Murphy v. Omaha Loan & Bldg. Ass'n
| Decision Date | 10 April 1942 |
| Docket Number | 31308. |
| Citation | 3 N.W.2d 403,141 Neb. 230 |
| Court | Nebraska Supreme Court |
| Parties | MURPHY v. OMAHA LOAN & BUILDING ASS'N. |
Syllabus by the Court.
1. "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.
2. Under the facts set out in the opinion, it is held that the notes and second mortgages given to secure them are the valid obligations of the mortgagors.
S. L. Winters, of Omaha, for appellant.
Morsman & Maxwell, of Omaha, for appellee.
Kennedy Holland, DeLacy & Svoboda, of Omaha, amici curiæ.
Heard before SIMMONS, C. J., and ROSE, EBERLY, CARTER, MESSMORE, and YEAGER, JJ.
Plaintiff sues to cancel some 18 notes and the mortgages securing them given to the defendant by 18 several mortgagors, and for an accounting and to recover amounts paid thereon. The trial court dismissed the plaintiff's petition. Plaintiff appeals.
Plaintiff sues as assignee of the claims of the several mortgagors. He alleges in effect that each of the 18 mortgagors were indebted to the defendant on notes secured by mortgages; that they were delinquent in their payments and facing foreclosure; that the mortgagors applied to the Home Owners Loan Corporation (hereinafter called the corporation) to refinance their loans; that the defendant agreed with the corporation to accept certain amounts in full payment of their indebtedness; that defendant, "in violation of its agreement *** and without the knowledge and consent" of the corporation, required the mortgagors, and they "reluctantly agreed," to execute to defendant notes and mortgages for additional amounts to those which defendant had agreed to accept from the corporation, before defendant would complete the transaction; and that the corporation in reliance upon the defendant's promise to accept the lesser amount loaned to the mortgagors the amount fixed in the agreements.
Defendant by answer admitted the original indebtedness of the mortgagors to it, the application to the corporation for new loans, and the second mortgages given to it; and alleged that they were freely executed and taken by the defendant with full knowledge of the corporation. Defendant further as to each mortgage set out the payments that had been made to it and pleaded the statute of limitations.
There were three parties to the transactions resulting in the refinancing of each of these loans-the mortgagors, the defendant, and the corporation.
The procedure followed in these cases was generally as follows: When a home owner desired to refinance his loan with the corporation, he consulted with the defendant and the defendant determined whether or not it would accept bonds of the corporation in payment of the amount owing to it. If so, it advised the corporation of that fact on a form furnished by the corporation entitled "Mortgagee's Consent to Take Bonds." So far as these 18 loans are concerned, such a consent agreement was signed in every instance and taken by the borrower to the corporation or sent to the corporation. The corporation then determined its course. In the 18 cases here involved the corporation was obviously unwilling to make full refunding in its bonds. The evidence is that it advised the defendant of what it would do and consultation was had. The defendant then determined what it would do. The corporation determined the conditions and the amount of the loan it would make. Where the conclusion was reached by the defendant that it would take payment of a part of its debt in the corporation's bonds and some or all of the remainder in a note secured by a second mortgage, the borrower was advised of that fact and the second mortgage was made, executed and delivered to the defendant by the borrower, and the corporation was advised of that fact. In 15 of the 18 cases here involved there is indorsed on the "Mortgagee's Consent to Take Bonds" (which had been given to the corporation prior thereto and was in its possession) an agreement of the defendant to accept corporation bonds for a stated part of the debt owing it "and second mortgage" for a stated amount.
In 17 of the 18 cases here involved (including the three not covered by indorsements on the "Mortgagee's Consent") the defendant by separate letters wrote the corporation, referring to its offer to advance a stated amount in bonds, and advised the corporation that the borrower had given it a second mortgage, stating the amount thereof, the monthly payments, the interest rate; that the defendant's mortgage recited that it was subject to a mortgage to the corporation and would not be filed for record until after the corporation's mortgage was recorded. In some of these letters the defendant demonstrated the amount of reduction that would be had by the borrower in his stated monthly payments. In the one instance where such a letter does not appear in the record the indorsement appears upon the "Mortgagee's Consent" whereby the defendant agrees to accept a stated amount in bonds and a stated amount by "second mortgage."
In every instance the mortgages by the borrowers (the plaintiff's assignors) to the corporation are dated subsequent to the letters and indorsements above referred to by which the corporation was notified that defendant had taken second mortgages for a determined amount in addition to the bonds it expected to receive from the corporation.
After the new mortgages to the corporation and the defendant had been made (and in 16 of the 18 cases after the mortgages to the corporation had been recorded) the defendant in each of the 18 cases executed a receipt to the corporation, on its form "of authorization for delivery of Home Owners Loan Corporation bonds in the amount of $______, accrued interest on bonds $______ and $______ in cash in full payment of amount due the undersigned as lien holder in the matter of the loan of ______, refunded by the above corporation." (In each instance the blanks were filled in for the particular loan.) The plaintiff offered these receipts in evidence. The defendant objected that they were immaterial. The trial court sustained the objection. Plaintiff assigns that as error. In order that we may have the entire factual condition before us, we will consider that the receipts are in evidence for whatever value they may have in reaching a conclusion in the situation presented by this record.
Certain other facts should be mentioned. Early in the history of the corporation and before any of these 18 cases had gone beyond the initial stages the defendant by letter inquired of the corporation as to the taking of second mortgages and was advised, through channels, by the corporation's general counsel, that the corporation had "no means of preventing" it; that if the corporation could not advance the full amount of the indebtedness the "mortgagee may take a second" for the excess, the corporation's managers having been instructed, however, "not to negotiate such loans unless the second mortgage *** is so arranged *** that the home owner may reasonably be expected" to meet his obligation. The plaintiff introduced rules, regulations and instructions which he claims superseded this letter, about which more will be said later.
While all of them did not testify, it is a fair conclusion that the borrowers (plaintiff's assignors) were all in financial difficulty; that they might not have known of the indorsements on the "Mortgagee's Consent" agreements nor of the receipts by which the defendant received the corporation bonds. It, however, is clearly established that they all knew they were refinancing their delinquent indebtedness on their homes; that the corporation had a first mortgage, the amount thereof, and that the proceeds (after agreed deductions) were to be paid to the defendant; that the defendant had a second mortgage, the amount thereof, and that they were obligated on both mortgages which they had executed in payment of the prior indebtedness to the defendant.
These transactions were all handled in the Omaha office of the corporation. It is clear that the corporation, so far as its officers in its Omaha office are concerned, before the mortgages to it were executed, had full knowledge of the fact that defendant had taken these second mortgages, that they cooperated with the defendant in working out the problem of the delinquent mortgagors (plaintiff's assignors) and accepted their mortgages and paid out their bonds and cash and closed the transaction with full knowledge of the fact that the borrowers had executed and delivered these new obligations and securities to the defendant. In three of these cases after the transactions were closed the corporation asked the defendant to waive its priority rights under its second mortgage in order that advances might be made for the reconditioning of the property.
A considerable part of the evidence in this record came from the files of the corporation and was produced by the officer in charge. He testified that "tons" of their records had been destroyed and that there was nothing in the file which he had in court showing that the corporation consented to the second mortgage. The record establishes that there was no fraud, no duress, no over-reaching, no secrecy no collusion, no withholding of information, and no misleading...
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