Court Opinion

ID: 5193009
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:39:07.563793+00
Date Added: 2024-06-11T08:26:58.418406
License: Public Domain

Ingraham, J. (dissenting):
I do not concur in the reversal of this judgment. The question presented is whether the' obligor upon the bond to secure the payment of the mortgage upon real estate was discharged from liability in consequence of the receipt by the mortgagee, on December 29, 1893, of the six months’ interest due on the 1st of January, 1894, from the grantee of the property covered by the mortgage. The action was to foreclose the mortgage. The referee filed his decision under section 1022 of the Code of Civil Procedure, concisely stating the grounds upon which the issues were decided and directing judgment to be entered thereon. That decision, after setting forth the bond and mortgage to secure its payment, stated that the mortgaged premises were conveyed by Casey to one Friedberg, and by Fried-berg to one Nordenschild, who, in 1893, was.the owner of the premises ; that there was no agreement on the' part of the plaintiff to change the rate of interest or to extend the time- of payment of the bond and mortgage, and that the fact, that the plaintiff accepted a different rate of interest than that provided in the bond and mortgage does not prove an agreement to change the rate of interest, and that no consideration for such agreement was shown.
The court' has found -as á fact that there was no agreement to extend the time of payment of the mortgage, which would discharge the liability of the obligor upon the bond which the mortgage was given to secure. The only evidence in the case from which such an agreement could be inferred was contained in the cross-examination *99of an employee of the plaintiff. He testified that the interest for the six months commencing July 1,1893, and ending January 1,1894, was paid on December 29,1893; that that was for the interest due on January 1,1894, and was for the previous six months. There is no allegation in the answer that an agreement was made whereby the payment of the mortgage debt was extended during this period; nor was such a defense insisted upon at the trial. The extension set up in the answer was that the time for the payment of the principal sum secured by the said mortgage sought to be foreclosed in this action was extended to a date subsequent to April 5, 1892, and from the time of entering into such agreement the rate of interest to be paid on the principal sum secured by said mortgage was changed from five per cent per annum to six per cent.
It is not proposed to reverse this finding of the trial judge, that the extension here alleged was not proved. It appearing, however, upon the cross-examination of one of the plaintiff’s witnesses that the interest that became due on the 1st' of January, 1894, was received by the plaintiff on the 29th of December, 1893, three days before it became due, it is held in. the prevailing opinion as a matter of law,that the receipt of such interest discharged the bond. It may be conceded that a valid agreement to extend the payment of of this mortgage for one day would discharge the obligor, but the question presented is, whether or not the receipt of this interest three days before it became due was conclusive evidence of such an agreement. In Bangs v. Strong (7 Hill, 250) there was an express agreement, the execution of which seems to have been admitted, by which the time for the payment of the mortgage was extended from eight to ten months, during which time the mortgagee could not proceed with the collection of the debt, and this agreement was made between the creditors and the principal debtor, without the consent of the surety. Judge Bronson, in delivering the opinion of the Court of Errors, says: “Where time is thus given to the principal debtor by a valid agreement which ties up the hands of the creditor, though it be but for a single day, it is quite clear that the surety is, discharged. The principle is the same whether the time be long or' short.” There is no reason to doubt the entire correctness of this statement. The question in this case is whether such an agreement' was proved,- so that the finding of the trial judge that there was no
*100agreement is unsupported by the evidence. In the case of Wakefield Bank v. Truesdell (55 Barb. 602) the true rule, I think, is stated. That action was on a promissory note, the payment of which was jointly and severally guaranteed by the defendant and several others, and which had been discounted by the plaintiff for the accommodation of the maker. This note was due on the 23d of August, 1855, and on the twenty-fourth day of August, the day after it was due, the maker paid to the plaintiff the interest on the note up to the 26th day of February, 1856, being six months’ interest in advance. This payment was made and received specifically as interest, and the cashier indorsed on the note the words, “ Int. paid to Feby. 26th, 1856.” The referee found that the plaintiff, without the knowledge or assent of the defendant, extended the time of payment for six months, and gave the maker time for its payment until the 26th day of February, 1856, and that the defendant was thereby discharged from his liability as surety, and ordered judgment for the defendant ; and it was held that this finding was sustained by the evidence. The court there stated: “ The real question is, what was the intention of Thompson when he paid the interest on the 24th of August, in behalf of the makers ? and what was the intent of the cashier when he received the interest, and indorsed it on the note ? and how did they understand the intentions of each other ? ” And it was held that it was intended to extend the time of the payment of the note to the 26th of February, 1856.
The question here is what was the intent of the plaintiff and the owner of the property making this payment on the 29th of December, ' 1893, when the interest was paid ? There is certainly no proof of .any intention or understanding to extend the time of payment of this mortgage. The interest was due on the 1st of January, 1894. Three days before the interest’was due the owner of the property paid it, and all we have is the fact that on that day the plaintiff received it. Unless we are to say that as a matter of law. this receipt of interest extended the time of the payment of the mortgage for three days, the finding of fact by the trial judge should not be disturbed. ’ Yet it is quite clear that if it was understood between the parties that the receipt of the interest three days in advance should not have the effect of extending the time of the payment of the bond, so that notwithstanding the receipt of this interest *101the plaintiff could have proceeded to collect the amount, the obligor on the bond would not have been discharged. As before stated the payment of this interest was not set up in the answer as a defense; nor was it claimed upon the trial that this payment of the interest was an agreement to extend the time of the payment of the bond. The person making the payment or the officer of the company who received it was not examined as a witness. No evidence was offered to show the circumstances under which the payment was made, and proof of any such agreement under the pleadings would not have been admissible. I do not think we are justified in reversing the judgment because a fact appeared upon the cross-examination of the witness which was capable of an explanation, and which was not pleaded as a defense, and would not have been allowed to be proven upon the trial if evidence had been offered of that fact as a defense. Where interest upon a mortgage is about to become due, the mere fact that the mortgagee out of abundant precaution anticipates its payment by a day or two and that money is received by the mortgagee as a payment as of the day when the interest was to become due, without any understanding, express or implied, that there is an intention on behalf of either party to extend the time of payment of the mortgage, there cannot, I think, arise a legal implication that there was such an extension. To discharge a surety there must have been an intention to extend the time of payment of the bond, and while there may be circumstances from which such an agreement may be inferred, a mere anticipation of payment of the interest for three days where the evident intent was not to extend the time, but out of abundant caution to have the interest in the hands of the mortgagee upon the day that it became due, no such intention is necessarily inferred. In the year 1894 the first of January came on Monday, which was a legal holiday. The interest could not have been paid on Sunday, and the Saturday before, which, was the thirtieth of December, was a half-holiday. If the payment had been made on Saturday, so that on the first of January the plaintiff would be in possession of the money, there could be no claim, I think, that there was an extension of the payment of the bond. An anticipation of the payment of the interest that would become due on the first of January, so that the plaintiff could have the money on the day that the interest became due to apply to its *102payment, was not, I think, a binding extension of the time of payment.
I think, therefore, that as this extension was not pleaded and was not insisted upon before the trial judge, he was justified in refusing to consider it, and that his finding that there was no extension was sustained by the evidence.
Judgment reversed, new trial ordered, costs to appellant to abide event.