Curtis v. Holee

The pleaded facts of the plaintiff’s case, briefly stated, are these: The defendant, A. D. Holee, on June 20, 1912, executed a note, secured by a mortgage on real property, in favor of one M. M. Arthurs, in the sum of two thousand five hundred dollars. The mortgage note by its terms was due and payable “on or before three years after date,” and the interest thereon, at the rate of six per cent per annum, was to commence running from July 1, 1912. The mortgage was duly recorded in the county recorder’s office of the county wherein the mortgaged property was located. The. mortgagor, Holee, conveyed the mortgaged property to one Haymond on or about the first of July, 1915, when he was still the owner in fee simple, subject to the mortgage, of the mortgaged property. Haymond made and entered into an agreement in writing with M. M. Arthurs, the original and then owner of the said note and mortgage. This agreement, which was written on the back of said note, provided that, in consideration of a raise in the rate of interest, provided for in and by said note, from six to seven per cent from the date of said agreement, namely, July 1, 1915, the time for the payment of the note was extended to June 20, 1916. At the time of the execution of said agreement of extension, namely, on July 1, 1915, the sum of $75 was paid on account of interest and five hundred dollars was paid on account of the principal of said note. Sub

This action to foreclose the mortgage as extended was instituted and filed August 29, 1919. Pending the hearing and determination of defendant’s demurrer to the plaintiff’s complaint, the defendant A. D. Holee entered into a stipulation with the plaintiff that hér default might be entered and a judgment might be taken by plaintiff against her upon condition that no deficiency judgment should be entered against her.

Answering the plaintiff’s complaint, the defendant Ruth Gold admitted the truth of the allegation that Holee, the mortgagor, did, by grant deed, convey the mortgaged property to Haymond, but, while conceding that all the subsequent conveyances of the property were made subject to the mortgage, affirmatively alleged that it did not appear from the grant deed to Haymond that the conveyance to the latter was made subject to the said mortgage. For lack of information and belief, the answer denied that Haymond and Arthurs agreed in writing at any time or at all that the payment of said note and mortgage should be extended

As previously indicated, the question of the liability of the original mortgagor has been eliminated from the ease and the question of the liability of appellant for a deficiency judgment does not arise upon this appeal, for no deficiency judgment was rendered.

It is a stipulated fact in the case that Haymond, as the grantee of the defendant Holee, did not, when taking a conveyance of the mortgaged property, agree to pay the note in suit or assume the mortgage by which it was secured, and, because of this fact, it is insisted, upon behalf of appellant, that the agreement between Haymond and Arthurs, the owner of the mortgage, for an extension of the time within which the note would mature, is insufficient, under the provisions of section 360 of the Code of Civil Procedure, as evidence of a continuing contract which would take the case out of the operation of the statute of limitations. The insufficiency is claimed to result from the fact that Haymond was under no legal obligation in the first instance, or at all, to pay the. note or assume the mortgage, and, therefore, the extension agreement, in so far as it related to him, was not signed by a party to be charged with the original indebtedness. In other words, it is the contention of the appellant that the grantee of a mortgagor who does not assume the mortgage is a stranger to the mortgage debt to whom the provisions of section 360 of the Code of Civil Procedure do not apply, and that, therefore, the legal life of a mortgage note cannot be continued by the written agreement of such a grantee of the mortgagor.

[1] As previously stated, it is admitted that Haymond did not agree to pay the note and mortgage and never

[2] We turn, then, to a consideration of the form of acknowledgment in the present case. If the grantee acknowledged the existence of the debt in writing with sufficient certainty, that will, suffice to take the debt out of the operation of the statute. (Chaffee v. Browne, 109 Cal. 211 , 218, [ 41 Pac. 1028 ]; State etc. Co. v. Cochran, 130 Cal. 245 , 251, [ 62 Pac. 466 , 600]; Concannon v. Smith, 134 Cal. 14 , [ 66 Pac. 40 ].) An actual promise to pay is not necessary. (Foster v. Bowles, 138 Cal. 346 , [ 71 Pac. 494 , 649].) When such an acknowledgment- is made before the note becomes 'barred by the statute of limitations as applied to the date originally designated for the payment of the note, it constitutes a continuation of the life of the original obligation beyond the operation of the statute of limitations as applied to the original obligation. (McCormick v. Brown, 36 Cal. 180 , [ 95 Am. Dec. 170 ]; Daniels v. Johnson, 129 Cal. 415 , [ 79 Am. St. Rep. 123 , 61 Pac. 1107 ]; Rodgers v. Byers, 127 Cal. 528 , [ 60 Pac. 42 ].) [3] The acknowledgment of

[5] While the extension agreement in the instant case does not, in so many words, make mention of the mortgage, still that agreement was written upon the back of the mortgage note and made express reference thereto. The note, upon its face, bore the caption, “Note secured by mortgage,” and, therefore, considered and construed in connection with the note to which it referred, the agreement to extend the time for the payment of the note constituted an unqualified acknowledgment of the mortgage and the debt secured thereby, sufficiently direct and distinct to arrest the running of the statute of limitations.

It was not essential that the plaintiff’s complaint should allege, nor the trial court should find, that the conveyance from Holee, the mortgagor, to Haymond, his grantee, was made subject to the mortgage in suit. The complaint alleged that the mortgage was recorded prior to the transfer to Haymond, and, moreover, the execution of the extension agreement, particularly when coupled with the payment of a part of the principal and some of the interest due upon the mortgage note, was a sufficient acknowledgment that the property conveyed was transferred subject to the mortgage. (Fitzgerald v. Flanagan, supra; McLane v. Allison, 60 Kan. 441 , [ 56 Pac. 747 ].) It likewise operated to toll the statute of limitations as against the successors in interest of Haymond, all of whom took the mortgaged property expressly and affirmatively subject to the mortgage and to the agreement extending the legal life of the mortgage note.

What we have thus far said in effect adversely disposes of the remaining points presented in support of the appeal.

The judgment is affirmed.

Wilbur, J., and Sloane, J., concurred.