Piester v. Piester

• Decision Date: 10 January 1885
• Citation: 22 S.C. 139
• Parties: PIESTER v. PIESTER.
• Court: South Carolina Supreme Court

22 S.C. 139

PIESTER v. PIESTER.

Supreme Court of South Carolina.

January 10, 1885

1. A sealed note payable one day after date, " with interest at the rate of two per cent. a month," carries the stipulated rate of interest after maturity.

2. A subsequent creditor for valuable consideration without notice of an unrecorded mortgage is protected by the act of 1843 not only as to the land covered by the mortgage, but also as to the general assets of the estate of the mortgagor after his decease.

3. Proceedings in the Probate Court and an order therein directing a sale and requiring a mortgage for the purchase money, do not constitute constructive notice of an unrecorded mortgage taken pursuant to such order.

4. A mortgage as such has no precedence in the administration of the estate of one deceased, except to the extent of its specific lien upon the property mortgaged; that being exhausted, it ranks according to the grade of the demand secured thereby. Kinard v. Young , 2 Rich. Eq. , 258, approved, and Edwards v Sanders , 6 S.C. 316, reversed.

Before HUDSON, J., Newberry, November, 1883.

The opinion fully states the case.

Messrs. Suber & Caldwell , for R. H. Wright.

Mr. Geo. S. Mower , contra.

OPINION

MR JUSTICE MCGOWAN.

This was an action in the nature of a bill to marshal the assets of David B. Piester, who died intestate in 1873. In his life-time, November, 1869, the intestate executed a mortgage of 400 acres of land to John T. Peterson, probate judge for Newberry County, to secure his bond as guardian of Laura Lake, and on December 21, 1869, he executed another mortgage of the same land to the said judge of probate, to secure his other bond as guardian of Robert G. Lake. The intestate had been appointed guardian of these minors, upon his own ex parte petition in the said Probate Court.

These mortgages were not recorded in the register's office of the county until August 7, 1872; and in the meantime, April 7, 1871, the intestate having borrowed money from Robert H. Wright, in order to secure it, executed a sealed note to him as follows: " $400.00. One day after date I promise to pay to the order of R. H. Wright four hundred dollars, with interest at the rate of two per cent. per month, for value received. Witness my hand and seal, 7th August, 1871. (Signed) D. B. Piester. [L. S.]" Wright had no actual notice of either of the mortgages at the time he loaned the money and took the above note, or indeed until they were produced in this action in 1884. The Circuit judge ruled that the Wright note bore interest after as well as before maturity, at the rate of two per cent. per month; and, second, that the guardianship bonds should rank equally with the Wright note (all being specialty debts) as to the 400 acres of land embodied in the mortgage; but that the guardianship bonds should, under the act of 1789, take precedence as " debts of mortgage" over the mere specialty demand of Wright, as against Piester's general estate outside of the mortgage.

The parties appeal to this court upon two grounds: First . That his honor, the Circuit judge, committed error in allowing interest on the Wright note after its maturity at a greater rate than seven per cent. per annum. Second . That his honor, the Circuit judge, erred in not allowing the demand based upon the sealed note of Wright to rank equally with the guardianship bonds in regard to the general estate of the intestate Piester.

I. In regard to the interest on the Wright note, we concur with the Circuit judge that it should bear interest as specified after it fell due. It is well settled by numerous cases that in general an obligation to pay interest at any other rate than seven per cent. per annum only carries that interest to the date of its maturity, unless the obligation contains an agreement of the parties that the peculiar rate shall run as well after as before maturity, if this latter is also provided for. And whether the obligation expresses such agreement is simply a matter of construction. Langston v. R. R. Co. , 2 S.C. 248; Briggs v. Winsmith , 10 Id. , 133; Sharpe v. Lee , 14 Id. , 341.

Do the terms of the note in this case, properly construed, contain such an agreement? We think they do. The phrase " one day after date" is generally adopted to express a due note, and it seems unreasonable to suppose that the parties intended that the note should bear interest only for one day, if so much. But without putting much stress on this, it is a well-recognized rule of construction that every word, if possible, should have attached to it some meaning. The note really does not bear interest at all until the day after its date, April 8, 1871, when it fell due. There is no such expression as " " interest from date," but the words are " one day after date, with interest at the rate of two per cent. per month."

It is a mistake to suppose that the case of Briggs v. Winsmith , 10 S.C. 133, was in this respect similar. The report of that case shows that the note was payable twelve months after date, " with interest from date at the rate of twelve per cent. per annum." As this note has no such statement, the interest indicated could only begin to run on the day of its maturity. " The general rule is that when a sum is liquidated and ascertained and to be paid on a day certain, without any reference to the subject matter of the contract, interest is allowed from the day fixed for payment. It is a compensation by way of damages for the detention of another's money after the time at which by law or contract it should have been paid." Schmidt v. Limehouse , 2 Bail. , 276. The words " per month" may possibly have reference only to the rate and not the time, but, as we have seen, it could only be the time after the maturity of the note, the interest to accrue thereafter.

II. As to the rank of the bonds to the probate judge to secure which the mortgages not registered within time were given. The act of 1843 provides that " no mortgage or other instrument of writing in the nature of a mortgage of real estate shall be valid so as to affect the rights of subsequent creditors or purchasers for valuable consideration without notice, unless the same shall be recorded in the office of the register of mesne conveyance for the district wherein such real estate lies within sixty days from the execution thereof," & c. There can be no doubt that in 1871, when Wright loaned his money and received the note of the intestate (Piester), he became a subsequent creditor for valuable consideration without notice of the mortgages, which were not recorded until August 7, 1872. There is no allegation that he had actual notice.

It is insisted, however, that constructive notice would suffice, and he must be charged with that, for the reason that these mortgages were executed under an order made in a case in the Probate Court, which being a court of record, all the world must take notice of what transpired therein. There are several answers to this view, but it cannot be necessary to do more than to refer to the express terms of the act of 1843, which declares mortgages " invalid as against subsequent creditors for valuable consideration," unless the same shall be recorded in the office of the register of mesne conveyance, & c.; which was not done until after Wright's debt was contracted, and the case does not belong to that class which holds that actual notice supersedes the necessity for recording.

Assuming, then, that Wright was a subsequent creditor without notice of the mortgages, they were as to him " invalid," and, as we think, he stands precisely as if they had never been given. The Circuit judge admits this, so far as concerns the alleged lien on the 400 acres of land covered by the mortgages. He says: " The act of 1843 declares that mortgages shall not be valid, so as to affect the rights of subsequent creditors without notice, unless recorded in sixty days after execution. It is conceded that if these mortgages had been recorded before Wright's note arose, though later than sixty days after execution, this would have constituted constructive notice. But this was not the case, and as the act declares them ‘ invalid’ so as to affect the rights of one in Wright's position, it seems impossible to escape the conclusion that these mortgages cannot affect Wright's claim as to the estate of the debtor therein conveyed. The terms are broad and sweeping, but they necessarily restrict the operation of such mortgages to the property specifically...