Benneson v. Savage

Mr. Justice Scholfield delivered the opinion of the Court: It will be most convenient to notice the several objections urged in argument against the decree of the circuit court, in their order of precedence upon the record. First—It is objected that the contract described in the bill and that described in the trust deed are not the same, and that therefore the trust deed is not a security for the contract described in the bill. A copy of the trust deed is made part of the bill as an exhibit, and it is therefore unimportant, even if it be conceded that the pleader misconceived its legal effect, for the instrument itself being thus before us, we will give it that legal effect to which it is entitled. Allen et al. v. Woodruff et al. 96 Ill. 11. The trust deed recites, among other things, as follows: “Whereas, the said Charles A. Savage is justly indebted to the party of the third part in the sum of $6000, according to the tenor and effect of a certain promissory note executed by him, of even date with this deed, and payable three years after date, to the order of the said party of the third part, in the aforesaid sum of money, for value received, with interest thereon at the rate of nine per cent per annum from the date of the said note until due, and at the rate of ten per cent per annum after due, until the said principal sum is fully paid,— both principal and interest being payable at the banking house of L. & C. H. Bull, in Quincy, Illinois, with the current rate of exchange on New York. The first payment of interest on said note is to be made on the first day of October, A. D. 1873, for the period ending on that day, and thereafter the interest is to be paid semi-annually, on the first days of April and October in each year, until the last payment of interest, which is to be made for the remaining period on the day of the maturity of the said note, according to interest coupons thereto annexed ; and in and by said note it is further provided, that the holder thereof may extend the time for the payment of the whole or of any part thereof, on the maker executing coupons for interest to accrue thereon 'during such extension, at a rate not exceeding ten per cent per annum, payable at the dates named in said note for the payment of interest, such coupons to be annexed to said note, and to be evidence of such extension.” The coupons described in the bill provide, that if they are not paid at maturity they shall bear interest after that date at the rate' of ten per cent per annum, and this, it is contended, is entirely different from the coupons in the foregoing recital. We are unable to concur in this construction of the recital. The language of the recital, it will be observed, is, that the interest shall be paid “according to interest coupons thereto annexed, ”—that is, annexed to the note or contract,— and so the coupons are themselves made a part of the recital, and must therefore be read to ascertain their precise terms. (Jones et al. v. King et al. 86 Ill. 225.) And when this is done, it is seen that the coupons described in the bill and the coupons described in the recital are the same coupons. Second—It is next objected that the mortgage was released by reason of the extension of the time of the payment of the debt without the consent of the mortgagors, Elvey W. Savage and Anna Wells, who were the real owners of the mortgaged property. The mortgage expressly recites, as was seen supra, that it is provided in the note which it secures, “that the holder thereof may extend the time for the payment of the whole or of any part thereof, on the maker executing coupons for interest to accrue thereon during such extension.” But it is contended, first, that this does not warrant an extension of time without the consent of the sureties; and second, that the extension was not made in accordance with the terms of the deed. 1st. Counsel insist that the mortgagors do not, by this, do any more than consent to the continuance of the mortgage in the event they shall themselves hereafter consent to an extension of the contract. But that, as has been seen, is not the purport of the language employed, and, plainly, it is not within its reasonable contemplation. The mortgagors consent that the holder of the note may extend the time for its payment upon the maker executing and annexing to the notes coupons for interest,—that is, they consent, if that shall be done, the mortgage shall continue,—for there is nothing else to which their consent can have effective application; and this is put beyond reasonable doubt by the condition of defeasance, wherein it is recited: “Now, if the said Charles A. Savage, his heirs, executors or administrators, shall well and truly pay, or cause to he paid, unto the said party of the third part, or to the legal holder of the said promissory note, the principal sum therein mentioned, with "the interest to accrue thereon, •* * * ór as the said principal or interest may become payable by virtue of any extension of time for the payment of said note, which may be made as therein provided, and of the interest coupons to be in that case thereto annexed, * * * then and in that case this deed shall become and be void, and the property hereby conveyed shall be released at the proper cost and charge of the said party of the first part, and their legal representatives. But if the said Charles A. Savage, his heirs, executors or administrators, shall fail to pay, or cause to be paid, to the said party of the third part, or to the legal holder of the said note, any of the principal sum payable thereby, or any installment of interest thereon, at the respective times when the said principal sum, or any installment of interest thereon, shall become due and payable by the tenor and effect of said note and said original interest coupons, respectively, or as the said principal, or any part thereof, or interest thereon, may become payable by virtue of any extension of time for the payment of said note, or any part thereof, which may be made as therein provided, and of the interest coupons to he in that ease thereto annexed, * * * then and in such case this deed shall remain in full force and virtue, and the said promissory note, with the interest accrued thereon, and all moneys which may have been advanced and paid by the said party of the third part, or the legal holder or holders of said note, for the purposes herein-before expressed, with the aforesaid interest thereon, shall thereupon, each and every of them, in respect to and for the purposes of the trust hereby created, become and be presently due and payable, and the said parties of the second part, or the survivor of them, or the executors or administrators of such survivor, may thereupon at once proceed to sell the property hereby conveyed.” 