Cheney v. Woodruff

• Decision Date: 22 September 1886
• Citation: 29 N.W. 275,20 Neb. 124
• Parties: GILEAD P. CHENEY, APPELLANT, v. O. D. WOODRUFF ET AL., APPELLEES
• Court: Nebraska Supreme Court

29 N.W. 275

20 Neb. 124

GILEAD P. CHENEY, APPELLANT, v. O. D. WOODRUFF ET AL., APPELLEES

Supreme Court of Nebraska

September 22, 1886

APPEAL from Johnson county district court. Tried below before BROADY, J.

Decree reversed, and decree entered for the amount due in the premises.

B. F Perkins and L. W. Colby, for appellant.

The benefit of the statute of limitations may be waived, and will be, unless pleaded. Taylor v. Courtnay, 15 Neb. 196. Atchison & N. R. Co. v. Miller, 16 Neb. 664. A mortgage foreclosure is not barred after the lapse of five years from the time the cause of action accrued. Hale v Christy, 8 Neb. 264. Stevenson v. Craig, 12 Neb. 464. Cheney v. Cooper, 14 Neb. 415. Herdman v. Marshall, 17 Neb. 259. A maker of a note who has declared to all the world that he has no defense or set-off to make against the note, and the mortgage to secure it, is estopped to set up usury as against a bona fide purchaser for value before maturity, who made the purchase relying on such declaration. Coleb. Col. Secur., § 138. Weyh v Boylan, 85 N.Y. 394. Smyth v. Munroe, 84 N.Y 354. Horn v. Cole, 51 N.H. 287. Ashton's Appeal, 73 Pa. 153.

T. Appelget & Son, for appellees.

A mortgage of real estate is a mere chose in action after the notes it secures are barred by limitations, and is open to all defenses in favor of the original mortgagee. Trustees of Union College v. Wheeler, 61 N.Y. 88. Johnson v. Carpenter, 7 Minn. 176 (Gil. 120). Comp. Stat., Neb. 1885, p. 632, § 31. The purchaser of notes before maturity, secured by mortgage, has no remedy except upon the mortgage, after the notes are outlawed. Slocum v. Jacobus, 10 Iowa 262. Olds v. Cummings, 31 Ill. 188. Terry v. Tuttle, 24 Mich. 206. Mott v. Clark, 9 Pa. 399. Pryor v. Wood, 31 Pa. 142. Baily v. Smith, 14 Ohio St. 405. Sims v. Hammond, 33 Iowa 368. Cumberland Coal Co. v. Parish, 42 Md. 598. An assignee of a mortgage takes it subject to equities attending its execution, and also to those existing at the time of the assignment. Crane v. Turner, 67 N.Y. 437. Hortsman v. Gerker, 49 Pa. 283. Twitchell v. McMurtrie, 77 Pa. 383.

OPINION

MAXWELL, CH. J.

This action was brought in the district court of Johnson county to foreclose a mortgage on real estate for a debt evidenced by four promissory notes alike in date, amount, parties, and effect, except the time of maturity, being due in two, three, four, and five years after date. The following is a copy of one of said notes:

"$ 35.00. TECUMSEH, NEB., December 14th, 1872.

"Two years after date, for value received, I promise to pay to the order of P. D. Cheney, thirty-five dollars, at bank of Russell & Holmes, without interest before maturity, with twelve per cent per annum after maturity."

"O. D. WOODRUFF."

The notes are all endorsed by P. D. Cheney. An action to foreclose the mortgage was brought on the 9th day of December, 1884, the summons being issued on that day, and served on the 15th of that month.

The defendant answered the petition, admitting the execution of the notes and mortgage, but alleging that the notes were given for usurious interest, which is admitted, and pleading that the action is barred by the statute of limitations. On the trial of the cause the court below refused to receive the notes in evidence, and found the issues in favor of the defendant and dismissed the action. The plaintiff appeals.

The testimony shows that the plaintiff purchased the notes in question in May, 1874, and that he had no notice of the usurious consideration. He is entitled to maintain the action therefore unless it is barred by the statute of limitations.

In Hale v. Christy, 8 Neb. 264, it was held by a majority of the court that an action to foreclose a mortgage upon real estate may be brought at any time within ten years after the cause of action accrued. The writer filed a dissenting opinion in that case, but the rule having been established by a majority of the court, and as it affects property rights, it will be adhered to. If a change is desired, it must be made by the legislature and not by the court. As the action was brought within ten years from the maturity of the first note the action is not barred.

It is claimed, however, that the notes are barred, and are not now evidence of the debt, and that therefore, although the plaintiff purchased the notes before due, that an action on the notes being barred, the equities between the defendant and P. D. Cheney may now be set up, and therefore the defense of usury is available, and a remark in Cheney v Cooper, 14 Neb. 415, that "As the statute would run against the note in five years, it is probable that after the expiration of that time the remedy would be against the mortgaged premises alone," is quoted to sustain that view. It is stated in that case that the question was not then before the court. It is apparent, however, that the meaning of the language used in that case was, that if an action at law was brought on the note to recover a judgment against the maker, it must be brought in five years. Such an action is not brought to subject the mortgaged property to the satisfaction of the debt, but to subject any property possessed by the debtor liable to sale upon...