Hibernia Savings & Loan Society v. Wackenreuder

Garoutte, J. This appeal is from the judgment and from an order denying appellants’ motion for a new trial in an action for the foreclosure of a mortgage. The main point involved relates to the manner in which interest should be computed upon the principal of the note. It was computed by the court, in .fixing the amount of the judgment, at six per cent per annum, compounded monthly, and it is now claimed by appellants that only simple interest should have been allowed. The construction of the contract between the parties determines the question involved. The contract as to the original loan called for interest at the rate of eight per cent, compounded monthly. Proceedings of fore[472]closure were begun upon such contract, whereupon the mortgagor made a written proposition to plaintiff, whereby he proposed “to pay enough on the existing mortgage to reduce it to eight thousand dollars, and to then give a mortgage for the sum of eight thousand dollars, to bear interest at the rate of six per cent per annum.” Plaintiff answered the mortgagor's proposition by the following resolution of its board of directors: “Application No. 11, V. Wackenreuder, for a renewal of his loan of June 29, 1881, at six per cent. Renewal declined, but present loan allowed to run at six per cent, and the attorney requested to grant a stay of sixty days.”

It will be observed that the foregoing proposition of the mortgagor was rejected, and it would seem for that reason that-the case how stands exactly as though no such proposition had ever been made to the bank; but after the rejection of that proposition, the bank, of its own motion and without consideration, notified the mortgagor that it had reduced the rate of interest upon the loan to six per cent, and such reduction being greatly to the benefit of the mortgagor, in the absence of anything to the contrary, we must assume was accepted by him. "We think the only fair construction to be placed upon the bank's agreement, or proposition to reduce the interest to six per cent, is the one placed upon it by the trial court. Before this time the note was drawing interest at the rate of eight per cent, compounded monthly. The statement of the bank to the mortgagor only proposed to modify a single term of the note, and that was the annual rate of interest. No modification of the clause of the note pertaining to the compounding of the interest was mentioned in the bank's proposition, and we are bound to conclude that no modification as to that clause was contemplated, and that the original contract in that regard remained in statu quo.