U.S. Building & Loan Ass'n v. Gardiner
| Decision Date | 21 June 1930 |
| Docket Number | 6640. |
| Citation | 289 P. 555,87 Mont. 586 |
| Parties | UNITED STATES BLDG. & LOAN ASS'N v. GARDINER et al. |
| Court | Montana Supreme Court |
Appeal from District Court, Yellowstone County; O. F. Goddard Judge.
Action by the United States Building & Loan Association against Irene W. Gardiner and husband and another for the foreclosure of a mortgage. From the judgment, plaintiff appeals.
Reversed and remanded, with direction.
Tansil & Simmons, of Billings, and J. F. Emigh, of Butte, for appellant.
Derry & Bowen, of Billings, for respondents.
The plaintiff, United States Building & Loan Association, a corporation, has appealed from a judgment and decree in its favor and against defendants, Irene W. Gardiner, John A Gardiner, her husband, and Suburban Homes Company, a corporation.
The complaint herein is in the usual form for the foreclosure of a mortgage on real estate; attached thereto and made a part thereof is a copy of the mortgage and note for which it was given as security.
Under the pleadings and proof, plaintiff sought to recover the principal sum of $3,886.02, with interest thereon at 7 per cent. per annum from May 1, 1927, $4.50 paid out for extension of abstract, $340.51, taxes paid, and $250 as a reasonable attorney's fee. The court found that it was entitled to judgment for $3,588.46 "as of the date of said trial, and no more," which amount included the sums paid for abstract and taxes, and excluded any allowance as attorney's fees. Judgment was entered in accordance with the findings; hence the appeal.
Counsel for plaintiff and for defendants agree that "the only real question involved in this appeal is the construction to be placed upon the note and mortgage sued upon in the court below."
The property involved consists of a lot in the city of Billings and the improvements thereon, owned by defendant Irene W Gardiner, and occupied as a home by her and her husband, John A. Gardiner. In September, 1922, John A. Gardiner, acting for his wife, made application to the Building & Loan Association for membership in the organization and for a loan of $3,500 on the premises. The application provides that the loan is "to be repaid by me in 108 monthly installments of $52.83 each, which includes interest," but the amount and rate of interest are left blank. It authorizes the association, if the loan is made, to draw on the applicant each month for the monthly payment, and the applicant guarantees "to pay this draft promptly each and every month until my loan is paid in full." The application provides "said loan to be evidenced by a note and secured by mortgage, both to be drawn on the regular printed form used by the company."
The application contains the following clause: "If this loan is granted I further agree to subscribe for at least one share of stock in said association for each $100 borrowed and to assign same to the association as additional security, and if the balance of loan is paid before maturity, to pay interest in accordance with their plan of reckoning."
The application was sent to the main office of the association at Butte and the note and mortgage were drawn in accordance therewith; each was signed by Irene W. Gardiner and John A. Gardiner. The note reads, in part: * * *" "This obligation is secured by a mortgage of even date herewith and the pledge by the payer of 35 shares of the capital stock of the United States Building and Loan Association, assigned to the payee, as additional collateral security." On the note is indorsed, corresponding to the passbook number given in the application in connection with the statement that the applicant is a member.
The mortgage recites that it is given "to secure the payment of 108 equal monthly installments of * * * $52.83, * * * each installment being for a payment on account of a loan of * * * $3,500 * * * as principal and * * * $2,205.00 * * * premium and interest thereon. * * *" By answer the defendants alleged that, when signed, neither the note nor mortgage contained the figures "108" and "$2,205.00," and, as an affirmative defense, alleged that the loan was of $3,500 at 7 per cent. simple interest, figured on balances diminishing each month by reason of the application of the balance of the equal monthly installments after satisfying the interest then due. It is further alleged that defendants had paid the sum of $1,532.07 and that plaintiff is entitled to judgment only for the balance of the principal and simple interest at 7 per cent., which amount defendants offered to pay before the suit was instituted, and which sum defendants have at all times been "ready and willing to pay."
Defendants failed to prove that the figures mentioned above had been inserted in the instruments after signing. Gardiner testified that, before making the loan, he ascertained that the interest would be 7 per cent., and that there was no explanation made to him that the interest charge would amount to more than 7 per cent. Mrs. Gardiner testified that she never intended to pay more than 7 per cent. Both, however, read and signed the note and mortgage, and the answer contains no allegation of fraud or for the reformation of the instruments.
The trial court held that the note and mortgage were unambiguous and that the rate of interest to be collected was but 7 per cent. on the diminishing balances; that, under this method of computation, defendants were indebted to plaintiff in the sum of $3,588.46 "at the date of said trial, and no more"; that defendants had offered to pay the full amount due, which plaintiff had refused, and that defendants' inability to perform was due to such refusal; that the true intention of the parties was that the fixed monthly payments should first be applied on interest and balance on principal, and each month the interest at 7 per cent. should be computed on the diminished principal, thus giving a smaller amount each month to be charged for interest and an increased amount to be applied on the principal.
As the note and mortgage were prepared by plaintiff, if the meaning of their provisions are...
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