
    Berry v. The Cleveland Trust Co., Trustee.
    
      (Decided December 6, 1935.)
    
      Messrs. Hamilton, Kramer é Wiles, for plaintiff in error.
    
      Messrs. Fauver & Fauver, for defendant in error.
   Funk, P. J.

On February 3, 1932, the Cleveland Trust Company, as trustee under the will of David S. Troxel, dedeased, filed its petition in the Common Pleas Court of Lorain county against Clement R. Bates, Paul F. Berry, and certain alleged mortgage lien holders, for foreclosure of a mortgage on certain real estate in the city of Elyria, and for personal judgment against Bates and Berry on the note secured by such mortgage. Personal judgment was asked against Berry by virtue of a provision in the deed to Berry which purported to obligate Berry to assume and agree to pay the mortgage.

The record discloses that on and prior to April 6, 1926, the Cleveland Trust Company, as such trustee, sold and conveyed certain real estate in Lorain county to Clement R. Bates for the sum of $125,000, of which $25,000 was paid in cash, and for the balance of which a note secured by first mortgage on the premises was given by Bates to the trust company as such trustee; that such note and mortgage were the basis of the suit in the court below; and that on April 6, 1926, Bates sold and conveyed the premises by warranty deed to the Elyria Properties Company, a corporation, clear of encumbrance except the mortgage for $100,000.

There is nothing in the deed or in the evidence to indicate that the Elyria Properties Company agreed to assume and pay the mortgage, and it was not made a party to the action.

It was thereafter learned that Bates had died prior to the time the petition was filed, so of course no attempt to serve summons upon him was made.

The record further shows that the Elyria Properties Company conveyed the premises to Paul F. Berry by warranty deed dated September 15, 1926, which deed was filed for record on October 4, 1926, and contained the provision that the premises were “free and clear from all encumbrances whatsoever excepting first mortgage in the amount of $100,000, now reduced to $95,000, held by the Cleveland Trust Company, Trustee, and a second mortgage in the amount of $25,000 now reduced to approximately $24,000 to the Fidelity Mortgage Company and taxes for 1926, which the grantee herein assumes and agrees to pay”; that Berry took possession of the premises under such deed, and, up to the time the foreclosure suit was commenced, collected the rents for the premises, and paid the interest on the mortgage debt for about five years and $2,500 on the principal; and that on November 23, 1932, and during the pendency of the case below, but before personal service was obtained upon Berry, he transferred the premises by quit-claim deed to one William E. Knight, who was the agent of Berry that closed the deal with the Elyria Properties Company, and who, upon his own motion, was made ,a party defendant and filed his answer in the court below long before the trial.

The deed from Berry to Knight was duly filed for record on November 26, 1932.

Although numerous alias summonses were issued for Berry, personal service was not obtained on him until July 31, 1933.

The only matter contested at the trial in the Common Pleas Court, other than objection to the jurisdiction over the person of Berry and the question of misjoinder of causes of action against the several parties defendant, was the question as to whether or not Paul P. Berry had assumed and agreed to pay the mortgage debt and thereby became personally liable therefor.

The case was tried before the court and a jury. At the close of all the evidence the trial judge overruled a motion of the defendant Berry for a directed verdict in his favor, and sustained a motion of plaintiff for a directed verdict in its favor, to all of which defendant Berry excepted. Motion for a new trial was duly filed and overruled, and the cause is here on the petition in error of Berry against the Cleveland Trust Company as trustee.

Berry will be hereinafter referred to as defendant, and the Cleveland Trust Company as such trustee, as plaintiff, as they were below; they being the only parties in this court in this case.

Counsel for defendant claim numerous errors prejudicial to him, committed in the trial court, among them being the overruling of his motion to quash the service of summons, the overruling of his objection to the jurisdiction of the court over his person in that case, the overruling of his motion to strike certain matter from the amended petition and to make the same more definite and certain, the overruling of his demurrer to the amended petition, the overruling of his motion to direct a_verdict in his favor both at the end of plaintiff’s case and at the close of all of the evidence, and the sustaining of the motion, of plaintiff at the close of all of the evidence to direct a verdict in its favor, the rejection of certain evidence offered by defendant, and the overruling of his motion for a.new trial.

