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W. E. SNYDER, Piff. in Err.,

Schmucker v. Sibert, 18 Kan. 104, 26 Am.

Rep. 765; Mc Lane v. Allison, 60 Kan. 441, Charles N. MILLER et al.

56 Pac. 747.

Messrs. Thompson & King, for defend(........ Kan.........)

ants in error:

When a default matured all the notes, •1. A mortgage securing a series of

and this default continued until after the provided that nonpayment of any one of them, time when the notes became due by their together with nonpayment of taxes due on terms, the purpose of the conditions had the mortgaged premises, should mature the been accomplished, and they were functus entire debt. None of the notes was paid at maturity. At the date of the maturity of officio; and the payment of taxes on the the first note, taxes on the land were due and mortgaged premises after that time, when unpaid, and

such default continued the statute of limitations was running on til after all the notes were due. A pur- the face of the notes, and not under the conchaser of the land from the mortgagor, who ditions in the mortgage, could not affect the did not assume payment of the mortgage, operation of the statute. then paid the taxes. Subsequent to the payment of taxes, and more than five years from

Lewis v. Lewis, 58 Kan, 564, 50 Pac. 454; the date of the default upon the first note Green v. Goble, 7 Kan. 301; Atchison, T. & and taxes, the mortgagee brought suit tos. F. R. Co. v. Atchison Grain Co. 68 Kan. foreclose the mortgage. Held:

585, 75 Pac, 1051. a. The statute of limitations menced to run at the date of the default upon the first note and taxes.

Burch, J., delivered the opinion of the b. The running of the statute of lim court: itations was not suspended by the pay This proceeding in error grows out of an ment of taxes.

action commenced in the district court of c. By paying the taxes the landown. Ottawa county on December 12, 1903. The er did not waive the right to plead the statute of limitations, or estop himself from petition prayed for the foreclosure of a so doing.

mortgage securing four promissory notes 2. The case of First Nat. Bank v. Peck, due respectively on February 18, 1896, Feb

8 Kan. 663, approved and followed, and the ruary 18, 1897, February 18, 1898, and Feb. case of Douthitt v. Farrell, 60 Kan. 195, 56

ruary 18, 1899. The mortgage contained a Pac. 9, criticized.

provision to the effect that, if any one of (May 6, 1905.)

the notes secured and the taxes upon the

mortgaged premises should not be paid when ERROR to the District Court for ottawa

County to review a judgment in favor of due and payable, the entire mortgage debt defendants in an action brought to foreclose makers of the notes from the state was

should at once mature. The absence of the a mortgage securing certain promissory notes. Affirmed.

pleaded to avoid the running of the statute The facts are stated in the opinion.

of limitations. The answer pleaded default Messrs. E. C. Sweet and Garver &

in the payment of taxes for the year 1895, Larimer, for plaintiff in error:

resulting in a tax sale of the land in 1896 Where the condition of the mortgage is certificate of taxes paid by the certificate

followed by an indorsement on the tax-sale that the whole debt shall become due upon holder for the years 1896, 1897, and 1898. the failure to pay “interest and taxes,” both The defendant purchased the land subject to conditions must exist. Lewis v.

Lewis, 58 Kan. 563, 50 Pac. 454. mortgage on November 18, 1897, and was not But, even where both such conditions have charged with any personal liability on the

notes. Because of the default in the pay. existed so as to start the running of the statute of limitations, the subsequent pay default in the payment of the note due Feb

ment of the taxes for the year 1895, and the ment of the taxes by one interested in their payment suspends the operation of the ruary 18, 1896, he claimed the entire mort

gage debt matured on the date last menstatute. Douthitt v. Farrell, 60 Kan. 195, 56 Pac. tioned, and prayed the benefit of the statute

of limitations. The reply pleaded payment 9. A payment by Miller, the subsequent August 21, 1899. A demurrer to the reply

of the delinquent taxes by the defendant on grantee of the land, had the same effect as

was sustained, and the correctness of this if such payment had been made by the

ruling is the matter now in question. mortgagor himself.

