Case Name: Mathew W. Burchard v. James H. Frazer and others
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1871-07-07
Citations: 23 Mich. 224
Docket Number: 
Parties: Mathew W. Burchard v. James H. Frazer and others.
Judges: The other Justices concurred.
Reporter: Michigan Reports
Volume: 23
Pages: 224–241

Head Matter:
Mathew W. Burchard v. James H. Frazer and others.
What a sale by the acre. Where land is sold by virtue of the acceptance, by the purchaser, of a proposition made to him by the vendor, in writing, naming the nufiiber of acres, and proposing to sell it “ together with the house thereon for the sum of thirty dollars for each acre of land and fifty dollars for the house thereon,” and the aggregate purchase price paid, and secured to be paid, amounts to the same sum which the number of acres named in the proposition would amount to at the price named, with fifty dollars added for the house, it is to be regarded as a sale by the acre.
Fraud of agent: Effect of. And where a person, who acted as the agent of his wife, who owned the land, in making such sale and in taking a mortgage for the deferred payments of the purchase price, subsequently became the assignee of said mortgage, and filed a bill to foreclose the same in his own name, he will be treated, as to all equities growing out of fraud or deceit on his part in the making of such sale, directly as the vendor and mortgagee.
Fraud in sale of land: Reforming deed: Reduction from purchase price. Where such agent of the vendor, when he made the said proposition to sell, and when the deed was delivered to the purchaser, knew that the land in question contained twenty acres less than the number represented in said proposal, and then had in his possession the minutes of two surveys which showed such deficiency, and also knew that the purchaser of said land supposed, from representations made to him by such agent, that he was purchasing the full number of acres named in said proposal, in thus misrepresenting the quantity, and making the sale for a price corresponding to the larger quantity, he was guilty of a deliberate fraud.
And where the deed, conveying the land upon such purchase, contained no covenant of warranty as to quantity, and was surreptitiously altered after drawn, and before execution, without the knowledge of the conveyancer or the purchaser, by the addition of the words, “ said to contain five hundred fourteen and sixty-eight hundredths acres, be the same more or less,” — such purchaser, upon discovering the deficiency, might sustain a bill for reforming said deed or for a deduction from the purchase price.
Value of deficiency in land on fraudulent $ale> deducted from purchase-price mortgage on foreclosure. Such deduction will be allowed in favor of the grantees of such purchaser in a suit, for the foreclosure of the mortgage given by such purchaser for a portion of the purchase price of said lands, instituted by such agent of the vendor as assignee and owner of said mortgage.
Payment by note: When it detaches from lien of mortgage. Where such purchaser, while said mortgage and the bond to which it was collateral wa£ held by a trustee of said vendor, gave to said trustee his promissory note, for the amount of interest then accrued and in arrear, bearing interest at a higher rate than that provided for by said bond and mortgage, and the course of action of . such trustee indicates clearly the intention to treat such note as payment, — it will have the effect to detach the amount thereof from the Hen of the mortgage.
Intention to recave note as payment: What acts proof of • Where such trustee, after having taken such promissory note, took a new note from such purchaser for the interest accrued upon the former note, and receipted that amount of interest upon said former note, and afterwards put said smaller note in judgment, although the same remains unpaid; and where, subsequently and after said : mortgage all became due, such- purchaser entered into a written agreement to pay a higher rate of interest than that borne by said mortgage on all the balance due on said mortgage from the date the same all became due, “the amount to be ascertained to-morrow,” and the account of payments and calculation of interest made in writing, in pursuance of such agreement, credits said larger note as a payment, and the -balance is made out xipon this basis precisely as if the amount had been paid in cash, — these circumstances clearly indicate the intention to treat such note as payment, and to detach, that amount from the Hen of the mortgage.
Agreement to pay higher rate of interest: Consideration: Forbearance. Where there has already been forbearance on the part of a mortgage creditor, at the request of the mortgagor, on the faith of a verbal promise to pay a higher rate of interest than that borne by the mortgage, and the mortgagor is anxious for further extension without reference to any particular period, and executes a written agreement to pay such higher rate of interest from the date of the maturity of such mortgage until the principal shall be fully paid •without specifying any time of payment, such prior forbearance is a sufficient consideration for the promise to pay the additional interest up to the date of the agreement; and any forbearance which took place after that on the faith of the agreement is a sufficient consideration for rhe promise to pay such additional interest till fully paid; and as between the mortgagor and the mortgagee or holder of the mortgage, such agreement would be valid and have the same effect as if the original bond and mortgage had provided for such rate of interest after maturity till fully paid.
