San Antonio Real-Estate, Bldg. & Loan Ass'n v. Stewart

• Decision Date: 21 March 1901
• Citation: 61 S.W. 386
• Parties: SAN ANTONIO REAL-ESTATE, BUILDING & LOAN ASS'N v. STEWART.
• Court: Texas Supreme Court

61 S.W. 386

SAN ANTONIO REAL-ESTATE, BUILDING & LOAN ASS'N v. STEWART.

Supreme Court of Texas.

March 21, 1901.

Certified questions from court of civil appeals of Fourth supreme judicial district.

Action by the San Antonio Real-Estate, Building & Loan Association against Solon Stewart. Defendant's plea of bar of the statute of limitations was sustained by the trial

court, and question certified from the court of civil appeals. Reversed.

Onion & Henry, for appellant. Denman, Franklin, Cobbs & McGown, for appellee.

WILLIAMS, J.

The statement and question below are certified for decision by the court of civil appeals for the Fourth district: "On August 19, 1892, Solon Stewart and his wife, Georgia C. Stewart, desiring to build a home in the city of San Antonio, entered into a contract with the San Antonio Real-Estate, Building & Loan Association to obtain the sum of $2,376, with which to erect a home, and at the same time executed and delivered to said association 72 promissory notes, payable in monthly installments, including interest from date up to September 1, 1898, and at the same time made, executed, and delivered to said association a builder's and mechanic's lien in writing, properly acknowledged, so as to bind the homestead, and in that lien, which is referred to in each of the notes, it was provided `that, whenever any three of said notes or monthly payments remain unpaid, in whole or in part, after due, then and thereupon the balance of said notes remaining shall be due and payable, and said association may at any time thereafter proceed to foreclose said debt and lien.' The money was used to erect a home for Stewart and wife. Stewart defaulted in payment of the notes that became due in January, February, and March, 1894, and paid nothing on any of the notes due in 1894 until October of that year, when he paid the January note, and in December paid the February note, and afterwards the March note of 1894. On the 1st days of April, May, June, July, August, September, October, November, and December, 1894, and January, February, and March, 1895, and at various times for many months thereafter, the representative of the association saw Stewart, and urged him to pay the notes that were past due, and each time Stewart begged for further time, verbally promising to pay the notes. Further time was granted by the association, and Stewart paid off at different times twenty-nine of the seventy-two notes, among the number being the three notes due respectively in January, February, and March, 1894. Both parties acted in connection with the notes as though no default had taken place by reason of failure to pay the installments due for the first three months of 1894. Payment was never refused by Stewart until just before the suit was instituted. On March 1, 1900, more than four years after default had been made in the payment of the three notes due in January, February, and March, 1894, but at a time when none of the remaining unpaid notes were barred by limitation on their faces, this suit was instituted, and Stewart interposed a plea of four years' limitation, on the ground that all the notes became due in March, 1894, which plea was sustained by the court. Question. Did all the unpaid notes become due upon default in the payment of the three notes, in such manner that the statute of limitations has barred appellant, regardless of what took place, as hereinbefore stated, between Stewart and the association in reference to the contract?"

The notes and the instrument creating the lien, executed at the same time concerning the same subject-matter, are to be construed together as constituting one contract. According to the great weight of authority, including decisions of this court, the stipulation in the last-mentioned writing has the effect of fixing a contingency upon the happening of which the debt should mature at a time earlier than the dates given in the notes for their maturity. Dodge v. Signor (Tex. Civ. App.) 44 S. W. 926; Bank v. Peck, 8 Kan. 660; Manufacturing Co. v. Howard (C. C.) 28 Fed. 741; Brownlee v. Arnold, 60 Mo. 79; 1 Daniel, Neg. Inst. 156; Gregory v. Marks, 8 Biss. 44, Fed. Cas. No. 5,802; Noell v. Gaines, 68 Mo. 649. There is some authority for the construction that such a stipulation in the mortgage alone does not have the effect, upon default in the payment of an installment, of maturing the notes for general purposes, but operates only to allow foreclosure of the mortgage, and the application of the proceeds of the property to the whole debt, without otherwise affecting the terms of credit expressed in the notes. Owings v. Mackenzie (Mo. Sup.) 33 S. W. 802, 40 L. R. A. 154, dissenting opinion of Hough, J., in Noell v. Gaines, supra, and cases cited. This view cannot be adopted consistently with the previous decisions of this court or the current of decisions elsewhere, of which many others could be cited besides those before referred to, and the effect of the stipulation in question in the instrument giving the lien must be held to be the same as if it had been inserted in the notes. Among the courts so treating it, another difference of opinion has arisen as to its effect, some treating it as maturing the notes absolutely, upon default in payment of one of the installments, and others holding that it merely gives to the creditor a right of election to declare the whole debt to be due, or to waive the default, and insist upon the performance of the contract as it originally stood, unaffected by such default.

The view first stated has been adopted by this court, with the result that upon default in an installment the debt matures and limitation begins to run. Harrison Machine Works v. Reigor, 64 Tex. 91; Dodge v. Signor, supra. Other authorities to the same effect are Hemp v. Garland, 45 E. C. L. 519; Moore v. Sargent, 112 Ind. 484, 14 N. C. 466; Bank v. Peck, supra. It was insisted at the argument that these decisions were not well considered, and that the proposition that such provisions merely give to the creditor the option of declaring the debt due upon default in an installment is supported by the weight of authority and by the better reason. We have given the question a careful re-examination, and, as a result, are unable to say either that it did not receive proper attention in the cases previously before this court, or that the decisions are so clearly wrong or against the preponderance of authority as to justify us, if we were inclined to a different conclusion, to overrule them. They have, to say the least, the merit of giving to the unqualified provision that default shall mature the debt its exact meaning, while the opposite view qualifies it by an intention arrived at by construction that something else, viz. the option of the creditor, shall be essential to such maturity. Provisions in such contracts sometimes expressly give the option to the creditor, and sometimes assume the form used in the present case. The authorities relied on by appellant give precisely the same effect to these differing provisions, which is, at least, a questionable liberty taken with the language in which the parties have expressed their intention.

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