Reynolds v. Price

• Decision Date: 01 May 1911
• Parties: REYNOLDS v. PRICE.
• Court: South Carolina Supreme Court

71 S.E. 51

88 S.C. 525

REYNOLDS v. PRICE.

Supreme Court of South Carolina

May 1, 1911

Appeal from Common Pleas Circuit Court of Sumter County; Geo. W Gage, Judge.

"To be officially reported."

Action by Mark Reynolds against Margaret O. Price. From the judgment, plaintiff appeals. Reversed.

R. O Purdy and R. W. Shand, for appellant. L. D. Jennings and Geo D. Levy, for respondent.

HYDRICK J.

This action was brought to foreclose a mortgage given by defendant to plaintiff to secure her bond, dated December 19, 1905, for $600, payable one year thereafter, for the balance of the purchase money of the lot mortgaged. The mortgage secured the payment of all reasonable attorney's fees, costs, and charges, in case it should be placed in the hands of an attorney for collection or foreclosure, or was collected by legal proceedings, and all other debts due and owing to the mortgagee by the mortgagor. The defendant pleaded tender. The circuit court held that the tender was sufficient to cover the amount actually due, and, under the authority of Salinas v. Ellis, 26 S.C. 337, 2 S.E. 121, held the lien of the mortgage discharged. Plaintiff had judgment for the amount found due by the master at the date of tender, but was denied the right to judgment of foreclosure.

To a correct understanding of the case, a brief statement of the circumstances under which the tender was made and refused is necessary. A custom prevails at the Sumter bar to charge what is called a renewal fee of $2 for extending the time of payment of a loan for any definite period beyond the date of maturity. The circuit decree says that it was stated at the bar that such charge is always made and always paid. This loan was so renewed at maturity in 1906, and again in 1907; the defendant having agreed to pay the renewal fees. In the early fall of 1908, plaintiff notified defendant, who resided in Columbia, that he would require payment of the loan at maturity. He received no response until December 28th, when defendant's husband --who acted as her agent throughout the transaction--wrote him, asking a few days' indulgence. Thereafter he wrote plaintiff several letters, excusing the delay in paying the debt, and asking further indulgence. In the meantime several persons had seen plaintiff, at defendant's request, with the view of taking up the debt. Finally, on February 3, 1909, Mr. Geo. D. Levy, a member of the Sumter bar, called upon plaintiff, who is also a member of that bar, and told him that he represented the defendant, and wanted to take up her mortgage debt. At that time it was Mr. Levy's intention to pay plaintiff the amount due him, and take an assignment of the bond and mortgage to himself, until new papers could be executed to him by defendant. He informed plaintiff of his intention, and plaintiff told him it would be agreeable to him. Whereupon, at his request, plaintiff gave him a statement of the amount due, which contained an item of $4 for two renewal fees, and one of $10 for attorney's fee.

At that time plaintiff had already prepared the summons and complaint in foreclosure, which he had signed in his own name, as attorney for plaintiff, and so informed Mr. Levy. Looking at the statement, Mr. Levy called plaintiff's attention to the item of $10, and told him he thought it unusual to make that charge. Plaintiff replied: "Well, that is my charge. If you want the papers, you will have to pay it." On the next day Mr. Levy took the amount due, according to plaintiff's statement, less one renewal fee of $2 and the attorney's fee of $10, and went first to the office of Mr. Harby, another attorney, where they counted the money, and taking Mr. Harby, as a witness to the tender, they went to plaintiff's office, and Mr. Levy told plaintiff that he had come "prepared to take up the mortgage," but that he was instructed by his client to refuse to pay the $2 renewal fee and $10 attorney's fee. Plaintiff replied: "Well, sir; you can't get it." Mr. Levy then said: "I desire to comply with the law and stop interest on this money, and I herewith tender you the amount of your statement, less $12." The tender was refused. It appears from the testimony that Mr. Levy had no authority from the defendant to make the tender, and that she had not instructed him to refuse to pay the renewal fee, or the attorney's fee, although she subsequently ratified his acts. About a week after refusing the tender, and after the summons and complaint had been served, plaintiff went to Mr. Levy's office, and offered to accept it. Mr. Levy then told him that he thought the lien of his mortgage was discharged, but that he would consent for him to have judgment for the debt. Plaintiff testified that he did not refuse the tender arbitrarily or with the view to oppress the defendant, but in good faith, under the honest belief that he had a legal right to collect the fees claimed. As evidence of his good faith and of his desire to save the defendant needless expense, he said that he knew that he could have secured a much larger fee by placing the bond and mortgage in the hands of a brother attorney for collection, when the fee collectible would have been probably not less than $65--10 per cent. of the amount due--but he had the summons and complaint prepared in his own office and signed his own name thereto, as plaintiff's attorney, to save her the greater expense.

