98 Me. 317 | Me. | 1903
In this bill in equity brought to redeem a mortgage on certain real, estate in Somerville, the plaintiff contends that by virtue of the covenant against incumbrances contained in the deed of warranty of the premises given to him by the defendant’s intestate, he is entitled to have the amount of certain tax liens outstanding on the mortgaged premises, deducted from the amount due on the mortgage, and to have a decree entered only for the balance.
May 7, 1894, the defendant’s intestate, Hiram Bliss, Jr., conveyed to the plaintiff two parcels of land by a deed of warranty containing the following stipulation in the granting clause: “Said grantee is to pay all taxes on the piece first described, and the grantor those now due on the balance.” It contained a covenant that the premises were “free from all incumbrances except any taxes that may be on the first described lot,” etc. The plaintiff accordingly relies upon the covenant of warranty against incumbrances as to the second parcel of land.
As a part of the same transaction, the plaintiff reconveyed the premises to the defendant’s intestate by deed,of mortgagé to secure $500 of the purchase money.
The plaintiff also avers that he has paid $500 upon the principal of the mortgage indebtedness, and that the amount now due is not equal to the amount of the unpaid taxes; that in July, 1901, a notice of foreclosure of the mortgage was published and entered of record; that, in June, 1902, he demanded of the defendant a true account of the sum due on the mortgage, less the amount of the unpaid taxes, but that the defendant neglected and .refused to render such account; that the premises in question are of much greater value than the amount legally due on the mortgage; that he is ready and willing to pay the amount which may be found to be equitably due, and that the estate of the defendant’s intestate has been rendered insolvent.
The plaintiff accordingly prays that an account may be taken of the sum equitably due for principal and interest on the mortgage; that an account may also be taken of the amount due for all taxes legally assessed upon the property to the date of his deed; and that thereupon the amount of such incumbrance be offset against the amount found due upon the mortgage, and the plaintiff be allowed to redeem upon the payment of the balance if any.
To this bill the defendant filed a general demurrer on the ground that the facts alleged do not justify any relief in equity, and also demurred specially because the town of Somerville is not made a party to the bill.
This cause comes to this court on report with the stipulation that if the demurrer is sustained upon the ground that the plaintiff is not entitled to have the amount of the taxes deducted from the mortgage debt, the bill is to be dismissed, but the plaintiff is to have the right to redeem by paying the amount of the debt to be fixed by the court
The equitable right of set-off is not dependent upon the express provisions of statute, but is derived from the rules of the civil law and founded upon principles of natural equity and justice. In applying the doctrine, courts having general equity jurisdiction exercise more extensive powers than those of the common law, and seek to give effect to the rule in all cases where the peculiar equities intervening between the parties clearly require it. Waterman, on Set-Off, 426; Holbrook v. Bliss, 9 Allen, 77; Story’s Eq. Jur. §§ 1434 and 1435; Greene v. Darling, 5 Mason, (1st Cir. Court) 201. “Courts of equity in matters of set-off usually follow the law, but in many cases where there is some intervening equity they will allow a set-off where a court of law would not.....Insolvency of itself will often raise an equity which will justify the interference of the court, even when the party desiring the set-off is himself the petitioner.” Goodwin v. Kevey, 49 Conn. 569.
“The doctrine of set-off,” says Mr. Pomroy, “by which a defendant may recover judgment for debt against the plaintiff is wholly of statutory origin; and the doctrine of recoupment, by which the plaintiff’s pecuniary recovery may be lessened, by means of a claim for damages in favor of the defendant, is a very recent innovation upon the common law methods of procedure. The modes of procedure in a court of equity have never been thus restricted......It may make any adjustments, admit any limitations and determine upon any cross demands and subordinate claims which complete justice done to the parties should require.” 1 Pom. Eq. 175.
A question analogous to the one at bar was presented in Harrington v. Bean, 94 Maine, 208. In that case, as in this, the claim which the mortgagor asked to have allowed in reduction of the mortgage debt, was not a separate and independent claim, that could only be allowed as a set-off, if at all, but was one that arose directly out of the contract involved in the mortgage transaction, and necessarily reduced the value of the mortgage property. In that case the incumbrance was a right of fiowage which materially lessened the value of
“Again it now appears that the estate of Dexter has since been declared insolvent. In such case even equitable claims against the estate are admissible in set-off to claims made by the executor. R. S. (1883), c. 82, § 63; Lyman v. Estes, 1 Maine, 182; Medomak Bank v. Curtis, 24 Maine, 36; Ellis v. Smith, 38 Maine, 114.”
