Brinsmade v. Johnson
| Decision Date | 02 November 1915 |
| Citation | 179 S.W. 967,192 Mo.App. 684 |
| Parties | HOBART BRINSMADE, Respondent, v. JAMES BROOKS JOHNSON, Appellant |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. Eugene McQuillin Judge.
REVERSED.
Judgment reversed.
George B. Webster for appellant.
(1) The plaintiff's cause of action was barred by the Statute of Limitations before his suit was filed. Limitations begin to run when the cause of action accrues (R. S. 1909, sec. 1887) and it accrues when the right to institute a suit for its enforcement first arises. Stark Bros. v. Gooding, 175 Mo.App. 353; Frank v. Organ, 167 Mo.App. 493; Rivard v. Mo. Pac. Ry., 257 Mo. 135; Gray v Givens, 26 Mo. 291. When the trustee in the bond mortgage, on August 26, 1899, declared the entire issue of bonds and coupons due and payable, in pursuance of the provision of the mortgage referred to on the face of the bonds, a precipitation of their maturity occurred, and a cause of action against this defendant on his guaranty immediately arose. N. Y. S. & T. Co. v. Lombard Inv. Co., 73 F. 537; Crump v. Case T. M. Co., 136 Ky. 60; Dougan v. Railroad, 44 N.Y.S. 503; Phelps v. Sargent, 69 Minn. 118; Binz v. Hyatt, 200 Mo. 299; Boyd v. Buchanan, 176 Mo.App. 56. (2) The defendant's guaranty was to pay at maturity, if the Elevator Company did not, and that meant any maturity which by the terms of the bonds or of the mortgage securing them, might occur. The mortgage and bonds and coupons, being parts of the same contract, are to be read and considered together, especially since on the face of the latter there was specific reference to the former, and also a statement that they were issued "subject to all the terms" of the mortgage. Ins. Co. v. St. Mary's Sem., 52 Mo. 491; Waples v. Jones, 62 Mo. 440; Winn v. Lippincott Inv. Co., 125 Mo. 543; McDonald v. Wolff, 40 Mo.App. 302; Houck v. Frisbee, 66 Mo.App. 16; Western Adv. Co. v. Star P. Co., 146 Mo.App. 90; Joy v. St. Louis, 138 U.S. 1; Stadler v. Mo. R. P. Co., 133 F. 314; Benjamin v. Railroad, 49 Barb. 441. Hence, though the bonds and coupons bore on their face a definite fixed maturity, yet being subject to the terms of the mortgage, every holder was put on notice that such maturity might be accelerated. When that occurred the plaintiff was bound to sue within ten years. The defendant here is sued as a guarantor, and in that capacity is entitled to invoke the doctrine that the liability of a surety is not to be extended by implication. Shine v. Bank, 70 Mo. 524; Taylor v. Shouse, 73 Mo. 361; Binz v. Hyatt, 200 Mo. 304; Allen v. Bank, 4 Mo.App. 66; McAffee v. Wyckoff, 89 N.Y.S. 996; Tolman Co. v. Rice, 164 Ill. 225; Caskin v. Savory, 4 Gray 528; Staver v. Locke, 22 Oreg. 519; Mayfield v. Wheeler, 37 Tex. 225.
Roland M. Homer for respondent.
(1) An interest coupon or note is not affected as to the date of its maturity by the terms of a deed of trust securing it, declaring that it shall become due on default of payment of another interest coupon or note, except for the purpose of enforcing a mortgage security. Owens v. McKenzie, 133 Mo. 323; Hawes v. Mulholland, 78 Mo.App. 493; Rumsey v. People's Railway Co., 154 Mo. 246; White v. Miller, 19 L. R. A. 673; Westminster College v. Piersal, 161 Mo. 286; McMillan v. Greyson, 83 Mo.App. 432; Curry v. La Fon, 155 Mo.App. 678; Fry v. Shephard, 173 Mo.App. 209. (2) A bond or note secured by a mortgage executed contemporaneously are not to be so far regarded as parts of one contract that the mortgage may be used to qualify or change the express terms of the former. Owens v. McKenzie, 133 Mo. 323; Hawes v. Mulholland, 78 Mo.App. 497; White v. Miller, 19 L. R. A. 673. (3) A guarantor of the payment of an interest coupon or note cannot be held liable before the principal or maker of such an interest coupon or note. Sedalia-Warsaw Ry. Co. v. Smith, 27 Mo.App. 371; Tandy v. Commission Co., 113 Mo.App. 418; Wilkinson v. Hood, 65 Mo.App. 494. (4) A cause of action for the foreclosure of a deed of trust, as separate from a cause of action in a suit upon the note secured by the deed of trust, has been maintained in this State for many years. Prior to the enactment of the ten years' statute regarding deeds of trust, it was possible to foreclose them at any time, although the notes had long been past due and could not be sued upon. Chouteau v. Burlando, 20 Mo. 482; Gardner v. Terry, 99 Mo. 523; Lewis v. Schwenn, 15 Mo.App. 342.
