Opinion
39466.
DECIDED JULY 12, 1962. REHEARING DENIED JULY 26, 1962.
Action on contract. Fulton Civil Court. Before Judge Etheridge.
E. E. Moore, S. S. Robinson, for plaintiff in error.
Parks Eisenberg, David S. Eisenberg, contra.
1. The ambiguity in a provision of the contract was for the jury to resolve; therefore, the trial court properly overruled the general demurrer to the petition.
2. Where the purpose of the contract would be defeated by one interpretation but given effect by another, the meaning ascribed to the ambiguous clause will be that which gives effect to the main apparent purpose of the contract.
3. Defendant's demurrer to the amendments on the ground that they attempted to vary unambiguous terms of the contract was without merit, as the amendments in fact removed an ambiguity in the contract initially pleaded.
DECIDED JULY 12, 1962 — REHEARING DENIED JULY 26, 1962.
Plaintiff's action seeks damages for breach of contract by the defendant. Plaintiff alleged that he was engaged in the business of constructing commercial and residential buildings; that defendant engaged plaintiff to construct an eight-unit apartment building on property owned by the defendant; that it was agreed between the parties that the president of the plaintiff corporation could secure a better loan in his name than the defendant could, and, pursuant to the agreement, a written addendum was drawn to add to the contract providing, inter alia, that "Grady Wright [defendant] shall deed, in trust, by warranty deed to Petty Bregman [president of the plaintiff corporation] (hereinafter referred to as Bregman), the property described . . . for the purpose of obtaining the above mentioned loans, and upon completion of construction of said project Petty Bregman shall deed, by warranty deed to Grady Wright, the property . . . subject to the aforementioned first mortgage loan"; that plaintiff prepared all necessary instruments to comply with this amendment to the contract including a warranty deed for transfer of the property but the defendant refused to execute the warranty deed stating that there was no trust provision contained therein; that Bregman had completed all arrangements for his loan; that the plaintiff offered to prepare any trust instrument the defendant required, insisting, however, that the trust instrument not be included in the warranty deed, this being a requirement of the lending institution; that the attorneys for the defendant refused to comply and stated that the contract would not be allowed to be performed by plaintiff.
After the defendant demurred generally to the petition, the plaintiff amended alleging that after the written contract was entered into, the plaintiff, through Bregman, attempted to obtain a permanent real estate loan for the defendant but did not succeed in securing the loan in the proper amounts or terms; that in an effort to assist the defendant, Bregman offered to secure a permanent loan in his own name for the defendant so that proper terms and amounts would be available under the terms of the contract; that Bregman succeeded in making such arrangements in accordance with the provisions of the contract, provided the title to the real estate was in his name, and it be closed by a specified date; that it was thereafter agreed by the parties to carry on the contract with certain changes; that defendant's attorney stated he would require some sort of trust agreement to show the nature of the transfer of the property from the defendant to Bregman; that plaintiff agreed to this but with the proviso that such trust agreement should be drawn in accordance with the requirements of the lending institution; that the instruments conveying the property were prepared for execution and Bregman proceeded to process the loan; however, the lending institution, through one of its officers, required that the warranty deed from defendant to Bregman not contain any trust agreement; but that if any trust agreement was desired between the parties that it be by separate instrument; that the defendant's attorney refused to allow the defendant to execute any warranty deed "unless same was lettered by words creating a trust"; that Bregman offered to execute any trust instrument the defendant's attorneys would require, so long as the words of trust were not contained in the warranty deed in accordance with the requirements of the lending institution and that plaintiff made every attempt to carry out the conditions of the contract but the defendant refused to perform.
The defense demurred generally to the amended petition. The trial court overruled all the defendant's general and special demurrers to both the original and the amended petition. The defendant excepted to this order but presses upon this appeal only the exception to the overruling of the demurrers to the original petition, the amended petition and his renewed demurrer number 3, being a general demurrer to paragraph 1 of the plaintiff's first amendment in which the defendant also demurred to paragraphs 19 through 34, both inclusive, of the amended petition.
1. The defendant contends that neither the original nor the amended petition alleges sufficient facts to show a breach of the contract by the defendant. This contention arises from the language of paragraph (b) of the amendment to the contract which reads in part: "Grady Wright shall deed, in trust, by warranty deed to Petty Bregman the property. . ." (Emphasis added). The defendant maintains that this language requires the deed which the defendant was to execute transferring the property to Bregman to contain words of trust.
Plaintiff maintains otherwise and alleges that it stood ready to execute any instrument sufficient to constitute the holding of the property by Bregman in trust for the defendant.
The beneficial interest, where property is held in trust, is in some other person than the one holding the title. Code § 108-101. No particular form is necessary to create a trust estate, but there is only required a manifest intention that another person shall have the benefit of the property, in which case the grantee of the property is a trustee for the other person. Code § 108-102.
