Ex Parte Felder

Decided September 17, 1901

Supreme Court of South Carolina · decided 1901-09-17

Before Buchanan, J., Orangeburg, October, 1900. Agreed case without action by J. S. Felder, E. M. Vose and Alma Felder, in re Caroline Felder and Jacob S. Felder, as executors of Paul S. Felder, deceased, and in their own right, against Elizabeth M. Vose et al., and The Bank of Charleston, N. B. A., for construction of written agreement.

Reversed · Decided 1901-09-17

Mr. Justice Gary,

¶1 dissenting. As I do not concur in the opinion of Mr. Justice Jones, I will state briefly the reasons for my dissent. The reasons set forth by his Honor, Judge Buchanan, in his decree, which will be incorporated in the report of the case, sustain his conclusion. Although the agreement between the bank and the Felder heirs, which is set out in the leading opinion, is inartistically drawn, and its provisions are inconsistent, it nevertheless plainly appears it was the intention of the parties that the *536 bank should only receive $8,000 of the proceeds arising from the sale of the mortgaged property. It must be remembered that the other creditors were not entitled, by law, to any portion of the amount for which the property was sold in excess of the $8;ooo, as it did not bring enough to satisfy the amount adjudged to be due on the mortgage. ’The controversy is solely between the bank and the heirs. It is true, there are expressions in the agreement tending to show that ■the fund in excess of the $8,000 was to be turned into the general fund and distributed among the creditors, and that the 'heirs were to -receive the pro rata share which the bank would 'have received on the balance due upon its judgment in foreclosure, but they are inconsistent with other express sions in the agreement. If such was the intention of the parties, then why did not the bank turn the excess into the general fund? The failure to do so shows that the bank did not place such construction on the agreement, for if it did, it was guilty of a violation of duty.

¶2 In the case of Williamson v. Association, 54 S. C., 582, the Court says: “It is a well settled principle that when the construction to be given a contract is rendered doubtful by the language -thereof, the interpretation of the contract by •the parties themselves is entitled to great weight” — citing Chicago v. Sheldon, 9 Wall., 50; R. R. Co. v. Trimble, 10 Wall, 367; Steinbach v. Stewart, 11 Wall, 566; Lowber v. Bangs, 2 Wall, 728. Furthermore, if such construction is to be placed on the agreement, i-t would-not show that the bank is entitled to more than- the $8,000.

¶3 But we do not think either of the parties to the agreement intended to -create a trust fund for the payment of the unsecured creditors. Such a provision might have destroyed entirely the rights of the heirs, without any benefit to the bank; for, suppose the mortgaged property had been sold for the exact amount adjudged to be due the bank, there would not have remained a balance upon which the heirs could 'have received a single cent as their pro rata share in the distribution of the excess of $8,000. Or suppose the *537 mortgaged property had been sold for enough, not only to satisfy the amount adjudged to be due under the mortgage, but to pay the unsecured creditors in full, they still would not have received a distributive share. The heirs certainly did not intend to enter into an agreement by which the larger the sum for which the property should be sold, the more effectually their rights might be destroyed — an agreement by which their distributive share might be diminished in proportion to the increase in the price of the property. It seems to me that the heirs- have the equity on their side, and that the construction placed upon the agreement by the majority of the Court enables the bank to retain possession of a larger sum than was contemplated.

¶4 There is another reason why I cannot -concur in the opinion of Mr. Justice Jones: If the heirs are to get the pro rata portion which the -bank would have received on the balance of the judgment in foreclosure in excess of the valuation fixed therein, to wit: $8,000, the dividend would be declared, not on the difference between $8,000 and the amount adjudged -to be due, but on the balance remaining after crediting -the judgment in foreclosure with the amount for which the property was sold. Wheat v. Dingle, 32 S. C., 473; Ragsdale v. Bank, 45 S. C., 575.

¶5 For the foregoing reasons I dissent.

