Landy v. Jordan, 17110

• Citation: 129 Colo. 140,266 P.2d 1115
• Decision Date: 15 February 1954
• Docket Number: No. 17110,17110
• Parties: LANDY et al. v. JORDAN.
• Court: Supreme Court of Colorado

Page 1115

266 P.2d 1115

129 Colo. 140

LANDY et al. v. JORDAN.

No. 17110.

Supreme Court of Colorado, En Banc.

Feb. 15, 1954.

Rehearing Denied April 5, 1954.

Graham Susman, Hyman D. Landy, Denver, for plaintiffs in error.

J. Nelson Truitt, Denver, for defendant in error.

CLARK, Justice.

Edna May Jordan, as plaintiff, brought action in the trial court to enjoin further proceedings in a real-estate foreclosure action by the public trustee; for judgment annulling and vacating the sale of her premises pursuant thereto; and to cancel and declare void the certificate of purchase issued thereupon. Plaintiffs in error, Landy and Susman, who are not identical with counsel of the same names who represent them, are the holders by assignment of the certificate of purchase and we will hereinafter refer to them as defendants. The original loan was procured by plaintiff from Capital Federal Savings and Loan Association of Denver, a corporation, hereinafter designated as Capitol. During the progress of the action in the trial court and upon showing that Capitol had assigned its certificate of purchase to defendants, dismissal was entered as to Capitol. The public trustee filed disclaimer and for that reason is not a party in the present proceeding.

Under date of September 18, 1947, plaintiff procured from Capitol a loan in the principal sum of $2500 represented by her promissory note secured by deed of trust of even date therewith on certain lands and premises in the City of Denver belonging to her. June 29, 1950, Capitol filed with the Public Trustee its notice of election and demand for sale, charging that plaintiff had defaulted in the payment of principal and interest due October 15, 1947, and likewise in the payment of additional indebtedness due on May 29, 1950.

The issue as to whether either of the alleged defaults claimed existed in fact are the only material questions presented on this review. The trial court found that there was no delinquency in either instance and with this finding we agree.

The promissory note involved, in part reads as follows:

'In monthly installments (or payments) after date for value received, I * * *, promise to pay to Capitol * * *, the sum of Twenty-five Hundred and No/100 Dollars, and such additional sums as may be advanced hereon by the said Association, with interest on the unpaid balance at the rate of fifty cents per month on each $100.00 (and in like proportions on lesser amounts) until paid in full. Monthly installments of $30.00 shall be payable on or before the 15th day of each and every calendar month until the principal with interest as above shall be paid in full, beginning October 15th, 1947.'

To use a term apparently common to the business, after the granting of the loan, it was 'set up' on the books of Capital with $54 deducted from the amount of the loan and placed in a 'reserve for taxes and insurance' to which reserve was to be added additional sums of $7 per month, thus making the monthly installment $37 instead of $30 as provided by the note.

It is admitted that the payment due October 15, 1947, was not made, and that the first installment paid on the note was November 21, 1947, a payment of $40 by the lessee of the premises covered by the deed of trust pursuant to assignment of rents by plaintiff to Capitol. From that date on, the tenant continued to pay the rental to Capitol, less an occasional deduction for water rental or similar item. From each and every payment there was first deducted the amount of $7 set aside under the reserve for taxes and insurance, which fund at the end of June, 1950, showed a balance of $81.52. It is contended that, since the first installment was not paid on its due date of October 15, 1947, the note was in continuous delinquency, subject, under its acceleration clause, to election on the part of the holder to declare the full amount due and payable at any time. It further is contended that the position of the holder of the note in the foregoing notice was not changed or modified by the fact that no default was declared until June 29, 1950, notwithstanding the current regular monthly payments made through the application of the rental money. To agree with this contention would require adherence to highly technical interpretation of the rather ingenious provisions of the note in question, which strongly carries the impression that this intricate design was intentionally woven. The payments, as noted, become due on the 15th of each month, while the interest is to be calculated and added on the first day of each month, thus making it necessary for one who thinks he is borrowing money at six per cent interest per annum to pay interest on interest for at least a part of each month and in addition pay interest on charges for late payments; also, finally, the record on the ledger sheet is so arranged by the company that under ordinary conditions the note would necessarily be delinquent on the first payment. We, however, decline to follow this intricate calculation through its various evolutions as it easily may be determined that on the 29th day of June, 1950, either there was no default existing at all or, if there was, it was very slight and covered only a part of a month. If there be no default at the time of the election, it is immaterial what default there may have been prior thereto. On June 6, 1950, slightly over thirty-two months after the date of the note, there had been paid in to Capitol for credit on principal and interest, and in addition to the $7 per month set up in the reserve for taxes and insurance account, a total of $972.71; whereas, at $30 per month, the payment required under the provisions of the note, would amount to $960, or a credit balance of $12.71. On June 15, 1950, the payment being slightly delayed, there would be a technical delinquency from that date until the 5th day of July, when a further payment was made, but that would cover only part of a month and only part of the monthly payment. Another calculation that would seem interesting, would be to figure interest at a straight six per cent per annum on $2500 for the full period of two years, seven months and eighteen days, without allowance for credits on principal at all, which...