Agreement by mortgagor to pay highei' rate of interest, made after maturity of mortgage, not binding upon those who purchased from him before maturity of , mortgage. But where, at the time such agreement was made, and even before the maturity of the mortgage, the mortgagor had sold out all the land covered by the mortgage, in separate parcels to various persons, as to these purchasers it wag txo more competent for the mortgagor to increase the mortgage debt by any snch agreement than to affect them by an additional, subsequently-executed mortgage for the increased sum, and. such agreement only, binds the mortgagor personally; and the lien of the mortgage upon the lands so sold is only for the amount of the principal, with interest, as provided in the original bond and mortgage. . . • , >
Heard May 5.
Decided July 7.
Appeal in Chancery from Wayne Circuit.
This is a bill Sled by Mathew W. Burchard against James H. Frazer, Thomas Smith, D. Bethune Duffield, August Cramer, John Cleason, Henry Ford, James Ford, Samuel Ford, George Ford, Peter Esper, Francis R. Ward, Jacob Burger and' Mary Burger, to foreclose a mortgage made by said Frazer, and dated December 15, 1863, to secure the payment of the sum of eleven thousand four hundred and ninety dollars and forty cents, with interest, according to the conditions of a bond to which it was collateral, and which bond and mortgage were given to Maria R. Burchard, for a portion of the purchase price of the lands therein described, and were assigned by her to James F. Joy and by him to the complainant. • The, bill is in the usual form except that it contains an averment that “the said James H. Frazer (the money provided to be paid by the said bond and mortgage being over due) promised in writing, to pay the owner of said bond and mortgage, interest on all money unpaid on the same, at the rate of ten per cent, per annum from the 15th day of December, 1867.” The defendants, other than Frazer, were joined as subsequent purchasers and incumbrancers.
Separate answers were filed, one by Frazer, one by Duffield and Smith, and one by Jacob and Mary Burger, setting forth the circumstances of the sale of said land by the complainant, acting as agent of his wife, to said Frazer, and of the giving of said mortgage by said Frazer, substantially as the same are stated in the opinion, and claiming a deduction from the amount due upon said bond and mortgage, as compensation for the deficiency in quantity of the land so sold; and denying that there was the amount due and unpaid upon said bond and mortgage which was claimed by the bill.
The facts were agreed upon by stipulation, - and were substantially as follows, viz: Maria E. Burcbard, on tbe 15th day of December, 1863, and before that time, was the owner of the mortgaged premises specified in the bill of complaint; on the 8th day of December, 1863, the complainant, acting in her behalf, made the written proposition to the defendant, Frazer, for a sale of the same to him. [A copy of which proposition appears in the opinion.]
Frazer accepted the proposition, and on the 15th of December, 1863, went with complainant to the office of the defendant, Duffield, and had the deed of the premises, and the mortgage mentioned in the bill of complaint, drawn according to their directions.
Frazer then executed the mortgage, and left it and four thousand dollars in money, the amount of the cash payment, with Duffield, to be paid and delivered over to complainant, when he should have the deed of the premises executed and delivered. The complainant thereupon took the deed and added to the description the words “said to contain five hundred fourteen and sixty-eight one hundredths acres, be the same more or less,” and had the same executed, ■ and then delivered it to Duffield, who was acting for Frazer, and Duffield paid him the four thousand dollars in money, and delivered the mortgage. Neither Frazer nor Duffield' assented to the addition made by the complainant to the description, as aforesaid, and neither of them knew it till Frazer got the deed from the register’s office, two or three weeks afterwards; Frazer then called the complainant’s attention to the words added to the description by him, and said he wanted the land surveyed, and an allowance made if the land did not hold out; the complainant objected to making any corrections, but told Frazer that he had had the land surveyed, and that he would give him the survey; that he could not find it then. The complainant did afterwards give him the minutes of two surveys,, from which, there appeared to be a deficiency of about twenty acres in the quantity purported to be conveyed by the deed; the quantity specified in the deed being the contents, according to the government plat and survey. Frazer soon after had the land surveyed, and by the survey the quantity fell short about twenty acres, the same as in the case of the surveys furnished by the complainant. Frazer then applied to the complainant to make an allowance for the deficiency, which the complainant refused to do. Frazer afterwards went on and sold the land in parcels [the times and the manner being stated], and- made, and authorized to be made, payments on the bond and mortgage mentioned in the bill of complaint. [ The dates and amounts are given.]
