Lines v. Potter

WHITING, J. This action was brought to enforce specific performance of a written contract for deed. This contract, dated February 19, 1917, /was prepared on a printed form, and, so falas the covenants for payment were concerned, it read: “the said party of the second part hereby covenants and agrees to pay to the said party of the first part the ,sum of eighteen thousand two hundred ($18,200) dollars in the manner following: The sum of $500.00, at or before the execution of this contract; the sum of $17,700.00 on or before the 19th day of August, 1917, with interest at the rate of .......................per cent, per annum, payable........................annually, on the whole sum remaining from time to time unpaid. * * *” The italicized words were written by pen. In the blank places after “of” and “payable,” the continuous line was a part of the printed form, while the dotted lines had been made by pen at time of execution of contract. The contract also contained a printed provision that: “In case of * * * failure * * * to make either of the payments, or interest thereon, * * * then the whole of said payments and interest shall become immediately due and payable. * * *” The contract contemplated that the party of the second part should, and the evidence introduced showed that he did, enter upon and take possession of the premises immediately after the execution of the contract. [1] Respondents have cited many authorities, all of which support the wlell-established rule of laAV announced in. 15 R. C. L. 21, that: “Where there is an agreement to pay interest on an unmatured debt, and no rate is stated, the legal rate of interest will be implied.” [2] The above rule is conclusive in favor of respondent, if the contract before us contains “an agreement to pay interest.” The question before us is, therefore, not what rate of interest should be allowed, but whether there was an agreement to pay interest. We must not lose sight of the. fact that, Av’hile in [467] terest will, in absense of contract therefor, be allowed after maturity of an obligation to pay money, it is so allowed as damages for the breach of the obligation, wjhile interest before maturity rests solely upon the contract and can never be collected unless the obligor has contracted to pay same. O’Brien v. Young, 95 N. Y. 428, 47 Am. Rep. 64. [3] The sole question before us is the intent of the parties, which, owing to the death of one of the parties and the incompetency of the other to testify, must be gathered from the writing ifself. 'Did the parties intend to contract for interest? The trial court held, as we think erroneously, that they did. 'Prom a judgment and order denying a new trial this appeal was taken. [4] If the blank before “per cent.” had been left as in the printed form, we would have no hesitancy in holding that the parties did intend to contract for interest, but that, through oversight, they failed to insert the rate agreed upon. The statute would then supply the omission. Respondent urges that the provision, that appellant might pay the $17,700 “before” August 19th indicates an intent that the $17,700 should bear interest pror to August 19th. It might be that the words “or before” were inserted in order that appellant might make a payment earlier than August 19th and stop interest; on the other hand, appellant might have contemplated an early resale or for some other reason have desired the contract worded. so that he could make an eaxdy paymexxt, xiot in order to stop interest, but that he might acquire the legal title prior to August 19th, if it should happen to be to his interest so to do. [5] Respoxident urges that because the coxxtract contemplated that appellant should take possession of the land he shoxxld pay interest from its date. It is a fact from which we might conclude that appellant ought to pay .interest, provided we had any way of knowing that the parties did not consider the principal sum, without interest, full consideration for the passing of present possessioxi as-well as future title; but this we do not know. Moreover, we are not empowered to make a contract for these parties, howsoever just our contract might be. [468] [6] Respondent urges that the printed provision: “In case of * * * failure * * * to make either of the payments, or interest thereon, * * * then the whole of said payments and interest shall become immediately due and payable” ■ — is evidence that the contract itself contemplated interest. No one would claim that it was evidence that there were “payments” to be made after the execution of the contract; the contract specifically providing for but one payment after such execution. The most • that can be said is that, if there were payments or interest contracted for and' default should be made therein, then, under such printed provision, all payments and interest should- become immediately due and payable; but it is clear that this contract did not contemplate any interest that could possibly be due prior to any other default, as the first “annual” period from date of contract -would' not expire until six months after' August 19, 1917. It is therefore apparent that this provision was mere surplusage, of no possible legal effect, and no evidence that the parties- intended- to contract for interest. [7] Let us then try to determine what was in the minds of the parties when one of them, we know not which one, with the presumed consent of the other, drew the dotted- line across the blank place before the -words “per cent.” This act is to be construed exactly as though we knew that it was the known act of the party of the first part. We are bound- to conclude that it was clone with the intent on the part of both parties to prevent the writing in of any rate of interest. Why should the parties intentionally prevent the writing in of a rate of interest, if they were intending to contract for interest? Presuming that these parties were reasonable beings, possessed of ordinal-)' ntelligence, we must conclude that they never would have so filled this blank if they were contracting for interest — it is not in accordance with usual practice, nor with the dictates of common sense so to do. These parties indicated’ an intent not to contract for interest just as plainly as though they had inserted the word “no” in the blank; -otherwise their deliberate act was absolutely without purpose or effect. [8] In Couturie v. Roensch (Tex. Civi App.), 134 S. W. 413, the court held that where, as in the case before us, a blank [469] after the words “rate of” and before the words “per cent.” 'had, before the note was signed, been drawn across by a pen, the trial court did not err in holding that there w'as such a latent ambiguity as justified admitting parol proof as to intent. It was, however, contended that the ambiguity was patent, and could not, therefore, be aided by oral evidence. The court said: “It occurs to us that, if the interest clause in said note is so altered as to make a patent ambiguity, it would not leave the note as if no reference had been made to interest, but would rather show an intentional erasure of the entire interest clause, and thereby indicate affirmatively that no interest was to be paid.” The judgment and order appealed from are reversed.