Opinion
No. 30637.
May 15, 1933. Suggestion of Error Overruled June 12, 1933.
1. MORTGAGES.
Mortgagor may convey mortgaged premises subject to mortgage or on assumption of mortgage debt by grantee who thus renders himself personally and primarily liable therefor.
2. MORTGAGES.
Mortgagee which had no notice of contract for exchange of lands between mortgagors and third party, and neither accepted nor ratified its terms under which third party agreed to assume mortgage indebtedness on consummation of exchange, acquired no rights as against third party, and mortgagors could change terms of contract.
3. MORTGAGORS.
Absent fraud or mistake, mortgagors' deed containing no provision for assumption of mortgage indebtedness by grantee named therein under direction of third party, who, in contract for exchange of lands with mortgagors, agreed to assume indebtedness held waiver of indebtedness assumption terms, and, therefore, third party was not liable to mortgagee for deficiency after foreclosure.
APPEAL from Circuit Court of Lauderdale County.
Dunn Westbrook, of Meridian, for appellant.
Appellant respectfully submits that unless Hodges was the grantee of a deed from the P'Pool defendants and as part of the consideration for such deed executed to him assumed the payment of the debt in this cause due by the P'Pools to the Southern Building Loan Association, he did not become personally liable to the Southern Building Loan Association for the payment thereof and that they cannot recover of him the amount of such debt in this cause.
Where the grantee, as part of the consideration for the deed executed to him, assumes the payments of a debt due by the grantors to a third person he becomes personally liable to such third person for the payment thereof who can recover of him the amount of such debt in an action instituted for that purpose.
Barnes v. Jones, 111 Miss. 337, 71 So. 573.
The memorandum of sale was made on the 22d day of September, 1930. The property on which this deed of trust existed was conveyed on the 7th day of October, 1930, by the P'Pools to the Consumers Lumber Supply Company, a corporation. Clearly the memorandum of sale was never consummated. Hodges never received any benefits personally on which any legal liability could be predicated. Certainly, if the P'Pools by their own action either breached or waived the terms of this memorandum of sale, then the complainant, Southern Building Loan Association, is not entitled to any greater relief or rights in this cause than their mortgagors would have had against the grantee.
We think it absolutely sound in law to hold that there must be an acceptance by the mortgagee of the proposition as made by the grantee on the terms and under the conditions of the proposition and that the acceptance must take place before the relation of the parties has been charged with reference to the subject-matter to the injury of the grantee.
Gilliam et al. v. McLemore, 106 So. 99.
From the above decision and the quoted portion of the opinion, it will be seen then in the case at bar, unless some action was taken by the Southern Building Loan Association to indicate their accession to the agreement with Hodges, no liability existed as between Hodges and the Southern Building Loan Association and any rescission on the part of either Hodges or the P'Pools is not to the prejudice of the Southern Building Loan Association and is not such an act as of which they might complain. If, as in this case, the P'Pools saw fit to waive the agreement with Hodges and deliver the property to third parties in accordance with deed of conveyance, then it is not such action as of which the complainant herein may complain.
In the majority of jurisdictions it is held that a contract between a mortgagor and his grantee, whereby the latter assumes and agrees to pay the mortgage debt, may be rescinded at any time before the mortgagee has accepted the agreement or asserted his rights thereunder.
21 A.L.R. 462; Biddle v. Brizzolare, 64 Cal. 364, 30 P. 609.
Marshall W. Amis, of Meridian, for appellee.
The memorandum of sale created such a privity of obligation as between the Southern Building Loan Association and Hodges as to authorize suit thereon by the Building Loan Association against Hodges directly.
Sweatman v. Parker, 49 Miss. 19; Lee v. Newman, 55 Miss. 365; Dodge v. Cutrer, 100 Miss. 647, 56 So. 455; Barnes v. Jones, 11 Miss. 337, 71 So. 575; Moore v. Kirkland, 112 Miss. 55, 72 So. 855; Henson v. Davis, 95 So. 787.
The memorandum of sale was sufficiently definite in its description of the property involved. Even if the description were indefinite the parties by their performance of the contract and by their pleadings in this cause have rendered it definite.
Hanna v. Renfroe, 32 Miss. 125; Lewis v. Seibles, 65 Miss. 258, 3 So. 148; Gex v. Dill, 86 Miss. 20, 38 So. 1932; Atkinson v. Dixon, 70 Mo. 381-393; Mee v. Benedict, 98 Mich. 260, 57 N.W. 175, 22 L.R.A. 641, 39 Am. St. Rep. 543; Tregent v. Whiting, 14 Mich. 77; Carlton v. Lewis, 119 Ind. 181, 21 N.E. 475; Beal v. Blair, 33 Iowa, 318; Russell v. Sweezey, 22 Mich. 236; 13 Cyc. 549.
It is a well settled rule that the construction or meaning placed upon ambiguous terms or provisions of a written document by the contemporary acts of the parties will cure the document of any defect on account of such ambiguity.
Ramsey v. Brown, 77 Miss. 124, 25 So. 151; Powell v. Russell, 88 Miss. 549, 41 So. 5; Spengler v. Stiles-Tull Lbr. Co., 94 Miss. 780, 48 So. 966; Candler v. Cromwell, 101 Miss. 161, 57 So. 554; Town of Como v. Pointer, 87 Miss. 712, 40 So. 260.
