Tonkel v. Shields , 125 Miss. 461 ( 1921 )

Ethridge, J.,

delivered the opinion of the court.

The appellee filed a bill for injunction to prevent the appellant from advertising and selling certain lands under a deed of trust executed by the appellee to the appellant for the purchase money of certain lands. The deed of trust was for twenty-six thousand five hundred dollars and interest payable annually on all of said notes on said date, and the notes called for attorney’s fees, etc. It was further stipulated in the déed of trust that if the grantor therein failed to pay the said notes or any of them or any part thereof, or all or any part of the annual interest thereon when due, or failed to carry out the covenants and agreements therein contained, that the lands might be sold at public outcry, etc.

It was further agreed that the grantor in the deed of trust, the appellee, or her assigns, shall have the right to cut and remove all of -the merchantable timber located on said lands and to dispose of same, provided and with the understanding that she should apply to the credit of the above notes the following pro rata of all of the proceeds derived from the sale of said timber, that is to say five dollars per thousand feet for all red and white oak, ash, and hickory removed from said lands; that said payments applied on said notes were to be made as soon as the timber was placed on a railroad right of way and a sale made thereof, and that as soon as such sale is made that a credit shall be immediately placed in the Bank of Shaw, of Shaw, Miss., to the account of M. Tonkel, or the holder of said notes, to be applied to the payment of the notes therein secured. It was further stipulated that in case the timber was sold and diverted without the consent of Tonkel or the holder of the notes that Tonkel or the holder of said notes may then, at any time thereafter before the debt is fully paid and satisfied, request the trustee to take possession and make a sale.

After the execution of the deed of trust the appellee sold certain of the timber, and paid, or caused to be paid, the amount stipulated to the Bank of Shaw,- said amount oeing paid at different times during the summer and autumn of 1918, and were placed by Tonkel or the bank as a credit on the note first maturing. Just prior to the time the first payment was due appellee’s agent called up the Bank of Shaw and requested the bank to send a draft for the amount of interest due to the Bank at Indianola, Miss., and that same would be paid by said agent. The Bank at Shaw thereupon made out a draft for one thousand five hundred and forty-six dollars and sent it to the Bank at Indianola, Miss. ' Mr. Fletcher, appellee’s agent, caused the draft to be returned, with notation indorsed thereon that it was for too much, and that the correct amount due ivas one thousand three hundred and twenty-one dollars and ten cents, and that he would honor a draft for that amount. The Bank at Shaw thereupon made out' a second draft for some amount slightly different from the original draft, and returned that to the Bank at In-dianola. The appellee’s agent indorsed on that draft that it was still too much, and that the true amount, according to the calculation of himself and the cashier of the Bank at Indianola was that it should be for one thousand three hundred and twenty-one dollars and ten cents, and that he would pay that amount. Afterwards Fletcher sent a check/ for one thousand three hundred and twenty-one dollars and ten cents, payable to the Bank at Shaw or1 bearer,'with notation, “Interest on notes due M. Tonkel by Mrs. Ollie Shields.” This check was returned and, on the 31st day of January, Fletcher wrote the Bank at Shaw inclosing a check for one thousand three hundred and twenty-one dollars and twenty-three cents for interest due M. Tonkel on the note due on the 9th of January by Mrs. Ollie Shields, and in which he stated that he had very carefully gone over the calculations and sent the dates and amounts of the credits upon which he based his calculations of the amount then due. On February 2d Fletcher ivrote M. Tonkel a letter, stating that he had offered to pay one thousand three hundred and twenty-one dollars and twenty-three cents a second time, and that his check has been returned to him, stating that Tonkel had refused to accept the same, and stating, further, that he did not know how Tonkel figured the interest, but that he (Fletcher) had figured it very carefully, and then had the bank to figure it, and that their figuring corresponded, and stated that he was returning the check, and, if Tonkel would advise him how he figured the interest and show that Mrs, Shields OAved more than the amount of the check, that he would be glad to send the balance. On February 4th this letter was answered by Mr. Tonkel’s attorney, stating that the notes had been turned over to him for collection, and that Tonkel had exercised his option on the deed of trust and declared the entire indebtedness due and payable, and that he would enforce the payment of the entire amount, and saying, further, that the indebtedness was payable at the Bank of Shaw, and that it was Fletcher’s duty to come there and adjust the matter if he had any grievances, and that it was not Mr. Tonkel’s duty to come to him; that the matter had dragged along a month past due and that the collection would be foreclosed by foreclosure proceedings, stating:

“It looks like you are hankering for a lawsuit and, if so, we will accommodate you.”

