Smith ex rel. Exchange Bank v. Toler

STEPHENS, J. This is a foreclosure proceeding, via or-dinaria, instituted by G. P. Smith, for and on behalf of the Exchange Bank of Natchi-toches, against T. B. Toler, wherein plaintiff seeks to recover the sum of $1,000, with interest and attorney’s fees, alleging such amount to be due on a note given in representation of a portion of the purchase price of certain property purchased by the defendant from plaintiff. The plaintiff’s petition with reference to said note reads as follows: “The second note for the purchase price, to-wit: Fifteen Hundred ($1500) Dollars, was due and payable on January 1, 1928, with interest at eight per cent from its maturity until paid and ten per cent attorney’s fees, if placed in the hands of an attorney for collection. To secure the payment of the said note due January 1, 1928, a vendor’s lien and privilege and special mortgage was retained by petitioner and granted by the vendee on the property sold and said note is paraphed ‘Ne Varietur’ by the Notary for identification with the act of sale. “It was further agreed in such sale that there was a pending suit between the heirs of Dwyer and petitioner, that should the plaintiffs in that suit be successful, then the sum of Five Hundred ($500) Dollars was to be deducted from the note and said note for $1500 was so endorsed. It appears that the decision in the Dwyer suit was against your petitioner and thus, under the terms of the deed and the endorsement on the note, the same should be credited with $500, leaving a balance due Toler on the note, of One Thousand ($1000) Dollars.” It is then alleged in the petition that prior to the maturity of the note it was pledged by Smith to the Exchange Bank. The defendant, in his answer, admitted the purchase of the property by him, and alleged that the consideration was the sum of $6400 of which $600 was paid in cash; a mortgage held by the Federal Land Bank of New Orleans for the sum of $2700 was assumed by the vendee; and for the balance of the purchase price he executed two promissory notes, one for the sum of $1600, due and payable January 1,1927, and one for the sum of $1500 due and payable January 1, 1928, both conditioned to bear § per cent, per annum interest from maturity. He alleged payment of the first note in full. He further alleged an agreement that the last-mentioned note should be reduced by the sum of $500 in the event his vendor lost a suit then in contest with one John Dwyer, and that the balance [621] thereof might be paid on its due date by sufficient timber, if still on the land sold. Defendant further answered, alleging that a short time after the execution of the deed he advised his vendor, G. 3?. Smith, plaintiff herein, that he desired that the note for $1500 be extinguished and paid by the timber on the land, none of which had been cut by defendant, in accordance with the agreement contained in the deed; and that the said Smith accepted said timber and cut and hauled, or caused to be cut and hauied, from said land, a certain portion thereof, which was so taken and received in compliance with the agreement contained in the deed above referred to. Defendant further alleged .that the timber situated on the land belonged to G. P. Smith, who had exercised ownership thereof, and that said Smith had the right of ingress and egress at all times to cut and remove the same, and that such right was extended to the Exchange Bank if it were, the holder or the pledgee of the note. Defendant prayed in reeonvention that the note sued on, having been extinguished, should be canceled, and that any evidence thereof should be erased from the mortgage record of Natchitoches parish. A trial of the case resulted in a judgment rejecting plaintiff’s demands and ordering the mortgage given to secure the payment of the note sued on canceled and erased. Prom the judgment so rendered, the plaintiff prosecutes this appeal. On October 23, 1926, G. P. Smith sold to T. B. Toler certain property, real and personal, for the recited consideration of $6,400, payable as follows: $600 cash; the assumption by the vendee of a $2,700 mortgage held by the Federal Land Bank of New Orleans; and two notes, one for the sum of $1,600 due January 1, 1927, and one for the sum of $1,500 due January 1, 1928. It is conceded that the defendant has discharged his obligations arising from the transaction promptly as they matured, with the exception of the payment of the $1,000, representing the balance due on the $1,500 note; and his position as to that amount, as set up in his answer, is that it has been extinguished by the transfer by him and the acceptance by the plaintiff of the timber on the land sold. Pertinent facts developed during the trial of the case are as follows: A few weeks after the sale was made, the defendant, Toler, advised the plaintiff, Smith, that he would expect him to take the timber on the land in payment of the note of $1,500; that repeát-edly thereafter, both before and after the maturity of the. note on January 1, 1928, he requested the plaintiff to cut and remove the timber from the property. That this was the position of the defendant with reference- to the exercise of his option to pay in timber or money was admitted by the plaintiff in his testimony: “He told me he wanted me to take the timber and I told him I couldn’t take it.” That, notwithstanding this attitude, as indicated by his attorney, the plaintiff, in recognition of defendant’s rights under the agreement, treated the timber as his own. He sold more than 12,000 feet of the timber to Mr. Breedlove at $3 per thousand, and made some effort to sell more of it to another person. .The defendant has never cut any of the timber, but has maintained consistently that the timber belonged to plaintiff, and should be cut and removed by him in order that he, the defendant, -might “clear” the