
    The Teachers’ Building and Loan Association of New York City, Respondent, v. Martha R. Severance and Stephen N. Severance, Appellants.
    
      Mortgage to a building and loan association — acquiescence of the association inpayments of interest less than the amount called for by the mortgage — construction of a resolution, authorizing a reduction in payments, determined by the acts of the parties.
    
    By the terms of a bond and mortgage given to a building and loan association, conditioned that payments should be made thereon pursuant to the terms of the articles of association, the interest thereon was to be paid on the last Friday of each January, February, March, April, May, October, November and December. Subsequently the association adopted a resolution reciting that the mortgagor obtained her loan when the constitution of the association "provided for a reduction of interest at the end of each three months,” and resolving that the mortgagor “be allowed a reduction of 94 cents, * * * at the end of each three months from the time the interest commenced on the several loans.” Thereafter, for a period of over six years, the mortgagor, without objection on the part of the association, continued to make interest payments, deducting therefrom the sum of ninety-four cents for each month.
    
      Held, that it was not clear, from an inspection of the resolution, whether the reduction of ninety-four cents should be made at each regular monthly payment of interest, or at periods of three months each; that as the association had drawn the resolution, and had acquiesced in the construction placed upon it by the mortgagor for over six years, it was estopped from subsequently claiming that the deduction made by the mortgagor was erroneous, and from insisting that the alleged insufficient payments of interest constituted such a default as would entitle the association to institute an action for the foreclosure of the mortgage.
    Appeal by the defendants, Martha R. Severance and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the .clerk of the county of Kings on the 19th day of February, 1898, upon the report of a referee.
    In the resolution referred to in the opinion, the defendant Martha R. Severance is alluded to as Martha L. Severance.
    
      H. E. Lee, for the appellants.
    
      Miron Winslow, for the respondent.
   Hatch, J.:

This action was brought for the foreclosure of a mortgage, executed and delivered by the defendants. The plaintiff is a building and loan association, and the bond and mortgage referred to the articles of association and was conditioned that payments should be made thereon pursuant to their terms. The parties have assumed that the manner and method of the payment of interest was regulated not alone by the terms of the bond and mortgage, hut in accordance with the articles of association and the resolutions which might be adopted pursuant to the plaintiff’s constitution and mies; and as a part of the plaintiff’s case, and in order to determine the amount presently due upon the bond and mortgage, the resolution to which reference will hereafter be made was adopted, regulating the reduction in the rate of interest as authorized by the constitution in existence when the bond and mortgage were executed. It is, .therefore, clear that the rights of the parties are to be determined with reference to the constitution and articles of association and the action of the directors in passing the resolution reducing the interest charge, as the whole constitutes the contract between these parties.

By the terms of the bond and mortgage the principal and interest were to be paid on the last Friday of each January, February, March, April, May, October, November and December. The instruments bear date January 15, 1888, and payments were made thereon in accordance with their terms until September, 1889, when the plaintiff regularly adopted the following resolution: “In regard to a reduction of interest on loans, we offer the following, whereas, Mrs. Martha L. Severance,” and other persons named, “obtained loans from the Association when the constitution provided for a reduction of interest at the end of each three months, therefore, Resolved, That Martha L. Severance be allowed a reduction of 94 cents, * * * at the end of each three months from the time the interest commenced on the several loans.” After the passage of this resolution, the defendant Martha R. Severance made a reduction upon her interest charge of ninety-four cents each month, and paid the same over to the collectors of the association, and the association entered the sanie in its books. These payments continued to be made, with the deduction of the fixed sum of ninety-four cents for each month, from September, 1888, to about November, 1894 — a period of over six years — during which time there was not a suggestion made that the defendant had not paid all that she was required to pay under the terms of the bond and mortgage and the actioñ of the plaintiff in passing its resolution in respect thereto. It is clearly evident that if the terms of the resolution necessarily import a deduction of only ninety-four cents for each period of three months, then the parties have been acting under a mutual mistake for a period of over six years, as both parties had before them at all times the instruments, including the resolution, which constituted the contract between these parties. If the terms of this resolution when construed in connection with the bond and mortgage are ambiguous in their character and permit of different interpretations, then as the plaintiff framed and adopted its own resolution, and the defendant acted thereunder pursuant to her interpretation, which was acquiesced in by the plaintiff, and both parties acted thereon for six years, the case presents strong reasons for holding that the parties themselves, by actual interpretation of the terms of the contract, have settled their rights and liabilities in respect thereto. It is not claimed that the defendant has been in default in making any payments of any character specified in the bond and mortgage, or that she has not at all times promptly responded to any and all obligations, except in making the claimed erroneous deduction from the interest charge. The default, therefore, which must support the right to foreclose this mortgage, is to be found in her failure to pay this difference between ninety-four cents each month and ninety-four cents every three months, which amounted, as claimed by the plaintiff, at the time'of the discovery, to about the sum of $635.

