Mickles v. . Dillaye and OthersMickles v. . Dillaye and Others
But where valuable and permanent improvements have been made in good faith, by a person standing upon the legal footing of a mortgagee in possession, but who supposed himself to have acquired the absolute title, and such mistake was favored by the omission of the mortgagor, for several years before and after the improvements, to assert any interest in the premises, the mortgagor on asking the aid of equity to redeem will be compelled to allow the value of the improvements, though exceeding the rents and profits received.
APPEAL from the Supreme Court. The action was for the redemption of certain premises in the city of Syracuse, mortgaged to Philo D. Mickles. The trial was before a referee, who found that the mortgaged premises were, in 1840, conveyed to Philo D. Mickles by one Fitch. There was then outstanding a mortgage upon the premises, executed by Fitch to David Hall. Philo D. Mickles conveyed to the plaintiff, with warranty, March 8th, 1841, for the price of $4000, to secure $2000 of which, the plaintiff executed the mortgage which in this suit he sought to redeem. This mortgage and the bond collateral thereto were, in April, 1841, assigned by Philo D. Mickles to John Townsend. Philo D. Mickles purchased the Fitch mortgage on September 23d, 1843, and on the 6th of November, 1843, assigned it to John Townsend, without the knowledge or consent of the plaintiff, so far as the evidence showed. Townsend, on the 23d of September, 1846, sold the premises to Charles A. Wheaton, for $1750, upon a foreclosure of the Fitch mortgage, of which no notice was served on the plaintiff. At the time of this sale, Wheaton was the owner, by assignment from Townsend, of the mort
P. D. Mickles was in possession of the premises at the time he conveyed them to the plaintiff, and when he received the mortgage now sought to be redeemed. From that time until the sale under the attempted foreclosure he continued to rent them in his own name and to receive the rents, without disclosing the interest of the plaintiff. They were assessed to him. Wheaton, the purchaser, went into possession immediately after the sale, the tenants of P. D. Mickles attorning and paying the rent to him. P. D. Mickles who was examined as a witness, testified that when he heard of the sale, which he supposed was by virtue of the mortgage executed by the plaintiff, he told Wheaton he was very glad of it. He understood that the premises sold for enough to pay the mortgage, and he considered the matter settled, and that Wheaton had obtained a perfect title. The purchasers of the premises under Wheaton took possession at the time of their respective purchases. There was a brick building on the lot, which was erected by P. D. Mickles, in 1842 or 1843. It was about nineteen feet wide, thirty-five feet long and two stories high. After Dillaye purchased, and in 1852, it was found that the old building was in a dilapidated condition, and was ready to fall down. The walls were badly cracked, particularly the one in the rear. It could have been repaired at an expense of about $250, by taking down the rear and one of the side walls and rebuilding them. Dillaye caused it to be rebuilt and enlarged, at an expense of about $5000, increas
The referee found the foregoing facts in substance; and stated that the improvements made by Dillaye were permanent and valuable and were made by him in the full belief that he was the absolute owner of the premises. He added that it appeared from the evidence that while the improvements were making the plaintiff was absent from the county of Onondaga and that there was no evidence that he was aware of the fact while the improvements were progressing. In matter of law he determined that the plaintiff was not obliged to allow any thing on account of the rebuilding beyond what it would cost to repair the old tenement. He proceeded to state the account, charging the plaintiff with the mortgage debt and interest, the repairs estimated upon the principle above stated, premiums of insurance and taxes, and the interest on these last items, and crediting him with the rents received, but without including the increased rent on account of the rebuilding, and making due from the plaintiff, to be paid on the redemption, $1885.99. The defendants excepted. Judgment was rendered allowing a redemption upon the payment of that sum according to the report which was affirmed at a general term in the fifth district. The defendants appealed.
Le Roy Morgan, for the appellants.
B. D. Noxon, for the respondent.
DENIO, J.—The right of a mortgagor who has made default in the payment of the mortgage debt according to his contract and especially where the mortgagee or his assigns has lawfully acquired the possession, is in equity,
Where the conventional relation of mortgagor and mortgagee is shown and acknowledged between the parties, there is no reason why the latter should be allowed to obstruct the right of redemption by expending money upon improve
So, if the mortgagor having in fact only a redeemable estate should, even in good faith, deny the mortgagee‘s equity, this ought not to prejudice the latter provided he had done nothing to mislead the mortgagor, and had not unreasonably slept upon his rights. In order to apply the cases in which permanent improvements have been allowed to be taken into the account, it is necessary to have a clear view of the situation of these parties at the time the improvements were made. The defendant Dillaye was in possession as owner under a deed with warranty from a person in possession holding a similar evidence of title from one who had purchased the premises at a sale made professedly upon the foreclosure of a mortgage executed by the true source of title, and who had taken possession under that foreclosure. It is easy to see that an examination, such as a very cautious man would have made, would have shown the invalidity of the foreclosure. But the omission to make an examination was not such gross negligence as to charge the defendant with bad faith. He cannot claim that the estate is irredeemable because he supposed it to be so; but he is not deprived by his omission to examine, of the position of a person acting in good faith without actual notice. The referee has found, what could not be doubted upon the evidence, that
In Wetmore v. Roberts, (10 How. Pr. R., 51), the question we are now considering was examined in the Supreme Court by Mr. Justice HAND, with his accustomed industry. It was a suit for foreclosure by a junior mortgagee, the defendant having purchased the premises from one who had bid them in upon a foreclosure of the elder mortgage, in which proceeding the junior incumbrancer was not made a party. It was alleged that the defendant had made improvements, in good faith, of the value of $6000, and it was decided that the premises should be sold, and that the value of the permanent improvements as well as the amount due on the elder mortgage should be paid out of the proceeds; after which the plaintiff was to be paid the amount due on his mortgage. I refer to the authorities relied on by Judge HAND, and also to Talbot v. Braddill (1 Vern., 184) and to
I am clearly of opinion that the refusal to allow for the erection of the building was erroneous.
