Merriam v. Miles
| Decision Date | 08 April 1898 |
| Docket Number | 7901 |
| Citation | 74 N.W. 861,54 Neb. 566 |
| Parties | NATHAN MERRIAM v. ANDREW MILES, EXECUTOR, ET AL |
| Court | Nebraska Supreme Court |
ERROR from the district court of Douglas county. Tried below before AMBROSE, J. Reversed.
REVERSED AND REMANDED.
Wharton & Baird, for plaintiff in error.
F. B Tiffany and W. T. Nelson, contra.
Andrew Miles and James W. Vinton, executors of the will of John L Miles, deceased, and James Thompson brought this action against Nathan Merriam, Charles T. Brown, Patrick Egan, and H. J. Cosgrove to recover on eight promissory notes for $ 1,000 each, executed by the defendants to William M. Clark and transferred to John L. Miles and James Thompson. Of the defendants, Merriam alone was served with process. As a defense he pleaded that the notes were made to Clark in part payment for a tract of land purchased jointly by the makers and were secured by mortgage on the land purchased, which was afterwards platted into lots as an addition to Lincoln; that, before the notes were sold to Miles and Thompson, Merriam, Egan, and Cosgrove sold their respective interests in the land to Brown, their co-tenant, and co-maker of the notes, who, in the deed of conveyance and as a part of the consideration assumed and agreed to pay these notes; that afterwards, for a valuable consideration, Miles and Thompson entered into a written agreement with Brown, whereby they extended the time of payment for four years, and agreed to accept partial payments on certain designated terms, and also agreed to and did release from the lien of said mortgage twenty-eight of the lots included therein; that Merriam was not a party to such agreement, and that, "as between said Brown and this defendant, this defendant was and remained only a surety upon said notes, which was well and fully understood by the said Miles and Thompson at the date of the execution and delivery of said agreement." The reply contains a peculiar negative pregnant in meeting the last averment quoted from the answer. It is as follows: "Plaintiffs deny that as to the payment of the notes set out in plaintiffs' petition Charles T. Brown became the principal and the defendant Merriam surety thereon, with the full understanding of the said John L. Miles and James Thompson at the date of the purchase of said notes." This is followed by averments that at the time of the purchase of the notes five of them were overdue and the time of payment had been extended by the then holder, and that the written agreement made by Miles and Thompson was merely in ratification of the agreement for an extension theretofore in force. The court, the case having been tried without a jury, found specially the facts almost as the defendant asserted them, but on the issue of notice to Miles and Thompson of the changed relationship between Brown and the other makers found that they had no notice thereof and did not consent thereto. On these findings it was held that Merriam was not discharged, but that he was entitled to a deduction from the amount of the notes of the value of the twenty-eight lots released by Miles and Thompson from the lien of the mortgage. Judgment was entered against Merriam for the amount thus ascertained, and Merriam has brought the case here for review. There can be no doubt of the correctness of the findings of fact, except with regard to notice. Indeed defendant in error concedes that the facts are not open to dispute except as to the change in relationship between Brown and his co-makers, and with regard to notice; and on the former issue the ultimate facts are not open to controversy. It is shown beyond peradventure that Brown bought the property and as a part of the consideration agreed to pay the debt. It is not shown that the holder of the note was a party to that contract. The only question here is as to the legal effect of those facts on the duties of the holder.
It is asserted on behalf of the plaintiffs that, unless the holder was a party to the agreement, or afterwards ratified it and accepted the new liabilities thereby created, he was not bound in any respect thereby, and could for all purposes continue to treat all the parties to the instruments as principals and deal with them on that basis. We do not think that so broad a statement of the law is warranted by reason or the authorities, although some cases are found which go to that extent. The doctrine has been frequently recognized by this court that, where one buys land incumbered by a mortgage, and covenants to pay the mortgage debt, or as part of the consideration assumes the payment thereof, his promise creates a principal obligation which the mortgagee may enforce against him. (Cooper v. Foss, 15 Neb. 515 19 N.W. 506; Keedle v. Flack, 27 Neb. 836, 44 N.W. 34; Rockwell v. Blair Savings Bank, 31 Neb. 128, 47 N.W. 641; Reynolds v. Dietz, 39 Neb. 180, 58 N.W. 89; Grand Island Savings & Loan Ass'n. v. Moore, 40 Neb. 686, 59 N.W. 115; Meehan v. First Nat. Bank of Fairfield, 44 Neb. 213, 62 N.W. 490; Green v. Hall, 45 Neb. 89, 63 N.W. 119.) It follows, as a logical consequence, that thereupon the vendor becomes in effect a surety, and the vendee the principal debtor, that is between themselves. (Paine v. Jones, 76 N.Y. 274; Huyler v. Atwood, 26 N.J.Eq. 504; Flagg v. Geltmacher, 98 Ill. 293.) Of course there can be no change without the knowledge and consent of the mortgagee which can affect his rights. He need not look at all to the vendee unless he so elects. He need surrender no rights against the vendor unless he so elects; but it by no means follows that because he is not contractually bound by the contract between them, he may, after learning thereof, enter into new relations with one of the parties, in disregard of the rights of the other. He may enforce his rights as they before existed, but if he undertakes, after notice of the changed relationship between the other parties, to deal with one of them by changing his own contractual obligations with him, he must regard the rights...
To continue reading
Request your trial