Montague v. Stelts

• Decision Date: 22 September 1892
• Citation: 15 S.E. 968,37 S.C. 200
• Parties: MONTAGUE et al. v. STELTS et al.
• Court: South Carolina Supreme Court

15 S.E. 968

37 S.C. 200

MONTAGUE et al. v. STELTS et al.

Supreme Court of South Carolina

September 22, 1892

Appeal from common pleas circuit court of Abbeville county; J. H HUDSON, Judge.

Action by C. L. Montague & Co. against In a H. Stelts and others for the foreclosure of a mortgage. From the decree entered both parties appeal. Affirmed.

Following is the report of the master, to which reference was made:

"On February 9, 1887, the defendants J. H. Holcomb and Mrs. Stelts made and delivered to plaintiffs two notes, the one for $529.78, due November 1, 1887, and the other for $531.33, due November 15, 1887, with interest after maturity at 8 per cent per annum, together with 10 per cent, as attorneys' fees in case of collection being made by suit. On the same day Mrs. Stelts executed her bond in favor of plaintiffs in the penal sum of $2,000, conditioned for the payment of the above-mentioned notes, and also executed her mortgage to secure the payment of the same. On March 19 1887, the defendants made and delivered to plaintiffs their note for $262.80, due November 1, 1887, with interest after maturity at 8 per cent., and 10 per cent, attorneys' fees in case of suit. These notes were not paid at maturity, and in 1889 were placed in attorneys' hands for collection. On February 16, 1889, an agreement for compromise was entered into between the parties, a memorandum of which was made and signed. By this agreement the defendants paid $325 cash, and agreed to pay $925 on December 1, 1889, in full settlement of balance due. The $325 was received by plaintiffs, and was applied, by agreement, to the payment of $150.13 of unsecured demands, and the balance to the note of $262.80. Said agreement stipulates that the sum of $925 should be paid on December 1, 1889, with interest after maturity at 10 per cent. per annum, payable annually, and proceeds as follows 'If the said amount of nine hundred and twenty-five dollars is not paid when due, the said C. L. Montague & Co. shall have the right to collect all that may be due them by and under the said notes and accounts, irrespective of this agreement, except as to application of payment of $325.' It further stipulates that the mortgage of Mrs. Stelts, above referred to, 'shall not in any wise be affected by this agreement, in case the said sum of $925 is not paid when due but the same shall continue of force as security for the payment of said $925, as aforesaid, and for the payment of the whole amount due, in case said compromise is not paid when due.' The defendants failed to pay the $925 on December 1, 1889, and plaintiffs brought this action to foreclose said mortgage for the collection of the whole amount due on the two notes secured by it, and also for the note of $262.80, admitting a credit of $165.87 on it. The summons is dated December 17, 1889, and appears to have been served in a day or two afterwards, the sheriff making return that he had served it on both of the defendants. It seems however, that Holcomb alone was actually served at that time Mrs. Stelts being allowed to come and answer at the June term of the court for the present year. Mr. Holcomb, immediately after he was sued, came to see plaintiffs' attorneys, and proposed to have Mrs. Stelts to assign certain

