Hurst v. Merrifield

• Decision Date: 20 June 1933
• Citation: 144 Or. 78,23 P.2d 124
• Parties: HURST et ux. v. MERRIFIELD et al.
• Court: Oregon Supreme Court

23 P.2d 124

144 Or. 78

HURST et ux. v. MERRIFIELD et al.

Supreme Court of Oregon

June 20, 1933

Department 2.

Appeal from Circuit Court, Jefferson County; T. E. J. Duffy, Judge.

Suit by George Hurst and wife against J. W. Merrifield and others. From the decree, defendant F. G. Atkinson appeals.

Affirmed.

This is a suit to foreclose a mortgage upon certain described lands in Jefferson county, Or. The mortgage was given to secure a loan of $1,533.52. The first portion of the amended complaint pertaining to the foreclosure sets forth in the usual form the execution of the note and mortgage to secure the same. The mortgage was duly recorded. The complaint then proceeds to formally allege that, subsequent to the execution of the mortgage, defendants J. W. Merrifield and Mary C. Merrifield his wife, sold and conveyed the premises to defendant F. G Atkinson by warranty deed, which recited that the premises were sold subject to the plaintiffs' said mortgage and that said F. G. Atkinsonassumed and agreed to pay said mortgage; that Atkinson accepted the deed and agreed with the Merrifields, for the use and benefit of plaintiffs and as a part of the purchase price of said premises, to pay the note and mortgage; that a warranty deed was duly executed and recorded; that thereafter, on the 5th of December, 1927 Atkinson by warranty deed sold and transferred the premises to Ed Hill; that the warranty deed therefor recited that the premises were sold subject to plaintiffs' mortgage, but Hill did not therein assume or agree to pay the said mortgage; that said deed was duly recorded; that on May 7 1928, Ed Hill and his wife by warranty deed sold and conveyed said premises to defendant F. A. Hein; that the deed recited that said premises were subject to plaintiffs' mortgage and that Hein assumed and agreed to pay the same; that Hein accepted the deed and the same was duly recorded; that thereafter, and after the note and mortgage were long past due, Hein paid the sum of $250, which was applied in payment of interest then accrued on the note and part payment of the principal; that plaintiffs gave Hein permission to cut firewood on said premises and account to plaintiffs each sixty days thereafter for the same.

The agreement, which is attached to the complaint, shows that the price of the firewood was to be credited upon the note and mortgage, and that Hein agreed to pay the taxes on the premises, then past due, on or before January 1, 1930. One of the conditions for the agreement was that the delinquent taxes on said lands should be paid by F. A. Hein not later than January 1, 1930, and that default in the performance of any or all of the conditions herein stated on the part of F A. Hein "shall, at the option of George Hurst and Mary Hurst, render this agreement null and void."

Plaintiffs pray for judgment against J. W. Merrifield and Mary C. Merrifield, his wife, and against F. G. Atkinson and each of them for the balance due upon the mortgage of $960.78 and $6.87 interest, together with interest at the rate of 7 per cent. per annum since November 5, 1929, and for $100 attorney's fees, and for a foreclosure of their mortgage.

Defendants F. G. Atkinson, F. A. Hein, and Mary Hein answered the complaint admitting the execution of the mortgage and the transfer from Merrifield and wife to Atkinson, and alleging that the deed provided that Atkinson should assume and agree to pay the indebtedness to plaintiff's that the deed was accepted by Atkinson; the transfer to Hill; the execution of a deed to the premises; that Hill assumed and agreed to pay the mortgage. It is not alleged, however, that by the terms of the deed Hill assumed or agreed to pay the mortgage. It is further alleged that Hill sold and transferred the premises to Hein; that Hein and wife assumed the indebtedness to plaintiffs, as set out in plaintiffs' complaint; that without the knowledge or consent of defendant Atkinson, for a valuable consideration, the plaintiffs entered into an extension agreement with F. A. and Mary Hein, which was an exhibit attached to plaintiffs' complaint; that the plaintiffs accepted F. A. Hein as the principal debtor and looked to said F. A. Hein to pay said indebtedness to plaintiffs; that Atkinson was injured by the granting of the extension of time to defendants F. A. and Mary Hein. Defendants pray that no relief be granted as against the defendant F. G. Atkinson.

