| Me. | Feb 3, 1898
Bill in equity to redeem land from an equitable mortgage. The cause came before the court and the bill was sustained and decree entered allowing the plaintiff to redeem, and the cause was sent to a master to take account of the amount due on the mortgage according to the opinion of the court in that case.
The accounting must be had according to the rules laid down in our former opinion. So far as that has declared them it is conclusive, and they cannot be now considered anew. Bradley v. Merrill, 88 Maine, 319.
That opinion declares the relation of mortgagor and mortgagee, and allows redemption according to the rules recognized in such cases. Permanent improvements not necessary for the preservation of the property are to be disallowed. Those necessary for the preservation of the property and repairs to make the premises tenantable are to be allowed.
Do the rulings of the court below impinge upon the rule above laid down? One Merrill, under whom defendant claims, held an equitable mortgage. He had agreed to reconvey upon the payment to him of $6000, with compound semi-annual intei-est at the rate of 7 per cent per annum until paid, together with sums paid for repairs, taxes and otherwise, with interest on the same at the same rate from the time of such payment, and he agreed to account for the net rent and income, “ deducting any commission that I may have to pay for collecting the same.”
I. The court below allowed five per cent commissions on the rent collected as compensation for care of the property, and to this allowance plaintiff has exception. The rule in this state is to allow a charge of that sort in accounting between mortgagor and mortgagee, and it is-equitable to sustain such allowance here. The net rent is ascertained after such allowance. From this it was agreed that mortgagee might deduct any commissions “ that I may have to pay for collecting the same.” No commissions were paid as. he collected the rents himself. We think the allowance by the master was just and reasonable, and that it is not prohibited by the stipulation of the parties. That meant in addition for the care of
II. Defendant has exception to the refusal to compound his interest, as stipulated'in the above agreement. It has been uniformly held in this state that compound interest cannot be recovered where the parties do not expressly promise to pay it. If interest be payable at stated periods before the principal falls due, and be not collected, the law will not imply a promise to pay interest upon such interest, and, in a suit to collect the debt and interest in arrear, compound interest cannot be recovered. The cases cited at the bar are all based upon such a statement of facts, and none of them apply to conditions where the promise to pay compound interest is express, but only where it is to be implied for the non payment of money after it becomes due and payable. Doe v. Warren, 7 Maine, 48; Bannister v. Roberts, 35 Maine, 75; Kittredge v. McLaughlin, 38 Maine, 513; Stone v. Locke, 46 Maine, 445; Parkhurst v. Cummings, 56 Maine, 155; Whitcomb v. Harris, 90 Maine, 206.
Where the promise to pay compound interest is express, it may be enforced just the same as any other contract. It is not usurious even. In Otis v. Lindsey, 10 Maine, 315, the note in suit was given in payment of other notes upon which the interest had been compounded, and it was held that the plaintiff might recover. The new note was an express promise to pay compound interest. In Farwell v. Sturdivant, 37 Maine, 308, the interest-upon a mortgage note that called for interest semi-annually was compounded and a new note given for the amount. In computing the amount due a partial payment had been omitted, and in a bill to redeem, compound interest was allowed upon the express promise evidenced by the new note to pay it. In Stickney v. Jordan, 58 Maine, 106, a note payable with interest annually, given and payable in New Hampshire, was held to draw compound interest under the laws of that state, and that compound interest might be recovered here.
In this cause there was no promise by plaintiff to pay either principal or interest, but in consideration of a loan by and the conveyance of land to the grantor of defendant he agreed to reconvey upon the payment of §6000, with compound semi-annual interest at the rate of seven per cent per annum until paid. By what process of reasoning can the defendant be required to reconvey until he shall have received the amount named as a condition precedent to such conveyance? The terms are express. Nothing is left to be implied or inferred. The parties plainly say what their contract was. It is not void under rules of law, and why should it not be enforced ? Because the terms of the contract may have been hard is no good reason for disregarding it, even in equity in the absence of fraud or incapacity to make it. "We are compelled to recognize the plain agreement of the parties and therefore sustain the exception to a refusal to compound the interest accruing under its express terms.
III. Merrill had an equitable mortgage. There was a second mortgage upon the property of the same character, when Merrill conveyed to defendant. Merrill paid the second mortgage. He did not redeem, because it created no lien on the property to which his mortgage attached. It was a lien only on the equity of redeem ing Merrill’s mortgage, so that, if it be not extinguished altogether, it must be considered as if assigned to Merrill. The title to both these mortgages passed to defendant irrespective of the forms of conveyance, and redemption of both is governed by the same rule. The allowing of the amount paid as a new principal was error and operated to charge interest upon interest to which the mortgagor did not assent and could not be compelled to. It is still an equitable mortgage and subject to redemption. Plaintiff’s exception to the ruling below allowing the amount paid on account of the Proctor mortgage to be treated as a new principal upon which
IV. Defendant built part of a double house upon the mortgaged premises, and plaintiff has exception to the refusal to charge defendant with rent of this house. In the former opinion it was decided that the cost or value of the new house should not be allowed defendant. Now it is claimed that he should be charged for the income of it. If the house itself cannot be considered an improvement so as to be allowed defendant, and he must lose it, on what doctrine of equity can he be charged with its rents ? Should he lose both the house and the income of it? A hard doctrine that, for equity to enforce. This exception must be overruled.
V. The question of tender is not open on these exceptions and need not be considered. That, too, was disposed of in the original opinion. Moreover, it seems to have been settled below as matter of fact that- there was no tender.
The result of this opinion is that the second exception, noticed in this opinion taken- by defendant, and the third exception, noticed in this opinion, taken by plaintiff, be sustained and all other exceptions be overruled.
The alternative sum, $10,346.66, found by the master to be due on April 28, 1896, should be allowed, less $23.42, the amount of interest upon interest improperly allowed upon the Proctor mortgage, leaving the true sum as due on that date to be $10,323.24. From that date to the time of redemption an account should be taken in accordance with the doctrines of this opinion, and unless the parties agree, the cause should be sent to a master for the purpose.
The bill has been sustained with costs for plaintiff, to be recovered if she redeems. Parkhurst v. Cummings, 56 Maine, 160; Cushing v. Ayer, 25 Maine, 388.
Exceptions sustained. Master’s report accepted for $10,32334 as due April 28, 1896.