Hill v. Schultz, 7667

• Decision Date: 03 February 1951
• Docket Number: No. 7667,7667
• Citation: 227 P.2d 586,71 Idaho 145
• Parties: HILL et al. v. SCHULTZ et ux.
• Court: Idaho Supreme Court

Page 586

227 P.2d 586

71 Idaho 145

HILL et al. v. SCHULTZ et ux.

No. 7667.

Supreme Court of Idaho.

Feb. 3, 1951.

Rehearing Denied Feb. 27, 1951.

B. A. McDevitt, Pocatello, E. B. Taylor, Hailey, for appellants.

James, Shaw & James, Gooding, for respondents.

PORTER, Justice.

In the fall of 1947, defendants were erecting a building in Ketchum. There was a mortgage on the building of some $16,000; and appellants needed funds with which to complete the construction of the building. On November 1, 1947, appellants borrowed $25,000 from respondents with which to pay off such mortgage and to finish the construction of their building. Appellants executed their promissory note for the $25,000 and secured the payment of same by a mortgage on their premises.

The promissory note was made payable ten years after date with interest at the rate of six percent per annum. It also contains the following provision: 'The undersigned further agree to make quarterly payments annually, to be appled first on account of interest the balance on account of principal, any net proceeds from the operation of slot machines and a bar, at premises situated in the Townsite of Ketchum, Blaine County, State of Idaho, particularly described as the North 30 feet of Lot 2 and the South 20 feet of Lot 3 in Block 4, in said Townside; the net proceeds being: gross receipts from said operations, less all operating expenses in connection therewith, all maintenance charges for the upkeep of the said premises, real and personal property taxes, income taxes, license fees both State and Federal, property insurance, and a maximum of Two Hundred and no/100 ($200.00) Dollars per month for general living expenses of the undersigned. The payees of this note are to have the privilege of inspecting the books and records showing the moneys received and expended in the said operations of the undersigned every three months, commencing from the date said operations commence.'

At the same time, appellants and respondents entered into a written lease whereby appellants leased to respondents for a period of ten years at the annual rental of $10 per year, a portion of said building described in the lease as 'that certain floor space, to be mutually agreed upon between the parties hereto, and for all concessions and games to be operated on said floor space.' Thereafter, respondents stored and set up certain gambling equipment in the building, but same was never operated and was later removed.

The mortgage provides that the mortgagors shall keep the premises insured in a sum not less than $25,000 payable to the mortgagees as their interests may appear; that the mortgagors shall pay promptly all insurance premiums and all taxes assessed against the property; that if the mortgagors fail to pay the insurance premiums, the mortgagees may do so and that the same shall become due at once to the mortgagees; that should the mortgagors fail to pay said amount or amounts so paid by the mortgagees upon demand or fail to perform or keep any of the covenants or agreements in the mortgage, then in any such event, the mortgagees, at their option, may declare the entire amount of the mortgage debt, including accrued interest, due and payable and proceed to foreclose the mortgage.

Appellants failed to pay the insurance premiums for the year 1948 and the same were paid by respondents in the sum of $842. Appellants likewise failed to pay the 1948 taxes on the premises amounting to $230.71.

Under date of March 21, 1949, respondents made written damand upon appellants for reimbursement for the insurance premiums paid and interest thereon; called appellants' attention to the unpaid taxes; and requested appellants to pay such amounts within ten days. Appellants, having failed to pay the amount due on the insurance premiums or the taxes, respondents served notice upon appellants under date of April 2,1949, that respondents did thereby declare due the entire amount of the mortgage debt, including accrued interest and the amount of insurance premiums paid thereon; and that unless appellants immediately paid the sums due under said mortgage, respondents would proceed to foreclose the mortgage. No payments having been made by appellants, respondents filed this action in foreclosure on April 20, 1949.

By their complaint, respondents alleged the execution of the note and mortgage; that by reason of the failure of appellants to pay the insurance premiums and to pay the taxes, respondents had declared the whole sum of the promissory note due and payable; and prayed judgment in foreclosure. By their answer, appellants denied that they were in default under the terms of the note and mortgage; affirmatively alleged that the note, mortgage and lease constituted one agreement;...