Ackens v. Winston

| New York Court of Chancery | Oct 15, 1871

The Vice-Chancellor.

It clearly appears from the evidence, and was admitted on the argument, that the intention of the parties to the mortgage was that interest should be payable yearly, and at the rate of six per cent, per annum. The scrivener who drew the papers testified that he was instructed by Murphy and by Ackens to insert in them provisions to that effect, and that he thought he had done so.

It was also admitted that the defendant, "Winston, had no notice of this intention of the parties, except so far as he is chargeable with it by the record of the mortgage.

I see no difficulty as to the rate of interest. At the date of the mortgage, the lawful rate in that county was six per cent. The bond calls for interest at the rate of lawful per cent., and the mortgage for interest from the first of April next after the date. The law fixes the rate; and the omission of the parties to name it cannot affect the complainant’s right to recover at that rate against the mortgagor or his assigns.

As to the time when interest is payable, it is clear from the terms of the mortgage that it was to be paid before the expiration of the ten years. This is not by implication, but by express statement. The language is “ within sixty days from the time it becomes due at any time during the ten years.”

The language is sufficient to notify the defendant who purchased subject to the mortgage, that periodical payments of some kind were intended, and to put him on inquiry as to what such periods were. He cannot, it is true, be affected by a reformation of the instrument which substantially changes their terms and alters their effect, however proper such a reformation may be as between the parties to the instruments, but he is subject to the agreement contained in the mortgage, and to such construction and interpretation of it as its obvious omissions or ambiguities may require. The evidence shows that yearly payments were intended. The prevailing usage as to mortgage debts is to pay interest as often, at least, as once a year. This is the true construction of the mortgage, and must bo so decreed. It does not contradict 03’ alter its terms, but settles its meaning and operation in accordance with the proofs, in accordance with the inference the defendant might reasonably have drawn from it, and in accordance with the information he might easily have acquired. Under these circumstances the complainant is entitled to recover the interest for each year remaining unpaid, together with his costs of suit.

The stipulation that in default of payment of interest within sixty days after the same becoming due, the whole principal shall be payable, cannot be enforced in this suit. This is so, not because the stipulation works a forfeiture which equity does not favor, but because the immediate payment of the whole principal is declared in the mortgage to be dopendont on conditions, and these conditions are not expressed with such explicitness and certainty as to entitle the complainant now to the aid of this court in enforcing them. The true moaning being now settled, the conditions may be operative as to the future, but not as to the past.

I respectfully advise a decree in pursuance of the above.