Brown v. Kirk

• Decision Date: 08 February 1886
• Citation: 20 Mo.App. 524
• Parties: JOHN H. BROWN ET AL., Respondents, v. JOHN E. KIRK, Appellant.
• Court: Kansas Court of Appeals

20 Mo.App. 524

JOHN H. BROWN ET AL., Respondents, v. JOHN E. KIRK, Appellant.

Court of Appeals of Missouri, Kansas City.

February 8, 1886

APPEAL from Linn Circuit Court, HON. G. D. BURGESS, Judge.

Reversed and remanded.

Statement of case by the court.

The petition states that plaintiffs are husband and wife; that in January, 1875, one Clarkson executed to the plaintiff, Minnie Brown, his promissory note for the sum of $850; and that for the better securing the payment thereof he executed to one Brownlee a deed of trust on certain described lands in Linn county; that in January, 1877, the defendant, Kirk, bought said land of Clarkson, and by arrangement and agreement by all parties, plaintiffs and defendant and Clarkson, the defendant assumed payment of said note as part of the purchase money for said land, and that thereby Clarkson was discharged from the payment of the note, and Kirk became bound therefor to plaintiff, Minnie Brown. The petition charges that defendant afterwards made two payments of interest, and had the time extended for payment of the debt that in March, 1879, the plaintiffs caused said land to be sold under said deed of trust, and the proceeds of the sale amounting to $500.00, were placed as a credit on the note.

This suit is to recover balance due on the note.

The answer, after admitting the preliminary averments of the petition, alleged that it was in December, 1876, and not in January, 1877, he purchased the land from Clarkson, and that afterwards, January 10, 1877, the following endorsement was made on said note:

" Tenth January, 1877. In the land trade between S. H B. Clarkson and myself, I am to pay this note, it being a lien on the land.

[Signed] JNO. E. KIRK."

The answer alleges that defendant paid the interest on the note for only one year; and that on the nineteenth day of March 1877, defendant sold and conveyed said land to one William Wishard for the consideration of $1,600.00; and that it was stipulated and so expressed in the deed, that Wishard took said land subject to said mortgage, and paid defendant the difference only between the mortgage debt and purchase money, and assumed the payment of said note to plaintiff, to which all parties, plaintiffs, defendant, and Wishard consented; whereby defendant was discharged.

The answer further pleaded, that after the arrangement last aforesaid, the plaintiff collected the interest from said Wishard, and extended the time of payment of said debt for one year, without the knowledge or consent of defendant, whereby he claims that he was discharged and released from further liability on said note.

The answer further pleaded that plaintiffs had caused said land to be sold under the deed of trust, and had bought it in at said sale at a great sacrifice; that plaintiffs well knew the defendant was a non-resident of the county, and that Wishard was a non-resident of the state, and that plaintiffs sold said land without notice to defendant or Wishard, under circumstances evincive of a fraudulent purpose to acquire the land at an unconscionable price, and that the same was bought in by said Minnie, and is yet held by her, at a grossly inadequate price, three or four times less than its actual value; that the sale was so made to defraud and injure this defendant. The answer asks that defendant be permitted to pay plaintiff the whole amount of said note and interest, and that he be subrogated to the rights of the mortgagee, etc.

On motion of plaintiffs, the last plea of the answer was stricken out, as constituting no matter of defence.

The defendant at the trial had before a jury, introduced evidence tending to prove the issues on his part; and the plaintiffs offered evidence tending to disprove the issue as to the novation pleaded respecting the sale made by defendant to said Wishard.

The jury found the issues for the plaintiffs, and the defendant prosecutes this appeal.

A. W. MULLINS, for the appellant.

I. There are two modes by which a novation of parties may take place. (1) Where, by agreement, between all parties, a new debtor intervenes and assumes the debt, in which case the old debtor is discharged. (2) Where a new creditor intervenes to whom the same debtor agrees to pay the debt, in which case the new creditor acquires all the rights of the former creditor. In both of these cases the same rules of law apply; and the substituted contract completely extinguishes the previous one. 1 Story on Cont. (4 Ed.) sect. 376; 1 Pars. Cont. (5 Ed.) 217.

