Rees v. Logsdon

Stone, J., delivered the opinion of the Court. In May, 1883, the appellants were the owners of a sawmill, and the appellee the owner of a tract of timber land in Alleghany County. In that month they entered into the following agreement: “This agreement made this the 7th day of May, 1883, between Joseph Logsdon, of Alleghany County, Md., and Burkhiser and Rees, of Mineral County, W. Va., the parties of the second part, do agree to move the saw-mill on the property of the party of the first part, in Alleghany County, Md., on or before the 10th day of June, 1883; and the said party of the second part agrees to saw said Logsdon’s timber for four dollars per thousand feet; and the said party of the second part does agree to take all the sawing out in lumber—that is, such lumber as is suitable for wagon stuff, cut according to dimensions given: Said Logsdon does agree to furnish the lumber at $16.00 per thousand, delivered at the factory of Gfermond, Rees & Co., in Keyser, W. Va.” “ The said Logsdon further agrees to keep the mill in logs as far as possible; and the party of the second part agrees to saw good lumber; and the parties of the second part do further agree that the party of the first part can have the privilege of taking the mill at fourteen hundred dollarsj and pay for it all in lumber at $16.00 per thousand, delivered at the factory of Gfermond, Rees & Co., in Keyser, W. Va.” “ Witness our hands and seals, this the 7th day of May, 1883.” “ Burkhiser & Rees, [Seal.] Joseph Logsdon, [Seal.]” ⁹⁶ Soon after the saw-mill was moved on the land of Logs-don, the appellee, he exercised the option given him under the agreement, and purchased the mill. Security was demanded by the appellants, and Logsdon and wife executed a mortgage to the appellants to secure the sum of fourteen hundred dollars. • The mortgage itself is in the common form and makes no allusion to the agreement, or for what it was given, except that it recites an indebtedness on the part of Logsdon to the appellants in the sum of fourteen hundred dollars.

There is, however, no doubt that this mortgage was given to secure the payment for the mill. On that point there is no conflict in the evidence. The appellants subsequently filed a bill to foreclose the mortgage, and the defence set up by the appellee is that by the agreement, under which he purchased the mill, he was to pay for it in lumber, and that he began his payments and continued them until the appellants refused to receive any more lumber, and so the matter rested until suit was brought. The substantial question in the case is, therefore, whether the agreement is merged in the subsequent mortgage, or whether the mortgage was taken merely as collateral security for the performance of the agreement.

There is no doubt that the acceptance of a security of a higher nature in lieu of or in satisfaction of one of an inferior nature, operates as an extinguishment or merger of the latter; but where such security is accepted merely as an additional or collateral security for a pre-existing debt, it is equally clear that the doctrine of extinguishment or merger does not apply. Brengle vs. Bushey, 40 Md., 141 , and the cases there cited. The question whether the mortgage in this case was taken merely as collateral security is, therefore, one of fact, and the burden of proof is upon the appellee to show that such was the case. Taking the whole evidence we think ⁹⁷ the appellee has made out his case with reasonable certainty.

There is a conflict between the parol proof offered hy the appellants and the appellee. They, themselves, are the only witnesses of any importance; but the written proof, as well as the parol, we think, establishes the following facts: The appellants at the time they made the agreement of the 7th of May, 1883, were carrying on a spoke factory, and were in want of timber for the use of the factory. They first agreed with the appellee, Logsdon, to transport their mill to his land and to saw timber for him, and agreed to take all their pay for such sawing in lumber. This is the first part of the agreement.

The second part of it gave Logs-den the option to purchase the mill and to pay for it all in lumber. This agreement shows that the principal object of the appellants at the time the agreement was made, was to procure lumber for their factory. The sale was made within ten days after the mill was taken upon the land of Logsdon, and the mortgage was executed in a very short time afterwards. At the time of the execution of the mortgage, the spoke factory of the appellants was in