On December 15, 1866, the arrears of interest on the face of the bond and mortgage, deducting indorsements, were computed to that date, amounting to one thousand four hundred and ninety-seven dollars and sixty-two cents, and Frazer executed his promissory note for the amount to James F. Joy, who was then .holding the bond and mortgage in trust for said Maria R. Burchard, in the words and figures following:
“ $1,497.62. December 15, 1866.
“ One year after date I promise to pay to the order of J. F. Joy, trustee, fourteen hundred ninety-seven and sixty-two one hundredths dollars, value received, with interest at ten per cent, per annum, payable semi-annually. James H. Frazer.”
And Joy executed therefor and gave to Frazer a receipt, as follows:
“December 15, 1866.
“Received of James H. Frazer his note for $1,497.62, due one year from date, being for arrears of interest due on his mortgage to M. R. Burchard, assigned to me as trustee,, up to date.”
Frazer afterwards paid two years’ interest on the note, to December 15, 1868, by his note given therefor, and on which last-mentioned note a judgment has been recovered, and remains unpaid, which payment is indorsed on said note, as follows:
“Received and receipted the interest on this note to 15th December, 1868.”
No other payments were ever made on said note, and the complainant brings the same into court, and offers to surrender it up to Frazer, and claims that the same was no payment on said bond and mortgage. On the 5th day of May, 1869, the said Joy gave said Frazer a computation of the amount due on said bond and mortgage, [the material part of which is as follows:
Balance bro’t forward______________________ $8,540 46
Interest Sept. 15, 1865, to Dec. 15, 1866, 1 year and 3 months.................... 738 54
$9,279 00
Payment Dec. 15, 1866, Frazer’s note_______ 1,497 62
$7,781 38.
Interest Dec. 15,1866, to Dee. 22,1866, 6 days, 9 53
$7,790 91]
[This computation leaves as a final balance due May 5, 1869_____________ $6,478 10]
On the fifth day of May, 1869, Frazer executed and delivered to Joy, who was then still holding the said mortgage as trustee for Maria R. Burchard, an agreement in writing, in the following terms:
“ Whereas, Maria R. Burchard holds a mortgage and bond against me, originally for $11,490.40, and dated December 15, 1863; and whereas, the same has not been paid at maturity; and whereas, I agreed verbally to pay ten per cent, for forbearance and time on all that remained due December 15, 1867;
“Now, therefore, I do hereby stipulate and agree to, and with, said Maria R.. Burchard, for whom James F. Joy acts as trustee for the present, that from December 15, 1867, the amount due on said bond’ and mortgage shall bear interest at the rate of ten per cent, per annum, and may be computed at that rate; and I will pay the same from, and after, that date, and when the amount is ascertained, I will pay the interest thereon remaining at the rate of ten per cent, until the principal shall be fully paid. The amount now due to be ascertained to-morrow.
“Witness my hand and seal, this May 5th, 1869.
[seal.] “James H. Frazer.”
The bond and mortgage mentioned in the bill of complaint were, on the 30th day of May, 1869, duly assigned to the complainant. If no deduction is made from the mortgage on account of the deficiency in the mortgaged premises, or on account of the note executed by Frazer for interest, as above set forth, the amount due on the bond and mortgage mentioned in the bill of complaint, on the 19th day of October, 1870, the date of the commissioner’s report of the amount due, was $8,602.45, not allowing the two years interest indorsed on said note of $1,497.62, being $299.52, and for which said judgment was recovered; and the increased interest, under the agreement of May 5, 1869, would be $734.34.
There also is due from the defendants, Jacob Burger and Mary Burger, to the defendant Frazer, October 19, 1870, $1,730.07, towards the purchase price of the parcel of the mortgaged premises bought by them.
The decree below made a deduction' from the amount due on the bond and mortgage, as follows, viz: six hundred dollars on account of the deficiency in quantity of the land, and one thousand four hundred and ninety-seven dollars and sixty-two cents on account of said promissory note. The claim of interest at ten per oent, under said agreement, was disallowed, and interest computed at seven per cent.
