Court Opinion

ID: 3609806
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:54:17.487615+00
Date Added: 2024-06-11T14:23:46.846002
License: Public Domain

The result of this action works very great hardship and, as I think, manifest injustice to the defendants. The rules of law applicable to the facts proved, do not require such a result.
The plaintiffs (passing over prior payments which were *Page 492 
made) were bound by their bond and mortgage to pay to the mortgagee, in wagons of a specified description and quality, one thousand dollars, with interest, on whatever remained unpaid on such bond and mortgage by the 15th of May, 1860, and seven hundred and fifty dollars, with like interest, by the 15th of June, 1860, the wagons to be delivered at such store-house in the village of Boonville, and on the Black River canal, as the mortgagee might direct; but, with a proviso, that if the mortgagee should not pay off a mortgage due by him, which incumbered the premises of the mortgagors, then the payments by the mortgagors so provided to be paid, may be suspended until such second named mortgage shall be extinguished.
The mortgagors manufactured the wagons required for the fulfillment of their obligation, and on the 15th of May, 1860, had completed, and in readiness for delivery, twenty wagons, and were fully prepared to deliver them in discharge of their obligation. That obligation not limiting the amount, which they might pay if they saw fit, on the 15th of May, to just $1,000 and interest, they had a perfect right to offer the whole twenty, although they would operate in part satisfaction of the June payment.
The mortgagee had designated no store-house at which they should be delivered, and the wagons were at the shop of the defendants in Boonville, where they were made. And on or about the 15th day of May, the mortgagee came to the defendants' shop and inquired of them if the wagons were ready for delivery, and was told that they were. He thereupon stated that he was not ready to take them away, and proposed to the defendants that they should take them down and store them for him until the next lot was ready, and then he would probably know what he was going to do with them, and would take them all away together. The defendants consented, and he examined the wagons and promised to pay them for their trouble, and the defendants thereupon took the wagons "to pieces" and stored them in their barn.
The defendants then finished other wagons, and had them in readiness to be delivered by or on the 15th of June; but *Page 493 
the mortgagee having made no designation of a store-house, they remained for several days at the defendants' shop, and the defendants then stored them with the others to meet the assurance of the mortgagee that he would take them all away together. And the wagons were kept in store from that time onward until the disagreement between the parties, which led to this action to foreclose the mortgage and recover money in lieu of wagons.
Again, after the mortgage in question had been assigned to the plaintiff's testator, the store-house in which the wagons were stored being required for other uses, the defendants apprised the testator of that fact, and he first directed that they be placed in his barn in order that there might be no more storage to pay, but upon suggestion that the street was muddy, he said he did not want them muddied, and proposed their being placed in the defendants' buildings, and it was done. He was then informed of the amount the defendants had been required to pay for the storage in the store-house, and that they should charge it to him, and he assented, stating that it was all right.
The facts above stated were proved without contradiction, and though there is no finding of facts in detail, the question, what was the legal operation or effect of these facts, properly arises on the findings of the judge before whom the action was tried.
Other evidence showed that on the days above named, the mortgagee had not extinguished the prior mortgage on the defendants' premises, and it appeared that the defendants did not intend to give up their control over the wagons until that was done.
In April, 1862, an arrangement had been made by which other security for indemnity against such prior mortgage was given and accepted by the defendants, and the assignor of the mortgage now in question demanded the wagons and designated a store-house to which they should be taken. The defendants claimed that they ought not then to be required to move the wagons again, but nevertheless they drew the wagons to the place designated. *Page 494 
Hereupon the question arose which led to this controversy and to the present appeal. Passing by some negotiations which were claimed by the defendants to amount to an agreement between the parties on the details of the final settlement, the plaintiff's testator finally refused to accept the wagons because the number was not sufficient to pay the sums due, with interest down to April 30, 1862, when the final demand was made.
The defendants did draw to the place designated for the testator's acceptance, wagons enough to pay the sums due, with interest to the respective days, May 15 and June 15, 1860, mentioned in the bond or mortgage, but refused to pay interest after that time.
The court below held, that, notwithstanding what the defendants did toward the performance of their undertaking, interest continued to run against them down to the time of such demand, and therefore by their refusal to pay it they became liable to pay the whole in money, lost the privilege of paying their debt in wagons, and judgment of foreclosure is pronounced against them.