We have carefully considered all of the numerous errors complained of by defendant, all of which were argued orally at length and are argued at great length in both the original and the reply briefs of defendant, and we find none of them to be prejudicial to him, save and except one, which we will hereinafter discuss.

The amended petition alleged, as a part of the first cause of action, “that as a part of the consideration of the transaction” whereby the Elyria Properties Company deeded the premises to Paul F. Berry, “the defendant Paul F. Berry assumed and agreed in writing to pay the mortgage indebtedness to this plaintiff; that said indebtedness was the promissory note above described.”

The answer of defendant, after denying the jurisdiction of the court over his person and alleging in substance that the several causes of action against the several defendants were improperly joined, was a general denial.

The reply to the answer was also a general denial.

At the trial defendant claimed that it was not a part of the agreement between him and the Elyria Properties Company that he would assume and agree to pay the mortgage, and that he did not so agree, that he never saw the original deed to him, and not even a copy of it until the time of trial, and that although he knew that a deed to him for the property had been executed and delivered to his'agent, William E. Knight, for him, he did not know that it contained such a provision.

Defendant further claimed that his deal with the Elyria Properties Company was merely an exchange of equities, whereby the properties company offered in writing to convey to him such real estate, encumbered by such mortgage, in exchange for the outstanding stock in a certain corporation, all of which was owned by him, and which written proposition he, through his agent, Knight, accepted in writing at the bottom of the letter containing such proposition, and that before he so accepted such proposition, the Elyria Properties Company wrote another letter clarifying or modifying the terms thereof as to taxes, and that the two letters constituted the agreement between him and the Elyria Properties Company.

Defendant, in support of Ms claim, offered in evidence both of the letters, duly identified, and wMehare marked, respectively, defendant’s exhibits 5 and 5A, and both of which, on objection thereto by plaintiff and over defendant’s exception, the court refused to admit in evidence — largely upon the theory that the terms of the deed could not be varied under a general denial and in the absence of such allegations in defendant’s answer as would support a prayer for the reformation of the deed.

"Was this ruling of the court erroneous and prejudicial to the defendant?-

First. It will be noted that plaintiff is in the position of a third person seeking to take advantage of a claimed benefit accruing to it by reason of an alleged agreement between defendant and the Elyria Properties Company; and as such company was not only not a party in the trial court but was not a necessary party, defendant was unable to ask for a reformation of the deed in such action.

Second. An examination of the two letters, which apparently constituted the contract between the Elyria Properties Company and defendant for the deed to defendant for the real estate described therein and in the mortgage, shows that the first letter was dated August 18, 1926; that the second letter was dated September 9, 1926, and that defendant, in writing, by his agent, Knight, accepted the proposition on September 9, 1926; that the first letter was silent on the matter of defendant assuming and agreeing to pay the mortgage, but that, as to taxes, it contained, in the first paragraph on page 2, the provision that “The taxes are due and payable December 20, 1926, and are to be assumed by Paul Berry”; and that the second letter, which is marked “defendant’s exhibit 5A,” read as follows: “Referring to our letter of August 18, 1926, page two, first paragraph, in regard to the taxes mentioned, "we hereby agree to pay any and all taxes due and payable in June, 1926” — which latter letter seems to clarify, rather than modify, what was said in the first letter about taxes, but which says nothing whatever about the payment of the mortgage.

It is thus apparent that the language in the deed is in complete harmony with the contract as set forth in the letters, except that, as to the mortgage, the deed adds the words “which the grantee herein assumes and agrees to pay,” which provision, as applying to the mortgage, was not mentioned in either of the letters.

