Steward v. Nelson

• Decision Date: 17 May 1934
• Docket Number: 6083
• Citation: 54 Idaho 437,32 P.2d 843
• Parties: FRANK STEWARD, Receiver of the Property of E. C. KING, Appellant, v. PARLEY NELSON and SARAH NELSON, His Wife, and Others, Respondents
• Court: Idaho Supreme Court

32 P.2d 843

54 Idaho 437

FRANK STEWARD, Receiver of the Property of E. C. KING, Appellant, v. PARLEY NELSON and SARAH NELSON, His Wife, and Others, Respondents

No. 6083

Supreme Court of Idaho

May 17, 1934

MORTGAGES-LIMITATION OF LIEN-STATUTE OF LIMITATION-EFFECT-CONSTITUTIONAL LAW-IMPAIRMENT OF CONTRACT.

1. Law existing when mortgage is made enters into and becomes part of contract.

2. Under law existing at time mortgages were made in 1916 and 1918, each note, and mortgage given to secure payment thereof, was to be construed as one contract (I. C. A., secs 5-216, 5-328, 44-801, 44-806).

3. Liability to pay mortgage debt rested on mortgaged lands as well as on mortgagor.

4. Mortgages executed in 1916 and 1918 remained valid so long as notes they secured were actionable, since mortgages were incident to debts (I. C. A., secs. 5-216, 5-238, 44-801, 44-806).

5. Law which in its operation amounts to a denial or obstruction of rights accruing by contract, though professing to act only on remedy, is unconstitutional as impairing obligation of contract (Const. U.S. , art. 1, sec. 10; Const. Ida., art. 1 sec. 16).

6. Act providing that no mortgage should be enforceable after ten years from maturity of debts which mortgage secures or from date to which payment thereof has been extended by agreement of record, in so far as act related to mortgages executed in 1916 and 1918 and payment of debts which mortgages secured and which were due in 1920, was not extended of record held unconstitutional as impairing obligation of contracts (I. C. A., secs. 44-1102, 44-1103; Const. U.S. , art. 1, sec. 10; Const. Ida., art. 1, sec. 16).

APPEAL from the District Court of the Ninth Judicial District, for Madison County. Hon. C. J. Taylor, Judge.

Action for foreclosure of mortgages. From judgment for defendants dismissing the action plaintiff appeals. Reversed and remanded with instructions.

Judgment reversed with instructions.

Lewis A. Lee, for Appellant.

"The obligation of a contract is impaired by a statute which alters its terms, by imposing new conditions or dispensing with conditions, or adds new duties or releases or lessens any part of the contract obligation or substantially defeats its ends." (Fidelity State Bank v. North Fork Highway Dist., 35 Idaho 797, 209 P. 449, 31 A. L. R 781.)

"It is also settled that the laws which subsist at the time and place of making of a contract, and where it is to be performed, enter into and form a part of it, as if they were expressly referred to or incorporated in its terms. This principle embraces alike those which affect its validity, construction, discharge and enforcement." (Von Hoffman v. Quincy, 4 Wall. 535, 18 L.Ed. 403.)

Chas. W. Poole, for Respondents.

No party to a contract has any vested right in any particular remedy or procedure for the enforcement of the contract. (12 C. J. 947, sec. 558; National Surety Co. v. Architectural Decorating Co., 226 U.S. 276, 33 S.Ct. 17, 57 L.Ed. 221; Oshkosh Waterworks Co. v. City of Oshkosh, 187 U.S. 437, 23 S.Ct. 234, 47 L.Ed. 249.)

A statute which deals with remedies, remedial rights or procedure will be given retroactive effect when it appears that it was the intention of the legislature that such effect should be given it. (59 C. J. 1173, sec. 700; Easterling Lumber Co. v. Pierce, 235 U.S. 380, 35 S.Ct. 133, 59 L.Ed. 279.)

A statute of limitations is not a part of any contract. (17 R. C. L. 680; Billings v. Hall, 7 Cal. 1; Davis & McMillan v. Industrial Acc. Com., 198 Cal. 631, 246 P. 1046, 46 A. L. R. 1095, 1101.)

BUDGE, C. J. Givens, Morgan, Holden and Wernette, JJ., concur.

OPINION

BUDGE, C. J.