“It cannot be that a court with full equity powers cannot reach the evident equity of this case and enforce it. The mortgagor has done no wrong, and is an innocent sufferer from a wrong done him by the mortgagee in the mortgage transaction. He only asks that the mortgage debt be chancered to that extent. We have no hesitation in saying that it should and can be done.”
In Johnson v. Gere, 2 Johns. Ch. 546, the defendant gave a bond and mortgage to secure purchase money, and an action of ejectment was brought against him by one claiming a paramount title. The plaintiff brought suit on the bond. On application to the court of chancery, an injunction was granted staying the proceedings on the
White v. Stretch, 22 N. J. Eq. 76, was a bill to foreclose a mortgage given to secure purchase money. The defendant’s deed of the property to the plaintiff contained a covenant that the premises were free from “all assessments and incumbrances of what nature or kind soever.” It was held that the cost of a sewer was an incumbrance existing at the date of the deed, and should be deducted from the amount of the mortgage debt. The proceedings relating to the construction of the sewer had been confirmed by the court at the date of the deed, and the amount of the assessment subsequently determined by the commissioners appointed for that purpose.
In Dayton v. Dusenbury, 25 N. J. Eq. 110, a writ to foreclose a purchase-money mortgage on lands, the contention of the defendant was, that there had been a breach of the covenant against incumbrances in the deed to him, because at the date of the conveyance the premises were subject to the lien of certain judgments against former owners of the property, and that the amount of these judgments should be set-off against the mortgage debt. The plaintiff replied that some of these outstanding judgments, being against a married woman, created no lien on the property. The court thereupon considered the question thus presented respecting the validity of the lien, and determined that all the judgments were valid liens; but it appearing that the aggregate amount of the judgments far exceeded the amount of the mortgage debt, the decree was that the suit for foreclosure be stayed until the premises were released from the lien of the judgments.
But the defendant suggests that in all these cases above cited in which the set-off or reduction was allowed, the amount of the damages arising from the outstanding liens and incumbrances had been made
But this objection was not deemed insuperable or even worthy of consideration by the New Jersey Court of Equity in Union Nat’l Bank v. Pinner, 25 N. J. Eq. 495. That case is exactly in point. In all essential respects it is precisely like the case at bar. There, as here, the contention was that when the mortgaged premises were conveyed they were subject to certain tax liens still outstanding, and that, by virtue of covenants against incumbrances contained in the deed of conveyance, the amount of the tax liens should be deducted from the amount due on the riiortgages and a decree taken, if at all, only for the balance. In the opinion the court says: “I think the second point is well taken. . . . The rule of law is established in this State by the case of White v. Stretch, (22 N. J. Eq. 76), and the previous decisions in chancery therein referred to, that in a suit to foreclose a purchase-money mortgage, the mortgagor and grantee in the conveyance can claim deductions for incumbrances covenanted against in the deed from the mortgagee. It is altogether an equitable and reasonable rule, and must be enforced in the present case. The assignees hold the mortgages subject to this equity; and the master in ascertaining the amount due for principal and interest on the mortgages must ascertain, also, the unpaid taxes against the premises at the giving of the deed, and deduct them, with lawful interest thereon, from the amount of the mortgages. ”
It does not expressly appear in this last case, as it does in Dayton v. Dusenbury, supra, that any question was raised in regard to the validity or amount of the existing liens. If any question was raised in the last case in regard to the legality of the tax assessments or the validity and amount of the outstanding liens, it was included in the reference to the master and determined in that suit for foreclosure; as was done in Dayton v. Dusenbury, 2 Johns. Ch. supra.
In the case at bar, upon the allegations in the plaintiff’s bill, the defendant’s demurrer admits tliat the taxes claimed to have been
But it is the opinion of the court that the town of Somerville and the other claimants under tax deeds of the premises, if any, should be made parties defendant to this bill. According to the stipulation in the report, if the demurrer is sustained on the ground that such claimants are not made parties, “answer and replication may be filed, and the amount due be fixed below without appeal with the right of amendment if necessary.”
The demurrer is sustained solely on this ground, and the cause remanded for further proceedings in accordance with this opinion and the stipulation of the parties contained in the report.
Mandate accordingly.