Smith v. Jarman

• Decision Date: 15 December 1922
• Docket Number: 3775
• Citation: 211 P. 962,61 Utah 125
• Court: Utah Supreme Court
• Parties: SMITH v. JARMAN et al

211 P. 962

61 Utah 125

SMITH v. JARMAN et al

No. 3775

Supreme Court of Utah

December 15, 1922

Appeal from District Court, Third District, Salt Lake County; L. B Wight, Judge.

Action by Loyal L. Smith against Heber Jarman and others. From a judgment dismissing the action, plaintiff appeals.

REVERSED AND REMANDED WITH DIRECTIONS.

Frank B. Stephens and Grant H. Bagley, both of Salt Lake City, for appellant.

J. M Stull and J. W. Stringfellow, both of Salt Lake City, for respondents.

FRICK J. CORFMAN, C. J., and WEBER and THURMAN, JJ., concur. GIDEON, J., concurs in the result.

OPINION

FRICK, J.

The plaintiff, hereinafter called appellant, commenced this action against the defendants to recover upon a certain negotiable promissory note and to foreclose the mortgage executed and delivered, as hereinafter stated, to secure the payment of said note. The complaint is in the usual form in such actions. The defendant Jarman filed an answer to the complaint, alleging part payment of said note to the mortgagee, as will hereinafter appear, while all the other defendants except his wife defaulted. The case was tried to the court, and it made findings of fact and conclusions of law in favor of the defendant, and entered judgments dismissing the action upon the grounds hereinafter stated, from which judgment this appeal is prosecuted.

The appellant bases his assignments of error solely upon the findings of fact and conclusions of law as declared by the district court. The assignments are: (1) That the court's conclusions of law are "erroneous, against law, contrary to and not supported by the findings of fact"; (2) that the judgment is contrary to and not supported by the findings of fact; and (3) that the court erred in not entering judgment for plaintiff as prayed for in his complaint. In view that the assignments of error are based entirely upon the court's findings of fact and conclusions of law, it becomes necessary to state the findings of fact and conclusions of law somewhat in detail. I shall, however, state them in my own language, condensing them wherever possible.

