First National Bank v. Farmers & Merchants National Bank

On Petition for Rehearing.

Gillett, J.-

39. In their brief in support of the petition of the appellees seeking a rehearing herein, counsel argue that there was no consideration for the execution of the mortgage, since, under the terms thereof, appellant bank was authorized, upon default in the payment in advance of interest according to the stipulation, to exercise the option to declare the whole sum .immediately due and payable.

Granting, for the sake of the argument,' that said appellant could, in the circumstances, have proceeded to collect its debt without delay after the execution of the mortgage, it does not follow that it. was not a tona fide incumbrancer. *346It is true that the mere receiving of the mortgage as a security for over-due paper was not sufficient to that end, yet if said appellant advanced any new consideration to procure the conveyance, it thereby became, so far as consideration was concerned, a bona fide incumbrancer. Busenbarke v. Barney (1876); 53 Ind. 499; Gilchrist v. Gough (1878), 63 Ind. 576, 30 Am. Rep. 250. The question in such a ease, to borrow from the language used in the leading case of Bassett v. Nosworthy (1673), Finch *102, “is not whether the consideration be adequate, but whether it be valuable.”

40. 31. - Putting the strongest construction upon the language which provided for the exercise of the option to declare the debt due for nonpayment of the interest in advance, it nevertheless follows that appellant bank has yielded a consideration; for, although, as it turned out, said appellant may have become entitled to sue immediately after the execution of the mortgage, yet the contract relative to time had a basis for a legal operation, since, during the passing of the very interval or moment on which the claim of a default might have been predicated, said appellant had, by its agreement, put itself in a situation wherein the debtor was empowered, by the payment of the interest, at least to render said appellant liable in damages, should it bring an action, as on a covenant not to sue. See Trayser v. Trustees, etc. (1872), 39 Ind. 556; Ayers v. Hamilton (1892), 131 Ind. 98. It therefore follows that the provision for delay constituted a consideration, and, however strongly the idea might be enforced that the promise of delay and the promise to pay the interest were strictly mutual or dependent covenants, yet the giving of the former constituted a consideration for the mortgage, since, by the immediate performance of the condition, the debtor, by force of the contract, might have gained a benefit which he would not otherwise have been entitled to. Appellant bank was not bound ¡to yield this privilege, and, having done so, it cannot be said that the mortgage is with*347out consideration. Indeed, it strikes us as a wholly unwarranted view that the matter of nonperformance by the debtor, upon whom performance was devolved, could in any case have anything to do with the question whether there was a consideration for a conditional promise which such party could have availed himself of, even within the shortest interval of time after, the execution of the agreement. Speaking in the concrete, appellant bank, by accepting the mortgage, put it in the power of Jamison, by immediately paying the interest as stipulated, to“make available to himself the covenant for delay, according to its legal effect, during the first three months.

In arguing the question, counsel seem to fail to distinguish between the concluding of the contract and the performance of its engagements. Appellant bank and Jamison were two different parties, and, the contract having been concluded, the former is not to be charged with the derelictions of the latter in respect to performance. Said appellant yielded a right in respect to the enforcement of the debt, and, having been granted an estate by way of mortgage in consideration thereof, the grant was not -subject to be defeated by the failure of the debtor, over whom said appellant had no control, immediately to perform the condition upon which the right was granted.

41. *34842. *347On another ground it may be said that the proof was sufficient to show that appellant bank was in a situation to claim the rights of a bona fide incumbrancer. So far as the lien of an attachment is concerned, the plaintiff thereunder can be awarded no greater right than the statute gives him. See Gimbel v. Stolte (1877), 59 Ind. 446; Houston v. Houston (1879), 67 Ind. 276. By failing to give a notice of Us pendens the attachment creditors left the title in such condition that, by the provisions of the statute, the debtor had power effectively to mortgage the property to a bona fide incumbrancer, and thereby to displace .'the other liens. Having by such neglect .left their *348debtor with such power, it may be said that they are claiming under him in respect to the character of the transaction, and that if, as between appellant bank and Jamison, appellant yielded a consideration, such creditors cannot impeach the transaction on the ground of a want of consideration. It was declared in Durland v. Pitcairn (1875), 51 Ind. 426, that /‘it is an elementary rule,, that he who prevents a thing being done shall not avail himself of the nonperformance he has occasioned.” So it was said by Elliott, J., in Elkhart Car Works Co. v. Ellis (1888), 113 Ind. 215, that “it would be a flagrant violation of right to permit the grantor of an estate upon a condition subsequent to defeat the estate by wrongfully preventing the performance of the condition, and the law is not subject to the reproach of permitting such a thing to be done.” The principle declared in the cases cited is applicable here. As .the attachment creditors, by their neglect, left their debtor with power to convey under the law, it is clear that if a contract was made relative to an extension of time which was sufficient between the parties to constitute a new consideration, such creditors should be concluded, in the matter of consideration, by what concluded him, and that it is no answer for them to assert that, after the making of the mortgage, which rested upon a sufficient consideration, he turned his back upon the transaction and walked away.

We have carefully considered all of the grounds on which a rehearing is sought, and are of opinion that the petition therefor should be overruled. It is so ordered.