Ferris v. Ferris — 28 Barb. 29

Majority

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Thomas T. Ferris vs. Francis Ferris and others.

Headnote

Where a mortgage contains a condition that in case of the failure of the mortgagor to pay the interest at the time when the same becomes due, or within a certain number of days thereafter, the principal sum shall become due and payable immediately; and the mortgagor, through his own neglect to pay the interest, suffers the whole mortgage debt to become due according to the terms of the mortgage, the court cannot interfere to relieve him from the payment thereof, or alter the terms of the contract. >

A condition of that nature, in a bond and mortgage, is not a forfeiture, or a penalty.

The case of Broderick v. Smith, (15 Sow. Pr. Rep. 434,) explained.

DEMURRER to answer. The action was to foreclose a mortgage. The complaint alleged the execution of a bond, by the defendant Ferris, on the 15th of June, 1857, for the payment to the plaintiff of $2477.50 on or before the 21st day of June, 1859, with interest payable semi-annually; and that as collateral security for the payment of that amount,

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Ferris on the same day executed a mortgage on certain premises therein described, with the same condition as the bond; and that both the bond and mortgage contained the following additional clause or condition, viz: “ that should any default be made in the payment of the said interest, or any part thereof, on any day whereon the same is made payable, as above expressed, and should the same remain unpaid and in arrear for the space of thirty days, that then the said principal sum of $2477.50, with all arrearages of interest thereon should, at the option of the plaintiff, become due and payable immediately thereafter.” The complaint further alleged that the defendants had failed to comply withjthe condition of the said bond and mortgage, by omitting to pay the interest thereon, for more than thirty days, which became due and payable on the 15th day of December, 1857; and he claimed that by reason of that omission the whole amount secured by the mortgage had become due and payable. The defendants E. Eafael and Margaret M. his wife, were made parties, as having or claiming an interest in the mortgaged premises, Mrs. Eafael having purchased the same of Ferris, subsequent to the execution of the mortgage.

The. defendant Margaret M. Eafael put in an answer, alleging that the fee of the mortgaged premises was vested in her as her sole and separate estate; that E. Eafael, her husband, was her business agent, and, as such, had the exclusive management of her affairs; that he had been for several months last past absent from tbe city of New York, and unexpectedly detained in foreign parts;. that she (Mrs. E.) was unacquainted with the forms and usages of business; and that no demand had ever been made upon her, previous to the commencement of this action, for the payment of the interest moneys mentioned in the complaint. That she, the defendant, had for several years resided and still did reside, in the city of New York; that she was now and had been at all times, ready and willing to pay to the plaintiff the said interest moneys, and that she now paid the same, amounting to the sum of $86.71

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with interest from the time when it became due, amounting to SI.90, together with the plaintiff’s costs and disbursements, &c. And the defendant prayed that she might be relieved, by the order of this court, from the penal clause of the said bond, or special condition in the complaint mentioned, and from the plaintiff’s claim thereon, for the payment of the principal sum secured by said bond; and that the complaint might be, as to her, dismissed with costs from the time of filing and serving the answer, and the payment of the moneys into court.

To this answer the plaintiff demurred, on the ground that the matters contained therein were insufficient to constitute a defense. Various specifications of insufficiency were made, which it is not necessary to mention.

Callaghan & Miller, for the plaintiff.

Wm. Henry Anthon, for the defendant.

In this case the principal sum secured by the mortgage was made payable in 1859, with interest payable semi-annually. The mortgage contained a condition that if the interest should at any time remain unpaid for thirty days after it became due, the principal sum should become due and payable immediately. The plaintiff seeks to foreclose the mortgage, on the ground that the interest has remained due and unpaid for more than thirty days. The answer sets up that Mary Rafael, the present owner of the premises, bought the same as part of her separate estate; that her husband has the management of her affairs; that he has been absent for some months; that she is ignorant of business; and that no demand has been made of such interest. The defendant also states that she has paid into court the interest, and interest thereon, and costs, apd she asks that the complaint may be dismissed with costs, from the time of the answer. To this answer the plaintiff demurs.

