First Savings Bank of Ogden v. Brown

• Decision Date: 03 February 1936
• Docket Number: 5511
• Citation: 54 P.2d 237,88 Utah 294
• Court: Utah Supreme Court
• Parties: FIRST SAVINGS BANK OF OGDEN v. BROWN et al

54 P.2d 237

88 Utah 294

FIRST SAVINGS BANK OF OGDEN v. BROWN et al

No. 5511

Supreme Court of Utah

February 3, 1936

Appeal from District Court, Second District, Weber County; Lester A Wade, Judge.

Action by the First Savings Bank of Ogden against Moroni E. Brown and others. Judgment for plaintiff, and defendants Dolores Brown and Crilla W. Thorpe appeal.

AFFIRMED.

J Quill Nebeker, of Ogden, for appellants.

Geo. S Barker, of Ogden, for respondent.

EPHRAIM HANSON, Justice. ELIAS HANSEN, C. J., and FOLLAND, MOFFAT, and WOLFE, JJ., concur.

OPINION

EPHRAIM HANSON, Justice.

Plaintiff brought this action to recover on a promissory note and to foreclose a mortgage on certain real property given to secure payment of the note. A default judgment was entered by the court below in plaintiff's favor as prayed. The defendants Crilla W. Thorpe and Dolores Brown alone have appealed from that judgment. They have jointly assigned as error: (1) The overruling of the demurrer of defendant Thorpe to plaintiff's complaint; (2) the sustaining of plaintiff's demurrer to the answer of defendant Thorpe; and (3) the entry of judgment against each of said defendants.

Plaintiff's complaint was filed May 23, 1933. Its allegations may be summarized as follows: Paragraphs 1 and 2 allege the corporate existence of plaintiff and of the defendant Gwilliam Lumber & Coal Company, hereinafter referred to as the Lumber Company. Paragraph 3 alleges that defendant Moroni E. Brown and Dolores Brown are husband and wife. Paragraph 4 alleges that on September 15, 1930, defendants Moroni E. Brown and Dolores Brown executed and delivered to defendant Lumber Company, for a valuable consideration, their promissory note in the sum of $ 2,250, bearing interest at the rate of 8 per cent per annum, a true copy of which is attached as Exhibit A and made a part of the complaint the same as if written out at length in the body of the same. Paragraph 5 alleges that at the same time and place and as a part of the same transaction, for the purpose of securing payment of said note, the Browns executed and delivered a mortgage, a copy of which is attached, marked Exhibit B and made a part of the complaint the same as if written out at length therein; that said mortgage was acknowledged so as to entitle it to be recorded and was recorded October 8, 1930, in Book 4-M of Mortgages at page 77 in the office of the county recorder of Weber county. Then follows a description of the mortgaged premises. Paragraph 6 alleges the assignment and transfer of the mortgage to plaintiff by the Lumber Company on October 8, 1930, by a written instrument, a true copy of which is attached, which assignment was recorded the same day in Book 4 of Mortgages, page 76. The assignment recites that the note and the money to become due are also transferred. It is further alleged that the note was indorsed without recourse to plaintiff at the same time as the mortgage was transferred, setting out in haec verba said indorsement. Paragraph 7 alleges that no part of the principal sum of the note has been paid and interest has been paid to on or about October 15, 1931, only. The provision of the note as to attorney's fees and the provision of the mortgage providing for acceleration of the payment of the debt, hereinafter quoted, are set out. It is then alleged that plaintiff has employed counsel and that 10 per cent of the principal and interest is a reasonable fee; that interest on said note has not been paid, except as stated, and that taxes are delinquent and unpaid for two years. Paragraph 8 alleges plaintiff is the owner of the note and declares the whole principal sum and accrued interest due. Paragraph 9 alleges plaintiff has expended $ 8.50 for continuation of the abstract. Paragraph 10 alleges that on March 24, 1931, the defendants Moroni E. and Dolores Brown deeded the mortgaged premise to defendant Crilla W. Thorpe, which deed was recorded, and provided that it was made "subject to all mortgages, liens and encumbrances of whatsoever nature now outstanding against said property." It is alleged that this deed is subject to plaintiff's mortgage. Paragraph 11 alleges a quitclaim deed given by the Construction Securities Company to defendant L. P. Wright on August 13, 1929, and duly recorded in Book 114 of Deeds, page 347, is subsequent and inferior to plaintiff's mortgage. Paragraph 12 alleges that a tax sale redemption certificate covering the mortgaged premises dated May 17, 1930, and recorded in Tax Sale record 1929, page 97, line 2, is inferior to the claims of plaintiff. Paragraph 13 alleges that each of the defendants claims some interest in the mortgaged premises adverse to plaintiff, but such claims are inferior to plaintiff's claim and lien against said premises. Paragraph 14 alleges that it is provided in the mortgage that "the rents, issues and profits thereof after default of any of the conditions to be performed by the mortgagors" are also mortgaged to secure payment of the indebtedness. Paragraph 15 alleges the mortgage conditions have not been performed and the property is not of sufficient value to discharge the indebtedness and a receiver should be appointed pending foreclosure to collect rents, to attend the property and to pay taxes. Paragraph 16 alleges that "(blank)" is a proper person to be receiver.

