Summary
In O'Connor v. Meskill, 39 A. 1061 (Ch. 1898) (not officially reported), it was expressly held that after default in paying interest a mortgagee was not required, even before his election to accelerate the principal, to accept payment of the overdue interest.
Summary of this case from S.D. Walker, Inc. v. Brigantine Beach Hotel Corp.Opinion
03-23-1898
O'CONNOR v. MESKILL et al.
Robert S. Clymer, for complainant. Walter F. Hayhurst, for defendants.
Bill by Patrick O'Connor against John Mes kill and others to foreclose a mortgage. Heard on bill, answer, and proofs. Decree as prayed.
Robert S. Clymer, for complainant.
Walter F. Hayhurst, for defendants.
GREY, V. C. (orally). I think this case can be determined now, as it is largely controlled by decisions which have been made in our own courts. The mortgage sought to be foreclosed is so drawn that it is expressed to be due in eight years after its date, and contains the usual clause that the interest should be paid in semiannual payments, with the proviso that, in case these semiannual payments are not paid within 30 days after they become due, then the mortgagee should have the privilege at his option of declaring the whole principal to be due, and of enforcing payment of the mortgage for its collection. It is undisputed that the semiannual interest which, by the face of the mortgage, came to be due in October, 1895, was not paid. It was not paid at the time it was due, on October 26, 1895, nor was it paid within 30 days after that semiannual period, nor was any tender or offer made to pay it within those 30 days. The complainant has elected that the whole principal sum shall come to be due, and files his bill in this cause to collect it. There are two explanations or defenses which are made. One is that the parties themselves supposed the payments were annual payments, because of a conversation had at or about the time of the inception of the mortgage, in 1890, between Meskill, the decedent mortgagor, and Mr. O'Connor, the mortgagee, whereby the defendants were misled by the complainant into a belief that the interest payments were to be made annually. The statements then made by the complainant were obviously such as mightpass between two friends, but I do not understand that they in any way affected the legal obligation of the contract into which they had already entered; nor was any consideration passed which would have made these conversations binding obligations. The statements which are testified to as made by Mr. O'Connor impress me as indications of his considerate feeling for the mortgagor, and of his disposition to treat him with patience and forbearance, and perhaps with generosity. But nothing in the nature of a contract was indicated by the conversation, nor did the statements made amount to a fraudulent misrepresentation. I may say, however, that whatever was the original understanding from Mr. O'Connor, in 1890, as to the time when the interest came to be due, it is perfectly evident that in 1895 Mr. Lukens, who was conducting the business for the defendants since the death of Mr. Meskill, was perfectly competent to manage it; that he was a business man, and knew exactly the relations of the parties to the contract for a long time before the default occurred; and that he was acting for them up to the time of the last payment, which credited the interest due up to April, 1895. It also appears that the correspondence between him and Judge Clymer, who acted for the complainant, touching the mortgage and the time when it might become due, was sent to the family; and I do not see why it is not entirely fair to believe that Mr. Lukens made known, to the parties for whom he was acting, the actual situation, which was fully disclosed by the correspondence between him and Judge Clymer. So that whatever may have been the original understanding of Mr. Meskill and his family as to Mr. O'Connor's relations to them, and the nature of the contract, and the authority to enforce it by making the principal due for nonpayment of interest, the evidence shows that, when they came to deal with it in relation to this default, they all knew that the interest payments called for were to be semiannual, and that nonpayment within 30 days after they were due might bring the payment of the principal to be due.
The other ground for defense which has been opened is purely a legal one, and that i? a claim that the construction of the contract should be that the mortgagor and his heirs are entitled to make the semiannual payments of interest not only during 30 days after they fall due, but for such further period, indefinite in its character and extent, as might elapse between the time when the 30 days expired and the time the election was actually exercised and notified to them, on the part of the mortgagee, to bring the principal due; and some cases in the Western states are cited to support that view. I cannot accept that as the law of this state; nor do I see how such a construction can be given to the contract. The parties themselves stipulated with relation to this incident by express agreement, which is perfectly clear and simple in its character. The mortgagors said to the mortgagee: "Inconsideration that you loan us $2,000, and give us a credit for eight years, we agree that if we fail to pay you the semiannual interest on this money at equal semiannual dates, or within 30 days after, you may, if you choose, call the principal to be due." The defendants failed a number of times to make these payments within the time, and a strong intimation is given in one of the letters referred to that there would be, or had been, an actual election to bring the principal due; but even after that the mortgagee waived it and accepted payments of interest, and the foreclosure is now asked on later defaults.
In the case of Land Co. v. Post (N. J. Err. & App.) 37 Atl. 892, just such a contract as this, giving time for payment of the principal sum, was construed, and payment of the principal was enforced after omissions to pay interest within the periods named, and the subsequent acceptance of payments which operated as waivers of the previous defaults, but where later payments were omitted, on account of which the principal was claimed to have become due under the contract. The mortgagee filed his bill to foreclose, claiming that the principal should be held to be due, and on that a defense was made that the previous waivers had exhausted the contract for the default, and that it did not operate on the subsequent omissions. The court said that the contract applied to each separate successive undertaking to pay the semiannual interest; and default on one, even if a waiver had previously been had on others, was sufficient to enable the mortgagee to elect to call the principal to be due. That election the parties have in the case before me agreed might be exercised when 30 days had elapsed after the interest fell due; but there is nothing in the contract by which the mortgagee agreed that after that time, and until he had elected, the payments of interest might still be made, and thus prevent the exercise of his option. Why should the 30 days have been prescribed at all if it was not final? If it were true that the mortgagor and his heirs might tender or pay up to the time that the mortgagee elected, then the "thirty-days" element is of no significance, and the contract must be construed to mean that the parties agreed that the option to call the principal to be due arose only when the mortgagee demanded payment or notified the mortgagor. The efficiency of the limitation to 30 days would thus be entirely destroyed, although it is clearly expressed, and is an essential part of the contract.
It seems to me that to construe this contract according to the contention of the defendants would require this court, not only to thrust into it a term which is not there, but to give it a meaning which is in express contradiction of what is there, and with regard to which the whole tenor of the proofs shows the parties themselves acted. It may be hard to these defendants that they find the mortgagee indisposed to continue to extend to them the same generous consideration which they say he extended or offered to their father; but this court cannot take notice of that, and compel this man to be generous if he does not choose to be so. The contract is complete and unambiguous, and this court has no power either to remodel it, to make it more lenient, or to so construe it as to defeat its manifest intent. 1 will advise a decree in accordance with the prayer of the bill. The complainant's solicitor may present such a decree.