Troy City Bank v. Bowman — 19 Abb. Pr. 18

Majority

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THE TROY CITY BANK a. BOWMAN.

Supreme Court, First District;

General Term, February, 1865.

Headnote

Complaint on Fobeclosube oe Collatebal Mobtgage.—Uncertainty in Bond.

In an action brought to foreclose a mortgage, given to secure a bond made by one of the mortgagors and his partner, to secure the payment of certain notes, which notes were held by the mortgagees as collateral security for an indebtedness past due, it is not necessary that the complaint should allege that tne notes held as collateral security had become due. A failure to comply with the condition of the bond makes out a sufficient cause-of action.

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A bond conditioned for the payment of a specified sum, or so much thereof as shall remain unpaid on certain notes held by the obligees after the application of all moneys received thereon, or on collaterals held by them, is not void for uncertainty.

Appeal from, a judgment.

This was an action brought to foreclose a mortgage, made by the defendants, Samuel S. Bowman and Sarah his wife, as collateral security to a bond given by Samuel S. Bowman and Felix A. Finn, who were partners, under the firm of Samuel S. Bowman & Co. The bond was given to the plaintiffs for having discounted notes which were held and indorsed by Bowman & Co. Bowman and his wife, subsequent to making the mortgage, conveyed the premises to the defendant Callaghan, subject to the mortgage, who assumed to pay the same.

The complaint, after alleging the incorporation of the plaintiffs, stated that Morris S. Samuel & Co. made from time to time their promissory notes payable to the order of Bowman & Co., describing the several notes, and alleged that “ the said Samuel S. Bowman & Co. endorsed said promissory notes, and the same so endorsed were respectively delivered to and discounted by these plaintiffs before the same became due; that these, plaintiffs ever since- have been and still are the lawful owners and holders of the said notes; that when the same respectively became payable they were duly protested for nonpayment, of which due notice was given to said endorsers, and that the said notes still remain due and unpaid.” The complaint further stated the total amount due upon the notes as $9,985.91; and that Bowman & Co., to secure the plaintiffs against any loss on such notes, delivered to the plaintiffs certain other notes made by other parties, as collateral, u the net proceeds of which, when collected, were to be applied to the payment of the above-mentioned notes endorsed by the said Samuel S. Bowman &■ Co. And as a further collateral security to the plaintiffs for the payment of the said notes endorsed by the said Bowman & Go.,” they gave their bond conditioned for the payment of $7,317.14, “ or so much of said sum as shall remain unpaid on the notes of' Morris S. Samuel & Co., endorsed by Samuel S. Bowman & Co., after the application to the payment thereof of all the net moneys received from the makers of said

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notes or the collaterals accompanying the same, as follows, namely: One-third in twenty-four months, one-third in twenty-seven months, and one-third in thirty months, together with the interest on the amount due at the rate of seven per cent, per annum, payable semi-annually.” And as collateral security for the payment of th,e said indebtedness, the defendants, Samuel S. Bowman and Sarah S., his wife, on the same day gave to the plaintiffs the mortgage in suit.

The substance of the mortgage, the conveyance by the mortgagors to Callaghan, and the interests of subsequent incumbrancers, and the fact that no proceedings at law had been had for the recovery of any part of the sum secured by the bond and mortgage, were alleged in the usual form, and the demand of relief was for the usual decree of foreclosure and sale and judgment over for deficiency.

The cause was tried upon the issues raised by the defendant’s answer, at a special term before Mr. Justice MuIIin. The counsel for the defendant moved upon the pleadings to dismiss the complaint as not stating a cause of action, which- motion was denied.

Among oth'er evidence was the receipt given by the plaintiffs for the mortgage in suit, which enumerated the notes of third persons held as collateral, and contained the following clause:

“ And upon the receipt of said money, the same is to be credited upon said note and bond and mortgage, and the said Samuel S. Bowman and Felix A. Finn are to be held responsible only for any deficiency in the same, and the same is to be paid according1 to said bond and mortgage. TJpon the payment of the same by the said Samuel S. Bowman and Felix A. Finn, the notes or judgments unpaid against the said Morris L. Samuel & Co., or the notes of, or judgment against any persons who are reliable on said collections, shall be forthwith assigned to Samuel S. Bowman and Felix A. Finn, and in the meantime no suit shall be brought against the said Samuel S. Bowman and Felix A. Finn or Samuel S. Bowman & Co., and the bond and mortgage to be cancelled.”

At the close of the evidence the defendant’s counsel moved for judgment upon the proofs, and also upon the pleadings, upon the ground that the bond was absolutely void on its face

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for uncertainty; that it provided no period at which it should be paid, and that no case was proved.

The court found that the notes delivered by Samuel S. Bowman & Co. to the plaintiffs, as collateral security for the payment of the said notes of Morris L. Samuel & Co., were returned to said Samuel S. Bowman at his request, on the 30th day of April, 1858, with the exception of two notes made by Mc-Spedon & Baker, which are now in suit, and the notes of two parties which have been paid, and which were credited on the amount of the said notes of Morris L. Samuel & Co., held by the plaintiffs before said bond and mortgage were given, excepting the sum of $87.50 since paid. The court granted to the plaintiff the relief demanded in the complaint.

The defendants, the Bowmans and Callaghan, excepted to the decision, and judgment having been entered, appealed to the court at general term.

