
    Anderson Price, Resp’t, v. Mary Yost Wood, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed February 16, 1894.)
    
    Mortgage—Security—Interest clause.
    Where an indemnity mortgage is given to secure future advances and services, it is not the intent of the parties that the usual interest clause therein should ever become operative.
    Appeal from a judgment in favor of plaintiff.
    
      E. E. Baldwin, for app’lt; Anderson Price, in pro. per.
   Van Brunt, P. J.

In October, 1892, the defendant, being embarrassed for money to meet certain obligations, employed the plaintiff, who was an attorney and counsellor, as her attorney and agent, and an agreement was entered into between them, bearing date October 22, 1892, which, after reciting the execution of her bond and mortgage in the sum of $11,000, and the conveyance as further collateral security of certain lots in 129th street, provided that the agreement was to declare the intention and purpose for which said mortgage was executed, to wit, that the Cranston West Point Hotel Company had become liable for the payment of certain debts and incumbrances mentioned in a schedule attached to said agreement, and for some of which defendant had become liable, etc., and that it was the desire and intention of the defendant to secure the services of the plaintiff in the payment, reduction, settlement and adjustment of said debts, in which the plaintiff was to use his best judgment, and the defendant, to and by further indorsements, etc. By the said agreement the defendant then agreed that the proper charges for the services of the plaintiff, in addition to all payments made by him in settlement, etc., of debts, shall be allowed as part of the sum of $11,000, for which said mortgage was given, and also all other expenses. The agreement then provides that the plaintiff shall keep an account of all said services, payments and expenses, and which said account shall be rendered to the defendant on demand, and all payments and services and expenses shall draw interest from the date rendered, ■ made and incurred and shall constitute, and be a part of the sum of $11,000, for the securing of which the said mortgage was given. The agreement then provides that plaintiff may refuse to make any further advances in case the condition of affairs of the company renders it imprudent, notice of which was to be given to defendant in writing ; and that, in case the defendant desires to secure other sums than the amount represented in said mortgage, other and additional security should bé furnished by defendant. Annexed to said agreement was a schedule of liabilities. The defendant, pursuant to the provisions of said agreement, and simultaneously with its execution, executed to the plaintiff the bond and mortgage mentioned in the complaint to secure $11,000 with semi-annual interest, bearing date October 22, 1892, and payable October 22, 1893, with an interest cause providing that, in case semi-annual interest remains unpaid for thirty days, the whole principal sum’ should become due and payable. This bond and mortgage was-executed to secure future advances and services; no part of the consideration being advanced by the plaintiff at or before the execution thereof. Before the execution of the bond .and mortgage, the defendant objected to the interest clause therein, because it did not comply with the agreement and thereupon the plaintiff assured the defendant that interest would accrue and would be computed according to the agreement, and that the interest clause was merely formal, and that the terms of the agreement should control; and, relying upon such representations, the defendant executed said bond and mortgage. The plaintiff subsequently made advances and performed services under the agreement, and also in respect to matters outside of the agreement. Upon four separate occasions between February 1 and April 20, 1893, the defendant demanded of plaintiff an itemized account of his advances made and services rendered; and in the latter part of March, 1893, the defendant requested the plaintiff to furnish her with an itemized account of his services, disbursements and interest; and again on May 8d, up to which time the plaintiff was acting as agent and attorney of the defendant; and the referee has failed to find that any such' account was rendered, and the evidence shows that it was not. The plaintiff furnished statements of amounts paid, not simply payments made under the agreement, but including others, and no account whatever as to services rendered until May 2, 1893, when he rendered a bill for nearly $10,<000. The defendant, not having tendered any interest on the 22d day of April, 1893, on May 23d this action of foreclosure was commenced, the plaintiff claiming the sum of $8,750, with interest from October 22, 1892, the.date of the mortgage, to lie due thereon. The defendant answered, and, a reference being had, the referee reported in favor of the plaintiff for $7,575.30 advances, with interest to be added, and $1,500 as value of services, and gave judgment of foreclosure and sale, and from such judgment this appeal is taken.

It is to be borne in mind, in the determination of the rights of the parties to this litigation, that the relation of attorney and client existed between the plaintiff and defendant at the time of the execution of these papers, and that, therefore, the transactions of the plaintiff with the defendant are to be scrutinized. It appears that the bond and mortgage in suit and the agreement were executed at one and the same time, and that they are to be read together, and, unless the plaintiff has performed all his obligations under the agreement, he cannot enforce the obligation of the bond and mortgagé. It further appears that the defendant, before executing the bond and mortgage, objected to this interest clause, and only executed it relying upon the representations of the plaintiff, her counsel, that the clause was merely formal, and that the terms of .the agreement must control. Under these circumstances, how is it possible for the plaintiff to establish a forfeiture for- the failure to comply with this merely formal provision ? There was nothing in the agreement about forfeiture. There was nothing in the > agreement by which the amount secured by the bond and mortgage could be augmented by interest, and it clearly shows that the $11,000 was a lump sum, in which was to be included the interest upon advances, services, etc. There is nothing in the agreement to which the interest clause in the bond and mortgage could possibly attach until the amounts secured were liquidated. Furthermore, the plaintiff, in the agreement, upon demand, agreed to render to the defendant an account of services, payments and expenses, and it appears that, although frequently demanded, no such account was ever pretended to be rendered until May 2, 1893 ; and even then the account contained items not chargeable to the bond and mortgage, and a charge of nearly $10,000 for services, which services as chargeable against this mortgage, the referee found to be worth $1,500 ¡ and this was also after the plaintiff claims that the defendant was in default for nonpayment of interest. It is difficult to see how the defendant could be in default for nonpayment of interest when the amount due had not been liquidated, and when a charge for services is made against her many times greater than their value. The fact is that at the time of the execution of this bond and mortgage neither party supposed that any liability would or could arise from that interest clause until the amounts under the agreement had been liquidated. The rights of the parties rested upon the agreement, and the bond and mortgage were held as security for what should be due under the agreement. There is no provision for any payment whatever by the agreement, and it probably was never expected that it would be necessary for the plaintiff to resort to the bond and mortgage for payments of the amounts due under the agreement They were taken simply to insure the plaintiff from final loss in case other sources of .payment should fail. It is undoubtedly true that the plaintiff advanced moneys far beyond what he was called upon to do by the agreement, but these friendly acts on his part cannot enlarge the plain intent and meaning of the agreement and bond and mortgage now under consideration. We are of opinion that it was not the intent of the parties that the interest clause in the bond and mortgage should ever become operative ; that there being no means of determining what amount of interest should be at any time due and payable, the parties intended to be governed • by the agreement, and that the bond and mortgage should only be enforced after its due date, and in case other means of payment were not provided. The judgment appealed from must, therefore, be reversed, and a new trial had before a referee to be appointed in the order to be entered thereon, with costs to the appellant to abide the event.

All concur.  