Union Stockyards National Bank of South Omaha v. Maika

Scott, Justice. This action was commenced in the district court of Johnson County on December 28, 1904, to recover upon an alleged balance claimed to be due from defendants in error to plaintiff in error upon two certain promissory notes. A demurrer was interposed to the petition, and after argument and due consideration the court sustained the demurrer, to which ruling the plaintiff excepted and elected to stand upon its petition. Judgment was rendered against the plaintiff and it brings the case here on error. 1. The defendants in error have filed a motion to strike certain papers from the files as not being a part of the transcript or record in this case. The judgment complained of was rendered in a case docketed as No. 711 in the court below and the original papers and transcript of the journal entries therein have been properly certified and returned to this court. In addition to these the original papers and transcript of journal entries in another case between the same parties and entitled the same, but bearing the docket number 677 in the court below, have been certified and returned by the clerk of that court. As it is the judgment in the former case which is here sought to have reviewed, it is apparent that the files and journal entries in docket No. 677 are improperly here. The motion will be granted and the clerk of this court is directed to return to the clerk of the district court of Johnson County the files and certified journal entries in case No. 677. 2. From the petition it appears that at South Omaha, Nebraska, on August 19, 1898, the defendants in error for value received made, executed and delivered their joint and several promissory note to R. Becker and Degan, whereby they promised to pay $5,100 one year from date, with interest at the rate of 10 per cent per annum. At the same place on August 30, 1898, they executed to the same payee and on the same terms their joint and several promissory note for the sum of $4,050. Both of these notes were endorsed to the plaintiff in error. A real estate mortgage was — 147 — given by defendants in error to plaintiff in error to secure the payment of these notes, upon real estate owned by them and situated in Dawes County, Nebraska. Thereafter and upon default in the payment of said notes and interest, plaintiff in error instituted suit for foreclosure of said mortgage in the district court of Dawes County, in the State of Nebraska, and such proceedings were had that judgment and decree of foreclosure was entered in that court. The judgment is not set out in haec verba, but from the allegations of the petition that court rendered its judgment or decree in rem, but no personal judgment for deficiency after applying the proceeds of the mortgaged property' on the notes was rendered. The action is for a balance claimed to be due upon the notes after allowance of credit for proceeds of sale of the mortgaged property. The dates of the notes were August 19th and 30th, 1898, respectively, and as each note was due one year from its date, more than five years had elapsed since the notes became due and the time of the commencement of this action. Statutes of limitation go to the remedy and not to the cause of action, and such being the case an action upon a contract is governed by the lex fori or the law of the place where the action is brought. (25 Cyc., 1018, and cases there cited; 33 Cent. Dig., tit. “Limitation of Actions,” § 4.) The time within which an action could be maintained upon these notes is fixed by Section 3454, Revised Statutes of 1899. That section is as follows: “Within five years an action upon a specialty or any agreement, contract or promise in writing, and on all foreign claims, judgments or contracts, expressed or implied, contracted or incurred before the debtor becomes a resident of this state, action shall be commenced within two years after the debtor shall have established his residence in this state.” It is apparent from the allegations of the petition that these notes were barred by the statutes unless the application of the proceeds of the mortgaged property arrested the running of the statute, and the sufficiency of the petition in that respect may be and — 148 — was raised by demurrer. (Cowhick v. Shingle, 5 Wyo., 87; Marks v. Board, 11 Wyo., 488; Col. S. & L. Association v. Clause, 13 Wyo., 166.) Section 3466, Revised Statutes of 1899, is as follows: “When payment has been made upon any demand founded on contract or a written acknowledgment thereof, or promise to pay the same, has been made and signed by the party to be charged, an action may be brought thereon within the time herein limited, after such payment, acknowledgment or promise.” In Cowhick v. Shingle, supra, this court held that a partial payment by one or two parties jointly and severally liable upon a promissory note was not sufficient under Section 3466 above quoted to suspend the running of the statute in favor of the other. The question is fully discussed and the authorities are reviewed as to what is sufficient to toll the statute. Mr. Justice Clark, who delivered that opinion, after reviewing many cases, said: “In some of the above cases the acknowledgment or partial payment relied upon to take the case out of the statute was made before the bar of the statute had become complete; .but in my judgment there is no distinction in principle between the legal effect of payment made before or after the bar of the. statute had attached; in.either case the legal effect thereof is to create a new cause of action. * * * Upon the whole case I am of the opinion that the true construction of our statute, Section 2381, Revised Statutes of 1887 (which is identical in language with Section 3466, Revised Statutes of 1899), is that given by the supreme court of Ohio in Kerper v. Wood, 48 O. St., at page 621, viz.: ‘A payment, an acknowledgment or promise in writing will not avail to take the case out of the statutory bar unless made by a party to be charged thereby, or an agent authorized for that express purpose.’ ” (See also Bergman v. Bly, 66 Fed., 40.) In construing a statute of similar import the supreme court of Nebraska, in Whitney v. Chambers, 17 Neb., 90 (22 N. W., 229), held that “the payment of a dividend by the assignee of an insolvent debtor is not such a part payment, as will, — 149 — under Section 22 of the code, take the residue of the debt out- of the statutory limitation, as against such debtor.” 'That court said later in reference to that decision: “This case is sustained by the great weight of authority, and it was decided and rests upon the principle that the sale of the property of the maker of the note by his assignee and his application of the proceeds of such sale towards the payment of the note was not a voluntary payment made on the note by the maker, but was a payment in invitum, * * * and by operation of law.” (Moffitt v. Carr, 48 Neb., 403; 67 N. W., 151; 58 Am. St. Rep., 696.) In Hughes v. Boone, 19 S. E., the supreme court of North Carolina held: “A partial payment of a judgment made on execution does not interrupt the running of the statute of limitations.” In Harper v. Fairley, 53 N. Y., 442, the court said: “A part payment, .whether made before or after the debt is barred by the statute, does not revive the contract, unless made by the debtor himself or by someone having.authority to make a new promise on his behalf for the residue.” In Moffitt v. Carr, supra, there was a foreclosure of a trust deed or mortgage under a power of sale contained therein upon land situated in Missouri, and the holder of the note endorsed the amount of the proceeds upon the note and it was held not sufficient to'arrest the funning of the statute. The authorities uniformly support the rule thus announced, though there is a difference of opinion in the adjudicated cases as to the effect of the application by the creditor of the proceeds of collateral security to the payment of the debt. An examination of those cases shows that where such application has been made pursuant to express authority it was regarded as the act of the maker of the note and thus constituted a part payment within the definition of the statute. That question, however, is not presented and need not be discussed further. The court further said: “Had' the mortgage made by Carr conveyed lands in the State of Nebraska; had the mortgage been foreclosed, a judicial sale made of the premises, and the proceeds of such sale — 150 — indorsed upon the note in suit — it is quite clear that such indorsement would not have been a part payment on the note, within the meaning of the code, and would not have arrested the running of the statute of limitations.” Wherever the question has arisen in a foreclosure sale under a power contained in the mortgage the courts, with the exception of one case in Missouri, which has since been repudiated, have proceeded upon the theory that the act of the creditor in such case represents no voluntary affirmative act on the part of the debtor from which a promise to pay could be reasonably implied. In support of this rule and as to what constitutes a part payment within the meaning of the statute may be cited the following cases, viz.; Holmquist v. Gilbert (Colo.), 92 Pac., 232; Wolford v. Cook, 71 Minn., 77; Lang v. Gage, 65 N. H., 173 (18 Atl., 795); Gibson v. Lowndes, 28 S. Car., 285; Campbell v. Baldwin, 130 Mass., 199; Moffitt v. Carr, supra; Westinghouse Co. v. Boyle, 126 Mich., 677 (86 Am. St. Rep., 570; 86 N. W., 136); Regan v. Williams, 80 Mo. App., 577, overruling Bender v. Markle, 37 Mo. App., 234; 19 A. & E. Ency. of Law (2d Ed.), 328, and Vol. 3 of Supplement, and cases cited in foot notes; 25 Cyc., 1370, and cases there cited; 33 Cent. Dig., tit. “Limitation of Actions,” Sec. 631, and cases there cited. The application of the proceeds of the sale to the payment of the notes was by order of the court, and the most that can be said is that it operated as a payment pro tanto. It did not revive the unpaid balance, or arrest the running of the statute, for'it was an enforced part payment made pursuant to the order of the court and in accordance with a judgment in rem, and in so far as the makers of the notes' are concerned was an involuntary payment. (Gibson v. Lowndes, supra; Thomas v. Brewer, 55 Ia., 227; Benton v. Holland, 58 Vt., 533 (3 Atl., 332.). In Lang v. Gage, supra, the rule is thus stated: “Part payment alone is merely an acknowledgment of indebtedness pro tanto. * * * The efficiency of a payment to avert the effect of the statute of limitations as a bar rests in the — 151 — conscious and voluntary act of the debtor explainable only as a recognition and confession of the existing liability. * * * It must appear that the payment was a partial one, and made under such circumstances as to show that the debtor understood that he was liable to pay 'the residue of the . debt, and his willingness to pay it.” To the same effect is Blair v. Lynch, 105 N. Y., 636. In Campbell v. Baldwin, supra, the court say:. “In the case at bar, the plaintiff executed a mortgage in which he gave to the mortgagee a power to sell the estate and to appropriate the proceeds to the payment of the mortgage debt. But this cannot be fairly construed as an authority to the mortgagee to make a new promise on behalf of the mortgagor to pay the debt, so as to avoid the statute of limitations.” So in the case before us the action of the district court of Dawes County, Nebraska, was limited to an interpretation and adjudication of the rights of the parties-under the mortgage, and no jurisdiction existed in the court, and the makers of the note did not create nor was anyone authorized,' so far as the petition shows, to create a new liability on their part. It follows that the order of the district court in sustaining the demurrer to the petition was correct and that the judgment should be affirmed. _ Affirmed. Potter, C. J., and Beard, J., concur.