It appears from the findings of fact. That on the 1st day of April, 1916, the defendant Heber Jarman, who was then unmarried, in consideration of a loan of $ 1,250, executed and delivered to the Houston Real Estate Investment Company, a corporation (hereinafter called company), "his certain negotiable promissory note in writing," payable to said company or order, with interest at 7 per cent. per annum, payable semiannually; that said note by its terms became due five years after its date, "and contained no provision whereby the maker might pay the same before it became due." That to secure the payment of said note said Jarman executed and delivered to said company a mortgage in which he mortgaged certain real property, which is fully described therein, and which mortgage was duly recorded as provided by law; that there was a stipulation, both in the note and in the mortgage aforesaid. That in case default be made in the payment of any interest due on the principal sum the holder of the same "might declare the entire principal * * * due and payable and proceed to foreclose said mortgage." That on the 26th day of May, 1916, the said company, in consideration of the payment of $ 1,250 by appellant to it, sold and indorsed said note and assigned said mortgage to the appellant, "who at all times since said last-mentioned date has been and now is the bona fide owner and holder" of said note. That the assignment of said mortgage was duly recorded on the 27th day of June, 1916. That said note, since its indorsement and delivery to the appellant, and said mortgage since its assignment to him, have at all times been in his possession at his home in the state of Illinois; that at the time of the execution of said note and mortgage one C. W. Johnson was the president and acting manager of said company, and that said Johnson directed the transactions relating to the making of said loan on the part of said company as its officer and agent. That thereafter, on the 1st day of June, 1916, said company discontinued its business, and said Johnson resigned as an officer thereof. That on or about the 17th day of June, 1916, the said company, in consideration of $ 2,500, "sold, assigned, and transferred to the said C. W. Johnson the real estate, loan, and rental business then and theretofore carried on by it, including the good will, expiration, actions, and clientele, and the right to complete all unfinished transactions which the said company had under way, in the capacity of broker and agent, and all office furniture and fixtures." That after said sale said Johnson operated said business under the name of Johnson Realty Company, of which he was the president and manager, and that said "Johnson Realty Company, through its president and manager, during the time it continued in business, held out to the general public and to the defendant Heber Jarman in particular that it was the successor in interest and in the former business of the mortgagee company, but the plaintiff [appellant] herein had no knowledge of any such holding out or representations." That appellant never gave any "actual notice" to Jarman, the defendant, that appellant "was the assignee and owner of the said note and mortgage, and not until about December, 1919, did the said Heber Jarman have notice that the said note and mortgage had been assigned. That some time in April, 1920, the said Heber Jarman learned that the plaintiff herein claimed to be the owner of said note and mortgage." That prior to April 1, 1920, the appellant had forwarded the interest coupons as they matured to said C. W. Johnson for collection, and that the interest which had accrued prior to said date was paid by said Jarman to said Johnson, who remitted the same to appellant. That by virtue of an "arrangement made between the said C. W. Johnson and the said Heber Jarman, the latter paid to the Johnson Realty Company as part payment of the principal sum named in said note and mortgage, the following sums and upon the following dates: April 1, 1918, $ 100; October 1, 1918, $ 100; October 19, 1919, $ 100; and the said Johnson Realty Company received the said sum as credit on the principal sum named in said mortgage." That from and after the execution of said note and mortgage said Jarman paid the accrued interest as it matured to said Johnson, and received from the latter the canceled interest coupons, and said Johnson continued to remit to the plaintiff the interest as it matured and was paid by Jarman up to and including October 1, 1919. That neither said Johnson nor any one else ever paid to the appellant said $ 300 paid as aforesaid. "That plaintiff permitted the said Johnson to act as his agent in the matter of collecting the interest due on said note and mortgage without disclosing in any manner, other than by the recording of the assignment as aforesaid, his ownership of said note and mortgage, and no evidence was elicited to show any circumstance at any time to place the mortgagor on inquiry as to any want of authority on the part of Johnson to exercise full control over the note and mortgage, except the fact that neither the said C. W. Johnson nor the Johnson Realty Company nor the Houston Real Estate Investment Company ever had the possession or control of said note or mortgage after the assignment thereof to the plaintiff as aforesaid. That the interest coupon note, which became due and payable on April 1, 1920, has not been paid by the defendant Heber Jarman or any one on his behalf." That upon learning that the appellant was the owner of said note and mortgage, and that Frank B. Stephens "was his duly authorized representative and attorney," Jarman, on the 12th day of April, 1920, tendered to said Stephens the sum of $ 33.25, that being the semiannual interest which had accrued on the $ 950 remaining unpaid on said $ 1,250 loan after deducting said $ 300, paid as aforesaid. That said tender was refused upon the ground that the interest upon the whole sum of $ 1,250 remained unpaid, amounting to $ 43.75, and that said Jarman did not keep his tender good. That upon refusal of said Jarman to pay said accrued interest, amounting to $ 43.75, the appellant "elected to declare the whole principal sum and interest thereon due and payable, and brought this suit to foreclose said mortgage."

The court also found that the interests of the defendants in said mortgaged premises were inferior and subject to appellant's interest therein.

Upon the foregoing findings of fact the court made its conclusion of law, which reads as follows:

"That the said defendant Heber Jarman, the mortgagor, is entitled to a credit of $ 300 on the principal sum named in the note and mortgage sought to be foreclosed by this action, and at the time of bringing this suit the mortgagor was not in default in the matter of payment of interest; hence said action was prematurely commenced, and should be dismissed at the plaintiff's costs."

In view that neither party excepts to any of the findings of the court the facts found must stand as a correct statement of facts, and therefore all that we are required to determine is, Are the court's conclusion of law and judgment sound as a matter of law?

The conclusion of law of the district court is based upon our statute (Comp. Laws Utah 1917, § 4903), which reads:

"The recording of an assignment of a mortgage shall not in itself be deemed notice of such assignment to the mortgagor, his heirs, or personal representatives so as to invalidate any payment made by them or either of them to the mortgagee."

The theory upon which the district court proceeded is that the payments made by the defendant, the mortgagor,...