Ward & Palmer, for complainant.
The proposition to sell has performed its functions and been merged in the deed and mortgage executed in consummation of its provisions. — Haggarty v. Frazer, 2 Penn., 533 ; Houghtaling v. Lewis, 10 Johns., 296; Smith v. Higbee, 12 Vt., 113; Hamlin v. Martin, 18 Mich., 354; Renard v. Sampson, 12 N. Y., 561.
Whether the proposition itself would sustain the defendants’ claim, is matter not at all clear in their favor. It is not a forced or unnatural construction of it to say, that the number of acres was inserted as a matter of description, to be governed by the more certain description of the government plat and survey, and as a basis of fixing the price of the entire parcel. — Roat v. Puff, 3 Barb., 553. The proposition contained no offer’ to guaranty the quantity of the land, or for a future survey and adjustment of the price.
Frazer did not expect to pay for any excess, and could not therefore be held as understanding that he was to have a deduction for any deficiency. It was really an offer to sell the land in bulk, calling it so many acres, and such was the construction put upon it by the parties. The deed, drawn up as they directed, did not specify any number of acres. The price of the parcel was fixed on the basis of the proposition for the sale, and a part paid, and a bond and mortgage given for the remainder, without qualification or provision for further adjustment^ and the respective instruments of conveyance and security delivered as a completion of the transaction.
If Frazer at any time had any right to relief, he has lost it, both by delay and by subsequent ratifications of the deed and mortgage, after he had full knowledge of all the facts affecting his rights. — Disbrow v. Jones, Harr. Ch., 102; Campau v. Van Dyke, 15 Mich., 371; Moore v. Reed, 2 Ired. Ch., 580; Sadler v. Robinson, 2 Stewart, 520; Pintard v. Martin, 1 S. & M. Ch., 126; De Armand v. Phillips, Walk. Ch., 186.
But if Frazer has equities remaining in the matter between himself and the complainant, how do the other defendants show themselves in a position to avail themselves of them? Frazer claims them as growing out of transactions preceding the deed and mortgage. The other defendants take all their rights under, and subject to, these instruments.
The defendants further claim, that the note given by Frazer for one thousand four hundred and ninety-seven dollars and sixty-two cents, for arrears of interest to December 15, 1866, shall be applied as a payment on the bond and mortgage. The amount was due on a specialty, and a security of a lower nature is given for the same debt. If the position of the securities was reversed, the higher security would merge and' extinguish .the lower, but the converse of the proposition does not hold true.
The most the defendants can claim in behalf of the note, placing it in the light -of'one simple contract given for another is, not-that it, of itself, operates as a payment, but that it shall' so operate, if that was th.e agreement when it was taken. The prevailing presumption of law is, that it was not so taken. — 2 Parsons on Motes and .Bills, 152 ; Williams v. Storrs, 5 Wis., 534; Fickling, v. Brewer, 38 Ala. 685; Cole v. Sackell, 1 Hill; 516; Soffe. v. Gallagher., 3 E. D. Smith, 507; Hill v. Beebe, 3 Kenan, 556; Gardner v. Garham, 1 Doug. (Mich), 507; Galopean v. Ketchum, 3 E. D. Smith, 175; Blunt v. Walker, 11 Wis., 334; Dudgeon v. Haggart, 17 Mich., 273.
And a receipt given at the time of taking it, acknowledging full payment of the debt, has often been held not to be proof of such an agreement. — Glen v. Smith, 2 Gill. & Johns., 494-507; Tobey v. Barker, 5 Johns., 70 ; Johnson v. Weed, 9 Johns., 310; Higby v. N. Y. & H. R. R., 3 Bosw., 497; Putnam v. Lewis, 8 Johns., 389; Thompson v. Briggs, 8 Foster, 40 ; Berry v. Griffin, 10 Md., 27; Muldon v. Whitlock, 1 Cow., 290.
The receipt in this case negatives any presumption that the note was received as payment. It states only that it was received “for arrears of interest due on his mortgage,” not in payment or satisfaction of it.
