United States Mortg. Co. v. Henderson

• Citation: 111 Ind. 24,12 N.E. 88
• Parties: United States Mortgage Co. v. Henderson.
• Decision Date: 12 May 1887
• Court: Supreme Court of Indiana

111 Ind. 24

12 N.E. 88

United States Mortgage Co.

v.Henderson.

Supreme Court of Indiana.

May 12, 1887.

Appeal from superior court, Marion county.Baker, Hord & Hendricks, for appellant. McDonald, Butler & Mason, for appellee.

Mitchell, J.

This suit involved the settlement of accounts between the United States Mortgage Company and William Henderson. It appears from the record that the United States Mortgage Company is a corporation organized under the laws of the state of New York for the purpose of loaning money on bonds and mortgages. In October, 1874, this corporation entered into a written contract with William Henderson and Alexander C. Jameson, whereby the latter were appointed its agents for the purpose of making loans of money in the state of Indiana, and collecting moneys to become payable upon the loans thus made. Among other stipulations the contract of agency provided that if the interest upon any loan made by the agents therein appointed should be unpaid, and in arrears for the period of 10 days after the same should fall due and become payable, then, in every such case, the agents themselves should immediately pay the amount so in arrears to the company. The contract provided, further, that the mortgage company should not be liable to the agents for any charges, disbursements, or commissions for their services in connection with the agency, and that the agency might be terminated by the company at any time. Sums aggregating about $450,000 in amount were loaned by Messrs. Henderson & Jameson during the years 1874, 1875, and 1876 under this contract. In 1878, the mortgage company having some time before refused to furnish any more money to loan, Jameson withdrew from the business, and turned over and assigned his interest in the accounts to Henderson. After the termination of the relation of principal and agent a disagreement arose as to the state of the account between the mortgage company and Henderson. The result was the institution of this suit by Mr. Henderson on the eighth day of October, 1881, in the superior court of Marion county. He alleged in his complaint that the company was indebted to him in the sum of $14,424.68, with interest from the dates of the several amounts charged as shown in the bill of particulars filed with his complaint. The bill of particulars exhibited with the complaint stated an itemized account against the United States Mortgage Company to William Henderson, Dr. The bill stated 13 separate items in different amounts, of which the following is an example: “1878. To foreclosing mortgage v. J. M. Hemel, $600.” It also stated two items in different amounts, one of which is as follows: “1881. To general attention to your business from March 8, 1878, to September 8, 1881, at rate of $1,800 per annum, $6,300.” There were four items, of which the following is an example: “To cash paid by Alexander C. Jameson and William Henderson on loan of Joseph K. English, May, 1876, $200; November, 1876, $200; and May, 1877, $200,-which sums were embraced in the decree of foreclosure of said mortgage, and bid in for the full amount by said United States Mortgage Company, and the interest of said A. C. Jameson, assigned to me. $600.”

Concurrently with the filing of the complaint, a writ of attachment was sued out. It is claimed that the attachment was improvidently issued, and that the court erred in overruling a motion to quash the writ. The event of the suit was such that it is now of no consequence whether this ruling was correct or otherwise. The attachment was abandoned. This follows from the fact that a personal judgment was taken against the defendant without an adjudication of the proceedings in attachment. Taking a personal judgment, without more, was equivalent to a dismissal of the attachment. The judgment stands as though no auxiliary proceedings had ever been commenced. Sannes v. Ross, 105 Ind. 558, 5 N. E. Rep. 699; Smith v. Scott, 86 Ind. 346;Lowry v. McGee, 75 Ind. 508. The litigation having progressed to final judgment after a full appearance to the action by the mortgage company, no available error can now be predicated upon a ruling in respect to the attachment proceedings which were in effect dismissed.

