The Union Central Life Insurance Company v. Keith

• Decision Date: 21 December 1937
• Docket Number: 6486
• Citation: 74 P.2d 699,58 Idaho 471
• Parties: THE UNION CENTRAL LIFE INSURANCE COMPANY, Respondent, v. JOHN E. KEITH and BLANCHE B. KEITH, Husband and Wife et al., Appellants
• Court: Idaho Supreme Court

74 P.2d 699

58 Idaho 471

THE UNION CENTRAL LIFE INSURANCE COMPANY, Respondent, v. JOHN E. KEITH and BLANCHE B. KEITH, Husband and Wife et al., Appellants

No. 6486

Supreme Court of Idaho

December 21, 1937

MORTGAGES-FORECLOSURE-ACCELERATION CLAUSE-LIMITATION OF ACTIONS-PLEADING-DEMURRER.

1. The practice of sustaining a demurrer to part only of a cause of action is not authorized by statute, since general demurrer is either good at to the whole cause of action or not good at all. (I. C. A., sec. 5-607.)

2. The trial court's ruling sustaining demurrer to part of petition only is not reviewable where not appealed from nor complained of by plaintiff. (I. C. A., sec. 5-607.)

3. A mortgagee need not elect to declare entire debt due under acceleration clause, in order to maintain foreclosure action on installments as they became due, and hence statute of limitations runs against such installments from time they became due, irrespective of such election. (I. C. A., sec 5-216.)

4. Commencement of suit for foreclosure of mortgage containing acceleration clause, on the entire indebtedness, constituted an election to accelerate maturity as respects all indebtedness, which had not yet become due.

5. Where acceleration clause in mortgage merely gives election or option to mortgagee to declare entire indebtedness due on default in payment of one installment, statute of limitations does not begin to run against entire indebtedness until affirmative election by mortgagee. (I. C. A., sec. 5-216.)

APPEAL from the District Court of the Third Judicial District, for Owyhee County. Hon. Chas. F. Koelsch, Judge.

Action to foreclose mortgage. Judgment for plaintiff. Affirmed.

Affirmed with costs to respondent.

James S. Bogard and Paris Martin, Jr., for Appellants.

Where the acceleration clause merely gives an election to the mortgagee to declare the entire indebtedness due, the statute of limitations does not run as to the entire indebtedness from a default, unless there is an affirmative election by the mortgagee. (Wiltsie on Mortgage Foreclosures, 4th ed sec. 83; Westcott v. Whiteside, 63 Kan. 49, 64 P 1032; Lovell v. Goss, 45 Colo. 304, 101 P. 72, 132 Am. St. 184, 22 L. R. A., N. S., 1110.)

The mortgagee in the exercise of his option may foreclose or he may waive the default and continue the mortgage to maturity. (Quackenbush v. Mapes, 54 Misc. 124, 105 N.Y.S. 654.)

The right of the mortgagee to declare the whole debt due on failure to pay any installment of interest due continued as long as default continued, and was not waived by mere delay. (Union Central Life Ins. Co. v. Schultz, 45 Idaho 185, 261 P. 235.)

McElroy & Chalfant, for Respondent.

"But where the acceleration clause gives merely an election or option to the mortgagee, to declare the entire indebtedness due, the statute of limitations does not run as to the entire indebtedness from a default, unless there is an affirmative election by the mortgagee." (Sec. 83, Wiltsie on Mortgage Foreclosures; Hewitt v. Dean, 91 Cal. 5, 27 P. 423; Wheeler & Wilson Mfg. Co. v. Howard, 28 F. 741.)

"The bringing of an action or proceeding for the foreclosure of the mortgage in its entirety is in itself considered a sufficient election by the mortgagee of his option to foreclose, unless by express agreement the election must be otherwise or previously done." (Sec. 69, Wiltsie on Mortgage Foreclosures.)

AILSHIE, J. Morgan, C. J., Holden, Budge and Givens, JJ., concur.

OPINION

AILSHIE, J.

