Parker v. McGinty , 77 Colo. 458 ( 1925 )

McGINTY was plaintiff below and had judgment in a suit to foreclose a mortgage given by the Parker Brothers Land Company to him to secure a promissory note for $5,000. The defendants Parker and Wagner bring error.

The mortgage is conditioned on the payment of "the sum of five thousand dollars, in manner particularly specified in one certain promissory note bearing even date herewith, due on or before five years after date with interest at six per cent per annum, interest payable annually, executed by said the Parker Brothers Land Company to the said Frank McGinty." There was no further description of the note in the mortgage. The note carried coupons and contained the usual provisions for maturity at the option of the holder on failure to pay interest and for attorney's fees.

While the note was current the company conveyed the mortgaged land to plaintiffs in error, Parker and Wagner, and they to Lankriet. The deed to plaintiffs in error excepted from the covenant against incumbrances the mortgage in question and then followed this clause: "which mortgage the parties of the second part herein assume." When interest fell in arrears the note was declared due and suit begun. The defence's motion to separate the causes, which they claim were several, was denied, their demurrer to the complaint was overruled and their demand for a jury was refused.

The points for reversal are:(1) That the causes should have been separated. (2) That the court ordered judgment on the note against Parker and Wagner, in case of deficiency. (3) That it included attorney's fees in the computation. (4) That it included therein interest on the coupons. (5) That the action was premature. (6) That a jury was denied.

1. The claim is that the action on the note and the action to foreclose the mortgage are separate causes. The Code 1921, § 272, providing for judgment for deficiency, indicates that the framers regarded the action as one. There is nothing in the case of Folda Real Estate Co. v.Jacobsen, 75 Colo. 16, 223 P. 748, that prevents this conclusion. It is there shown that they are logically two, but permissibly one; that they are one in equity, and that a foreclosure is in equity follows from Danielson v. Gude,11 Colo. 87, 17 P. 283. The original Colorado Code required the one action, but the Act of 1879 (revision of 1887, § 252,), omitted that provision and so permitted separate actions and was apparently for that purpose.

2. Were Parker and Wagner liable to a personal judgment for the amount of the note? They were. The assumption of the note in the deed which they accepted made them directly liable to the holder of the note. Smith v.Davis, 67 Colo. 128, 186 P. 519. They claim they did not know the assumption was in the deed, but they cannot say they were ignorant of the terms or legal effect of the instrument which gives them title. Jaeger v.Whitsett, 3 Colo. 105; Clayton v. Bank, 75 Colo. 393, 226 P. 141; Gillett v. Flora, 68 Colo. 218, 187 P. 527.

3. Plaintiffs in error say that the description of the note in the deed of trust as recorded gave them no intimation of the provision for attorney's fees, and they knew nothing of it; the mortgage, however, by reference to the note puts all purchasers on inquiry as to its terms and so they are, in effect, charged with notice of them. Clayton v.Bank, supra; Colburn v. Gilcrest, 60 Colo. 92,151 P. 909; Jones v. Bank, 74 Colo. 140, 219 P. 780.

4. This court has held that interest on coupons is not compound and may be lawfully contracted for and recovered.Lake County v. Linn, 29 Colo. 446, 459,68 P. 839, and cases there cited. The coupons are commercial paper (Gelpcke v. Dubuque, 1 Wall. 175, 206,17 L. Ed. 520), and the rule applies to private as well as municipal paper. Harper v. Ely, 70 Ill. 581; Humphrey v. Morton,100 Ill. 592; Benneson v. Savage, 130 Ill. 352,22 N.E. 838.

5. The action was not premature because the maturity of the note was accelerated by failure to pay interest and foreclosure was proper on such maturity. The condition of the mortgage is such that if the note is paid "in the manner particularly specified" therein, i. e. according to its terms, the mortgage shall be void and of this plaintiffs in error had constructive notice, as we have shown. The note was not so paid, but according to its terms was due and unpaid. Counsel cite Rasmussen v.Levin, 28 Colo. 448, 68 P. 94. It is enough to say that that case does not decide the question now before us.

6. It was not error to refuse a jury. Danielson v.Gude, 11 Colo. 87, 17 P. 283; Cree v. Lewis, 49 Colo. 186,189, 190, 112 P. 326; Neikirk v. Boulder Bank,53 Colo. 350, 355, 127 P. 137.

7. Since the above facts were shown in the complaint it follows that the demurrer thereto for want of facts was properly overruled. The briefs argue the question as to the misjoinder of causes and of parties but both of these objections were waived by answering over. We have held this so many times we are tired of citing the cases.

Judgment affirmed.

MR. CHIEF JUSTICE ALLEN and MR. JUSTICE WHITFORD concur.

On Rehearing En Banc.