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Disposition: Reversed

Case posture

Disposition: Reversed.
Posture: Before BUCHANAN, J., Orangeburg, October, 1900. Reversed.Agreed case without action by J.S. Felder, E.M. Vose and Alma Felder, in re , Caroline Felder and Jacob S. Felder, as executors of Paul S. Felder, deceased, and in their own right, against Elizabeth M. Vose et al. ,, and The Bank of Charleston, N.B.A., for construction of written agreement. The following is the Circuit decree: In the settlement of the indebtedness and estate of Paul S. Felder, a dispute has arisen as to the application of a certain tract of land to the payment of the claims of his indebtedness. It was claimed, and seemingly with good reason, that the Salley tract was the property of the heirs of Paul S. Felder by his first wife; that his first wife had a life estate only, and that after her death the property rightly and properly belonged to her children. The words, heirs of Paul S. Felder, were used to indicate the children by his first wife, being the only children of Paul S. Felder, and the only children of the first wife; for while he was married twice, there are no children by the second marriage. The land referred to, it is claimed, came from the mother of the children who now claim it; and it was contended, was in no sense responsible for the debts of Paul S. Felder. The creditors were desirous of obtaining payment from everything rightly belonging to the estate of Paul S. Felder; and inasmuch as Paul S. Felder had mortgaged the land, or had given a deed purporting to convey by way of mortgage the said Salley or Martin place to the Bank of Charleston, National Banking Association, as security for certain indebtedness, the association desired the application of the proceeds to the payment of its claims, or to the extent of the amount that would come from its sale. The said Paul S. Felder, by his last will and testament, devised the tract of land to his four children, who are parties hereto. The executors filed a creditor's bill to marshal the assets of his estate, the same being insolvent; the said association being a creditor and a party to the action, proved its debts for a considerable sum, and the heirs at law of Ann M. Felder, deceased, filed their answer, claiming that the said Salley or Martin place was not a part of the real estate of Paul S. Felder, deceased, but was conveyed to their mother, Ann M. Felder, the first wife of the said Paul S. Felder, for life, and after her death to her children, and that the mortgage executed to the said banking association by the said Paul S. Felder in his lifetime, was to secure a past due indebtedness of the said Paul S. Felder, deceased, and that their rights in said premises were not affected thereby. Several references had been held on this issue, and after an appeal had been taken by the association to the Supreme Court as to the right of trial by jury of this issue, and while said appeal was pending in the Supreme Court, an overture was made by said association to the children of Ann M. Felder heretofore mentioned (Jacob Felder, Elizabeth Vose, Annie A. Izlar and Alma Felder) looking to the settlement of the issue between the association and such heirs (of Ann M. Felder) — an agreement was perfected and the construction of that agreement, is the object of the `controversy without action.' In the beginning it shall be remembered that the association claimed as against the heirs (of Ann M. Felder) the land or its proceeds; whereas, the heirs claimed the land and all of it under their mother, who, it was contended, had only a life estate, and that the remainder belonged to them; and that, inasmuch as the life tenant was dead, they were entitled to the immediate possession of their land; that they did not claim through their father, who, while he mortgaged (or attempted to convey by mortgage) the said land, yet he disposed of it by will, as he doubtless thought the land would or should go, it having come from or by his first wife. It was urged that it was the purpose of Paul S. Felder to mortgage only what he must have known he possessed, and in disposing of the place to the heirs of the first wife, he but carried out what he believed the law would carry out in any case, i. e. ,, give the land over to the children of Ann M. Felder. The heirs of Ann M. Felder, as incidental to the ownership of the lands, claimed the fruits of such ownership, the right of its production, c. The association insisted on its rights under the mortgage, and being met with this claim of the heirs that bid fair, if established, to defeat its security entirely, was willing to agree to some arrangement. The heirs, doubtless, with a view of helping along the payment of the indebtedness of their father and to the amount of $8,000, agreed to the proposition — the heirs concede in the light of their claim, the association contends in the light of its mortgage. The heirs of Ann M. Felder, claiming the whole land in fee, agree with knowledge of its entire claim; the association, knowing the amount of indebtedness claimed by it, desires payment out of the proceeds of the land. Some concession was desired on the part of each, which each was willing to give. The contract was signed. What are the rights of the heirs of Ann M. Felder under it? This involves an inquiry into what was designed by each party when the agreement was signed; what were the contentions, and, in the light of the positions of each party, what was meant in the use of the terms employed? In construing a contract, the leading course of construction is to ascertain the intention of the contracting parties, and whatever that intention was, to carry it out. The intention, if possible, shall be gathered from the contract itself. Anderson , v. Holmes , 14 S.C. 165 ; Lockwood , v. Young , 33 S.C. 550 . If, however, the terms of the contract were not clear, but the language used is susceptible of more than one construction, thus rendering the contract ambiguous in its terms, then the Court may resort to extrinsic evidence to aid it in arriving at the true intention of the parties, and as to the circumstances which led up to the making of the contract, the conditions which existed between them at the time of exacting it, the object to be attained, c. Maxwell , v. Thomas , 15 S.C. 612 . It was expressly agreed here, `that either party may refer to the record in the main case as often as may be necessary in arguing this controversy.' The light drawn from such `main