Foster v. McGraw

1. The court is to judge as to the proof of the execution of a deed, the question of alteration afterwards, is generally for the jury. 2. Evidence of circumstances attending the execution of a paper and what the parties said whilst in the act of execution, may be received on the principle of explanation, not to vary the terms of the contract. 3. When one who owes several debts to another makes payments and no appropriation be made by either party, the law applies them to the debt which is least secure.

Error to the Court of Common Pleas of Tioga county: No. 155, to July Term 1869. ■> This was a scire facias sur mortgage, issued August 18th 1866, by John McGraw against A. H. Foster and Farrington Barealow. The writ was served on Foster; no service was made on Barealow. The defendant pleaded, “Non est factum, payment with leave,” &c. The case was tried June 12th 1869, before White, P. J. The plaintiff offered in evidence a mortgage dated J anuary8 1st 1856, from the defendants to him, for $10,000, on lands in Chat-ham and Middlebury townships. The defendant objected to its admission on the ground that it had been altered since its execution. The evidence was admitted and a bill of exceptions sealed. Payments having been made on the mortgage, the plaintiff claimed $4140, with interest from January 1st 1862, and rested. The defendant gave in evidence an agreement between the plaintiff and himself, dated January 23d 1864, which recited, that certain suits in New York and Pennsylvania were pending' between them; that the plaintiff held a mortgage from Barealow and one from Barealow and the defendant jointly, which were liens upon real estate in Middlebury township; that the plaintiff held an agreement between him and the defendant reciting the mortgages and providing for their consolidation upon terms therein mentioned, on which agreement the suit in New York was founded ; and for the purpose of settling all matters in variance, the defendant agreed to pay the plaintiff $11,000 “ in full for all of -his demands upon the said real estate in Middlebury, including the mortgages above recited and the contract hereinbefore referred to, if paid as follows, viz.: $2000 in hand, and the remaining $9000 within thirty days from this date, with use. If the said $9000 be paid within the time specified, said McGraw agrees to assign to said Foster the said mortgages, and surrender the said above-mentioned contract to him; if not paid within the time specified, the $2000 paid in hand is to apply on the original indebtedness of said Foster to said McGraw. In mean time proceedings to stay on all suits pending between said parties: and if this contract be carried into execution within the time specified, then all suits pending are to be discontinued, and each party to pay his own costs,” &c. The defendant testified:— “No claims were taken into consideration in the settlement, except those referred to in the contract. The original indebtedness was the mortgage in this suit.” The defendant then gave in evidence the following receipts from the plaintiff:— “ Received of A. H. Foster, $2000, to apply on contract of this date, if balance on said contract be paid as therein provided ; otherwise to be applied on original indebtedness of said Foster to me. January 23d 1864.” “ $3000. Jersey City, April 21st 1864. Received of A. II. Foster, $3000, to apply on contract of January 28d 1864, if balance due on said contract be paid as therein provided, on or before June 1st 1864; otherwise to be applied on original indebtedness of said Foster to me, with interest, the time being .this day extended, in consideration of above payment.” “ Received, Ithaca, January 14th 1865, of Aaron H. Foster, his note for $2000, dated this day, payable to the order of Simeon Hammond, in sixty days after the date thereof, at the First National Rank of Ithaca, N. Y., and endorsed by the said Hammond, to apply, when due and paid upon said Foster’s indebtedness to me as per agreement.” He also produced the note mentioned in the foregoing receipt, and rested. The plaintiff, in rebuttal, gave in evidence the following agreement, dated December 26th 1861, between plaintiff and defendant :— “ Whereas said Foster owns certain lands in Tioga county, described in a deed to him by Farrington Barcalow, dated August 8th 1861, for an undivided half thereof; and whereas said McGraw holds two mortgages on the same, one given by said Foster and Barcalow on the whole, on which there was due on the 1st day of July last $4140; the other given by Barcalow on one-half, on which there was due on said 1st day of July $7013.84; and a note of said Foster, dated August 8th 1861, for $3000; which in the whole amounts to $14,153.34, which sum said Foster agrees to secure by his bond and mortgage to said McGraw, payable as follows,” &c. * * * And whereas said agreement cannot be carried out, because said Barcalow, just before the conveyance of said one-half by said deed, fraudulently gave and caused to be recorded a mortgage for $7000 on said lands so conveyed by him, which may be a valid encumbrance thereon. “Now the said Foster agrees with said McGraw, that if said McGraw shall foreclose his said mortgages, or either of them, against said lands, that he will purchase the same, unless the same will sell for more than the debt, interest and costs due to said McGraw; and that he will secure the said sum of $14,153.34, by his bond and mortgage on said lands, subject only to- such mortgages as are now on the same prior to said McGraw’s mortgages; and that he will in the mean time pay to said McGraw the interest on instalments that