The judgment of the Supreme Court should be reversed, as respects the account stated by the referee, and there should be a reference in that court to take an account
HARRIS, J. The plaintiff acquired his title to the premises, such as it is, in March, 1841. The purchase price is said to have been $4000. Of this, no part was ever paid. The plaintiff executed his bond and mortgage for $2000, and, as Philo D. Mickles, the grantor, now testifies, it was agreed that the remaining $2000 should be applied upon a note which the plaintiff held against him. There was no written evidence of such an agreement, and the indorsement was, in fact, never made. At the time of the conveyance the Fitch mortgage was an outstanding incumbrance upon the premises, and yet no provision was made for its payment, nor did the plaintiff, in any way, protect himself against this incumbrance, except by the covenant of warranty in his deed. Indeed, it does not appear that the plaintiff ever so much as inquired whether the property was incumbered or not.
For five years, and more, after the conveyance, the grantor continued to possess and enjoy the premises, as he had before. He received rents in his own name; paid taxes and assessments; made improvements; and, in short, held himself out to the world as the absolute owner. There is no evidence that the plaintiff ever claimed to be the owner, or that Philo D. Mickles ever, by word or act, recognized his ownership.
At the time of the foreclosure of the Fitch mortgage, in 1846, the amount due upon the two mortgages was at least equal to the value of the premises. Certainly, it exceeded the purchase price mentioned in the plaintiff‘s deed. Philo D. Mickles was then insolvent. There was no inducement, therefore, for the plaintiff or Philo D. Mickles to prevent a foreclosure by paying off the mortgages. Upon the fore
Wheaton, as purchaser, went into possession, and soon after conveyed the premises by deed, with warranty, to the defendant Robinson, who held the premises about four years and then sold to the defendant Dillaye. The latter, in 1853, “in the full belief that he was the absolute owner,” as the referee has found the fact to be, proceeded to make “large and permanent and valuable improvements upon the premises, costing some $5000, more or less.” The property being thus doubled in value, it became an object for the plaintiff to assert his right of redemption. Accordingly, after sleeping upon his rights, such as they were, for nearly thirteen years, he commenced this action, in 1854, claiming the right to redeem; and the question presented is whether, assuming the right, any compensation shall be made to Dillaye for the large improvements he has made.
All will agree, I think, that the plaintiff presents a case which entitles him to no greater degree of favor than the established rules of equity applicable to this case entitle him to demand. “I should have been glad,” says Mr. Justice ALLEN, in pronouncing the judgment now under review, “to have found some principle upon which the defendants, who have, in perfect honesty, expended their money to a large amount in the permanent improvement of the property, by which its value and productiveness have been and are greatly enhanced, could be reimbursed, at least to the amount of the rents and profits which they had received.” We are
I admit the general rule to be that, where the simple and acknowledged relation of mortgagor and mortgagee in possession exists, the latter will not, upon redemption, be allowed for general improvements made without the acquiescence or consent of the mortgagor, especially if the improvements tend to cripple the power of redemption. Moore v. Cable (1 John. Ch. R., 385), was such a case. The assignee of a mortgage, without calling upon the mortgagor or attempting to foreclose the mortgage, chose to take possession of the mortgaged premises, which consisted of wild lands, and had a part of the land cleared. The claim of the mortgagee to be allowed for what he had thus expended, was rejected. In noticing this case in his Commentaries, Chancellor KENT says: “The clearing of uncultivated land, though an improvement, was not allowed in Moore v. Cable, on account of the increasing difficulties it would throw in the way of the debtor to redeem. But,” he adds, in the same connection, “lasting improvements in building have been allowed in England, under peculiar circumstances, and they have sometimes been allowed in this country, and sometimes disallowed.” (
In the case before us, the premises had been held, under the statute foreclosure, of 1846, for more than six years before Dillaye purchased. The possession had been continued and undisturbed. The silence of the plaintiff for this long period had encouraged the belief that those who had the property in possession were the true owners. Dillaye purchased, not as the assignee of the mortgagee, but believing that he was acquiring the property as his own. He made the improvements never doubting that he was the absolute owner. The referee has not found that the plaintiff was ignorant of the fact that the premises had been sold upon the foreclosure, or that Wheaton and his grantees were in possession under that sale. All he finds on this subject is, that “during the erection of the improvements, the plaintiff was absent from Onondaga, and there was no evidence that he was aware of the fact while the improvements were progressing.” The plaintiff having so long acquiesced in the adverse possession of the premises, himself contributed to the mistake under which the defendants acted. Had no improvements been made, there is no reason to believe that he would ever have asserted his right to redeem. Under such circumstances, he should not be allowed, in a court of equity, to enrich himself at the expense of one who has acted innocently. The improvements are a substantial benefit to the property, and, if he would redeem, he ought, ex æquo et bono, to pay for them to the extent of such benefit.
COMSTOCK and PRATT, Js., did not sit in the case; all the other judges concurring,
Judgment modified and account ordered to be re-stated.