Bowen v. Barksdale

The opinion of the court was delivered by Mr. Chief Justice Simpson. In February, 1875, the defendant, N. L. Barksdale, with the defendant, Burns, as his surety, made and executed to the plaintiff a sealed note, of which the following is a copy: “$800. Twelve months after date, with interest from date, ten per cent, per annum, we, or either of us, promise to pay Emeline Bowen eight hundred dollars, for value received, and if not paid at maturity, the interest to be added to the principal and bear interest, and so continue until the note is paid. Witness our hands and seals, February 26th, 1875. (Signed) N. L. Barksdale, [seal.] Christopher Burns, [seal.]” Barksdale secured this note by a mortgage of certain real estate situate in Laurens County, containing three hundred and twenty-nine acres, more or less, which was executed at the same time of making the note, the mortgage being duly recorded, &c. Several payments were made on this note by Burns, the surety, and certain payments were also made thereon by the defendant, T. N. Barksdale, a son of the defendant, N. L. Barksdale, who also had made certain payments thereon, but these credits did not pay the note in full. In April, 1884, defendant, N. L. Barksdale, sold to W. II. Barksdale a portion of the mortgaged premises, some seventy acres, for $800, which amount being credited on [149] the note, the land thus sold was released from the mortgage. Some time after the execution of the mortgage, defendants, Traynham & Dial, Toliver Robertson, and T. N. Barksdale, each recovered judgments against the said N. L. Barksdale for certain amounts, and under the judgment of Traynham & Dial a homestead of ninety-five acres of the land was set off to the said N. L. Barksdale, including the dwelling house and adjoining lands, which was confirmed by the court, leaving one hundred and fifty acres of the mortgaged premises, of which a plat was made, representing the land after deducting the portion sold to W. H. Barks-dale above and the homestead. Under these circumstances, the action below was instituted by the plaintiff to foreclose her mortgage for the balance due on her note. The judgment creditors were all made parties, and the following questions arose and were decided by his honor, Judge Izlar, before whom the case was tried: 1st. The rate of interest which the note of plaintiff should bear after maturity. 2nd. Whether the plaintiff should be required to exhaust the homestead before going upon the other land, under the double fund doctrine. 3rd. Whether Christopher Burns, the surety, was entitled to be subrogated to the rights of the plaintiff in the mortgage and note to the extent of the payments made by him thereon, after satisfaction of the balance of said note. 4th. Whether T. N. Barksdale was entitled to such subrogation for the payments made by him. Upon the first question, his honor held and decreed that the note bore interest after maturity only at seven per cent., both as to the principal and the annual interest. Upon the second, he decreed that the double fund doctrine was applicable, and that the plaintiff' should be required to sell the homestead tract, the proceeds to be applied to her debt before going upon the proceeds of the remainder of the land. Upon the third, he held that Christopher Burns, the surety, was entitled to stand in the place of the plaintiff, for his payments on the note, as to any remainder of the proceeds of sale of the mortgage premises, after the plaintiff was paid the balance due on her note. Upon the fourth, he held that-there was nothing in the evidence which satisfied him that T. N. Barks-dale had any interest, equitable or otherwise, in the note and mortgage. And he adjudged and decreed a sale of the mortgage [150] premises (excluding the portion sold to W. H. Barksdale), with direction as to the application of the proceeds in accordance with his rulings and holdings as above. The appeal involves and raises the question of the correctness of these rulings, and also a question as to the costs of Toliver Robertson and of T. N. Barksdale, hereafter to be noticed. , The first question as to the rate of interest the note should bear after maturity, is a question of intention, to be reached by a proper construction of the terms of the note itself under the light of the cases involving like questions. No doubt but that the general rule as to notes due several years after date, with interest from date' at a higher rate than 7 per cent., is, that the interest after maturity drops down to 7 per cent., the legal rate, in the absence of a contract for a higher rate. This is upon the ground, that the note in such a case shows by its terms that the promise to pay the higher rate terminates at the maturity. When, however, the note is due at the end of twelve months, or at a shorter period, and the promise is to pay the interest annually, this term has been construed to carry the promise as to the interest forward to the ultimate payment of the principal, and at the rate specified in the note, because, otherwise, the word annually would have to be eliminated from the note entirely, which could not be done without altering the note. Now, here the note.was to mature at twelve months, with ten per cent, interest from its date, and with the promise, if not paid at maturity, then the interest to be added to the principal and bear interest, and so to continue annually until the note is paid. There can be no doubt but that the parties understood and meant that some interest should be added to the principal after maturity each year, and bear the same interest as the principal, and this was to continue until the note was paid in full. Now, what rate of interest was thus to be added annually ? The only rate of interest mentioned in the note was ten per cent., and we think this was the rate referred to where the terms, “the interest,” were used, indicating the interest which was to be added to the principal annually after maturity. In endeavoring to reach the intent of parties to an instrument of any kind, every word therein must be given its proper meaning. Tested by this rule, we think the. [151] construction of his honor to the note here was erroneous. We think that ten per cent, should be added to the principal after maturity of the note annually, thus becoming a portion of the principal, and bearing the same interest as the principal. As to the application of the double fund doctrine, we think his honor was correct. Here were two tracts of land, to wit, the homestead, set off by metes and bounds, and the 150-acre tract. True, these two portions of land had originally been incorporated together, and formed but one tract, but when the question below was made, this tract had been divided into the homestead and the 150-acre tract, so that it was distinctly known what the judgments had lien on, and what the mortgage covered. We think Bank v. Harbin (18 S. C., 425) is authority here, and sustains the ruling of his honor. There can be no doubt but that his honor was correct in holding that the payments made by Christopher Burns, the surety, and for him, should come in immediately after the mortgage debt was paid ; in fact, this is not contested in the appeal. We see no reason for disturbing the findings and holdings of his honor as to the payments made by T. N. Barksdale, nor as to his decree upon the matter of the costs. • It is the judgment of this court, that the judgment of the Circuit Court be modified as to the rate of interest of the mortgage debt, as hereinabove adjudged, and that in all other respects it be affirmed. Let the case be remanded,, so that the judgment herein may be enforced.