11 S.D. 210 | S.D. | 1898
In this action to foreclose a mortgage on cer tain church property, executed to plaintiff by a corporation, the Board of Trustees of the First Methodist Episcopal Church of Sioux Falls, in their official capacity, to secure their joint promissory note,for $8,000, gjven for the exclusive'benefit of said corporation, plaintiff sought to obtain a deficiency judgment against each of them, and also against the defendants John H. Chapman, one of the joint obligors, and John A.Spalding, who, it is alleged, subsequently purchased the property with Chapman as a co-partner, and, as a part of the consideration, expressly assumed and agreed to pay the entire mortgage indebtedness. At the close of plaintiff’s evidence, on motion of counsel for defendanhSpalding, the action was dismissed as to him; and, at the conclusion of the case, upon a finding that plaintiff, for a valuable consideration, and since the execution of the deed to Chapman, had granted him an extension of the time of payment, without their knowledge or consent, all the other defendants were absolved from liability, and a decree was entered foreclosing the mortgage, and adjudging said Chapman to be the only defendant against whom execution might issue for any deficiency arising from a sale of the mortgaged premises. From that part of the judgment decreeing said
The evidence upon which appellant relies to justify a deficiency judgment against the trustees as makers of the §8,000 note and mortgage, and to hold Spalding liable under Chapman’s assumption of the payment thereof, as a part of the purchase price of the property, will be considered in connection with the law found to be applicable thereto. Subject to appellant’s mortgage, which had npt yet matured, Chapman, it appears, purchased the property from the Board of Trustees for §15,000, by assuming this mortgage, and by paying $7,000 in cash, obtained at the time from the respondent Spalding. It was shown that Chapman was a real-estate broker, and, as the agent of the church organization for the sale of the property, had full authority to dispose of the same on the terms above mentioned, and to retain §1,000 as his commission. In the spring of 1891, while visiting in the Bast, Chapman called upon Spalding, whom.he had personally known for many years, and in the course of conversation mentioned the mortgaged premises, and described the improvements thereon, when it was suggested by Spalding that Chapman .purchase the property himself for §15,000, by assuming the incumbrance thereon, and by paying the §7.000 balance in cash, which, it was agreed, Spalding should loan for that purpose, taking a second mortgage upon the property as part security. It was found at the trial that immediately, and be fore the note matured according to its terms, appellant was advised that Chapman had purchased theproperty, assuming, as part consideration therefor,
As the note was made exclusively for the benefit of the church, and the signers thereof received none of its proceeds, a court of equity cannot ignore a contract for an extension clearly gatherable from the letters properly offered and received in evidence. Referring to the matter in her letter to .Chapman written three days before the note became due for the first time, she inquires: ‘‘Would you like to keep the money at the same rate of interest? If so, please state some time.” Promptly answering, Chapman expressed thanks for the kindness in proposing an extension of the note and accepted the proposition as follows: “I should like to keep the money for another year on the same terms. ” In addition to the foregoing, the record contains numerous letters- passing between Chapman and appellant which conclusive^ show the existence
For the purpose of holding Spalding liable for the deficiency arising from the foreclosure and sale of the property, if is alleged in the complaint that he purchased the same with Chapman, and assumed and agreed to pay off and satisfy the mortgage. It is therefore necessary to examine the record, and
At the time Chapman negotiated for the church property, subject to the $8,000 mortgage, and borrowed $7,000 from Spalding with which to make the cash payment, less the $1,000 commission, concerning which the ,latter was not advised, he also purchased from said Spalding a New Hampshire farm, the consideration being $6,000, the payment of which, together ■with the $7,000 thus borrowed, was secured by certain mortgages upon the farm and upon the church property above mentioned; and in connection with the transaction, the following
memorandum appears to have been made:
J. H. Chapman buys meeting-house lots with buildings, at Sioux Falls, South Dakota, for.......... $15,000
And buys Wilton farm for.......................... 6,000
$21,000
Sioux Falls property subjecu to mortgage of $8,000. at 7 per cent., due in two years................... $ 8,000
Gives note to J. A. Spalding for $6,000, and 2nd mortgage on that property, and first mortgage on farm 6,000
Note for $1,000 to J. A. S.; note for $1,000 to J. A. S.; note for $5,000 to J. A. S. ■...................... 7,000
With 3rd mortgage on Sioux Falls property, and 2nd on farm....................................... $21,000
J. A. S to have use of farm for interest on his $5,000 note. Other acct., that is, $8,000 here and $8,000 there; an acct. to be rendered as to income, etc., and settlement made, each to pay one-half of all lacking from income.
[Signed]
J. H. Chapman, J. A. Spalding1.
I hereby agree that, after all notes against said church property and said farm are paid, to divide equally with J. A. Spalding whatever may remain in my hands from the sale of the above mentioned property.
May 15, 1891. [Signed] J. H. Chapman.
The exact and only remaining question is whether the foregoing circumstances and memoranda disclose a transaction by which Spalding is made liable as a party to the covenant, by which Chapman assumed and bound himself to pay the mortgage made the subject of this action. It is very evident that the relation of debtor and creditor, and mortgagor and mortgagee, was created and still exists between Chapman and Spalding to the extent of the $7,000 loan and the $6,000 agreed upon as the purchase price of the farm, all of which Chapman 'undertook to pay in any event, and as a contingent matter, and 'further compensation, agreed to divide equally vit-h Spalding anything in excess of such amount remaining in his hands from a sale of the property. Spalding was not named in the deed, nor in any manner recognized in th« transaction, he had no control over, or power to dispose of, the premises, and appellant never relied upon him, or knew that such a person lived, until a short' time before the commencement of this suit. True it is that he retained the use of the New Hampshire farm in lieu of interest on his $5,000 note, and in consideration of' the right to share equally with Chapman in the rents and profits arising from the church property, agreed to pay one-half the expense of holding it, provided the income should be insufficient; but he never held himself out as a partner. . And the irresistable inference is that he was never such in a sense that
No credit was extended to Spalding, nor was he in any , sense a grantee, and there is nothing in the récord to indicate the-slightest intention upon his part to assume the obligation of paying a mortgage to which he is an absolute stranger. “To - create such liability, there must be such words as will clearly import that the grantee assumed the obligation of paying the debt” 1 Jones, Mortg. (5th Ed.) 748; Granger v. Roll, 6 S. D. 611, 62 N. W. 970. The evidence upon which appellant relies, while showing a community of interest, repels the idea of an obligation upon the part of Spalding, or his intention to be bound by Chapman’s undertaking to pay the mortgage indebtedness. The same principle was involved in the case of Williams v. Gillies, 75 N. Y. 197, where the court declined to hold a party responsible under the following state of facts, as dis