McCLELLAN, J.
— This bill is filed by Olliver against Parker et al. to foreclose a mortgage executed by the latter to the Lombard Investment Company, and covering certain lands situated in the county of Montgomery, to secure a loan of money evidenced by a promisory note, and which mortgage and note were assigned to and are now the property of the complainant. The main question in the case as now presented is whether the bill was prematurely filed ; and that question rises upon the following facts stated in the bill and in certain pleas filed by the respondents : Said note and mortgage were executed October 25,1890, and the note was due and payable on, and the law day of the mortgage fell- upon', November 1, 1895; but the note contains this stipulation : “If the maker of this note and interest notes attached hereto shall allow the taxes or any other public rates or assessments on the property or any part thereof given as security for the aforesaid notes to become delinquent, * * * * then upon the happening of any of said contingencies the whole amount herein secured shall at [554]*554once become due and payable, and the mortgagee, its legal representatives or assigns, may proceed at once to collect this note and foreclose the mortgage given to secure said note, and sel] the mortgage property to satisfy said debt, interest and costs,” &c. And said mortgage contains this provision: “The first party [the mortgagor] agrees to pay all the taxes or assessments, general or special, levied upon said real estate or upon this mortgage, before the same becomes delinquént, * * .* * and if not paid, the holder of this mortgage may, without notice, declare the whole sum of money herein secured due and collectible at once.” Having relation to these stipulations in the note and mortgage, the bill, which was filed May 4,1894, avers: “that the said makers of said notes have allowed the State and county taxes for the year 1893 to become delinquent .and that the same are now delinquent, and that said property is in danger of being sold to satisfy the same, and orator avers that by reason of said delinquency said note has become due and payable, and he has so elected, and is entitled thereby to the foreclosure of said mortgage for the payment of said note, the interest and damages thereon and attorney’s fee for the collection of said note and the foreclosure of said mortgage as in said note and mortgage provided.” The pleas interposed by the respondents set up in substance : Fir at. That since the filing of the bill the taxes for the year 1893 have been paid by them, that a failure to sooner pay the same was with no intention of subjecting the property to a decree of sale for the payment of said taxes or to violate the stipulation of the note and mortgage in that regard, but that they acted in respect of said delay “only in accordance with a long established custom, existing in this county, to pay taxes for the preceding year [any time] before the 1st day of June of the succeeding year; and that said custom was well known to said mortgagee when said mortgage was made and to complainant when he became the assignee thereof;” and, further, that this property was not decreed to be sold for the taxes of 1893, and when the same were paid by the respondents they offered to pay the complainant all costs of the suit then accrued, and this offer is renewed in the plea. Second. That because of the existence and knowledge of all parties to the contract of the custom stated above of paying taxes at any [555]*555.time before the 1st of June of the year succeeding that of the levy, the taxes of 1893 were not delinquent within the meaning of the note and mortgage when this bill was filed May 4, 1894, and would not have been so prior to the 1st day of the ensuing month, before which time they were paid. And third, that if there was a breach of said stipulation accelerating the maturity of said note, &c., the same has been waived by complainant, for that thereafter, on March 19,1894, and again on May 24, 1894, the receiver of the Lombard Investment Company, complainant’s assignor, wrote letters to the maker of tho note and mortgage demanding payment of a coupon interest note due May 1, 1894, and that said letters were written by the receiver as the agent of the complainant and by his direction.
