Owings v. McKenzie
| Decision Date | 10 March 1896 |
| Parties | Owings et al., Appellants, v. McKenzie et al |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. J. H. Slover, Judge.
Reversed and Remanded.
Peak & Ball for appellants; W. M. Williams and R. L. Yeager of counsel.
(1) The relation of principal and surety exists as between the maker of the notes and the grantees who assume and agree to pay. As to the holder of the notes, both maker and grantees are principal debtors and an extension does not release the original debtor. Ins. Co. v. Mayer, 8 Mo.App. 18; Brown v. Kirk, 20 Mo.App. 524; Corbet v Waterman, 11 Iowa 86; Shepherd v. May, 115 U.S 505; Circullu v. Heinandez, 103 U.S. 105; Rey v Simpson, 22 How. 341; Waters v. Hubbard, 44 Conn. 340; Boardman v. Laribee, 51 Conn. 39; Crawford v. Edwards, 33 Mich. 353; James v. Day, 37 Iowa 164; Marsh v. Pike, 1 Sanford, Ch. 210. (2) Whenever a debt is due, the debtor is bound to pay on demand. The note in suit was not "due" on default in the payment of the first note, because the debtor was only bound to pay the note due by its face. The maturity of both notes was only for the purpose of enforcing the deed of trust and disposing of the collateral. Morgan v. Martin, 32 Mo. 438; Hurck v. Erskine, 45 Mo. 484; Wheelan v. Riley, 61 Mo. 565; Phillips v. Bailey, 82 Mo. 639; Hough, J., in Noell v. Gaines, 68 Mo. 649. (3) In any case the default would not have the effect of making the other note due for any purpose except at the election of the holder. She did not, and was not bound to, declare it due. Noell v. Gaines, 68 Mo. 649; 1 Jones on Mortgages [4 Ed.], sec. 742, and cases cited. (4) Each note is a separate and distinct cause of action, capable of separate ownership, whether secured or not; and the rule that all papers composing a part of one and the same transaction are to be regarded as one entire contract does not apply to the case of a promissory note secured by a deed of trust. It would destroy all negotiable paper, if the rule applied. Hagerman v. Sutton, 91 Mo. 519; Mayes v. Robinson, 93 Mo. 114; Jennings v. Todd, 118 Mo. 296; Horn v. Bennett, 34 N.E. 956.
Cook & Gossett and Warner, Dean, Gibson & McLeod for respondents.
(1) The grantee in a deed to property incumbered by a mortgage or deed of trust, who, by the terms of the conveyance to him, assumes the payment of the indebtedness secured by the mortgage or deed of trust, becomes, as soon as the mortgagee knows of the arrangement, primarily liable to the mortgagee for the debt for which the mortgagor was already liable, and the relation of the grantor and grantee toward the mortgagee, as well as between themselves, is thenceforth that of principal and surety for the payment of the mortgage debt, and any agreement for the extension of the time of payment of the debt, made between the mortgagee and the grantee, or any alteration of the original contract, releases the grantor from liability upon the debt. Jones on Mortgages [4 Ed.], sec. 741; Pomeroy's Equity Jurisprudence, sec. 1206; Ins. Co. v. Hanford, 143 U.S. 187; Calvo v. Davies, 73 N.Y. 211; Jester v. Sterling, 25 Hun, 344; Fish v. Hayward, 28 Hun, 456; Paine v. Jones, 76 N.Y. 274; Bank v. Wood, 56 Mo.App. 214; George v. Andrews, 60 Md. 26; Stove Works v. Caswell, 48 Kan. 689. (2) Where, even, the land is conveyed subject to the mortgage, the grantee incurring no personal liability thereon, if the mortgagee, by a valid agreement with the grantee, extends the time of payment of the mortgage debt without the consent of the mortgagor, the mortgagor is discharged from liability to the mortgagee to an amount equal to the value of the land at the time of such extension. Murray v. Marshall, 94 N.Y. 611; Spencer v. Spencer, 95 N.Y. 353. (3) It is immaterial whether the extension may or may not prejudice the surety. If made without his consent he is discharged. Sloan v. Latimer, 19 S.E. (S. C.) 491. (4) The notes and deed of trust formed part of one and the same transaction, and must be construed together. Pingrey on Mortgages, sec. 1534; Jones on Mortgages [4 Ed.], sec. 1179; Gregory v. Marks, 8 Biss. 44; Schoonmaker v. Taylor, 14 Wis. 313; Buchanan v. Ins. Co., 96 Ind. 520. (5) The note here sued on came due for all purposes. Noell v. Gaines, 68 Mo. 649; Detwiler v. Breckincamp, 83 Mo. 45. (6) With respect to payment, the surety's rights are exactly those of the principal debtor. With respect to the rights he acquires by such payment to the creditors, they are exactly those, by subrogation, of the creditor. If the creditor has extended a debt and the surety pays it before due, he can not sue the debtor until due, and an extension, for that reason, without his consent, releases him. Benne v. Schnecko, 100 Mo. 250; Dozier v. Lewis, 27 Miss. 679; Brandt on Suretyship, p. 261; Allison v. Sutherlin, 50 Mo. 274; Mahew v. Boyd, 5 Md. 102. (7) The law is well settled that where, upon a view of the whole record, it is manifest that the judgment is for the right party, it will not be reversed even if errors may have intervened. Bassett v. Glover, 31 Mo.App. 150; Kartjorn v. Seimers, 29 Mo.App. 271; Vaughn v. Daniels, 98 Mo. 230.
