Court Opinion

ID: 7278784
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:03:31.582288+00
Date Added: 2024-06-11T16:18:58.370685
License: Public Domain

Mr. Justice Ropu
dissenting:
Plaintiff, appellee here, declared upon a promissory note under seal, dated March 10, 1910, signed by the defendant Richard S. Wolfe, appellant here, and payable two years after date to the order of one Harold L. Johnson. The declaration further set forth that “on the 1st day of March, 1932, one Laura Green, then the holder of said note, agreed in writing with the defendant Thomas J. De Lashmutt, then the owner of the property upon which said note was secured, to extend the time of the payment of said note to March 10, 1915.” The note was attached to and made a part of the affidavit, of merit. It is headed, “Coupon Rond Secured by Deed of Trust on Real Estate,” and on the margin thereof is, “Secured by Deed of Trust (rec. deed book No. 123, p. 177) on brick dwelling, and lot 70x100 ft. on Columbia turnpike situated in Arlington district, Alexandria county, Virginia.” In addition to indorsements of interest payments, there appears the following indorsement :
Washington, D. C., March 3, 393 2.
The time of payment of this note is extended to March 10, 1915, with interest thereon at the rate of (5 per centum per annum, payable semiannually. Said note and deed of trust securing the same are to remain otherwise unqualified and in *307full force,; and tlie payment of this note is hereby guaranteed without demand, notice, or protest.
(Signed) Tlios. J. Do Laslmmtt,
Present Owner of 1’roperty.
Airs. Laura Green,
Holder of Note.
.Defendant demurred to the declaration upon the ground that upon its face plaintiff had .stated no cause of action. The demurrer was overruled, whereupon plaintiff filed .four pleas, in 1lie second of which it is averred that De .Lashmutt purchased the mortgaged property and agreed to pay the indebtedness secured by said deed of trust; that rvitli full knowledge of these facts Laura Green, the then holder and owner of the mortgage note, without the knowledge or consent, of the defendant and for a valuable consideration, extended the time of payment of said note, and that plaintiff took the note subsequent to the extension and with full knowledge.
In the fourth plea, interposed “by way of equitable defense as provided by statute,’’ (see sec. 274b, Act of A! arch 3, 1915, 38 Staff at L. 950, chap. 90, Comp. Staff 3910, sec. 1253b) the facts set forth in the second plea are reiterated, and it is further alleged that in equity and good conscience defendant is entitled to have, the real estate security exhausted before attempt is made to enforce any liability against him; “that said real estate has never been sold under said deed of timst, but on the contrary, although said note originally fell due March 10. 1912, the said deed of trust securing the same was never foreclosed, hut the said real (‘state has been allowed to remain in the possession of the said De Lashmutt, who has been allowed to receive the rents and profits thereof, or to have the beneficial use and occupation thereof; and this defendant further says that, during the period of delay aforesaid in the enforcement of said security, the value of said real estate lias very greatly diminished, and he says that, had said real estate been sold under said deed of trust when the same first became due and payable, such sale would have produced a sum sufficient to pay said indebtedness: whereas now, after a lapse of about four *308years, said improved real estate having been allowed to run down and decay by the said De Laslnnutt, who, this defendant is advised and believes, is still the owner of said real estate, the same cannot now be sold for enough to satisfy said note.” Seo D. C. Code, sec. 95 [31 Stat. at L. 1201, chap. 851].
In the affidavit of defense the facts set forth in these pleas are substantially incorporated. That such was the understanding of the parties at the hearing before the trial court is apparent from the opinion of that court, which is appended to and made a part of appellee’s brief; for it therein is assumed that, when the extension of the note was made by Laura Green, she knew that its payment had been assumed “in the granting deed” by Do Laslnnutt, the grantee of the mortgagor. That this is so is further apparent from the briefs and arguments in this court; for in the brief of appellee arc the following statements: “The defense sought to bo made in defendant’s affidavit is bid an elaboration of the points made in Ike several pleo.s. * * * It appears that Wolfe, the maker of the note, had sold the property upon which it- was secured to De Laslnnutt-, who, as part consideration, assumed payment thereof.” Moreover, the argument at bar proceeded upon the assumption that the extension of the note by Laura Green was with full knowledge that De Lashmutt had assumed and agreed to pay it. And yet this court now apparently questions the technical sufficiency of the affidavit of defense, — a point not suggested by the trial court, by counsel in the briefs, or in the argument at bar. Had such a contention been made below it would have required but a moment for defendant to have made his affidavit conform literally to his pleas. We have said repeatedly that affidavits of defense should be liberally construed, to the end that no real defense be foreclosed summarily. It is my view, therefore, that this court should now squarely meet- the real issue here, which is whether the giving of time by the mortgagee to the purchaser of the equity of redemption, who has agreed with his grantor to pay the mortgage debt., the mortgagee having knowledge of that fact and the extension being given without the knowledge or consent of the mortgagor, releases the mortgagor.
