Evidence, To prove a note attested, Of custom, Presumptions and burden of proof, Relevancy and materiality, Competency, Of value. Bills and Notes, Attestation, Interest. Limitations, Statute of. Practice, Civil, Exceptions, Order of evidence. Mortgage, Of real estate: foreclosure, deficiency after foreclosure. Surety. Subrogation. Witness, Cross-examination.
Compliance with the rule of law that, in order to constitute an attestation of a note within G.L.c. 260, § 1, cl. 3, the witness must put his name to it openly and in circumstances which reasonably indicate that his signature is with the knowledge of the promisor and is a part of the same transaction with the making of the note, may be found upon evidence that a signature affixed, under the word "witness" upon a note which on its face stated that it was secured by a mortgage of real estate, was the name of the one who drafted the mortgage, a conveyancer of wide experience, that his name also was appended to the mortgage as a witness, that he as a justice of the peace took the acknowledgment of the maker of the note as grantor in the mortgage, that all signatures purporting to be his were such, and that the note and mortgage were made contemporaneously. It was no violation of G.L.c. 231, § 81, for the judge, at the trial of an action involving the question above described, to charge the jury, with respect to the fact that the conveyancer also wrote his name under the word "witness" on the mortgage after the names both of the maker of the note and of his wife, as follows: ". . . the mortgage itself, while it requires no witness to the signatures of the mortgage and his wife, if his wife has to sign, nevertheless may be witnessed. And the putting on of a witness's name as a witness to the mortgage itself, — the mortgage deed is distinct from the mortgage note, — while it is not necessary, is perfectly proper; and it has no effect upon the mortgage note if there is an attestation of the mortgage deed . . . although there is, as counsel has pointed out to you here, a signature, — possible for you to find an attestation purporting to be that of . . . [the conveyancer] upon the mortgage deed itself." The admission of evidence at the trial above described, as to a practice or custom of the conveyancer in question "to witness instruments which he prepared," was held in the circumstances, even if it were error, to have caused no prejudice to the defendant, and under G.L.c. 231, § 132, an exception to such admission was overruled. The maker of a note dated in 1904, secured by a mortgage of real estate and bearing interest on its face at the rate of three and three quarters percent, in 1907 made an agreement with the payee for an extension of three years at four and one quarter per cent, and in 1910 a further agreement, which was evidenced by a memorandum stating, "Extended for three years to July 10, 1913 at 4 per cent (no reduction to be made in rate of interest)." In 1912, he sold the real estate without an agreement by the grantee to assume and pay the mortgage debt, and in 1915 his grantee also made such a sale. By subsequent agreements between successive owners of the equity of redemption and the mortgagee, interest at various times was paid at the rates of four and one half, four, and five and one half per cent to August, 1919. In an action against the original mortgagor for a deficiency remaining due on the note after foreclosure of the mortgage in 1920, the plaintiff disclaimed recovery of interest after August, 1919, at a rate higher than four per cent, and the judge charged the jury that, if they found for the plaintiff, interest at that rate might be recovered. Held, that (1) In computing the amount of the mortgage debt against which the price received at the foreclosure sale was to be credited, interest should be computed at the rates agreed upon from time to time between the mortgagee and the successive holders of the equity of redemption; (2) The defendant was liable to pay interest upon such deficiency at the rate of four per cent after the last payment of interest by the last holder of the equity of redemption. At the trial of the action above described, the defendant contended that the mortgagee plaintiff, without the defendant's knowledge or consent, made with the defendant's grantee a valid and binding agreement extending the mortgage of a character which relieved the defendant of any obligation on the mortgage note and left the plaintiff to look to the land alone for satisfaction of the mortgage debt, or so lessened in value the defendant's right to take over the plaintiff's rights as mortgagee upon payment of the mortgage debt that the defendant should not be held to pay the whole, if any part, of the deficiency. Evidence of such an agreement was in a notation upon the envelope in which the mortgage and note were kept by the plaintiff's agent, "Renewed for three years from July 28, 1913, at 4 1/2%," and the testimony of the defendant's grantee, "I had one, probably more than one conversation with . . . [the plaintiff's agent], and arranged for, I won't say an extension, I don't recall whether exactly an extension, but I arranged for the mortgage then existing on the property should be allowed to remain but as a part thereof I was required to increase the rate of interest by one half per cent, that is, from four to four and one half per cent. I cannot tell from memory whether the length of time it was allowed to remain was one year or three years or five. I should say a definite period was arranged on but I can't say whether one, three, or five, or two and one half, or any other definite time. After the talk . . . I paid the changed rate of interest. . . ." The judge left to the jury the determination of the question, whether such a valid and binding agreement was made. Held, that (1) The burden of proof was on the defendant to establish the extension he asserted as a defence; (2) The question properly