Savage v. Howell

On Motion for Rehearing. The plaintiff-appellant, moving for rehearing, sets forth two grounds therefor. In addition, he calls to our attention a claimed erroneous statement in our recital of the facts. The statement that "the complaint does not allege any amount of interest to have been lost by virtue of the appeal" was inadvertently made. The complaint does allege a loss of interest on the judgment because of the stay and delay occasioned by the appeal and supersedeas. This inaccuracy of statement, however, in no way affects the result reached.

Only one of the two grounds for rehearing need be considered. As to the other, we are satisfied with the treatment accorded the subject in our former opinion.

It is strongly insisted that we erred in our treatment of the item of interest claimed as damages under the supersedeas bond. Assuming, as plaintiff contends and correctly we think, that he was stayed in the foreclosure of his corporation's mortgage for the period of supersedeas, this alone does not entitle him to judgment against the sureties. There must have been a loss of such interest to plaintiff. The foreclosure proceeding was to satisfy an amount adjudged due in excess of $23,000, consisting of both principal and interest. The order of sale directed an application of the proceeds of sale to the total indebtedness without specifying any application as between principal and interest. If the rule governing the application of voluntary partial payments be deemed to have been properly followed under the order of sale, then all the interest for loss of which claim is made under the bond was satisfied and the claim fails. On the other hand, if, as plaintiff argues, the special master shall be deemed properly to have applied the proceeds on equitable principles, the rule governing where the proceedings are in invitum (46 C.J. 462, § 86 under topic "Payment"), and to have appropriated the entire proceeds to principal, then interest for the period of supersedeas is recoverable from the sureties on the supersedeas bond. We thus were called upon to interpret the order of sale in this behalf. We did so in this language, from which position we now are asked to recede, to-wit: "In the absence of other directions or agreement between the parties, it cannot be said that the application of the $11,000.00 payment was not made, first, to costs incurred; second, to interest due up to the time of ascertainment of the amount of the deficiency; and, third, the balance to the principal indebtedness."

We are not persuaded that the effect given the order of sale in the language just quoted misinterprets its true intent. If it were the case of applying the proceeds of a voluntary partial payment, obviously no other application than that deduced from the order in our former opinion would have been thought of. Although the payment here involved was compulsory in form, i.e. through a judicial foreclosure, yet in substance and practical effect it is so nearly voluntary in character as reflected by circumstances to be mentioned, that we think we should violate the true intent of the order to treat it as made in the light of any other understanding of it. In the first place, it was a default foreclosure, having the semblance but lacking the reality of a contest. Furthermore, the plaintiff, through his own or his corporation's attorney, was in complete charge of the proceedings.

One of two inferences seems inescapable. The plaintiff, in charge of the default foreclosure proceedings, either made no request for inclusion in the order of sale of a specific direction that the proceeds be applied first to the principal indebtedness and the remainder to interest; or, having made such request, the same was denied by the trial judge in the form of order actually entered.

The plaintiff's position is but little aided in assuming either alternative as the true one. If the specific direction we are now asked to supply by construction were asked and refused, obviously we should lack grounds for reading it into the order actually made. On the other hand, if the trial judge were not reminded of the pertinency of a different rule by a request for specific direction governing application, then because of the considerations mentioned, it would appear the more likely and natural thing for him to have intended the application appropriate to the seemingly voluntary character of the payment involved. While, of course, we impute knowledge of both rules to the trial judge, he naturally was more familiar with the United States rule governing application of partial payments voluntarily made. It theretofore had been approved and applied in this jurisdiction in Jones-Downes Company v. Chandler, 13 N.M. 501,85 P. 392, 13 Ann.Cas. 710, and Armijo v. Henry, 14 N.M. 181,89 P. 305, 25 L.R.A., N.S., 275, whereas we never before had had occasion to notice or consider the rule governing application of involuntary payments.

Even under the rule generally followed in making application of involuntary payments, i.e., upon equitable principles (46 C.J. 462), there is no fixed standard of application. Some three or four different methods are employed to accomplish equity, as suggested by the text cited. The discretion of the trial judge controls and within that discretion, even in proceedings in invitum, he is privileged to adopt the rule followed in applying partial payments voluntarily made, if it seems the more equitable.

All parties agree that we may not in this proceeding apply the payment arising from the foreclosure proceedings. Unquestionably, some application of the payment, as between principal and interest, was made by the special master prior to or coincidentally with the approval of his report of sale. We simply are compelled to determine from the order what application the master properly may have made and then assume that such application was made. Thus seeking to determine the true intent of the order, the plaintiff asks us to assume application under it conformably to what now may appeal to us as equitable. But the record fails to show that these considerations were urged upon the trial court when it incorporated in the order of sale only a general direction for application of the proceeds thereof. Indeed, the implications are strongly to the contrary. We adhere to our former holding that the application was first to costs; second to interest; and third to principal.

This conclusion, although unsatisfactory, is less so than that proposed by the plaintiff. And, yet, a simple request for specific direction as to application of the payment, seasonably made by the party now asking us to interpret the obscure passages of the order, or by his predecessor in interest, would have removed all doubt on the subject.

The motion for rehearing will be denied, and it is so ordered.

BRICE, C.J., and ZINN, SADLER, and BICKLEY, JJ., concur.