NATHAN RHINE v. ELLE ELLEN, 36 Cal. 362

By the Court, Sawyer, C. J. : On the first of March, 1866, the plaintiff, being in possession of a tract of land and a gold bearing quartz vein situate in the County of El Dorado, and known as the “Hermitage Ranch” and “Hermitage Quartz Mine,” conveyed the same, by deed duly executed and acknowledged, to Elle Ellen, of said county, defendant in this action, James E. Eddy, of San Francisco, and Charles Harris, Charles S. Maguire, and Benjamin Dickerson, Jr., of the State of Massachusetts, in the proportions of one half to Dickerson, and one eighth each to the other grantees.

The conveyance is by deed of grant, bargain, and sale, and purports on its face to have been made “for and in consideration of thirty-two thousand dollars, lawful money of the United States, to him in hand paid, the receipt whereof is hereby acknowledged at, or before, the ensealing and delivery of these presents.” This action is to recover of defendant, Ellen, four thousand dollars, the amount of the purchase money corresponding to the proportion of one eighth conveyed to Ellen, which the plaintiff alleges, has never been paid.

The plaintiff, in his complaint, alleges the contract, to be somewhat different from what it would be upon the construction of the instrument itself. Instead of the consideration being an entire sum paid by all the grantees jointly, it alleges, in effect, that the share of each grantee was sold separately for a corresponding portion of the consideration, and that each party agreed to pay his proportion, and no more, and that defendant’s portion is four thousand dollars in gold coin, and no more, he not being liable for any portion due from his cotenants, and they not being liable for his.

It alleges that the other grantees have paid their portions, respectively, but that defendant, Ellen, notwithstanding the acknowledgment of payment in said deed, has never paid his share of four thousand dollars, nor any part thereof. He asks judgment for the amount due.

The answer denies the contract or consideration to be as alleged in the complaint, and alleges that the agreement between him and the plaintiff was, substantially, that defendant should take the share conveyed to him and manage and control it as he should see fit for a period of one year from the 2d of March, 1866; and if, at the expiration of said year, the defendant should elect to retain said one eighth, then he should pay to plaintifl* the sum of four thousand dollars; but if said defendant, at the expiration of said year, should not elect to retain and pay for said property, said plaintiff agreed to pay said defendant all moneys, expenses, and liabilities which said defendant should lay out, expend, or incur in, upon, and about said property; that the said defendant should improve said property, and put the same into a corporation or joint stock company, as he should think fit, and in that event, if he should elect finally not to retain the same, said plaintiff should pay all assessments, expenses, and moneys paid for improving the same, etc.; that the said arrangement, and not the sum of four thousand dollars, was the real consideration of the conveyance made; that, in pursuance of said understanding, he took said interest and managed it for one year, and had the same incorporated in pursuance of said agreement, and expended large sums of money in building a quartz mill and other improvements, and in working the mine; that, at the end of said year, and on the second day of March, 1867, he did not desire or elect to retain said property, and on that day so notified said plaintiff, through his (plaintiff’

s) agent, Hyneman—said plaintiff being at the time absent from the State of California-—that he would not retain and pay for said property, and then and there did tender an offer to said Hyneman for plaintiff all said property and a deed duly executed therefor, together with all the stock in the company incorporated, representing one eighth of said property, and being the entire interest conveyed, and demanded the amount expended by him in improving said property, etc.; that said agent refused to receive the same; and that he has ever since been ready and willing to deliver over said property, and he brings the conveyance into Court toube delivered up on receipt of the amount of his said advances.

The evidence fully sustains the allegations of the answer, and also shows the motives for making such an arrangement on the part of plaintiff, and that the defendant expended in improvements and working said mine over four thousand dollars. As the judgment for defendant is in accordance •with these facts, the Court must have found the issues in his favor.

The leading, and really the -only, substantial question'is, whether it was admissible for the purpose of showing that defendant is not liable to pay the sum claimed, to prove the real consideration as between plaintiff and defendant, upon which the conveyance was made—to show that there was no unconditional promise to pay the sum of four thousand dollars. The rule, as now established by almost the entire body of modern authorities, is, that, for collateral purposes, at least, the real consideration of a deed may be shown to be different from that expressed in the deed.

