Hines v. Hambrick

Roberds, P. J. On January 1, 1949, Mrs. Hines, by written agreement, leased to Hambrick a plantation in Tallahatchie County, Mississippi. She reserved the right to sell the property and terminate the lease and gave Hambrick the refusal to purchase it at such price as she might be offered and which she was willing to accept. On September 9, 1949, Mrs. Hines entered into a contract with Waldrup under which she agreed to sell and he agreed to purchase the plantation on stated terms, subject to the prior purchase right of Hambrick. On the same day, Mrs. Hines gave Hambrick notice of the price but not the terms,, which she had been offered. Negotiations were then had between Mrs. Hines and Hambrick, as hereinafter set out. On September 24, 1949, Mrs. Hines and Hambrick entered into a written agreement terminating the lease and adjusting and settling certain disputes pertaining thereto, as a part of which Hambrick waived and released all right to purchase the plantation. Hambrick filed the bill herein to set aside, on the ground of fraud, his settlement contract and the Waldrup purchase contract. He offered to purchase the property upon the terms set out in the Hines-Waldrup contract upon conveyance to him of title to the plantation. The chancellor sustained the prayer of the bill and Mrs. Hines and Waldrup appeal. The appeal involves these questions: First, did the provision in the lease giving Hambrick the preference to purchase at the “price” at which Mrs. Hines was willing to sell include the right in Hambrick to purchase on the terms Mrs. Hambrick was willing to accept? Second, was there an obligation on Mrs. Hines to disclose to Hambrick the terms? If so, was that obligation dependent upon a demand of such terms by Hambrick, — 364 — and, if so, does the proof herein disclose he made such demand? Third, was the settlement agreement binding upon Hambrick?' We have concluded the settlement agreement was and is binding upon Hambrick, and, therefore, do not discuss the first two propositions except as such discussion may bear upon the third question. We consider now the settlement agreement. Hambrick says it was procured through, fraud of Mrs. Hines. That fraud, he says, consisted in the failure of Mrs. Hines to disclose to him the terms of the Waldrup offer to purchase the plantation. The lease was for a period of five years, beginning January 1, 1949, with right in Mrs. Hines, the lessor, to sell the plantation and terminate the lease, and with the right in Hambrick, the lessee, ‘£. . .to purchase prior to any sale to any other party, and such rights shall be at the same price at which the Lessor may receive a bona fide offer.” The Waldrup offer was for $109,000, of which $10,000 was to be paid in cash, and the balance in annual payments over a period of ten years. On the day of the Waldrup contract, attorneys for Mrs. Hines wrote Hambrick that Mrs. Hines had received an offer at the named price without disclosing the terms of payment, asking- Hambrick to give notice whether he desired to exercise his option. Hambrick asked Oarlton, one of counsel for Mrs. Hines, whether this meant all cash and Oarlton said he so understood but would find out from Mrs. Hines, who resided in Memphis, what terms, if any, she would make him. He did contact Mrs. Hines and obtained terms. He informed Hambrick of the terms. In the meantime Hambrick had engaged Breland & Whitten as his attorneys. Hambrick testified they had full authority to represent him and to negotiate for terms with Mrs. Hines. These attorneys had a number of conferences with Oarlton & Henderson, counsel for Mrs. Hines. Finally, Oarlton informed — 365 — attorneys for Hambrick that Mrs. Hines would accept $32,500 cash, the balance payable in stated annual installments over a period of five years. Included within the described land was what was termed the “separate” or “lost” forty. Apparently Mr. Hambrick did not desire to purchase that forty acres. He and his attorneys were informed this tract might be omitted from his purchase. Breland informed Hambrick of the terms, and Breland testified that ‘1 Mr. Hambrick told me, he said he thought that would be all right; he had to go and see some other people, as I recall, he was intending to take somebody else in the transaction with him. And some days later he came back and told me the party didn’t want to go into it, and that he had decided he didn’t want to buy it himself, and it was then after that that this release' was drawn in the office . . . ”. Breland also testified “Mr. Hambrick had told me he had made up his mind that he didn’t want to purchase it on those terms and at that price.” No one claims that Mrs". Hines was requested to disclose to Hambrick, or his attorneys, the terms of the Waldrup proposal. The nearest thing to such a request was this statement of Breland: “Then I went to Mr. Carlton I think, and Mr. Carlton, as I recall, said that he had the proposal by Waldrup in his office, but he wasn’t privileged to show it to me- without his client’s consent, and I agreed with him that I didn’t think he ought.” No one, not even Breland, intimated in the testimony that Mrs. Hines was requested to disclose the Waldrup terms, or that her attorneys were asked to procure her consent for them to do so. The testimony is positive no one made such request of Mrs. Hines. On the other hand, Mr. Whitten testified that they, as attorneys