Maxwell v. Provident Mut. Life Ins. Co. of Philadelphia

• Decision Date: 11 February 1935
• Docket Number: 25242.
• Citation: 41 P.2d 147,180 Wash. 560
• Court: Washington Supreme Court
• Parties: MAXWELL v. PROVIDENT MUT. LIFE INS. CO. OF PHILADELPHIA.

41 P.2d 147

180 Wash. 560

MAXWELL v. PROVIDENT MUT. LIFE INS. CO. OF PHILADELPHIA.

No. 25242.

Supreme Court of Washington, En Banc.

February 11, 1935

Appeal from Superior Court, King County; James T. Lawler, Judge.

Action by J. W. Maxwell against the Provident Mutual Life Insurance Company of Philadelphia. From a judgment of dismissal plaintiff appeals.

Reversed and remanded, with direction.

Almon Ray Smith and Charles E. Congleton, both of Seattle, for appellant.

York &amp York, of Tacoma, for respondent.

MILLARD Chief Justice.

Plaintiff purchased certain Seattle real property subject to a mortgage; that is, he did not assume payment of the mortgage debt. Plaintiff sold the property back to his grantors on an installment sale contract. He made a written offer to pay $1,106.90, and delivered his check therefor, to defendant mortgagee of the property, in consideration of extension of time of certain payments until maturity of the mortgage four years later. The mortgagee immediately cashed the check, and twenty-four days thereafter made a written counter proposal to which plaintiff never replied. The time of payment of the installments, in consideration of which plaintiff paid $1,106.90 to defendant mortgagee, was not extended to date of maturity of the mortgage. Within ten months following its counter proposal, defendant mortgagee foreclosed the mortgage. One year subsequently, on the ground that the consideration therefor had failed, plaintiff instituted this action against defendant mortgagee to recover the conditional payment of $1,106.90. Defendant denied that the money was paid conditionally, and as an affirmative defense pleaded the foreclosure decree as res adjudicata of the present action. Finding in favor of the defendant on the grounds of estoppel and res adjudicata, the trial court said: 'I have decided to rest my decision on two counts--that of estoppel and res adjudicata. The plaintiff remained silent when he should have spoken. He knew, or should have known, that the plaintiff in the foreclosure suit (defendant in this suit) had credited him with this payment of $1,106.90, and he should have asserted his defense, if any, in that suit. At no time until this suit was instituted was any demand made by plaintiff for a return of this money. He is therefore estopped. This foreclosure suit, and the findings conclusions and judgment entered therein, are res adjudicata of the claim sought to be recovered in this action. This doctrine of res adjudicata applies, in my opinion, with equal force whether the defendant appeared and contested the suit, or withdrew his appearance and allowed judgment to go by default. * * * The rule is that in an action between the same parties, a judgment therein is res adjudicata as to all points in issue, and also all points that might have been raised and adjudicated. * * * The mere fact that J. W. Maxwell, plaintiff in this suit, did not tender the issue as to the $1,106.90 in the foreclosure suit can afford him no relief in this suit for the reason that he had the opportunity to tender such issue but formally withdrew his appearance and defaulted.'

Judgment of dismissal was entered. Plaintiff appealed.

Counsel for respondent contend that payment by appellant was a voluntary payment which cannot be recovered, that appellant's acquiescence, until the commencement of this action, in respondent's application of the payment differently from the direction of appellant, precludes impeachment of the transaction, and that all questions as to the application of the payment to satisfaction of interest then due on the mortgage were adjudicated and foreclosed by the foreclosure action.