As long ago as 1871 this court decided •Headnotes by BURCH, J.

that a stipulation in a mortgage of the same

character as that under consideration was Note. -As to effect of statutory bar of prin- not a one-sided affair, vesting a mere option cipal debt on right to foreclose a mortgage or deed of trust, see, in this series, Kulp v. Kulp. I had an equal right with the mortgagee to in

in the mortgagee, but that the mortgagor 21 L. R. A. 550.

sist upon it, and to receive whatever advan- a provision that, if default is made in tages it might confer upon him. Mr. Justice punctual payment of interest, the principal Brewer, speaking for the court, said: “This shall be recoverable at once. Now, the clause is inserted in mortgages usually for statute of limitations (21 Jac. I. chap. 16) the benefit of the mortgagee; but, being a

enacts that such actions as therein menvalid stipulation, the mortgagor has equal tioned, including ‘all actions of debt groundright to insist upon it, and receive whatever ed upon any lending or contract without advantage he can from its enforcement. specialty,' shall be brought ‘within six years When the payor, at the expiration of six next after the cause of such action or suit, months, failed to pay the note then due, by and not after. This expression, 'cause of the terms of the contract all three notes be action,' has been repeatedly the subject of de. came due. The statute of limitations began cision, and it has been held, particularly in to run on all, and a subsequent purchaser Hemp v. Garland, decided in 1843, that the purchased after maturity.” First Nat. Bank cause of action arises at the time when the v. Peck, 8 Kan, 663. The same rule was an debt could first have been recovered by acnounced in England at least as early as 1843. tion. The right to bring an action may A defendant gave a warrant of attorney to arise on various events, but it has always secure a debt payable by instalments; the been held that the statute runs from the plaintiff having the right in case of any de- earliest time at which an action could be fault to have judgment and execution for the brought.” The reason for allowing the whole, as if all the periods for payment had debtor to take advantage of the stipulation expired. In an action of assumpsit it was is well stated by the supreme court of Texas held that the defendant might show, under in the case of Harrison Mach. Works v. a plea of the statute of limitations, that the Reigor, 64 Tex. 89, 90, 91, as follows: “The first default was made more than six years purpose of statutes of limitation is 'to combefore action, and that this was a complete pel the settlement of claims within a readefense, not only as to instalments due more sonable period after their origin, and while than six years before, but also as to those the evidence upon which their enforcement due within that period. Lord Denman, Ch. or resistance rests is yet fresh in the minds J., said: “We are of opinion that the de- of the parties or their witnesses. Wood, fendant is right, and that the cause of action Limitation of Actions, $ 5. If the holder of a accrued upon the first default for all that note may, at his option, treat the claim as then remained owing of the whole debt. due at a later date than the maker has . . In this case there was a default more agreed that it shall mature, and thus prethan six years ago, and upon that the plain-scribe a different date at which it shall be tiff might, if he pleased, have signed judg- barred, the evidence for its enforcement may ment, and issued execution for all that re- be preserved, whilst that for its resistance mained due, or he might have maintained may be destroyed, and thus the purpose of his action. If he chose to wait till all the the statute be wholly defeated.

Here instalments became due, doubt he no option was left to the creditor. He was might do so; but that which was optional forced to treat the debt as due. It is true on the part of the plaintiff would not affect he was not obliged to bring suit upon it upon the right of the defendant, who might well default in payment of the first note. Neither consider the action as accruing from the is any creditor compelled to sue upon a claim time that the plaintiff had a right to main- so soon as it becomes due. But the statuto tain it. The statute of limitations runs was put in motion without consulting his from the time the plaintiff might have wishes, by the very terms of the contract, brought his action, unless he was subject to which neither party had any right to change any of the disabilities specified in the stat- without the consent of the other.” So in ute; and, as the plaintiff might have Noell v. Gaines, 68 Mo. 649, 656, it is said: brought his action upon the first default, if “It cannot, with any show of reason, be he did not choose to enter up judgment we urged that the notes could, under the terms think that the defendant is entitled to the of the contract, fall due for one purpose and verdict upon the plea of the statute of lim- not for another. If they fell due when the itations.Hemp v. Garland, 4 Q. B. 519, 523, contingency happened, and because it hap524. This case was expressly approved in pened, and because the parties, upon valid 1891 by the court of appeal, on appeal from consideration, had thus contracted, it must the Queen's bench division, in the case of needs follow that the face of the notes, under Reeves V. Butcher [1891] 2 Q. B. 509. the circumstances mentioned, ceased to furLindley, L. J., said: “I am of opinion that nish any guide as to their maturity.” And we cannot differ from the judgment below the benefit to be derived by sureties from a without altering the law. The agreement is contract providing that nonpayment of a one reasonably easy to be understood. It part of the debt shall mature the whole is provides for a loan for five years, subject to 'forcefully stated by the Kentucky court of

