Krause v. Swanson
| Decision Date | 10 April 1942 |
| Docket Number | 31266. |
| Citation | 3 N.W.2d 407,141 Neb. 256 |
| Parties | KRAUSE et al. v. SWANSON et al. |
| Court | Nebraska Supreme Court |
Syllabus by the Court.
1. There being no declaration of legislative purpose or policy in the Home Owners' Loan act with regard to agreements to take second mortgages after completion of Home Owners Loan Corporation first mortgages, no public policy may be drawn from the act, the effect of which would be to nullify or render void such agreements or second mortgages executed pursuant to such agreements.
2. Regulations promulgated under the Home Owners' Loan act which are for the guidance and control of the agents and agencies of the Home Owners Loan Corporation in making loans have no force or effect beyond the agents or agencies to which the regulations are directed.
3. "A payment or other performance by a third person, accepted by a creditor as full or partial satisfaction of his claim, discharges the debtor's duty in accordance with the terms on which the third person offered it." Restatement, Contracts, sec. 421.
4. Where a person honestly owes a debt, and ought, in equity and good conscience, to pay it, there is a sufficient consideration for the execution of a note and mortgage given for payment of the debt.
5. A moral obligation to pay a preexisting legal debt is a good consideration for the execution of a note and mortgage in its payment.
R B. Hasselquist and Gilbert P. Hansen, both of Omaha, for appellants.
Brown Crossman, West, Barton & Fitch, of Omaha, for appellees.
Heard before SIMMONS, C. J., ROSE, EBERLY, CARTER, MESSMORE, and YEAGER JJ.
This is an action in equity by Donald S. Krause and Jeanette Krause plaintiffs and appellants, against Frank L. Swanson and Lenore Beveridge Swanson, defendants and appellees, the purpose and prayer of which is to cancel and set aside a promissory note and second mortgage. After trial in the district court, a decree was entered denying the relief prayed by the plaintiffs.
From this decree the plaintiffs have appealed.
The substantial facts on which the action is based are the following: On January 21, 1933, the defendant Lenore Beveridge Swanson was the owner of the south 44 feet of the north 88 feet of lots 8 and 9, block 1, Comer's addition to the city of Omaha, Douglas county, Nebraska. On this date she sold this real estate on land contract to the plaintiffs for $3,400. The terms of the contract called for an initial payment of $250 with payments thereafter at the rate of $30 a month. The interest rate was 6 per cent. per annum. At the time of sale the Omaha Loan & Building Association held a first mortgage on the premises. Within a short time plaintiffs defaulted in their payments under the terms of the contract, and in payment of taxes which they were required to pay by the terms of the contract. After default the plaintiffs, with consent of defendant Lenore Beveridge Swanson, sought a refinancing loan from the Home Owners Loan Corporation, which corporation will be hereafter referred to as H.O.L.C. Finally on September 20, 1935, a loan was consummated from H.O.L.C. in the amount of $2,977.60, which was based on an appraised value by H.O.L.C. of $3,722. Prior to the making of the loan the defendant Lenore Beveridge Swanson executed a "Mortgagee's consent to take bonds" on a form supplied by H.O.L.C., which contained the following provisions:
To complete the transaction the defendant Lenore Beveridge Swanson transferred title to the plaintiffs by warranty deed. This defendant accepted and receipted for the bonds specified in the consent and liquidated her mortgage to the Omaha Loan & Building Association. The receipts from refinancing were less than the amount owing by plaintiffs to defendant Lenore Beveridge Swanson under their contract. After the refinancing through H.O.L.C., plaintiff Donald S. Krause and defendant Lenore Beveridge Swanson agreed on the amount of $450 as the difference, and which difference they agreed represented an indebtedness by plaintiffs to defendant Lenore Beveridge Swanson. On October 21, 1935, the plaintiffs executed and delivered to the defendant Frank L. Swanson their promissory note for $450, representing the difference between the balance due on the contract and the avails to defendant Lenore Beveridge Swanson from the H.O.L.C. loan. This note bears interest at 7 per cent. per annum and is payable in instalments of $30 each six months. The note was secured by a second mortgage on the real estate involved herein.
As ground for reversal the plaintiffs claim that this note and mortgage are void for reasons (1) that they were without the knowledge and consent and made in secrecy from the H.O.L.C., (2) that a promise to execute them was compelled by the defendants, (3) that the agreement and release between the H.O.L.C. and the defendant Lenore Beveridge Swanson released and discharged the plaintiffs from the mortgage debt, and (4) that the taking of the promissory note and second mortgage was contrary to the laws of the United States and the Home Owners' Loan Act of 1933, 12 U.S.C.A. § 1461 et seq., and the rules and regulations promulgated thereunder.
Factually we find no difficulty with any of the propositions set forth. It is true that the promissory note and second mortgage were without the knowledge and did not have the consent of H.O.L.C. The evidence does not support the claim that plaintiffs were compelled to promise to execute or to execute the note and mortgage. The evidence of plaintiffs does indicate that defendant Lenore Beveridge Swanson insisted upon payment in cash, or a note and second mortgage, for the difference between the bonds and the balance due on the land contract before execution of the consent to take bonds, while defendants' evidence is to the effect that she insisted upon cash which was never paid to her. It is beyond dispute that plaintiff Donald S. Krause offered cash, or cash and a second mortgage.
The proposition that the taking of the promissory note was violative of the federal laws pertaining to the Home Owners' Loan act of 1933 is without any foundation whatever. An examination of the act fails to disclose anything even remotely bearing upon the question of further...
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