Opinion
04-12-1904
HAUSER v. CAPITAL CITY BREWING CO.
F. C. Lowthorp, for complainant. James Buchanan, for defendant.
Bill to foreclose mortgages by Charles Hauser against the Capital City Brewing Company. Decree for defendant.
F. C. Lowthorp, for complainant.
James Buchanan, for defendant.
REED, V. C. The first mortgage was executed January 26, 1900, upon the land, buildings, plant, and fixtures of the Capital City Brewing Company. The condition was that the instrument should be void if the company paid to the holder of all promissory notes made or indorsed or thereafter to be made or indorsed by the complainant at defendant's request, not exceeding at any time $25,000. The second mortgage was made August 21, 1900, conditioned for the payment of $15,000, with interest, in one year. The defendant interposed three points; the first of which is that the mortgages are not due, because the complainant on February 26, 1902, by a parol agreement for a consideration extended the time for the payment of the mortgages for a period of five years from that date. It is admitted that Mr. Hauser loaned his credit to the brewing company by indorsing paper and paying the same until on May 5, 1902, the indebtedness of the company to him was admittedly $19,800. On November 26, 1901, the Capital City Brewing Company made a third mortgage to complainant for $10,257.80, payable in one year from date. Previous to February 26, 1901, the brewing company became financially embarrassed. An agreement was entered into between it and George W. Page by the terms of which Mr. Page bought 501 shares of the stock of the company for the sum of $20,000. $10,000 of the $20,000, by some arrangement between the parties, was paid upon the third mortgage to Mr. Charles Hauser, which liquidated it; and the remaining $10,000 was used by the company in the payment of other debts. On February 26, 1902, Mr. Charles Hauser, the complainant. Mr. Page, the stock purchaser, and several officers of the brewing company met at the office of the counsel of the brewing company, when and where the $20,000 was paid over to the brewing company, and a check for $10,000 was given to Mr. Charles Hauser. At that time the following indorsement was writtan upon the bond and mortgage made January 26, 1900: "Trenton, N. J. February 26th, 1902. Received from the Capital Brewing Company on account of principal and interest due on within mortgage and the bond secured thereby, the sum of ten thousand dollars, and it is agreed that hereafter the rate of interest thereon shall be reduced from five per cent to four and a half per cent per annum. Charles Hauser." On the bond executed August 21, 1900, the following indorsement was written: "It is hereby agreed that from and after this date the rate of interest on the foregoing bond shall be four and a half per cent instead of five per cent Charles Hauser. The Capital City Brewing Company, by Carl Hauser, President." It is insisted that at this meeting Charles Hauser verbally agreed that the brewing company should have five additional years to pay off the sum still due upon the mortgages which he held.
It appears that when Mr. Page took under consideration the project of investing $20,000 in the business of the Capital City Brewing Company by the purchase of 501 shares of its stock he applied to the Trenton Trust & Safe Deposit Company for a loan of $20,000. The negotiation was conducted on the part of the trust company by its president, Mr. Hamill. Mr. Hamill's account is that the trust company agreed to let Mr. Page have the money upon the security of the capital stock of the brewing company, provided he had amajority of it, and providing certain other things were done that would protect Mr. Page, and incidentally the loaner of the money, namely, that Mr. Page should be put in such a position that he could not be called upon, or the Capital City Brewing Company should not be called upon, within an unreasonably short time to pay certain obligations, notably these mortgages. Mr. Hamill says that a typewritten statement was prepared, at the instance of Mr. Page, of what he suggested, which paper was delivered to Mr. Hamill by Mr. Page previous to the meeting of the parties on February 26, 1902, and which paper Mr. Hamill said he handed to Mr. Buchanan while the parties were assembled at that meeting. Mr. Hamill says that on that occasion he made a statement to Mr. Page, in the presence of those assembled, to the effect that the condition upon which the loan was to be made was that the mortgage was to be extended. At this meeting in Mr. Buchanan's office Mr. Lindsay, who was the bookkeeper of the brewing company, was present. Mr. Lindsay says that at that meeting Mr. Charles Hauser said that he did not want his money for five years. Mr. Page, who was present, testified that he wished to give Mr. Hauser a new mortgage, but Mr. Buchanan said "that the old one would answer just as good, and save a lot of time and trouble." Mr. Page further testifies that Mr. Hauser said, "that he would take four and a half per cent. for his money, and we should have the money for five years, with the understanding that at any time we could pay some portion of it off, and he would give us credit for it." Mr. Page also says: "I told him [Mr. Hauser] we would have to have the money for five years. He said we could have it for five years." He says that this was before he paid for his stock. Mr. Welde, the brewmaster of the company, was also present at this meeting of February 26, 1902. His testimony is that Mr. Page said, "Mr. Hauser, how long can we have that money?" And Mr. Hauser replied, "Five years, and for four and a half per cent." Mr. Carl Hauser, the president of the company, and son of Mr. Charles Hauser, who was called in rebuttal of these witnesses, testifies that he was present at this meeting. Mr. Hauser was asked "if anything was said by any one at that meeting about an extension of time for the payment of the mortgages your father held against the brewing company." He replied: "There was something said about five years. Mr. Page stated that, but I did not know and I did not understand what it was over. Mr. Page was the only one that I heard say anything about five years." Mr. Charles Hauser himself denies that he made any agreement or that anything was said at that meeting about an extension of the mortgages for five years.
