Court Opinion

ID: 6640916
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:45:11.7525+00
Date Added: 2024-06-11T15:59:14.294566
License: Public Domain

By the Court.

ElaNdeau, J.
The Defendant executed a Promissory note to the Plaintiff for three hundred and twenty dollars, payable in one year, with interest at the rate of four per cent, per month. After the signature the following note or memorandum was written : “ With privilege of two years by paying interest annually at four per cent, per month.” At the end of the first year nothing was paid on the note for principal or interest, and no action was taken by the holder. After the expiration of the second year, nothing being paid by the maker, suit was commenced to foreclose a mortgage, which was collateral to the note, and the only question raised in the case is, what is the Plaintiff entitled to for the use of the money the second year ? Can he recover four per cent, per month, or only seven per cent, per annum, the legal measure of damages ?
The contract is clearly an alternative one, and the question turns upon whether the election rested with the creditor or the debtor to extend it to two years. This, in contracts of this nature will vary with the purpose and object of the agreement; sometimes it may be with one, and sometimes with the other, but the test will generally be, who is the first agent, and ought to do the first act ? Who shall have the election ? As, if a man granteth a rent of twenty shillings, or a robe, to one, and his heirs, .the grantor shall have the election ; for *480be is tbe first agent, by payment of one or delivery of the other. So, if a man maketh a lease, rendering a rent or a robe, tbe lessee shall have the election, causa qua supra. Co. Litt. 145 a.; Layton vs. Pearce, Doug. 15; Bac. Abr. Election, B.; Chitty on Con., 8th Amer. Ed., p. 625.
In Giles vs. Bradley, 2 Johnson’s Cases, 253, tbe Plaintiff purchased of tbe Defendant’s testator a negro slave, and paid for him, and it was agreed that if tbe Plaintiff or bis wife did not like tbe boy, tbe testator was to take him back and refund tbe money, if be was returned within five months of tbe purchase. Tbe Plaintiff returned him, and was allowed to recover, tbe Court holding that tbe contract was obligatory at tbe option of tbe Plaintiff, and be could elect to determine it at any time within tbe five months. See also Note “A,” at tbe end of this case, where several authorities are collected.
In Disborough vs. Neilson, 3 John. Cases, 81, tbe Plaintiff contracted to deliver to tbe Defendant from 700 to 1,000 barrels of meal from tbe 15th of March to tbe 1st of May. It was held that tbe Defendant was bound to receive tbe whole one thousand barrels if tendered by tbe Plaintiff within tbe time, as tbe election to deliver a less amount rested entirely with tbe Plaintiff. 11 Vermont, 612; 19 Maine, 79; 4 Greenleaf, 497.
In McNitt vs. Clark, 7 John. R. 465, tbe Defendant purT chased a patent right, and agreed to pay $400 at tbe end of six months, or pay two-thirds of tbe profits, or six hundred dollars at tbe end of twelve months, or pay two-thirds of tbe profits at that time. He did neither, and tbe Court held that under tbe contract tbe election was with tbe Defendant to pay $400 at tbe end of six months, or account, or to pay $600 at tbe end of tbe year, or account for tbe profits ; but having totally failed to do either, be bad lost bis election, and tbe Plaintiff could elect for himself, and recover either be sued for.
In Smith vs. Sanborn, 11 John. R., 59, tbe Defendant agreed to pay eight dollars per acre for a piece of land within a certain time, or if be defaulted, be was to pay nine dollars per acre for tbe land within a certain other time. Before tbe expiration of tbe time within which tbe De*481fendant was allowed to pay for tbe land, at nine dollars per acre, tbe Plaintiff commenced suit for tbe first default and sought to recover «'for tbe land at eight dollars per acre, but the Court held that tbe election was with tbe Defendant, and be could have bis full time to pay tbe greater amount at bis option, and the Plaintiff was nonsuited.
These cases present a fair illustration of tbe obligations arising under such contracts. In the case at bar, tbe Defendant borrowed tbe money and agreed to pay it in one year, with four per cent, per month interest, with tbe privilege of beeping it two years by paying tbe interest annually at the' same rate. It is clear that no act of tbe Plaintiff could extend tbe contract for a longer period than one year, against tbe will of tbe Defendant. Had tbe Plaintiff, at tbe end of tbe year offered to pay tbe whole amount, principal and interest, 'be could have terminated the contract by so doing. The election, therefore, was with the Defendant, and to accept tbe privilege be must have paid tbe interest due at tbe end of tbe first year. Had be done so no action could have been sustained against him on tbe note until tbe end of tbe second year ; but tbe moment be failed to perform tbe condition by which alone be could avail himself 'of tbe privilege of keeping tbe money tbe second year, tbe Plaintiff bad a right of action against him for tbe note and one year’s interest. If tbe Plaintiff could sue at any time during the second year, then it follows, of course, that tbe Defendant bad no right to the money under tbe contract, and consequently there rested upon him no obligation to pay tbe contract price for it.
Tbe Plaintiff insists that as tbe condition of paying tbe interest annually was all for bis benefit, be could waive it, and that by waiting tbe second year be bad done so. Tbe answer to this, is, that tbe election in such contracts must be in one or tbe other party, and cannot be in both. If tbe Plaintiff, by bis act could make tbe contract a continuing one for two years, then the election was with him ; but tbe test above given proves it otherwise. Tbe Defendant was tbe first agent; be was to pay tbe interest annually, and on that act depended tbe adoption of tbe privilege of extension.
*482Tbe Plaintiff bad bis right of action at tbe end of tbe first year, and if be did not avail bimself of it be has no one to blame bnt himself. Tbe dama^e'fe recoverable upon the note after tbe first year are seven per cent, per annum. Talcott v. Marston, 3 Minn. R., 339.
Judgment affirmed.