277 P. 1017 | Kan. | 1929
The opinion of the court was delivered by
The First National Bank of Lyndon brought an action against Ada J. Barnholdt to recover the balance due upon
Among other things the plaintiff asked for the cancellation of a release of the mortgage mentioned which it had previously signed and placed of record. A summary of the facts upon which the bank based its right of recovery is that when the second installment of interest on the mortgage note became due the makers were unable to pay it. That upon agreement of the parties F. H. Barnholdt executed a promissory note for the amount of the unpaid interest, $220, payable six months after date with interest at eight per cent per annum. It was alleged that the understanding of the parties was that the note should not be considered as an interest payment, but rather as additional evidence thereof, and that the makers should not receive credit on the note secured by the mortgage until the interest note was paid in full. The interest note was not paid when it became due, and it was renewed by making and delivering a new note for the sum of $231.63, being the amount of principal and interest due on that note. Plaintiff states that this last interest note was not given by Barnholdt nor received by plaintiff in payment of the interest due on the mortgage, but merely to extend the time of payment of the indebtedness secured by the mortgage.
It was further alleged that when the mortgage note matured the Barnholdts procured a loan from the Union Central Life Insurance Company for $3,150, the amount of the principal due to the bank; that the proceeds of the loan were not sufficient to pay the entire indebtedness, and it being necessary that this insurance company loan should be a first mortgage, F. H. Barnholdt orally promised that he and his wife would execute and deliver their promissory note for $231.63, and give plaintiff a second mortgage on the land to secure its payment, if the plaintiff would release the mortgage so that the new mortgage to the insurance company would become a first lien on the land, and that plaintiff believed and relied on these statements and was thereby induced to make and record a written release of the principal mortgage and did deliver the original note to the defendant. It is further alleged that the statements and representations were falsely and fraudulently made by Barnholdt to the
In connection with the general denial the defense was that the note for $231.63 was accepted as a substitute for the installment of interest due and that it operated to discharge the interest obligation; that the note had not been signed by the defendant Ada J. Barnholdt, and that the notes signed by her husband were accepted by the plaintiff as a payment of the interest due, and further that the interest had been paid. She further insisted that if any representations were made as to giving a second mortgage, none were made by her, and further that the claim and cause of action of the plaintiff, based as they were upon alleged fraudulent representations, were barred by the statute of limitations. The trial was by the court without a jury and the judgment was that the plaintiff recover nothing and that defendant recover her costs. No special findings were asked for or made and nothing is found in the record to indicate the grounds of the judgment.
It appears that F. H. Barnholdt died sometime before this action was instituted. There is no dispute that the first installment of interest on the mortgage was paid nor that a note for the second installment of interest was given by F. H. Barnholdt, and that at the end of six months this note was renewed by the giving and acceptance of another for $231.63. It is also conceded that the third installment of interest was paid when the new mortgage was made to the insurance company for $3,150. The evidence tended to show that the bank declined to release its mortgage of record until the third installment of interest was paid, and when that was done it released the mortgage and made an entry on its discount record that the mortgage debt of $3,150 had been paid.
The plaintiff alleged and gave testimony to the effect that the note for the second installment of interest was not to be regarded as a payment of the interest, and would not be so treated until the note was paid. It was also claimed by the plaintiff that the mort
Whether the interest note given and accepted by plaintiff was a novation or a substitution of a new obligation for the old one which extinguished the latter depends upon the intention of the parties. The general rule is that the mere acceptance of a new obligation for an older one does not operate as a payment unless it is intended that the new should extinguish the old. The president of the bank said that it was understood that the note should not be regarded as a payment of the interest until the note itself was paid. There were circumstances tending to show an intention to substitute the new for the old obligation. The original note for $3,150 bore interest at the rate of seven per cent, and it was stipulated that if it was not paid when due both principal and interest were to bear interest at the rate of ten per cent. The note given for the unpaid interest, as we have seen, stipulated for a rate of eight per cent until it was paid. The note was dated January 9, 1924, was payable six months after date, and when it was due on September 9, 1924, the plaintiff took the new note from F. H. Bamholdt alone for the amount of the note and interest, $231.63, running six months from date, bearing interest at eight per cent, and plaintiff then surrendered the first note. In this action the plaintiff did not ask for judgment for the amount of interest due on the mortgage note, which amounted to $220 with interest thereon at ten per cent, the rate stated in the mortgage if payment was not made when due, but it took a note for eight per cent, which tends to show that the interest note was a new contract independent of the mortgage note and a substitute for it. When the mortgage was executed to the insurance company, the third and last installment of interest on the plaintiff’s mortgage had not been paid, and plaintiff then insisted that it must be paid before it would release the mortgage of record. Negotiations were delayed until the defendant could borrow the money for the pay
“To support the claim of a novation the assent of the parties that the new obligation shall be accepted in extinguishment of an old one is an essential element, but the substitution may be accomplished by either an express or an implied agreement. Whether the parties gave assent and intended a novation is a question of fact for the jury, and may be determined upon inferential as well as direct evidence.” (Syl. ¶¶ 1, 2. See, also, Badders v. Checker Cab Co., 118 Kan. 125, 234 Pac. 41.)
Upon the question that the action was barred by the statute of limitations, it is contended that being one for relief on the ground of fraud, it could only be brought within the two-year period. The installment of interest on the original mortgage, for which plaintiff claimed the interest note was given, not as payment but as evidence of the debt, became due on January 9, 1924, and the second or renewal note was dated September 9, 1924. A suit on the latter note was brought before the justice of the peace by plaintiff on July 1, 1925, and the present action was not brought until July 25, 1927. Plaintiff alleged that on January 19, 1925, F. H. Barnholdt agreed to pay and also promised to secure the payment of the note, and that plaintiff believed and relied on the promise and representations made, and further states that they were false and fraudulently made for the purpose of defrauding plaintiff, and that it was never the intention of Barnholdt to give a new note for the $231.63 obligation, and that they have never since paid the debt. That note was