George v. Butler

• Decision Date: 04 December 1901
• Citation: 26 Wash. 456,67 P. 263
• Parties: GEORGE v. BUTLER et al.
• Court: Washington Supreme Court

67 P. 263

26 Wash. 456

GEORGE v. BUTLER et al.

Supreme Court of Washington

December 4, 1901

Appeal from superior court, Snohomish county; Frank T. Reid, Judge.

Action by Henry George against W. E. Gaynor and others. Mary M Butler and others intervened. From a judgment for defendants plaintiff appeals. Affirmed.

Whitney & Headlee, for appellant.

Francis H. Brownell, for respondents.

HADLEY, J.

This is an action foreclosing a mortgage. It appears by the complaint that on the 16th day of February, 1892, the defendant W. E Gaynor executed and delivered to Wyatt J. Rucker and Bethel J. Rucker certain promissory notes as follows: One note for $3,000, due 18 months after date and one for $1,666.67, due 2 years after date. By the terms of the notes each drew interest at the rate of 8 per cent per annum from date until maturity, and after maturity at the rate of 3 per cent. per month, payable monthly. On the same day the notes were executed the said defendant executed a mortgage upon certain real estate in the city of Everett to secure the payment of the notes. No part of said notes has been paid except the sum of $583.34, which was paid upon the last-mentioned note on the 24th day of February, 1894. It is alleged that on the 12th day of November, 1895, the said payees and mortgagees assigned and transferred the said notes and mortgage to the plaintiff in this suit, and that he is now the holder thereof. The complaint alleges that the defendant Gaynor, the maker of said notes and mortgage, was absent from the state of Washington at the time said notes became due, and that he has not returned to this state since right of action upon the notes and mortgage accrued. The respondents Lucy A. Friedlieb and Mary M. Butler subsequently, by deed, became the owners of separate portions of the mortgaged premises. Said respondents demurred to the complaint by way of general demurrer, and also by way of interposing the statute of limitations. The demurrer was by the court overruled. Respondents then answered the complaint, denying certain allegations therein, and alleged affirmatively, among other things, their ownership of portions of the mortgaged premises, and that the action was not commenced within the time limited by law as to said $3,000 note, in that no payments were ever made upon said note, and more than six years elapsed since the maturity thereof before this action was commenced. The reply denies the affirmative allegations of the answer. Upon these issues the cause was tried by the court, and decree entered denying any recovery on the said $3,000 obligation, and granting a recovery upon the other note for the amount of its face less the said payment thereon, with interest computed at the rate of 8 per cent. per annum until the date of the decree. The plaintiff appeals, and assigns as error: (1) That the court erred in refusing to allow the full amount of said $3,000 note, together with 8 per cent. per annum interest, and 3 per cent. per month thereafter, compounded; (2) that the court erred in refusing to allow upon the other note interest at 3 per cent. per month, compounded after maturity; (3) that the court erred in concluding as a matter of law that appellant was not entitled to have his mortgage foreclosed for the principal and interest due on the $3,000 note.

The $3,000 note matured August 16, 1893, and the other one matured February 16, 1894. On the 16th day of August, 1899, six years had elapsed since the maturity of the $3,000 note, and on the 16th day of February, 1900, a like period had elapsed since the maturity of the other one. This action appears to have been commenced between the two last-mentioned dates. It is clear that under any view of the statute of limitations the smaller note was not barred at the time this suit was commenced, and the right of action to foreclose the mortgage, as far as said note was concerned, was not barred. Appellant urges that the $3,000 note was not barred by reason of the absence of the maker of the note from this state. It is true, under the showing in this record the note was not barred as to Gaynor, the maker, and consequently the right of action to foreclose the mortgage was not barred if Gaynor had remained the owner of the mortgaged premises. Respondents are, however, subsequent grantees of the mortgaged premises, and they have interposed the plea of the statute of limitations as to a right of action against them for the foreclosure of the mortgage.