2d. Counsel for plaintiffs in error insist that the only discretion given to the holder of the note is to fix the rate of interest reserved, within the limits prescribed, and that providing that the coupons shall bear interest after that date at the rate of ten per cent per annum, is beyond the power conferred by the mortgage, and hence that it can not be held to secure such a contract. But the executing of a coupon is the executing of an instrument, which, ex vi termini, bears interest after maturity,—if no rate is expressed, six per cent; and at the date of executing these coupons, any rate, not exceeding ten per cent, might be fixed by agreement of the parties. (Harper et al. v. Ely et al. 70 Ill. 581; Humphreys et al. v. Morton et al. 100 id. 602.) And so, under a familar rule applicable to such cases, authority to execute coupons necessarily implies authority to fix the rate of interest they shall bear after maturity, at any sum not prohibited by law; and it is held that a coupon is a part of the debt covered by the mortgage which secures its bond. Daniell on Neg. Inst. sec. 1491 a; Gilbert v. W. C. V. M., etc. R. R. Co. 33 Gratt. 599. It is suggested that there is omitted from these coupons the words, “with the current rate of exchange on New York.” There are two plainly sufficient answers to this: First, these words are, by no language of the deed of trust or of the note which it secures, required to be inserted in the coupons. It is required that “both principal and interest” shall be paid “at the banking house of L. & C. H. Bull, in Quincy, Illinois, with the current rate of exchange on New York;” but this is the language of the note only, and it is nowhere required that such language, or any part of it, shall be embodied in the coupons. Second, the omission of this language in nowise tends to change and enlarge the burden of the mortgagors, and they can not therefore complain of it. Third—It is further objected, that the power to extend the time of payment was a naked power, and that it was revoked by the death of Elvey W. Savage. In our opinion, this is a misapprehension of the character of the power. The trustees, it is conceded, took but a naked power. But this clause was intended to affect the substantial rights of the debtor and the creditor. As is contended by counsel for plaintiffs in error, the extension of the time of payment of the debt without the consent of the surety would operate to release the surety; and so, on like principle, here, such extension would release the mortgage. That could not concern the trustees, but it would materially injure the creditor. To prevent that,—that is, to continue, for the benefit of the creditor, the lien of the mortgage,—this power was inserted,—a power not to the trustees, but* to the debtor and creditor, to continue the mortgage as they extended the time for the payment of the money; and so it is a power coupled with an interest, and not revoked by the death of the mortgagor. Walker v. Denison, 86 Ill. 142. Fourth—It is contended, that when the note secured by this mortgage matured, defendant in error had it within his power to have applied assets of Charles A. Savage in his hands, in full discharge of the debt, but -failed to do so, and diverted such assets to other purposes. This is claimed to be proved by a transaction between defendant in error and Charles A. Savage on the 26th of November, 1875, whereby defendant in error purchased of Charles A. Savage ten quarter-sections of land in Nebraska, and, to secure the payment of the purchase money, gaVFhim his promissory note for $10,000, payable on demand, on which a credit of $2000 was indorsed. The following are stipulated to be the facts in regard to this transaction: “After the deed of C. A. Savage to W. T. Savage of these Nebraska lands was recorded in Gage county, Nebraska, where they are located, Jonas B. Aiken, a creditor of said Charles, commenced suit against him in the district court of said Gage, county, Nebraska, by attachment, and levied on these lands, for the payment of his debt; that while said suit was pending, said W. T. Savage deeded these lands to Olivia T. Savage, wife of said Charles; that said Aiken prosecuted his said suit to. judgment and execution, under which said lands were sold by the sheriff of said Gage county to said Aiken, and a deed of the same was executed to him by said sheriff; that thereafter said Olivia T. Savage brought suit in said district court, against said Jonas B. Aiken and others, to set aside said sheriff’s deed and remove the cloud thereby created from her said title derived from said W. T- Savage; that said Aiken set up the defense in said suit, that said deeds of C. A. Savage to W. T. Savage, and W. T. Savage to Olivia T. Savage, were made with due notice, and without consideration, and were covinous* fraudulent and void, and sustained said defense, the suit being decided adversely to said Olivia; that said Olivia appealed, the case to the Supreme Court of Nebraska, when a final decision was made adversely to said Olivia, as reported in 11 Neb. 323.” No reason is apparent why, under these facts, William T* Savage should be charged with these lands in the present suit. It does not appear but that the claim of Aiken exceeded their entire value, and it is upon plaintiffs in error to show a failure, in duty by defendant in error to apply property to the payment of this note. They have not done so, and it is therefore unnecessary to consider the questions so elaborately discussed* in the argument before us, in regard to the payments claimed, to have been made for these lands. Fifth—Argument is pressed upon us to the effect that defendant in error should be charged with the value of a certain house and lot on Broadway, in Quincy. This is not set up in the answer, and therefore, if sustained by evidence, could not be now considered. But we may remark that, in our opinion, it is not so sustained by the evidence. There is much evidence in this record to which we deem it unnecessary to make any reference. The entire evidence has been carefully considered, and after such consideration we are unable to say that there is any error in the record for which the judgment of the Appellate Court should be reversed. It is therefore affirmed. Judgment affirmed. Mr. Chief Justice Shops took no part in the decision of this case.