1. It is entirely competent for debtor and creditor to agree upon a date or a contingency upon the occurrence of which the debt matures and becomes payable, or alternatively upon a date and a contingency, the date to toll maturity unless the contingency happens before it transpires, and the contingency to mark the time of maturity if it happens before the alternate day fixed in the contract. There is nothing in such stipulations in the nature of a forfeiture or a penalty. When the contingency occurs, it is as if the parties, without reference to any contingency, had agreed upon that day as the time of maturity and payment, and not in any sense upon the idea that the bringing of the debt to maturity at that time is a penalty on the debtor for the happening of the contingency or a forfeiture of any rig-ht of his because it did happen. The debt matures upon that event because he has agreed that it should; and as he pays not one cent morp than the debt with accrued interest, which the creditor would be entitled to however long maturity might have been postponed, it is not conceivable that in paying back the money borrowed with interest for the use of it while he has actually had such use, any penalty or forfeiture can possibly be involved. The character of the contingency cannot be of consequence, any more than it can be important what year or month or day the parties fix upon for payment where maturity is thus tolled : the happening of the contingency but determines the year and month and day of maturity and puts it into the contract as if it had been .originally [556]*556stated therein. The event may bear a relation to the contract or it may not. It may consist of the doing or omission of something forbidden or required by the undertaking of the parties, or it may be entirely collateral thereto and independent thei’eof. A note by A. to B. may be payable on a day certain, or upon the death meantime of 0., or upon the failure meantime to pay any monthly instalment of interest, or upon A’s failure to meet meantime some other wholly independent obligation of his, or upon his contracting another liability, or allowing his property?- to become subjected to a lien or charge, &c. &c. So long as the effect of the stipulation is only the acceleration of the payment of an existing debt, it involves nothing in common with a penalty or forfeiture and will not be relieved against directly or indirectly in a court of equity. The stipulation here that this debt should mature in the event the debtor should allow taxes on the property conveyed to the creditor to secure its payment to become delinquent is clearly within this principle ; and the plea which averred subsequent payment of delinquent taxes, and upon this fact invoked the equitable doctrine of relief against penalties and forfeitures, was wholly bad. — 1 Pom. Eq. Jur., § 439; Chambers v. Marks, 93 Ala. 412; Standift v. Morton, 11 Kan. 48.
2. The stipulation in this note and mortgage is, as we have seen, that they shall become due &c. upon the event of the maker thereof allowing the taxes ‘ ‘to become delinquent.” The bill, speaking as of the date of its filing, May 4, 1894, avers that the makers of said note had allowed the taxes upon said property for the year 1893 to become delinquent, and that the same were then delinquent.
Free access — add to your briefcase to read the full text and ask questions with AI
McCLELLAN, J.
— This bill is filed by Olliver against Parker et al. to foreclose a mortgage executed by the latter to the Lombard Investment Company, and covering certain lands situated in the county of Montgomery, to secure a loan of money evidenced by a promisory note, and which mortgage and note were assigned to and are now the property of the complainant. The main question in the case as now presented is whether the bill was prematurely filed ; and that question rises upon the following facts stated in the bill and in certain pleas filed by the respondents : Said note and mortgage were executed October 25,1890, and the note was due and payable on, and the law day of the mortgage fell- upon', November 1, 1895; but the note contains this stipulation : “If the maker of this note and interest notes attached hereto shall allow the taxes or any other public rates or assessments on the property or any part thereof given as security for the aforesaid notes to become delinquent, * * * * then upon the happening of any of said contingencies the whole amount herein secured shall at [554]*554once become due and payable, and the mortgagee, its legal representatives or assigns, may proceed at once to collect this note and foreclose the mortgage given to secure said note, and sel] the mortgage property to satisfy said debt, interest and costs,” &c. And said mortgage contains this provision: “The first party [the mortgagor] agrees to pay all the taxes or assessments, general or special, levied upon said real estate or upon this mortgage, before the same becomes delinquént, * * .