Deering Harvester Co. v. C. L. Smith Farm Land Development Co.

PROVOSTY, J. Plaintiff, through a trustee, sold to Waddell, all on credit, 42,512 acres of marsh land for as many dollars, and Waddell executed for this purchase price his two notes, one for $25,000, due in one day, and the other for $17,512, due in one year, secured by vendor’s privilege and mortgage on the property. On the same day, to wit, November 30, 1912, Waddell sold the property to defendant for $255,072. Defendant paid $94,233 cash, and for the balance assumed the payment of the two Waddell notes, and executed its own notes to its own order and by itself indorsed in blank, and identified by the notary’s paraph with the act of sale and mortgage, as follows: One note for $7,-488 due December 1, 1913; one note for $25,-000 due December 1, 1914; one note for $25,-000 due December 1, 1915; one note for $25,-000 due December 1, 1916; one note lor $35,-000 due December 1, 1917. [1] All these notes have been paid except the three last; and this suit is upon the latter, and for the recognition and enforcement of the vendor’s privilege and mortgage and for taxes paid and attorney’s fees. Plaintiff holds the notes as pledgee, and sues as such. The only defenses are that no more than $3,-000 is due for attorney’s fees, and that the defendant is entitled to have the mortgage released from 2,500 acres for every $12,500 it has paid, under the following clause of its contract with Waddell: “And it is further understood and agreed that the vendor herein, or the legal holder or holders of said promissory notes herein given as portion of the purchase price, will release in tracts of not less than 2,300' acres in a compact body to the purchaser hereof, or to its assigns or transferees, from the effect and operation of said mortgage and vendor’s privilege, on payment to the holder or holders of said notes of the sum of $5 per acre for the number of acres so released, the amount so paid to be credited as of date of payment on the note the due date of which is December 1, 1914; for all acreage released over and above the 2,500 acres just above mentioned the $5 per acre necessary to be paid to secure said release shall be credited upon any unpaid note executed by or assumed by the purchaser herein, at the option of the purchaser or its successors. It is specially understood that no tract will be released at one time containing less than 2,500 acres.” Plaintiff would restrict the operation of this clause to payments made in anticipation of the maturity of the notes; and its learned counsel argue in support of that construction that, inasmuch as by another clause of the contract default on one of the notes is to cause all the notes to become due and the mortgage as a whole to become enforceable upon the entire property, "the release could be demanded only for payments by anticipation, since a release could hardly be demandable after the mortgage as a whole had become enforceable. If payments by anticipation had been intended, nothing could have been easier than to use language expressing that idea. The word “payment” is used unqualifiedly; and we must assume that a writing drawn up by business men to evidence a transaction of the magnitude of the one in question expresses the ideas intended to be expressed. The learned counsel quote article 1957 of [305] the Code, “The agreement is interpreted against him who has contracted the obligation,” and say that defendant was the ob-ligor. Defendant was the obligor for paying the debt, but not for giving the release; and the sole obligation imposed by said clause is the giving of release. Next, the learned counsel say that, “in order to release the first 2,500 acres of land, it was necessary that $12,500 should have been paid and credited upon the note of December 1, 1914, which would have meant a payment of $12,500 in addition to the payments to be made upon the two notes of $25,000 each due on December 1, 1912, and December 1, 1913, respectively,” and that this shows clearly that, for the release, payment by anticipation was meant. This interpretation does not take into account the provision that “for all acreage released over and above” the first 2,500 acres the purchaser may require the payments to be credited on any note executed by it or on any note assumed by it. To say that defendant is not entitled to a release for payments credited on any of the notes it executed, or on any of the notes it assumed the payment of, is simply to go against the plain language of the clause. [2] Next, it is argued that by not demanding the releases at the time of the payments the defendant waived them, or, at any rate, put upon the contract the interpretation that the releases were not demandable. Suffice it to say of this argument that it is founded upon nothing at all. There is no time fixed in the clause for demanding the releases; and why should the defendant be demanding partial releases if it had no present need of them, and especially if it expected to pay the whole debt and extinguish the mortgage upon the entire property at once, as evidently was its expectation? In the cases cited by the learned counsel, except in one, the release clause was differently worded. Thus in Commercial Bank v. Hiller, 106 Mich. 118, 63 N. W. 1012, the release was to be accorded as to one-fifth of the lots “as fast as the lots were contracted to be sold,” and as to the remaining four-fifths “upon the payment of $150 for each and every lot to be released.” The latter stipulation, said the court, “evidently contemplated that the payment and demand for release were to be concurrent.” The court must have considered that the agreement for the four-fifths was to be read in the light of the agreement for the one-fifth, so that the release of each lot was to be a special and separate transaction. In the case of McComber v. Mills, 80 Cal. 111, 22 Pac. 55, the lots were to be released “whenever the defendant might desire to sell any of them.” The court said that the defendant had not paid plaintiff “$250 or any other sum for-the release of any particular lot, and did not tell plaintiff what particular lots he wished released under the contract,” and that besides the contract had been changed by a subsequent agreement to the effect that no more lots were to be released. The case of Stephens v. Keen, 68 Fla. 558, 67 South. 