The court overruled a demurrer to the complaint, and this ruling is the subject of the second assignment of error. We make the following extract from the complaint, which is all that bears upon the subject presented: “The said defendant, the United States Mortgage Company, is indebted to plaintiff in the sum of $14,424.68, with interest thereon from the dates of the several items of account, the bill of particulars of which is filed herewith, and hereby made a part of the complaint, marked ‘Exhibit A.”’ The complaint, as has already been seen, is upon an account stated against the United States Mortgage Company to William Henderson, Dr. The objection made to the complaint is that it fails to show that any service had been rendered by the plaintiff for the defendant at its request, or with its knowledge or approval, or that any money had been expended for it on its account, or that it ever promised to pay, etc. The complaint does not furnish a model of good pleading; but applying to it the liberal rule of the Code, which only requires that the facts be stated so as to enable a person of common understanding to know what was intended, we should not feel justified in reversing the judgment for what seems at most a defect in the form of pleading. Sections 338, 376, 658, Rev. St. 1881. Considering the complaint and the bill of particulars together, and the inference fairly arises that the indebtedness charged in the complaint was for services rendered the mortgage company in foreclosing certain mortgages therein specified, and for general attention to its business, etc. Applying the liberal rule of construction of pleadings which the Code enjoins, we are constrained to hold that there was no error in overruling the demurrer to the complaint.

Besides denying generally any indebtedness to the plaintiff, the mortgage company presented special matters of set-off and counter-claim. It appeared that a loan of $60,000 had been made by the agents to the Indianapolis Journal Company. This loan was to run 10 years, and was secured by a real-estate mortgage. The interest was to be paid semi-annually at the rate of 9 per cent.; this agreement being evidenced by 20 separate interest coupons for $2,700 each. The mortgagors made default in the payment of some of these coupons. The mortgage company predicating its claim on that provision in the contract of agency which required the agents themselves to pay all interest on loans made by them, and which remained in arrears 10 days after it became due, asserted that the agents were indebted to it under the contract for the unpaid interest coupons on the loan to the Journal Company. To this claim it was replied that some of the coupons fell due before and some after the month of October, 1879, and that the mortgage contained a provision therein written to the effect that a failure by the mortgagor to pay any of the interest coupons within a month of maturity gave the mortgagee the privilege, at his election at any time thereafter, of treating the principal debt, as well as the arrearages of interest, as due. In pursuance of this provision, the mortgagor having made default in paying the coupons which fell due, respectively, in February and August, 1879, the mortgage company exercised its option, and elected that the principal and arrearages of interest should be due, and foreclosed the mortgage for the whole in October, 1879. Without further detailing the facts put forward in the various paragraphs of the pleadings, it is enough to say they present the following questions: Two installments of interest having become due on the loan to the Journal Company, for the payment of which Henderson and Jameson had become liable under their contract with the mortgage company, can they be held for the payment of these installments after the mortgage company elected to treat the whole debt as due, and after it has foreclosed the mortgage, and included both principal and interest in its judgment and decree against the Journal Company? After the mortgage company elected to treat the principal sum as due, and proceeded to foreclose its mortgage, can it now look to Henderson and Jameson for payment of the interest subsequently accruing on the decree?

In respect to the first proposition. Assuming that the matter was a proper subject of counter-claim, which is fairly open to doubt, since the mortgage company availed itself of the option to treat the principal debt as due, because of the default of the mortgagor in failing to pay interest, and proceeded to merge both the principal and unpaid interest into a judgment and decree in its favor, we can discover no principle which would justify it now, while holding a decree and judgment against the mortgagor for the whole, in pursuing a remedy against Henderson and Jameson upon their personal contract. The stipulation in the contract by which Henderson and Jameson agreed, in case any interest on loans negotiated by them should remain in arrears for a period of 10 days, that they would immediately pay such interest themselves, put them in such relation to the loan as entitled them to a remedy against the borrower, and to participate in the security in the event they are called upon to pay the interest coupons. Instead of electing to require its agents to pay the arrearages of interest, and to continue the loan, the mortgage company exercised its option, and appropriated the coupons, and declared a forfeiture of the credit to the borrower. The coupons, which drew 10 per cent. interest as soon as they matured, would have become the property of Henderson and Jameson upon payment by them. They were secured by the same mortgage that secured the principal. The mortgage company took a decree and...