51 Wash. 591 | Wash. | 1909
— On January 16, 1907, the respondent loaned to the appellants the sum of $12,000, to become due three years after date, with interest at six per cent per an
“But in case default be made in the payment of the principal or interest of said promissory nóte, or any part thereof, when the same shall become due and payable, according to the terms and conditions thereof, then the said party of the second part . . . are hereby empowered to sell the said premises . . . and out of the money arising from such sale to retain the whole of said principal and interest, whether the same shall be then due or not, together with the costs and charges of making such sale . . ..”
By the terms of the note, an installment of interest amounting to $360 became due on July 16,1907, which was not paid. This is an action brought by the respondent to foreclose the mortgage because of the nonpayment of this interest installment. There is no serious controversy over the facts. Mr. Naher, one of the appellants, testified that, on the day preceding the maturity of the interest payment, he called up the respondent by telephone, telling him that the interest on the note fell due the next day, and inquired when he could meet him personally for the purpose of paying it; that the respondent stated in answer that he might mail a check for the amount; that he again said that he wanted to see him personally as he wanted the payment indorsed on the note; that to this the respondent repeated his directions to send the check by mail. That on the next day he went to the respondent’s place of residence to pay him the money, but was unable to find him; and between that time and July 30, he made
“Seattle, July 30, ’07.
“Mr; G. Naher, Seattle, Wash.
“D Sir: I hereby notify you that unless you will before the end of this week make insurance policy payable to me shall call on you for principal & interest at once. Yours truly, A. Weinberg.”
To this letter some response was made which is not shown by the record, and on August 1, 1907, the respondent wrote again as follows:
“Seattle, August 1, 1907.
“Mr. G. Naher, 702 17th St., Seattle.
“Dr. Sir: Yours to hand. You well know the note & mort. were made to me and are in my possession at all times & as said before I will insist on insurance policy or call entire loan & interest due. Yours respf. A. Weinberg.”
August 5, 1907, Mr. Naher left the amount of the interest with the Puget Sound National Bank of Seattle, who notified Mr. Weinberg of the deposit of the money by letter, in which letter he was requested to call and bring the note that the money might be handed him and the payment indorsed on the note. The respondent responded to this notice by writing thereon the following: “Interest on note past due therefore refuse to accept same. A. Weinberg.”
Two days following, the respondent sent a formal letter to the appellants electing to exercise his option to declare the whole sum of principal and interest due for the failure to pay the installment of July 16, 1907. Later on he placed the notes and mortgage in the hands of his attorney for collection, who demanded payment of the entire debt. Answering
The principal questions suggested by the record, and debated by the parties, are two, namely: whether a lawful tender of the interest in default by the appellants to the respondent prior to the time the respondent elected to declare the whole sum of principal and interest due and payable would cut off the right of the respondent to declare the entire debt due payable; and whether there was in fact such a tender.
Taking up these questions in their order, we are clear that, on a contract of the character in question here, a payment or a tender of payment of the overdue interest before the option-to declare the whole debt due has been exercised cuts off the right to exercise the option. This must follow, we think, from the nature of the contract. The debt does not become due on the mere default in the interest payment. Some affirmative action is required, some action by which the holder of the note makes known to the payors that he intends to declare the whole debt due.' This exercise of the option may of course take different forms. It may be. exercised by giving the payors formal notice to the effect that the whole debt is declared to be due, or by the commencement of an action to recover the debt, or perhaps by any means by which it is clearly brought home to the payors of the note ’that the option has been exercised before the interest is paid or tendered. After a tender or payment there is no interest due, and the right to exercise the option has its foundation in the fact that interest remains due and unpaid.
But it is said that the holder of the note has a reasonable
Our attention has not been called to many cases where this precise question has been discussed, but a case in point is Sykes v. Arne (Cal.), 47 Pac. 868. That was a suit brought to foreclose a chattel mortgage. The mortgage debt was payable in installments, and a clause in the mortgage gave the mortgagee the right on the mortgagor’s default in the payment of any installment as it fell due to declare the whole debt due and payable. Default in the payment of an installment was made, but before the mortgagee elected to proceed, a tender was made of all that was actually due. The court held that the tender cut off the mortgagee’s right to exercise the option, holding that when “the entire debt may be treated as due upon any default in payment of interest or other installment, at the election of the mortgagee or trustee, the whole debt is nevertheless not due until the election has been exercised.”