It is definitely settled in Ohio that a written agreement between the grantor and the grantee for the conveyance of real estate is not executed by and merged in the deed as to the stipulations to be performed by the grantee; that, while the agreement to convey is performed by the execution and delivery of the deed conveying whatever was, by the terms of the contract, to be conveyed, it does not execute any of the stipulations of the grantee as to the consideration to be paid for the property; and that the agreement as to matters other than mere conveyance is not thus performed or satisfied. The deed is to be considered as a part of the transaction, in connection with, and not to the exclusion of, the contract between them; that is, both the deed and the contract are parts of one transaction, and the rights of the parties must be determined by the terms of the whole contract. Conklin, Trustee, v. Hancock, 67 Ohio St., 455, 66 N. E., 518; Brumbaugh v. Chapman, 45 Ohio St., 368, 13 N. E., 584; Reid v. Sycks, 27 Ohio St., 285; Metcalf v. Lay, 16 Ohio Law Abs., 487.

Third. There is also a well-established rule' that seems to be fundamental under our Code, to the effect that a defendant, under a denial, should be permitted to prove such facts as go directly to disprove the facts denied, which, although apparently new matter, instead of confessing and avoiding, tend to disprove the facts alleged in the petition; the result being that the plaintiff is prevented from sustaining his claim because of certain other facts which are inconsistent with them. In other words, any affirmative fact that is inconsistent with the facts alleged may be proved under a denial, because the proof of one is the disproof of the other.

On the other hand, evidence of facts which are not inconsistent with the facts alleged in the petition, and do not tend to defeat such facts, but which, when considered in connection with the facts alleged in the petition, show that the plaintiff has not the right that arises from the facts alleged in the petition, is incompetent under a denial; it being necessary, in order to make the evidence of such facts admissible, to specifically allege such facts in the answer. In other words, facts that are consistent with the facts alleged, but show nonliability notwithstanding the facts as alleged, constitute new matter; and such facts must be pleaded in order to make the proffered proof of them competent and admissible in evidence.

Phillips on Code Pleading, Section 380. Bliss on Code Pleading, Section'327. Pomeroy’s Code Remedies (5th Ed.), Section 549.

Under the above-mentioned rules, we hold that defendant’s exhibits 5 and 5A were competent evidence, under his general denial, upon the issue as to what the real contract between defendant and the Elyria Properties Company was, although such exhibits are not necessarily conclusive as between the parties to this action.

Had the exhibits 5 and 5A been admitted, it would then have been the duty of the trial court to have submitted the case to the jury, and of course the error in rejecting them was prejudicial to defendant, as he was thereby deprived of having the jury pass upon the issues in the case between him and the plaintiff.

As to defendant’s other exhibits, consisting of the minutes of several meetings of the board of directors of the Elyria Properties Company, which minutes relate to such transaction; a certified copy of the resolutions authorizing its president and secretary to sign such papers as are necessary to complete the deal; and several letters pertaining to the stock defendant transferred to the Elyria Properties Company in payment for such real estate — all of which were refused to be admitted in evidence:

It will be first noted that, as the properties company is a private corporation, such certified copies of resolutions passed by its board of directors, marked defendant’s exhibits 1 and 8, were not competent evidence. We are also of the opinion that the.letters marked defendant’s exhibits 6 and 7, pertaining to the stock of the corporation which defendant was assigning to the properties company for the real estate, were not competent evidence in this case.

It will be further noted that this is not an action between defendant and the Elyria Properties Company, and as there is no claim of any discrepancy between the minutes of the board of directors of the properties company and the two letters, and as there was no issue as to the authority of the president and the secretary of the company to sign the two letters and execute and deliver the deed to defendant, and no evidence tending to question such authority, we are' of the opinion that the minutes of the properties company, marked defendant’s exhibits 2, 3 and 4, are not competent under the facts and circumstances shown by the record herein.

No question is made as to the foreclosure of the mortgage and sale of the premises, and as to such proceedings the judgment is affirmed; but for error in refusing to admit in evidence defendant’s exhibits 5 and 5A, and directing a verdict for plaintiff at the close of all the evidence, that part of the judgment relating to the personal liability of the defendant Berry is reversed, and the cause is remanded to the Common Pleas Court for further proceedings according to law.

In the companion case of W. E. Knight v. The Cleveland Trust Co., No. 748, we have examined all of the claims of error, and find no error therein prejudicial to plaintiff in error. The judgment and decree as to W. E. Knight is therefore affirmed.

Judgment affirmed in part and reversed in part.

Stevens and Washburn, JJ., concur in judgment.  