Zekind v. Newkirk

Davison, J. This was a suit in chancery commenced in January, 1853, by the appellees, who were the plaintiffs, against Charles Zekind and Others, to foreclose a mortgage. The Circuit Court, at its March term, 1857, rendered a decree for the plaintiffs, from which the defendants appeal to this Court. The facts, so far as they relate to the errors assigned, are these: Zekind, in August, 1838, bought of S. and W. Edsill the mortgaged premises. For a part of the purchase-money, he indorsed to the Edsills, in blank, two promissory notes; and to secure the payment of the notes, he executed to them the mortgage in question. The notes and mortgage were duly assigned to-' Newkirk, Mulford, Sf Co., who, without the institution of any proceedings against the makers of the notes, brought this suit to foreclose, &c. The following is the condition) of the mortgage: “These presents are upon this express condition, that if two promissory notes, numbered 2 and 3, [546] dated July 24, 183S, signed by G. H. Long and T. J. Claw-son^ and payable to Charles Zekind Sf Co.—No. 2 given for 350 dollars, payable nine months after date, and No. 3 given for 700 dollars, payable at seventeen months—be well and truly paid at the time for the payment thereof, by the said Long and Clawson, their heirs, &c., or by the said Charles Zekind (by whom the notes were indorsed to S. and W. Edsill), his heirs, &c., without delay, then and from thenceforth this indenture, and all the estate hereby granted, shall cease and be void, &c.; but in case of failure of the payment as herein above specified, then this indenture, and the estate hereby granted, is to remain absolute and in full force and virtue in law.” It was proved that the notes, or some part of them, could have been collected from the makers, had due diligence been used after they respectively became due; that the makers, in the years 1839 and 1840, owned personal property in their possession to an amount greater than the amount stated in the notes; that no demand upon the makers of the notes was made for the money; that Zekind Sf Co. were never notified of their non-payment; and that, in the year 1842, the makers were decreed and certified bankrupts, under the bankrupt law of the United States. These facts plainly show that, for the collection of the notes from the makers, no' diligence was used; and, further, that due diligence, had it been used, would have been availing. It follows that when this suit was brought, the defendants were not liable as indorsers of the notes. 2 Blackf. 350.—6 id. 285.-8 id. 304.—7 Ind. R. 247. But in support of the decree, it is insisted, that a true construction of the condition of the mortgage, renders the failure to use due diligence against the makers of the notes, or an excuse for not using it, unimportant in the discussion of this case; because the condition expressly stipulates that the estate mortgaged shall become vested absolutely in the mortgagees, unless the notes are paid by the makers or the assignors at the time for the payment thereof, without delay. This stipulation is, indeed, very explicit, and seems to authorize the foreclosure of the mortgage upon [547] the mere failure to pay the notes at maturity. It is, however, contended, that the indorsements, being made concurrently with the mortgage, should be construed as parts of the condition. We are not inclined to adopt this construction. It may be that the indorsements and mortgage should be considered one transaction, and constitute but one contract between the parties; but when so considered, the inquiry arises, what is that contract? It was, no doubt, competent for the parties so to stipulate in the condition of the mortgage as to waive the necessity of suing, in the first instance, on the notes. Have they done so? True, an indorsement, though in blank, is, in legal effect, a written contract; yet its terms, which the law defines, must be varied, and even- controlled, by a written contemporaneous agreement. And in this case, it is not an unfair conclusion, that the parties intended to control the contracts implied by the indorsements; because, in the condition to which we have referred, they expressly agree that the deed of mortgage shall become absolute, if the notes are not paid at the time for the payment thereof, wdthout delay. And such intent is not even doubtful, when it is noted that the mortgagor himself stipulated, in effect, that he would pay the notes, in the event that the makers failed to pay them as they respectively became due. We are of opinion that the whole transaction, as it appears in the record, when fairly construed, at once shows that the notes were assigned to the mortgagees, and by them accepted, in view of their payment as they matured. R. Breckenridge and D. H. Colerick, for the appellants. C. Case, for the appellees. Per Curiam. The judgment is affirmed with 5 per cent, damages and costs.