for Hambrick, intentionally and deliberately refrained from asking for the Waldrup' terms. They did not want to know them. They feared Hambrick could not meet them and thereby would waive his right' to purchase. They preferred to negotiate with Mrs. Hines for terms to Hambrick, which they did. It might — 366 — be added that Hambrick testified on the stand that be could and would have purchased on the Waldrup terms had he known them. Breland suggested that all questions arising’ under the lease, as well as the option of Hambrick to purchase, should be settled by agreement between the parties. The parties themselves and their attorneys met in the office of Carlton & Henderson in Sumner, Mississippi, and, after a full discussion, entered into the following agreement, prepared jointly by all the attorneys: ‘ ‘ State of Mississippi ‘ ‘ County of Tallahatchie “This agreement made and entered into and executed iir duplicate originals on this the 24th day of September, 1949, by and between Mrs. Charlotte Hines, hereinafter called the Party of the First Part, and J. PI. Hambrick, hereinafter called the Party of the Second Part, Witnesseth: “(1) For and in consideration of the mutual agreements, undertakings, and releases herein contained, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as set out hereinafter. “(2) The party of the second part releases all rights to purchase that certain property described in the contract referred to hereinafter and specifically releases all right of all kinds under paragraph 7 of said contract, that contract being1 of date January 1, 1949, between the parties hereto and of record in Deed Book 89 at pages 361-65 of the records in the office of the Chancery Clerk of Tallahatchie County, Mississippi, in the Second District, at Sumner. “ (3) All rights under said lease and contract recorded at said Book 89 at pages 361-65 are hereby released and terminated as of December 31, 1949. “ (4) In a final accounting between the parties hereto, the party of the second part shall pay to the party of the first part a cash rental of Eight and No/100 Dollars — 367 — ($8.00) per acre on Three Hundred Twenty Five (325) acres, being a total of Two Thousand Six Hundred Dollars ($2,600.00), and the party of the first part agrees to accept said sum in full settlement of all cash rental due under the aforesaid lease contract. “ (5) On a final accounting between the parties hereto all sums expended by the party of the second part for labor and material in the- construction and repair of buildings on the leased property shall be credited against the indebtedness owing by the party of the second part to party of the first part. “(6) The party of the second part shall not be held accountable on final settlement with the party of the first part for any sums of money drawn by him for tenants’ and representing tenants’ shares in cotton seed, and any such amounts which have been debited as an indebtedness owing by the party of the second part to the party of the first part shall now be credited to such account. “ (7) All terms of said lease contract of record in Deed Book 89 as aforesaid shall remain in full force and effect until December 31, 1949, except as otherwise provided herein. “(8) In event the accounts of the parties hereto are not mutually agreeable, after adjustment as herein provided, all differences shall be arbitrated pursuant to Title III, Chapter 1, of the Mississippi Code of 1942. “ Witness our hands, the day and date first herein-above written. “/s/ Mrs. Charlotte Hines Mrs. Charlotte Hines “ /s/ J. H. Hambrick J. H. Hambrick” The instrument was then and there duly acknowledged by both parties. Is this agreement, executed by Ham-brick under these circumstances, binding upon him? We think so for two principal reasons. — 368 — First, we do not see that any fraud was practiced upon Hambrick under the lease contract. As stated, Mrs. Hines contends that the prior right of Hambrick in that lease to purchase the property at the same price as might be offered by another imposed no obligation to permit Hambrick to purchase upon the same terms as another. Whether right or wrong, which we do not decide, the contention is certainly legitimate and reasonable. But if the word “price” does include terms, Hambrick certainly should have requested Mrs. Hines to give him the terms. Mrs. Hines did not refuse to give them; she simply kept silent about them, and, as stated, it is uneontradicted that Hambrick did not want to know the terms. He had able counsel, and they thought that was the best strategy for Hambrick. The benefits Hambrick obtained under the settlement agreement indicate that was the best strategy. In the second place, there is no showing whatever in this record that Hambrick was deceived or misled into executing the settlement agreement. The only intimation of fraud is that he did not then know the Waldrup terms. Well, he knew he did not know them. No one represented or misrepresented them. He simply preferred to adjust all of his differences regardless of the Waldrup terms. And, in addition, had he requested the terms and Mrs. Hines had refused, and in that situation had he executed the settlement agreement, he would have waived whatever wrong Mrs. Hines had committed. At most, that would have been a violation of contract on the part of Mrs. Hines. There being- no fraud inducing him- to enter into the settlement agreement, he, by that act, waived all prior wrong of which he had knowledge when he made the settlement. “Where the ■ person defrauded after having knowledge of the fraud enters into a new contract concerning the same subject matter, or an agreement modifying the original contract, or renews the original contract for an additional term, or asks favors, as, for example, requesting an ex — 369 — tension of time for performance, lie will ordinarily be regarded as having waived the fraud in the original transaction . . .”