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The United States Mortgage Company v. Henderson el al.

8th, 1878, to September 8th, 1881, at rate of $1,800 per annum, $6,300."

There were four items, of which the following is an exampler

"To cash paid by Alexander C. Jameson and William Henderson, on the loan of Joseph K. English, May, 1876, $200, November, 1876, $200, and May, 1877, $200, which sums were embraced in the decree of foreclosure of said mortgage, and bid in for the full amount by said United States Mortgage Company, aud the interest of said A. C. Jameson, assigned to me, $600."

Concurrently, with the filing of the complaint, a writ of attachment was sued out. It is claimed that the attachment was improvidently issued, and that the court erred in overruling a motion to quash the writ. The event of the suit was such that it is now of no consequence whether this ruling was correct or otherwise. The attachment was abandoned. This follows from the fact that a personal judgment was taken against the defendant without an adjudication of the proceedings in attachment. Taking a personal judgment without more was equivalent to a dismissal of the attachment. The judgment stands as though no auxiliary proceedings had ever been commenced. Sannes v. Ross, 105 Ind. 558; Smith v. Scott, 86 Ind. 346; Lowry v. McGee, 75 Ind. 508.

The litigation having progressed to final judgment, after a full appearance to the action by the mortgage company, no available error can now be predicated upon a ruling in respect to the attachment proceeding, which was in effect dismissed.

The court overruled a demurrer to the complaint, and this ruling is the subject of the second assignment of error.

We make the following extract from the complaint, which is all that bears upon the subject presented: "The said defendant, the United States Mortgage Company, is indebted to plaintiff in the sum of $14,424.68, with interest thereon from the dates of the several items of account, the bill of particulars of which is filed herewith and hereby made a part of the complaint, marked ' Exhibit A.'"

The United States Mortgage Company v. Henderson et al.

The complaint, as has already been seen, is upon an account stated against the United States Mortgage Company, to William Henderson, Dr. The objection made to the complaint is, that it fails to show that any service had been rendered by the plaintiff for the defendant at its request, or with its knowledge or approval, or that any money had been expended for it, on its account, or that it ever promised to pay, etc. The complaint does not furnish a model of good pleading, but applying to it the liberal rule of the code, which only requires that the facts be stated, so as to enable a person of common understanding to know what was intended, we should not feel justified in reversing the judgment for what seems at most a defect in the form of pleading. Sections 338, 376, 658, R. S. 1881.

Considering the complaint and the bill of particulars together, the inference fairly arises that the indebtedness charged in the complaint was for services rendered the mortgage company, in foreclosing certain mortgages therein specified, and for general attention to its business, etc. Applying the liberal rule of construction of pleadings, which the code enjoins, we are constrained to hold that there was no error in overruling the demurrer to the complaint.

Besides denying generally any indebtedness to the plaintill', the mortgage company presented special matters of setoff and counter-claim. It appeared that a loan of $60,000 had been made by the agents to the Indianapolis Journal Company. This loan was to run ten years, and was secured by a real estate mortgage. The interest was to be paid semiannually at the rate of 9 per cent., this agreement being evidenced by twenty separate interest coupons for twenty-seven hundred dollars each.

The mortgagors made default in the payment of some of these coupons. The mortgage company, predicating its claim on that provision in the contract of agency, which required the agents themselves to pay all interest on loans made by them, and which remained in arrears ton days after it became The United StRtes Mortgage Company r. Henderson el at.

due, asserted that the agents were indebted to it under the contract for the unpaid interest coupons on the loan to the Journal Company.

To this claim it was replied that some of the coupons fell due before, and some after, the month of October, 1879, and that the mortgage contained a provision therein written, to the effect that a failure by the mortgagor to pay any of the interest coupons within a month of maturity gave the mortgagee the privilege, at his election at any time thereafter, of treating the principal debt, as well as the arrearages of interest, as due. In pursuance of this provision, the mortgagor having made default in paying the coupons which fell due respectively in February and August, 1879, the mortgage company exercised its option, and elected that the principal and arrearages of interest should be due, and foreclosed the mortgage for the whole in October, 1879.

