Case Name: Ronald H. Macdonald et ah, Plaintiffs, v. Howard Nott Potter, Defendant
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1907-12
Citations: 57 Misc. 206
Docket Number: 
Parties: Ronald H. Macdonald et ah, Plaintiffs, v. Howard Nott Potter, Defendant.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 57
Pages: 206–209

Head Matter:
Ronald H. Macdonald et ah, Plaintiffs, v. Howard Nott Potter, Defendant.
(Supreme Court, New York Special Term,
December, 1907.)
Mortgages — Construction and effect — Covenant to pay—When payable.
Accord and satisfaction — What constitutes in general — Payment of part of amount due.
Where a mortgage was given to secure the payment of $93,000 on June 27, 1907, a clause in both the bond and mortgage, providing that the obligor shall pay $7,000 on account of the principal on the 27th day of June in each and every year until the principal shall be fully paid, the first payment to be made June 27, 1905, and, in the event of any installment remaining due and unpaid for thirty days, the whole debt should become due at the option of the mortgagees, does not extend the time of the payment of the principal.
Where the mortgagor, in June, 1907, when the balance due on the mortgage was $78,000, mailed a check for $7,000 to the mortgagees “ being instalment of principal under terms of said mortgage due June 27, 1907 ” and the mortgagees, in a letter dated July 1, 1907, acknowledging the receipt of said check, state “ which amount we will apply to the payment in full of said balance of mortgage * * * As the mortgage is past due we must insist upon its payment in full,33, the retention of the check did not constitute an accord and satisfaction and the mortgagees had the right to credit the amount as a payment on account-of .principal.
Action for foreclosure of mortgage.
Harold Swain, for plaintiffs.
Parsons, Closson & Mcllvaine, for defendant.

Opinion:
Newburger, J.
The mortgage sought to be foreclosed provides for the payment of the sum of $93,000 on the 27th day of June, 1907, with interest. The bond and mortgage provided: "And it is hereby expressly agreed that the said obligors' will pay the sum of seven thousand dollars on account, of the principal hereof on the 27th day of June in each and every year until said principal shall be fully paid, the first of said payments to be made on the 27th day of June, 1905, and in the event of any such installment of principal remaining due and unpaid for the period of thirty days, then and in that ease the whole amount owing hereunder shall 'become due at the option of the holder hereof." The defendant contends that the true construction of this clause is that the mortgage shall be payable only in installments at the rate of $7,000 a year. There is no ambiguity in the language used. The amount of the principal became due on the 27th day of June, 1907. The clause as to the payment of $7,000 on account of the principal did not extend the time of the payment of the principal. The defendant, however, claims that by reason of the retention of the defendant's check of $7,000 there was an accord and satisfaction. It appears that in June, 1907, the defendant wrote the following letter, with a check for $7,000:
" Dear Sir — I inclose herewith my check,- dated the — day of June, 1907, for $1,755 on the 34th Street National Bank, to your order, being six months' interest due J une 27, 1907, on your mortgage on The Warrington. I also, inclose my check, dated the — day of June, for $7,000 on Messrs. E. O. Potter & Company, to your order, being installment of principal under terms of said mortgage due June 27, 1907. Kindly note these payments on the bond as heretofore. Yours truly,
" H. N. Potter."
'On the first of July plaintiff replied by the following letter:
" New York, July 1, 1907.
" Mr. Howard Nott Potter, care of Messrs. Snelling & Potter, No. 1170 Broadway, city:
" Dear Sir — We beg to acknowledge receipt of your check for $1,755, being six months' interest to June 27, 1907, on $78,000, balance of second mortgage secured by premises Nos. 161-163 Madison avenue, New York City. Also we acknowledge receipt of your check for $7,000', which amount we will apply to the payment in full of said balance of mortgage. There seems to be a misunderstanding on your part regarding the terms of this mortgage, which was due and payable June 27, 1907. As the mortgage is past due we must insist upon its payment in full.
"Very truly yours,
" Ronald H. Macdonald & Co."
On the eighth day of July, seven days later, defendant, through his attorney, wrote the following letter:
"July' 8, 1907.
" Messrs. Ronald H. Macdonald & Co., No. 29 West 34th Street, New York City:
. " Dear Síes — Your letter of the 1st inst. to Mr. Howard N. Potter, who has been absent from the city, has been referred to us. The check for $7,000 was sent you in payment of the installment of that amount which became due on June 27, 1907, in accordance with what we understand from Mr. Potter was the agreement. Mr. Macdonald will recognize that he cannot keep the money and decline to observe the terms on which it is paid.
" Very truly yours
" Parsons, Closson & McIlvaine."
to which plaintiffs did not reply. It will be clearly seen from a reading of defendant's letter inclosing the check that the payment was for an installment of principal under the terms of the mortgage, and was not an accord and satisfaction as is contended by the defendant. The principal became due on the 27th day of June, 1907, and as. the defendant paid the sum of $7,000 on account of principal pursuant to the terms of the mortgage, plaintiff had a perfect right to retain the amount and credit the defendant with such payment.
Judgment for the plaintiff.