The abandonment of the intention originally announced to the plaintiff of asking him to assign the bond and mortgage, and the subsequent tender, made with the statement that it was made to comply with the law and stop interest on the money, but really made with the different intention, afterwards avowed and now claimed for it, of thereby discharging the lien of plaintiff's mortgage, is a piece of finesse which does not commend itself to the favorable consideration of a court of conscience.

The law is that "one designing to make a tender with the purpose of insisting, in a case of refusal, that the mortgage lien is discharged, is bound to act in a straightforward way, and distinctly and fairly make known his true purpose without mystery or ambiguity, and allow reasonable opportunity for intelligent action by the holder of the mortgage. *** But, if a mortgagee acting in good faith refuses a tender through mistake as to his legal rights, the lien of the mortgage is not discharged." Jones on Mortgages, § 893, p. 955; 27 Cyc. 1406, 1407; 20 A. & E. Enc. L. (2d Ed.) 1062. In Potts v. Plaisted, 30 Mich. 149, the court said: "In view of the serious consequences to the holder of a mortgage, upon the refusal of a tender--consequences which may often amount to the absolute loss of the entire debt--and in view of the strong temptation which must exist to contrive merely colorable or sham tenders, not intended in good faith, we think the evidence should be so full, clear, and satisfactory as to leave no reasonable doubt that the tender was so made, that the holder must have understood it at the time, to be a present, absolute, and unconditional tender, intended to be in full payment and extinguishment of the mortgage, and not dependent upon his first executing a receipt or discharge, or any other contingency." Being under the impression that the purpose of the negotiations with him was to get from him an assignment of the bond and mortgage, and knowing that defendant had no legal right to demand an assignment, plaintiff might have concluded that he was strictly within his legal rights in refusing the tender, even if it should have the effect of stopping interest--the avowed purpose for which it was made--and he might have been satisfied to take his chances as to that consequence, when he might have pursued a different course, if he had been fairly and unequivocally informed of the real purpose of the tender.

The case of Salinas v. Ellis established the rule in this state that refusal of a tender of the mortgage debt discharges the lien of the mortgage, without regard to any equities arising out of the circumstances under which the tender may be made or refused; and, also, that the tender need not be kept good. While the common-law doctrine of mortgages does not prevail in this state, the rule in question grew out of the rigor of that doctrine, and was originally designed to prevent the great injustice and hardship which resulted from it. A rule intended to prevent hardship and injustice should not be applied by a court of equity so that it will work what it was intended to prevent. Consequently, in those jurisdictions where the rule prevails it has been so limited and modified in its application as to prevent its becoming the means of injustice. Among other limitations, it is universally held that the mortgagee is entitled to reasonable time and opportunity to ascertain if the tender is sufficient and to decide whether he will accept it. He is not required to act without time for consideration. Having had such time and opportunity, if he arbitrarily and without adequate excuse refuses the tender, he may well be said to be the author of his own injury, if he thereby loses his lien. But, where there is an honest difference between mortgagor and mortgagee as to the amount due, the law does not require the mortgagee to act at his peril--at the peril, on the one hand, of giving up part of what he believes, in good faith, to be due him, or, on the other, of losing his lien. Such an application of the rule would be most inequitable and unjust. Questions frequently arise between mortgagee and mortgagor as to the amount of the debt, growing out of the date and application of payments, the method of calculating interest, and many other matters, which will readily suggest themselves, which require judicial determination. They may be, and frequently...