rent contracts of the land under mortgage, mounting to about $950, to the plaintiffs, provided they would allow the matter to stand just as it then was for another year. Mr. Cothran, who had charge of the case, promised to write to the plaintiffs, and submit the proposition to them. Subsequently, on the same day, Mr. Graydon, representing Mrs. Stelts, saw Mr. Cothran, and submitted the proposition on her behalf. On January 10, 1890, Mr. Cothran wrote to the plaintiffs as follows: 'Mrs. Ina H. Stelts (Martin) desires us to submit this proposition to you: She will assign rent contracts on the Martin place (covered by your mortgage) amounting to $900, if you will allow her matters to stand until sale-day in December. It is very doubtful in our minds whether the mortgaged property, if forced to sale, would bring enough to pay you and the prior mortgage. The sale cannot take place until fall, if they put in an answer, and we are decidedly of the opinion to accept the proposition. It will not interfere with the suit already begun to foreclose the mortgage, and we will take judgment at October court anyhow.' Montague & Co. replied: 'If we thoroughly understand Mrs. Martin's proposition, it strikes us as a very liberal one, and very much to our advantage, as by that means we will be able to collect $900 next fall, and, as the mortgage will be foreclosed during the fall, it certainly should make us the amount still due. We leave the matter in your hands, and, if the above is correct, as we interpret your letter, think it advisable to accept her proposition. If we are in error, please advise us.' The rent contracts were accordingly delivered to the attorneys of Montague & Co., but there was no written assignment of them. During the fall of 1890, and up to March, 1891, collections were made of the rent to the amount of $700. The contracts amounted to $951.20. Mrs. Stelts claims in her answer that the whole indebtedness to plaintiffs was satisfied by the assignment of these rent contracts, and that the failure to collect the full amount of said contracts was owing to the want of due diligence on the part of plaintiffs. It is evident that the parties, at the time when the agreement was made in pursuance of which the rent contracts were assigned to plaintiffs, were looking at the matter from different standpoints. Mrs. Stelts apparently considered the compromise of February 16, 1889, still of force, and that the amount she was bound for under that compromise was $925, which would be more than covered by the rent debt contracts for $951.20. Granting that her assumption that her debt was only $925 was correct, she overlooked the fact that it bore 10 per cent. interest, which in a year's time would increase it to $1,017.50. I do not think the view can be sustained that she assigned the rent contracts, and that plaintiffs accepted them, in payment of the debt, and, unless the transaction amounted to that, she is still liable, in the most favorable view of the case, for the balance of the $925, with interest. But the agreement of February 16, 1889, stipulated expressly that the $925 was to be paid on December 1, 1889, and the failure to pay on that day remitted the parties to their respective rights and liabilities on the contracts which were inclosed in and sought to be settled by that agreement, except as to the application of the payment of the $325, which it was stipulated should stand. That agreement expired by its own limitation, or, at most, the right to continue it was with Montague & Co., after December 1, 1889. That they did not elect to continue it is shown by the fact that they brought suit within the month for the collection of the notes and a foreclosure of the mortgage. So when Mrs. Stelts was negotiating with them to allow the matter to stand for another year, unaware, as she was, that they had already brought suit, she had in view the compromise; while they, supposing that she had been served with the papers in the case, and therefore knew their position, intended only to let the suit stand over for another year. This view of the case reconciles perfectly any apparent conflict in the testimony of Messrs. Cothran and Graydon. That Montague & Co. had the right to treat the compromise agreement as ended by the failure of the defendants to pay on December 1, 1889, and that they did so treat it, cannot, I think, admit of question.

Mrs. Stelts' liability must be determined, then, with reference to the notes and mortgage. The amounts collected on the contracts assigned to plaintiffs have been credited by them on the notes. She claims that the whole amount of said rent contracts could have been collected by the use of due diligence on the part of plaintiffs, and the balance of $251.20 uncollected thereon should be credited on her indebtedness. The contracts of the two colored men, Harris and Washington, amounting to $500, were collected in full. It does not appear that the crops of Ellis and Spruell were exhausted by the payment of the $200, collected from them. I am inclined to the opinion that proper measures at the right time would have resulted in larger collection from them. The question is whether the plaintiffs should be held liable for failure on their part so to collect. Their liability as holders of collateral security was that of bailees. They were bound to use such diligence and care as a prudent person would ordinarily use in his own affairs. I do not think that the proof shows that they did so. Their agent visited the premises once, and saw all the tenants but one. This was proper and necessary in order to give them notice. In obedience to such notice, two of the tenants promptly paid the whole of their rent. One of the others paid $100, on December 19th, while the remaining paid nothing till the following March, and then apparently at the instance of

the husband of Mrs. Stelts. I do not think it was sufficient mark of diligence to merely write these two men letters, which plaintiffs did. A more effective, while equally as plain and easy, remedy was through the sheriff's office, and, if plaintiffs had any misgivings as to their right to adopt that course as holders of the rent liens, Mrs. Stelts was near by, and ready, doubtless, to lend the sanction of her name to such a proceeding. It would have been ordinary diligence on the part of the plaintiffs to have given her notice. There is no proof that they did so. It will not do to say it was more Mrs. Stelts' interest than plaintiffs' to collect the rent. She had

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