. 37 C. J. S., Fraud, Section 69, p. 364, and authorities cited in footnotes. See the following Mississippi cases supporting the same principle: Pintard v. Martin, Smedes & M. Ch. 126; Edwards v. Roberts, 7 Smedes & M. 544; Georgia Pac. Ry. Company v. Brooks, 66 Miss. 583, 6 So. 467; Whittington v. H. T. Cottam Company, 158 Miss. 847, 130 So. 745, 76 A. L. R. 332; Blue Ribbon Creamery v. Monk, 168 Miss. 130, 147 So. 329, 782. Had Hambrick desired to maintain his contention that Mrs. Hines was under obligation to inform him of. the terms of the Waldrup' offer, he should have insisted upon that being done, and, if necessary, then instituted legal proceedings to enforce his right, rather than enter into another contract regarding the same subject matter, expressly waiving his right. Now, this settlement contract was a valuable agreement for Hambrick. This plantation contained 872 acres in all. The lease agreement stipulated that for purpose of rent payment the acreage would be 828 acres. The rent was to be one-fourth of the cotton and one-fourth of the cotton seed produced upon land planted to cotton, and cash rental of eight dollars per acre for the remaining acreage up to 828 acres. When this settlement was made, Mirs. Hines was insisting that Hambrick was obligated to pay cash rent upon 425 acres. Hambrick was contending that he was to pay cash rent upon 325 acres. In other words, there was a rent dispute between them of $800. It will be noted that in paragraph (4) of the settlement agreement, Mrs. Hines contracted away her contention and Hambrick got the benefit of that $800. In paragraph (6) Hambrick was given credit for all sums he had drawn for accounts of tenants and the shares of tenants in cotton seed. These amounts had been charged to Hambrick. Presumably, they had been drawn from Mrs. Hines, because she and Hambrick, on — 370 — the date of the lease agreement, had entered into a contract under which Mrs. Hines was to advance Hambrick as much as $10,000 with which to produce his crop. This paragraph recites the amounts had been charged as an indebtedness against Hambrick. The total of such charges is not shown in the evidence. However, the settlement agreement shows that, whereas Hambrick had been charged with them, yet as a part of this settlement he was credited with them. The settlement agreement also provides for arbitration, under the law, of any further differences which might arise between the parties. All in all, it is clear this settlement agreement was very valuable to Hambrick. It will be further noted that in paragraph (4) of the settlement Hambrick was to pay $2,600 cash rent. The Waldrup contract was filed for record October 24, 1949. On November 29 thereafter, Hambrick paid to Mrs. Hines the $2,600 cash rent. Also, on the date of the Waldrup purchase contract he had put up $7,500' earnest money in case Hambrick did not purchase the property and the sale to him was consummated. The total cash payment by Waldrup was to be $10,000. After the execution of the Hambrick settlement agreement, and with knowledge of such settlement, Waldrup, before the institution of this suit, paid Mrs. Hines $2,500 more, which, added to the $7,500 he had already deposited in escrow, aggregated the total cash payment of $10,000. It is argued by appellant that the recording of the Waldrup' contract was constructive notice to Hambrick and that his payment thereafter of $2,600’ under the settlement agreement was a ratification of that agreement and is a bar to any right he may have had to set it aside. Also, it is urged that the payment by Waldrup of the $2,500 and payment outright to Mrs. Hines on the purchase price of the $7,500 theretofore held in escrow, having knowledge of and relying upon the settlement agreement would preclude Hambrick from attacking the Waldrup contract and the settlement agreement. However, we deem it — 371 — ■unnecessary to pass upon these contentions since, as shown above, we think Hambrick’s bill should have been dismissed on other grounds. We set this out to give a clear picture of the situation between the parties. We emphasize, as the decisive point in this case, that no one misled or deceived or induced Hambrick to make the settlement agreement. If it be said he was wronged by not being informed of the Waldrup terms, the complete answer is that he made the settlement contract knowing the Waldrup trade included terms, and that he did not know them, had not asked Mrs. Hines for them, and his attorneys said they did not want to know them. He had knowledge of the wrong, if there was wrong. He had a right to waive it. He did waive it by his deliberate and free agreement adjusting- and settling all matters between himself and Mrs. Hines, supported by valuable considerations, which he and his attorneys determined was to his benefit, and which later was fully performed by both parties. Reversed and decree here dismissing the bill.