The note by its terms was payable September 15, 1933, and provided that the interest was payable quarterly. It also contained this provision: "And if interest is not paid when due, it is to become part of the principal and bear same rate of interest." The mortgage contains the following provision:

"It is further expressly agreed that should default be made in the payment of any installment of interest or principal as in said note provided, and should the same remain unpaid and in arrears for the space of thirty days, or should default be made in any other condition to be performed by the mortgagors, the holder of said note may declare the principal sum mentioned therein to be due and payable immediately, and may proceed at once to foreclose this mortgage, anything hereinbefore written or in said note to the contrary notwithstanding. The mortgagor--agree--to pay all taxes and assessments on the said land and attorney's fee in case of a foreclosure, and if the mortgagors fail to pay such taxes before they become delinquent, the mortgagee may pay the same and the sums so paid shall be added to the debt hereby secured."

Dolores Brown was served with summons on May 23, 1933, but was not served with a copy of the complaint. She made no appearance and filed no pleading of any kind. Defendant Thorpe filed a general demurrer to the complaint, which was overruled. She then filed an answer which may be summarized as follows: She admits all of the allegations contained in paragraphs 1, 2, 3, 4, and 5. As to paragraphs 6, 7, 8, 9, 11, 12, 14, and 16, she alleges, by separate paragraphs in her answer concerning each of such paragraphs, that she "has insufficient knowledge or information upon which to base a belief as to the truth or falsity of said allegations, and therefore denies specifically and generally each and every allegation of fact in said paragraph." Answering paragraph 10, said defendant denies the deed executed and delivered to her by the Browns is subsequent and inferior to plaintiff's claim or note, and admits every other allegation. Answering paragraph 13, she admits she claims some interest in said premises and that such claim is based on said warranty deed given to her by the Browns, and denies each and every other allegation contained in said paragraph. Defendant Thorpe then denies specifically and generally each and every allegation of fact contained in paragraph 15. As an affirmative defense to paragraph 5, she alleges that she came into possession of said premises under the deed given to her by the Browns and that she is occupying the same as her home; that the premises are not being rented and there are no rents or profits being derived therefrom. Upon information and belief she alleges that, notwithstanding the agreement of the mortgagors to pay taxes, as above quoted, there was an agreement between the mortgagors and the mortgagee that the mortgagors need not pay the taxes on said premises unless they chose, and that in the event they did not pay them, upon maturity of the note or in case of foreclosure, the mortgagee might pay any delinquent taxes and add the amount thereof to the amount due under said note, and that the failure to pay taxes would not constitute a breach of the conditions of said mortgage so as to entitle the mortgagee to foreclose. It does not appear when or how this side agreement came to be made.

Plaintiff filed a general demurrer to this answer. The demurrer was sustained and defendant Thorpe failed to plead further. The court thereafter entered her default for failure to file an amended answer within the time allowed by the order of the court, or at all, and a judgment by default was entered against all the defendants as prayed in the complaint.

We shall first consider appellants' assignments of error attacking the court's action in overruling the general demurrer of defendant Thorpe to plaintiff's complaint. Appellants argue that the note by its terms did not become due until September 15, 1933. Since the complaint was filed May 23, 1933, the action was premature. The complaint alleges that the interest has been paid to October 15, 1931, only and that two years' taxes are delinquent and unpaid. It is appellants' contention that, because the note contains no acceleration clause but provides that if the interest is not paid when due it is to become part of the principal and bear the same rate of interest, the plaintiff could not...