179 A. 839 | Conn. | 1935
The named plaintiff, by complaint dated January 25th, 1934, and two other mechanics' lienors made defendants, by cross-complaint, claimed foreclosure of their liens on premises in Bridgeport, a receiver of rents, and deficiency judgments. A receiver was appointed February 23d 1934, and collected the rents until the passage of the last day for redemption, November 11th, 1934. The judgment, which was entered June 29th, 1934, contained a provision that the defendants owner and lessee deliver to the plaintiffs (by which title the original plaintiff and defendants filing cross-complaints are hereinafter referred to) or to the redeeming incumbrancer, possession of the premises and that upon failure to redeem, title shall be in the plaintiffs in proportion to the amounts found due them respectively. The debts to the plaintiffs are adjudged to amount to a total of $2739.92. The incumbrances prior to their liens are found to amount to $9876.64, and the value of the property to be $15,500, on the date of the judgment. The appellant Investors' Mortgage and Guaranty Company holds a mortgage subsequent in priority to plaintiffs' liens. The receiver had in his hands $614.69 from rents collected, during his receivership, from a tenant, lessee of defendant Johnston, owner of the equity, and on his motion for advice the court (Shaw, J.) ordered that the fund be distributed to the plaintiffs. This order, only, is appealed from.
It appears from the finding that on November 19th, 1934, the City Savings Bank and the Bridgeport Savings Bank, first mortgagees, obtained a judgment of foreclosure in which the plaintiffs herein, made parties defendant in that case, were given March 11th, 1935, as law day to redeem. The plaintiffs have not taken possession of the premises or in any way exercised dominion over them and the possession of Johnston *19 and his lessee has not been interrupted so far as the plaintiffs are concerned.
The appellant asserts that the plaintiffs have no claim upon the rents collected by the receiver accruing prior to the vesting of title and right to possession in them under the foreclosure decree, on the ground that title and right to possession are essential prerequisites to such a claim. In this State the legal title to mortgaged real estate, as between mortgagor and mortgagee, is in the mortgagee, and in the absence of an agreement or other circumstances debarring him from so doing he is entitled to possession. If the mortgagor remains in possession he is entitled to the rents and profits without any obligation to account to the mortgagee for them. Savage v. Dooley,
Possession of the premises here involved continued in Johnston, as owner, and his lessee up to the law days fixed by the plaintiffs' foreclosure decree. Primarily, therefore, the rents belonged to Johnston and but for the intervention of the receiver would have been collected by him. Therefore the fact that the plaintiffs had no title to the property until their judgment became operative, through failure of the owner and subsequent incumbrancers to redeem, would not, of itself, disentitle them to be awarded the proceeds of these rents toward payment of unsatisfied debts of Johnston to them if they established the necessary priority over other claimants. The rents being in the possession of the court, through the receiver, "that court has the power by its orders to make such application of them as justice and equity may require and it may order their disposition in such a way as to aid in discharging the obligations" of the liens. Desiderio v. Iadonisi, supra, p. 655. Unless the debts to the plaintiffs are extinguished by and through appropriation by them of the foreclosed property, their claims remain unpaid, are prior in order of preference to the claim of the appellant, and distribution of the funds in the receiver's hands ratably among the three plaintiffs would be proper.
The appellant claims further, however, that even if this be so, the obtaining by the plaintiffs of the judgment of foreclosure constituted an appropriation of the property, without the taking of physical possession or steps to enforce their right thereto.
Prior to 1833 the foreclosure of a mortgage operated to bar any subsequent recovery upon the mortgage debt, but since then, by successive statutes, a mortgagee has been accorded a right to recover the deficiency *21
when the value of the property acquired on foreclosure and appropriated to payment of the debt proves insufficient to satisfy it in full; provided, since 1878, the persons liable for the deficiency are made parties to the foreclosure suit. Wilcox v. Bliss,
In Loomis v. Knox (1891)
In Cion v. Schupack (1925)
Certain equitable and practical considerations argue for a requirement, imposed in the two cases last mentioned, of a taking of possession as an essential of appropriation. Consummation of the purposes of a judgment of strict foreclosure by the extinguishment of subsequent interests by a cutting off of outstanding rights to redeem can occur only at a future and, in many instances, a considerably distant date. People'sHolding Co. v. Bray,
There is, however, an obstacle, which we have found insurmountable, to a doctrine that, to constitute appropriation, *25
actual taking of possession is required. Where a foreclosure decree has become absolute by the passing of the law days, the outstanding rights of redemption have been cut off and the title has become unconditional in the plaintiff, with a consequent and accompanying right to possession. "The qualified title which the plaintiff had previously held under his mortgage had become an absolute one." Ferguson v.Sabo,
The adverse considerations which we have noted may be measurably met or ameliorated in another way. Appropriation does not occur upon the entry of the judgment of strict foreclosure but upon the extinguishment of subsequent rights by the expiration of the law days without redemption. People'sHolding Co. v. Bray,
The trial court was in error in concluding that the foreclosing lienors — the plaintiffs — have not appropriated the property.
Assuming, as we must, on the finding and for present purposes, the value of the equity in the property appropriated by the plaintiffs to be sufficient to satisfy the debts to them, they would obtain, in the fund *27 created by the rents, an additional payment to which they are not entitled.
There is error, the order appealed from is set aside, and the case is remanded to the Court of Common Pleas for further proceedings in accordance with this opinion.
In this opinion the other judges concurred.