Fourth Nat. Bank in Wichita v. Hill, 40564

• Citation: 314 P.2d 312,181 Kan. 683
• Decision Date: 31 July 1957
• Docket Number: No. 40564,40564
• Parties: The FOURTH NATIONAL BANK IN WICHITA, Appellee, v. Fred HILL and Nellie B. Hill, His Wife, Sammie C. Hill, Producers Loan Company, Farmers and Mechanics Trust Company, Security National Bank of Kansas City, Nelson H. Poe, Allen H. Poe and United States of America, Appellants.
• Court: United States State Supreme Court of Kansas

Page 312

314 P.2d 312

181 Kan. 683

The FOURTH NATIONAL BANK IN WICHITA, Appellee, v. Fred HILL and Nellie B. Hill, His Wife, Sammie C. Hill,

Producers Loan Company, Farmers and Mechanics Trust Company,

Security National Bank of Kansas City, Nelson H. Poe, Allen

H. Poe and United States of America, Appellants.

No. 40564.

Supreme Court of Kansas.

July 31, 1957.

Rehearing Denied Sept. 13, 1957.

Syllabus by the Court.

1. A written lease to real and personal property with an option to purchase the property described creates no estate in the lessee beyond his leasehold interest since an option is merely a contract by which the owner of property agrees with another person that he shall have the privilege or right to buy the property at a fixed price within a certain time.

2. An extension of time of payment of a principal's indebtedness does not discharge the surety if made with his consent.

3. Ordinarily, a grantee of mortgaged property does not incur a personal liability for the payment of the mortgage debt, enforceable by the mortgagee, merely because he takes title subject to the mortgage and he is not personally liable to the mortgagee, in the absence of circumstances showing an agreement to discharge the debt.

4. Where a note is given merely in renewal of another and not in payment thereof, the renewal does not extinguish the original debt nor in any way change the debt except by postponing time of payment, and, as a general rule, the holder is entitled to the same rights and remedies as if he was proceeding on the original note.

5. Where a mortgage is given to secure the payment of a particular debt, the mortgage is not exhausted until the debt is paid or canceled, notwithstanding the debt may in the meantime be evidenced by several different promissory notes.

6. The Soldiers' and Sailors' Civil Relief Act (50 U.S.C.A.Appendix § 532) providing for the protection of interests in property owned by those called into the military service during the period of such service, uses the word 'owned' to include equitable as well as legal interests in property.

7. G.S.1949, Ch. 79, art. 31, requires that the registration fee be paid only once on a single indebtedness secured by a mortgage upon real property notwithstanding the debt may also be secured by a lien upon personal property. (G.S.1949, 79-3101, 79-3102.)

8. The terms 'subsequent purchasers' and 'subsequent mortgagees in good faith' as used in G.S.1949, 58-303 mean only purchasers and mortgagees who purchase or take their mortgages after the expiration of two years from the filing of the mortgage without notice of the existence of prior mortgages. A subsequent mortgagee with notice of a prior existing mortgage is not a subsequent mortgagee in good faith under the statute.

9. G.S.1949, 58-308 imposes a duty upon the mortgagee to enter satisfaction or cause satisfaction thereof to be entered of record when any mortgage of personal property shall have been fully paid or satisfied.

10. Whether or not a particular transaction constitutes a chattel mortgage or some other distinguishable transaction, depends on the intention of the parties as shown within the four corners of the instrument, and where unambiguous, by giving the terms thereof, their plain and ordinary meaning.

11. Parties to a chattel mortgage may agree that a building remain personal property and when foreclosed, waive the right of redemption.

12. 50 U.S.C.A.Appendix, § 521 erects no absolute bar to proceedings against one in the military service, and whether the rights of a party litigant are materially affected in his ability to prosecute or defend an action by reason of such service so as to entitle him to a stay of proceedings and an indefinite continuance, rests within the sound judicial discretion of the trial court, and appellate review is limited solely to whether the trial court abused its discretion in granting or denying the application.

13. The record in an action to foreclose a real and chattel mortgage examined, considered and held: That the trial court did not err in any of its holdings specified as errors by the appellants, as more fully set forth in the opinion.

George Stallwitz and Richard W. Stavely, Wichita, W. F. Lilleston, George C. Spradling, Henry V. Gott, Ralph M. Hope, and Charles S. Lindberg, Wichita, and R. C. Woodward and H. P. Woodward, El Dorado, on the briefs, for appellants.

Dwight S. Wallace, Wichita, Jimmie E. Grey and Donald C. Tinker, Jr., Wichita, and L. J. Bond and Robert Bond, El Dorado, on the briefs, for appellee.

