This is an action to enforce the application of the proceeds of the sale of certain mortgaged property to the payment of a mortgaged from the defendant Gibson to the plaintiff. These mortgaged chattels had been sold by the defendant Association, and the proceeds of the sale applied on a certain mortgage for $15,006.06. But the said Association had by instrument in writing and by its conduct agreed that the plaintiff's mortgage of $884.32 should first be paid prior to the payment of the $15,006.06 mortgage.
This suit arises from the following facts:
The defendants, E.W. Gibson and E.W. Gibson, Jr., had been farming on a large scale and had become heavily involved. During the years 1925 and 1926, their farming operations were financed by the South Carolina Agricultural Loan Association, who rediscounted the Gibson notes secured by chattels and crop mortgage with the Federal Intermediate *Page 480 Credit Bank of Columbia, S.C. By reason of unpaid balances from both years' operations, same amounting to approximately $15,000 at the end of the 1926 season, the Gibsons met with difficulty in financing 1927 farm operations. These balances had previously been secured by real estate mortgages upon lands of the Gibsons already mortgaged.
So that in the spring of 1927, in order to reduce the amount of its new advances to the Gibsons, the plaintiff at the instance of the Gibsons and at the solicitation of the defendants and relying upon certain statements of the officials of the Association and Bank, agreed to sell to the defendant Gibsons the guano needed to make the 1927 crop. The purchase price of this guano was to be paid in the fall. At the same time, the Association agreed to advance the Gibsons $6,500 of cash money needed for the 1927 farm operations. However, only $5,500 was actually advanced.
Testimony shows that the cash advances from the Association of $5,500 was secured by a first mortgage on the live stock and all crops of the Gibsons, and by pledge of some balance due from the marketing association on the 1925 cotton. The cost of the fertilizer was secured to the plaintiff by a mortgage on the crops alone, to be raised by the Gibsons in 1927, which mortgage was for $5,000. Next, the balances from the previous year, of $15,006.06, were merged and secured by a new second mortgage on the live stock and chattels, and by a third mortgage on the crops to the Association. While there was some irregularity in the dates of the recording, the rank of the several liens was fixed by contract in the various instruments.
During August, 1927, the Gibsons discovered that their cotton was on the point of being annihilated by the inroads of the boll weevil. Although it had a much larger amount at stake, the defendant Association would not extend further credit to the Gibsons for the purpose of fighting this pest and saving the crop for the benefit of itself and of the *Page 481 Fertilizer Company, and incidentally for the Gibsons. So, again, we find the plaintiff, Catawba Fertilizer Company, coming to the rescue of the Gibsons and to the assistance of the Association and Bank by offering to furnish dusting machines and calcium arsenate to the extent of $884.32. And as an inducement to the plaintiff furnishing the much-needed implements and supplies to preserve the crop from this pest, the Association and Bank executed an instrument (Exhibit 2) by which instrument the Association and Bank agreed that "the said $900.00 hereinabove mentioned should be paid prior to the payment of the $15,006.06 mortgage."
Upon the execution and delivery of this instrument, immediate delivery of the dusting machines and calcium arsenate was made to the Gibsons for the purpose of saving their crop.
However, the Association and Bank had been tardy in furnishing supplies for the crop, the papers not being executed until April 29th of that year, so that there was a crop shortage. From the proceeds of the sale of cotton, the first mortgage was paid, and approximately $2,084.29 was paid on the plaintiff's mortgage. When it was ascertained that the crop was insufficient to pay the plaintiff's mortgage in full of $5,000, and its August mortgage of $884.32, the plaintiff demanded that the defendant Association and Bank sell the live stock and that the proceeds of the live stock be applied according to contract. This it refused to do, and thereupon this action was brought.
During the progress of the trial, the plaintiff introduced in evidence the waiver (Exhibit E) as a part of its proof. The defendant Association objected on the grounds that this waiver had not been pleaded. The trial Judge took the view that this waiver was evidentiary and so clearly a part of the history of 1927 financial arrangement of the Gibsons that it was not necessary to plead it, but, should there be doubt upon this point, allowed the plaintiff to amend to allege this instrument. *Page 482
None of the defendants offered any testimony and, at the conclusion of the plaintiff's evidence, the defendant moved for a directed verdict. The jury was discharged and the plaintiff likewise moved for a directed verdict in its favor. The Court was first inclined to grant the motion in behalf of the defendant but, after reflection, during the noon recess, his Honor announced that the view expressed by him in the morning session was in error, and found for the plaintiff the amount mentioned in the waiver (Exhibit E) "not so much on the two-fund doctrine as on this instrument." The decree was then entered.