case' was given the Court by argument of learned counsel, who argued the matter on each side respectively. The history of the case has materially aided the Court in finding the intention of the contracting parties, and what was meant by the language employed in the writing. It may be stated that each party gave up by agreement only so much of his claim or contention as was specifically given up, or was incidental or necessary to the specific concession contemplated. I think the heirs of Ann M. Felder intended a yielding up or concession of the land, which would amount to the sum of $8,000. This seems to have been the limit, and the amount above that sum the Felder heirs were to receive. The valuation was fixed at $8,000 by the bank itself, with which the bank was doubtless satisfied. It desired to realize that much out of the sale of the place. It was not satisfied that the land would bring that much, but both parties did know that the amount secured by the mortgage exceeded $8,000, and that if the heirs withdrew their fight as to the title to the land that the bank would be entitled to judgment for a much larger sum. If the heirs were to give up all claim to the excess over $8,000, what would be the need of any agreement? A new disclaimer or a withdrawal of the answer would permit the bank to get what it wanted. This would be no compromise, so far as the heirs were concerned. It would be a surrender of their claim and rights as the owners of the fee in the Salley place. So a different agreement was made — not an abject surrender of the land claimed to be derived from their mother, but a compromise — a mutual waiver of a part of each contention. It was agreed that the answer was to be withdrawn, and judgment and foreclosure was to be had — the value of the land was to be fixed so that the bank would realize the sum of $8,000, which it wanted out of the judgment. The referee reported the indebtedness to the bank to be $10,561.93, with interest from September 20th, 1898. By this arrangement the bank would get out of a very doubtful lawsuit, and would realize about eighty per cent. on its claim. This was the realization promised itself by the bank. So the heirs agreed to withdraw their answer and allow judgment of foreclosure and sale, and the bank agreed to give them in consideration the benefit of all the judgment so to be obtained, in excess of the $8,000. True, the contract speaks of sharing in the pro rata , dividends which the other creditors would get out of the other assets of Paul S. Felder's estate, but that part of the contract, I think, was intended to meet the contingency of the Martin or Salley place selling for less than $8,000, in which case the bank was to get the dividend on such part of the judgment as might be between what the place sold for and $8,000, and the Felder heirs on the amount over $8,000. Suppose the judgment entered up had been $10,500, and the land had sold for $7,000. There would have remained unpaid on the judgment $3,500, and the bank would have been entitled to the fruits of $1,000 of this, representing the amount between the bid and the amount fixed in the agreement, and the Felder heirs would have been entitled to the fruits of $2,500, being the amount over the sum in the agreement. It, however, turned out that the land sold for $9,000, that is $1,000 over and above the sum fixed in the agreement, as the amount of the judgment reserved to the bank, and I think that, under the agreement, this $1,000 belongs to the Felder heirs and not to the bank. I think that the agreement, though not in terms as apt as might be, operated as a transfer or assignment of all of the interest of the bank in the judgment it obtained on the mortgage on the Martin place over and above $8,000 to the Felder heirs, and that the fruits of the parts transferred, whether derived from dividends from the other assets of the estate of Paul S. Felder or from a sale of the land securing the judgment, matters not. The controversy here concerns immediately only the bank and the heirs of Ann M. Felder. The intention of the parties was, I think, that the bank should have the benefit of $8,000 of the judgment obtained on the foreclosure of the mortgage, and the Felder heirs to have the benefit of all the judgment over and above this amount. But there is another view of the matter that might work a recognition or may be construed as making an admission of the $1,000 as due to the Felder heirs, growing out of the payment of the dividend on the basis herein indicated. $9,000, it seems, was deducted from the judgment, and dividend only paid on the balance, if I have correctly understood the facts and argument. The agreement is not apt in its terms, and in argument a good deal of light was drawn by learned counsel from the main case and from the general history of the litigation, and in the light of this information as explaining the language used in the agreement, I think the Felder heirs entitled to the overplus of $1,000. The Felder heirs were to practically abandon their claim and withdraw their contest over this particular piece or tract of land, and the bank was to give them the benefit of all the judgment recovered in the foreclosure of the mortgage over and above $8,000, and when the land brought $9,000, the $1,000 should go to the Felder heirs. The language of the agreement, construed with reference to the purposes and interests, position and history, developed on the argument, I think meant the plan here found. No one could foretell the property would bring more than $8,000. It might bring more; it did bring $9,000. That it did, is the misfortune of the bank. It received its $8,000 with the $1,000 above it. It was the good fortune of the Felder heirs that it did bring $1,000 over and above $8,000. They withdrew their answer, and I think they are fairly entitled to the $1,000. And now, pursuant to the terms of the agreement, judgment is hereby rendered against the said Bank of Charleston, National Banking Association, for the sum of $1,000, with interest from the 6th day of November, 1899, being the whole amount claimed by the heirs of Ann M. Felder, deceased, in favor of said heirs, Jacob S. Felder, Elizabeth M. Vose, Annie A. Izlar and Alma Felder, in settlement of the controversy without action, argument upon which was had before me. From this decree the Bank of Charleston, National Banking Association, appeals.

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Supreme Court of South Carolina

Parallel citations

39 S.E 737