S. Sanxay, for the appellants.

I. The defendants were entitled to their motion of judgment of dismissal of the complaint. (Code, § 148.)

1. The complaint did not state facts sufficient to constitute a cause of action for the foreclosure of the mortgage, or otherwise.

2. The mortgage was executed by Bowman and his wife without any consideration moving to them; but only as a collateral security for a bond made by Bowman & Co., composed of Samuel S. Bowman and Felix A. Finn, who were, quoad Bowman and wife, third parties; which was, in itself, given as a collateral security for the payment of certain notes made by certain other parties whose names are not stated; nor are the amount, dates or time of said notes given; nor is it alleged that the same had become due, or were unpaid, or how much was due upon said notes, if any thing. *

3. The bond to secure which said mortgage was given, though for a stated sum, was in truth for a conditional and uncertain amount, depending upon the contingency of the collection of certain notes, and of the application of the amount thereof when collected, and was to be available only for the balance that might remain due after such application of suck collections, if any thing.

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4. There is no allegation that any of said notes had become due, or what had become of them.

II. . The bond which the mortgage was given to secure, was void, for uncertainty. It is uncertain in amount and time when payable, and can only be made certain by extrinsic facts, which are entirely omitted to be' stated, even if they exist. The statement of a conclusion of law is not sufficient. The statements may all be true, and yet the notes and collaterals may not be due, or may have been passed away or transferred, &c. Bo fact is stated from which any conclusion can be deducted that the bond is due, or that any sum whatever is due upon it.

III. The defendants were entitled to judgment when moved for.

1. The receipt read and put in evidence was part oí the transaction whereby plaintiffs acquired the mortgage; and that paper qualifies the bond and mortgage, and amounts to an agreement not to sue, and, of course, not to foreclose the mortgage.

2. The same also limits the amount that may, by possibility, become due upon the bond and mortgage, and provides for a condition of things when nothing whatever may become due thereon, and when the same are to be cancelled.

3. It is also shown that two of the notes, amounting to $4,500 and upwards, are still in the process of collection, and secured; and which notes, when and if collected, are to be credited upon the bond and mortgage. It is clear that no proceedings at any rate, could be taken upon the bond and mortgage until the determination of the question whether those are to be collected or not.

• 4. It also appears that the plaintiffs have converted certain of the collateral notes for which the bond and mortgage were given as collateral, and for which notes, so converted, no credit is given upon the bond and mortgage.

E. L. Fancher, for the respondents.

I. By the condition of the bond and mortgage, the principal sum of $7,317.14, or the amount remaining unpaid on the notes of Morris L. Samuel & Co., was made payable as follows: one-third in twenty-four months; one-third in twenty-seven months; and one-third in

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thirty months from that date, with interest on the amount due at seven per cent.

II. The amount due on the notes, being more than the sum of $7,317.14, specified in the mortgage, and interest, the plaintiffs recovered that specified sum only, and interest on it, as the amount due under the bond and mortgage, after crediting whatever had been received; and the judgment was entered accordingly. To this certainly the defendants cannot object.

III. The collateral notes, amounting to $813 were properly surrendered to Samuel S. Bowman & Co., no one having any interest in them, except that firm, at the time of such surrender, .which was prior to the deed to Callaghan.

IY. Plaintiffs have the right to retain the security of the remaining collateral notes¡—i. e., the two notes of McSpedon & Baker, and the one note of Glatz, and the judgments upon them, until their debt shall be paid, and are not bound to surrender them to any one.

When the plaintiffs are fully paid, Samuel S. Bowman & Co. will be entitled to an assignment of the judgment on the Glatz note, and their creditor, D. R. Martin, to whom they have assigned the McSpedon & Baker notes, and judgments thereon, will then be entitled to an assignment of those judgments.

Y. Defendant Callaghan will not be entitled to those assignments, he having assumed the mortgage of $7,317.14, and interest; but even if he pretends to be thus entitled, he cannot object to the plaintiff’s foreclosure of the mortgage, it being past due. Nor has he objected, not having answered the complaint.

There is no force whatever in the objections taken by the defendant’s counsel in his two first points. The complaint sets out the indebtedness clearly, and that the mortgage in question was given to secure the payment of a bond, by which the time for the payment of this indebted-' ness was considerably extended. It also shows that Bowman and Finn have failed to comply with the conditions of the bond. These facts surely constitute a sufficient cause of action.

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As to the assertion that the bond was void for uncertainty, as the case contains no copy of it, we can only be guided by what the complaint states it to be. The amount is distinctly stated, as well as the periods at which it is payable. Besides, it would not be void for uncertainty, if it could be made certain by extrinsic facts. Id cerium est, quod certum reddi potest.

The defendant Bowman certainly has no right to complain of the surrender of some of the collateral notes to him; as to the remaining three notes retained by the plaintiffs, they have a right to retain them until their debt shall be paid. This was the agreement, and they are under no obligation to surrender them.

The stipulation in the receipt contains no promise on the part of the plaintiffs not to bring an action to foreclose this mortgage, when the time of payment mentioned on the bond has elapsed. The clause referred to means, that until the expiration of that time, no suit shall be brought.

The judgment should be affirmed, with costs..

Footnotes

* Present, Clerke, Ingraham, and Sutherland, JJ.