In Ver Planck v. Godfrey, 42 App. Div. 16, 58 N. Y. S. 784, the mortgage provided that the whole of the principal debt should become due at the option of the mortgagee on “default in the payment of any tax or assessment for sixty days.” The taxes on the mortgaged premises were allowed to remain delinquent for more than sixty days, but were paid before the mortgagee began foreclosure proceedings, but
That such a clause in a mortgage and a breach thereof does not make the mortgage due for the purpose of starting the running of the statute of limitations has been repeatedly held. 13 Am. & Eng. Ency. Law (2d ed.), 793, note 1. Such is the rule in this state. First Nat. Bank v. Parker, 28 Wash. 234, 68 Pac. 756, 92 Am. St. 828; White v. Krutz, 37 Wash. 34, 79 Pac. 495. Another case in point from this state on the principle involved is Zeimantz v. Blake, 39 Wash. 6, 80 Pac. 822. In- that case the plaintiffs sued to enforce the specific performance of a contract to convey land. The contract on which the suit was based provided for the payment of the purchase price in installments, and time was made the essence of the contract. These installments were not all paid as they fell due, but those OAving were tendered before the final payment fell due and before any forfeiture Avas declared, and were paid into court on the commencement of the suit. It was urged that this did not save the forfeiture; that in order to recover, the plaintiffs must prove that all of the payments due under the contract up to the time of the final tender were paid or tendered at the time they fell due, as time was made of the essence of the contract, and a forfeiture occurred as of course on default of any payment. Answering this objection the court said:
“We cannot so construe the contract. This clause in the contract did not, of itself, forfeit the contract in equity simply because a payment was not made immediately on its falling*597 due. Undoubtedly the party agreeing to make the sale could declare a forfeiture, and cut off the right of the other party to make the payments, but it required some affirmative action on his part. If he remained passive until the other party made tender of payment, he was obligated to accept it and to perform his part of the contract.”
The only case cited to us which directly holds the contrary of the conclusion reached by us is Swearingen v. Lahner, 93 Iowa 147, 61 N. W. 431, 57 Am. St. 261, 26 L. R. A. 765; but as we believe it contrary to the better reason as well as the weight of authority, we must decline to follow it.
As to the second question we are of the opinion that there was a tender of the overdue interest prior to the time the mortgagee elected to exercise the option given him to declare the whole sum of principal and interest due. The letters of June 30 and August 1, 1907, do not amount to such an election. The language of the first is that the loan will be called in if the mortgagor does not before the end of the week make the insurance policy on the property payable to the mortgagee ; and the second is that the mortgagee will insist on an insurance policy or call in the loan. These letters but threaten an exercise of the option, and are evidently made for the purpose of procuring additional security for the loan. They do not amount to an actual call of the loan, or to an exercise of the option. That this is their meaning is evidenced by the subsequent act of the mortgagee. On the sixth day after mailing the last letter he sent a letter to the mortgagor in which he gave notice that he had elected to declare the whole debt due and payable. If he had thought that his earlier letters amounted to such a declaration he would not have felt the necessity of sending the later one. But prior to the time of the sending of the later notice, the mortgagors tendered the interest payment through the bank. It is objected to this tender that it was not sufficiently formal; that the mortgagors did not seek out the mortgagee, produce the money and make an actual offer of it to him; that the letter was nothing more
“It is complained in this connection that the tenders were insufficient, but we think the appellant is estopped to complain of this. Had he refused to perform the contract because he had not been tendered payment in full, and appeared in the action and defended on that ground, he probably could have succeeded in defeating a recovery of costs against him, if his contention should have proven true, though not the performance of the contract. But the appellant did not object to the tender when made on the ground that enough was not tendered him, nor did he defend this action on that ground. He denied any liability whatsoever under the contract, and it is on that ground that he must succeed now, if he succeeds at all.”
That the reason given for refusing to accept the interest was insufficient needs no further demonstration.
A formal tender was unnecessary for a further reason. The answer to the note from the bank makes it manifest that a formal tender would have been refused. This by all of the modern cases is a sufficient reason for not making a tender, on the principle that the law does not require one to do vain or useless things. Sanford v. Royal Ins. Co., 11 Wash. 653, 40 Pac. 609; 28 Am. & Eng. Ency. Law (2d ed.), p. 5.
We conclude, therefore, that the court was in error on al
Dunbar, Mount, and Crow, JJ., concur.
Rudkin, C. J., Chadwick, and Gose, JJ., took no part.