Stanback v. Haywood, 209 N.C. 798 (1936)

April 8, 1936 · Supreme Court of North Carolina

209 N.C. 798

T. M. STANBACK, Administrator of the Estate of T. C. INGRAM, Deceased, v. ANNIE HAYWOOD, Widow of W. F. HAYWOOD, C. T. HAYWOOD and His Wife, MYRTLE HAYWOOD, D. C. HAYWOOD and His Wife, ADNA HAYWOOD, et al.

(Filed 8 April, 1936.)

Trial F a — New trial will be awarded where issues submitted by court are insufficient'to present all material questions raised by pleadings.

In this action to foreclose a mortgage, and recover any deficiency after sale, defendants alleged that contemporaneously with the execution of the notes and mortgage, the mortgagee agreed with defendants by parol not to foreclose the mortgage, but to accept a reconveyance of the land and cancel the notes if defendants were unable to pay same. Issues as to the execution of the notes and mortgage, the existence of the parol agreement, and indebtedness, were submitted to the jury. Held: A new trial must be awarded on plaintiff’s exceptions to the issues and to the judgment rendered thereon, since the issues submitted are insufficient to support the judgment, in that the issues did not require defendants to prove, or afforded plaintiff opportunity to disprove, that defendants were unable to pay the balance due on the notes, which, under the pleadings and evidence, was a condition precedent to defendants’ right to have the notes canceled upon a reconveyance of the land, O. S., 584.

Stacy, C. X, and Clarkson, X, concur.

Appeal by tbe plaintiff from Clement, J., at September Term, 1935, of Montgomery.

New trial.

Armstrong •& Armstrong for plaintiff, appellant.

B. T. Poole, M. C. Lisle, Lee Smith, cmd B. L. Smith & Sons for defendants, appellees.

Schenck, J.

This was a suit to foreclose a mortgage for $16,000, given to tbe plaintiff’s intestate by tbe defendants to secure eight notes for $2,000 eacb, four of wbicb bave been paid, and to collect any deficiency after application to tbe debt of tbe amount received from tbe foreclosure sale.

Tbe defendants in tbeir answer admitted tbe execution of tbe notes and mortgage referred to in plaintiff’s complaint, and in tbeir further defense alleged that contemporaneously with tbe execution of said notes and mortgage a parol agreement was entered into between them and tbe plaintiff’s intestate to tbe effect that in tbe event tbe defendants were unable to pay tbe balance due on said notes, said intestate would not foreclose said mortgage, but would accept in full satisfaction of any such balance due a reconveyance to him of tbe land described in tbe mortgage securing tbe notes, wbicb were given for tbe purchase price of said land.

The court submitted the following issues :

“1. Did the defendants execute the notes and mortgage set out in the complaint ?

“2. Did T. C. Ingram, the original plaintiff, agree at the time of the consummation of the trade with the defendants that he would, in the event defendants were unable to pay the notes given for said land, accept the land in payment of said notes, as alleged in the answer ?

“3. What amount, if any, are the defendants indebted to the plaintiff?”

To the submission of the foregoing issues the plaintiff reserved exception.

The jury answered the first issue “Yes,” the second issue “Yes,” and the third issue, “None, except the land,” whereupon the court entered judgment to the effect that the heirs at law of the plaintiff’s intestate were the owners and entitled to the possession of the land described in the complaint, and directing the defendants to make conveyance accordingly, and that the defendants were entitled to have the notes secured by the mortgage canceled and directing the plaintiff to surrender the same. To the signing of this judgment the plaintiff reserved exception.

The exception to the issues submitted should have been sustained for the reason that, under the issues submitted, no requirement was made of the defendants to prove, and no opportunity afforded the plaintiff to disprove, that the defendants were unable to pay the balance due on the notes. This was a vital issue between the defendants and the plaintiff, concerning which there were no admissions in the pleadings or record.

“Section 395 of The Code (C. S., 581) is mandatory, and binding equally upon the court and counsel, and it is the duty of the trial judge, either of his own motion or at the suggestion of counsel, to submit such issues as- are necessary to settle the material controversies arising on the pleadings. In the absence of such issues, or equivalent admissions of record sufficient to reasonably justify a judgment rendered thereon, this Court will order a new trial.” 1 Syllabus of Tucker v. Satterthwaite, 120 N. C., 118.