Appellants state issues raised by exceptions are:
1. Application of the two-fund doctrine.
2. Error in the admission of evidence offered by plaintiff, over objection of the two bank defendants.
3. Error of the Court in allowing plaintiff to amend its complaint in accordance with said evidence.
4. Error of the Court in granting judgment in favor of the plaintiff in accordance with its amended complaint.
5. Error of the Court in allowing plaintiff to add to said judgment interest on same for about a year and a half previous to date of said judgment.
6. Error of the Court in his final refusal to grant judgment in behalf of the two bank defendants.
7. Error of the Court in his construction as placed upon the release admitted in evidence over objection of the two bank defendant. On pages seventeen, eighteen, and nineteen of the case we find this release:
"Know all Men by These Presents: That whereas, E.W. Gibson, on the 12th day of April, 1927, executed to the South Carolina Agricultural Loan Association a certain mortgage securing the payment of the full and just sum of Fifteen Thousand Six and 06/100 ($15,006.06) Dollars, the same being a third mortgage covering certain crops, as is more particularly described therein, and recorded in the office of the Clerk of Court for Chester County, in Mortgage Book 249, page 21, and *Page 483
"Whereas, the said mortgage was subsequently assigned to the Federal Intermediate Credit Bank of Columbia, S.C. by the said South Carolina Agricultural Loan Association, and
"Whereas, it is desired by the said E.W. Gibson, to obtain from the Catawba Fertilizer Company certain Calcium Arsenate and Dusting Machinery,
"Now, therefore, in consideration of the said Catawba Fertilizer Company furnishing to the said E.W. Gibson Calcium Arsenate and Dusting Machinery to the value of not exceeding Nine Hundred ($900.00) Dollars, the said Federal Intermediate Credit Bank of Columbia, S.C. and the said South Carolina Agricultural Loan Association hereby release the lien of their mortgages for Fifteen Thousand Six and 06/100 ($15,006.06) Dollars, which mortgage is a third mortgage in favor of the said Catawba Fertilizer Company to the extent of Nine Hundred ($900.00) Dollars only and hereby agree that the said Nine Hundred (900.00) Dollars hereinabove mentioned shall be paid prior to the payment of the Fifteen Thousand Six and 06/100 ($15,006.06) Dollars mortgage; it being the intent and purport of this instrument to make the Nine Hundred ($900.00) Dollars a second mortgage, equal in rank to the one now held by the Catawba Fertilizer Company, and the same shall in no manner affect the first mortgage covering said crops heretofore executed by the said E.W. Gibson.
"In witness whereof, the Federal Intermediate Credit Bank of Columbia, S.C. by H.G. Arnold, its president, and the South Carolina Agricultural Loan Association, by F.E. Hinnant, its Manager, have hereunto set their hand and official seals at Columbia, S.C. this 23rd day of August, 1927.
"Federal Intermediate Credit Bank of Columbia, S.C. by Howard C. Arnold, its President.
"South Carolina Agricultural Loan Association, by F.E. Hinnant, its Manager. *Page 484
"Signed, Sealed and Delivered in the presence of:
"Eoline Stack, "Mildred Sheppard."
It is conceded that the respondent had a mortgage on the crops, but not on the stock. The crops brought $2,000.
It is the office of a pleading to allege the ultimate facts to be established, and not the evidence to establish them. Jonesv. Atlantic Coast Lumber Corporation, 92 S.C. 418,75 S.E., 698.
Evidentiary facts need not be pleaded in order to be admissible in evidence. Black v. State Company, 99 S.C. 432,83 S.E., 1088.
Section 192 of the Code of Civil Procedure of 1912, says that "The complaint shall contain: * * * A plain and concise statement of the facts constituting a cause of action, without unnecessary repetition." The only fault that can be found with the plaintiff's complaint is that it lacks conciseness, and contains too much repetition. He stated the facts constituting his cause of action. The order of the Circuit Court requires him to add allegations of law, to wit, whether his action is legal or equitable, that is, whether it is an action on the note set out in the complaint, or an action on the note and equitable mortgage alleged in paragraph 3 of the complaint, and for the foreclosure thereof; also, the manner in which said written instrument is claimed to give the plaintiff a lien. These are the questions for the Court. The order also required him to set forth in the complaint at least a part of the evidence upon which he relies to prove the facts alleged. Evidentiary matter ought not to be set out in the pleadings. They should contain only allegations of facts — naked — accompanied by as few modifying adjectives as the exigencies of the case will permit.