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appeals as follows: "It is easy to conceive | all accrued costs, would not, after suit had that a surety might require such a clause been commenced, discharge the default and as a condition for his own protection. He reinstate the contract as to notes otherwise might be unwilling to bind himself for five not due for a long period of time. Stanclift years unconditionally, whereby he might be v. Norton, 11 Kan. 218. The legislature has compelled to pay at the end of that time not seen fit to interfere, and the rule thus both the principal and interest, and might early announced is now definitely estabvery prudently say: 'Insert a clause which lished as a part of the law of this state. Darrequires the interest to be paid quarterly, row v. Scullin, 19 Kan. 59; Meyer v. Graeand which provides that, if not so paid, the ber, 19 Kan. 165; Ellwood v. Wolcott, 32 debt is to become due, so that, if not paid, Kan. 526, 4 Pac. 1056; Lewis v. Lewis, 58 I will have the right to pay it or secure Kan. 564, 50 Pac. 454; Douthitt v. Farrell, myself.'” Ryan v. Caldwell, 106 Ky. 543, 60 Kan. 195, 56 Pac. 9; Kennedy v. Gibson. 50 S. W. 966, 967. The reasoning of these 68 Kan. 612, 75 Pac. 1044. At a date earcases applies with peculiar force to the sit- lier than that of the decision in First Nat. uation of one who has purchased subject Bank v. Peck this court held: "As a gento a mortgage which he has not assumed, eral rule, when a statute begins to run, it and especially so if the mortgagors ha continues to run until the demand is barred. left the state, and he may be deprived of This principle is laid down with great unitheir aid in making proper defenses to a formity in all the authorities, and may be belated claim. When on the United States considered settled. Undoubtedly the circuit bench, Mr. Justice Brewer said: legislature may prescribe differently, and in "Now, here, according to the averments of this state several exceptions are made, but this petition, this mortgage and this deed none such as is claimed in this case.” Green of trust were executed at the same time, v. Goble, 7 Kan. 297, 301. and to secure these notes; they were parts By applying the rules recognized in these and parcels of one transaction, and are to cases to the facts the case under considbe construed as one instrument;, and if eration, it becomes plain that the demurrer there were but one instrument, and that con- to the reply was properly sustained. But taining a promise to pay money at three the defendant claims that the court should separate times, with a proviso that, upon a have been guided by the case of Douthitt v. failure to pay the first sum at the time Farrell, 60 Kan. 195, 56 Pac. 9, the syllabus named, all should become due, I cannot see of which reads as follows: "Where a promhow, logically, we can escape the conclusion issory note was given, by the terms of which that the parties have made an absolute, un- the principal became due in five years from conditional stipulation, operative under all date, with interest payable semiannually; circumstances and for all purposes. I had and a real-estate mortgage securing it was occasion when I was on the supreme bench given, which provided that upon default in of my own state to consider this matter in payment of any of the interest when due, two or three cases, and that was the con- and the taxes on the mortgaged premises clusion I then came to, and it is unchanged. when due, the whole indebtedness should I am aware that Judge Hough, in his dis- mature; and both such defaults occurred; senting opinion, suggests certain contingen- and the statute of limitations thereupon cies in which the application of this rule, commenced to run against the indebtedness; where there are several negotiable promis- and the delinquent taxes were thereafter sory notes secured by mortgages or deeds paid by the mortgage debtor,-held, that the of trust, might work out some embarrass- running of the statute in his favor was ments; but still I do not think that the ended by his voluntary correction of the one possibility of such embarrassments can default; and, although more than five avoid the clear force of the language the years elapsed from the occurrence of the two parties have used. I do not see why they defaults mentioned, the cause of action on cannot make such a contract, and if they the note and mortgage was not barred." made it, and its language is clear. I do not This decision was based upon the case of see why the courts should not give force and Smalley v. Ranken, 85 Iowa, 612, 52 N. W. effect to it." Wheeler & W. Mfg. Co. v. 507. Smalley v. Ranken refers, in turn, to Howard, 28 Fed. 741. Although the courts Watts v. Creighton, 85 Iowa, 154, 52 N. W. of some of the states and some of the Fed- | 12, and Watts v. Creighton discusses and exeral courts have taken a different view, the pressly rejects the doctrine of First Nat. doctrine propounded in First Nat. Bank v. Bank v. Peck. The argument in the SmalPeck has been steadily adhered to by this ley Case is as follows: “What did the par. court. It has been carried to the extent of ties stipulate that the taxes should be paid holding that a tender of delinquent taxes, by defendant for? To protect the plaintiff whose nonpayment constituted the sole from the loss or impairment of his security. breach of the contract, and the payment of 'At the filing of the amendment every right

