Court Opinion

ID: 7884166
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:37:46.736895+00
Date Added: 2024-06-11T16:31:41.883955
License: Public Domain

The opinion of the court was delivered by
Valentine, J.:
The facts presented by the record are as follows: The petition is for the foreclosure of mortgage given by the defendants to one Dean S. Kelley to secure a promissory note for $600 payable five years after date, and also ten semi-annual interest-notes for $36 each. The notes and mortgage were executed July 14th 1873. The mortgage is in the ordinary form except that it contains a covenant as follows:
“And the said grantors hereby covenant and agree that they will pay all taxes and assessments of every nature that may be levied or assessed on said premises at'the time the same shall become due and payable by the laws of this state; that they will insure or cause to be insured the building on said premises in a responsible insurance company, to be named by the grantee, in the sum of three hundred dollars, and assign the policy or cause the same to be made payable in case of loss to the grantee, his heirs or assigns, as his interests may appear, and continue such insurance until said indebtedness shall be paid in full. But in case of the nonpayment of said sum of money, either principal or interest or any part thereof, at the time or times above limited for the payment thereof, or in case of the nonpayment of any taxes that may be levied or assessed upon said premises, at the time the same shall become due and payable as aforesaid, or in ease of the failure of the grantee to insure and keep said property insured and the policy assigned or made payable to the grantee in manner aforesaid, then, and at the time of such nonpayment, or failure, or either of them, the whole sum hereby secured shall, if the grantee so elect, become due and payable, anything in said note to the contrary notwithstanding, and this deed shall then be and at that time become absolute, and notice of such election may be given to the grantor at any time thereafter. * * * And it is further covenanted and agreed, that in case of fail*354ure of the grantor to pay taxes or cause said property to be insured as above provided, the grantee, his heirs or assigns, may, if he elect so to do, pay said taxes, or cause said property to be insured as aforesaid, and the amount of money so paid for taxes or insurance shall become an indebtedness against said grantor and draw interest at the rate of twelve per cent, per annum from the time of such payment.”
Kelley transferred said notes and mortgage to one H. M. Holden August 8th 1873, and said Holden transferred the same to the plaintiff afterward and before maturity of said notes or either of them. Defendants did not pay the first interest-note which fell due on January 14th 1874; did not pay taxes for 1873, due November 1st 1873; did not insure property; and did not pay certain back taxes which were due on a portion of said property at the time the mortgage was given; and by reason thereof, and after the maturity of the first interest-note, viz., on February 13th 1874, plaintiff elected to have the whole debt become due, and on that day gave notice thereof to defendants. The answer admits these facts, and sets up that Kelley acted as the agent of H. M. Holden and the plaintiff in making the loan to defendants, and claims a failure of consideration. The testimony shows (and there is no dispute on the point,) that Kelley paid a judgment of foreclosure against Clark upon the premises herein, amounting to $314.36; also, taxes on same land, $114.17; also, for abstract, $5, and for patent, etc., $2.50 — making a total of $436.03, which is alTthe consideration Clark ever received for the notes; that $150 commission was reserved by Kelley, and that he still has about $14 in his hands belonging to Clark. Defendant admits in open court that there is no evidence that Kelley acted as agent for plaintiff, or H. M. Holden, and hence the only question for this court is, whether the plaintiff obtained the notes and mortgage before or after maturity, and consequently, whether the notes are subject to or freed from equities between Clark and Kelley.