*309Tlie Supreme Court of the United States, in Johns v. Wilson, 180 U. S. 440, 448, 45 L. ed. 613, 617, 21 Sup. Ct. Rep. 445, says that the real question in Union Mut. L. Ins. Co. v. Hanford, 143 U. S. 187, 36 L. ed. 118, 12 Sup. Ct. Rep. 437, “was whether the giving of time to the grantee, without the assent of the grantor, discharged the latter from personal liability. It was held that it did (citing Shepherd v. May, 115 U. S. 505, 29 L. ed. 456, 6 Sup. Ct. Rep. 119).” The majority opinion here differs with the Supreme Court as to what was decided in Shepherd v. May. In that case the purchaser of the equity of redemption had not assumed to pay the mortgage debt. lie was not, therefore, as between his grantor and himself, the principal and his grantor -the surety, nor was there evidence that the extension was made without the knowledge of his grantor. However, the Supreme Court itself has determined what that case decided. Later on in the opinion in Johns v. Wilson, the court says: “Further objection is made to this proceeding upon the ground that it is not shown that the mortgagor ‘had been exhausted’ or that he is insolvent. If by this is meant that, after the sale of the property, the mortgagee is bound primarily to proceed against the mortgagor personally for any deficiency, the position is inconsistent with the doctrine of the cases above cited, in which it is assumed that the purchaser, who has agreed to pay the mortgage, is the principal debtor and the mortgagor is surety. This view is thus concisely stated by Mr. Justice Gray in Union Mut. L. Ins. Co. v. Hanford, 143 U. S. 187, 190, 36 L. ed. 118, 120, 12 Sup. Ct. Rep. 437: ‘The grantee as soon as the mortgagee knows of the arrangement becomes directly and primarily liable to the mortgagee for tbo debt for which the mortgagor was already liable to the latter, and the relation of the grantee and grantor toward the, mortgagee, as well as between themselves, is thenceforth that of principal and surety for the payment of the mortgage debt” (Italics mine.) And such is the almost universal rule. Calvo v. Davies, 73 N. Y. 211, 29 Am. Rep. 130; Spencer v. Spencer, 95 N. Y. 353; George v. Andrews, 60 Md. 26, 45 Am. Rep. 706; Chilton v. Brooks, 72 Md. 554, 20 Atl. 125; Franklin Sav. Bank v. Cochrane, 182 Mass. 586, 61 *310L.R.A. 760, 66 N. E. 200; Home Nat. Bank v. Waterman, 134 Ill. 461, 25 N. E. 648, 29 N. E. 503; Iowa Loan & T. Co. v. Haller, 119 Iowa, 645, 93 N. W. 636; Dedrick v. Den Bleyker, 85 Mich. 475, 48 N. W. 633; Sime v. Lewis, 112 Minn. 403, 128 N. W. 468; Pratt v. Conway, 148 Mo. 291, 71 Am. St. Rep. 602, 49 S. W. 1028; Merriam v. Miles, 54 Neb. 566, 69 Am. St. Rep. 731, 74 N. W. 861; Hull v. Hayward, 13 S. D. 291, 79 Am. St. Rep. 890, 83 N. W. 270; Herd v. Tuohy, 133 Cal. 61, 65 Pac. 139.
As I view tlio question it is a very simple one. AVlien the grantee of the mortgagor assumes and agrees to pay the mortgage debt he becomes, as between the parties, the principal and' his grantor the surety. But- the mortgagee is under no obligation to change the relationship between the mortgagor and himself. If, however, the mortgagee acts on the faith of, or otherwise makes .himself a party to, the agreement between the mortgagor and his grantee (Keller v. Ashford, 133 U. S. 610, 625, 33 L. ed. 667, 673, 10 Sup. Ct. Rep. 494), or assents to the agreement, or does or omits any act on the faith of it ( Willard v. Wood, 135 U. S. 309, 314, 34 L. ed. 210, 213, 10 Sup. Ct. Rep. 831), the mortgagor’s grantee becomes the principal as to the mortgagee as well as to the mortgagor, and the giving of time to the grantee without the assent of the grantor releases the latter from personal liability. In the present case the mortgagee not only recognized the agreement between the mortgagor and his grantee, but indorsed on the note itself, for a valuable consideration, an extension for three years. But one interpretation can be placed upon the words of this indorsement, that “said note and deed of trust securing the same are to remain otherwise unqualified and in full force,” and that is that the debt and the mortgage have been extended for the period named. And yet the majority opinion holds that the mortgagor, appellant here, could have paid the note at the time it originally was to mature, and then immediately have instituted foreclosure proceedings against his grantee. My view is that the rule is' directly to the contrary. There was but one debt, evidenced by this one mortgage note, and when the mortgagee extended the time of payment of that debt he thereby *311rendered it impossible for tlie mortgagor, even had he paid the mortgage, to foreclose until after the expiration of the extended time. Authorities need not be multiplied, but in Spencer v. Spencer, 95 N. Y. 353, 357, the court, speaking of an agreement of extension between the mortgagee and the purchaser of the equity of redemption, said: “This agreement was a valid contract, and would preclude the holder of the mortgage from enforcing it against the land until after the expiration of the extended time.” And in George v. Andrews, 60 Md. 26, 34, 45 Am. Rep. 706, the court, speaking of an agreement of extension, observes: “Ft is very clear that after this arrangement between the appellant and Meredith, if Andrews and wife, who were the original debtors, had tendered the amount of the mortgage debt to the appellant and demanded an immediate assignment to them that they might enforce immediate payment, .Meredith could not have complied so as to enable them to proceed; nor could he have proceeded at once upon the demand of the appellees as the sureties of Meredith under the theory of the law as stated, for he had bound himself to wait for a definite period. It may be possible that during that period such depreciation might take place as to create the deficiency.” This must he so, ’for by paying the debt the mortgagor merely would be subrogated to the rights of the mortgagee.
Believing that the rule announced in the majority opinion is inequitable and opposed to the decisions of the Supreme Court, of the United States, I respectfully dissent.
.Mr. Chief Justice Covington, of the Supreme Court of the District of Columbia, sat with the Court in the hearing and determination of this appeal, in the place of Mr. Justice Van Oes dei„