Bunker v. Barron , 93 Me. 87 ( 1899 )

Peters, C. J.

On May 7, 1868, Mary Quint and her sons William and Draxey Quint, being possessed of a farm in Embden, the same real estate described in the complainant’s bill, conveyed the property to John S. Paine by warranty deed which was immediately duly recorded. Lydia Quint, wife of William, not joining in the deed, afterwards conveyed her dower interest to Paine, by her deed duly recorded, for the consideration of $100.00.

On the same day of the conveyance, and as a part of the same transaction, Paine gave the Quints a bond for the re-conveyance of the property to them upon their payment to him of the sum of $300.00, $100.00 in three years from date, $100.00 in four years and $100.00 in five years from date, with interest annually, “and also all other debts which the said Quints shall contract with the said Paine.” This bond was not recorded until May 26, 1876. •The court has declared this transaction to be a mortgage. Bunker v. Barron, 79 Maine, 62. The Quints gave no notes for the moneys to be paid by them for the re-conveyance, but on January 7, for each of six successive years afterwards gave Paine a note of $36.00 for the interest on the $300.00 at twelve per cent interest thereon, said notes themselves being on interest, but never a cent being paid on either the notes or the bond to the end.

November 7, 1874, the Quints, having purchased another lot of land called the Eli Walker lot, borrowed $225.00 more of Paine to complete payment on that lot, and gave Paine a warranty deed of the lot as security for the money advanced for such purchase.

But before the date of this last transaction, namely, September 12, 1874, William Quint had mortgaged the farm to the complainant for $400.00, the mortgage being at once recorded; and the complainant, acquiring all the rights of William and Draxey Quint, Mary having in the mean time deceased, ’leaving William and Draxey her sole heirs, brings this bill to redeem the property from the Paine mortgage.

On February 1, 1875, Paine and the Quints met for the purpose of computing the indebtedness to Paine, one Thomas Gray having been called in to ascertain for them the amount due. In this settlement was included the amount of the first loan $300,00 with interest compounded annually at twelve per cent; the amount of the second loan, $225.00 with twelve per cent interest; also the $100.00 paid by Paine for Lydia Qiiint’s right of dower in the farm, together with the six notes of thirty-six dollars each; twelve per cent being computed and compounded annually on all the items without exception. The result was that William Quint gave Paine a new note for $872.34 and took a new bond to himself, covering the home farm and the premises purchased of Walker.

Mr.. James O. Bradbury was appointed master to ascertain the amount to be paid for redemption; and as Paine took possession of the home farm in the spring of 1878, it became necessary to ascertain the rents and profits of the place annually, and to apply them in settlement of the principal. In this way the master allowed simple interest on the first principal, the $300.00, and also on the $100.00 paid for the release of the dower, no one objecting to the allowance of the latter item, and the result of his figures brought Paine indebted to the farm in a net balance of $32.70 at the end of the year 1893. And so the master finds there was nothing due on the debt secured by the mortgage, but that it had been overpaid in the above sum of $32.70. This result allows simple interest annually on all principal.

The .master’s report correctly disallows anything more than simple interest. The small notes were without consideration so far as double interest was concerned, and simple interest was received which was all the contract called for. The law of usury was in force when the contract was made, and the law of to-day even is that only six per cent is recoverable unless it is agreed in writing to pay more. Counsel for the defense cites this phrase for Parkhurst v. Cummings, 56 Maine, 160: “He may take a note when the interest becomes due and the mortgage may be a security for such note.” In that case the note called for interest annually, and the new note covered six per cent interest while these notes covered twelve. • The court further says in that case: “But, after the principal becomes due, annual interest cannot be recovered in a separate suit.” Several of these small notes were given after the principal was due.

But a conclusive answer to the recovery in full of these small notes is the principle that “parties to a mortgage, cannot, as against subsequent parties in interest, stipulate by an unrecorded agreement for a higher rate of interest than that provided in the mortgage as recorded; nor can they incorporate into the mortgage any additional indebtedness.” Jones Mort. § 361. Paine cannot impose terms and conditions upon the second-mortgage holder which were not properly a part of the contract between him and the Quints.