V.

of the plaintiff in this respect was fully pro- | viding for penalties or forfeitures. Swear tected. The object of the condition of the ingen v. Lahner, 93 Iowa, 147, 26 L. R. A. mortgage was to enable the plaintiff to treat | 765, 57 Am. St. Rep. 261, 61 N. W. 431. the debt as due, and save himself from loss But a more fundamental consideration is because of the default. After the payment that the parties made the contract, and the of the taxes, all such liability for loss was courts cannot make another to take its at an end. His situation was exactly as if place. Its language excludes the idea that there had been no default, as far as the con the creditor may or may not “treat the debt ditions for forfeiture were concerned. To as due." It becomes due in fact. If an elecjustify a forfeiture under such circum- tion were all that the parties intended, stances would work an injustice that the words appropriate to that purpose should court ought not to permit.” This reasoning have been used. “It is not necessary to asproceeds upon premises wholly incompatible sume that the parties to such a contract inwith those employed in the decisions of this tended to provide for none but wrongful recourt already quoted and cited. Stipula- fusals to pay instalments. It might haptions for the acceleration of the maturity pen that the debtor, upon good grounds, of debts do not provide penalties or forfeit would afterwards deny his liability upon the ures. “It is therefore settled by the over-contract, and therefore refuse to pay instalwhelming weight of authority that if a cer- ments, in which case the provision would tain sum is due, and secured by a bond, or serve him a useful purpose, in bringing the bond and mortgage, or other form of obli- question at issue to a prompt test, and not gation, and is made payable at some future leave it entirely with the creditor to delay day specified, with interest thereon made until, perhaps, evidence of the defense had payable during the interval at fixed times, been lost. The question at last is one of annually or semiannually or monthly, and a construction of the language used, and that further stipulation provides that, in case de which makes it mean just what it says is fault should occur in the prompt payment of not without reason or good authority to supany such portion of interest at the time port it. Where the purpose is only to give agreed upon, then the entire principal sum the option to the creditor, language expresof the debt should at once become payable, sive of it may be easily inserted.” San Anand payment thereof could be enforced by tonio Real Estate Bldg. & L. Asso. the creditor, such a stipulation is not in the Stewart, 94 Tex. 441, 86 Am. St. Rep. 864, nature of a penalty, but will be sustained in 868, 61 S. W. 386. This distinction was equity as well as at law. In exactly the recognized, and, indeed, controlled the desame manner, if a certain sum is due, and cision, in the very recent case of Kennedy v. is secured by any form of instrument, and Gibson, 68 Kan. 612, 75 Pac. 1044. The is made payable in specified instalments, opinion reads: “The note provided that a with interest, at fixed, successive days in the default should mature the entire debt, at the future, and a further stipulation provides option of the holder, while the provision in that, in case of a default in the prompt pay the mortgage was that a default made the ment of any such instalment in whole or in whole debt due, regardless of an election by part at the time prescribed therefor, then the holder. Which of these provisions the whole principal sum of the debt should should control? In the absence of an option at once become payable, and payment there clause in the note, the stipulation in the of could be enforced by the creditor, such mortgage would have operated to mature the stipulation has nothing in common with a whole debt upon a default, and the mortpenalty, and is as valid and operative in gagors could have taken advantage of the equity as at the law.” 1 Pom. Eq. Jur. 2d stipulation. First Nat. Bank v. Peck, 8 ed. $ 439. “Provisions such as that under Kan. 660. The stipulation in the note as to consideration are not in the nature of pen-default, however, conflicts with that of the alties; nor have they anything in common mortgage, and, of necessity, the former conwith forfeitures, but are to be regarded as trols. The note contains the obligations of nothing more than agreements between the the mortgagors, and the mortgage, concurparties fixing the time and the conditions rently executed, is an incident to and seupon which the whole debt may become due. curity for the note. The stipulation in the Such an agreement may be as advantageous note must therefore prevail, and, unless the to the payor as to the payee. Buchanan v. holder exercised the option and elected to Berkshire L. Ins. Co. 96 Ind. 510; Malcolm declare the whole debt due, the statute v. Allen, 49 N. Y. 448; 1 Pom. Eq. Jur. 8 would not run earlier than the time origi439; 2 Jones, Mortg. § 1186.” Moore v. Sar- nally fixed for the maturity of the note.” gent, 112 Ind. 484, 485, 14 N. E. 466. In- Such being the established position of this deed, the supreme court of Iowa itself, in a court the Smalley Case must be eliminated later case, has expressly held that such as a support for the conclusion reached in stipulations are not to be regarded as pro- the Douthitt Case. In deciding the Douthitt