The plaintiffs filed a reply putting in issue the substance of the new matter contained in the answer. The trial court rendered a decree that plaintiffs recover of J. W. Merrifield and Mary C. Merrifield, husband and wife, and from the defendant F. G. Atkinson the sum of $6.87 interest, the further sum of $970.78, with interest until paid, and the further sum of $100, attorney's fees, and that the plaintiffs' mortgage be foreclosed. It was further decreed "that the defendants J. W. Merrifield and Mary C. Merrifield, husband and wife, have and recover of and from defendant F. G. Atkinson any portion of this judgment and decree which the said J. W. Merrifield and Mary C. Merrifield are forced by this decree to pay to the plaintiffs, together with the costs and disbursements herein." It was further decreed that each of the defendants be foreclosed and barred of any and all right, title, equity, interest, or estate in and to said real property, except the right of redemption.

Mortgagees could sue mortgagors or any or all of grantees who assumed payment of mortgage.

George H. Brewster, of Redmond (Max A. Cunning, of Redmond, on the brief), for appellant.

Bert C. Boyland, of Bend, for respondents.

Defendant Atkinson filed a motion for judgment on the pleadings; also a motion for a dismissal of the suit as to him. The court denied the motions and allowed plaintiffs to file an amended complaint, which was filed and was of the purport above set forth.

According to our view of the case, we are not at this time prepared to say that the amendment was material. It was within the sound discretion of the trial court. An amendment may be permitted in the discretion of the court at any time before trial. Section 1-906, Oregon Code 1930. The words "before trial" refer to a trial upon the issues of fact. State v. Pacific Live Stock Co., 93 Or. 196, 182 P. 828. The other motion involves the liability of Atkinson and will be considered hereafter. We think the facts of the case are fully portrayed in the record.

The second assignment of error is that the trial court erred in rendering any judgment against F. G. Atkinson. This is based upon the purported agreement for the extension of time given by plaintiffs to F. A. Hein. It is shown that Atkinson did not consent to an extension of time. The law governing this question, as we find it, is as follows: In a note to Zastrow v. Knight (56 S.D. 554, 229 N.W. 925) 72 A. L. R. on page 394, we find the general rule bearing upon the matter enunciated and supported by a wealth of authorities. It is there stated, in substance, that the weight of authority supports the proposition that, if the mortgagee, with knowledge of the conveyance of the property and assumption by the grantee of the mortgage debt, extends the time of payment by a valid agreement between him and the grantee, such extension operates to discharge the original mortgagor or intermediate grantee who may likewise have assumed the mortgage, unless such extension is assented to by the mortgagor or intermediate grantee, or unless the rights of the mortgagee against such parties are expressly reserved. Several cases supporting this rule from the courts of eleven states are cited. 19 R. C. L. 384, § 156. It is well settled that the extension of the time of payment of a mortgage debt given by a mortgagee to a purchaser of the mortgaged premises, in order to release the mortgagor (and the same rule is applied to an intermediate grantee) must be pursuant to a valid contract entered into for a sufficient consideration, and that mere indulgence given by the mortgagee to the purchaser will not have that effect.

The rule is laid down in 3 Pomeroy's Equity Jurisprudence (4th Ed.) § 1206, that, when a grantee assumes payment of the mortgage debt in the conveyance to him as a part of the purchase price, the land in his hands is not only made the primary fund for payment of the debt, but he himself becomes personally liable therefor to the mortgagee or other holder of the mortgage. The assumption produces its most important effect, by the operation of equitable principles, upon the relations subsisting between the mortgagor, the grantee, and the mortgagee. As between the mortgagor and the grantee, the grantee becomes the principal debtor primarily liable for the debt, and the mortgagor becomes a surety with all the consequences flowing from the relation of suretyship. As between these two and the mortgagee, although he may...