Innoncente v. Guisti , 71 R.I. 274 ( 1945 )

I am unable to concur with the opinion of the court in the matter of the suspension of the operation of the statute of limitations by the plaintiff's application, on the mortgage note, of the net proceeds of the foreclosure sale of the mortgaged property, as a partial payment of the note. I am convinced that according to sound reasoning and the greater weight of authority, such a crediting does not show a recognition by the maker of the validity of the note as an obligation binding on him at thattime, so as to toll the operation of the statute.

The following cases are typical of many which lay down and apply the rule which in my judgment is the sound one. Thomas v. Brewer, 55 Ia. 227 (1880); Westinghouse Co. v.Boyle, 126 Mich. 677 (1901); Union Stockyards National Bank v. Maika, 16 Wyo. 141 (1907); and Howard v. Pritchett,207 Ala. 415 (1922).

In the first of these cases it is held that a payment realized on a promissory note, by a proceeding in rem against property upon a mortgage of it given by the maker to secure the payment of that note, is not such a payment as implies an acknowledgment by him of liability on the note so as to prevent him from setting up the statute of limitations as a defense to an action at law on the note.

In Westinghouse Co. v. Boyle, supra, the plaintiff was a creditor of the defendant, because of the sale by the former to the latter of a certain machine, and it held a chattel mortgage of the machine to secure the unpaid balance on the sale price. The defendant being in default as to the payment of a considerable part of the sale price, the plaintiff, upon a foreclosure of the mortgage, sold the machine for a sum considerably less than that unpaid balance and credited on that balance the net sum realized from the sale.

The plaintiff contended that, in making the foreclosure sale and crediting upon the note the net amount realized thereat, it was acting as the agent of the defendant under the mortgage and that therefore the operation of the statute of limitations was interrupted. But in that case the court rejected that contention and held that the action was barred by the statute. Earlier Michigan cases are cited to the same effect.

In its opinion in Union Stockyards National Bank v. Maika,supra, the Wyoming supreme court says, at page 150: "Wherever the question has arisen in a foreclosure sale under a power contained in the mortgage the courts, with the exception of one case in Missouri, which has since been repudiated, have proceeded upon the theory that the act of the creditor in such case represents no voluntary affirmative act on the part of the debtor from which a promise to pay could be reasonably implied."

After an examination of these and numerous other authorities on the subject, including the cases referred to in the majority opinion, I am convinced that the opinions above discussed are in accord with the nature of the relationship between a mortgagor and mortgagee and the meaning of the power of sale in the mortgage, as well as with sound reasoning and the great weight of authority; and that they state the rule which should be followed in the instant case.

It should be kept in mind that the mortgage here contained no covenant to pay the debt; and that, in the majority opinion, the agency of the mortgagee, which is actually coupled with a creditor's interest, has been extended by interpretation beyond the ordinary or necessary limits of the express language used in granting the power of sale.

In the majority opinion the case of Woonsocket Institutionfor Savings v. Ballou, 16 R.I. 351, is cited and apparently relied upon. I am convinced that that case deals with a different kind of relationship and is not contrary to the opinions above discussed and that it should be given no weight in deciding the question now before us.

My conclusion is that in the instant case the defendants' exception to the decision, by the trial justice, for the plaintiff should be sustained.

FLYNN, C.J., concurs in the dissenting opinion of Mr. Justice Moss.