Baird v. Meyer, 5372.

• Decision Date: 22 October 1927
• Docket Number: No. 5372.,5372.
• Citation: 215 N.W. 542,55 N.D. 930
• Parties: BAIRD v. MEYER et al.
• Court: North Dakota Supreme Court

55 N.D. 930

215 N.W. 542

BAIRD

v.MEYER et al.

No. 5372.

Supreme Court of North Dakota.

Sept. 28, 1927.

Rehearing Denied Oct. 22, 1927.

Syllabus by the Court.

“Excess of parties” is not “defect of parties.”

A plaintiff in an action against his debtor for a judgment on a promissory note, in which action he has a warrant of attachment issued and levy made upon certain lands, may in the same complaint allege the conveyance of said lands to third parties in fraud of creditors and have said third parties brought in to the case for the purpose of having the said fraudulent conveyance set aside as to him and the lands subjected to the lien of his judgment under this attachment.Such complaint is not subject to attack on the ground of an improper joinder of causes of action.

Where a negotiable promissory note is made payable on a date certain, with “interest at 6 per cent. per annum until due,” and is secured by a real estate mortgage containing a provision authorizing the holder to declare the whole sum due and payable upon the failure to pay interest annually and to foreclose the mortgage because of such default, and the terms of the mortgage are not made a part of the note, it is held that such “acceleration clause” in the mortgage is for the purpose of foreclosure only.In such case where the holder foregoes the right to foreclose the mortgage and brings action for a money judgment on the promissory note only, it is held that such “acceleration clause” in the mortgage does not mature the note.

Where such promissory note has stamped thereon a provision to the effect that “maker reserves the privilege of paying $100 or any multiple thereof on any interest paying date” and the indorsements on the note show annual payments of interest, it is held that the contract set forth in the note shows that, in the contemplation of the parties, interest was payable annually, even though said term is not stated in the note.

Appeal from District Court, Sargent County; Geo. M. McKenna, Judge.

Action by L. R. Baird, receiver of the Farmers' & Merchants' Bank of Cogswell, against W. J. Meyer and others.From an order sustaining one ground of the demurrers to his complaint, plaintiff appeals, and defendants appeal from an order overruling their demurrers as to certain grounds.Affirmed in part, and reversed in part.

Chas. S. Ego, of Lisbon, for plaintiff.

S. A. Sweetman, of Forman, and Kvello, Adams & Rourke, of Lisbon, for defendants.

BURR, J.

On May 8, 1926, the plaintiff, as receiver, brought action against one W. J. Meyer upon a promissory note for $2,500, dated the 28th day of August, 1919, and due December 1, 1929, with interest at 6 per cent. per annum until due.The complaint alleges that, “while no part of the principal has been paid and the same is now (not?) due,” yet no interest has been paid on it since the 1st day of December, 1921, the action was brought for the purpose of issuing an attachment against the property of the defendant, and demands judgment against defendant for $2,500, with interest from the 1st day of December, 1921.A warrant of attachment was issued on the grounds “that the defendant has sold, assigned, transferred, secreted, and otherwise disposed of his property with intent to cheat and defraud his creditors and to hinder and delay them in the collection of their debts; and that the defendant is about to sell, assign, transfer, secrete, and otherwise dispose of his property with like intent and effect.”Levy was made upon certain lands other than the mortgaged premises, and thereafter one Edith Schultz and one Edward Schultz filed third party claims to said lands as being the owners thereof by warranty deed from defendant Meyer.The plaintiff moved the court for leave to amend his complaint and for an order to interplead the said Edith Schultz and Edward Schultz, under the provisions of section 7412 of the Code, which motion was granted.