Appellee’s attorney answered this letter, stating that he had sent the amount of one thousand three hundred twenty-one dollars and twenty-three cents, the amount of interest due according to the appellee’s Avay of figuring, and that Mr. Fletcher had offered to pay the amount and also any other amount due if Mr. Tonkel would only show him his way of figuring the interest; that the difference between them amounted to more than twTo hundred dollars, but Mr. Tonkel preferred to try and foreclose the deed of trust when not a single note was due rather than to enter into a discussion about the matter to show how he figures Fletcher out of two hundred dollars more interest than Fletcher can figure the same; that they were willing to pay Tonkel what was due, and have been willing to do this, and offered it to' him; that they were willing to pay the full pound of flesh, but did not propose to give any blood, as the bond does not stipulate for it.

Foreclosure proceedings were instituted by advertising the property for sale, and an injunction followed; the bill offering to pay the amount due, but not actually carrying the money into court. A motion was made to dissolve the injunction, and evidence taken thereon showing that applying the payments on the partial payment plan by reducing the interest then accrued sustained the complainant’s position; the appellant showing that applying the payments according to the partial payment rule, first paying the interest accrued to the time of the payment and the balance on the principal, and calculating new interest on the new principal so obtained to the next payment, and so on, sustains the complainant’s theory as to the amount really due at the time. The appellant’s contention was and is that the payments were applied on the principal, and that he was not called on to apply it to the interest other than the first note due, and that, so treating it, his contention of the amount of interest due would be correct. Appellant also contends that there was no tender of any money at all, that a check is not good as a tender, and, as the money was not tendered, that he was acting within his rights in advancing the maturity of the deferred note under the terms of the deed of trust. He also contends that no money was paid into court, and that for this reason it was error to sustain the contention of complainant, and refused to dissolve the injunction. Under the terms of the instrument the entire interest was due annually, on the 9th day of January, 1919, and each year thereafter, and that the 1919 interest payment was the first indebtedness in point of time which matured.

We think the correct rule to apply in the present cause is to apply each payment to the amount of interest which had accrued or been earned on the entire series of notes to that date, and, if any was left, then the balance to be prorated among the several notes in accordance with the stipulation in the deed of trust. Our statute on partial payments (section 2681, Code of 1906, section 2079; Hemingway’s Code) provides as follows:

“When partial payments are made, the interest that has accrued to the time of payment, if any, shall be first paid, and the residue of such partial payment shall be placed to the payment of the principal.-”

The words in -the statute, “the interest that has accrued to the time of payment,” mean that the interest that has been earned, though it may not be yet due, will be first paid.

The general rule in applying payments is that it is applied to the item that first matures in the absence of any stipulation as to how it is to be applied, or any actual application of it at the time of the payments. This construction of the statute is in accord with the chancellor’s view on this question as reflected in the result of his decision. This being true, the complainant was not in default as to the amount due. There was no rejection of the check because it was a check and not money. It is quite clear that the check was not accepted solely because it was not for the amount contended for by the appellant. The proof shows that the check was absolutely good, and would have been promptly paid, the appellee having the money in the bank for this purpose, and if the check had been declined on the count that it was a check and not money, it would have been promptly replaced with money. However, that question would not have arisen in this case had the appellant drawn his draft for the correct amount, for the bank would have paid the draft with money if demanded. Whether the amount offered in the check by the appellee was the correct amount or not as a fact, it is quite clear from the record that the appellee believed in ■good faith it to be the correct amount, and the stipulations in the deed of trust, giving the grantee the right to advance the payments after a default in the payment, never stipulated that he would have a right to advance them, and make all of them mature when there was a 'bona--fide dispute between them as to the correct amount, and this is especially true where a party declines to disclose his method of figuring the amount due. This being true, and the appellant having undertaken to foreclose the mortgage when he had no right so to do, the injunction was properly issued to prevent his so doing. The bill offers to pay the amount, and the appellee had repeatedly offered and tried to get accepted the payment of the amount which he claimed was due, and had utterly failed to get the appellant to show wherein his figures were wrong.

While the proper practice is always to pay an amount conceded to be true into court with the bill, a failure to do so in the present case would not prevent the injunction being retained, because it is perfectly evident from the record that the money was available to the appellant at any time he chose to take it. He was seeking to take a drastic step by advancing all the notes to maturity, and in so doing he was seriously handicapping the appellee in handling the property in order to carry out her contract Avith himself. It Avould seem from the record that the property subsequent to the sale to the appellee had repeatedly advanced in market value, and that it would be very profitable to the appellant to acquire this property, and greatly damaging to the appellee to have to pay all of this money because of a slight discrepancy, relatively speaking, betAveen the contentions of the two parties. We believe the chancellor reached the correct conclusion on the facts of this record, and the judgment will be affirmed.

Affirmed.