The case in this respect presents no dispute of fact, as we assume that if the resolution necessarily limited the reduction of interest to-ninety-four cents for the period of each three months, then the defendant would be equally chargeable with such interpretation as. would be the plaintiff. The case is, therefore, to be disposed of upon undisputed facts and by a construction of the terms of the resolution and the acts of the parties thereunder.

In this connection it is pertinent to observe that by the terms of' the bond and mortgage the interest is payable in specified months of the year, and not quarterly, as is provided by the resolution when the deduction shall be made. Its language is ninety-four cents “ at the end of each three months.” If the resolution be held to relate-to the time when interest is payable, then if it was to be at the rate of ninety-four cents for three months, the reduction would be for one-third of such sum. But there is no specification in the resolution of any such fact. The reduction is to be ninety-four cents each three months. But it would not be an unreasonable interpretation to say that the_ ninety-four cents had reference to the reduction to-be made at the date when the payment was due, which was each month, but was not to bo deducted except at the end of each quarter ; and, if the resolution be susceptible of such construction, then there would be no reason in not holding that the amount of the reduction had reference to the-time when the interest fell due, and that the language “at the end of each three months ” had reference alone to the time when the reduction was to be made and not to the amount.

It is easy to see that the resolution as framed is ambiguous in its terms and may be construed as providing for a reduction at the given rate at the regular monthly payments of interest; and such construction should be made if the language used, giving force to all, is susceptible thereof. (Fiske v. Williams, 4 App. Div. 487; Edsall v. The Camden & Amboy R. R. & Transportation Co., 50 N. Y. 661.) This is the ordinary rule of interpretation as laid down by the courts. It is also a well-settled canon of construction laid down by Mr. Justice Swayne in Insurance Co. v. Dutcher (95 U. S, 269) in these words : “ The construction of a contract is as much a part of it as anything else. There is no surer way to find out what parties meant than to see what they have done. Self-interest stimulates the mind to activity and sharpens its perspicacity. Parties in such cases often claim more, but rarely less, than they are entitled to. The probabilities are largely in the direction of the former.” This rule is cited with approval in Woolsey v. Funke (121 N. Y. 87). (See Nicoll v. Sands, 131 N. Y. 19; Tilden v. Tilden, 8 App. Div. 99.) .

In the present case the plaintiff, having drafted its resolution, acquiesced for six years and over in the interpretation placed upon it by the defendant. It would be difficult to present a stronger illustration, by way of actual application of the language of Mr. Justice Swayne, than is here presented. The plaintiff was certainly under the stimulus of self-interest, because it was the recipient of the moneys; and, if under such a spur it could not discover, for a period of six years, that it was entitled to more money than it was receiving, when it was constantly in such reception each month, it strains no rule to say that the proper interpretation of their own language was the interpretation which the defendant placed upon it respecting the deduction to which she was entitled.

During this period of time the defendant, if she now be held to be in default, has subjected herself to fines which have never been inflicted, to a loss of profits for which there appears to have'been no claim of deduction, and to a default in the fulfillment of her obligation of which not the slightest suggestion was made. Under such circumstances we think that the acts of the parties themselves have placed an interpretation upon this contract which precludes assertion by the plaintiff of any default in the payment of any sums which it was entitled to exact. If this judgment is to be supported, then we must say that "the defendant has fulfilled every obligation which she supposed her contract required her to perform, and that the plaintiff has for six years accepted this discharge of the defendant’s obligation without a murmur of complaint that she had not fulfilled all that the contract required her to do. By virtue of these acts on the part of the plaintiff, the defendant has been distinctly prejudiced. Her obligation was to discharge the amount of her loan in small sums, in such amounts and at such times as her meagre means would permit. In fulfillment of this obligation she became entitled to her proportion of such profits as the association might make, and thereby pro ta/nto to discharge her obligation and to receive a profit from her investment. It is fair to assume that the accumulation of a large amount, which was expected to be discharged in small sums at stated periods, has, at the present time, if her default be established, placed it beyond her means to fulfill the obligation by payment. Such was the statement made, upon the argument. She is also-deprived of the profits which she might have realized from her investment.

Under such circumstances, we think the plaintiff, by virtue of its acts, should now be held estopped from insisting that the defendant is in default in any sum due upon the bond and mortgage at the time when the plaintiff instituted its action of foreclosure. (Trustees, etc., v. Smith, 118 N. Y. 634; Pratt v. Ano, 7 App. Div. 494 Bimson v. Bultman, 3 id. 198.)

The judgment should, therefore, be reversed and a new trial granted, costs to abide the final award of costs.

All concurred

Judgment reversed and new trial granted, costs to abide the final award of costs.  