II. The second instruction for plaintiffs assumes absolutely that defendant was liable for the payment of the note. In that respect it is wrong in principle and improper and misleading in form. When defendant sold the land to Wishard, and he assumed the payment of the mortgage debt as part of the consideration to be paid by him for the land, Wishard became the principal debtor, and defendant only surety. 1 Jones on Mortgages, sect. 742, and cases cited. Therefore, the extension of time given to Wishard, without the concurrence of defendant, discharged him from all liability on the note. 1 Jones on Mortgages, supra; Stillwell v. Aaron, 69 Mo. 539. The third instruction is erroneous on same grounds.

III. The court erred in sustaining plaintiffs' motion to strike out a part of defendant's answer. Having failed to give defendant notice of their claim upon him, and having sold the land for a nominal sum, he should be adjudged subrograted to rights of plaintiffs as to the mortgage. Allison v. Sutherlin, 50 Mo. 274.

IV. The verdict is insufficient. Norvell v. Duvall, 50 Mo. 272.

M. M. CRANDALL and S. P. HUSTON, for the respondent.

I. The court did not err in striking out part of defendant's answer. There is no allegation of fraud, other than that actual notice was not given. De Jarnette v. De Giverville, 56 Mo. 440; Mitchell v. Nodaway Co., 80 Mo. 257.

II. Whether defendant was liable as principal or surety, an agreement to extend time in consideration only of payment of interest then due would not discharge him. To have that effect it must have been made with the principal debtor upon a sufficient consideration. Payment of interest in advance is such a consideration, but payment of interest when due is not. Stillwell v. Aaron, 69 Mo. 539, and cases cited; Hosea v. Rowley, 57 Mo. 357.

III. The plaintiffs' third instruction simply told the jury that the burden of proof was on the defendant to establish the defence he pleaded. The verdict, also, is sufficient, as it contains the substance of the issue. Graham & Waterman on New Trials (2 Ed.) 160.

IV. Unless there was an agreement between all the parties to discharge one and take another, there is no right to invoke any equities. If there was such substitution, the party originally liable was discharged. Duncan v. Roberts, 72 Mo. 469.

PHILIPS P. J.

The allegations of the petition, in respect of the agreement by which Clarkson was released on the assumption of payment of the note or debt by defendant, constitute a novation. 1 Pars. Cont. (7 Ed.) 217, et seq.; Black v. Paul, 10 Mo. 103. The answer failed to deny this averment. On the contrary, it proceeded on the recognition of its truth by pleading a like arrangement respecting the sale to Wishard. By the novation, Clarkson was discharged as the debtor of plaintiffs, and the debt, so far as he was concerned, was effectually extinguished; and the defendant, thenceforth, became the debtor of the plaintiffs. Butterfield v. Hartshorn, 7 N.H. 345; Caswell v. Fellows, 110 Mass. 52; Morris v. Harvey, 75 Va. 726.

It, therefore, only remains to be ascertained whether, by reason of any of the matters set up and established in the answer, the defendant can escape this personal liability for the debt.

I. The novation pleaded, whereby it is claimed that Wishard was substituted by consent of all the parties to the place of the defendant, presented a question of fact for the jury, under proper directions from the court. With their finding on the facts, we cannot interfere, unless they were misdirected by the court. Among the instructions given on behalf of the plaintiffs, is the following:

" 2. The mere fact that plaintiffs, or W. H. Brownlee, trustee for Mrs. Brown, may have received one year's interest from Wishard and may have extended the time of payment one year did not and does not discharge the defendant from liability on the note sued on."

I am of opinion that this instruction was, under the circumstances of this case, calculated to mislead the jury, and to persuade them that they were authorized to disregard one very important element of proof in determining whether there was such novation.

The existence of such agreement, like any other fact of kindred import, may not be susceptible of direct proof, but it is to be determined by the jury from all the facts and circumstances in evidence. Parsons on Cont. (vol. 1, p. 218, note 1), says: " Such a release may be inferred from the acceptance of the interest, the receiving of new notes, or the proving a claim in bankruptcy," etc., citing Bilborough v. Holmes, 5 Ch. D. 255.

There were many other facts and circumstances connected with this whole transaction tending most persuasively to show that the plaintiffs recognized the arrangement made between defendant and Wishard for the former's release. And these, coupled with the fact that plaintiffs, after this, dealt with Wishard, collected interest from him, and agreed with him for an extension...