was left to the jury, whether there was an agreement for extension, or whether it was only an arrangement that an overdue mortgage might continue to subsist without relinquishing the right of foreclosure if any of the other conditions were unperformed; (3) The evidence properly was admitted. At the trial above described, it was proper to exclude evidence that, after the arrangements above described, no request was made on the defendant by the plaintiff for payment of the mortgage, since silence of the plaintiff could not enlarge nor diminish the scope of the alleged agreement. At the trial of the action above described, it appeared that by the mortgage deed the defendant covenanted and agreed to pay all taxes at any time thereafter laid or assessed upon the granted premises; that, in case of any default in the payment of such taxes, the plaintiff might demand of the mortgagor whatever amount he as mortgagee had been obliged to pay; and that "the entire mortgage debt shall become due after one month's default in the performance of any part of the foregoing condition at the option of the holder or holders." The notice of intended foreclosure in March, 1920, stated that it was for "breach of condition of said mortgage," and at that time, and at the time of the sale, $2,360 had been overdue as taxes for more than one month. Besides the arrangement by the owner of the equity of redemption with the plaintiff in 1913 (relied on by the defendant as a binding agreement of extension discharging him, and described above) it appeared that in July, 1918, the successor as holder of the equity of redemption, who had not agreed with his grantor or with the defendant to assume and pay the mortgage note, had accepted a proposal by the plaintiff "to extend this mortgage for three years, (from August 28, 1918) at five and one half per cent." There was evidence that the value of the mortgaged premises was sufficient to satisfy the mortgage debt until the time of that agreement; there was conflicting evidence on the question whether at any time thereafter and before foreclosure that value was less than the mortgage debt. There also was evidence that previous to the foreclosure taxes had been in arrears at various times during six years, and that in 1914, when they were in arrears, the plaintiff had written to the defendant, who then had parted with the equity of redemption, stating that fact and that foreclosure proceedings were imminent, and that the defendant stated, "The mortgage is good. If the mortgage is good that is the end of it." The defendant contended also that the agreement of July, 1918, relieved him from further responsibility on the mortgage note. Held, that (1) A verdict for the defendant could not have been ordered; (2) The failure to pay the taxes was a breach of the mortgage warranting the foreclosure in the circumstances; (3) The failure to pay the taxes was a breach by the defendant of a primary obligation quite apart from that of promiser on the note; (4) If any loss ensued because of the delay to foreclose for nonpayment of taxes after the defendant, to whom the first extension was given, had parted with the equity, he was not entitled to have such loss considered in reduction of the debt since no extension given referred to an extension of the time within which the taxes should be paid; (5) No reversible error appeared in instructions to the jury in substance that the agreement did not preclude foreclosure for failure to pay taxes during the time of the extension named; that upon the tax at any time remaining overdue for a month, the mortgage might have been foreclosed and that upon any such failure to pay the tax the defendant had had a right to step in, pay the mortgage debt, and take over the right of the mortgagee to foreclose; and that the defendant, having failed upon such occasion or occasions to avail himself of such right, could not set up the extension agreement of July, 1918, as a defence after a foreclosure by the mortgagee which had resulted in a deficit; (6) It was proper for the judge to leave to the jury the questions, whether any damaging extension agreement or agreements had existed, and whether the amount of deficiency was in whole or in part a result thereof, and if in part, what part, and to instruct them to give to the defendant the advantage of any increase of deficiency caused from damage to his right "to step into the mortgagee's shoes" by paying the mortgage debt and taking over the right to foreclose resulting from a valid and binding extension agreement, if any. The mortgage above described permitted the plaintiff or his agent to become a purchaser at the foreclosure sale, and evidence therefore was not admissible to show the value of the premises at the time of such a sale to an agent of the plaintiff, the regularity of the sale not being questioned. At the trial of the action above described, testimony by the defendant and by previous owners of the equity of redemption, none of whom was qualified as an expert or was an owner of the premises at the time of the trial, was not admissible on the question of the value of the property in 1912, 1913, 1915, 1918, and 1920. If a defendant, who had been called by the plaintiff, has testified only as to a single subject and his further examination with the permission of the trial judge is suspended until he is called by his own counsel, he cannot be cross-examined as a matter of right by his own counsel when recalled to testify in his own behalf, but must testify as in direct examination; and the judge within his discretion properly may rule that he may be cross-examined by his own counsel only on the subject as to which he testified when called by the plaintiff. Evidence at the trial above described to show that counsel for the plaintiff, who succeeded former counsel in 1917, was told by such former counsel that the mortgage had been renewed for three years from August, 1915, was inadmissible.
