Mulvane v. Sedgley

The opinion of the court was delivered by Pollock, J. : On the 15th day of April, 1887, plaintiffs in error, P. I. Mulvane, Caroline J. Mulvane, J. A. Munk, and Emma S. Munk, made and delivered to one Anna J. Hen tig their two promissory notes in the sum of $600 each, due and payable at the First National Bank of Topeka, Kansas, in one and two years from the date thereof, secured by mortgage on real estate in the city of Topeka, of which, at the time, they were owners. These promissory notes appear thereafter to have been transferred to one James Hentig, and by James Hentig to the plaintiff in this action. The same were given as evidencing the purchase-price to be paid for the mortgaged property. Thereafter, and on the 12th day of December, 1887, plaintiffs in error sold and conveyed the mortgaged premises to one A. L. Williams by deed of general warranty, in which said deed Williams expressly assumed and agreed to pay the mortgage debt as a part of the purchase-price thereof. Thereafter, but before the statute of limitations had run, plaintiffs in error departed from the state of Kansas and have remained non-residents. The promissory notes were left by James Sedgley with one John R. Mulvane, in the city of To — 107 — peka, for collection, and the same have continued to remain in the hands of said John R. Mulvane from about the date of the execution thereof to the date of the commencement of this action, except the period of about one year, when the same were in the hands of attorneys representing the owner thereof. On the 27th day of March, 1890, John R. Mulvane wrote James Sedgley, then the owner of said notes, informing him of the purchase by Williams of the mortgaged property and his assumption of the debt, as follows: “The notes you speak of, made by Mrs. Munk and Caroline Mulvane, are perfectly good. The property has been bought by one A. L. Williams, attorney of the Union Pacific Railway Company, who has assumed the payment of the notes. . . . The facts are, the makers are perfectly good and the properties, in addition, are first mortgages ; hence, while we have urged payment of interest as a matter of business, not that we hesitated about the security, we will press it again.” Again, on May 25, 1891, John R. Mulvane wrote James Sedgley as follows “I am sorry for the delay in that Catherine Mulvane and Mrs. Munk note. They sold the property to Mr. Williams, who is attorney for the Union Pacific railroad. He assumed the payment of these notes. He is expecting a big fee through the foreclosure of the C. K. & N., and has promised to-day that as soon as he gets the money he will pay. This must be very soon. In the meantime, I have notified Doctor and Mrs. Munk that they must pay the paper. They have asked me to wait a little while on Mr. Williams, and if he does not pay then they will take it up. It is perfectly good and you are running no risk whatever of loss.” — 108 — On May 27, 1897, Mulvane wrote plaintiff as follows : “ I am just from Williams’s office. Made the proposition some time ago to deed you the property. This he has agreed to do. If he will deed the property then I will look up the taxes. . . .” In reply to this plaintiff wrote Mulvane July 23,1897 : “In your favor of May 27 you say Mr. Williams has agreed to deed you the property and you will look up the taxes after he has done so. If you have secured from Mr. Williams a deed to the property to me, please forward deed to me. If you have not yet got title to the property for me, please forward me by return mail all the papers relating to the loan.” After the purchase of the property, and on the 30th day of October, 1891, Williams made a payment upon one of said promissory notes, the last due, of $>500. Williams has at all times been a resident of the state of Kansas and the city of Topeka, being absent from the state of Kansas, however, about ten weeks in each year during such time. In the year 1896 John R. Mulvane made a proposition to Williams, the purchaser, that if he would convey the real estate mortgaged in satisfaction of the promissory notes that such conveyance would be accepted, which Williams agreed to do. Mulvane prepared a deed of general warranty from A. L. Williams and wife to Nellie P. Sedgley, and handed it to Williams, who signed it but did not acknowlege the same. The wife of A. L. Williams did not execute the deed, nor was it, after the signing thereof, returned to Mulvane. This suit was brought by defendant in error, Nellie P. Sedgley, on the 28th day of August, 1897. Thereafter, on the 23d day of July, 1898, by leave of court, — 109 — she filed an amended petition making defendant in error, A. L. Williams, party defendant therein, alleging his purchase of the mortgaged premises, his assumption and agreement to pay the mortgage debt, and praying a judgment against him for the amount of the notes. A summons was issued, and served on Williams, indorsed “Suit brought for the recovery or money,” stating the amount. To this amended petition plaintiffs in error answered, admitting the execution of the notes and mortgage, the conveyance of the property to Williams, his assumption and agreement to pay the mortgage debt, pleading the bar of the statute of limitations as to Williams, and, as a consequence arising from the relation of principal and surety created by the deed of conveyance from plaintiffs in error to Williams and his assumption of the mortgage debt, the bar of the statute of limitations as to plaintiffs in error. They also alleged the agency of John R. Mulvane, the