would have become due according to the payments above set forth, which are to be the terms of payment of principal and interest, in such new mortgage and the bond given with the same,” &c. Also the following letter from defendant to plaintiff’s attorney : “ Corning, March 11th 1865. “ D. Boardman, Esq., Dear Sir: — I have been expecting to hear from you in relation to delivery of deed and other papers left with you as between John McGraw and myself, in connection with lands in Tioga county, Pa., to perfect title against F. Barcalow’s fraudulent mortgage, as per agreement. Having paid the note at your bank, and all now due, except the joint mortgage, which is abundant security for all unpaid, I can see no good reason for holding said deed and papers longer.” The plaintiff testified, under objection and exception, that at the execution of the contract of January 23d 1864: “ The word ‘ original’ in the contract was interlined by Judge Williams, at my request. Mr. Sherwood, Mr. Williams, Mr. Foster and myself were present. Was inserted before the contract was executed. There was a discussion in regard to what indebtedness would be intended, if the contract were executed as first drawn by Mr. Williams ; that it might be construed as the amount inserted in the contract, if the payments were not made as specified; and the word ‘ original’ was interlined, so that there would be no inference that the payments made should apply on the amount included in the contract, if not made according to the contract, but upon the $13,000 and over, the whole indebtedness. The stipulations were not made according to the contract of 23d January 1864. He further testified, under objection and exception: “The agreement between Mr. Foster and myself was, that the younger claims were to be paid first; the $3000 note and mortgage given by Barcalow on his undivided half of the property. * * * The agreement that the payments made were to apply on the younger ■ claims, existed before and after .the contract of 23d January 1864.” The defendant gave evidence contradictory of the plaintiff’s testimony as to the occurrences at the execution of the agreement. The plaintiff’s 2d point was:— “ That if neither the debtor nor the creditor made application of the payments, then the law applies them upon that debt which is most beneficial to the creditor and the least secured; and that if the jury believe the evidence, the note and the younger mortgage of this property against A. H. Foster were least secured, and therefore the payments should apply on them, and not upon the joint mortgage in controversy.” To which the court replied: “ If neither Foster nor McGraw applied them, then the law applies them on those debts which are least secure; and if the jury believe the evidence, then the note and latest mortgage were least secure, and the payments are applied, under the legal rule, on them, and not on the joint mortgage in suit.” The defendant’s points with their answers were as follows:— 1. “ The contract of 1864 being clear and explicit in its terms, must be construed by the court, and cannot be altered or its construction affected by extrinsic evidence.” Answer: “ The contract of January 23d 1864, may not be regarded as very ambiguous, but it is not so clear and explicit in all its points as not to be susceptible of explanation by the parties to it; and although they differ in their construction of the clause in it which I regard as somewhat ambiguous, their evidence confirms me in the construction I have given it.” 3. “ The term ‘ original indebtedness, ’ employed in the contract of 1864, must be held to refer to the instruments, which were the original subject of negotiations in the contract of 1861, and the original charges upon defendants’ lands, namely, this mortgage and the mortgage of August 1st 1857.” Answer: “ The expression ‘ original indebtedness,’ employed in said contract, refers to the whole indebtedness of Foster to Mc-Graw existing at the date of said contract, which, as shown by the evidence, was upwards of $13,000, and was compromised at $11,000, payable in the manner specified in the contract.” 4. “ All payments made upon the contract of 1864, are now to be applied upon said instrument of ‘ original indebtedness’; and as the mortgage upon which this suit is brought is the oldest mortgage, the payments are to be. applied upon it till it is paid.” Answer: “ All the payments made by him to McGraw since its execution, including the cash in hand $2000 payment, are to be applied on the whole indebtedness of Foster to McGraw existing at the time; and neither debtor nor creditor having made a special application of them, the law applies them on debts which are least secure, and not on the mortgage-debt in suit, which is most secure.” 6. “ The letter of Poster, bearing date March 14th 1865, to Boardman, cannot be so construed as to change the application of the money previously paid, contrary to the agreement of 1864, nor different from its application as expressed in the receipts given at the time the money was paid.” Answer: “ The letter of Poster, dated March 14th 1865, was not designed to change the application of the payments as made previously, but concludes him from denying that they were applicable in the manner alleged by the plaintiff, and not on the joint mortgage, and shows that he assented to such application.” The verdict was for the plaintiff for $6336. The defendant took out a writ of error. The 1st, 2d and 3d assignments of error were to the admission of the evidence. The 4th, the answer to the plaintiff s point. The 5th, 6th, 7th and 8th, the answers to the defendant’s points.