It is not disrespectful to say that this is a harsh judgment against the defendants, who, as it seems to me, have been industrious and prompt in performing their whole duty, have suffered inconvenience and loss from the plaintiff's delay in the discharge of his duty to them, had made and could make no profit by his failure to do so, and the consequent putting off the final delivery of the wagons to his possession.
The court below have regarded the rules of law as leading necessarily to this result, and if that be so, then if the judgment be harsh, the defendants must bear it.
The general principles governing the decision are unquestionable.
The defendants are to be deemed debtors to the amounts named in their bond and mortgage.
The right to pay their debt in specific articles was a privilege for their benefit. If they did not exercise their right according to their bond, the plaintiff is entitled to money to the amount due to him. *Page 495 
And if they were in default in not performing according to the conditions of their bond, the debt would bear interest until it was paid.
But in the conclusion of the court below in respect to the effect of the transactions of May and June, 1860, I think there is error. It is stated in these words:
"There was a balance due in May and June, 1860, which has not been paid, nor was there ever in that year any sufficient tender. The offer that was then made was conditional, and the property never placed at the disposal of the mortgagee. The reason alleged was the outstanding Tuttle incumbrance, and it was never the intention of the defendants to put the property at the disposal of the mortgagee."
Upon this view of the effect of what was done by the defendants, and upon this alone, it is that they are charged with interest until that mortgage was removed or otherwise arranged.
The bond provided that the sum secured should be paid by installments, on or by specified days, and that with each payment there should be paid interest upon all sums unpaid that shall accrue thereon up to the time of payment of each installment.
And while it is conceded that the defendants were not bound to deliver the wagons until the prior mortgage was extinguished by the mortgagee, and were in no default for not delivering the wagons unreservedly to the mortgagee, they are declared chargeable with interest if they did not see fit to waive their security and make an unconditional tender of the wagons.
In the first place, the reasonable construction of the bond does not require this, and in the next place the principles which govern a court of equity in imposing interest, forbid it.
The instrument by its terms declares what shall be paid and when, and what interest shall be paid. Installments are to be paid on separate days, and with those installments, and at the time of payment, there shall be paid interest upon all sums accruing upon sums unpaid up to the time of payment of each installment. The fair and reasonable meaning of *Page 496 
this is, for example: On the 15th of May, $1,000 shall be paid, and therewith shall be paid interest upon all sums remaining unpaid upon the bond up to the time of that payment. A computation of that interest fixes the exact sum which, by the condition of the bond, was payable on that day, and that sum is the amount due by the contract, and it is that payment, i.e.,
the payment of so much for principal and interest which is suspended, if the mortgagee does not by that time extinguish the prior incumbrance.
The bond does not read that the time for paying the installments shall be extended in that event, or the payment of the installment shall be suspended. If it did, I think, upon views hereafter presented, the defendants were not in this case chargeable with interest after June, 1860. But it reads: The party (defendants) may suspend the payment due at that time,i.e., the sum then payable for principal and interest, and any further payment until the said mortgage to Tuttle shall be extinguished.
Undoubtedly the general rule is, that where there is an obligation for the payment of money, or of money and interest on a day named, the interest continues to accrue until payment, or until something is done which, in respect to the question of interest, is equivalent to payment. That is, I apprehend, the rule applicable to this case, and I do not consider it material to consider whether the interest after default be regarded as damages for the default, or be deemed to accrue by virtue of the contract; but I do insist that nothing in the language of the instrument under consideration created a different rule of liability and made the defendants chargeable with interest whether in default or not, as the necessary legal effect of the bond.
The defendants, on the 15th of May, had manufactured twenty wagons, and were ready at their manufactory to deliver them. That was the proper place for delivery under their bond. The mortgagee had a right to designate a store-house where delivery should be made, but, not having done so, the defendants were at liberty to hold the wagons at their *Page 497 
own manufactory, in readiness to deliver, and that was performance on their part.