The amended complaint alleges, among other things, that on the 28th day of August, 1919, the defendant gave this promissory note in the sum of $2,500, due December 1, 1929, “with interest from date at the rate of 6 per cent. per annum until due”; that as a part of the same transaction the said Meyer gave as security a second mortgage upon the N. 1/2 of the S. 1/2 of section 34, township 130, range 58, containing these provisions: “If default be made by the said first party in any of the provisions, it shall be lawful for the second party to declare the whole sum above specified to be due and payable;” that the interest on the note is to be paid annually on the 1st day of December of each year, and that the defendant will pay the taxes on the premises; that the said mortgaged land has so depreciated in value as to become worth no greater sum than the taxes and superior lien; that the bank became owner and holder of the note with no notice of defect or defense; that no part of the principal has been paid and no interest paid since the 1st day of December, 1921; that taxes are unpaid; that the plaintiff has declared the whole sum due and payable because of these defaults; that at the time he executed the note defendant Meyer was the owner of certain other real property-describing the real estate attached-and “with intent to cheat and defraud his creditors and for the purpose of depriving them of the means of collecting their just debts, and for the purpose of removing from legal process his property so that the same would not be subject to the payment of his debts, the defendant did wrongfully, fraudulently, and unlawfully” transfer the aforedescribed real estate to Edith Schultz, and Edward Schultz by warranty deed dated April 15, 1926, and recorded April 16, 1926, and thus rendered himself insolvent; that upon filing the complaint a warrant of attachment was issued and said real property levied upon, not the mortgaged premises; that Edith Schultz and Edward Schultz have served a demand for the release of said property; and that unless they were interpleaded the plaintiff was in danger of losing his claim.And so plaintiff demanded judgment against the defendant“for the sum of $2,500, with interest from the 1st day of December, 1921, according to the tenor of the note and mortgage; that the said Edward Schultz and Edith Schultz be required to appear and set forth the reason and grounds for their respective claims to the property described; that the attachment lien of the plaintiff be held to be a superior lien to the claim of the said Edward Schultz and Edith Schultz;” and “that this plaintiff have the decree of this court for such other or further relief as may be deemed equitable in the premises.”It will be observed the plaintiff does not seek to foreclose the mortgage, nor does he sue on it.

To this amended complaint the three defendants demur individually and severally on the grounds, first, that there is a defect of partiesdefendant; second, that several causes of action have been improperly united; third, that the amended complaint does not state facts sufficient to constitute a cause of action.

The court overruled the demurrer as to the first and second grounds, and the defendants appeals.The court sustained the demurrer as to the third ground, and the plaintiff appeals.This case therefore is before us on cross-appeals involving all of the grounds set forth in the demurrer.

The parties stipulated that the trial court, in passing upon this demurrer, took into consideration and based his decision “upon the demurrer, original complaint, the amended complaint, the note which is described in both the original and the amended complaint, and the mortgage securing said note referred to in the amended complaint, and upon the affidavit and order of the district court-impleading the defendantsEdward Schultz and Edith Schultz-and upon the affidavit for attachment, the undertaking for attachment, the warrant of attachment, and the notice of levy under said warrant of attachment,” and that the Supreme Court may consider all of said papers in passing upon any appeals.

In the original complaint, as we have hereinbefore stated, the plaintiff said that all of said sum was now due and payable, but in his brief he sets forth the complaint as saying “the principal sum is not due, yet there is past due interest,” etc.The trial court in his memorandum opinion comsidered the original complaint as it is, stating that “the principal sum is now due.”

The promissory note is as follows:

“Cogswell, N. D., August 28, 1919.$2,500.00.December 1, 1929.After date (without grace), for value received, I promise to pay to the order of N. B.Even, at Cogswell State Bank, Cogswell, N. D., twenty-five hundred ($2,500) dollars, with interest from date at the rate of 6 per cent. per annum until due.Principal and interest to draw interest at the rate of 10 per cent. per annum after due until paid.Payable at Cogswell State Bank, Cogswell, N. D.All the signers and indorsers hereby severally waive demand, notice of nonpayment, and protest.[Signed]W. J. Meyer.”

On the face of the note toward the lower left-hand corner and to the left of the signature is the following provision, evidently placed thereon by rubber stamp:

“Maker reserves the privilege of paying $100 or any multiple thereof on any interest paying date, interest then to cease on any sum so paid.”

The following indorsements appear on the back:

“N. B.Even [in ink].

[Revenue Stamp.]

1-11-218-28-20, $150.Int. paid in full to 12-1-20.

Paid int. on this note 12-1-1921, $140.

12-28-1921, paid on interest $140.”

The mortgage contains these further provisions:

“This mortgage to draw interest from August 28, 1919, payable the 1st of December of each year, privilege to pay $100 or multiple at any interest payment date.”

And:

“If default be made by the said first party in any of the foregoing provisions, it shall be lawful for the second party to declare the whole sum above specified to be due and payable.”

[1] The first...