Fidelity State Bank v. Miller

• Decision Date: 29 December 1916
• Parties: FIDELITY STATE BANK, a Corporation, Appellant, v. C. W. MILLER, Respondent
• Court: Idaho Supreme Court

162 P. 244

29 Idaho 777

FIDELITY STATE BANK, a Corporation, Appellant, v. C. W. MILLER, Respondent

Supreme Court of Idaho

December 29, 1916

PROMISSORY NOTE-ORIGINAL APPLICATION-ACTION ON-ATTACHMENT-HOMESTEAD - EXEMPTION - FINDINGS OF FACT - EVIDENCE-SUFFICIENCY OF.

1. Under the provisions of sec. 2296, Rev. Stats. of the United States, lands acquired under the provisions of the homestead laws of the United States are not liable to the satisfaction of any debt contracted prior to the issuing of the patent therefor.

2. The giving of a new promissory note in payment of an existing one is a payment of the old note when such is the intention of the parties, and the cancelation of the old note is a good consideration for the new one.

3. Held, under the evidence, that it was the clear intention of the parties that the cancelation of the old note and the execution of the new note should be a full payment of the old note.

4. Under the provisions of sec. 3482, Rev. Codes "value" is any consideration sufficient to support to simple contract, and an antecedent or pre-existing debt constitutes "value," and is deemed such whether the instrument is payable on demand or at a future time.

5. Sec 3576, Rev. Codes, provides, among other things, that an instrument is discharged by the intentional cancelation thereof by the holder and by any other act which will discharge a simple contract for the payment of money.

6. Held, that the evidence shows that the officers of the plaintiff refused to accept any renewal notes, and that the old notes were marked paid, canceled and returned to the defendant.

7. Held, that the evidence does not support the findings of the court to the effect that the note sued on was a renewal of a former promissory note.

[As to construction of federal statute exempting land acquired on homestead from liability for debt contracted before issuance of patent, see note in Ann.Cas. 1912D, 282]

APPEAL from the District Court of the Second Judicial District for Clearwater County. Hon. Edgar C. Steele, Judge.

Action to discharge attachment and quiet title in real estate. Judgment for plaintiff. Reversed.

Cause remanded with instructions. Costs awarded to appellant.

Chas L. McDonald, for Appellant.

The giving of a new promissory note in lieu of an existing one is payment of the old note when such is the intention of the parties. The cancelation of the old note is a good consideration for the new one. (7 Cyc. 697, 1011; Smith v. Smith, 4 Idaho 1, 35 P. 697; Merchants' Bank v. McClelland, 9 Colo. 608, 13 P. 723; Vollmer v Reid's Estate, 10 Idaho 196, 204, 77 P. 325; Stanley v. McElrath, 86 Cal. 449, 25 P. 16, 10 L. R. A. 545.)

"The surrender of the evidence of the debt or liability strongly indicates payment, as whatever is received therefor is to be regarded as payment." (Riverside Iron Works v. Hall, 64 Mich. 165, 31 N.W. 152; Fidelity Ins. Trust etc. Co. v. Shenandoah Val. R. R. Co., 86 Va. 1, 19 Am. St. 858, 9 S.E. 759; French v. French, 84 Iowa 655, 51 N.W. 145, 15 L. R. A. 300; Citizens' Commercial & Sav. Bank v. Platt, 135 Mich. 267, 97 N.W. 694; Webber v. Alderman, 102 Mich. 638, 61 N.W. 57; In re O'Neil, 189 F. 1010, 1013; Manser v. Sims, 157 Ala. 167, 47 So. 270.)

"Under sec. 2296, Rev. St. U.S. where a debt was contracted after the issuance of a final certificate of entry to defendant, but prior to his obtaining a patent, the land might lawfully be taken in satisfaction of the debt, since the patent when issued relates back to the date of the final certificate." (Ruddy v. Rossi, 28 Idaho 376, 154 P. 977.)

Ben F. Tweedy and Wm. J. Hannah, for Respondent.

The appellant has commingled the debt contracted before the issuance of the final receipt with the debt contracted after its issuance, and placed them in one entire, indivisible note, as written evidence of the debt for payment of which the attached land can be sold on execution, and of the debt for payment of which the attached land cannot be sold on execution, and the judgment rendered on the note sued on must be entire, indivisible and an entity. The creditor cannot commingle a debt for payment of which the land cannot be attached with a debt for payment of which the land can be attached, and attach the land for the commingled debts, since the commingling of such debts makes both debts of such character that no attachment can be issued or levied for the payment of either of them. (4 Cyc. 440, subd. 2, and cases cited under notes 41 and 42; Vollmer v. Spencer, 5 Idaho 557, 51 P. 609; Wallowa Nat. Bank v. Riley, 29 Ore. 289, 54 Am. St. 794, 45 P. 766.)

SULLIVAN, C. J. Budge, J., MORGAN, J., Concurring.

OPINION

SULLIVAN, C. J.

This action was brought to recover on a promissory note executed by the defendant. An attachment was issued and levied on certain real estate belonging to the defendant, and also on certain personal property, but no question is raised on this appeal in regard to the personal property.

The defendant filed a cross-complaint, claiming that the property on which the attachment was levied was exempt from execution under the provisions of sec. 2296, U.S. Rev. Stats. (6 F. Stats. Ann., p. 307; 5 U.S. Comp. Stats. (1916), sec. 4551), on the ground that said indebtedness was incurred before the defendant received his patent from the United States for said land.

The plaintiff answered said cross-complaint and it was stipulated that the final judgment should be rendered on the issues joined on the cross-complaint.

Judgment was entered whereby it was decreed that the attachment levied should be canceled and set aside and said real estate released therefrom, and that the sale of said real estate for the payment of the indebtedness sued on in the complaint should be enjoined and the title thereto quieted as against said attachment.

It is contended by the defendant that the note sued on is but a renewal of the original obligation incurred by the defendant on February 10, 1911, and May 22, 1911, and that by reason of the indebtedness being incurred prior to the issuance of the patent to the land attached, said land under the provisions of sec. 2296, Rev. Stats. of the U.S. (6 F. Stats. Ann., p. 307; 5 U.S. Comp. Stats. (1916), sec. 4551), is exempt from attachment or execution, and that by reason thereof his title to said land should be quieted as against said attachment.

Plaintiff contends that each of the new notes was an original obligation given for a present consideration, and had no relation whatever to the original note.

The trial court, upon hearing the evidence, adopted the view of the defendant and entered judgment quieting his title to said land as against the claim of the plaintiff. Said decree was based on the theory that the note sued on was a renewal of the original obligation.

The main contention is that the evidence is insufficient to sustain the findings to the effect that the note sued on was a renewal and that no indebtedness was ever created by the renewal note; that simply the time of payment of the original indebtedness was extended. The note sued on bears date December 17, 1912.

Final proof was made and receiver's final certificate was issued for said land on April 10, 1911, and patent was issued May 23, 1912.

It is well-settled law that the giving of a new promissory note in lieu of an existing one is a payment of the old note when...