* * and if not paid, the holder of this mortgage may, without notice, declare the whole sum of money herein secured due and collectible at once.” Having relation to these stipulations in the note and mortgage, the bill, which was filed May 4,1894, avers: “that the said makers of said notes have allowed the State and county taxes for the year 1893 to become delinquent .and that the same are now delinquent, and that said property is in danger of being sold to satisfy the same, and orator avers that by reason of said delinquency said note has become due and payable, and he has so elected, and is entitled thereby to the foreclosure of said mortgage for the payment of said note, the interest and damages thereon and attorney’s fee for the collection of said note and the foreclosure of said mortgage as in said note and mortgage provided.” The pleas interposed by the respondents set up in substance : Fir at. That since the filing of the bill the taxes for the year 1893 have been paid by them, that a failure to sooner pay the same was with no intention of subjecting the property to a decree of sale for the payment of said taxes or to violate the stipulation of the note and mortgage in that regard, but that they acted in respect of said delay “only in accordance with a long established custom, existing in this county, to pay taxes for the preceding year [any time] before the 1st day of June of the succeeding year; and that said custom was well known to said mortgagee when said mortgage was made and to complainant when he became the assignee thereof;” and, further, that this property was not decreed to be sold for the taxes of 1893, and when the same were paid by the respondents they offered to pay the complainant all costs of the suit then accrued, and this offer is renewed in the plea. Second. That because of the existence and knowledge of all parties to the contract of the custom stated above of paying taxes at any [555]*555.time before the 1st of June of the year succeeding that of the levy, the taxes of 1893 were not delinquent within the meaning of the note and mortgage when this bill was filed May 4, 1894, and would not have been so prior to the 1st day of the ensuing month, before which time they were paid. And third, that if there was a breach of said stipulation accelerating the maturity of said note, &c., the same has been waived by complainant, for that thereafter, on March 19,1894, and again on May 24, 1894, the receiver of the Lombard Investment Company, complainant’s assignor, wrote letters to the maker of tho note and mortgage demanding payment of a coupon interest note due May 1, 1894, and that said letters were written by the receiver as the agent of the complainant and by his direction.
1. It is entirely competent for debtor and creditor to agree upon a date or a contingency upon the occurrence of which the debt matures and becomes payable, or alternatively upon a date and a contingency, the date to toll maturity unless the contingency happens before it transpires, and the contingency to mark the time of maturity if it happens before the alternate day fixed in the contract. There is nothing in such stipulations in the nature of a forfeiture or a penalty. When the contingency occurs, it is as if the parties, without reference to any contingency, had agreed upon that day as the time of maturity and payment, and not in any sense upon the idea that the bringing of the debt to maturity at that time is a penalty on the debtor for the happening of the contingency or a forfeiture of any rig-ht of his because it did happen. The debt matures upon that event because he has agreed that it should; and as he pays not one cent morp than the debt with accrued interest, which the creditor would be entitled to however long maturity might have been postponed, it is not conceivable that in paying back the money borrowed with interest for the use of it while he has actually had such use, any penalty or forfeiture can possibly be involved. The character of the contingency cannot be of consequence, any more than it can be important what year or month or day the parties fix upon for payment where maturity is thus tolled : the happening of the contingency but determines the year and month and day of maturity and puts it into the contract as if it had been .originally [556]*556stated therein. The event may bear a relation to the contract or it may not. It may consist of the doing or omission of something forbidden or required by the undertaking of the parties, or it may be entirely collateral thereto and independent thei’eof. A note by A. to B. may be payable on a day certain, or upon the death meantime of 0., or upon the failure meantime to pay any monthly instalment of interest, or upon A’s failure to meet meantime some other wholly independent obligation of his, or upon his contracting another liability, or allowing his property?- to become subjected to a lien or charge, &c. &c. So long as the effect of the stipulation is only the acceleration of the payment of an existing debt, it involves nothing in common with a penalty or forfeiture and will not be relieved against directly or indirectly in a court of equity. The stipulation here that this debt should mature in the event the debtor should allow taxes on the property conveyed to the creditor to secure its payment to become delinquent is clearly within this principle ; and the plea which averred subsequent payment of delinquent taxes, and upon this fact invoked the equitable doctrine of relief against penalties and forfeitures, was wholly bad. — 1 Pom. Eq. Jur., § 439; Chambers v. Marks, 93 Ala. 412; Standift v. Morton, 11 Kan. 48.