This, however, is not all; upon the application of the mortgagee, the wagons were submitted to his examination, and the defendants declared their readiness to deliver. There-upon a distinct arrangement, upon sufficient consideration, and based upon the mortgagee's declared want of readiness to take them, was made. It was agreed that the defendants should take down the wagons, — i.e., separate their several parts and store them, — and he would pay them for their trouble; and the defendants stored them accordingly. If this had been an ordinary manufacture of wagons, upon an order therefor, or a sale of wagons, I hesitate very little in saying, that this was an acceptance of the wagons, and that they were thereafter held at his risk of loss by inevitable accident, and that the manufacturer had thereupon a complete right of action for the price. Not amounting to a waiver of the lien for the price, such a waiver is not essential to a complete performance by such a manufacturer, or a vendor, in order to entitle him to all the benefit to result to himself from the contract.
So here, in my opinion, the defendants had placed themselves in a position to claim the like benefit of performance on their part, and the circumstance, that they still retained their lien upon the property, secured to them by the agreement, as security for the discharge of an incumbrance on the premises, the purchase-price of which they were thus paying, no more impaired the effect of their tender of the goods, than the possession of the seller of goods under his lien for the price hinders his recovery of the price from the buyer. A vendor is not bound to make an unconditional tender of possession of the goods, in order to enable him to allege an absolute sale, a full performance by him and a right to immediate payment.
And, further, when, in June, the residue of the wagons were completed, they were at the proper place in readiness for delivery, the mortgagor had not only not designated any other store-house at which they should be delivered, but his *Page 498 
promise to the defendants, requesting them to store the first twenty and in June he would take them all away together, warranted the defendants in storing them with the others.
And this view of the whole subject is strengthened by the fact, that subsequently the respondent's testator assented to the charge of the storage paid by the defendants for these wagons, as a proper charge by them, declaring that it was right.
Some claim was made, that the defendants are chargeable with interest, upon the principles which govern a court of equity on the subject of interest where specific performance of an agreement for the purchase or sale of real estate is decreed. On the contrary, those principles are in full support of the claim of the defendants to be relieved from such payment.
The fallacy in the argument was, that it was assumed that the contract under examination was the original agreement for the purchase of the mortgaged premises; on that assumption it was argued that, inasmuch as the defendants have had the possession and enjoyment of those premises, it is equitable that they should pay interest on the price. That is not the contract which is the subject of the present inquiry; the defendants do not deny and have not denied their duty to pay interest; it was stipulated in the bond; what they claim is, that they have performed on their part all that was essential to constitute performance, except so far as they were prevented by the default of the mortgagee, and so are not themselves in default.
Here the rule and practice of courts of equity above referred to, applies with striking force:
When a purchaser, although in possession, is ready and offers to pay at the appointed time, but the vendor is not ready with his deed, and the purchaser holds the money in readiness to pay whenever the deed shall be tendered and the purchase price is demanded, the purchaser is not chargeable with interest. (DeVisme v. De Visme, 1 McN.  Gor. 352; Regent's Canal Co. v.Ware, 23 Beav. 575.)
The court is governed on that subject by what is deemed *Page 499 
equitable under the circumstances, and, where the purchaser is in no default, but ready to perform and has given due notice, will see that he suffers no loss and that the vendor makes no profit. (See on this subject Fry on Sp. Per., ch. 4, p. 377, et seq.) Here it is said that the defendants could have sold the wagons and enjoyed the use of the proceeds. I am of opinion that what took place on the 15th of May, after a distinct examination of the wagons, and what I deem equivalent to an acceptance of them by the mortgagor, and an undertaking to store them on the one hand, and to pay the defendants therefor on the other, amounted to a specific appropriation of those wagons, so that, on tender of the extinguishment of the prior lien, the mortgagor might have demanded those identical wagons, and maintained an action to recover the possession thereof, and if the defendants had sold them, might have brought trover, as for an unlawful conversion. But if it were conceded that other like wagons were to be delivered in their place, the defendants could not, with safety, sell the first; they were liable to be called upon on any day to deliver, and were bound to be ready instantly, on demand, if the former lien was extinguished, to deliver the whole.
Upon these considerations my conclusion is that the defendants were not liable for interest, and their subsequent delivery of wagons in payment of the principal and the interest down to May 15 and June 15, respectively, was a complete defense to the action, and that the judgment should therefore be reversed, and a new trial ordered.