Northwestern Mutual Life Insurance v. Menke

186 N.E. 795 | Ohio Ct. App. | 1932

On May 11, 1932, the Northwestern Mutual Life Insurance Company, hereinafter referred to as the plaintiff, commenced an action in the court of common pleas against George H. Menke and wife, Cora, William H. McCombs and Sarah A. Youngs, to obtain a judgment on a note signed by Menke, and to foreclose a mortgage securing the same signed by Menke and his wife. The note, dated May 1, 1917, in the principal sum of $9,500, matured in five years after its date, and bore interest at the rate of 5 per cent payable semi-annually. In the petition of the plaintiff filed in the court of common pleas it is averred:

"That on or about the 9th day of November, 1917, the defendant, William H. McCombs, purchased certain property hereinafter described and as a part of the consideration for said purchase and in the warranty deed transferring the title to him, assumed and agreed to pay the mortgage of the plaintiff herein, together with interest and all special assessments for road or ditch purposes.

"That on or about the 24th day of February, 1920, the defendant, Sarah A. Youngs, widow, purchased the premises hereinafter described and as a part of the consideration therefor specifically agreed and by the terms of the warranty deed transferring title to her, assumed and agreed to pay the mortgage of the plaintiff herein, together with all interest, taxes and assessments payable thereon.

"That on or about the 21st day of June, 1922, the defendant, Sarah A. Youngs, executed and delivered to plaintiff herein a certain extension agreement recorded in Volume 155, at page 144, Wood County Mortgage Records, whereby the said Sarah A. Youngs in consideration of the extension of the date of payment of the aforesaid note, promised and agreed to pay the balance due thereon on May 1, 1927.

"That on or about the 15th day of July, 1927, the defendant, Sarah A. Youngs, executed and delivered to plaintiff a certain extension agreement recorded in Volume 174, page 15, Wood County Mortgage Records, whereby in consideration of the extension of the date of payment of the aforesaid note, said defendant agreed to pay the balance due thereunder."

Menke and McCombs each demurred to the petition of the plaintiff on the ground that they were released from the obligations of the note and mortgage because of the extensions of time of payment thereof without their knowledge or consent. The trial court sustained the demurrer and rendered judgment in favor of Menke and wife and McCombs. The mortgage was foreclosed and a personal judgment rendered against Sarah A. Youngs for the amount due thereunder. Pursuant to the decree of foreclosure, the mortgaged real estate was sold. It sold for a less amount than was then due on the note, and plaintiff, contending that it is entitled to a judgment against Menke and McCombs, as well as against Sarah A. Youngs, for the unpaid balance, seeks a reversal of the judgment rendered in their favor by the trial court.

The obvious question is, Has plaintiff by the extensions of time for payment of the mortgage indebtedness granted to Sarah A. Youngs released Menke and McCombs from liability thereon?

According to an annotation on page 282 of vol. 41 A.L.R., following the opinion of the court in Insley v. Webb, Admx., reported on page 274, the weight of authority holds that such an extension of time of payment operates as such release; and on page 285 thereof Ohio is listed among the states that adhere to the contrary or minority rule. Similar statements of the law are found in annotations to Gilliam v. McLemore, 43 A.L.R., 79, andZastrow v. Knight, 72 A.L.R., 379. The rule in Ohio is stated inTeeters v. Lamborn, 43 Ohio St. 144, 1 N.E. 513, the second paragraph of the syllabus thereof reading as follows: "A debtor who has given a note secured by a mortgage on real estate to his creditor sells the mortgaged premises to a third person, who, in part consideration of the purchase, assumes and agrees with his vendor to pay the mortgage debt, of all which the creditor has notice. Afterward, without the knowledge of the debtor, the creditor agrees with the purchaser, in consideration of the payment of interest in advance, to extend the time of payment.Held: 1. By such extension of time the debtor is not discharged from all liability on the note. 2. That, in equity, such debtor is released from liability to the extent of his loss by reason of such extension."

We call attention also to Denison University v. Manning,65 Ohio St. 138, 61 N.E. 706, and Richards v. Market ExchangeBank, 81 Ohio St. 348, 90 N.E. 1000, 26 L.R.A. (N.S.), 99. Ours "not to reason why," but to follow the rule thus announced. The judgment of the court of common pleas is therefore reversed and the cause remanded to that court with directions to overrule the demurrer and for further proceedings according to law.

In what amount, if any, a judgment should be rendered in favor of plaintiff as against Menke and McCombs will depend upon what loss, if any, their answer alleges and the evidence shows they have sustained by reason of the extensions of time of payment given by plaintiff to Sarah A. Youngs. Teeters v. Lamborn,43 Ohio St. 144, 156, 1 N.E. 513.

Judgment reversed.

RICHARDS and WILLIAMS, JJ., concur.