Weinberg v. Naher

• Decision Date: 08 February 1909
• Parties: WEINBERG v. NAHER et al.
• Court: Washington Supreme Court

99 P. 736

51 Wash. 591

WEINBERG v. NAHER et al.

Supreme Court of Washington

February 8, 1909

Appeal from Superior Court, King County; Geo. E. Morris, Judge.

Action by A. Weinberg against G. Naher and another. From a judgment for plaintiff, defendants appeal. Reversed.

Fred H Peterson and H. C. Force, for appellants.

Richard Soxe Jones and Jas. A. Snoddy, for respondent.

FULLERTON J.

On January 16, 1907, the respondent loaned to the appellants the sum of $12,000, to become due three years after date, with interest at 6 per cent. per annum, payable semiannually. The note taken to evidence the loan provided that, in case the interest was not paid when due, the whole sum of both principal and interest should become immediately due at the option of the holder of the note. At the time of the making and delivery of the note, and to secure the payment thereof according to its terms and conditions, the appellants also executed and delivered to the respondent a mortgage covering real property situated in the city of Seattle. The mortgage contained among others the following conditions: 'But in case default be made in the payment of the principal or interest of said promissory note, or any part thereof, when the same shall become due and payable according to the terms and conditions thereof, then the said party of the second part * * * are hereby empowered to sell the said premises * * * and out of the money arising from such sale to retain the whole of said principal and interest whether the same shall be then due or not, together with the costs and charges of making such sale. * * *' By the terms of the note an installment of interest amounting to $360 became due on July 16, 1907, which was not paid. This is an action brought by the respondent to foreclose the mortgage because of the nonpayment of this interest installment.

There is no serious controversy over the facts. Mr. Naher, one of the appellants, testified that on the day preceding the maturity of the interest payment he called up the respondent by telephone, telling him that the interest on the note fell due the next day, and inquired when he could meet him personally for the purpose of paying it; that the respondent stated in answer that he might mail a check for the amount that he again said that he wanted to see him personally, as he wanted the payment indorsed on the note; that to this the respondent repeated his directions to send the check by mail; that on the next day he went to the respondent's place of residence to pay him the money, but was unable to find him, and between that time and July 30th he made repeated inquiries for him at his place of residence, at one of which times he left his telephone number with the request that Mr. Weinberg call him up, but he was unable to find him at any of these times, and did not receive any telephone call from him, and did not hear from him until the 30th of the month. The record further shows that on the 30th of July the respondent wrote Mr. Naher the following letter: 'Seattle, July 30, '07. Mr. G. Naher, Seattle, Wash.--Dr. Sir: I hereby notify you that unless you will before the end of this week make insurance policy payable to me shall call on you for principal & interest at once. Yours truly, A. Weinberg.' To this letter some response was made, which is not shown by the record, and on August 1, 1907, the respondent wrote again as follows: 'Seattle, August 1, 1907. Mr. G. Naher, 702 17th St., Seattle--Dr. Sir: Yours to hand. You well know the note & mort. were made to me and are in my possession at all times & as said before I will insist on insurance policy or call entire loan & interest due. Yours respf., A. Weinberg.' August 5, 1907, Mr. Naher left the amount of the interest with the Puget Sound National Bank of Seattle, who notified Mr. Weinberg of the Deposit of the money by letter, in which letter he was requested to call and bring the note that the money might be handed him and the payment indorsed on the note. The respondent responded to this notice by writing thereon the following: 'Interest on note past due therefore refuse to accept same. A. Weinberg.' Two days following the respondent sent a formal letter to the appellants, electing to exercise his option to declare the whole sum of principal and interest due for the failure to pay the installment of July 16, 1907. Later on he placed the notes and mortgage in the hands of his attorney for collection, who demanded payment of the entire debt. Answering this demand, the appellants tendered the interest, which was refused. This foreclosure proceeding was then begun, whereupon the appellants paid the interest into court at the time they filed their answer. At the trial after the foregoing facts had been shown, the court held that the respondent had rightfully exercised the option given him in the mortgage note to declare the whole sum due and payable, and entered a decree foreclosing the mortgage. This appeal is from the judgment so entered.

The principal questions suggested by the record and debated by the parties are two, namely: Whether a lawful tender of the interest in default by the appellants to the respondent prior to the time the respondent elected to declare the whole sum of principal and interest due and payable would cut off the right of the respondent to declare the entire debt due and payable; and whether there was in fact such a tender.

Taking up these questions in their order, we are clear that on a contract of the character in question here a payment or a tender of payment of the overdue interest before the option to declare the whole debt due has been exercised cuts off the right to exercise the option. This must follow, we think from the nature of the contract. The debt does not become due on the mere default in the interest payment. Some affirmative action is required, some action by which the holder of the note makes known to the payors that he intends to declare the whole debt due. This exercise of the option may, of course, take different forms. It may be exercised by giving the payors formal notice to the effect that the whole debt is declared to be due, or by the commencement of an action to recover the debt, or perhaps by any means by which it is clearly brought home to the payors of the note that the option has been exercised before the interest is paid or tendered. After that time there is no interest due, and the right to exercise the option has its foundation in the fact that interest remains due and unpaid. But it is said that the holder of the note has a reasonable time in which to exercise the option after default is made, and the right cannot be cut off by payment or tender of payment before this reasonable time expires. This, however, is not what is meant by the authorities when they speak of a reasonable time in which to exercise the option. It was formerly thought that, inasmuch as the option was in the nature...