This is a suit by plaintiff, the original payee in a note secured by deed of trust on land, for a personal judgment against the maker thereof and his grantees who purchased the property securing the note agreeing as a part of the consideration for such conveyance, to assume the payment of the notes in suit together with another note mentioned in the deed of trust. We give the following facts of the case (as same appear in appellant's statement), that the origin, history, and nature of the transaction between the contending parties may be fully understood.
Plaintiff, Mrs. Owings, in November, 1886, sold a tract of land to defendant McKenzie; and for a balance of the purchase money McKenzie gave her his two promissory notes for equal amounts, one maturing in two years and the other in three years after date, secured by a deed of trust on the property. Before the maturity of these notes, McKenzie sold the property to his codefendants, Tilhof, Green, and Muehlbach, and they in turn sold to Canine, both deeds being made subject to the prior deed of trust, and the respective grantees assumed and agreed to pay the notes as a part of the consideration of the conveyances. The deed of trust contained the usual provision that, if default be made in the payment of either note, or any interest thereon, according to the terms thereof, then both of said notes should become immediately due and payable, and the trustee, at the request of the legal holder of said notes, might proceed to sell, etc. At the time the two year note matured, Canine was the owner of the property, and shortly thereafter, by agreement between him and Mrs. Owings, this note was extended for three months, but there was no valuable consideration for this extension. After its expiration, the time of payment of the unpaid balance on this note was again extended three months, to May 27, 1889, in consideration of one per cent additional interest.
After both notes had matured by their face, the trustee, at the request of plaintiff, was about to sell the property, when Canine, in order to stop the sale, agreed to pay, on account of costs and accumulated interest, the sum of $ 500, and at the time put up $ 100 of the amount. Plaintiffs, after waiting for a week for the balance of said sum, again ordered a sale, which was made in May, 1891. All of the defendants were represented at the sale. The proceeds of the sale paid the costs, paid the two year note in full, and paid a part of the three year note. This suit was brought on the three year note, to recover the unpaid balance thereof.
Defendants' answers pleaded an extension by agreement between plaintiff and Canine of both notes, for a definite time, and for a valuable consideration, without defendants' knowledge or consent. Also that the property was much more valuable at the time the notes were given and the extension made on the first or two years note than it was at the time the property was sold under the deed of trust.
On this issue the trial court refused to hear defendant's evidence. The record does disclose, however, that the property was originally sold by McKenzie to Green and Tilhof for the sum of $ 14,000 and of this sum the two notes of $ 3,760 each were a part of the consideration, and that at the trustee's sale the property only brought $ 3,500. The evidence showed an extension, as stated, of the two year note, but that no agreement was ever made relative to the extension of the note in suit.
One instruction for plaintiff was refused to the effect, "that although the two year note was so extended, yet this did not relieve the defendants from liability on the note in suit;" and for the defendants McKenzie, Tilhof, and Muehlbach who alone filed answers, a corresponding instruction stating the proposition in the affirmative, as follows, was given:
...
To continue reading
Request your trial