W. Lloyd Adams and his wife, on December 15, 1916, and January 29, 1918, respectively, executed two notes for $ 1400 and $ 400, payable to ROSS J. Comstock, and to secure the payment thereof gave to Comstock two mortgages of even dates with said notes. After execution, both the mortgages and notes were assigned by the mortgagee, Comstock, to one Royal Garn, and thereafter by Garn to E. A. King. After the assignment to Garn, and on May 16, 1918, the mortgagors, Adams and wife, sold the premises under a written agreement to Parley Nelson, the agreement providing that Parley Nelson assumed and agreed "to pay one certain mortgage against said property in the sum of $ 1800.00 payable to Royal Garn." The only amounts payable to Garn and the only mortgages on the premises were the two involved herein, aggregating $ 1800, and the court found that Nelson had assumed the payment of these mortgages. After purchasing the property Nelson made certain payments of interest to Comstock for Royal Garn, and, after the assignment to E. A. King, made payments of interest to him, the last payment being made May 20, 1929, twelve days before the act herein involved became effective. Nelson also wrote certain letters to King which might be taken as evidentiary of his acknowledgment of the amount due under the mortgages. On October 3, 1932, appellant, receiver of the property of E. A. King, instituted suit seeking foreclosure of the mortgages. The answer of respondent, inter alia, pleaded the defense that the causes of action in appellant's first and second causes of action were barred by the provisions of I. C. A., sections 44-1102 and 44-1103 (chap. 56, 1929 Session Laws of Idaho). There was no "agreement of record" extending the date of payment. The notes upon their faces showed the date of maturity of the obligations or indebtednesses secured or evidenced by the mortgages to be December 15, 1920. The fifth conclusion of law of the court recites:

"That by the provisions of Chapter 56, of the 1929 Session Laws of the State of Idaho, being sections 44-1102 and 44-1103 of the Idaho Code Annotated, the action to foreclose said mortgages is barred, and the plaintiff is not entitled to maintain this action for the foreclosure of said mortgages or either of them."

Judgment was entered in favor of respondents and the action was dismissed. This appeal is taken from the judgment.

Appellant's five assignments of error all directly relate to the foregoing conclusion of law, the assignments being briefly that the court erred in failing to find that: (1) I. C. A., sections 44-1102 and 44-1103, are unconstitutional in so far as they relate to or affect the notes and mortgages involved; (2) that they impair the obligation of the contracts under consideration, in violation of the guarantee of article 1, section 10, Constitution of the United States, and article 1, section 16, Constitution of Idaho; (3) that the above-mentioned statutes violated the rights guaranteed by the Fifth and Fourteenth Amendments to the Constitution of the United States and section 13, article 1, of the Constitution of Idaho; and in finding, (4) that the action to foreclose said mortgages is barred; and, (5) in rendering judgment of dismissal, and failing to enter judgment in favor of appellant and against all defendants. In other words, the question is: Are I. C. A., sections 44-1102 and 44-1103, unconstitutional in so far as they relate to the mortgages involved herein?

The discussion by the parties deals mainly with the question of whether the statutes referred to above constitute an impairment of the obligations of the contracts, within the meaning of article 1, section 10, of the Constitution of the United States and article 1, section 16, of the Constitution of Idaho. It is well settled that the law existing when a mortgage is made enters into and becomes a part of the contract. (Fidelity State Bank v. North Fork Highway Dist., 35 Idaho 797, 209 P. 449, 31 A. L. R. 781; Edwards v. Kearzey, 96 U.S. 595, 24 L.Ed. 793; Hooker v. Burr, 194 U.S. 415, 24 S.Ct. 706, 48 L.Ed. 1046; East Tennessee etc. R. Co. v. Frazier, 139 U.S. 288, 11 S.Ct. 517, 35 L.Ed. 196.) Under the law as it existed at the time these mortgages were made each note, and the mortgage given to secure the payment of the same, was to be construed as one contract. (Clark v. Paddock, 24 Idaho 142, 132 P. 795, 46 L. R. A., N. S., 475.) Liability to pay the mortgage debt rested upon the mortgaged lands as well as upon the mortgagor. (Gerken v. Davidson Grocery Co., 50 Idaho 315, 296 P. 192.) The mortgages constituted contracts by which specific property,--everything that would pass by a grant or conveyance of the property--was hypothecated for the performance of the act for which they were given to secure. (I. C. A., secs. 44-801 and 44-806.) The life of the mortgages would not cease to exist so long as the notes they secured were actionable, for the reason that the mortgages were incident to the debts. So long as the notes were kept alive, that is actionable, either by writing signed by the party to be charged, or any payment of principal or interest, the lien of the mortgages remained unimpaired for at least five years thereafter. (I. C. A., secs. 5-216 and 5-238; Moulton v. Williams, 6 Idaho 424, 55 P. 1019; Kelly v. Leachman, 3 Idaho 629, 33 P. 44; Cook v. Stellmon, 43 Idaho 433, 251 P. 957.) In other words, the mortgagee could, under the law as it existed at the time these mortgages were made, enforce the mortgages whenever he could enforce the debts secured bv the mortgages.

The 1929 acts of the legislature involved herein provide as follows:

I. C. A., section 44-1102:

"No mortgage or other lien upon real property, now, heretofore or hereafter given by any person, firm or corporation as security for any obligation or indebtedness shall be a lien or encumbrance on such real property, after the expiration of ten years from the maturity of the obligation or indebtedness secured or evidenced by such mortgage or other lien, or from the date to which the payment thereof has been extended by agreement of record. If the...