955, for $14,000.00 and of October 26, 1955, for $2,259.74. The Hewgleys secured these loans by executing a third mortage on the Sugar Creek farm. The proceeds of these loans were paid to the Union Bank which reduced his indebtedness to the Bank to $40,000.00, and which was secured by a mortgage on the mill property.

The Chancellor gave as his reason for excepting this debt, the $10,936.62 note, from the debts forgiven as a part of the consideration for the mill transaction, the fact that Scales had testified in other litigation prior to his death that he did not put any money of his own in the farm transaction and that when the mill transaction was consummated he took a third mortgage on the farm to secure the notes of $14,000.00 and $2,259.74, and retained the second mortgage securing the $10,936.62 note.

We cannot follow this reasoning since all the proof in the record shows that defendants executed the $10,936.62 note to Scales and secured it by a second mortgage on their farm. They acknowledged this debt to Scales. They thereby became indebted to Scales for this amount regardless from whence the money came. Nor do we see any significance in the fact Scales did not release the second mortgage securing this debt and took a third mortgage securing the two notes executed on October 21 and 26, 1955, for the reason defendants had an option to repurchase the mill. In the event Hewgley exercised his option the $10,936.62 note would be a part of the consideration, otherwise the note would be released or discharged. As stated, Hewgley did not exercise his option.

The argument of complainant the testimony of Mr. Cheatham, Scales, and Hewgley as to the mill property conveyance violates the parol evidence rule and should have not been considered by the Chancellor is untenable. This agreement was made subsequent to the execution of this note and was based upon a valuable consideration, and did not vary or alter the terms of the note.

As said in the case of Brunson v. Gladish, 174 Tenn. 309, 125 S.W.2d 144, the parol evidence rule, 'does not prohibit the establishment by parol evidence of an agreement made subsequent to the execution of the writing, although such subsequent agreement may have the effect of adding to, changing, modifying or even altogether abrogating the contract of the parties as evidenced by the writing; for the parol evidence does not in any way deny that the original agreement of the parties was that which the writing purports to express, but merely goes to show that the parties have exercised their right to change or abrogate the same, or to make a new and independent contract.'

Accordingly, we think the evidence preponderates against the finding of the Chancellor and this assignment of error should be sustained.

We do...