Court Opinion

ID: 6965040
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:18.089662+00
Date Added: 2024-06-11T16:08:34.573291
License: Public Domain

Mr. Justice Craig delivered the opinion of the Court: On the trial the court excluded the parol agreement set up in the affidavit for a continuance, and, on the propositions of law submitted, held that a parol agreement entered into at the time the mortgage was executed was not admissible to vary the contract between the bank and Henry Schultz, embraced in the chattel mortgage, and the propriety of this ruling is the principal question presented by the record for our consideration. Parol evidence is not admissible to vary or contradict the terms of a written agreement. This principle of law is so well understood and so thoroughly settled that it will not be necessary to cite authorities in its support. What did the defendant undertake to prove as a defense to the note? Upon an examination of the affidavit relied upon, it will be found that the defendant undertook to show that at the time Schultz executed and delivered to the bank a chattel mortgage to secure an overdraft of $175.44 and five promissory notes, including the one in suit, it was agreed between Schultz and the bank, that when the property embraced in the mortgage was sold, the note in suit should be first paid from the proceeds of the sale of the mortgaged property. If the alleged agreement had been incorporated in the mortgage, of course it would have been binding; hut it was not, and the question is, whether a parol agreement made at the same time the mortgage was executed is admissible for the purpose for which it was offered. In disposing of this question the mortgage, and the promissory notes described in the mortgage, must be considered together and treated as one instrument. When this is done, it appears upon the face of the mortgage, by its terms, that the property therein described was conveyed by Henry Schultz to the bank, to secure, first, an overdraft of $175.44; second, a note for $2500, dated March 3, 1888, and due on demand j third, a note for $500, due August 13, 1888; fourth, a note for $1250, due September 19, 1888; fifth, a note for $2000, due September 19, 1888; and sixth, a note for $1250, due October 15, 1888. These notes were all executed by Henry Schultz, and the several amounts therein specified he promised to pay on the date named in each note. The mortgage and the notes constituted a contract in writing between Henry Schultz, the mortgagor, and the Plankinton Bank, the mortgagee. As stated before, the mortgage was given to secure several notes, which became due and payable at different dates. The law is well settled, by the decisions of this court as well as by the decisions of other courts, that where a mortgage is given to secure the payment of several promissory notes maturing at different dates, the "notes are entitled to priority of payment from the proceeds of the property embraced in the mortgage, in the order in which they respectively become due and payable. The first becoming due has the first lien on the mortgaged property for payment, the next note becoming due will have the second lien, and so on to the last. Vansant v. Allmon, 23 Ill. 31; Walker v. Dement, 42 id. 272; Gardner v. Diederichs, 41 id. 158. The rule on this subject is well stated in State Bank v. Tweedy, 8 Black, 447, where it is held that the different installments in a mortgage, where secured by corresponding notes, may be regarded as so many successive mortgages, each having priority, according to its time of becoming payable. Applying this rule of construction to the mortgage in question, $3000 of the mortgage indebtedness, in addition to the overdraft, became due before the note indorsed by the defendant, and that amount was entitled to be paid out of the proceeds of, the mortgaged property before the bank was under any obligation to apply any of the proceeds on the note indorsed by the defendant, which would exhaust all the proceeds of the mortgaged property, and leave nothing to apply on the note indorsed by the defendant. But if the parol agreement made at the same time the mortgage was executed is admissible, what is the result? The terms of the mortgage—the written contract between the parties—are changed by the parol evidence, and the note which stands in the fifth order of payment is advanced to the first. We are aware of no rule of law under which this can be done. Indeed, the admission of the evidence would violate one of the elementary rules of ■evidence. But it is said, the agreement proposed to be proved is collateral to the mortgage, and upon that ground it is admissible. The parol agreement was made at the same time the mortgage was executed. It was made by and between the mortgagor and mortgagee. It related to the same subject embraced in the mortgage contract, and it is nothing but a part and parcel of the mortgage contract, which the parties failed to incorporate therein as a part of their contract. It is also said, the parol agreement was the consideration for the mortgage, and under the general rule, which admits parol evidence to explain the consideration in a deed or show a different consideration from the one expressed, this evidence may be admitted. It is a well understood rule that parol evidence may be given to explain a receipt, and upon the same principle the acknowledgment of the receipt of a certain consideration expressed in a deed may be changed or varied by parol evidence. But that doctrine has no application to the question involved here. The consideration named in the mortgage was not in dispute. Whether it was one sum or another had no special bearing on the case. The offered evidence had no bearing on the consideration of the mortgage. Its object and only purpose was to change the terms of the mortgage in regard to the payment of the notes described in the mortgage, and as such it was not admissible on the pretense that it had a bearing on the consideration named in the mortgage. But it is said, the defendant is not a party to the mortgage or in privity with a party to it, and being a stranger he may contradict it, by parol or otherwise. It is true that the defendant is not a party to the mortgage, but he claims under it. He introduced it in evidence. Indeed, the mortgage is the foundation of the defendant’s claim. Take the mortgage out of the case and the defendant has no ground whatever to stand upon. Claiming, then, as defendant does, under the mortgage, and under a contract alleged to have been made by the mortgagor and mortgagee at the time the mortgage was executed, he has no more right to introduce evidence to vary or contradict the terms of the mortgage than he would if he was a party to the instrument. Many authorities have been cited by counsel, in their argument, to sustain their position. These authorities have been examined, and the questions presented have been carefully considered, but we perceive no ground upon which* the parol agreement set up in the affidavit can he admitted in evidence. The judgment of the Appellate Court will be affirmed. Judgment affirmed.