Farmers Bank & Trust Co v. Fudge

The opinion of the Court was delivered by Mr. Chief Justice Gary. (After stating the facts as above.) Two of the appellants’ exceptions assign error on the part of his Honor, the Circuit Judge, as follows: “In sustaining the mortgage as a duly recorded instrument, when the undisputed evidence is that W. H. Millen, the witness who made the affidavit for probate, was then a stockholder, director and cashier of the plaintiff bank, and directly represented the bank in procuring and accepting the mortgage, and that W. P. Robinson, the other witness who took and certified said affidavit as notary public, was then stockholder, director and attorney of the bank, and actively represented the plaintiff in the transaction, each of them and the plaintiff knowing the relation of interest of both to the plaintiff, but without disclosing the same upon the record. “In sustaining the mortgage to the plaintiff bank as a legally executed instrument, the undisputed evidence being that the subscribing witnesses were disqualified by interest to be witnesses thereto, both being stockholders and directors of the bank, one of them being cashier and vice president of the bank, and the other secretary of the board of directors and attorney for the bank, and both directly representing the bank, in procuring and accepting the mortgage.” *34 1 Section 1352 of the Code of Laws (Civ. Code), provides: “Before any deed or other instrument in writing can be recorded in this State, the execution thereof shall be first proved by the affidavit of a subscribing witness to said instrument, taken before some officer within this State competent to administer an oath; * * * the proof in every case to be recorded with the instrument.” The labest decisions of the Court upon the construction of that section were in the cases of Dillon v. Oliver, 106 S. C. 410, 91 S. E. 304, and Arthur v. Hollowell, 98 S. E. 202. The fact, however, that the debts, upon which the appellants recovered their judgments were contracted prior to the execution of the plaintiff’s mortgage shows, that the question presented by the first exception is not properly before the Court for consideration; it being purely academic. 2, 3 We proceed to determine the other exceptions: Section 3453 of the Code of Laws (Civ. Code), is as follows: “The following form or purport of a release shall, to all intents and purposes, be valid and effectual to carry from one person to another or others the fee simple of any land or real estate, if the same be executed in the presence of and be subscribed by two or more credible witnesses. * * * ” Deeds and mortgages are required to be executed with the same fomalities. Harper v. Barsh, 10 Rich. Eq. 149. “An act which requires that the signing by the grantor, shall be attested by witnesses, has been held to require witnesses competent to testify in an action at law, between the parties to the deed, involving the subject matter of the conveyance.1’ (Italics added.) 9 Enc. of Law, 148. Section 437 of the Code of Civil Procedure is as follows: “No person offered as a witness shall be excluded by reason of his interest in the event of the action.” *35 And section 438 contains this provision: “A party to an action or special proceeding in any and all Courts, and before any and all officers and persons acting judicially, may be examined as a witness on his own behalf, or in behalf of any other party, conditionally, on commission, and upon the trial or hearing in the case, in the same manner and subject to the same rules of examination as any other witness. * * * ” There is a proviso, but there is no saving clause specially providing that the section should not in any manner affect the law, relating to the attestation of conveyances, or other instruments in writing, required by law to be attested, as in the statute that was under consideration, in the case of Winstead Bank v. Spencer, 26 Conn. 195, where it was held that such a saving clause prevented the application of the statute, which removed the disqualification of subscribing witnesses, arising from interest. In 1866 (13 St. at Large, p. 377) and prior to the. adoption of the Code, in 1872, a statute was enacted, entitled “An act to make parties, plaintiffs and defendants, in all cáseo, competent to give testimony in such cases, in like manner as other witnesses.” There are three sections, but it is only necessary to quote the first, which is as follows: “That on the trial of any issue joined or of any matter or question, or any inquiry arising, in any suit, action or proceeding in any Court of justice in the State, or before any person having, by law or by consent of parties, authority to receive, hear and examine evidence, the parties thereto, and the persons in whose behalf any such action or other proceeding may be brought or defended, and any and all persons interested in the same, except as hereinafter excepted, shall be competent and compellable to give evidence, either viva voce or by deposition, according to the practice of the Court, on behalf of either or any of the parties to the said action or other proceeding: Provided, That nothing herein shall be understood to prevent either party from introducing *36 evidence to contradict or impeach the testimony of parties having interest, and made competent by this act to testify.” This act was construed in the case of Moseley v. Eakin, 15 Rich. 324, wherein the Court used the following language : “By the first section it is declared that ‘on the trial of any issue joined, etc., the parties thereto, etc., and all persons interested in the same, except as hereinafter excepted, shall be competent and compellable to give evidence, etc., on behalf of either or any of the parties to the said action or other proceeding.’ By the existing law, not only persons interested, but parties in the cause who might have no pecuniary interest, such as executors and administrators and others, were excluded from testifying. The manifest object of the act was to remove these causes of disqualification.” It is true that the act of 1866 has been superseded by the foregoing sections of the Code, but, as the said act and the sections of the Code were intended in the main to accomplish a similar result, a case in which the act of 1866 was construed throws light upon the question under consideration. It is manifest that it was the intention of the act of 1866, as well as the said section of the Code, to remove the disqualification of all witnesses, arising from interest, not only in actions, but in any proceeding where they are called upon to testify as a witness, except in those cases where the sections of the Code otherwise provide, which do not include subscribing witnesses to a mortgage. 4 Another reason why this exception cannot be sustained is that the mortgage, even without witnesses, would have been good between the parties; and the fact that the witnesses may be disqualified by interest would not have the effect of destroying its validity. A mortgage attested by witnesses, who are incompetent by reason of interest, stands upon the same footing as if 'it were without witnesses. *37 Blackstone, in Book 2 of his Commentaries, tells us "that the last requisite to the validity of a deed is the attestation or execution of it, in the presence of witnesses; though this is necessary rather for preserving the evidence than as constituting the essence of the deed.” In the case of Craig v. Pinson, Cheves 272, the Court had under consideration the question whether a deed with one subscribing witness was valid to convey land. After quoting the foregoing language from Blackstone, the Court said: “From which it would seem that according to the laws of England, subscribing witnesses are not * * * necessary to the validity of a deed. An instrument of this kind has been held good, as an agreement in writing, to autorize * * * a specific performance.” It was also held in Harper v. Barsh, supra, that a mortgage with a single subscribing witness is void as a legal mortgage, •but could be enforced in equity. The effect of the defective execution of a will is quite different from that of a mortgage. Section 3564 of the Code of Laws provides that wills shall be attested, in the presence of three or more credible witnesses, “or else they shall be utterly void and of none effect,” while section 3453 provides that in order for a deed to be valid and effectual to carry the fee simple, it shall be executed in the presence of two or more credible witnesses. There are, however, no such words in section 3453 as “or else they shall be utterly void and of none effect.” The mere disqualification of a witness does not render a mortgage void, but there must be a provision of law to that effect. 5, 6 The next exceptions that will be considered, are as follows: “(1) In overruling appellants’ demurrer to the first cause of action on the ground that the mortgage debt was not mature, at the commencement of the action. (2) In not sustaining the defense made in the answers of appellants, to the first cause of action, that the suit was prematurely brought.” The note contains the proviso: “That failure to meet the interest at the interest period above named, shall make the *38 full amount of principal and interest become due, and payable forthwith, at the option of the mortgagee.” The mortgagor made default in the payment'of interest, in January, 1917, and the plaintiff, as assignee, had the right to exercise the option. Welborn v. Cobb, 92 S. C. 384, 75 S. E. 691. It was not necessary to give other notice than the commencement of the action, that the plaintiff elected to exercise the option, or to demand payment of the principal and interest. Sizer v. Dopson, 89 S. C. 535, 72 S. E. 464; Nixon v. Wright, 104 S. C. 376, 89 S. E. 320. The mortgagor, R. H. Fudge, testified. “I agree ’for the Farmers Bank & Trust Company, to take up that note in October, 1917. This foreclosure is entirely agreeable to me.” The appellants’ attorneys have failed to satisfy this Court that either Sep Massey or the plaintiff, his assignee, waived the right to insist upon the option. 7 The next question is presented by the following exception: “In adjudging that there was due on the mortgage debt, in the first cause of action, $12,359.11 as principal and interest, up to the date of decree; whereas, if maturity had been accelerated amount then due would not exceed $12,251.82.” ' The exercise of the opinion had the effect of accelerating the maturity of the note, and both principal and interest immediately became payable. The aggregate of principal and interest then due became an interest-bearing fund. The exercise of the option had the effect of substituting one contract for another, and the words “with interest from date at the rate of eight per cent, per annum” do not form a part of the substituted contract, which does not specify the rate of interest. Therefore the aggregate of principal and interest bore interest at the rate of 7 per cent, per annum from the time the option was exercised, to wit,' the commencement of the action, until the recovery of the judgment. Langston v. *39 Railroad, 2 S. C. 248; Briggs v. Winsmith, 10 S. C. 133, 30 Am. Rep. 46; Sharpe v. Bee, 14 S. C. 371; Mobley v. Davega, 16 S. C. 73, 42 Am. Rep. 632; Maner v. Wilson, 16 S. C. 469. His Honor, the Circuit Judge, erred/therefore, in allowing interest at the rate of 8 per cent, per annum. As to the remaining questions, this Court is satisfied with the conclusions of his Honor, the Circuit Judge, for the reasons assigned by him. It is the judgment of this Court that the judgment of the Circuit Court be modified in the particular hereinbefore mentioned, and that in all other respects it be affirmed.