Burchard v. Frazer

Ohrxstianct, J. The first question in this case is, whether Frazer, the mortgagor, and the other defendants who are purchasers from Mm, are entitled to the deduction of six hundred dollars for the deficiency of twenty acres of land at thirty dollars per acre. Complainant having acted as the agent of his wife (who — 237 — owned the land) in making the sale to Frazer and in taking this mortgage for the balance of the purchase money, and having since become the assignee of the mortgage, may, so far as relates to this question (and most others in the cause), be treated directly as the vendor and mortgagee. The sale was very clearly a sale by the acre. The proposition made by complainant to Frazer and accepted by the latter was in the following words: “514 68-100. I propose to sell James H. Frazer my land in the town of Dearborn, five hundred fourteen and sixty-eight one-hundredths acres, together with the house thereon, for the sum of thirty dollars for each acre of land, and fifty dollars for the house thereon, four thousand dollars to be paid on delivery of the deed, the balance to be secured by mortgage on the same land sold, with a stipulation that the timber shall not be cut off only in just proportion to the payments made in one, two, and three years, with interest annually, one-third of the balance each year and pay for one-half the expense of writings.” And though the deed, as drawn up by Duffield, did not contain a warranty of quantity, yet as it appears clearly from the evidence that the price paid (the four thousand dollars paid down and the amount for which the mortgage was given) was exactly in accordance with the proposition, thirty dollars per acre for five hundred and fourteen and sixty-eight one-hundredths, and fifty dollars for the house, and that complainant, at the time he made the proposition and when the deed was delivered, and he received the mortgage, knew that the tract contained only four hundred and ninety-four and sixty-eight one-hundredths acres, leaving a deficiency of twenty acres, and that he then had in his possession the minutes of two surveys, which showed this deficiency, and that he also knew that, from his representation to Frazer, the latter supposed he was getting the whole quantity of five hundred and fourteen and — 238 — sixty-eight one-hundredths acres; we cannot resist the conviction that, in thus misrepresenting the quantity and in making the sale to Frazer for a price corresponding to the larger quantity, complainant was guilty of a deliberate fraud; and this conviction is strengthened by the alteration surreptitiously made by him in the deed, without the knowledge of Duffield or Frazer, before execution; for, though it may not have altered the legal effect of the deed as to any of the covenants contained in it, it was calculated to give it the appearance, in case any question should arise as to quantity, of an agreement or assent on the part of Frazer to take it at that quantity, whether more or less. We see no reason to doubt that, under the circumstances of this case, Frazer, upon discovering the deficiency, might have sustained a bill for reforming the deed or for a deduction from the purchase price. And we think it equally clear he is entitled to the deduction in this suit for the foreclosure of the mortgage. He never owed the amount for which the mortgage was given; and his grantees are equally entitled to the benefit of the deduction. The decree of the circuit court in chancery, therefore, properly deducted the six hundred dollars, as of the date of the mortgage. The next question is, whether Frazer’s note of December 15, 1866, given to James F. Joy (who then held the bond and mortgage as trustee for Mrs. Burchard) for one thousand four hundred and ninety-seven and sixty-two one hundredths dollars, the amount of interest then accrued and in arrear, operated as payment so far as the mortgage lien was concerned; or, in other words, whether the reception of the note and the mode in which it was treated by Joy show the intention to detach this amount from the lien of the mortgage, and to look to the note instead of the land, for its payment. It may be admitted ■ that the mere giving a note for — 239 — accrued interest, without any thing more to show the intent of the parties, might not have this effect. But the bond and mortgage were drawing interest only at seven per cent., and the interest itself, though due, was not drawing interest as the claim then stood. This note was not only drawn with interest, but with interest at ten per cent. Two important advantages, therefore, were secured to the creditor by the taking of this note for the accrued interest; advantages which might well be supposed to outweigh the value of the mortgage lien for the same sum tuitliout interest. And the note created a new obligation on the part of the debtor, quite different from that secured by the bond and mortgage. But the course of action taken by the creditor (Joy as trustee) shows, we think, very clearly, the intention to detach this amount from the Jlien of the mortgage and to treat the note as payment. In December, 1868, he took a new note of Frazer for the interest accrued upon this note and receipted that amount of interest on the larger note; and a judgment has since been recovered upon the smaller note, though the amount is still unpaid. Again, on the 5 th of May, 1869, Frazer entered into a written agreement to pay ten per cent, interest on all the balance due on the bond and mortgage from December 15, 1867 (when the whole became due). The agreement states “ the amount to be ascertained to-morrow;” and the account of all the payments and calculation of interest in pursuance of the agreement, showing the amount due May 5, 1869, as furnished in writing to Frazer, credits this note as payment, thus: “Payment December loth, 1866, Frazer’s •note, $1,497.62,” and the balance is made out upon this basis, precisely as if the amount had been paid in cash. We can, therefore, see no reason to doubt that the note was intended to operate as payment, or to detach and' relieve — 240 — that amount from the Hen of the mortgage. The decree, therefore, was correct in this particular. The only remaining question is uj>on the validity and effect of the special agreement made by Frazer, the mortgagor, with Joy, then the trustee of Mrs. Burchard, on the 5th of May, 1869, to pay ten per cent, interest from the 15th of December, 1867, when the whole sum (not paid) had become due upon the bond and mortgage. The written agreement, we think, sufficiently shows that there had already been forbearance on the part of the creditor from the 15th December, 18G7, up to the date of the agreement, May 5, 1869, on the faith of a verbal promise to pay ten par cent, interest, and that this forbearance had been at the request of the mortgagor, and that he was also anxious for further forbearance, without reference to any particular period. This prior forbearance was a sufficient consideration for the agreement to pay the additional interest up to the date of the agreement, May 5, 1869, and any forbearance which took place after that .date on the faith of this agreement, was a sufficient consideration for the promise to pay ten per cent, interest till paid. This agreement, unlike the note, in terms attached to the debt secured by the mortgage; and, as between the mortgagor himself and the mortgagee or holder of the paper, we see no reason to doubt the validity of the agreement, which, as between those parties, should have the same effect as if the original bond and mortgage had provided for ten per cent, interest after the 15th of December, 1867, till paid. But at the time when this agreement was made, and, in fact, before the maturity of the mortgage debt, the mortgagor had sold out all the land covered by the mortgage, in separate parcels, to various persons, some of whom aré defendants in this case; and, as to these purchasers, it was no more competent for the mortgagor to increase the — 241 — mortgage debt or amount of the incumbrance by any such agreement, than it would have been to affect them by an additional mortgage, subsequently executed, for the increased sum, or any other debt for which the mortgagor might choose to execute a new mortgage after he had parted with the property. He could, under the circumstances, therefore, only bind himself personally that the interest upon the mortgage debt should be thus computed; and the complainant, as against him, personally, is entitled to a decree at the increased rate of interest. But so far as relates to the lien of the mortgage upon the land, all of which had already been sold to other parties, complainant is only entitled to a decree for the amount calculated at seven per cent, interest, in the same manner as if the agreement had never been made. The decree, therefore, as to the defendant Frazer, should be so far modified as to allow the recovery against him of any balance of the mortgage debt calculating the amount at ten per cent, interest, according to the terms, and for the period, mentioned in his agreement. In all other respects the decree of the court below must be affirmed, and the record must be remitted to the court below for the execution of the decree. Complainant must recover his costs in this court aá against defendant Frazer. But the other defendants must recover their costs (in this court upon the appeal) against complainant. The other Justices concurred.