land. On June 20, 1929, the defendant registered a letter to the plaintiff in which he demanded the surrender of the note herein sued on. This suit was instituted on the note more than eighteen months thereafter. The case must turn upon the construction and legal effect of the stipulation in the deed with reference to the payment of the note .sued on, to wit: “This note may be paid on its due date by sufficient timber returned to vendor if still on the land and not cut off, if- cut must be paid in cash.” The counsel for the plaintiff contends that the stipulation is vague and ambiguous; that it contains a potestative condition, in that it imposes no obligation on the vendor, and that its binding effect is optional as to the vendee; and that, if it grants an option to the vendee, that option was not timely exercised. It seems to us that the stipulation conveys a very definite meaning, and is free from ambiguity, and'does not contain, a potesta-tive condition. The deed conveyed the land and timber thereon. The stipulation granted the vendee the right to pay a portion of the purchase price, which was represented by a note, by retransferring all of the timber on the land to the vendor, or to pay the noté in cash at his option. The stipulation, which is clearly an integral part of the contract of sale, obligates the vendor to re'céive all of the timber, if not cut,' in payment of the note, or cash at the option of the .vendee. The question as to what is meant by “sufficient timbef” does not arise, as all of the timber is •yet on the land except that cut by the vendor pursuant to his agreement to receive it in payment of the note. Mr. Dismukes, the attorney who drew the contract and wrote the stipulation under consideration, and who testified for the plaintiff, stated that Mr. Smith, the; vendor, particularly wanted the provision placed in the agreement in order that the note might be paid, with the timber that, was on the .property. A note,- of course, is ordinarily payable in money, but it is well récognized that the creditor may enter into a binding agreement to permit the debtor, at his option, and for his [622] benefit, to extinguish an obligation by the transfer of something of value, or by payment in money. Knowledge that the defendant would exer-eise his option to pay the note in timber was timely conveyed to the plaintiff, and the plain-, tiff, in acknowledgment thereof, actually exercised the rights of ownership by cutting and selling some of the timber and receiving the consideration therefor. We find the following in Corpus Juris, Payment, p. 608, par. 39: “While payment is ordinarily required to be made in money, it may, when so agreed, either expressly or by implication, or when the creditor so consents, be made by furnishing, transferring, or delivering anything of value; and even in the absence of such agreement or consent, if payment in money actually results from the medium transferred or.delivered to the creditor, the debt is extinguished to the extent of such payment. Ordinarily,an agreement for payment other than in money is presumed to be made in favor of the debtor, and he has the option of paying the debt either in the medium specified or in money of equal value; but after the time for payment has passed the debt is payable only in money, in the absence of the creditor’s consent to receive something else. “Where it is agreed that payment may be 'made by assignment or transfer of property other than money, the debtor must do what is necessary to transfer such interest in the property as to enable the creditor to obtain the beneficial ownership thereof, and if he fails to do so he remains liable on the debt.” The plaintiff does nof pray, in the alternative, to be recognized as the owner of the timber, but we think he is entitled to such judgment under the prayer for general and equitable relief. Article 7 of defendant’s answer reads as follows: “Further answering said petition your defendant shows that the timber situated on the land referred to belongs to G. P. Smith, who has exercised ownership thereof, and that he has had the right of ingress and egress, at all times to cut and remove the same; and that he now has the right of ingress and egress to cut and remove the same, and that the said Exchange Bank, if the holder or pledgee of said, note, is hereby granted and conferred the right to enter in and upon said property, and to cut and remove therefrom the timber which was taken by the said plaintiff in payment and extinguishment on the note sued on.” • The defendant has done everything" in his power to vest title and ownership of the timber in plaintiff except to tender him a formal deed. That such tender would have been in vain is unquestionable. As the plaintiff has exercised the rights of ownership and possession, and no innocent third person’s interest is affected, we feel justified, m view of the above statement of the defend* ant, and the evidence adduced on the trial, and in the interests of an equitable disposition of the case, in decreeing the plaintiff the owner of the timber. the note sued on is a mortgage note identified with the act of sale and mortgage, and also bears the same stipulation with reference to the timber upon the back thereof that appears in the deed, the Exchange Bank of Natchitoches, pledgee, is not a holder in due course, but accepted the note with full knowledge of the rights of the parties, and holds it subject to the equities existing between them, and cannot therefore be consider-d an innocent third person, For which reasons we are of the opinion that the judgment should be amended so as to recognize the plaintiff as the owner of the timber on the land described in plaintiff’s petition, with the right of ingress and egress thereon for a reasonable time to effect its removal, and that the judgment, as amended, should be affirmed, and it is so ordered,