BRALEY, J.
On January 28, 1904, the defendant borrowed of the plaintiff $70,000 for which he gave his promissory note, payable in three years from date with interest at three and three quarters per cent semi-annually, secured by a mortgage with power of sale, upon default, on his real property with buildings thereon numbered 151-157 Court Street in the city of Boston. The jury could have found that the conditions of the mortgage were broken; that foreclosure followed on March 26, 1920; that a deed under the power was duly executed and delivered to the purchaser; and that the affidavit required by G.L.c. 244, § 15, was seasonably executed and recorded. It also could have been found that the purchase price of $46,000, after deducting the foreclosure expenses, was insufficient to satisfy the mortgage, and the present action is brought to recover an alleged deficiency of $26,337.12 with interest.
The first ground of defence is, that the action is barred by G.L.c. 260, § 2, because not brought within six years after the cause of action accrued. It is, however, provided by G.L.c. 260, § 1, cl. 3, that if a promissory note is signed in the presence of an attesting witness an action may be maintained by the original payee if brought within twenty years from the date of maturity. The note in question purports on its face to be signed by the defendant as maker, with the word "Witness" in print, and the words underneath "Geo. A. Sawyer" appearing at the left of the defendant's signature. While the defendant denied the genuineness of these signatures, and required their proof at the trial, (G.L.c. 231, § 29,) there was plenary evidence that the respective signatures were genuine. "In order to constitute an attestation of a note, within the statute, the witness must put his name to it openly, and under circumstances which reasonably indicate, that his signature is with the knowledge of the promisor, and is a part of the same transaction with the making of the note." Drury v. Vannevar, 1 Cush. 276, 277. The question of what is competent evidence to establish this fact was considered in Tompson v. Fisher, 123 Mass. 559, 560, where the person whose name purported to be upon the note as an attesting witness testified at the trial, that "the name looked like his handwriting, that he thought it was; that he could not tell under what circumstances it was put there; that he had no recollection whatever about it; that, if he signed it, he must have seen the defendant sign." It was held that, although the burden of proof was on the plaintiff, there was some proof of the due attestation of the note. It appears in the case at bar that Mr. Sawyer had died prior to the trial. But there was evidence that he drafted the mortgage which was executed by the defendant to whose signature his name appears as a witness, and he also as a justice of the peace took the defendant's acknowledgment that the mortgage was his free act and deed. It also could be found, that all these signatures, purporting to be his, were in his handwriting, and that the note and mortgage were contemporaneous. We are therefore of opinion that under all the circumstances this question was for the jury to whom it was submitted under instructions which did not as the defendant contends violate G.L.c. 231, § 81. The error of permitting the plaintiff to introduce evidence as to the practice or custom of Sawyer, a conveyancer of much experience, "to witness instruments which he prepared," if it be an error, (see Mumford v. Coghlin, 249 Mass. 184, 188,) caused no injustice to the defendant. Adams v. Dick, 226 Mass. 46, 57. G.L.c. 231, § 132.