D. G. Holbrook, for defendants.
When land has been contracted to be sold by the acre as in this case, and a deed executed, the purchaser may claim a deduction, if there has beet, a mistake, fraud or false representation, of the purchase money, if paid, or recover the amount of deficiency in an action, or by bill in equity.— Whaley v. Elliott Heirs, 1 A. K. Marshall, 343; Beirne v. Erskine, 6 Monroe, 281; Keytons v. Brawford, 5 Leigh, 59; Young v. Craig, 2 Bibb, 70; Fleet v. Hawkins, 6 Mumford, 188; Blessings, Admr., v. Beatty, 1 Robinson (Va), 287; Hendricks v. Mosely, 8 Yerger, 74; Stebbins v. Eddy, 4 Mason, 414; Sugden on Vendors and Purchasers (Ed. of 1851), 369 to 376.
As to the payment by note, there are several indications which, in themselves, show that the note was taken, and for years treated, as a payment..
1. The bond and mortgage are dated December 15, 1863. The last installment became due December 15, 1866, the date of the note. 2. The note was payable one year after date. 3. It drew ten per cent, interest, payable semi-annually. 4. By this the whole drew ten per cent, interest. 5. The receipt’ stated “ being for arrears of interest on his bond and mortgage.” 6. After the note had run two years (one year after it matured) another note was taken for the interest unpaid thereon, and indorsed as payment. 7. This note for two years’ interest was sued and a judgment recovered thereon, by which it was, in effect, paid or merged. 8. By this process a judgment was recovered for compound interest. 9. An agreement was entered into by Frazer to pay ten per cent, interest on the balance unpaid on the mortgage from May 16, 1867, “the amount noto due to he ascertained to-morrozv.” 10. A statement was made after-wards, and in Avhich the note of Frazer was allowed, in the Avords, “ Payment December 15, 1866, Frazer’s note, $1,1$6.62,” and a balance struck of $6,478.10. 11. The note Avas kept from December 15, 1866, until the amount due on the mortgage Avas computed in this case, and during all this time was treated as a payment. 12. There were five computations of interest made after this note was given, before it became due, and fiA'e afterwards, on which the note was allowed as a credit. 13. The striking a balance and agreeing on the amount due December 5, 1869, Avas an express admission that the note was a payment, especially as the complainant claims the interest on the balance at ten per cent, under the agreement.
F. II. Qanfield, on the same side.
I. The defendants are entitled to a deduction from the amount claimed to he due on the mortgage, on account of the difference in the number of acres called for in the written contract of purchase and what toas actually conveyed by the deed to Frazer.
1. The case shows a contract to purchase the land in question at thirty dollars per acre. It was not a sale of the land in gross, but by the acre. Frazer was induced by complainant, at the time he made the contract, to believe that the tract included five hundred and fourteen and sixty-eight one hundredths acres, while in fact it - contained about twenty acres less. There was either mutual mistake, or else a mistake on the part of Frazer and fraud on the part of complainant. In either case, the defendants are entitled to the deduction claimed. — Quesnell v. Woodlief, 2 Henning & M., 173 ; Cowger v. Gordon, 4 Blackf., 110; Hawk v. Pollard, 6 Blackf., 108, 7 Ind., 257; Hill v. Buckley, 10 Ves., 394; Belknap v. Sealey, 14 N., Y., 143; Weart v. Rose, 16 N. J. Ch., 294; Story’s Eg., § 779; Taylor v. Fleet, 1 Barb., 471. 2. So far as these twenty acres are concerned, the subject-matter of the contract had no existence, and it is contrary to every principle of equity, to permit complainant to recover for what he has not sold and could not convey. — Champlin v. Laytin, 6 Paige, 189, 202; 18 Wend., 189, 202; Terry v. Bissell, 26 Conn., 23; Hurd v. Hall, 12 Wis., 136; 14 Wis., 241. Had Frazer paid the entire price named in the contract and mortgage, he could have recovered back the price of the number of acres actually deficient, in an action at law'; and, a fortiori, may he now resist the payment in this cause. And it makes no difference that the contract is to be treated as consummated by the delivery of the deed. — Sollinger v. Jewett, 25 Ind., 478; Harrison v. Talbott, 2 Dana, 258; Cause v. Bayles, 4 N. J. Ch., 213 ; Weart v. Rose, 16 N. J. Ch., 290 ; Thomas v. Beede, 25 N. Y., 248. 3. The case shows gross fraud on the part of complainant, and he will not be permitted to take advantage of his own wrong. — Fitch v. Polke, 7 Blackf., 564; Cravens v. Kiser, 4 Ind., 512. 4. As to the subsequent purchasers, complainant is estopped to claim the price of the twenty acres in question, upon the principles which govern the rule of marshaling. — Cooper v. Bigly, 13 Mich., 463; Brown v. Simons, 44 N. H., 475.