The facts, which are as follows, clearly show that the money was conditionally paid by appellant to respondent for an extension of time of payment of two installments of the principal; that such extension of time was not made; that appellant is not, by acquiescence in, or assent to, respondent's application of that money differently from appellant's direction, estopped to question such use of the payment; and that the judgment in the foreclosure action is not res adjudicata of appellant's right to a recovery in this action:

Rose Blyer and husband purchased an apartment house in Seattle from Stephen Berg. On October 14, 1925, the Blyers made and delivered to respondent eight negotiable promissory notes for a loan of $45,000. The notes were payable in seven annual principal installments of $2,500 each, commencing October 14, 1928, and one installment of $27,500 payable October 14, 1935, with interest payable semiannually. To secure the payment of their notes, the Blyers executed and delivered to respondent a mortgage on their apartment house. By their deed, which was placed of record October 19, 1925, the mortgagors (Rose Blyer and husband) conveyed the title to the mortgaged property to appellant, subject to the mortgage of $45,000; that is, there was no assumption by appellant, Blyers' grantee, of the mortgage debt. Appellant thereupon transferred the apartment house to the Blyers on an installment contract of sale; Berg's interest therein being acquired by appellant. At the time of the foreclosure of the mortgage, to which we will refer later, there was a balance of $15,000 due to appellant on the contract. We gather from the testimony of appellant that he bought the contract under which the Blyers purchased the property from Berg; that, for the purpose of financing the purchase, the property was transferred to the Blyers who borrowed thereon $45,000 from respondent; that the Blyers deeded the property to appellant subject to the mortgage; and that appellant then sold or resold the property to the Blyers on an installment sale contract. It should be borne in mind that the property was conveyed to appellant subject to the mortgage to respondent, but that there was no assumption or agreement on the part of appellant to pay the mortgage. The record shows that the Blyers, who alone were obligated to pay the mortgage, were at all times in possession of the property until shortly prior to foreclosure of the mortgage, when they transferred their contract to Oka Hannam, who took, and remained in, possession of the apartment house until foreclosure of the mortgage. For some time after foreclosure, Oka Hannam was in possession of the apartment house as respondent's agent.

The mortgage required punctual payment, when due, of the principal installments, interest, and taxes, and provided that, in case of default, the whole mortgage debt should become due, at the option of the mortgagee, and the mortgage foreclosed. The Blyers defaulted in payment of the installments due October 14, 1930, and October 14, 1931. The Blyers also defaulted in the payment of the semiannual interest of $1,100 due October 14, 1931. Negotiations between the parties respecting extension of time of payments culminated in a written offer November 18, 1931, by appellant to respondent to pay the semi-annual interest of $1,100 due October 14, 1931, plus interest of $6.90 thereon from due date of October 14, 1931, to date of offer. The offer to pay the overdue interest was conditioned on extension of the time of payment of the two delinquent principal installments to October, 1935, maturity date of the mortgage. The letter making the offer and transmitting the check in payment of the delinquent interest reads as follows:

'Enclosed you will find my check for $1,106.90, payable to your order. This check is being sent to you and is to be accepted under the following conditions:

'It is to pay the semi-annual interest on the Rose Blyer $40,000 mortgage that was due on October 14, 1931, together with additional interest on the $1,100.00 from that date until this. This payment is being made only with the understanding that the two payments now due on the mortgage--one for $2,500.00 which was due October 14, 1930 and one for $2,500.00 due October 14, 1931, are to be extended until the maturity of the note; in other words, to be in a measure, a baloon payment at maturity.

'The taxes are being paid in the same way that they have been the last few years and have every reason to believe that Before the next are due, that the 1930 taxes will be paid in full.'

The check was cashed immediately by respondent, and the amount thereof applied to the payment of the semiannual interest due October 14, 1931. However, there was no compliance with the conditions on which the payment was made. Under date of December 12, 1931, twenty-four days after appellant made the conditional payment, the respondent made the following written counter proposal to appellant:

'I have been very slow in reporting to you in regard to the interest and principal payments in the Blyer case because there has been some little difficulty in arranging just what you want.

'The Company is not willing to extend principal installments where that extension will carry them more than six years beyond the due date, although that six year period might not overreach the maturity of the mortgage and I finally suggested to Mr. Weed and he has agreed as follows:

'He authorizes me to write you that providing during the term of the Blyer mortgage at least $2,500.00 is paid on account of principal on or Before the 14th. day of October of each year beginning 1932 they will apply that $2,500.00 in payment of the longest overdue principal note and they will not require payment of more than one installment each year. Of course this is providing the other requirements of the mortgage are fulfilled in regard to payment of interest, taxes, assessments etc., and I believe this proposition entirely fulfills the conditions on which you made this last interest payment.

'The only other condition that...