This is an action to foreclose a mortgage. In 1921 appellants were the owners and in possession of certain property in Owyhee county, comprising about 429 acres. November 7th respondent loaned them the principal sum of $ 12,000, to bear interest at 9 per cent per annum, appellants executing and delivering to respondent a series of 21 promissory notes; the first note for $ 791.80, payable August 1, 1922; the remaining 20 notes, each for $ 1314.57, falling due on the same date in each of the succeeding years. To secure these notes a mortgage was executed by appellants, which contained the following acceleration clause:

"Also that the failure to pay when due any sum herein covenanted to be paid, or the failure to comply with any one of the agreements hereof, . . . . shall cause the whole debt to become due and payable, at the option of the said mortgagee, or the then legal holder of said indebtedness, without notice."

It is admitted that notes numbered 1 to 8, both inclusive, were paid; notes numbered 9 to 15, inclusive, had matured and not been paid at the time this action was commenced and the other six notes had not matured. Respondent commenced this action in foreclosure, alleging its election to declare the whole indebtedness secured by the mortgage due and praying for a decree foreclosing on the security.

Appellants by demurrer plead the statute of limitations as against the whole indebtedness. The trial court sustained the demurrer as to notes 9 and 10 and overruled the same as to all the rest of the notes.

Before passing to the further consideration of this question, we wish to make it plain that, in discussing the issue of the statute of limitations as having arisen on demurrer, we should not be understood as sanctioning the procedure by which the issue was raised. A general demurrer is either good as to the whole cause of action or is not good at all. The practice of sustaining a demurrer to a part of a cause of action is not authorized by the statute and has been disproved by repeated decisions. (Sec. 5-607, I. C. A.; 49 C. J., p. 426, sec. 538; First Bank of Homedale v. McNally, 42 Idaho 443, 246 P. 5; McLeod v. Rogers, 28 Idaho 412, 154 P. 970; Bonham Nat. Bank of Fairbury v. Grimes Pass Placer Min. Co., 18 Idaho 629, 111 P. 1078; Jones v. Moss, 28 Idaho 245, 153 P. 249.) Since respondent has not appealed and makes no complaint of the ruling of the court in sustaining the demurrer to installments 9 and 10, there is nothing before us on which to pass in that respect.

Appellants contended that, when respondent elected to declare the whole indebtedness due under the acceleration clause contained in the mortgage, the election took effect as of the date of the first default in the payment of an installment note, and that the statute began to run against the whole indebtedness from that date; and that consequently the entire indebtedness was barred by the statute of limitations. (Sec. 5-216, I. C. A.) The effect of respondent's election declaring the whole debt due is the issue before us now.

It will be noted from the acceleration clause contained in the mortgage that it became active and operative only "at the option of the said mortgagee, or the then legal holder of said indebtedness." In other words, it is not an unqualified or positive self-operative maturity declaration. It is optional only and the election must be by the mortgagee, or holder of the indebtedness, at the time the privilege is exercised.

It will be noted that installments 9 and 10 had already become due, under the terms of the contract, six (1930) and five (1931) years, respectively, prior to the commencement of the action, so that no election was necessary to maintain the action on these obligations. The statute had run against them. On the other hand, the commencement of the suit for the foreclosure of the mortgage on the entire indebtedness was itself an election as to all indebtedness which had not become due as shown on the face of the installment notes. (Union Central L. Ins. Co. v. Shultz, 45 Idaho 185, 261 P. 235; Mullen v. Gooding Implement & Hardware Co., Ltd., 20 Idaho 348, 118 P. 666; Wienke v. Smith, 179 Cal. 220, 176 P. 42, 44.)

The general, and what seems to be the prevailing, rule with reference to the effect of these acceleration clauses, is stated by Wiltsie on Mortgage Foreclosure, fourth edition, at sec. 83, as follows:

"Where the clause for acceleration of maturity of a mortgage upon default in payment of an installment of interest or principal or upon other default provides unconditionally for the maturity of the entire indebtedness, irrespective of the pleasure or option of the mortgagee, the indebtedness becomes due upon a default of the nature provided for and the statute of limitations runs from such default. But where the acceleration clause gives merely an election or option to the mortgagee, to declare the entire indebtedness due, the statute of limitations does not run as to the entire indebtedness from a...