Case ID: ohio-app_48/html/0038-01.html
Source: Caselaw Access Project
Author: {"author": "Lloyd, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Citizens Banking Co. v. Thompson et al.
    (Decided June 26, 1933.)
    
      
      Messrs. Bowman & James, for plaintiff in error.
    
      Mr. Edward M. Fries, for defendants in error.
   Lloyd, J.

On February 27, 1920, Charles M. Davis and the defendant in error, Bert Thompson, became by purchase the respective owners of an undivided one-half of 200 acres of land in Liberty township in Wood county. On the same day they, with their wives Josephine Davis and Florence Thompson, executed and delivered to the plaintiff in error, the Citizens Banking Company of Weston, their promissory note for $25,000, due on or before five years after date, and mortgaged the aforesaid land as security therefor. On June 4, 1920, Bert Thompson and his wife conveyed by warranty deed their undivided one-half of this land to William C. Singer. It is a general warranty deed, the grantors for themselves and their heirs covenanting that they are lawfully seized of the premises, and that: “The said premises are free and clear from all encumbrances whatsoever, excepting taxes and assessments for the year 1920, and also two mortgages, one to The Citizens Banking Company of Weston, Ohio, for twenty-five thousand ($25,000.00) dollars and one to George P. Lutz for five thousand ($5,000.00) dollars, one-half of all of which is hereby assumed by grantee herein, together with the accrued interest thereon, and that they will forever warrant and defend the same with the appurtenances unto the said grantee against the lawful claims of all persons whomsoever, except as above mentioned.”

On December 28, 1923, Charles M. Davis, and wife conveyed by warranty deed their undivided one-half of the land to the Commercial Bank & Savings Company, covenanting that they do warrant and will defend the title thereto against all claims of all persons whomsoever, except a balance of $12,500 due on the $25,000 mortgage held by the Citizens Banking Company, and a mortgage for $6,850, dated June 1, 1922, given to the same hank by himself and wife, which two mortgages the grantee assumes and agrees to pay, together with interest thereon after January 1, 1924. Thereafter William C. Singer and the Commercial Bank paid the interest on the note and mortgage as it became due, and on June 22, 1925, Singer paid the Citizens Banking Company the sum of $12,500 and interest, and the Commercial Bank & Savings Company paid $2,500 and interest on the note and mortgage, leaving $10,000 unpaid thereon and due from the Commercial Bank. William C. Singer was president of the Citizens Banking Company, and when he paid this $12,500 to the bank there was written on the mortgage the following partial release:

“Weston, Ohio, June 22, 1925.
“In consideration of twelve thousand five hundred dollars paid by W. C. Singer, the undivided half of the real estate in the foregoing mortgage described belonging to said W. C. Singer is hereby released from the operation of said mortgage.
“The Citizens Banking Co., Weston, Ohio “By H. C. Strawson, Vice-President
“J. L. Ewing, Secretary.”

This release was authorized by the board of directors of the bank, and neither Thompson nor his wife consented to or had knowledge of this partial release of the mortgage, and, according to the agreed statement of facts submitted at the trial, the Commercial Bank & Savings Company continued to pay interest on the remaining unpaid $10,000 until July 1, 1930. On or about November 30, 1929, the Superintendent of Banks assumed possession of the assets and property of the Commercial Bank & Savings Company for purposes of liquidation. The action in the Court of Common Pleas was brought by William C. Singer for partition of the 200-acre tract of land. The land was sold in this proceeding, and the proceeds from the undivided one-half thereof owned by the Commercial Bank & Savings Company, after the payment of costs, were applied to the mortgage indebtedness. The proceeds from the sale of the other one-half of the land were paid to the estate of Singer, who is now deceased. In the partition proceedings so brought, the Citizens Banking Company of Weston filed a cross-petition setting up its note and mortgage; the relief sought being a foreclosure of the mortgage and a judgment for the balance due thereon against Thompson and wife and Davis and wife, who were made parties defendant to the action. After the application to the indebtedness of the proceeds of the sale, the balance remaining unpaid, including interest and taxes, amounts to approximately $7,000.

A jury was waived in the Court of Common Pleas, and the judge trying the case found in favor of the Thompsons on the theory that they had been discharged from liability on the note and mortgage because of the partial release written on the mortgage as to the Singer undivided one-half of the mortgaged land, and upon this finding the cross-petition of the Citizens Banking Company was dismissed as to the Thompsons. The Citizens Banking Company prosecutes error to this court to reverse this judgment.

That the Thompsons were liable as makers on the note for the full principal amount thereof, with interest thereon, is not open to argument, and unless they were discharged therefrom by the release of the undivided one-half of the land conveyed by them to Singer they still are liable for the amount remaining unpaid thereon. We have called attention to the express warranty in this deed of conveyance whereby the Thompsons convenanted to warrant and defend the title to the undivided half of the land conveyed to Singer against all lawful claims except the mortgages, therein mentioned, and taxes and assessments, and whereby they expressly agree that Singer shall assume and agree to pay one-half of the principal of the note representing the lien of the mortgage on the undivided half of the land conveyed to him; and the only way in which he could be protected under this warranty upon the maturity of the mortgage indebtedness was, upon payment by him of his obligated pro rata amount thereof, to have the mortgage released as to his undivided one-half of the land purchased from the Thompsons. So it would seem that the Thompsons, by their warranty, at least impliedly agreed to and authorized the very release because of which they now seek to excuse themselves from further liability on the note as makers thereof.

The assumption by Singer of the payment of $12,500 was in effect a part, if not the entire, consideration for the deed by which he acquired title to the Thompsons’ undivided one-half of the land, and as between himself and the Thompsons he was bound, at the maturity of the mortgage indebtedness, to pay thereon the amount which, by the acceptance of the deed, he agreed to pay. The liability of the Thompsons on the note and mortgage was thereby reduced by this payment, and they are now estopped from claiming a discharge from liability on the note because of the release of the mortgage as to the undivided one-half of the land conveyed by them to Singer, which the warranty required and contemplated.

They cannot avoid payment of the balance of their voluntarily created indebtedness, and should not be absolved therefrom simply because Singer, complying with his express obligation so to do, paid at its maturity one-half of the mortgage indebtedness, and by so doing completed the payment of the purchase price and secured a release of his undivided one-half of the land from the lien of the mortgage; nor would the ■Thompsons be discharged therefrom by the Citizens Banking Company receiving this payment from Singer and releasing his portion of the land from the lien of the mortgage, without their knowledge or express consent. This was the intended purpose of the payment, and to this Singer was entitled.

The judgment of the Court of Common Pleas is therefore reversed, and the cause remanded for further proceedings according to law.

Judgment reversed and cause remanded.

Richards, P. J., and Williams, J., concur.