Case Name: Hyman Simon & a. and Norman W. Davis & a. v. New Hampshire Savings Bank Charles Gill, Intervenor
Court: New Hampshire Supreme Court
Jurisdiction: New Hampshire
Decision Date: 1972-11-03
Citations: 112 N.H. 372
Docket Number: No. 6314
Parties: Hyman Simon & a. and Norman W. Davis & a. v. New Hampshire Savings Bank Charles Gill, Intervenor.
Judges: Grimes, J., dissented; the others concurred.
Reporter: New Hampshire Reports
Volume: 112
Pages: 372–380

Head Matter:
Merrimack,
No. 6314.
Hyman Simon & a. and Norman W. Davis & a. v. New Hampshire Savings Bank Charles Gill, Intervenor.
November 3, 1972.
Robert D. Branch, by brief and orally, for the plaintiffs.
Sulloway, Hollis, Godfrey Soden and John C. Ransmeier (Mr. Ransmeier orally) for the defendant.
Orr and Reno, for the intervenor, filed no brief.

Opinion:
Duncan, J.
The plaintiffs seek by this bill in equity to restrain and enjoin the defendant bank from foreclosure of a mortgage given to it on May 20, 1965, by the intervenor Gill, a developer, to secure a construction loan of $20,000. In May 1967, the plaintiffs Simon and Nurse assumed and agreed to pay the mortgage upon conveyance of a portion of the mortgaged premises to them. Simon and his wife were also bound by separate agreement with the bank, under seal, to pay the mortgage note "as fully as if [they] had signed [it]".
In 1970, the plaintiffs Davis obligated themselves to pay the mortgage to the bank by virtue of a deed to them from Simon and Nurse of a still smaller portion of the mortgaged premises. The same conveyance also bound them to pay a mortgage to the intervenor Gill which was subsequent both to the mortgage which is the subject of this suit and a second mortgage to the bank by the intervenor Gill later assumed by the plaintiffs Simon and Nurse. On January 30, 1970, the bank made demand for payment in full on Gill and Simon and Nurse, and notified Davis of the demand.
The Superior Court {Flynn, J.) transferred without ruling, upon the pleadings and an agreed statement of facts, the sole issue of whether the mortgage may be foreclosed in the absence of breach of any condition of the mortgage except the failure, upon demand, to pay the unpaid balance of the demand note secured thereby.
The mortgage which the bank seeks to foreclose is conditioned upon repayment of the borrowed sums and of "the mortgagor's note or notes . . . payable to the order of the . . . Bank, on demand, with interest payable monthly at the rate of 6 per cent per annum, and any renewals thereof," in which case, (assuming compliance with other conditions not here material) the mortgage deed "shall be void and of no effect...." The mortgage then provides: "It is further agreed without the mortgagee waiving the right to demand payment in full at any time that One Hundred Forty-Four . . . Dollars be paid monthly beginning December 20, 1965, to apply first on interest and balance on principal of the note or notes above referred to . . . and that on failure of performance of any of said conditions the mortgage debt shall become due and payable, and the mortgage may be foreclosed, under the power of sale.
Similarly the mortgage note, under date of May 20, 1965, contains a corresponding "promise to pay . on demand, with interest at 6 per cent per annum payable monthly, giving the bank the right of collecting this note at any time . . . together with a "further" agreement, "without the bank's waiving the right to demand payment in full, at any time, that $144.00 be paid monthly to apply first on interest and balance upon principal.. . ."
Thus both the note and the mortgage held by the defendant bank plainly provide for monthly payment not only of interest, but also of a part of the principal. But as both the note and mortgage specifically provide, the agreement for monthly payments was made without waiver of the mortgagee's "right to demand payment in full at any time". Moreover the note, the terms of which were incorporated in the condition of the mortgage, gave to the bank "the right of collecting this note at any time."
In the face of these explicit agreements, we cannot accept the plaintiffs' contention that the provisions for installment payment of the debt converted the mortgage note from a demand note to an installment note, so that payment in full could be demanded only under the acceleration provisions of the mortgage, upon default in the payment of monthly installments.
The case is controlled by principles laid down in Merrimack River Sav. Bank v. Higgins, 89 N.H. 154, 195 A. 369 (1937). There a mortgage note payable "on demand, with interest semi-annually, at five per cent" was held to be a promise "to pay forthwith", creating a "mature obligation as soon as it is given", in spite of the fact that semiannual payment of interest was also provided for. The plaintiffs' contention that the circumstances of the agreement required "a reasonable time to elapse" before the note matured, was held to be "unsound". "The form of the note is determinative". Id. 157.
The mortgage note in the case before us is not to be considered any less a demand note because in addition to requiring the monthly payment of interest, it also required the monthly payment of installments of the principal. The repeated reservation to the bank of the right to demand payment in full at any time leaves no room for an interpretation of the transaction which would nullify both the promise to pay on demand, and the reserved right to demand payment regardless of whether other conditions of the mortgage were breached or not. Significantly, the note also reserved to the maker a correlative "right to anticipate payments". Thus under their agreement neither party was at the mercy of the other, since each was in a position to protect his own interest as fluctuations of the money market might dictate.
We find nothing to preclude enforcement of the demand provisions of the note in RSA 382-A:3-108, which relates primarily to the definition of a negotiable instrument. See RSA 382-A:3-104(l) (c). Nor are we concerned with RSA 382-A: 1-208, since the bank does not rely upon the acceleration provisions of the mortgage to support foreclosure. As the statutory comments point out, "this section has no application to demand instruments . . . whose very nature permits call at any time with or without reason".
The plaintiffs urge that in determining the intention of the parties to the mortgage, consideration should be given to the mortgagor's application for the loan, which preceded it and sought approval of a twenty-year construction loan repayable at the rate of $144 per month. This document however, over the signature of the mortgagor, provides that it shall not constitute a contract or agreement on the part of the bank; that the loan shall not become available "until all other requirements of the Bank have been complied with"; and that the mortgagor agrees "that any terms of amortization or repayment which the Bank may agree upon will not be deemed to waive any provision of the note."
Clearly the note and mortgage represent the final, integrated agreement of the parties. We hold that the unambiguous demand provisions of both instruments became binding in accordance with their terms.
Cases cited from other jurisdictions such as Trigg v. Arnott, 22 Cal. App. 2d 455, 71 P.2d 330 (1937), Barron v. Boynton, 137 Me. 69, 15 A.2d 191 (1940), and allied cases relying thereon, were concerned with notes containing no reservation to the payee of a right to demand payment in full at any time, and none to the maker of a right to anticipate payment. The ambiguities resolved in those cases are not present in this case. The right sought to be exercised by the defendant bank bears no aura of the unconscionable, but is in conformity with the policy that funds of savings bank depositors shall be kept soundly invested. Peterborough Savings Bank v. King, 103 N.H. 206, 168 A.2d 116 (1961); see RSA ch. 387.
Payment of the demand note held by the defendant is an express condition of the mortgage, which authorizes foreclosure "on failure of performance of any of said conditions." The plaintiffs' argument that the foreclosure sale is contrary to statute cannot be accepted. RSA 479:25.
Temporary injunction dissolved; judgment for the defendant.
Grimes, J., dissented; the others concurred.