Hubbard v. Ogden

22 Kan. 363 | Kan. | 1879

The opinion of the court was delivered by

Valentine, J.:

This was an action on a promissory note and a mortgage. The note, with the indorsements thereon, reads as follows:

“$1,500. Atchison, Kansas, May 15, 1874.

“One year after date, I promise to pay N. P. Ogden, or order, the sum of fifteen hundred dollars, for value received, with interest at the rate óf 12 per cent, per annum, semiannually in advance, until paid. P. L. Hubbard.”

“Dec. 14, 1874, rec’d on the within, $90.”

“Sept. 3, 1875, rec’d on the within, $93.”

The mortgage was executed at the same time, by P. L. Hubbard and his wife, Ellen R. Hubbard, as a security for said note. The mortgaged property consisted of a piece of land in Atchison county belonging to P. L. Hubbard, and a lot in the city of Atchison belonging to Mrs. Hubbard. The mortgage contained, among others, the following stipulations, -to wit:

“This grant is intended as a mortgage, to secure the payment of the sum of fifteen hundred dollars, according to the ■conditions of a certain promissory note this day executed and delivered by the said P. L. Hubbard, party of the first part, to the said N. P. Ogden, party of the second part; and this •conveyance shall be void if such payment be made as herein ■specified. But if default be made in said payment, or any part thereof, or the interest due thereon, as above provided, •or if the taxes and assessments of every nature which are by law made due, are not paid when the same become due, then it shall be lawful for the said party of the second part, his executors, administrators, or assigns, to sell the premises hereby granted, or cause the same to be sold, with all the appurtenances, in the manner prescribed by law, and out of the moneys arising from such sale to retain the amount due for principal, interest, protest fees and damages for the same, with ■costs and charges of sale, and attorney’s fee of five per cent.; •and the overplus, if any there be, shall be paid on demand by said party making such sale to the said parties of the first part, their heirs or assigns. And we further waive all benefit •of the appraisement law.”

The' case was submitted to the court below (without a jury) upon the pleadings and exhibits, and upon an agreed statement of the facts of the case. The only questions, however, of any importance, either of law or fact, presented to the court below for its decision, were, whether Mrs. Hubbard, with regard to said lot, was a surety for her husband, and whether the time for the payment of said note had been so •extended by Ogden, the holder of the note, as to release Mrs. Hubbard with regard to said lot. Said note was given for money borrowed by P. L. Hubbard of Ogden, and it does •not. appear that Mrs. Hubbard ever received any of the money, •or any benefit therefrom. The interest on said note for the first six months, or from May 15, 1874, to November 15, 1874, was paid at the time the note was given. The interest for the next six months, or from November 15,1874, to May 15,1875, was paid on December 14,1874. No taxes for the year 1874, or for any subsequent year, were paid by either P. L. Hubbard or Mrs. Hubbard. The note may, therefore, have become due prior to May 15, 1875, because of such nonpayment of taxes, but it certainly became due on May 15, 1875, if not before, by reason of its own express terms. It was not paid, however, on that day, nor has it since been paid. Afterward, and on September 3, 1875, Hubbard paid, to Ogden $93 on said note, which was paid by Hubbard, and' accepted and received by Ogden, as the interest due on said note from May 15, 1875, to November 15, 1875. By this, payment, Hubbard paid in advance for the use of the money due on said note for a period of over two months. He paid in advance for its use from September 3,1875, to November-15, 1875. There was no express agreement made between the parties at any time that the payment of the note should be extended from September 3, 1875, to November 15,.1875, or for any other period of time. This payment, was without the knowledge or consent of Mrs. Hubbard.' At the time that the note and mortgage were executed, there was a mutual understanding, however, between the parties, that the plaintiff would let the defendants have the money for which the. note was given so long as they desired, or so long as the interest and taxes were kept paid in accordance with the terms, of the mortgage.

The court below found against Mrs. Hubbard, and announced its conclusions of law as follows:

“First: That the defendant Ellen R. Hubbard having mortgaged her separate property to secure the debt of her husband P. L. Hubbard, she is nothing more nor less than a surety, and entitled to all the rights of a surety in strido■ jure.

“Second: That the defendant P. L. Hubbard having paid interest in advance on the note sued on herein, and the plaintiff having received the same, without the knowledge- or consent of Ellen R. Hubbard, the surety, so far as the evidence shows, the said payment and reception of interest would have extended the time of payment of said note, and prevented the plaintiff from bringing suit upon said note and mortgage until November 15th, 1875, (the time to which said interest was so paid,) and thereby would have discharged the surety, E. R. Hubbard, but for the existence of the following clause in the mortgage: ‘ This grant is intended as a mortgage to secure the sum of $1,-500, according to the conditions of a certain promissory note this day executed and delivered by the said P. L. Hubbard, party of the first part, to N. P. Ogden, party of the second part; and this conveyance shall be null and void if such payment shall be made as herein specified.' But if default be made in such payment, or any part thereof, or the interest due thereon, as above provided, or if. the taxes or assessments of every nature which are by law made due and payable, are not paid when the same become due, then it shall be lawful for the said party, his heirs, executors, administrators and assigns, to sell the premises hereby granted, with all the appurtenances, in the manner prescribed by law, and out of the moneys arising from such sale to retain the amount due for principal, interest, protest fees and damages for the same, with costs and charges of sale, and an attorney-fee of five per cent.; and the overplus, if any there be, shall be paid on demand, by the party making the sale, to the party of the first part, their heirs or assigns. And we further waive all benefits of the appraisement law.’ But that under said clause' of said mortgage, which must be construed with said note as one contract, and from the continued breach of said clause by the said E. R. Hubbard by the non-payment of said taxes, there was no extension of the time of payment of said note, and the plaintiff had his continued right of action to foreclose said mortgage and recover upon said note, notwithstanding said payment of interest. #