The interest during the period from January 28, 1904, to July 28, 1912, was paid by the defendant either at the rate stated in the note or at an increased rate agreed upon by the parties. The defendant while the owner of the equity of redemption had the mortgage extended in 1907 at four and one quarter per cent and it was again extended on July 28, 1910, at the rate of four per cent, and until further changed by agreement, this rate was the rate payable by the defendant. The instructions to the jury on the question of interest if the plaintiff recovered were correct. The defendant however on August 10, 1912, conveyed the equity to Fred L. Hewitt subject to the mortgage, existing leases, restrictions, and taxes assessed for the current year. But the deed did not contain a clause that the grantee assumed and agreed to pay the mortgage, and this transaction did not of itself discharge the defendant. Codman v. Deland, 231 Mass. 344. The deed not only was recorded, but the plaintiff had actual notice of the change in title as well as the subsequent conveyance on August 27, 1915, from Hewitt to George F. Williams, who was the owner at the date of the foreclosure and who acquired title under the same conditions as stated in the deed to Hewitt. There was evidence that the interest paid by Hewitt was at the rate of four per cent from July 28, 1912, to July 28, 1913, and four and one half per cent from July 28, 1913, to August 28, 1915, and that after the conveyance to Williams, the rate was reduced to four per cent from August 28, 1915, to August 28, 1918. The interest thereafter paid by Williams was at the rate of five and one half per cent from August 28, 1918, to August 28, 1919. The plaintiff by his agent wrote the defendant August 12, 1914, when Hewitt owned the equity, that the taxes for 1913 were unpaid and the interest on the mortgage was in arrears and that foreclosure proceedings would be begun. The defendant replied in a telephone conversation that "the mortgage is good." "If the mortgage is good, that is the end of it." But no attempt to foreclose followed. The defendant at the date of the conveyance to Hewitt was the promisor. If he became a surety with the land as principal, the transformation must have been wrought after he parted with his title to the equity. While an agreement for extension need not be in writing, Brooks v. Wright, 13 Allen, 72, 76, the deed to Hewitt as previously said conveyed the land by express terms subject to the mortgage, and the grantee did not thereby assume and agree to pay the debt, and he did not assume it by implication. Fiske v. Tolman, 124 Mass. 254, Rice v. Sanders, 152 Mass. 108. The defendant under the sixth paragraph of his answer introduced evidence to show a valid and binding agreement between Hewitt and the plaintiff, whereby the mortgage was extended, and consequently the defendant became discharged as a surety, leaving the mortgagee to look to the land alone for payment of the debt. North End Savings Bank v. Snow, 197 Mass. 339. See Codman v. Deland, supra, page 347. The burden of proof was on the defendant to establish the extension. Haydenville Savings Bank v. Parsons, 138 Mass. 53. The only evidence consisted of an entry on an envelope in which the mortgage and note were kept. It reads as follows: "Renewed for three years from July 28, 1913 at 4 1/2%," and the testimony of Hewitt, "I had one, probably more than one conversation with . . . [the plaintiff's agent] and arranged for, I won't say an extension, I don't recall whether exactly an extension, but I arranged for the mortgage then existing on the property should be allowed to remain but as a part thereof I was required to increase the rate of interest by one half percent, that is, from four to four and one half per cent. I cannot tell from memory whether the length of time it was allowed to remain was one year or three years or five. I should say a definite period was arranged on but I can't say whether one, three, or five, or two and one half, or any other definite time. After the talk . . . I paid the changed rate of interest. . . ." It was for the jury, under suitable instructions which were given, to decide on the evidence, all of which was admissible, notwithstanding the defendant's exceptions, whether there was an agreement for extension, or whether it was only an arrangement that an overdue mortgage might continue to subsist without relinquishing the right of foreclosure if any of the other conditions were unperformed. Lewis v. Blume, 226 Mass. 505.
The offer of the defendant to prove that after the arrangement, no request was made on him by the plaintiff for payment of the mortgage, was properly excluded. The silence of the plaintiff could not enlarge nor diminish the scope of the alleged agreement.
The agreement of the mortgagee with Williams for "renewal" of the mortgage for three years from August 28, 1918, with interest payable at five and one half per cent is apparently recognized by the plaintiff as binding.
It however appears on the face of the note that it is secured by a mortgage of real estate duly recorded, and by the mortgage deed the defendant among other conditions covenanted and agreed to pay all taxes at any time thereafter laid or assessed upon the granted premises, and in case of any default in the payment of such taxes the mortgagee may demand of the mortgagor whatever amount he has been obliged to pay. It is further agreed, that "the entire mortgage debt shall become due after one month's default in the performance of any part of the foregoing condition at the option of the holder or holders." The notice of the time and place of sale, stated that the premises were to be sold for "breach of condition of said mortgage." It is stated in the record that at the date of sale, which was attended by the defendant, the taxes unpaid amounted to $2,360 for the year 1919, subject to which the property was sold. The failure to pay the taxes was a breach of the mortgage warranting the foreclosure. Silva v. Turner, 166 Mass. 407. The deeds to Hewitt and Williams merely show that they purchased the equity of redemption, and, while interested in payment of the mortgage which was an encumbrance on the land, they entered into no contract to pay the debt or the taxes, and when Hewitt conveyed to Williams his interest ceased. Williams, the last owner of the equity, who lost his interest by the foreclosure, was in a similar position. The failure to pay the taxes was a breach by the defendant of a primary obligation quite apart from that of a promisor on the note.
