California State Bank v. Webber

Vanclief, C. Action to foreclose a mortgage to secure payment of a promissory note, of which the following is a copy:

“ $2,500.00. Sacramento, Cal., May 27, 1889.

“ Two years after date, for value received, I promise to pay to the California State Bank, a corporation, or order, the sum of twenty-five hundred dollars, in gold coin of the present standard of value, with interest thereon from date until paid, at the rate of eight and one-half per cent per annum, in like coin, payable annually, and, if not so paid, the interest may be added to the principal, and bear like interest, or the whole note may, at the option of the holder, without notice to the maker thereof, be treated as due and collectible. If this note is not paid at maturity, it is hereby renewed from year to year, at the option of the holder, until paid, and during such year the maker shall not have the right to pay the same. Both principal and interest to be paid at the California State Bank in Sacramento, California. Chas. F. Webber.”

The mortgage, bearing the same date as the note, contained the following provision: “And in case default be made in the payment of said note, or any installment thereof, or of any interest thereon, then the mortgagee may, at their option, and without notice to the mortgagor, at once proceed to foreclose this mortgage.”

This action was commenced August 26, 1893, without previous notice to defendant of any exercise of plaintiff’s option mentioned in the note or in the mortgage.

It was alleged in the complaint, among other things, that no part of said note has been paid, either principal or interest, and the whole thereof, amounting to-[540]three thousand five hundred and eighteen dollars and forty-four cents, is due, owing, and unpaid.

The defendant’s demurrer to the complaint, on the ground that it does not state a cause of action, was overruled.

Thereupon, the defendant answered, denying that the debt evidenced by the note was due at the time of the commencement of the action, and denying that no part thereof had been paid, and alleging certain payments of interest and taxes on the mortgage; and, as a separate defense to the demand for any interest whatever, alleged as follows:

“ That at the time and place the said note and mortgage were made, executed, and delivered, as alleged in the complaint, it was then and there agreed by and between plaintiff and defendant, C. F. Webber, and as a part of the same contract, and of the same transaction with the making of the said note and mortgage, that the said Webber, defendant herein, should and would pay and discharge all taxes and assessments which might be assessed or levied upon said money so loaned by plaintiff to said defendant, and on the said mortgage, or on either the said money or mortgage, anything in the said promissory note or mortgage, or either, to the contrary notwithstanding; it was also agreed that the real rate of interest to be paid by defendant for the use of said money was to be seven per cent per annum; but, for the purpose of covering said taxes and assessments on said money and mortgage, the rate of interest was inserted in said note as eight and one-half per cent, and it was agreed between the said parties that, if this defendant should pay said taxes and assessments on said money or mortgage and the interest on said note annually at seven per cent per year, together with the principal sum, the same should be in full payment of said note and interest, notwithstanding the rate in said note was nominally eight and one-half per cent.