The master rejected the claim of Paine to recover under his mortgage the sum of $225.00 advanced for payment of the Walker place. We are not ourselves free of doubt on the point, though we incline in favor of its allowance. The objection to its allowance is that it is an independent transaction and not naturally a part of the first mortgage. The words in the bond providing for the security of further advances are: “and also all other debts which the Quints shall contract with the said Paine.” The Quints got Paine to pay this sum, and about three months after-wards included the sum in a general note of William Quint. It was for the purchase of a wood lot to supply the farm, as is somewhere stated, and from indications without any direct statement, is, we should judge, adjoining or near to the farm. This lot alone would not presumably be worth relatively so much when separated from the ownership of the farm.

It is contended that this was a separate and distinct transaction between the parties because Paine took an absolute title to the lot by a warranty deed from the Quints. That cannot be a conclusive fact. Paine seemed to have his money secured by all the possible properties.

The more important proposition of the whole case is whether the complainant, when he took his mortgage, September 12, 1874, had at the time notice of Paine’s bond to Quints and the terms of it; for, if he did not, the bond not being at the time recorded there would be no notice on the record that the transaction was a mortgage to secure present and also future advances. It is well settled that the record must disclose the fact. Jones Mort. § 364. We are however assuming that actual notice is equivalent to a disclosure by record.

The evidence on notice is within a brief compass. The complainant had possession of both bonds, the one dated May 7, 1868, made before the mortgage to himself, and the one dated February 1, 1875, made five months -after his mortgage, the complainant procuring both bonds to be recorded May 26, 1876. He says he got both of Quint, but does not know when. Nor does Quint remember when he delivered them to him. The complainant could not have received both bonds before taking his own mortgage, because the second one was not in existence until afterwards. And the case on this material point hinges right here. Unless the complainant had seen or knew of the bond why should he have taken a mortgage of the farm in September, 1874, when the records disclosed that the absolute title had stood in Paine since 1868 ? And this presumption is strengthened by the fact that the bond was in the complainant’s possession at a later if not an earlier date than his own mortgage.

Though the mortgage to the defendant calls only for optional and not obligatory future advances, still the intervening mortgage to the complainant is only constructive notice of an intended termination of the right of the defendant, and such notice is not enough as it must be direct and personal. Such seems to be the prevailing doctrine of the authorities, though there are cogent and finely reasoned cases in some of the leading courts to the contrary. Jones Mort. § 872, and cases.

Some technical points have been emphasized in the arguments, but none of them seem to be now material. There was a loud call for the production of the evidence exhibited before the master, and that was sent in. It is now agreed in the report, that, “in determining the amount due upon the mortgage the report of the master as to the value of the rents and profits is to be taken as it stands.” His report therefore is to be accepted and acted on in all respects as correct, excepting where we have determined upon a departure from it in this opinion. Objections have been urged against the master’s report in matters merely of form which are no longer worth consideration, as every essential question broached on either side has been fully considered by the court.

The conclusion therefore is that a new marshaling of the figures must be made before a final result can be reached. And for that purpose the case must be referred again to the old or to a new master. Such master will allow the defendant the item of $225. and interest thereon at the rate of twelve per cent (agreed by Quints) from Nov. 7, 1874, the date when the money was advanced by Paine. Against 'this item there will be calculated $32.70 the balance found due the farm for balance of rents and profits over principal received by Paine at end of the year 1893, and also further deductions will be allowed for such rents and profits as have been received from that date (1893) down to the date of the final findings by the master; and also further charge against the defendant will be reckoned for the reasonable rents and profits enjoyed by the defendant of the Walker lot so called for such time as he has been in possession of that lot; and, if a redemption is decreed from the mortgage in suit, the defendant will be required to assign to the complainant his title to the Walker lot, so that the complainant may have a lien thereon for the amount he may be required to advance thereon; and no final decree will be filed in the case until the facts and results are finally found as are indicated in this opinion.

Case remitted to a single justice for further order and proceedings before him.