“Third: That the mortgage sued on and signed by E. R. Hubbard, having the provision therein that the taxes were to be paid by the mortgagors, and they covenanting therein to do so, the covenant having been broken by the mortgagor, E. R. Hubbard, a right of action accrued to the plaintiff when the covenants were broken, and the fact of the plaintiff receiving interest in advance did not affect his right to bring an action to foreclose the mortgage at any time after the covenants to pay taxes were broken.

“Fov/rth: That the plaintiff is entitled to a judgment against defendant P. L. Hubbard for $2,277, and costs of suit, to bear twelve per cent, interest from date of judgment.

“Fifth: That the plaintiff is entitled to a further order of foreclosure and sale .of all of said mortgaged premises to discharge said judgment and the costs of this action.”

i principal ana urfMji’ Surety's liability. We think that the court below was correct in holding that Mrs. Hubbard was a surety of her husband to the extent of ^er separate property which she mortgaged to Ogden, and that she was entitled (with reference ^ said separate property) to all the rights of a surety. Bank of Albion v. Burns, 46 N. Y. 170, and other cases cited in the brief of plaintiff in error.

tract; facts constituting. We also.think that the court below was correct in holding that generally when a debtor owing money pays his creditor interest on the same, in advance, for the use of the same tor a period or time over, above and t L . . T7 beyond the time originally agreed upon for the money to become due, and at the time of the payment of the interest no express contract is made as to when the money shall become due or be paid, such prepayment of the interest, and its reception by the creditor, constitute an implied contract between the parties extending the time for the payment of the money up to the close of the time for which such interest was paid and received. People’s Bank v. Pearsons, 30 Vt. 711; Woodburn v. Carter, 50 Ind. 376; and other cases cited in the brief of plaintiff in error.

3'Surety^b°w We also think that the court below was correct in holding that an agreement upon sufficient consideration, made between the creditor and principal debtor, extendjng the time for the payment of the debt, without the knowledge or consent of the surety, releases the surety. (Rose v. Williams, 5 Kas. 483; Jenness v. Cutler, 12 Kas. 500; Royal v. Lindsay, 15 Kas. 591.) And it makes no difference whether the contract is express or implied.

4'ment,exSéd effect ofurety ’ But we think the court below erred in holding that the stipulation in the mortgage with reference to the payment of taxes took this case out of the general rule. At the time that said last-mentioned interest was Paicb the note was due upon every consideration. It was due because the taxes had not been paid, and it was due by its own express terms, and nothing could have made it due in any higher degree than it then was. This, of course, all parties knew. Yet the creditor had the power to extend the time of payment if he chose; and taking pay in advance for the use of the money was certainly extending the time for the payment of such money. Taking pay in advance for the use of the money was waiving all previous defaults, and saying to the creditor, “You may continue to use the money for the time for which you have paid.”

We think that the court below was correct in taking no notice of the parol understanding of the parties had at the time that the note and mortgage were executed, that Ogden would let the defendants have the money if they desired it, so long as they were not in default in the payment of interest in advance and taxes; for this understanding did not amount to a contract, and the defendants never paid any attention to it, but continually violated it, and had no right to expect anything under it. In fact, it would have been an impossibility under the circumstances of-this case for Ogden to have let the defendants keep the money in accordance with the terms of said understanding, after they had made default in the payment of interest and taxes. If we consider that Mrs. Hubbard, as well as Hubbard, agreed to pay said taxes and interest in order to get an extension of time for the payment of said money, then evidently, by her not paying the same, she clearly and manifestly showed that she did not want any extension of time. But if we consider that she merely assented or consented that Hubbard might pay the taxes and interest, and thereby get an extension of time, then evidently she gave this assent or consent only upon the express condition that said taxes and interest should be promptly paid at the time they respectively became due, and thereby that the debt, for which her land was incumbered should be kept within reasonable bounds. But this condition upon which she gave her consent was never fulfilled. The taxes were never paid; and neither the interest on the debt, nor the debt itself, was paid when the same became due. Therefore Mrs. Hubbard’s consent, given upon conditions that were never fulfilled, could never have had any operation.

We think the judgment of the court below was correct in all particulars except as to Mrs. Hubbard’s separate property, and with reference to that the judgment must be reversed. This cause will be remanded to the court below, with the order that the judgment be modified in accordance with this opinion.

Horton, C. J., concurring. Brewer, J., dissenting.