124 Mass. 481 | Mass. | 1878
As the court below ruled that the allegations of the answer and the facts offered in evidence at the trial
The plaintiff holds the note of the defendant, secured by a mortgage on real estate, which contains a power of sale in common form, with a provision that the mortgagee, or any person in her behalf, may purchase at the sale, and that no other purchaser shall be answerable for the application of the purchase money. The defendant sold his interest in the real estate soon after giving the mortgage. There having been a breach of condition, the plaintiff, for the purpose of foreclosure, caused the estate to be sold by public auction, and it was bid in by the plaintiff’s agent, who was the highest bidder, for a sum equal to the amount due on the note and the expenses of the sale. The proceedings were in all respects pursuant to the power in the mortgage and lawful, which we understand to include all the forms of a binding contract of sale and purchase. It also appears that the agent was duly authorized to purchase the estate for the plaintiff, with a view to a conveyance by the plaintiff to the agent, and a simultaneous deed by him to the plaintiff. The deeds were prepared by the auctioneer, and the plaintiff refused to execute them, and, as the answer alleges, fraudulently refused to apply the money, for which she had sold the property, to the payment of the note in her hands. This was the condition of things, when this action was brought upon the note.
Upon these facts, it appears that, at a sale properly conducted, the property was in fact purchased by the mortgagee for a sum equal to the full amount of the debt secured by the mortgage. The question does not arise, what would be the rights of the defendant, if the sale had been to a third person, who without cause had refused to pay the money, and whom the plaintiff could have compelled to a specific performance of his contract. Corder v. Morgan, 18 Ves. 344. If - a third party had purchased for the same amount, and paid the money to the plaintiff, who without any justifiable cause had refused to execute the necessary deeds, the case would have more nearly resembled this. Here the payment was completed; as mortgagee, the plaintiff could not institute proceedings against herself as purchaser to compel performance of the contract of sale, for the same hand
A mortgagee selling under a power of sale is a trustee for sale, and is bound in all particulars to execute the trust with a due regard to the interests of the mortgagor, or of those having his estate in the premises, and also of those who are no longer owners of the estate, but are liable on the note, which the mortgage secures. Montague v. Dawes, 14 Allen, 369. Dyer v. Shurtleff, 112 Mass. 165. Drinan v. Nichols, 115 Mass. 353. If, by virtue of the power in the mortgage, the mortgagee becomes the purchaser, he is bound to carry out and complete his purchase to the same extent as any other purchaser. The proper performance of his duty as purchaser is as imperative upon him, as the proper performance of his duty as seller. The fact that he unites the two characters in his own person cannot give him any additiona. rights; on the contrary, he is held to a stricter accountability
Such misconduct on the part of the plaintiff constitutes a substantial answer to her action. In Howard v. Ames, 3 Met. 308, the mortgage contained an authority to the mortgagee to sell the estate and apply the proceeds to the payment of the note. The mortgage was assigned to one Lothrop, who assigned it to the plaintiff after the maturity of the note. The plaintiff sold the estate by auction for a sum insufficient to pay the note, and brought his action against the defendant, who was the mortgagor, for the balance. The defendant was allowed to prove that Lothrop was the real owner of the note and mortgage at the time of the sale, and that he so managed the sale that the property brought less than it was worth, and that he did this in order to obtain an absolute title to the estate under its true value, while, if the sale had been made in good faith, the property would have sold for more than enough to pay the note. This was held to be a good defence to an action brought by the party to whom such mismanagement was justly to be imputed and to any other person standing in his place; and, in delivering the opinion, Chief Justice Shaw, after commenting upon the legal effect of the evidence, as a defence to the action, said: “It shows that it is the plaintiff’s own fault that the debt is not fully paid.” See also Briggs v. Richmond, 10 Pick. 391, 396; Davis v. Thompson, 118 Mass. 497.
We are therefore of opinion that the ruling at the trial waa erroneous. Exceptions sustained.