--This is a suit on a contract of guaranty assuring the payment of a number of coupons. Plaintiff recovered and defendant prosecutes the appeal.
The petition, in as many counts, declares upon twenty separate coupons, which were originally parcel of bond No. 445 of the Consolidated Elevator Company, duly secured by mortgage on its properties. Defendant admits that he sold the bond with coupons attached to plaintiff and guaranteed payment, but pleads the Statute of Limitations in defense, in the view that the maturity of the debt was accelerated by virtue of the precipitation clause contained in the mortgage and aptly referred to in the bond. It therefore appears that the important question for consideration relates to the force and effect to be given the provision of the mortgage by which the maturity of the bond is precipitated prior to the due date on the face, because of default stipulated in the mortgage, when it appears on the face of the bond that such provisions are called for therein.
It appears that on September 30, 1897, the Consolidated Elevator Company, a Missouri corporation, executed a series of mortgage bonds in the aggregate sum of $ 950,000, with appropriate interest coupons falling due semi-annually, stipulating the payment of interest at five per cent. on said bonds. On the same day the elevator company executed a mortgage, or deed of trust, with power of sale, on all of its properties in Missouri and elsewhere, to Julius S. Walsh, trustee, for the benefit of the bondholders and to secure the payment of such bonds. This mortgage was duly recorded in St. Louis, Missouri, and defendant became the owner of bond No. 445 thereunder. This bond, with others of the series, bore forty separate interest coupons of $ 25 each, maturing, according to the face, every six months, the first of which became due and payable on the first day of July, 1897, and the second on January 1, 1898 and so on thereafter on the first days of January and July of each year until the maturity of the bond, on January 1, 1917. The bond provides on its face that, "This is one of a series of bonds of like tenor and date . . . aggregating the sum of $ 950,000, duly and legally issued under the authority of the vote of the stockholders of said Elevator Company at an election held for that purpose, on the 23rd day of September, 1897, and equally secured by and subject to all of the terms of a mortgage or deed of trust dated September 30, 1897, executed by said Elevator Company to Julius S. Walsh as Trustee, conveying the property of said Elevator Company, etc."
By article VII of the mortgage, it is stipulated that in case default shall be made in the payment of any interest accruing upon any one or more of the bonds thereby secured according to the terms thereof on any day when the same shall become due and such default shall continue for six months, or in case the Elevator Company shall neglect to pay any tax or assessment levied against its property for a period of six months after the same shall have fallen into arrears, or shall fail to keep its property insured against loss by fire, or shall fail to pay the rent of any leasehold property conveyed in accordance with article III of the mortgage, then, and in any such case, the trustee may enter and take possession, etc.
By article VIII of the mortgage it is provided that, if any such continuous or other default on the part of the Elevator Company as mentioned in article VII thereof, or in case the Elevator Company shall make default in performance of any of the provisions of the indenture, then, and in any such case, if the holders of the majority in amount of the then outstanding bonds secured so elect and shall notify the trustee in writing of such election, "the whole of the principal of all bonds hereby secured or intended so to be and then outstanding shall forthwith be declared by the trustee to be and it shall immediately thereupon become due and payable, anything herein or in said bonds to the contrary notwithstanding."
Article VIII of the mortgage further provides, "Upon any sale being made of the premises and property hereby conveyed or intended so to be, either by the trustee under the express power herein conferred or under any judgment or decree for the foreclosure of this indenture, the principal of all the bonds secured hereby or intended so to be then outstanding, if not already due and payable, shall at once become and be due and payable."
On the tenth day of December, 1897, defendant sold to plaintiff bond No. 445 of the series, with coupons then attached, and as part of the consideration executed and delivered to plaintiff contemporaneously therewith his personal contract of guaranty as follows:
"For value received, I hereby guarantee payment in full at maturity of bond No. 445 of the Consolidated Elevator Company (first mortgage bonds), including coupons, beginning with the one due and payable July 1st, 1899, as they become due.
J. B. JOHNSON.
December 10, 1897."
It seems the coupons of 1897 and those falling due July 1, 1898 were detached at the time of the sale of the bond by defendant to plaintiff, for the contract of guaranty, in so far as the coupons are concerned, began with that payable July 1, 1899.
...
To continue reading
Request your trial