“It is within the sound discretion of the trial judge to determine what issues shall be submitted, and to frame them subject to the restrictions, first, that only issues of fact raised by the pleadings are submitted; secondly, that the verdict constitutes a sufficient basis for a judgment; and thirdly, that it does not appear that a party was debarred for want of an additional issue or issues of the opportunity to present to the jury some view of the law arising out of the evidence.” Redmond v. Chandley, 119 N. C., 575. See, also, Bank v. Broom Co., 188 N. C., 508.

The exception to the judgment should have been sustained, since the verdict, in the absence of any finding by the jury that the defendants were unable to pay the balance due on the notes, was not sufficient to support the judgment.

“The insufficiency of the verdict, ‘the facts found,’ to support the judgment is a defect upon.the face of the record proper which is presented for review, since the appeal is of itself an exception to the judgment . The omission of a vital issue is not cured by the charge of the court, for there is no finding by the jury.” Strauss v. Wilmington, 129 N. C., 99.

The issues submitted to the jury were insufficient to support the judgment for the reason that they were only partially determinative of the controversy between the parties. The essential fact of the defendants’ inability to pay the balance due on the notes is still undetermined. Eor this reason a new trial must be awarded. Chapman-Hunt Company v. Board of Education, 198 N. C., 111, and cases there cited.

If it should be thought that the allegations of the further answer are not sufficient to make the inability of the defendants to pay the balance due on the notes a condition precedent to their right to recover the land and have the notes canceled, and for that reason an issue as to such inability did not arise on the pleadings, it would seem that the further answer would be subject to dismissal, since all of the evidence relative to the alleged contemporaneous oral agreement tended to show that such inability was an essential condition of .such agreement. Any doubt as to the sufficiency of the allegations of the further answer, relative to the inability of the defendants to pay any balance due on the notes, may be removed by appropriate amendment.

The view we take of the two exceptions discussed renders it unnecessary for us to consider the other exceptions in the record.

New trial.

Stacy, C. J.,

concurs on the ground the contemporaneous oral agreement, as alleged in the answer, runs counter to the terms of the written instruments (Coral Gables v. Ayres, 208 N. C., 426, 181 S. E., 263), and, further, the evidence offered in support of said alleged contemporaneous oral agreement is not sufficient to carry the issue to the jury. Brown v. Kinsey, 81 N. C., 245.

Clarkson, J.,

concurs on the ground that the evidence was admissible to show an agreed mode of payment and discharge other than specified in the bond, and the evidence was sufficient to be submitted to the jury.

In Evans v. Freeman, 142 N. C., 61 (62-3), the evidence was that, “It was. a part of the agreement at the time the note was given that it should be paid out of the proceeds of the sale of the stock-feeder.” At p. 64, Walker, J., says: “But this rule applies only when the entire contract bas been reduced to writing, for if merely a part bas been written, and tbe other part bas been left in parol, it is competent to establish tbe latter part by oral evidence, provided it does not conflict with wbat bas been written.”

In Bank v. Winslow, 193 N. C., 470 (Brogden, J.), tbe note was to be paid from tbe sale of peanuts. In Justice v. Coxe, 198 N. C., 263 (266), (Connor, J.) : “Tbe contract, which defendant alleged in bis answer was entered into by and between him and tbe plaintiff contemporaneously with tbe execution of tbe notes, was, in effect, that defendant should be discharged of liability upon bis conveyance of tbe land to George W. Knight, Edward Higgins, and Samuel Puleston, and upon their assumption of tbe notes.” Stockton v. Lenoir Co., 201 N. C., 88; Stack v. Stack, 203 N. C., 498. Wilson v. Allsbrook, 203 N. C., 498 (Stacy, C. J.), tbe note “was to be paid from rents collected by tbe defendant.” In Kindler v. Trust Co., 204 N. C., 198 (201), citing numerous authorities, Adams, J., says: “In proper cases it may be shown by parol evidence that an obligation was to be assumed only upon a certain contingency, or that payment should be made out of a particular fund or otherwise discharged in a certain way, or that specified credits should be allowed.”

In Trust Co. v. Wilder, 206 N. C., 124 (125), we find: “Liberally construed, tbe defendants allege that they executed tbe notes as trustees for tbe plaintiff, receiving no consideration, and with tbe agreement that tbe notes were to be paid out of tbe proceeds of tbe sale of land. These allegations invoke tbe principles applied in Evans v. Freeman, supra, et al.” Galloway v. Thrash, 207 N. C., 165; Bank v. Rosenstein, 207 N. C., 529.