Eveland v. . Wheeler

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 246 It is not controverted, nor can it be, that the written agreement and bond and mortgage are, for the purpose of construction, to be read together as constituting one contract. The referee so correctly adjudged, and this was *Page 247 taken for granted or assumed by the Supreme Court. The three instruments were executed at the same time, were between the same parties, and related to the same subject-matter. Taken together, and not otherwise, they show the entire agreement. The authorities in support of this proposition are numerous, and are quite too familiar to require citation. So read and construed the entire agreement in its most material parts and significance, was to this effect: That the defendant's intestate would convey the farm to the plaintiff, who, in consideration thereof, would secure and pay to the former $4,565.31 — the sum of $3,000, as stipulated in the written contract, and the balance of $1,565.31 by his bond and mortgage, covering other property, the terms of which were then agreed on and inserted in such instruments; which instruments were then executed and delivered. The papers taken together evidenced a perfect agreement, and the entire agreement between the parties. They showed as well the duty of the intestate to convey, as also the obligation of the plaintiff to secure payment of, and to pay the entire sum constituting the consideration of the conveyance. Payment, or the securing of payment to the intestate, according to the terms of the agreement, was the consideration for the conveyance; and the conveyance was the consideration for such payment. The promises were mutual and dependent. A conveyance could not be required without payment or the securing of payment, according to the terms of the agreement; nor could payment be enforced without the delivery or tender of the conveyance. Under this condition of duty and obligation, the parties by mutual consent canceled and annulled the written contract, and the plaintiff surrendered to the intestate the farm, the possession of which he had held under the agreement to purchase for the period of about four years. During his occupation the plaintiff made repairs and improvements on the farm, and also various payments on the contract, and one payment on the bond and mortgage, in the aggregate amounting to between four and five hundred dollars, all claim for which repairs, improvements and payments was *Page 248 relinquished by him on such cancellation. There was not, however, any express agreement between the parties that the bond and mortgage should or should not be deemed canceled and discharged by the annulling contract; on the contrary, as the referee certifies, "it was the design and intention of the defendant (the intestate) to retain and keep said bond and mortgage in full force and effect, and the plaintiff designed and intended that said contract, bond and mortgage should all be canceled and annulled." Notwithstanding this diversity of intention and mutual misunderstanding of the parties, neither ask to be restored to his former position for that cause, but both plant themselves on the surrender and cancellation of the written contract — hold it as binding and conclusive as regard their rights, and demand an adjudication by the court as to its legal effect. The question, then, is, did the cancellation of the contract, ipso facto, also cancel the bond and mortgage? We are of the opinion that such was its legal effect, in the absence of an express agreement between the parties to the contrary. On the cancellation of the contract the intestate was discharged from all obligation to convey, which obligation constituted the sole consideration for the plaintiff's promises to pay. The essential element to the validity of the bond and mortgage — a consideration — was then wanting. They might undoubtedly have been kept on foot by an express agreement to that effect, having for its consideration the cancellation of the contract and the surrender of the premises contracted to be conveyed. But no such condition was imposed. The instruments must, therefore, stand or fall with the consideration on which they were made to depend in their inception. We are not without authority on this question. In Dearborn v. Cross (7 Cow. 48), the former bound himself by bond to sell land to the latter, who gave his notes for the consideration money and took possession. Afterward the land was surrendered to Dearborn who sold it to another. It was held that although the bond was not canceled or surrendered, yet it was in legal effect discharged, and that consequently no action could be maintained on the notes. *Page 249 In De Peyster v. Pulver (3 Barb. 284), it was decided that when a contract has been abandoned by mutual agreement of the parties thereto, one party cannot sue the other upon a note given as a part of the consideration for the performance of the contract by the party suing. In this case it was remarked by the court, per HARRIS, J.: "The acts of both parties sufficiently show a mutual agreement that the contract between them should be abandoned. The contract being thus abandoned by mutual agreement, the note for which this action is brought, and which was given as a part of the consideration for the performance of the contract of the plaintiff, cannot be recovered." So in the case now under examination, the consideration of the bond and mortgage sought to be set aside and annulled, was the agreement by the defendant's intestate to convey to the plaintiff the farm described in the contract. This agreement to convey was canceled by mutual consent of the parties, without any agreement that they should remain on foot as valid obligatory instruments. There is therefore no good reason for their enforcement; and they must be deemed to be invalid like other contracts the consideration of which has wholly failed. When, as in this case, the failure of the consideration touches the principal point and essence of the contract, such failure constitutes good ground in equity to set it aside. These considerations require a reversal of the order of the General Term. There is another view of the case, not without significance. The referee finds that the plaintiff intended that the bond and mortgage should be canceled, and that the defendants intestate intended the reverse. Did the intestate, although intending the reverse, know of plaintiff's undertaking and understanding? If so, and he permitted him to act upon such understanding, he is now bound by it, inasmuch as he retains all the advantages of the arrangement. In such case he will be concluded on well settled principles applicable to the doctrine of estoppel. We think it quite probable, from the facts found, that the intestate knew of the plaintiff's intention and understanding at the time of the *Page 250 cancellation of the contract. But it is unnecessary to consider this question. The order appealed from must be reversed, on the ground above discussed, unless evidence was admitted or rejected prejudicial to the defendant's rights. On a careful examination of the case, we are of opinion that no error exists in this regard. The order appealed from must be reversed, and the judgment directed by the referee affirmed, with costs. *Page 251