Philips v. Crips

• Decision Date: 25 May 1899
• Parties: PHILIPS v. CRIPS ET AL.
• Court: Iowa Supreme Court

108 Iowa 605

79 N.W. 373

PHILIPS

v.CRIPS ET AL.

Supreme Court of Iowa.

May 25, 1899.

Appeal from district court, Wapello county; Frank W. Eichelberger, Judge.

Action for judgment on a note of $10,000, dated April 3, 1893, and payable in five years, on which three semiannual interest payments had been made, and also to foreclose a mortgage securing the same. The mortgage contained a condition that the note should become due on failure to pay the interest promptly. The answer set up that the note had been materially and fraudulently altered by changing the rate of interest from 7 to 8 per cent., by reason of which it became void, and the defendants pray to go hence with their costs. In reply the plaintiff admitted having changed the rate of interest in the note, as alleged, but averred that such change was made innocently, and in pursuance of an understanding had with the payors. There was a decree for plaintiff as prayed. The defendants appeal. Affirmed.W. S. Coon and E. E. McElroy, for appellants.

McNett & Tisdale, for appellee.

LADD, J.

The plaintiff changed the rate of interest from 7 to 8 per cent. in the $10,000 note, dated April 3, 1893, and secured by mortgage, by drawing two lines through the “seven,” with ink of a coloring different from that in the body of the note, and writing “eight” above it. No effort whatever was made at concealment. This was done immediately after receiving the $400 check from the defendants, April 16, 1894, and, as plaintiff insists, in pursuance of an agreement that it should be so changed, made the previous December. Interest at the rate of 7 per cent. per annum up to October 3, 1893, had been paid in January, 1894. In December of 1893, by an arrangement with the defendants and the First National Bank of Ottumwa, the plaintiff undertook to carry an additional loan of $10,000, secured by second mortgage on the same property. The details of the transaction need not be set out, further than to say the plaintiff claims it was then agreed the note secured by the first mortgage was to be changed so as to bear 8 per cent. interest, and those secured by the second mortgage were to bear 7 per cent. only, and that by some oversight or mistake the first note was not changed, and the last were erroneously prepared to bear 8 per cent., instead of 7 per cent., as agreed. The defendants, on the contrary, insist that the first note was not mentioned or discussed, and that the notes secured by the second mortgage were prepared in accordance with the understanding then had. It may be added that the material difference in these contentions is something over $50 in interest, resulting from the fact that the notes secured by the second mortgage mature earlier than the first note. A detailed review of the evidence will serve no useful purpose. We shall only mention several interest payments, which seem very decisive in this controversy. The interest on all these notes was payable semiannually. That the check of $400 given April 16, 1894, was in payment of interest on one of these loans is not disputed. At that time interest on the first note was overdue 13 days, and that on the notes secured by the second mortgage would not be payable until June 20, 1894. On which did defendants intend it should be applied? If on the first note, then they must have proposed to pay interest as plaintiff insists was agreed. Their circumstances were not such as to lead any one to suspect an intention to pay interest in advance. With plaintiff it was always in arrears. Again, they gave a check for $350, in payment of interest, July 10, 1894. At that time the installment on the second mortgage notes had been overdue since June 20, 1894, and that on the first note would not mature until October 3d following. On which did they intend this to be applied,--that due or to become due? If on that which was due, then they only proposed to pay interest at the rate of 7 per cent....