Fredenburg v. Turner

Marston, J. This is a suit in chancery for the fore••closure of a mortgage. Atwood, who was the owner of certain real estate, with -a saw-mill situate thereon, entered into a written agreement [404] with Jesse W. Turner upon the 18th day of July 1866,. whereby he agreed to sell and convey the same by a good and sufficient warranty deed so soon as a survey of the same could be made. In consideration'thereof Turner agreed to-pay “the sum of eight thousand dollars as follows, to-wit: four "thousand dollars at date, and the balance in four equal annual payments, with interest annually, to be paid in sawing and lumber, at the mill on said premises, at market price for same.” The property was afterwards conveyed and upon the-26th day of July, 1866, a mortgage in the usual form given to secure payment of a note of which the following is a. copy: “$4,000. Kalamazoo, Mich., July 26, 1866. For value received we promise to pay to Benjamin Atwood, or bearer, four thousand dollars in sawing and lumber, at the saw-mill this day bought of him, on sec. 11, town 4 south of range 9 west, as follows, to-wit: in four-equal annual payments from and after the date hereof, or before, with interest annually on all sums unpaid. This-, note secured by mortgage which is duly stamped. J. W. Turner, Sally Turner.” The parties are not agreed as to the correct construction, of this instrument. Complainant claims that the note and mortgage having been made payable in equal annual instalments, in sawing and lumber at the mill, the instalmentsseverally fell due on the 26th day of July in each year, and that it was the duty of the mortgagor to elect whether he would pay in sawing or lumber, or if in both the proportionate amount of each, and to be prepared as each instalment became due, at the proper place, with the goods-specially set apart and designated to deliver to the creditor, which would vest the title thereto in the creditor even although he did not attend to receive them. It is somewhat difficult to adopt and follow any arbitrary rule in the construction of such instruments. Slight-changes in the phraseology of the instrument will ■ necessi- • tate a modification of the general rule applicable to chattel [405] notes, in order to effectually carry out the evident intention ■of the parties, and to give effect to the entire instrument. A note or an instalment payable in sawing, no matter whether it is expressed to be due or payable on a day certain or not, very evidently cannot be paid or a tender made, or any thing set apart or designated, upon that day, where from all the circumstances it is apparent that the sawing could not possibly be done at such time. In such case there is no definite specific article capable of being set apart or designated. The evident intention is that previous to such date logs will be furnished which the other party will saw or manufacture into lumber, and if he is' ready and willing to manufacture such logs into lumber, but the same are not furnished at the mill by the mortgagee in sufficient quantities and in time to enable the mortgagor, taking into consideration the capacity of his mill, and his obligations with others, to have them manufactured by the time fixed, clearly the default in such case would not be that of the mortgagor but of the mortgagee. What then is the proper construction of this instrument? The promise is to pay four thousand dollars in sawing and lumber at the mill, in four equal annual payments from the date thereof or before, with interest annually on all sums unpaid. The promise is not to pay in lumber or sawing at the option of either party, nor is any thing in the instrument itself, or in the record, to enable us to ascertain or determine the proportion to be paid in sawing, or the kind, quantity or quality of lumber that was to be delivered. It was evidently the understanding of the parties that the mortgagee should deliver at the mill logs to be manufactured into lumber, although the quantity to be delivered each year was not mentioned. The logs so to be delivered were to be manufactured from time to time each year, and if sufficient were not delivered and cut each year to pay the instalment falling due that year, the balance was to be paid in merchantable lumber at market prices, at all events by the 26th of July. And where as in a case like the present the note is payable in sawing and lumber and the parties cannot agree upon the proportion of each, [406] neither’ party haying the right to determine the amount, the law will apportion it equally, requiring one-half the amount to be paid in sawing and the balance in lumber. Another question arises upon the construction of this instrument. The principal is to be paid in four equal annual payments from the date thereof, or before, with interest annually on all sums unpaid. As it was clearly contemplated that each several instalment would, in part if not fully, be paid in sawing and lumber during the year before it became due, we are of opinion that at least so long as the mortgagor was not in default such instalment would not draw interest. The parties did not intend that an instalment should continue to draw interest after it had been extinguished by payment. The sawing of logs or delivery of lumber would be a payment pro tanto, and if such payments were equally distributed over the entire year the instalment would thus in part be paid long before it became due. Wilcox v. Allen, 36 Mich., 160. Having thus given our view of the proper construction of the instrument, the conclusion we deduce from the facts is: That so far as the mortgage debt was payable in sawing, complainant has lost his right to payment by failure to call for the labor at the time specified. That as to the remainder he is entitled to payment according to the terms of the mortgage, and should have decree of foreclosure therefore in default of payment within a reasonable time to be named. And that complainant should recover costs of the court below, but the appellants should have the costs of this court, to be offset against the costs of complainant. And the decree should be modified in accordance with these views. The other Justices concurred.