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Upon the argument of this case I supposed I was concluded by the decision of the general term in Broderick and others v. Smith, ( 15 How. 434 ;) but on, examining that case, I find that the plaintiff was bound to have a judgment which was a lien on the premises removed, which was not done until after the interest became due, and then no notice was given of the removal of the incumbrance. Mr. Justice Gierke, in delivering the opinion of the court, says: “ I think it was contrary to all equitable dealing for the plaintiff to take advantage of these circumstances, instead of apprising the defendants of the cancelment (of the judgment.) ® * * * This was oppressive and unreasonable conduct, on the part of the plaintiffs.”

This can hardly he considered as deciding that in a case free from any trick or oppressive conduct, a plaintiff having a bond and mortgage on which payment of the interest has been neglected for the thirty days, may not collect the principal if the defendant brings the amount of the interest and costs into court.

Without expressing any opinion as to the merits of the case of Broderick v. Smith, above cited, I feel at liberty to examine the questions in this case as not affected thereby. The contract made between the parties was for the payment of the principal sum on the 15th of June, 1859, with interest payable half-yearly; and if the interest was not paid within thirty days after it was payable, then the principal sum should be payable immediately thereafter. The question naturally arises, whether this court, without any other cause than an excuse from the defendant for neglecting to comply with the conditions of the contract, can alter the terms of it, without the consent of the parties. That the court may correct errors in a contract, or reform it to make it conformable to the agreement between parties, is undoubted; hut no such mistake is alleged here. The contract is as the parties agreed. The plaintiff takes the bond and mortgage, with the agreement of the mortgagor to pay the interest at a fixed time, and to pay

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the principal within thirty days thereafter, if the interest is not paid. What right has any court to say that it is oppressive or unconscionable in a plaintiff to claim the payment of the money which belongs to him on the day when the parties agreed it should be paid ? I exclude from the consideration of this question any inquiry as to the power of a court of equity to interfere where fraud has been used to postpone the payment of the interest; because no fraud is alleged here. The only defense is, that the defendant, being unacquainted with business, suffered the day of payment to arrive sooner in consequence of her own negligence, than she would otherwise have done. Is the plaintiff in the wrong, for this neglect ? Or has he done any thing by which a court would be authorized to interfere and change the conditions on which he loaned his money and took the bond and mortgage as security ?

In Noyes v. Clark, (7 Paige, 179,) the chancellor says: “ The parties had an unquestionable right to make the extension of credit dependent upon the punctual payment of the interest at-the times fixed for the purpose. And if, from the mere negligence of the mortgagor in performing his contract he suffers the whole debt to become due and payable, according to the terms of the mortgage, no court will interfere to relieve him from the payment thereof according to the conditions of his own agreement.” (Steel v. Bradfield, 4 Taunt. 227. 5 Barn. & Adol. 40. Gerolett v. Hanforth, 2 Wm. Black. 958. 3 Burrow, 1370.)

It is urged that this is a forfeiture, and that equity will always relieve a party against a forfeiture. The plaintiff’s claim is for the money secured by the bond, and interest. There is nothing more claimed. The debtor owes the amount. He forfeits nothing. He is required to pay nothing but his debt. There is no forfeiture to be relieved. If the bond had been conditioned to pay the money in one year, with an agreement to extend the payment a second year, if the interest was paid within thirty days after it became due, no one would for a moment argue that there was any forfeiture. And yet that

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condition, and the condition of the bond in suit are substantially the same.

[New York Special Term,

June 21, 1858.

Ingraham, Justice.] .

Nor can it be called a penalty. That is a sum named as damages, to be recovered for violating an agreement or promise, in lieu of damages. There is no such thing here. No damages are called for. Merely altering the day of payment is neither a forfeiture of any property, nor a penalty in damages for the breach of any agreement.

I have been referred, by the defendants, to the case of Mayo v Judah, ( 5 Munf. 494 ,) in which the court held that it was a forfeiture because it imposed further and greater obligation upon the parties. I do not so consider it, in this case; and unless there is something in the act of assembly under which that case arose, allowing it, I must dissent from that conclusion. The same remarks apply to the cases cited from 2 White & Tudor’s Eq. Cas. p. 468.

In the second and third districts, I am informed, decisions have been made, adverse to the right of the defendant to relief in similar cases to the present.

My opinion is that the plaintiff is entitled to judgment; And "a reference is ordered, to compute the amount due on the mortgage.