On the other hand, conveyances of property by a warranty deed give the grantee the benefit of the covenants in such a deed which includes the right to sell, the covenant of quiet enjoyment and freedom from encumbrances. Code § 29-303. The recipient of property by warranty deed normally takes the property in his own right and not for the benefit of another. The quoted language of the addendum to the contract, as we construe it, is capable of interpretation in at least two ways: (1) That the defendant shall deed the property to Bregman by a warranty deed, but Bregman shall hold it in trust; or (2) That Wright shall deed the property to Bregman by warranty deed which contains recitals that the property is to be held in trust (the latter portion of the addendum showing the trust to be for the benefit of Wright).
Our Code provides that a trust estate may be created by a deed which shall be recorded where the cestui que trust resides within three months from its execution and a failure so to record shall make the deed void. Code § 108-114.
It is a matter of common knowledge that financial institutions normally make loans upon real estate only where the borrower has a fee simple title and many of them by law are restricted to making loans upon real estate where there is any ownership in the mortgagor less than in fee simple.
Under the allegations of the original petition, it was agreed that Bregman was to secure the loan in his name. Considering the allegations of the original petition with its exhibits, there is an ambiguity in the amended contract and the addendum as to how the trust was to be created and by what language the transfer of the property was to be made, i.e., whether the trust language was to be in the warranty deed or there was to be a separate trust instrument. Where there is an ambiguity in the contract, parol evidence may be used to explain the ambiguity. Hanson v. Stern, 102 Ga. App. 341 (3) ( 116 S.E.2d 237).
Through the proper admission of parol evidence the intent of the parties can be determined and any ambiguity present can be resolved by the jury in the trial. Where the meaning of the contract is not clear a jury question is presented. Code § 38-502. Tarbutton v. Duggan, 45 Ga. App. 31 ( 163 S.E. 298).
The trial court properly overruled the general demurrer to the original petition.
2. The amendment to the petition amplified the facts alleged by setting forth the diligent efforts of Bregman to obtain a loan for the defendant under the terms of the contract and alleged specifically that the lending institution which had agreed to make the loan required that the warranty deed transferring the property not contain any trust agreement but that any trust agreement must be by separate instrument.
Under the allegations of the amended petition, the purposes of the contract would be defeated and the expectations of the parties thwarted if the warranty deed contained words of trust. Where the purpose of the contract would be defeated by one interpretation but would be given effect by another interpretation, the meaning ascribed to the clause will be that which gives effect to the main apparent purpose of the contract. 3 Williston on Contracts (1936) § 619, p. 1781 et seq., and Hanson v. Stern, supra.
The main apparent purpose of this contract alleged was the construction of an eight-unit apartment building by the plaintiff for the defendant. To accomplish this purpose the necessary financing had to be obtained and to obtain the necessary financing the words of trust had to be left out of the deed transferring the property.
Applying the principles set out above, the amendment to the petition removes any ambiguity and shows clearly that the trust was intended to be created by a separate writing which the defendant refused to execute.
The amended petition stated a cause of action for the defendant's wrongful breach of contract. The general demurrer to the amended petition was properly overruled.
3. Defendant's third demurrer to the amended petition demurred "generally to paragraph one of said amendment and to the allegations set forth there in each paragraph . . ." 19 through 34, inclusive, upon the ground that the plaintiff in these paragraphs attempts to vary the unambiguous terms of the contract entered into by the defendant and the plaintiff.
The tenor of this contention that there was an attempted modification is that these paragraphs in the amended petition contradict the provisions of the addendum to the original contract discussed in Division 1, that the defendant should deed in trust the property by warranty deed to Bregman.
We do not agree.
These paragraphs added by amendment to the petition recite merely that the plaintiff, through its president, was unable to secure a permanent real estate loan for the defendant in such terms as would permit performance of the original contract and that Bregman, president of the plaintiff corporation, offered to secure a permanent loan for defendant; that he made arrangements for such provided that the title was in his name; that Bregman and the defendant thereupon met and agreed to amend the contract; that the amendment so made was the one which was attached to the original petition and contained the provision for transfer of the property from defendant to Bregman; that thereafter the instruments conveying the title were drawn for execution but that the lending institution required that the warranty deed from defendant to Bregman not contain any trust agreement but that it should be by separate instrument; that the defendant and his attorney well knew when they executed the modification of the contract that any trust instrument executed and the terms thereof would have to be in accordance with the requirements of the lending institution; and that the addendum prepared by defendant's attorney was ambiguous as to the matter or form of the trust.
We do not regard these allegations as modifying or attempting to vary the written contract as pleaded. The defendant has not cited authority or argument sufficient to demonstrate wherein the allegations of the amendment show a departure from the terms of the contract.
The trial court properly overruled the demurrers to the original and amended petition.
Judgment affirmed. Felton, C. J., and Hall, J., concur.