Portland Mortgage Co. v. Horenstein

• Decision Date: 20 June 1939
• Citation: 162 Or. 243,91 P.2d 533
• Parties: PORTLAND MORTGAGE CO. <I>v.</I> HORENSTEIN ET AL.
• Court: Oregon Supreme Court

162 Or. 243

91 P.2d 533

PORTLAND MORTGAGE CO.v.

HORENSTEIN ET AL.

Supreme Court of Oregon.

Argued June 6, 1939.

Reversed June 20, 1939.

Mortgages — Extension agreement — Consideration

1. A mortgage extension agreement which did not obligate mortgagors to do more than they were required to do under terms of original mortgage and which was entered into after original mortgage debt was due and by which mortgagors merely promised to pay portion when they were already obligated to pay the whole was not supported by sufficient consideration to support a promise of mortgagee to reduce the principal or to accept payments of lesser sums extending over a period of years before foreclosing its mortgage.

Compromise and settlement — Consideration

2. An agreement to take less than the whole amount of a liquidated claim is not supported by sufficient consideration and is unenforceable.

Mortgages — Extension agreement — Consideration

3. Where mortgagors alleged that under extension agreement mortgagee agreed to reduce principal and to accept payments in lesser sums extending over a period of years before foreclosing its mortgage and foreclosure suit was tried upon theory that extension agreement was void for lack of consideration, burden was on mortgagors to show that contract was valid and not on mortgagee to show its invalidity.

Accord and satisfaction — Consideration

4. Accords must be supported by sufficient consideration.

Mortgages — Extension agreement — Consideration

5. Where mortgage extension agreement entered into after mortgage debt was due was not supported by sufficient consideration, it was error to refuse mortgagee right to foreclose the mortgage.

Mortgages — Costs

6. Where trial court erroneously denied mortgagee right to foreclose mortgage unless mortgagors failed to comply with certain provision of void extension agreement, mortgagee could not recover costs either in supreme court or trial court under the particular circumstances.

                  See 1 Am. Jur. 235
                  41 C.J. Mortgages, § 942
                

In Banc.

Appeal from Circuit Court, Multnomah County.

ROBERT TUCKER, Judge.

Suit to foreclose a mortgage by Portland Mortgage Company, a corporation, against H.M. Horenstein and others. From an adverse decree, plaintiff appeals.

REVERSED.

Nicholas Jaureguy, of Portland (Cake, Jaureguy & Tooze, of Portland, on the brief), for appellant.

John F. Logan and D.P. Price, both of Portland, for respondents.

RAND, C.J.

This is a suit for the foreclosure of a real estate mortgage given on July 27, 1928, by H.M. Horenstein and wife to plaintiff's assignor, the Equitable Savings and Loan Association. By its terms, it became due and payable on July 20, 1933. The mortgage was given to secure a loan of $45,000 and was to bear interest at the rate of 6 per cent per annum payable quarterly. Among other things, the mortgage stipulated that the mortgagors should pay all taxes, assessments and other charges levied against the land, keep the building thereon in good repair and insured against loss by fire in an amount equal to the amount due under the mortgage, and that, upon their failure to pay such taxes, assessments and premiums on insurance policies, the mortgagee, at its option, may pay the same and that the amounts so paid shall be a lien under the mortgage and bear interest at the rate of 10 per cent per annum.

The complaint in this suit was filed on May 8, 1936. At that time no part of the principal sum had been paid although overdue for nearly three years. The mortgagors were also in default in the payment of interest and in failing to pay the taxes for the years 1930 to 1936, both inclusive, which unpaid taxes amounted to some $15,000, and, in failing to repay the mortgagee various sums of money which it had paid out for insurance premiums and for taxes for years other than those above specified, and also in failing to pay certain assessments levied against the mortgaged property by the city of Portland, all of which they were obligated to pay under the terms of the mortgage.

On September 10, 1936, after the filing of the complaint and before any action had been taken thereon, the plaintiff, the then holder of the mortgage, entered into an agreement in writing with the mortgagors wherein it was agreed that, upon payment by the mortgagors of $10,000 in cash and the immediate payment by them of the taxes levied against the property for the year 1936 and their subsequent fulfillment of other promises contained in the writing, all of which they were obligated to do under the mortgage, the plaintiff would suspend the prosecution of the foreclosure suit until July 1, 1941, and would reduce the principal sum secured by the mortgage from $45,000 to $37,500 and also give credit on the reduced principal for the $10,000 paid.

It was further stipulated in the agreement that if the mortgagors should fail to comply with any of the conditions contained in the agreement, the mortgage should be reinstated for the full amount of the principal as if no reduction had been had and that the mortgage might be foreclosed in the pending suit at any time thereafter.

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