It is not strange that the testimony delivered 20 months after the meeting, respecting what occurred at the meeting, should be discordant it is entirely certain that Mr. Page and Mr. Hamill had come to an understanding that the loan of $20,000 was to be made upon the condition that Mr. Charles Hauser should grant an extension of the time for the payment of these mortgages. It does not appear, however, that there was ever a meeting between Mr. Page and Mr. Hauser, or between Mr. Hamill and Mr. Hauser, previous to the meeting of February 26, 1902. Nor does it appear that there was a previous meeting between any of the officers of the brewing company and Mr. Hauser respecting this extension, previous to February 26, 1902. So the facts seem to be these, namely: It was understood between Mr. Hamill and Mr. Page that the condition upon which the loan of $20,000 was to be made was that the brewing company should not be called upon to pay these mortgages for at least five years. A memorandum to that effect, to be signed by Mr. Charles Hauser, was prepared, and left with Mr. Hamill, who with it visited the office of Mr. Buchanan, gave him the paper, and had some conversation with him respecting it. That Mr. Buchanan stated to Mr. Hamill that, instead of a new mortgage being made, the old mortgage would stand as good security. Whether the term of five years was mentioned between Mr. Hamill and Mr. Buchanan is uncertain, for it may have been taken for granted by Mr. Hamill that the old mortgage was to be so extended as to accomplish the same purpose as a new instrument made in conformity with the contents of the typewritten memorandum. Nor is it certain that the colloquy between Mr. Hamill and Mr. Buchanan was overheard by the other parties, because what Mr. Hamill had to say was obviously in the way of instructions or reminder to Mr. Buchanan. The conversation seems not to have arrested the attention of any of those present. Mr. Lindsay says he was present during the whole period, and does not recall seeing Mr. Hamill at all. Mr. Carl Hauser says that he did not see Mr. Hamill, but he believes some one opened the door and handed in a paper to Mr. Buchanan. Mr. Welde was not questioned concerning the matter. The weight of testimony is that Mr. Hamill opened the door, presented a memorandum to Mr. Buchanan, talked with him, and that the conversation was not overheard by the other persons present. The contract for extension, if made, must rest upon what was said by Mr. Hauser, or what was said by Mr. Page and assented to by Mr. Hauser. Mr. Charles Hauser, of course, expected that the loan would continue for some period thereafter; otherwise he would not have signed the agreement for the reduction of the rate of interest. The extension was a matter of supreme importance to Mr. Page. It is therefore quite natural that the time of extension should have been mentioned at that meeting. That it was mentioned by Mr. Page Mr. Carl Hauser himselftestifies to, and that Mr. Hauser agreed to the proposition Mr. Page testifies to, and that Mr. Hauser said that he would not want the money for five years Mr. Lindsay testifies to. Mr. Hamill also says that after this meeting he told Mr. Charles Hauser that he understood that the mortgage was to be extended five years, and that Mr. Hauser made no denial of the statement. I think, therefore, that it is proved that at that meeting it was stated by Mr. Page that he wished it understood as a condition of his paying the $20,000 that the Hauser loan was to be extended for five years, and that Mr. Hauser assented to the proposition. To make the contract thus arising valid, it was essential that there should be a consideration (Massaker v. Mackerley et ux., 9 N. J. Eq. 440; Thompkins v. Tliompkins, 21 N. J. Eq. 338), or something in the transaction which amounted to an estoppel in pais (Van Syckle v. O'Heran [N. J.] 24 Atl. 1024). Of course, the mere payment of $10,000 already due was not a consideration. The payment, however, of another $10,000 was for the advantage of the company, which was in pressing need of money at that time. The security furnished by the plant of the brewing company for the payment of Mr. Hauser's loan was enhanced by the reception of this money. The promise to extend a mortgage under these conditions rested upon a good consideration. Besides, if Mr. Page made the investment to the knowledge of Mr. Hauser upon his assurance that the mortgage would be so extended, there arose an estoppel in favor of Mr. Page. In either aspect of the case, I am of the opinion that the bill for foreclosure was prematurely filed.