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HENSEL v. CAHILL. (07/21/55)

July 21, 1955

HENSEL, APPELLANTS,
v.
CAHILL.



Appeal, No. 95, Oct. T., 1955, from judgment of Municipal Court of Philadelphia County, Oct. T., 1951, No. 695, in case of Parke Hensel et ux. v. John J. Cahill, Substituted Trustee under the Will of John Callaghan deceased. Judgment affirmed.

COUNSEL

Irwin S. Lasky, with him Henry W. Balka, for appellants.

George F. Douglas, for appellee.

Before Rhodes, P.j., Hirt, Ross, Gunther, Wright, Woodside, and Ervin, JJ.

Author: Hirt

[ 179 Pa. Super. Page 115]

OPINION BY HIRT, J.

Plaintiffs on April 30, 1946, gave a mortgage on their property in Philadelphia in the sum of $2,000 with interest at 5% payable "within fifteen years in monthly installments of $15.82 each." In September 1949 they sold the land and under the terms of sale were obliged to deliver title free and clear of the above encumbrance. The defendant holder of the mortgage, agreed to accept $1,683.70, the balance of unpaid principal and $233.64 as interest, computed at the rate of 2 1/2% thereon for the balance of the term of the mortgage. Plaintiffs paid these amounts and the defendant

[ 179 Pa. Super. Page 116]

    satisfied the mortgage. Thereafter plaintiffs brought this action to recover $233.64 contending that under its terms the holder was obliged to satisfy the mortgage at any time on payment of the balance of unpaid principal with interest to the date of payment and that the defendant exacted the additional interest from them by duress. The monthly payments of $15.82, if made according to the terms of the mortgage, would have discharged the obligation, principal and interest at 5% in precisely fifteen years from its date, and the mortgage by its terms did not allow plaintiffs to anticipate these stated payments in any amount. In our view plaintiffs could not have compelled the satisfaction of the mortgage at any time on the payment of the balance of principal with interest to the date of payment. The mortgage was payable "within fifteen years" but by its terms specified exactly how it was to be paid within that period. The monthly payment of $15.82 was both the minimum required and the allowable maximum which the defendant was obliged to accept. Accordingly the principle of Schotte v. Meredith, 138 Pa. 165, 20 A. 936, involving a mortgage payable "at any time" within its stated term, has no application. The same may be said of Horstman v. Gerker, 49 Pa. 282, in which the holding was that a mortgage "payable in five years" without limitation, allowed a discharge at any time on payment within that period.

The lower court was of the opinion that the plaintiffs could not compel the defendant to satisfy the mortgage, under its terms, at any time on payment of the remaining principal with interest only to the date of payment. But the judgment was entered on the ground that plaintiffs' own testimony established that the payment was made in settlement of a dispute as to the rights of the parties in that respect. In the absence,

[ 179 Pa. Super. Page 117]

    particularly, of an appellate court decision construing a similar obligation, there was room for a dispute as to the legal effect of the terms of the mortgage which plaintiff gave. And the record in this case establishes that plaintiffs entered into an agreement with the defendant and, in pursuance of it, paid the balance of principal together with interest at 2 1/2% to the end of the term of the mortgage in settlement of the dispute. Plaintiffs after selling their property, and before September 14, 1949 the settlement date, through their real estate estate broker, requested a statement from the defendant as to "the balance required to satisfy the mortgage." Defendant in reply by letter dated September 9, 1949 referred to his understanding that the mortgage could not be paid off according to its terms except in the stipulated monthly amount but stated that he had purchased the mortgage for the trust estate "... on the basis of obtaining an investment that would continue during the period provided in the mortgage, and if the mortgage is now paid off the Estate will be obliged to reinvest the proceeds most likely in Government Bonds and will lose the benefit of the interest rate of the mortgage. However, the parties entitled to the income in the Estate agree that the mortgage could be satisfied upon payment of one-half of the interest which would accrue from the present time up to final payment, which would otherwise be payable on the mortgage, which at the 2 1/2% rate would amount to $233.64." An enclosure ...


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