It is an even more obvious rule that any party to a contract may nominate a third party to receive the benefits which would otherwise accrue to himself. Therefore, all that has happened in this case is that Hodges has nominated the Consumers Lumber Supply Company to receive the conveyance from the P'Pools and also to receive the thirty-six notes for fifty dollars each, the note for five thousand dollars and the deed of trust securing same.
A recital in the deed as to the amount of the purchase price would not be conclusive even if the deed had been made direct to Hodges, for parol evidence is always admissible to show the true consideration of a sale or real estate and to show whether same has been paid or not, even though the evidence be at variance with the recitals of the deed.
Mattock v. Livingston, 9 S. M. 489; Fowlkes v. Lea, 84 Miss. 509, 36 So. 1036; Campbell v. Davis, 94 Miss. 164, 47 So. 546; Raleigh State Bank v. Williams, 117 So. 365.
The appellee, Southern Building Loan Association, filed its bill of complaint in the county court of Lauderdale county against A. P'Pool and wife; A.O. P'Pool and wife; Walter G. Hodges, and the Consumers Realty Corporation, seeking to recover a balance alleged to be due it on a certain indebtedness originally contracted by the said P'Pools. The P'Pools answered the original bill and made their answer a cross-bill against the defendants Hodges and the Consumers Realty Corporation. Hodges and the Consumers Realty Corporation answered both the original and the cross-bills, and made their answer to the original bill a cross-bill. Upon the issues thus presented, the cause was heard and a decree was entered in favor of the complainants against the P'Pools and Hodges for the amount sued for, and adjudging that the indebtedness was the primary obligation of the defendant Hodges. Hodges was also awarded a decree for said sum against the Consumers Realty Corporation, which was ordered to be bound and held in the hands of said Consumers Realty Corporation for the benefit of the Southern Building Loan Association and the P'Pools.
From this decree, Hodges and the Consumers Realty Corporation appealed to the circuit court, where, on admission that the decree was erroneous in so far as it awarded any recovery against the Consumers Realty Corporation, that part of the decree was reversed and the bill and cross-bill were dismissed as to it. In all other respects the decree of the county court was affirmed, and from the judgment entered, Hodges appealed to this court.
From the averments of the original bill and the proof offered in support thereof, it appears that the P'Pools borrowed from appellee the sum of one thousand eight hundred dollars which was secured by a deed of trust on a certain house and lot in the city of Meridian. After default in the payment of this indebtedness, the deed of trust was foreclosed and the net proceeds of the sale were applied on the indebtedness, leaving a balance of four hundred fifty-five dollars and nine cents due as of July 30, 1931, for the recovery of which this suit was instituted. However, prior to default under the deed of trust, the P'Pools entered into a written contract with the appellant for the sale or exchange of lands and property, including the mortgaged premises. This contract provided that upon the consummation of the sale and exchange of property by the execution of mutual warranty deeds the said Hodges was to assume the indebtedness in favor of the appellee. Thereafter, in performance of the obligations of this memorandum or contract of sale, there was tendered to, and accepted by, the P'Pools a deed executed by the Consumers Realty Corporation conveying to them the land and property which Hodges had obligated himself to convey to them. Upon their part the P'Pools executed and delivered to the Consumers Lumber Supply Company a warranty deed conveying to it the lands and property, including the mortgaged premises, which they had obligated themselves to convey to Hodges. The indebtedness and deed of trust in favor of appellee were referred to on the face of this deed, but there was no assumption thereof in the deed. The Consumers Lumber Supply Company was not a party to this proceeding.
Among other grounds urged for reversal, the appellant contends, in effect, that the acts of the P'Pools in the acceptance of a deed from a third party, and the execution and delivery to a third party, of a deed without any provision therein for the assumption of the mortgage debt, constituted a modification of the original memorandum of sale, and a waiver of Hodges' obligation to assume the payment of the indebtedness secured by the deed of trust.
It is well settled in this state that a mortgagor may convey the mortgaged premises subject to the mortgage, or he may convey them in such a manner that the grantee assumes the payment of the mortgage debt, and thus render himself personally and primarily liable therefor. At the time of the execution of the memorandum of sale and at the time of the execution and exchange of deeds conveying the lands and property therein described, the appellee had no notice of this memorandum, and had not ratified or accepted its terms, and therefore had acquired no rights as against Hodges, and the P'Pools were free to change, alter, or vary any of the terms of the memorandum or contract of sale. Gilliam v. McLemore, 141 Miss. 253, 106 So. 99, 43 A.L.R. 79. Under this memorandum the obligation of appellant was to assume the indebtedness upon the consummation of the sale by the exchange of deeds. This memorandum was never consummated by the execution by the P'Pools of a deed wherein the grantee, as a part of the consideration for the deed executed to him, assumed the payment of the debt due by the grantors to the appellee. It appears to us that, in the absence of fraud or mistake, and none is charged or proved, a deed from the mortgagors to the appellant, without any provision for the assumption of the mortgage debt, constituted a modification and waiver of the provisions of the executory contract in respect to the assumption of the debt, and no liability was assumed by him. This status was not changed by reason of the fact that the property was conveyed, under the direction of the appellant, to the Consumers Lumber Supply Company instead of to the appellant. The judgment of the court below will, therefore, be reversed in so far as it affects the appellant, and a decree will be entered here dismissing the bill as to him.
Reversed and decree for appellant.