II. The note executed, by Frazer to Joy, December 15, 1866, is to be treated as a payment upon the mortgage.
I. The case shows that such was the intention of the parties. 2. The parties have since treated this note as a payment. 3. There was sufficient consideration for the agreement to accept the note as payment. — Rice v. Dewey, 54 Barb., 455.
III. The complainant is entitled to compute interest at sewn per cent., the rate specified in the mortgage, and not ten per cent., the rate named in the contract of May 5,1869.
1. This agreement is void for want of consideration. The promise to increase the rate of interest appears to have been made on account of forbearance; but there is no time mentioned during which the forbearance was to extend. 2. This agreement was not made until Frazer had disposed of all the land to subsequent purchasers, and thus placed ' it beyond his power to increase the burthen of mortgage upon the premises. But even if the agreement was made before the land was sold, it could not affect the subsequent purchasers, as they were without notice of the same.

Opinion:
Ohrxstianct, J.
The first question in this case is, whether Frazer, the mortgagor, and the other defendants who are purchasers from Mm, are entitled to the deduction of six hundred dollars for the deficiency of twenty acres of land at thirty dollars per acre.
Complainant having acted as the agent of his wife (who owned the land) in making the sale to Frazer and in taking this mortgage for the balance of the purchase money, and having since become the assignee of the mortgage, may, so far as relates to this question (and most others in the cause), be treated directly as the vendor and mortgagee. The sale was very clearly a sale by the acre. The proposition made by complainant to Frazer and accepted by the latter was in the following words: "514 68-100. I propose to sell James H. Frazer my land in the town of Dearborn, five hundred fourteen and sixty-eight one-hundredths acres, together with the house thereon, for the sum of thirty dollars for each acre of land, and fifty dollars for the house thereon, four thousand dollars to be paid on delivery of the deed, the balance to be secured by mortgage on the same land sold, with a stipulation that the timber shall not be cut off only in just proportion to the payments made in one, two, and three years, with interest annually, one-third of the balance each year and pay for one-half the expense of writings." And though the deed, as drawn up by Duffield, did not contain a warranty of quantity, yet as it appears clearly from the evidence that the price paid (the four thousand dollars paid down and the amount for which the mortgage was given) was exactly in accordance with the proposition, thirty dollars per acre for five hundred and fourteen and sixty-eight one-hundredths, and fifty dollars for the house, and that complainant, at the time he made the proposition and when the deed was delivered, and he received the mortgage, knew that the tract contained only four hundred and ninety-four and sixty-eight one-hundredths acres, leaving a deficiency of twenty acres, and that he then had in his possession the minutes of two surveys, which showed this deficiency, and that he also knew that, from his representation to Frazer, the latter supposed he was getting the whole quantity of five hundred and fourteen and sixty-eight one-hundredths acres; we cannot resist the conviction that, in thus misrepresenting the quantity and in making the sale to Frazer for a price corresponding to the larger quantity, complainant was guilty of a deliberate fraud; and this conviction is strengthened by the alteration surreptitiously made by him in the deed, without the knowledge of Duffield or Frazer, before execution; for, though it may not have altered the legal effect of the deed as to any of the covenants contained in it, it was calculated to give it the appearance, in case any question should arise as to quantity, of an agreement or assent on the part of Frazer to take it at that quantity, whether more or less.
We see no reason to doubt that, under the circumstances of this case, Frazer, upon discovering the deficiency, might have sustained a bill for reforming the deed or for a deduction from the purchase price. And we think it equally clear he is entitled to the deduction in this suit for the foreclosure of the mortgage. He never owed the amount for which the mortgage was given; and his grantees are equally entitled to the benefit of the deduction. The decree of the circuit court in chancery, therefore, properly deducted the six hundred dollars, as of the date of the mortgage. The next question is, whether Frazer's note of December 15, 1866, given to James F. Joy (who then held the bond and mortgage as trustee for Mrs. Burchard) for one thousand four hundred and ninety-seven and sixty-two one hundredths dollars, the amount of interest then accrued and in arrear, operated as payment so far as the mortgage lien was concerned; or, in other words, whether the reception of the note and the mode in which it was treated by Joy show the intention to detach this amount from the lien of the mortgage, and to look to the note instead of the land, for its payment.