Without further detailing the facts put forward in the various paragraphs of the pleadings, it is enough to say they present the following questions: Two instalments of interest having become due on the loan to the Journal Company, for the payment of which Henderson and Jameson had become liable under their contract with the mortgage company, can they be held for the payment of these instalments after the mortgage company elected to treat the whole debt as due, and after it has foreclosed the mortgage and included both principal and interest in its judgment and decree against the Journal Company? After the mortgage company elected to treat the principal sum as due, and proceeded to foreclose its mortgage, can it now look to Henderson and Jameson for payment of the interest subsequently accruing on the decree?

In respect to the first proposition: Assuming that the matter was a proper subject of counter-claim—which is fairly open to doubt—since the mortgage company availed itself of the option to treat the principal debt as due, because of the default of the mortgagor in failing to pay interest, and proceeded to merge both the principal and unpaid interest The United States Mortgage Company r. Henderson et al.

into a judgmeut and decree in its favor, we can discover no principle which would justify it now, while holding a decree and judgment against the mortgagor for the whole, in pursuing a remedy against Henderson and Jameson, upon their personal contract. The stipulation in the contract, by which Henderson and Jameson agreed, in case any interest on loans negotiated by them should remain in arrears for a period of ten days, that they would immediately pay such interest themselves, put them in such relation to the loan as entitled them to a remedy against the borrower, and to participate in the security, in the event they were called upon to pay the interest coupons. Instead of electing to require its agents to pay the arrearages of interest, and to oontinue the loan, the mortgage company exercised its option and appropriated the coupons, and declared a forfeiture o4 the credit to the borrower. The coupons, which drew ten per cent, interest as soon as they matured, would have become the property of Henderson and Jameson upon payment by them. They were secured by the same mortgage that secured the principal. The mortgage company took a decree and judgment for the whole, thus depriving its agents of their security, and of their right to proceed against the borrower. It may not now, while prosecuting its remedy upon the mortgage, which presumably covers property of sufficient value to satisfy the whole debt, pursue a personal remedy against its agents. To permit this would enable the mortgage company to use the interest coupons to accomplish its own ends, so far as forfeiting the borrower's credit and obtaining a decree of foreclosure for the whole debt, and then, after having complicated and embarrassed Henderson and Jameson in their remedy, to proceed against them personally. Henderson and Jameson can have no remedy against the mortgagor, except as they are subrogated to the securities of the mortgage company. The company having appropriated the coupons, and merged them in a decree in its own name, it is difficult to perceive how the agents could The United States Mortgage Company v. Henderson el ai.

now proceed against the Journal Company, if they are compelled to pay the interest coupons.

Our conclusion is, that the effect of the agreement between the mortgage company and its agents was such as to authorize it to require them to take up the interest coupons, upon which default had been made, or, at its option, to retain them and declare the debt due, and proceed to foreclose its mortgage for both principal and interest. It elected to pursue the latter course, and it must now abfde its election.

Concerning the interest which has accrued since the decree of foreclosure, it is clear that resort can not be had to the contract in question for its recovery. By the option which the mortgage company was authorized to exercise, according to the terms of the mortgage, the whole debt became due. The decree of foreclosure merged the entire contract with the Jourual Company, as well in respect to interest coupons matured, as in respect to those not matured, into the judgment and decree. The contract of loan was then terminated, and the liability of the borrower fixed. Thenceforth the mortgagor's liability was measured by the decree, and the interest coupons as well as the entire contract were functus officio. The liability of the Journal Company, as also that of the agents, was then at an end, so far as subsequently maturing interest coupons were concerned. The case is not distinguishable in principle from Hamilton v. Van Rensselaer, 43 N. Y. 244. See, also, Melich v. Knox, 44 N. Y. 676'; Hunt v. Roberts, 45 N. Y. 691.

The fourteenth instruction given by the court is the subject of argument. In this instruction the court stated the issues relating to the subject of the interest coupons above referred to, and also gave the law in charge to the jury in respect to the interest and the respective rights of the parties upon that subject, in consonance with what has already preceded. In so far as the issues were—evidently by inadvertence—inaccurately stated by the court in this instruction, the inaccuracy was immaterial, and could have in no wise affected

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