Defendant knows, or ought to know, what instruments he gave plaintiff. If he has forgotten their terms, the Code of Procedure provides a method whereby he may obtain an *Page 485 inspection and copy them. Bell v. Jackson, 93 S.C. 556,78 S.E., 679, at page 681.
The trial Court properly admitted the instrument. The defendants by their answer admitted paragraphs 6 and 7 of the complaint, in which was alleged the execution and delivery of the August mortgage. No particular kind of action was denominated in the complaint. The plaintiff merely sets forth all facts and circumstances, and asserted its rights to a part of the money collected by the defendants under the facts and circumstances set forth in the complaint. The defendants well knew that the waiver was required before the August mortgage was given.
The defendants cannot claim surprise. The instrument, Exhibit E, was executed by both Association and Bank. It was prepared by their attorney in Columbia. Although all the 1927 negotiations had been with Judge Peurifoy, president of the S.C. Agricultural Association, the defendants did not even have him present at the trial, nor did they account for his absence. The record clearly indicates they never intended offering any testimony, knowing that the plaintiff's showing as to the facts could not be controverted. The facts alleged in the complaint are sufficient to justify the decree.
There can be only one practical and sensible interpretation of the waiver. This is that the Association and Bank agreed substantially that they would waive the strict construction of the two-fund doctrine, that the principal creditor should suffer no loss to this extent — that the $884.32 mortgage be paid in full before any payment be made on the mortgage for $15,006.06. The instrument waived the rights of the Association for its full protection under the rule. Its mortgage for $15,006.06 was released for the full payment of the $884.32 mortgage. The defendants contracted to set aside the qualifying protection of the two-fund doctrine, whereby the primary creditor is normally paid in full. It specifically agreed that the $884.32 mortgage be paid in full. The Association and Bank knew that the only source of *Page 486 payment would be the proceeds of the sale of the stock and crops of the Gibsons. The defendants, better than anyone, knew the precarious financial condition of the Gibsons.
The Fertilizer Company by advancing the guano and arsenate saved the defendant from making, in 1927, advances of $5,884.32. All of this was to the advantage of the defendant Association and Bank. It had been reimbursed all of its 1927 mortgage from the sale of lint cotton in the sum of $5,000. The plaintiff had received only $2,084.29 of its advances.
The Court did not err in allowing amendment under the circumstances. Jordan v. Jordan, 130 S.C. 330,125 S.E., 910.
"Where the amendment of the complaint does not change the nature of the cause of action but conforms the allegations to the proof, it is entirely within the discretion of the Circuit Judge to allow it." Sumter County Duroc Stock Farm v. DuBose, 127 S.C. 551, 121 S.E., 673.
A motion during trial to amend pleadings to conform to the proof should not be denied, where the amendment does not work a surprise on the opposing counsel. Adams v.South Carolina G.E.R. Co., 403, 47 S.E., 693.
In allowing a plaintiff to amend complaint to allege a note under seal in lieu of a promissory note in rescinding an order of nonsuit, the Court held that the Court had power to correct any error during the term in which it occurred, and that the amendment to the complaint was properly allowed as there had been no denial of a material allegation, and no failure of proof, only a variance between the proof and an allegation of the complaint. Moore v. Christian, 31 S.C. 337,9 S.E., 981.
See, also, the following provision of the Code:
Section 436, 1922 Code, Volume 1.
A different cause of action was not set up. The plaintiff claimed that it had a right to part or all of the $2,025 received from the live stock. These were the only funds available *Page 487 with which to pay the $884.32, according to the August waiver. The complaint sets forth the execution of all mortgages, including the August mortgage, and makes claim under the facts as alleged for this sum of money. It is not confined to a legal conclusion denominated two-fund doctrine. It may claim it under the circumstances surrounding the execution of the mortgage set forth in paragraphs 6 and 7 of the complaint. Just under what facts the plaintiff could recover this mortgage from the defendants was a matter of evidence and the best evidence was this particular instrument executed by the defendants and not by a third party, not an instrument of which the defendants had no knowledge, but an instrument which the defendants had executed and delivered to the plaintiff.
I see no error as complained of.
MR. JUSTICE BLEASE concurs.