It may be admitted that the mere giving a note for accrued interest, without any thing more to show the intent of the parties, might not have this effect. But the bond and mortgage were drawing interest only at seven per cent., and the interest itself, though due, was not drawing interest as the claim then stood. This note was not only drawn with interest, but with interest at ten per cent. Two important advantages, therefore, were secured to the creditor by the taking of this note for the accrued interest; advantages which might well be supposed to outweigh the value of the mortgage lien for the same sum tuitliout interest. And the note created a new obligation on the part of the debtor, quite different from that secured by the bond and mortgage.
But the course of action taken by the creditor (Joy as trustee) shows, we think, very clearly, the intention to detach this amount from the Jlien of the mortgage and to treat the note as payment. In December, 1868, he took a new note of Frazer for the interest accrued upon this note and receipted that amount of interest on the larger note; and a judgment has since been recovered upon the smaller note, though the amount is still unpaid.
Again, on the 5 th of May, 1869, Frazer entered into a written agreement to pay ten per cent, interest on all the balance due on the bond and mortgage from December 15, 1867 (when the whole became due). The agreement states " the amount to be ascertained to-morrow;" and the account of all the payments and calculation of interest in pursuance of the agreement, showing the amount due May 5, 1869, as furnished in writing to Frazer, credits this note as payment, thus: "Payment December loth, 1866, Frazer's •note, $1,497.62," and the balance is made out upon this basis, precisely as if the amount had been paid in cash. We can, therefore, see no reason to doubt that the note was intended to operate as payment, or to detach and' relieve that amount from the Hen of the mortgage. The decree, therefore, was correct in this particular.
The only remaining question is uj>on the validity and effect of the special agreement made by Frazer, the mortgagor, with Joy, then the trustee of Mrs. Burchard, on the 5th of May, 1869, to pay ten per cent, interest from the 15th of December, 1867, when the whole sum (not paid) had become due upon the bond and mortgage. The written agreement, we think, sufficiently shows that there had already been forbearance on the part of the creditor from the 15th December, 18G7, up to the date of the agreement, May 5, 1869, on the faith of a verbal promise to pay ten par cent, interest, and that this forbearance had been at the request of the mortgagor, and that he was also anxious for further forbearance, without reference to any particular period. This prior forbearance was a sufficient consideration for the agreement to pay the additional interest up to the date of the agreement, May 5, 1869, and any forbearance which took place after that .date on the faith of this agreement, was a sufficient consideration for the promise to pay ten per cent, interest till paid. This agreement, unlike the note, in terms attached to the debt secured by the mortgage; and, as between the mortgagor himself and the mortgagee or holder of the paper, we see no reason to doubt the validity of the agreement, which, as between those parties, should have the same effect as if the original bond and mortgage had provided for ten per cent, interest after the 15th of December, 1867, till paid.
But at the time when this agreement was made, and, in fact, before the maturity of the mortgage debt, the mortgagor had sold out all the land covered by the mortgage, in separate parcels, to various persons, some of whom aré defendants in this case; and, as to these purchasers, it was no more competent for the mortgagor to increase the mortgage debt or amount of the incumbrance by any such agreement, than it would have been to affect them by an additional mortgage, subsequently executed, for the increased sum, or any other debt for which the mortgagor might choose to execute a new mortgage after he had parted with the property. He could, under the circumstances, therefore, only bind himself personally that the interest upon the mortgage debt should be thus computed; and the complainant, as against him, personally, is entitled to a decree at the increased rate of interest. But so far as relates to the lien of the mortgage upon the land, all of which had already been sold to other parties, complainant is only entitled to a decree for the amount calculated at seven per cent, interest, in the same manner as if the agreement had never been made.
The decree, therefore, as to the defendant Frazer, should be so far modified as to allow the recovery against him of any balance of the mortgage debt calculating the amount at ten per cent, interest, according to the terms, and for the period, mentioned in his agreement. In all other respects the decree of the court below must be affirmed, and the record must be remitted to the court below for the execution of the decree.
Complainant must recover his costs in this court aá against defendant Frazer. But the other defendants must recover their costs (in this court upon the appeal) against complainant.
The other Justices concurred.