Sullivan v. Ellis

• Decision Date: 04 January 1915
• Docket Number: 4152.
• Parties: SULLIVAN et al. v. ELLIS.
• Court: U.S. Court of Appeals — Eighth Circuit

219 F. 694

SULLIVAN et al. v. ELLIS.

No. 4152.

United States Court of Appeals, Eighth Circuit.

January 4, 1915

John F Mail, of Denver, Colo. (John H. Chiles, of Denver, Colo., on the brief), for appellants.

Harry S. Silverstein, of Denver, Colo. (Dana & Blount, of Denver Colo., on the brief), for appellee.

Before CARLAND, Circuit Judge, and T. C. MUNGER and YOUMANS District judges.

YOUMANS District Judge.

This is an appeal from a decree of foreclosure of a mortgage given by Maria L. Russell, to secure the performance of a certain contract entered into by her to indemnify Eva Prince, now Eva Prince Ellis, the appellee. The contract was that Eva Prince, in the settlement of a controversy between her and A. B. Sullivan, should foreclose a certain mortgage given her by Elizabeth M. Gibbons and Joseph Gibbons, and cause the property therein described to be sold, and if the proceeds of such sale did not amount to the full sum of money loaned by Eva Prince on the property mortgaged, with interest, Maria L. Russell would on demand pay Eva Prince the amount of the deficit. The original liability of Sullivan arose from the fact that, as agent for Eva Prince, he had taken a second mortgage for her when he had authority to take only a first mortgage.

The property was sold under decree of foreclosure, and the deficiency was ascertained and declared by the court.

Maria L. Russell died intestate on the 27th day of January, 1905, and the deficiency judgment was rendered on the 6th of February of the same year. No administrator of the estate of Maria L. Russell has ever been appointed. This suit was begun on the 22d day of November, 1912. A period of seven years, nine months, and sixteen days intervened between the date of the rendition of the deficiency judgment and the date of the bringing of this suit. The six years' statute of limitations of the state of Colorado has been pleaded as a bar to the action by one of the defendant appellants, the Julia L. Real Estate, Loan & Investment Company, a corporation which held the legal title to the property mortgaged by Maria L. Russell, under a deed from her after the execution of the mortgage.

A. B. Sullivan, whose obligation was secured by the mortgage given by Maria L. Russell, was her only child, and is her sole heir. Laches was not pleaded as a defense. It was expressly stated in the court below that laches was not relied on, and that statement has been repeated here. The record shows that upon the statement of counsel for appellants at the hearing that 'laches had not been pleaded,' and that defendants below 'relied purely on the statutory limitations,' the court replied 'that the principle of laches was present. ' It thus appears that the court considered both laches and limitations, although no reference was made to either in the decree.

The only assignments of error urged here are those that relate to the refusal of the court to hold the action barred by the statute of limitations. It is contended that the amount of the deficit became due upon the rendition of the deficiency judgment, and that the statute of limitations at once began to run.

The general rule with regard to commercial paper, payable on demand, is that it becomes due immediately, and that the statute of limitations begins to run from its date.

'This rule may not apply where there is something on the paper, or in the circumstances under which it is given, showing that it was not the intention that it should become due immediately.' 7 Cyc. 848, 849.

The contract in this case is not commercial paper. It contains the following provisions:

'The party of the second part hereby agrees to waive and forego any forfeiture on account of nonpayment of interest upon the promissory note secured by the said trust deed upon the property hereinbefore described, belonging to Elizabeth Gibbons, and signed, made, executed, and delivered by her, until and at such time as said note falls due by expiration of the term limited therein; and, further, doth hereby release the said A. B. Sullivan of and from all actions and causes of action, of any kind and nature, for or on account of the taking of said mortgage from the said Elizabeth Gibbons, to the party of the first part.

'In consideration of the release hereinbefore given by the party of the second part to the party of the first part, the said Maria L. Russell, party of the third part, does hereby agree with the party of the second part, and guaranties unto the said party of the second part, that in case she, the party of the second part, will at the time of the maturity of said note executed by the said Elizabeth Gibbons, advertise and sell the property therein described in manner and form as in trust deed provided for; and if she, the party of the second part, shall not receive at said time and in said manner the full amount of money so loaned and advanced by her as aforesaid upon said property, and the interest and taxes and expenses attending said sale, then and in that case, whatever said amount may be, the party of the third part will, upon demand, reimburse her for the same and pay said amount to her.'

We think the provisions above quoted contemplate a demand.

'The statute of limitations does not run against a cause of action until the cause has accrued, and, where a demand is necessary before the action can be commenced, the statute does not begin to run until after the demand. ' Bowes v. Cannon, 50 Colo. 262, 116 P. 336.

Maria L. Russell died before the deficit was determined. At the time it was ascertained there was no one representing her estate upon whom demand could be made, nor has any one been appointed since. The argument is made that appellee could have caused an administrator to be appointed. If that is conceded, there must have been a reasonable time within which that appointment could have been made. There must also have been a reasonable time within which to make demand.

'Where a party's right to sue...