agreement between John R. Mulvane, as agent, and A. L. Williams to accept a deed on behalf of plaintiff, Nellie P. Sedgley, in satisfaction of the mortgage debt, and the execution of such deed by Williams. Plaintiff replied, denying the agency of John R. Mulvane, except for the purpose of receiving payment on said promissory notes, which reply was duly verified. The defendant A. L. Williams answered, pleading the statute of limitations and the agreement to transfer the property in satisfaction of the mortgage debt. Thereafter, and on the 30th day. of December, 1898, the plaintiff, by leave of court, struck out all allega-, tions in her amended petition of the assumption of the debt by Williams. •At the conclusion of the evidence upon the trial, defendants below, here plaintiffs in error, moved the court — 110 — to instruct the jury to return a verdict in their favor, which motion was denied and exception saved. The jury returned a verdict in favor of the plaintiff and against all of the defendants save A. L. Williams, for the amount of the mortgage debt. Upon this verdict the judgment of the court was entered, foreclosing the mortgage and decreeing a sale of the property in satisfaction of the same. From this judgment defendants below prosecute this proceeding in error. It is conceded that the statute of limitations has not run in this case as to the Mulvanes and Munks, on account of their absence from the state. But it is earnestly contended by counsel for plaintiffs in error that, as to Williams, the first note is clearly barred by the statute; and, as the last payment upon, or recognition of, the second note was on October 30, 1891, and as the amended petition making Williams a party was not filed until the 23d day of July, 1898, and as the statute did not cease to run as to Williams until he was made a party defendant in the suit, and allowing an-absence of ten weeks from each year, that the note last due was also barred as to Williams at the date of filing the amended petition to which Williams was made a party. This contention we believe and shall assume to be true. Upon this hypothesis, it is further contended that, as between the Mulvanes and Munks on the one hand and Williams on the other, by the purchase of the property and the express assumption of the mortgage debt, Williams became the principal debtor and the Mulvanes and Munks sureties for Williams. Upon these premises, it is contended that as the statute of limitations has barred the right of recovery by the creditor against Williams, the principal, the right to recover from the sureties necessarily follows ; — 111 — that where there is no liability of the principal there can be no liability of the surety. While the relation of principal and surety undoubtedly exists in this case, as between Williams, the grantee, and the Mulvanes and Munks, the grantors, in the deed of conveyance of the property by reason of the express assumption of the indebtedness in the deed by Williams, whether this relation of principal and surety extends to and is binding upon the mortgagee depends upon the answer to the question, Did the mortgagee consent to and accept this relation as binding upon her? If not, clearly she may disregard the relation and recover upon the notes as against the makers, in whose favor it is admitted the statute has not run, and subject the mortgaged property to the payment of the debt. Whether the mortgagee assented to and accepted the relation of principal and surety existing between Williams and the Mulvanes and Munks is a question of fact. This question was submitted to the jury and by the jury found against plaintiffs in error. From the undisputed evidence in the record, it is clear that John R. Mulvane acted as the agent of the owner of the notes; that he held possession of the notes for the owner; that he knew of the purchase of the property by Williams and his assumption of the mortgage debt; that he wrote the owner of the notes, James Sedgley, informing him of the purchase of the property and assumption of the debt by Williams; that Williams paid $500, to be applied upon the mortgage debt; that Mulvane often requested payment of Williams, and that Williams stated to Mulvane that he would make payment of the same; that Mulvane agreed with Williams to accept a conveyance of the property in satisfaction of the debt; that a deed to — 112 — the property was prepared by Mulvane and signed by Williams but not returned to Mulvane; that plaintiff was informed of this fact; that suit was brought by plaintiff against Williams, in which a personal judgment was asked on his assumption of the mortgage debt. In view of these facts, as shown by the record, it is the opinion of the majority of the court that, as a matter of law, the trial court should have sustained the motion for judgment in favor of defendants ; that, as a matter of law, from the undisputed facts appearing in the record, plaintiff recognized and accepted Williams as her debtor, and hence the relation of principal and surety existing between the mortgagors and the purchaser of the property was extended to and became binding on the plaintiff. As the cause of action against Williams by plaintiff, upon his assump-' tion of the debt, is barred by the statute of limitations, plaintiffs in error have become released from their obligation. (Stove Works v. Caswell, 48 Kan. 689, 29 Pac. 1072.) It follows that the judgments of the court of appeals and of the district court must be reversed, and it is so ordered. Johnston, Smith, Greene, JJ., concurring.