Though the defendant admits that the plaintiff received the notes as above stated and in fact long prior to the maturity *355of either of the notes, yet he claims, and the • court below so instructed the jury, that, “by the election of the plaintiff, Eli Holden, the entire claim became due before he acquired an interest in said notes and mortgage,” and therefore that the notes are subject to equities between Clark and Kelley. Other instructions given by the court were in substance to the same effect, all hinging upon the theory that, by reason of the failure of the defendants to pay the portion of the taxes unpaid at the time the notes and mortgage were executed, and by reason of their failure to insure the property under the above covenant, the notes became due at the time they were executed. As above stated, the election of the plaintiff was made and notice thereof given to the defendants on the 13th of February 1874, one month after the maturity of the first note. The reason assigned for the above ruling is, that the covenant reads that, in case of default, “then and at that time” the entire debt shall, at the election of the grantee, become due; and as plaintiff elects to have the whole debt due, it relates back to “that time,” viz., the time of the default, which (it is said) was that of the date of the papers. The language however of the contract is, that “then and at the time of such nonpayment, or failure, or either of them,” the whole of the debt shall become'due “if the grantee so elect”— showing clearly that it was the intention of the parties, not that the whole of the debt or any part thereof not yet due should become due upon the happening of any default or failure — not that the grantee would be required to make his election at the happening of the first or any intermediate default, or not at all, but that the grantee might wait until-several defaults had occurred, and then, after the last default, exercise his option by electing that the debt should become due, and the debt would then become due, not because of such default merely, but because of the election by the holder thereof that it should become due. The grantee might waive all the defaults except the last one, and then upon that default, and because thereof, elect to make the whole of the debt become due. And then, by no rule of construction could *356the time for the debt to become due be made to relate back to the time of any default which occurred previous to the last one. No election had been made by any holder of the notes or mortgage when either H. M. Holden or the plaintiff Eli Holden purchased the same, and none of the notes had yet become due by their terms. Hence both the Holdens were innocent purchasers and holders of the notes and 'mortgage. Up to February 13th 1874, when Eli Holden elected that the whole of the debt should be due, he was unquestionably an innocent holder of the notes. Now how can it be said because of such election that he never was an innocent purchaser? Up to January 14th 1874 none of the notes had become due. Then how can it be said that because of said election none of the notes were ever otherwise than due? Evidently all of the notes but the first note became due at the time that Eli Holden elected that they should become due, that is, on said February 13th, and not one of them became due prior to said January 14th. On said January 14th the first note became due, and it had never before that time been due. Then how can it be said after February 13th that it had never been otherwise than due? Can a note become due a second time? Can a note that was always due become due again ? Can a note be due and not due at the same time? H. M. Holden purchased said notes on August 8th 1874, and the first default, as we think, was not made sooner than November 1st, 1874. The maker of the notes was to pay the taxes on the property (in the language of the contract) “that may be levied or assessed on said premises at the time the same shall become due and payable by the laws of this state;” and “that may be levied or assessed on said premises at the time the same shall become due and payable as aforesaid; ” and he was not required to pay taxes “that” had been previously “levied or assessed on said premises,” nor was he required to pay such taxes or any taxes “at the time the same” had “become due and payable,” or that were then “ due and payable.” Besides, the taxes that were then due and payable were paid out of the money for *357which the notes were given long before the notes were transferred to H. M. Holden. But is it possible to construe this contract so that Kelley might have elected to consider all of the notes du'e the very minute they were given? Such certainly could not have been the intention of the parties. The defendants certainly did not want to put it in the power of the holder of the notes to sue on them as soon as they were made when it was stipulated-in the principal note and mortgage that the loan should be for five years. The insurance was to be (in the language of the contract) “in a responsible insurance company to be named by the granteeand the grantee never named any insurance company; so the defendants of course were never in default in this respect. The first default was therefore after H. M. Holden purchased the notes; and therefore, if we should carry the time back when said notes became due to the first default it would still leave H. M. Holden an innocent purchaser and holder of the notes; and if he was an innocent purchaser and holder, then of course the plaintiff must recover. Upon this whole subject we would refer to the able and elaborate brief of counsel for plaintiff in error.
Counsel, for defendants in error raises the question that the plaintiff’s reply was not verified by an affidavit, and therefore that it did not put in issue some of the allegations of the defendants’ answer. The case was tried however in the court below, in the same manner as though it was considered by all the parties that the reply was sufficient, and therefore this court will now treat the case in the same way. (Bent v. Philbrick, ante, 190; Wright v. Bacheller, ante, 259, and cases there cited.)
The judgment of the court below will be reversed, and cause remanded for a new trial.
All the Justices concurring.