It cannot be proved that there was no consideration for the purpose of showing that no estate passed, and thereby defeating the operation of the deed, but it may be shown for other and collateral purposes. (Coles v. Soulsby, 21 Cal. 47; Hendrick v. Crowley, 31 Cal. 471.) The rule is announced and numerous authorities cited in Peck v. Vandenberg, 30 Cal. 23; and the whole subject is thoroughly discussed, the authorities reviewed in a masterly manner, and the true distinction stated with great discrimination and precision in McCrea v. Purmort, 16 Wend. 465. (See, also, Wilkinson v. Scott, 17 Mass. 257; Morse v.

Shattuck, 4 N. H. 232; Belden v. Seymour, 8 Conn. 311; Shephard v. Little, 14 Johns. 210; Bowen v. Bell, 20 Johns. 338; Coles v. Soulsby, 21 Cal. 51.) The rule established by these and numerous other authorities is broad enough to cover the point. This is a collateral personal action to recover the purchase money. It in no way calls in question the operation of the deed to pass a legal title to the grantees- named. It is not pretended on either side that it did not.

The plaintiff is himself obliged to rely on the rule as stated to show that the money has not been paid, against his express acknowledgment in the deed that it was paid. If it was competent to show, contrary to the express acknowledgment in the deed, that it has not been paid, in order to entitle plaintiff to recover, it must also be competent to show why it has not been paid, or that it was not to be paid at all, in order to defeat the recovery. The latter is as clearly for a collateral purpose as the former.

If it could be competent to show, for this collateral purpose, that the consideration was but one dollar instead of four thousand, such being the fact, in order to limit the amount of the recovery, as it clearly would be under the express adjudications cited, it must also be competent to show any other state of facts showing no liability at all. It must be borne in mind that there is no covenant at all in the deed to pay. The action is not brought upon any express covenant or promise found in the instrument.

The promise is implied by law from facts shown dehors the instrument, and contrary to its express acknowledgment. If a part of the facts constituting the transaction, upon which a promise is raised, are shown by plaintiff, it must be competent for the defendant to show the rest of the same transaction, from which it would appear that there was no promise. In fact the suit is not on the conveyance at all.

The whole agreement relied on for the recovery is outside of the conveyance, and that instrument is not offered as the contract sued on, hut it is offered for a collateral purpose, as an item of evidence to show a performance on his part, and as an acknowledgment by the defendant of the existence of certain facts, so far as they are favorable to his side. The mere acknowledgment of the existence of a fact may be rebutted by other evidence showing it to be false; but the covenants of a contract cannot be shown to be otherwise than as stated in the contract.

The words of conveyance of land are the operative words of the contract, and constitute the contract itself. But the acknowledgment of payment of the consideration, and of its amount, are but the acknowledgment of the existence of facts. The former cannot be contradicted, but the latter may be shown to be otherwise than as acknowledged. This is the distinction clearly drawn in McCrea v. Purmort. Mr.

Justice Cowan says: “Another principle, and one more universal than the former in its application, is, that wherever a right is vested or created, or extinguished, by contract or otherwise, and a writing is employed for that purpose, parol testimony is inadmissible to alter or contradict the legal and common sense construction of the instrument; but that any writing which, neither by contract, the operation of law, nor otherwise, vests, or passes, or extinguishes any right, but is only used as evidence of a fact, and not as evidence of a contract or right, may be susceptible of explanation by extrinsic circumstances or facts.

Thus a will, a deed, or a covenant in writing, so far as they transfer or are intended to be the evidences of rights, cannot be contradicted or opposed in their legal construction by facts aliunde-. But receipts and other writings which only acknowledge the existence of a simple fact'' such as the payment of money, for example, may be susceptible of explanation and liable to contradiction by witnesses. “A party is estopped by his deed. He is not permitted to contradict it; so far as the deed is intended to pass a right, or to be the exclusive evidence of a contract, it concludes the parties to it.

But the principle goes no further. A deed is not conclusive evidence of everything it may contain. For instance, it is not the only evidence of the date of its execution, nor is its omission of a consideration conclusive evidence that none passed; nor is its acknowledgment of a particular consideration an objection to other proof of other and consistent considerations. And by analogy, the acknowledgment in a deed that the consideration had been received is not conclusive of the fact. This is but a fact. And testing it by the reason of the rule which we have laid down, it may be explained or contradicted.