226, seems to be analogous to the present, but was made to turn, it seems to us, upon a rather slender pivot — that the payments were not made as of $50 per acre, but as “a general reduction of the mortgage indebtedness.” This would indicate that, if in making the payment the defendant had said I am paying at the rate of $50 per acre, he would have won his case. In Baldwin v. Benedict, 111 Iowa, 741, 82 N. W. 956, what was held was that the defendant could not by paying after default avail himself of a clause allowing release for payment to be made “during the pendency of the mortgage.” To the same effect, practically, is Brown v. Cleveland Trust Co., 30 Ohio Cir. Ct. R. 364, and the same may be said of Reed v. Jones, 133 Mass. 116. On the other hand, defendant [307] cites San Diego Construction Co. v. Mannix, 175 Cal. 548, 166 Pac. 325, where the view taken was the very opposite of that taken in Stephens v. Keen, supra, and where the reasoning appears to us to be absolutely unanswerable. [3] This brings us to the question of default, upon which also plaintiff relies. The facts in that connection are that some time before the maturity of the note of December 1, 1915, the defendant applied to Mr. Wad-dell for a release corresponding in amount with tire $75,000 already paid, and that Mr. Waddell refused to grant the release unless the $25,000 note which was to mature on December 1, 1915, should first be paid. The reason why the defendant applied for the release was that it needed the land in order to mortgage it for procuring the funds with which to meet the 1st of December payment. Mr. Waddell had then already pledged the notes to plaintiff, but defendant was ignorant of that fact, and, instead of enlightening defendant in that regard, Mr. Waddell, in his correspondence with defendant, dealt with the situation as if the notes were still held by him; but he did this with the full knowledge and consent of plaintiff through its attorney in fact, a Mr. Lauderbaek, so that he must be considered to have been the representative of plaintiff in the matter. The plaintiff should have complied with the said demands for release, and was clearly placed in default by them. [4] Next it is contended that, as the notes were pledged to plaintiff before maturity, they passed to plaintiff free of this equity of having to make release of mortgage on payment. The notes passed free of equities, but the mortgage did not (Citizens’ Bank v. Ferry, 32 La. Ann. 310, and other .cases too numerous to need to be cited); and it is not with the notes, but with the mortgage, that we are concerned in this case. As the plaintiff should have made the releases at the time they were demanded, it would be drawing profit from its own default if not required to make them now; and it cannot be allowed to do that. [5] The contract provides no rule for the selection of the lands to be released. Defendant in its answer has made a selection, and .prayed that the court adopt it. The land was sold at a uniform price of $6 per acre, and is all marsh, and the very absence of any provision for selection would seem to indicate that none was necessary, in view of the fact that the entire area is' of a uniform character. Under these circumstances, we will adopt the selection made by defendant and order its enforcement, but with reserve of right to plaintiff to show, on application for rehearing, why some different disposition should be made. [S] The notes contain the following provision for payment of attorney’s fees: “And 5 per cent, attorney’s fees upon the amount then due, provided that such fees shall not exceed .the sum of $3,000, in the event of suit or in the event this note is placed in the hand of an attorney after maturity.” And the contract contains the following: “Said notes stipulating in case it shall become necessary to place them in the hands of an attorney for collection the said purchaser binds himself to pay the fees of an attorney at law who may be employed for that purpose, which fees are hereby fixed at 5 per cent, upon the amount then due, provided that such fee shall not in any event exceed the sum of $3,-000.” Plaintiff demands $3,000 per note, or $15,-000. What would have been the proper interpretation of these clauses if the notes had been sued on separately need not be considered, since they are being sued on together; so that the $3,000 limitation contained in the contract applies plainly to the case as a ■whole; and that was the view taken by our learned brother below. [309] It is therefore ordered, adjudged, and decreed that the following lands situated in the parish of Cameron are released from the vendor’s privilege and mortgage of the plaintiff, to wit: Township IS South, of Range IS West: Section 4: Entire section. Section 5: Entire section. Section 6: North half of north half; west half of southwest quarter. Section 7: North half of southwest quarter ; southeast quarter of southwest quarter; east half of northwest quarter. Section 8: Entire section. Section 9: Entire section. Section 17: Entire section. Section 18: Entire section, except northwest quarter of northwest quarter. Section 19: Entire section. Section 20: Entire section, except east half of southeast quarter. Township IS South, of Range H West: Section 1: Entire section, except east half of southeast quarter, northwest quarter of southwest quarter, and southeast quarter of northeast quarter. Section 2: Entire section. Section 3: Entire section. Section 4: Entire section. Section 5: Entire section, fractional, containing 360 acres. Section 7: Entire section. Section 8: Entire fractional section, containing 480 acres. Section 9: Entire section. Section 10: Entire section. Section 11: Entire section. ■ Section 12: North half of south half and north half of section. Section 13: South half of north half and-south half of section. Section 14: Southeast quarter and north half of northeast quarter. Section 15: North half of northeast quarter, and northwest quarter of section. Section 17: Fractional west half and northeast quarter of section, containing 320 acres. Section 20: Fractional west half and southeast quarter of section, containing 320 acres. Section 22: South half of northeast quarter and south half of section. Section 23: Entire section. Section 24: Entire section. —and that, in so far as recognizing and ordering the enforcement of plaintiff’s vendor’s privilege and mortgage upon the said lands here released is concerned, the judgment appealed from is set aside, hut that in all other respects it be affirmed; the plaintiff to pay the costs of this appeal, and the defendant those of the lower court. O’NIELL, J., dissents, being of the. opinion the judgment appealed from should be affirmed.