Citations
- 32 Ohio App. 414
Full opinion text
Sullivan, J.
This cause is here on error from the common pleas court of Cuyahoga county, and it is here sought to reverse the judgment of the court below on the ground that it is excessive, produced by figuring interest at 8 instead of 6 per cent., against which the claim is made that the action of the lower court was warranted, because the suit was not upon the promissory notes in the record, but upon the foreclosure of the mortgage, which was given to secure nine promissory notes, eight of which were for the sum of $500 each, and one for the sum of $700. These notes were dated April 24, 1920, the same date as the execution of the mortgage, which, according to the record, was made simultaneously with the notes, and which, according to their tenor, draw interest at 6 per cent, per annum, payable semiannually, and there is no reference therein to any other rate of interest upon default in the payment of the principal or the installments of interest, but the mortgage does recite that the principal is to become due on failure to pay the interest as stipulated, and further provides that all overdue payments shall draw interest at the rate of 8 per cent, per annum, payble semiannually until paid.
In reaching the amount of the judgment below the court followed the clause in the mortgage which provides that all overdue payments shall draw interest at the rate of 8 per cent, per annum, and ignored the provision in the notes which provides for interest at 6 per cent, per annum, payable semiannually, and it was either done upon the ground that, the basis of the suit being the foreclosure of the mortgage, the provisions of the same exclusively govern, regardless of any stipulation as to interest in the notes, or upon the theory that the execution of the notes and the mortgage being simultaneous, and the contract being an entirety, the parties had the right in the mortgage clause to depart from the interest named in the notes and rely upon their claim to compute the amount due at 8 per cent., or, again, it may have been for the reason that the court below construed the language “overdue payments” in such a manner as to indicate that the expression meant interest that was overdue and in default, and not upon the theory that this language had reference only to the principal named in the note. Our interpretation of the language of the mortgage precludes any reference on the part of this language to computations on defaulted interest, because no interest had been paid, and reference could only be had, by the use of this language, to the principal named in the notes. If the mortgage so read that it referred to overdue interest, then we think there would be some ground for the holding of the court below, because there was no provision in the notes as to any payment, excepting 6 per cent, for defaulted interest, and it might reasonably be said from the record that the language of the mortgage, having reference only to interest, was not repugnant to any clause or provision contained in the notes.
It is impossible to exclude the importance of the notes from the transaction, even though the suit is upon foreclosure of the mortgage, because, if the notes had been disposed of, certainly upon suit there could be no recovery for more than 6 per cent., notwithstanding the clause in the mortgage for 8 per cent., because figuring it at 8 per cent, would produce an amount that was more than a computation of the interest on the principal of the notes warranted or demanded. In order to recover for more than the amount of interest named in the notes, it would have to be shown, not only that the transaction was simultaneous, but that no situation arose that would make the notes repugnant to the mortgage on such a vital proposition as the rate of interest. The mortgage was the security for the indebtedness. The indebtedness consisted of notes, and the total amount due thereon would have to be figured according to the contents of the notes, unless it should appear that the transaction was one in entirety, and that the parties agreed to the opposing terms, but, even then, it is our judgment that the figuration could not be at 8 per cent., because of the aforesaid repugnance. A reasonable construction of the clause in the mortgage referring to 8 per cent, is that the person who drafted it used the term “overdue payments,” when from the circumstances in the case it referred to principal, instead of interest, and it is clearly as reasonable to conclude that, when the language “overdue payments” was used by an error of expression, the word “interest” was not included, and, if it had been, the notes and mortgage might have been considered harmonious, and the clause in the mortgage as to 8 per cent, on defaulted interest, instead of payments, would probably be enforceable, although we do not pass upon this question at this time, except by way of obiter dictum.
"We think a case that applies to our views of the situation is McClelland v. Bishop, 42 Ohio St., 113, from which we quote:
“Held, that such stipulation relates to the remedy by foreclosure or other proceedings under the mortgage, and upon such default the mortgage may be foreclosed for the whole debt. It is a stipulation for the advantage of the mortgagee, and of full force as to a remedy on the mortgage, but does not operate to vary or extinguish the obligations expressed on the face of the notes themselves for general purposes.”
From pages 123 and 124 we quote as follows:
“This clause is for the advantage of the mortgagee or his assignee. It should be construed with reference to the subject matter and its evident purpose, namely, to provide for but one suit in foreclosure. In thus limiting its purpose, we give it full force, without rendering null the express stipulations of the notes. The terms of each contract can stand without rendering the other nugatory. * * *
“While it is true that all separate writings, made at the same time, and relating to the same transaction, are in the eye of the law as if embodied in one, yet it is not true, that when, in one contract, evidenced by a single paper, or in several, relating to the same transaction, containing stipulations relating to matters in their nature separate, either should be construed so as to extinguish the other. If the construction claimed for the mortgage be given, it would extinguish the terms of the notes. As well might the stipulations of the note extinguish those in the mortgage. The stipulation in the mortgage should be construed as providing a remedy on the mortgage, and that so far as foreclosure proceedings are concerned, the notes for that purpose are due, but for general purposes, the obligations on the notes, are to be determined by their own express terms. In this way both contracts can stand and be fully enforced according to the manifest intention of the parties.”
Thus holding, the judgment of the lower court is modified, and judgment will be entered as modified, on the ground that the judgment is excessive under the figuration of the rate, of interest inserted in the mortgage.
Judgment accordingly.
Vickery, P. J., and Levine, J., concur.