FATZER, Justice.

This was an action to foreclose a real estate and chattel mortgage. Trial was by the the court, and judgment was rendered for the plaintiff. Defendants Sammie C. Hill and Nelson H. Poe have appealed.

The action was commenced April 6, 1955, by the Fourth National Bank in Wichita, as plaintiff, hereafter referred to as Fourth, against the principal defendants Fred Hill and Nellie B. Hill, his wife; their son, Sammie C. Hill; Nelson H. Poe; and, Security National Bank of Kansas City, hereafter respectively referred to as the Hills, Sammie Hill, Poe and Security.

Following trial, the court made extensive findings of fact and conclusions of law, which are summarized as follows: On December 10, 1952, the Hills, for value received, executed to Fourth their promissory note for $186,000 to become due December 10, 1953. To secure that note they executed two mortgages in favor of Fourth dated the same day as the promissory note, which were filed of record in Butler, Harvey and Sedgwick Counties December 11, 1952, and upon which the mortgage registration fee was paid. One was a real estate mortgage covering property located in the cities of Potwin, Whitewater and McLain in Butler and Harvey Counties, and the other was a chattel mortgage given as additional security and covering seven elevators located on railroad rights of way at El Dorado, Chelsea, Cassoday, Brainerd, McLain and Furley, Kansas, in Sedgwick, Harvey and Butler Counties, which were operated under various firm names and styles, and which included,

'* * * 'All fixtures and equipment pertaining to the elevators above described * * *,' and all the fixtures and equipment pertaining to two elevators in Potwin which were covered by the realty mortgage * * *. The chattel mortgage also covered 'All right, title and interest of Party of the First Part in, to and under the leases and leasehold estates on which the aforesaid elevators on railroad rights of way are located.''

In addition to the described elevators, their fixtures and equipment, other buildings and equipment were situated on the premises referred to in the chattel mortgage, most of which was physically attached to the elevators while others, such as office buildings, a coal shed, two warehouse buildings and one barn, were not so attached but were separate and apart from the elevators. The chattel mortgage also covered fixtures and equipment contained in a store building in Potwin and a store building and general office building in Whitewater, which buildings were covered by the real estate mortgage.

Both mortgages were made subject to two leases 'with option to purchase' the properties covered by the mortgages for $186,000, which leases had been previously entered into between the Hills and Poe on January 14, 1952, and March 1, 1952, for a term of five years at an annual cash rental of $44,000. All of the Hills' rights and interest in those leases, including the rentals, were assigned by them to Fourth on March 12, 1952, for application upon their indebtedness. The real estate mortgage expressly included all extensions, renewals and changes in the form of the note to Fourth, but the chattel mortgage contained no such provision. Neither mortgage contained an after-acquired property clause. The chattel mortgage contained no warranty, but the real estate mortgage contained the usual warranty except the mortgagors bound only themselves and not their heirs and assigns.

On February 16, 1953, Sammie Hill entered military service and on March 16, 1953, the Hills for a valuable consideration, by quitclaim deed and by bill of sale, sold the properties involved in this lawsuit to Sammie Hill. The sale was made subject to Fourth's mortgages, which Sammie Hill neither assumed nor agreed to pay.

On January 12, 1954, the Hills, having failed to pay their note to Fourth when it became due December 10, 1953, executed a renewal note to Fourth in the sum of $146,703.51, the amount then due and unpaid. Payments on the renewal note were scheduled as follows: $1,000 on or before February 12, 1954, and a like amount on the 12th day of each succeeding month for ten additional months with the final payment including accrued interest due on January 12, 1955. Fourth retained the original note as security for the renewal note, which likewise was secured by the chattel and real estate mortgages heretofore referred to.

In order to give the Hills an opportunity to work out of their financial difficulties, Sammie Hill leased to Poe on January 1, 1954, the elevator properties described in both mortgages for a period of one year at a monthly rental of $1,000. As a part of the consideration of the new lease, the two leases previously executed by the Hills to Poe in 1952 with 'option to purchase' were 'cancelled, terminated, released and set aside' subject to the consent and approval of Poe and Fourth. On January 16, 1954, Sammie Hill assigned his rights and interest in the new lease to Fourth, which was accepted by Poe January 22, 1954, and on January 25, 1954, Fourth accepted the assignment and consented to the cancellation of the two prior leases with 'option to purchase.' At the time of the assignment of the new lease Sammie Hill was not indebted to Fourth, nor was he ever indebted to it. Pursuant to that lease and assignment Poe made twelve payments of $1,000 each to Fourth between January 22, 1954, and January 4, 1955,...