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Case the court in effect declared reciprocal | Moore v. Sargent, 112 Ind. 484, 485, 14 N. estoppels against the parties. The debtor E. 466, it is said: "The provision in the lost the right to plead that the statute was mortgage for accelerating the time when the running on account of his default, and the whole debt should become due and collecticreditor lost the right to sue on account of ble did not make the maturity of the debt the same default. The wound was healed evidenced by the second note depend upon without a scar. The condition in the mort. the election of the mortgagee. The second gage that the creditor could, under certain note became absolutely due upon failure to circumstances, insist upon payment of the pay the first note at maturity. According note before maturity according to its terms, to the terms of the contract, upon the hapwas restored to the status of an unbroken pening of that event the whole debt became covenant for the future protection of the in- as effectually and absolutely due as if furdebtedness secured, and the indebtedness it- ther credit had not been, in any contingency, self was restored to the status of an unma- agreed upon. The mortgagor had then the tured claim. The opinion reads: “We have right to pay or tender the whole debt, and no doubt but that the voluntary payment of by that means suspend the accumulation the taxes by the debtor was a waiver by him of interest. The acceptance of a part by of the conditions under which the statute of the mortgagee did not defeat the right of limitations was running in his favor, and the mortgagor to pay or tender the balance was a restoration by him of the plaintiff to at once, nor did it, without a new agreethe status of a holder of an unmatured in- ment, extend the time or prevent the former debtedness.” Manifestly no such rehabili. from enforcing payment of what remained tation of rights could be accomplished in unpaid. .. Under a provision which this case. The last note had matured by its gives the creditor the exclusive right to own terms six months before the taxes were elect, within a time fixed, whether or not paid. The plaintiff could not be reinvested he will treat the whole debt as due in case with the rights of a holder of an unmatured the debtor makes default in paying interest, indebtedness, and the mutual modification of it may well be that the unconditional acthe legal relations of the parties adverted to ceptance of interest by the creditor, aftor in the Douthitt Case was impossible. True, the expiration of the time, without notice the term “voluntary waiver" is used in that of the election, would waive the default. 2 decision, but, already observed, the Jones, Mortg. § 1186. Or if the default was waiver was of such a character that it neces-induced by the fraudulent or inequitable sarily worked a change in the rights of the conduct of the creditor, or by any agreeopposite party. That the conduct of a ment or promise upon which the debtor single party to the contract may have such might rely which operated to mislead or a far-reaching effect, unless the other throw the debtor off his guard, a court of party has been influenced in some manner equity would interfere to stay proceedings, by it, is not conceded by those courts which or the action might be abated upon the facts enforce the rule of peremptory maturity being properly pleaded.” adopted in this state. Thus, in the case of But under either theory the judgment of San Antonio Real Estate Bldg. & L. As8o. v. the district court in this case was correct, Stewart, 94 Tex. 441, 86 Am. St. Rep. 864, because the condition in the mortgage now 668, 61 S. W. 386, it is said: "It is not in controversy had spent its force when the in the power of the creditor, by his acts taxes were paid. No acceleration of the alone, to change the rights of the parties maturity of the notes secured could occur by resulting from the maturity of the debt. virtue of it. Failure to comply with it But both parties, by their joint action, may could not start the running of the statute, so alter such rights that the creditor would and a payment of taxes could not stop the no longer have the right to demand, nor the statute from running. No rights could be debtor to pay, the entire indebtedness. gained or lost on account of the stipulation.

While neither party, by his separate ac- On February 18, 1896, a cause of action action or nonaction, could impair the rights crued in plaintiff's favor, and the statute of of the other, each could waive his own limitations then commenced to run against rights as they accrued from the default in it. From February 18, 1896, until the notes payment of an instalment so as to estop matured by their terms, the plaintiff had him from relying upon such default. To ac- an indisputable right to bring suit upon complish this, it would only be necessary them, and during ail that time the statute that each should so act as to justify the of limitations continued to run. After the other in believing, and acting upon the be notes matured by their terms, the cause of lief, that the effect of the failure to pay an action continued to exist, unimpaired, and instalment was to be disregarded, and that the statute continued to run. The payment the contract should stand as if there had of taxes on August 21, 1899, could not prebeen no default.” Likewise, in the case of 'vent suit on the notes, and hence could not

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