Finzer v. Peter

232 N.W. 762, 120 Neb. 389, 73 A.L.R. 1170, 1930 Neb. LEXIS 235
CourtNebraska Supreme Court
DecidedOctober 31, 1930
DocketNo. 27256
StatusPublished
Cited by5 cases

This text of 232 N.W. 762 (Finzer v. Peter) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Finzer v. Peter, 232 N.W. 762, 120 Neb. 389, 73 A.L.R. 1170, 1930 Neb. LEXIS 235 (Neb. 1930).

Opinion

Thomsen, District Judge.

Finzer mortgaged his farm to Peter, and shortly thereafter sold the land. The grantee, in the deed he received, [391]*391assumed' and agreed to pay the mortgage, and in three subsequent successive sales each grantee assumed and agreed to pay the mortgage. While number three of these grantees held title, the mortgage became due, and by an arrangement with Peter, the mortgagee, the time for payment was twice extended, each time one year. During the last year number four acquired title, and, when that year ended, he likewise had granted to him an additional year to meet the obligation. None of these extensions was known to Finzer or the other grantees. When the final extension had expired, number four failed to pay. The mortgage Peter had received was a second one. One infers from the record that the value of the land had been absorbed by foreclosure of the first mortgage, so Peter chose to sue Finzer on the note which his mortgage secured. Finzer claimed that the extension of time for payment granted without his knowledge or consent released him, and relying upon Merriam v. Miles, 54 Neb. 566, in which we held that the maker and subsequent grantees under the conditions would be released, the case ultimately reached this court. The uniform negotiable instruments law definitely fixes the liability of the maker of a note. Comp. St. 1922, secs. 4671, 4729, 4730, 4801, et seq. That law was passed after the decision in Merriam v. Miles, supra, and so, in Peter v. Finzer, 116 Neb. 380, we held, since the statute made no provision for release of a maker of a note, by an extension of time given by the payee to subsequent owners of land, Finzer was liable. Finzer paid the judgment. While Peter’s suit against Finzer was pending, Finzer bestirred himself. He sued too. He brought in as parties defendant, in an action in equity, Peter and the subsequent grantees, recited the assumption agreement of the grantees and asked that the grantees be required to pay the debt to Peter and asked for other relief. Except for one amendment, which will be mentioned later in this opinion, this case remained stationary until Peter’s suit was ended. Then Finzer again amended his petition alleging his new difficulty — that he was required to, and did, pay, and asked,, together with equitable relief, for a judgment against the subsequent [392]*392grantees because each had assumed and agreed to pay the mortgage. The latter now also rely as a defense upon Merriam v. Miles, supra. Of these grantees only numbers one and two, respectively, Fred E. Bodie and J. L. Jobes,' are involved in this appeal. They claim that the extension of time granted by Peter to numbers three and four, without their knowledge or consent, released them.

Under these conditions if we should now hold that extension of time of payment to last grantees would release all former grantees, as held in Merriam v. Miles, supra, it could be done only by entirely ignoring the obligation which each successive grantee assumed by contract with his grantor. The grantee agrees to pay the remainder of the purchase price to a third person to whom the grantor is either directly or by association indebted. Primarily the interest of the grantor in' the contract with his grantee is to satisfy the obligation which he, the grantor, owes to his creditor. If, through some arrangement between the grantee and the creditor, the grantor is entirely relieved of the debt, it is obvious that the grantee’s obligation to the grantor is satisfied. But, if the creditor’s debt is not paid and the obligation of the grantor is not released, the grantee has never paid the remainder of the purchase price; he still owes it; he has not fulfilled his part of the contract.

Even though the assumption agreement confers rights on the mortgagee, the mortgagor still retains for himself such rights as the original indebtedness creates. That the benefit conferred upon the mortgagee by the assumption agreement does not result in a loss to the mortgagor of rights acquired by the contract creating the indebtedness is recognized in permitting the mortgagor to sue his grantee independently of any action by the mortgagee when the debt is due and unpaid. Locke v. Homer, 131 Mass. 93; Morlan v. Loch, 95 Kan. 716; Callender v. Edmison, 8 S. Dak. 81; Gregory v. Hartley, 6 Neb. 356; Stichter v. Cox, 52 Neb. 532. Particularly must the distinction between the rights of mortgagor .and mortgagee under the conditions and the independence of such rights be recognized when both are permitted to file separate suits and subject [393]*393the grantee to two judgments for the same debt. Gustafson v. Koehler, 177 Minn. 115.

The object of the contract is satisfaction of the debt or payment. If, as in Merriam v. Miles, supra, the act of the mortgagee results in a release of both debtors, the mortgagor and grantee and all subsequent title holders, a satisfaction in law results. In that event the debt no longer exists; the cause for action has disappeared. But, how can it be said that the object of the contract has been attained by the act of a third person, the mortgagee, who accomplishes nothing to satisfy the debt?

Substantially what the defendants are contending is clarified in the following example: B owes A. A owes C. B agrees with A that B will pay A’s debt to C. Because of some subsequent act of C, C cannot recover from B. However, C’s act has not affected A’s liability. C may still recover from A, but because of what C may have done A cannot recover what B still owes him. The fallacy in the reasoning is apparent. It lies in ignoring the contract creating the indebtedness between A and B and in overlooking that A has done nothing to estop him; that, if no element of estoppel is involved, the only way a debt can. be satisfied is by payment.

• Prom the foregoing it follows that the doctrine announced in Merriam v. Miles, supra, has no application to the facts in this case; that in an action by the mortgagor, who has been compelled to pay a debt which defendants assumed and agreed to pay, the defendants are liable on their assumption agreement; that no act of the mortgagee which does not result in a release of all parties can affect the contract between grantor and grantee.

As each grantee becomes in turn a grantor he also becomes a potential plaintiff without losing the role of a potential defendant. By a series of lawsuits beginning with the first and ending with the last grantor, the last grantee, the person who last owned the land, is compelled to pay. By compelling him to pay in the first instance, all the obligations of former grantees to their respective grantors are satisfied. Why pursue the circuit in lawsuits when [394]*394through equity a just result may be obtained in one suit, when other rights between .the parties, if any exist, may all be determined and settled, for equity, having once taken charge, will do complete justice between the parties? But the defendant Jobes contends that the action as it stands is a lawsuit, nothing but a money demand, a prayer for a money judgment; that in law the liabilities are several and not joint, and that these defendants are improperly joined. However, the test of equity jurisdiction is not necessarily the prayer or that a money demand is made; the test is in the facts and what is to be accomplished. Equity prefers to do directly what can be done indirectly.

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Bluebook (online)
232 N.W. 762, 120 Neb. 389, 73 A.L.R. 1170, 1930 Neb. LEXIS 235, Counsel Stack Legal Research, https://law.counselstack.com/opinion/finzer-v-peter-neb-1930.