The defendant must be presumed to have known of the terms of the mortgage and he could have protected himself from the contingency of loss by reason of unpaid taxes by a suitable clause in his deed to Hewitt, assented to by the mortgagee. Codman v. Deland, supra.
If any loss ensued because of the delay to foreclose for nonpayment of taxes after Vorenberg, to whom the first extension was given, had parted with the equity, he is not entitled to have such loss considered in reduction of the debt. The rights of the defendant under the extensions, whether arising from contract or resting on subrogation, were subject to the paramount right of the plaintiff to foreclose if the taxes were not paid, and to collect from him any resulting indebtedness. American House Hotel Co. v. Hemenway, 237 Mass. 180. Greene v. Richards, 244 Mass. 495.
The plaintiff deducted from the price received at the foreclosure the amounts paid for the services of an auctioneer, the cost of revenue stamps, and of publication of the notice of foreclosure, counsel fees, and compensation to the mortgagee. The compensation to the mortgagee was authorized by the default clause of the mortgage, and it was for the jury, to whom the question was submitted, to determine whether the charges were reasonable. Bangs v. Fallon, 179 Mass. 77.
The defendant's contention, that he is not bound by the foreclosure because the total payments of interest at the rates appearing in the record from the date of the sale to Hewitt and until foreclosure show no default, cannot be maintained for reasons sufficiently stated.
The further argument, that as one Clark, the purchaser, bid in the property for the plaintiff, the defendant could introduce evidence of its value at that time, cannot be maintained. The power authorized the plaintiff or his agent to bid, and the defendant is bound by the sale, the amount of which was credited, subject to any deduction the jury might find if the expenses of the foreclosure were excessive. McCarthy v. Simon, 247 Mass. 514.
The parties introduced evidence as to the fair value of the property at the date of the respective extensions. But the defendant's offer of proof that Hewitt would testify that the fair value in 1912 and 1914 was in excess of $100,000, and Vorenberg would testify that in 1912, 1913, 1915, 1918 and 1920 its fair value was in excess of $70,000, was excluded rightly. They had ceased to be owners some years before the trial, and neither had qualified as an expert. The rule that an owner of land or of personal property, in an action where the question is in issue, may give his estimate of its value, is inapplicable. Shea v. Hudson, 165 Mass. 43. Lincoln v. Commonwealth, 164 Mass. 368, 380.
The record recites, that the plaintiff called the defendant as a witness and examined him. By G.L.c. 233, § 22, a party who calls the adverse party as a witness shall be allowed to cross-examine him; but when the defendant was called as a witness by his counsel, the trial judge ruled, that his counsel could not cross-examine him except as to the evidence given by him in his examination by the plaintiff, and the defendant excepted. The order of the introduction of evidence, and the limit of cross-examination, were within the discretion of the judge, and no error is shown. Commonwealth v. Johnson, 188 Mass. 382. Walsh v. Feinstein, 251 Mass. 109, 112. Commonwealth v. Perry, 254 Mass. 520. Commonwealth v. Sacco, 255 Mass. 369.
The defendant did not undertake to prove any assumption by Hewitt or himself of the mortgage debt at and after the sale to Hewitt, and whether Mr. Dexter, the plaintiff's counsel until 1917, informed Mr. Peters, who succeeded him as counsel, that the mortgage had been renewed for three years from August 28, 1915, was immaterial, and the exclusion of the defendant's offer to prove this alleged fact was right.
We have examined all of the exceptions argued, and the result is that the motion for a directed verdict could not rightly have been granted, and that the defendant's requests for rulings in so far as appropriate were sufficiently covered by the instructions. The exceptions to portions of the charge, when read with their context, which is full, also shows no reversible error.
Exceptions overruled.