First Nat. Bank v. Marshall

• Decision Date: 30 September 1915
• Docket Number: 3533.
• Citation: 152 P. 36,51 Mont. 224
• Parties: FIRST NAT. BANK OF MILES CITY v. MARSHALL ET AL.
• Court: Montana Supreme Court

152 P. 36

51 Mont. 224

FIRST NAT. BANK OF MILES CITY v. MARSHALL ET AL.

No. 3533.

Supreme Court of Montana

September 30, 1915

Appeal from District Court, Custer County; C. C. Hurley, Judge.

Action by the First National Bank of Miles City, a corporation against W. C. Marshall and the Commercial State Bank of Miles City. From a judgment for defendant Commercial State Bank plaintiff appeals. Affirmed.

George W. Farr and H. E. Herrick, both of Miles City, for appellant.

Loud Collins, Campbell, Wood & Leavitt, of Miles City, for respondents.

BRANTLY C.J.

This is an appeal by the plaintiff, the First National Bank of Miles City, Custer county, from a decree rendered against it and in favor of defendant Commercial State Bank, of the same place hereafter referred to as the defendant bank, in an action brought by the former to foreclose a mortgage executed to it by the defendant Marshall. This defendant failed to appear and his default was entered. Though formal issues were made between the plaintiff and the defendant bank, the cause was submitted for decision upon an agreed statement of facts which may be epitomized as follows:

On December 13, 1910, Marshall, being indebted to the plaintiff in the sum of $2,290.85, executed to it his promissory note therefor, due in 6 months after December 30, 1910, with interest at 10 per cent. per annum, and also attorney's fees in case resort to legal proceedings was necessary in order to enforce collection. To secure payment of this note he executed and delivered to the plaintiff a mortgage upon certain horses and other personal property in Custer county. The mortgage contained this recital:

"Said property is clear of incumbrances, except two notes to the Commercial State Bank of Miles City, one for ($8,000) eight thousand dollars, and one for ($7,670) seven thousand six hundred seventy dollars, secured by mortgage upon above property."

This mortgage was duly acknowledged and recorded. Theretofore, on November 29, 1910. Marshall, being indebted to the defendant bank in the sum of $15,670, executed to it the two notes mentioned in plaintiff's mortgage, the one for $7,670, due and payable in 6 months thereafter, and the other for $8,000, due and payable in 12 months, each containing the same stipulations for interest and attorney's fees as that due to plaintiff. To secure the payment of them he executed to the defendant bank a mortgage upon the property included in plaintiff's mortgage. The consideration named therein was the sum of $15,670, and it was stipulated that this sum, with interest, should be paid at the expiration of one year from date, according to the terms and tenor of the two notes. Both mortgages contained the usual stipulations prohibiting removal of the property, etc., and, in case the notes secured by them should not be paid at maturity in accordance with their terms, authorizing the mortgagees, at their option, to take possession of it and cause it to be sold, and to apply the proceeds to the discharge of the indebtedness. None of the indebtedness due the plaintiff was ever paid, except the sum of $290 paid on August 23, 1911. On July 10, 1911, plaintiff's mortgage was renewed by the filing of a renewal affidavit as provided by the statute. On August 18, 1911, Marshall paid to the defendant bank $650, and on October 11th $7,823, both of which sums were applied to the discharge of the note for $8,000. These amounts consisted of the proceeds of sales of portions of the mortgaged property made by Marshall with the consent of both mortgagees. When this action was brought, there was due to the defendant bank upon the $8,000 note a balance of $224.78, besides the full amount of the note for $7,670, with interest. On January 12, 1912, the defendant bank filed an affidavit in renewal of its mortgage, in which it claimed that there was still due to it the sum of $8,666.10. During the pendency of the action, and by the consent of plaintiff and the defendant bank, the court appointed a receiver, with directions to take possession of and sell the remainder of the mortgaged property and to pay the proceeds into the hands of the clerk, subject to the order of the court. This he did, realizing therefrom the sum of $2,971.30.

In submitting the cause as they did, it was the purpose of the parties, as appears from the recitals in the statement of facts, to present and have determined the single question whether, by failing to file its affidavit of renewal of its mortgage until after the lapse of 60 days from the date of the maturity of the note for $7,670, the defendant bank lost the lien of its mortgage pro tanto, and for this reason the plaintiff is entitled to have the sum of money in the hands of the clerk, less the small balance due on the note for $8,000, applied to the discharge of the note secured by its mortgage. The district court held that the lien of the defendant bank was in no wise impaired by its omission to renew its mortgage upon the maturity of the first note, and hence that it was entitled to have the funds in the hands of the clerk applied to the balance due it. The sole question presented by the appeal is whether this holding is correct.

The contention of counsel for plaintiff is that, though the amount due the defendant bank prior to the mortgage transaction was a single debt, the taking of the two notes converted it into two separate debts, or, in any event, into a debt due and payable in installments, and that it was incumbent upon it to file the affidavit of renewal within 60 days after the first note matured, or resort to the alternative of taking possession of the property, at the peril of losing its lien as to this note. As appears from a memorandum opinion found in the record, the district court concluded, upon the facts, that the debt, though payable in two installments, was a single debt, and that the necessity for renewal arose only...