2. The stipulation in this note and mortgage is, as we have seen, that they shall become due &c. upon the event of the maker thereof allowing the taxes ‘ ‘to become delinquent.” The bill, speaking as of the date of its filing, May 4, 1894, avers that the makers of said note had allowed the taxes upon said property for the year 1893 to become delinquent, and that the same were then delinquent. We find no plea in this record taking issue upon this averment. By force of the statute the taxes for the year 1893 became delinquent on December 31, 1893. The plea intended to be addressed to this point admits that the taxes in question were not paid till May 14, 1894. It further avers that there was a custom by which taxes for 1893 were payable at any time before June 1, 1894. These taxes were in fact payable from and after October 1, 1893, and at all times- subsequent to that date whether before or after June 1, 1894 until they were paid; but the fact that they were payable after December 31, 1893, and customarily could be [557]*557paid up to and even after June 1st, following,.no more tends to show that they were not delinquent on and after the last day of the year of the levy than the fact that they were payable during the months of October, November and December of that year. In other words, the contingency of the stipulation was delinquency ; the bill avers that delinquency; and the plea neither denies that averment nor states facts inconsistent with it. Whatever custom may have existed as to the time of paying taxes, and however well it may have been known to the parties, they yet had a right to stipulate for maturity of the note and mortgage at the time taxes should become delinquent. This they did. The bill avers the happening of the contingency. The plea does not contradict it. The plea was bad.
3. The stipulation in question was a continuing one to be taken advantage of by the mortgagee or not as he might elect at any time when the contingency should happen or recur. His right of election upon a delinquency with reference to the taxes of 1893 was not impaired by the facts that there was a like delinquency in respect of the taxes of 189‘J, and that he did not then elect to treat the debt as being brought to maturity thereby. Having the absolute right to declare the note due upon any such delinquency, his failure to exercise it in one instance did not preclude its exercise in a subsequent instance. The first delinquency past without such election, the right was as fully secured to him. by the terms of the contract as to a succeeding delinquency as it had been with reference to the first. And the fact that he had elected not to declaro the debt due upon the first delinquency gave no assurance whatever that a subsequent right of election would be exercised in the same way. And it cannot be said that his election at one time not to declare the maturity of the debt induced the respondents to again allow the taxes to become delinquent, when they knew then as well as in respect of the first delinquency, that notwithstanding his pretermission at that time he had the unqualified right to make the contrary election. If they acted upon a different assumption, it was gratuitous, mere speculation upon which of two courses equally open to him he would adopt; and this action could in no sense be said to have been induced by him.
[558]*5584. On the averments of the 5th plea the letters, exhibits A and B thereto, it may be conceded, are to be taken as having been written by the then holder of the note and mortgage. The first of these, that of March 19,1894, was sent before bill filed, and was intended merely to call the mortgagor’s attention to the falling due of an interest note on May 1st following. The note was not paid, and three days after its maturity this bill was filed. The fact of the non-payment of this instalment of interest may well have induced the mortgagee to exercise his right to declare the maturity of the whole debt with accrued interest because of the mortgagor’s delinquency in respect of the taxes ; and while the notice with reference to the interest due on May 1st may have indicated a purpose on the part of the mortgagee not to bring the whole debt to maturity under circumstances existing on March 19th, when the notice was given, it cannot be said to have afforded any such assurance with reference to the different state of things which existed on and after default in the payment of that instalment. The right to declare the note and mortgage presently due and payable existed at every moment of time after December 31, 1893. That it was not exercised at an earlier date was no waiver of the right to exercise it on May 4th, 1894. That the mortgagee had no purpose prior to that time to exercise it, or even had indicated to the mortgagor at any particular date during the period that it was not then and under then existing circumstances his purpose to exercise it, could not be said to be a waiver of the right for all time or under all circumstances. He ma}7 well have been content to take the risks incident to a charge on his security for delinquent taxes so long as interest on the loan was promptly paid, and yet wholly unwilling to carry the loan under the conditions existing when the bill was filed ; both the taxes and the interest being unpaid and delinquent. Our conclusion is that the letter of March 19 was not a waiver of the right in question; and, the right having been exercised on May 4th, the letter of May 14th could have no bearing on the question.
•Affirmed.