It does not necessarily and undeniably prove the fact. It creates no right; it extinguishes none. A release cannot be contradicted or explained by parol, because it extinguishes a pre-existing right; but no receipt can have the effect of destroying, per se, any subsisting right—it is only evidence of a fact. The payment of the money discharges or extinguishes the debt; a receipt for the payment does not pay the debt—it is only evidence that it has been paid.

Rot so of a written release; it is not only evidence of the extinguishment, but it is the extinguisher itself.” (16 Wend. 473, 474.) Row, in this case, the plaintiff offers the conveyance to show, among other things, that the consideration is acknowledged to be four thousand dollars. This is a fact which he is bound to prove in order to show a right to recover. But the same conveyance also acknowledges that the amount has already been paid.

This is, however, but the acknowledgment of the existence of a fact, and on this ground the plaintiff is allowed to show the fact to be otherwise, or he cannot recover, in the face of his own acknowledgment to the contrary. But the defendant can be in no worse position than he, and he is equally entitled to show that the other part of the acknowledgment, as to what the consideration was, is, also, not in accordance with the real facts.

Unless this is so, there would be one rule-of evidence for the plaintiff, who makes an acknowledgment of a fact in express terms, and a different rule for the defendant, against whom the acknowledgment of another fact is only implied from the fact of accepting a conveyance containing a statement of a fact made by the other party. The evidence was clearly admissible.

The question discussed in the briefs, as to whether it could be shown what the true consideration was, for the purpose of charging the defendant as a trustee, holding the property conveyed for the benefit of the plaintiff, does not arise in this action, and there is no occasion to discuss it here.

This is simply a collateral personal action to recover the purchase money, in which the plaintiff first attacks the clause of the deed acknowledging payment, for the purpose of enabling him to recover, and the only question is, whether the defendant can, also,- for the collateral purpose of rebutting the presumption of liability thus raised, by showing the consideration to be different from that acknowledged, and that there was no liability on his part to pay the amount demanded.

For these collateral purposes, we have no doubt that both parties stand upon the same footing, and "that both branches of the clause are open to examination upon other evidence. There is nothing in the other points made. If the consideration upon which the conveyance was made was invalid, as claimed, because it seeks to create a trust concerning land, it cannot affect the question of defendant’s liability in this action, for there is still no unconditional agreement to pay the sum of four thousand dollars claimed.

If it be conceded that the agreement which was made was invalid, so far as it sought to create a trust, that does not turn it into the agreement declared" on, which was not entered into at all. Defendant was to pay -the money if, after working the mine a year, he should desire and elect to make an absolute purchase and retain the property—not otherwise. Upon the point that defendant did not indicate his election in time, counsel are mistaken in assuming that defendant must surrender within a year.

The testimony, on the contrary, shows that he was entitled to work it the whole year, and make his election at the end of the year, not within it. The Court below must-be presumed to have so found in support of the judgment, and testimony is sufficient to justify that view. The plaintiff was absent from the State when the year expired.

On the very first day after the expiration of the year, at the latest, the defendant sought the plaintiff, and he being absent, finding a man claiming to be his agent, and whom plaintiff acknowledges to be his agent, notified him that he elected not to keep the property, and tendered him, for plaintiff, the conveyance of the property and of his right to the stock of the corporation to which it had been conveyed, in pursuance of the understanding between plaintiff and defendant. We think the defendant was in time, and that he did all that was required of him, under the circumstances.

There is some verbal criticism on the terms “mine” and “claim,” used by the witness in speaking of the understanding of the parties with reference to transferring the property to a corporation, or “incorporating the property,” as is the common phrase used by miners in relation to such matters; but there can be no doubt as to what the parties intended. The criticism is scarcely worthy of notice. It is evident that the ranch and mine were both in contemplation of the parties in all their transactions. There was no limitation as to when the corporation was to be created.

The larger portion of the property was conveyed by plaintiff to residents of Massachusetts; and it is evident, also, that the corporation was to be created with reference to putting the stock upon the Boston market. Long after the conveyance in question, plaintiff—according to the testimony of one witness—told him that “they were going to sell the mine in Boston, and his (Rhine’

s) one eighth would bring a nice sum of money.” There is nothing in the testimony that requires us to say, on this appeal, that defendant was not authorized to join in creating the “Hermitage Mining Company,” for the purposes of the agreement between the parties under the laws of Massachusetts. Wo find nothing requiring further notice, and nothing to justify a reversal of the judgment. Judgment and order denying new trial affirmed, and remittitur directed to issue forthwith.