The principal question involved here is, can the subsequent grantee of a mortgagor not obligated to pay the debt plead the statute of limitations against an action to foreclose a mortgage when the statute has not run, as against the mortgagor and maker of the note secured by the mortgage, by reason of his continued absence from the state? This precise question seems never to have been directly passed upon by this court. The relation of a subsequent grantee of a mortgagor to the running of the statute of limitations has not been the subject of harmonious decision among the courts that have considered it. Certain phases of the subject have heretofore been considered by this court. In Damon v Leque, 17 Wash. 573, 50 P. 485, 61 Am. St. Rep. 927, a subsequent execution purchaser under a judgment against the mortgagor was made a party defendant in an action which was held to be one in foreclosure. The court in that case said: 'The case turns upon the question of the right of the mortgagor to revive the mortgage after the bar of the statute had become complete as against another party who had purchased the lands, but was not obligated to pay the debt. The authorities are conflicting upon this question, but the great weight sustains the defendants on the proposition. The mortgagor could no more revive the mortgage in such a case than he could give a new mortgage upon the land.' Again, in the case of Stubblefield v. McAuliff, 20 Wash. 442, 55 P. 637, it was held that, where a note was secured by a mortgage executed by a man and wife upon community realty, payments of principal or interest thereon made by the husband without the authority of the wife, after maturity, will not extend the time of the running of the statute of limitations as against the wife. The theory upon which the first case was decided was that, when the right of action as against the debt secured by the mortgage is barred, the right of action upon the mortgage itself is also barred. The latter case was decided upon the theory that part payment by one person, being equivalent to a new contract based upon an old consideration upon which a cause of action accrues at the time of payment, binds only the person making the payment, or one whom he has authority to bind by a new contract to pay the balance. In the case of Board of Church Erection Fund of General Assembly of Presbyterian Church v. First Presbyterian Church of Seattle, 19 Wash. 455, 53 P. 671, the opinion contains a statement that may upon first reading appear to put the case in conflict with Damon v. Leque, supra, which had been previously decided. A similar state of facts existed in the two cases. In the later case the grantee of the mortgagor sought to raise the defense of the statute of limitations in this court. The defense had not been pleaded in the court below by way of answer, and the demurrer was only upon the ground that the complaint did not state facts sufficient to constitute a cause of action. It was held that, when the attention of the court is intended to be directed to the subject of the statute of limitations by way of demurrer, it must be so specially designated in the demurrer; that being a distinct and separate ground of demurrer as provided by statute. In discussing this subject the opinion states: 'In the first place, a pleading of the statute of limitations is a privilege which is accorded by the law to the defendant,--in this case the Presbyterian Church,--and it can avail itself of that privilege or answer upon the merits, or default, just as it pleases. It is not a right which defendant Walter Morgan can receive the benefit of.' The further discussion of the subject, however, shows clearly that the court did not adjudicate the question of the statute of limitations, for the reason that it was not raised in the record. The case was in fact determined upon other grounds. There is, therefore, no conflict between that case and Damon v. Leque. On the authority of the latter case it must be considered, therefore, at the outset of the consideration of this subject, as settled by this court, that, when a debt secured by a mortgage is barred by the statute of limitations, the mortgage is also barred, and the mortgage cannot be revived by the act of the mortgagor as against a subsequent grantee without his consent. In the case at bar the full statutory period had run against the mortgage debt if the debtor had remained within the state. Section 4808, 2 Ballinger's Ann. Codes & St., provides as follows: 'If the cause of action shall accrue against any person who shall be out of the state or concealed therein, such action may be commenced within the terms herein respectively limited after the return of such person into the state, or after the time of such concealment; and if, after such cause of action shall have accrued, such person shall depart from the reside out of this state, or conceal himself, the time of his absence or concealment shall not be deemed or taken as any part of the time limited for the commencement of such action.' By reason of the above provision the operation of the statute of limitations was suspended during the absence of the debtor from the state, and it is therefore clear that the right of action against him is not barred. The statute having been suspended as to the...