Court Opinion

ID: 3881378
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:12:45.05215+00
Date Added: 2024-06-11T13:51:49.025869
License: Public Domain

This is an action to foreclose a mortgage of real estate given by the defendant Annie Williams to the defendant A.P. Jackson to secure her note for $1,705, dated May 8, 1920, due October 1, 1920, payable to him. On May 27, 1920, A.P. Jackson made his note to the Bank of Swansea for $1,705, due October 1, 1920, and assigned as collateral the note and mortgage above described from Annie Williams to himself. Prior to these dates, on January 22, 1920, Annie Williams, with another, had given a note to P.J. Williams for $300, payable November 1, 1920, and had secured it by a mortgage upon the real estate afterwards mortgaged to A. P. Jackson. P.J. Williams indorsed this note in blank, assigning it to the Bank of Swansea. So that, at the time the loan of the bank to Jackson had been consummated, the bank had both the $1,705 mortgage and the $300 mortgage. This was on May 27, 1920.
In November, 1921, Annie Williams, having become indebted to the bank in other sums, upon obligations either personally contracted or assumed by her, consolidated all of her obligations, including the two mortgages above described, into a note to the bank for $2,325, due January 1, 1922, with 8 per cent. interest and discount. That was in form a collateral note, and stated upon its face that the maker had deposited as collateral security therefor real estate mortgages as per list attached which included the two mortgages above described. Strictly speaking, Annie Williams, being *Page 136 
the mortgagor upon each of these mortgages, both of which were at that time held by the bank, was not in a position to assign either one of them; but manifestly the intent was that they should be held by the bank as security for the $2,325 note then executed.
On May 17, 1922, Annie Williams made a payment from cotton upon the $2,325 note of $303.94 and on August 12, 1922, of $74.13. In June, 1923, Annie Williams took out a policy of insurance upon the dwelling house which was upon the mortgaged premises for $1,250, the loss, if any, being made payable to the Bank of Swansea as mortgagee.
In July, 1923, the dwelling house was burned and the insurance, $1,250, was paid to the bank on August 6, 1923. In February, 1924, after the insurance money had been collected by the bank, Annie Williams and the bank had a settlement in which it was ascertained that she owed the bank upon the consolidated note of $2,325 a balance of $1,429, for which she gave the bank a new note with the same agreement that the two mortgages should continue as security therefor. The balance was evidently ascertained by calculating the interest on the $2,325 note from January 1, 1922, to August 6, 1923, when the insurance money was received by the bank, and deducting it (less the premium which had been paid by the bank) from the $2,325 plus interest, and calculating interest upon the balance from August, 1923, to February, 1924, the date of the settlement.
When the new note for $1,429 was given by Annie Williams, the $2,325 note was canceled and surrendered by the bank to her. It was presented by her at the reference in mutilated condition. The bank concedes that it made an error in this calculation, in omitting the cotton credits of $303.94, as of May 17, 1922, and $74.13, as of August 12, 1922. Allowing these credits, the balance should have been $1,049.87, instead of $1,429, and the amount due upon this *Page 137 
true balance, as of August 5, 1926, the date of the circuit decree, should be $1,257.87.
I think that, when Mrs. Williams and the bank had a settlement in February, 1924, after the insurance money had been received by the bank, and by agreement it was applied to the $2,325 note, which represented the total of her obligations, and a new note taken for the balance, the transaction constituted an account stated, which she can attack only upon the ground of fraud or mistake. She has made out a case of mistake as to the cotton payments which the bank concedes.
Clearly, it was intended by both parties that the balance ascertained to be due at the time of the $2,325 note, and later at the time of the $1,429 note, should be secured by the outstanding two mortgages, both of which the bank was entitled to foreclose for the corrected balance above stated of $1,257.87, with interest and attorney's fees. It asks only for the foreclosure of the $1,705 mortgage, and, of course, is limited to that.