O'Brien v. McNeil

| Mass. | May 22, 1908

Hammond, J.

This is a bill for an accounting, and it is before us upon the plaintiff’s appeal from a decree of the Superior Court. The only questions argued before us arise upon the exceptions to the master’s report.

Although there are two defendants, McNeil is the only real defendant in interest, and we shall use the word “ defendant ” to describe him alone.

The first exception raises the question whether the defendant is to be charged with interest at the rate of six per cent per annum upon the $6,000 which was received by him on a mortgage placed by Campbell, acting as his agent, on the St. Botolph Street estate. As to this the master reports as follows: “ Upon the mortgage of $6,000 above mentioned, McNeil has paid interest at the rate of four per cent to October 1, 1906, and at the rate of four and one half per cent since that date; and he is entitled to charge the sums so paid against the plaintiff. The latter contends that he is entitled to receive from McNeil interest on the principal sum at the rate of six per cent. But I have treated this mortgage as a transaction standing by itself, and instead of putting it into the account on the same basis as the other amounts credited as partial payments and allowing interest accordingly, I have treated it as a credit to be deducted at the end of the account, and, in view of the circumstances, I rule that the plaintiff is not entitled to receive any greater interest than that paid by McNeil, and I allow one to offset the other.”

Even if the transaction be treated as a separate matter, we think that the plaintiff is entitled to interest at the rate of six per cent upon this sum. One Wheeler held a first mortgage of $6,500 on the estate; and there was thereon also a second mortgage for $2,600, signed by one Burton and belonging to the plaintiff but held by Gately as a part of the collateral security for the indebtedness due him from the plaintiff. The plaintiff was the owner of the estate subject to these two mortgages. At the time when the plaintiff applied to the defendant for assistance in the Gately matter, Wheeler was threatening to foreclose the first mortgage, and McNeil, being apprised of this fact, advised the plaintiff to allow the1 sales to go on, and he promised the plaintiff he .would attend it. The defendant attended “ the sale with the plaintiff and bid in the property for $8,000, on December 31, 1901, paying $600 at the time of the sale and the balance of $7,400 later. The conveyance was made to Campbell [who took for the defendant] who, on February 5,1902, at McNeil’s direction, and with the plaintiff’s consent, placed a new mortgage of $6,000 on the property.” The defendant received this $6,000 to his own use.

It thus appears that the defendant advanced to the plaintiff $8,000, and shortly afterwards received $6,000, the proceeds of the Campbell mortgage. The master has charged the plaintiff interest at the rate of six per cent upon the $8,000 advanced by the defendant, but has not credited him with any interest upon the $6,000 received by the defendant. It is manifest that, if the plaintiff is to be charged with interest upon the $8,000, he should be credited with interest at the same rate upon the $6,000. But it is to be noted that the interest already paid by the defendant at the rate of four per cent and four and one half per cent has enured to the benefit of the plaintiff, inasmuch as it has been paid to reduce a charge upon the estate on St. Botolph Street, the only property now held by the defendant and which the plaintiff desires to redeem. There must therefore be deducted from the interest upon the $6,000, at the rate of six per cent, the amounts already paid by the defendant as interest, and only the difference is to be credited to the plaintiff. The first exception must be sustained.

The second exception raises the question whether the master has twice charged against the plaintiff the interest upon the note which Gately held against the plaintiff. This was a note dated August 6, 1901, for the sum of $10,989.38, signed by the plaintiff and payable to Thomas F. Reddy, three months after date, with interest payable monthly from July 3, 1901, at the rate of eight per cent per annum, and it was indorsed to Gately, who held the same with certain securities as collateral as set forth in the report. Gately was threatening to foreclose some of the mortgages which he thus held as security. Thereupon the plaintiff, about January 1, 1902, applied for financial assistance to the defendant, who lent him the sum of $11,-528.62, by check dated January 16, 1902, and payable to Gately, and it was paid. The Reddy note held by Gately was indorsed without recourse by Gately to the defendant and delivered to him. At the same time the securities held as collateral were properly assigned by Gately to the defendant.

It is not stated how the sum of $11,528.62 due Gately and paid to him by the defendant for the plaintiff was made up. The face of the Reddy note was only $10,989.38, and, even if no interest at all^* had been paid upon it, there would have been due as interest on January 16, 1902, only $469.17, making the sum total due on the note at that date only $11,458.55, which is about $70 less than the sum the defendant paid to Gately. The master has charged the plaintiff full interest upon the note, as though none ever had been paid on it up to the time of the settlement with Gately, and he has also charged the plaintiff with “ Amount advanced by McNeil to the plaintiff in excess of latter’s note to Reddy indorsed to McNeil, $539.24,” which sum is just the difference between the face of the note and the sum advanced by McNeil. If therefore the Reddy note was the only claim Gately had against the plaintiff, it is plain that the master has charged the plaintiff twice with the interest on the Reddy note. And such is the contention of the plaintiff. On the other hand, the defendant argues that according to the allegations in the bill the plaintiff owed Gately $11,528.62, and that there is nothing in the report to sustain the contention that the $539.24, or any part of it, was for interest on the note, and further, that the master has found, to the contrary by the manner in which he has described the item, as above stated.

The matter is not very clearly set forth in the report. We are not satisfied with the defendant’s explanation. It is certain that the master has charged the plaintiff with interest on the note from July 3, 1901, the time when it began to run. The fair inference is that no interest ever had been paid at the time ■of the settlement with Gately, and that there was due Gately .on January 16, 1902, the face of the note with interest from ■July 3, 1901, amounting in all, as above stated, to $11,458.55. If, therefore, the statement of the master that the $539.24 represents an amount paid by McNeil “in excess of the . . . [plaintiff’s] note to Reddy” is to be taken literally, then the amount owed by the plaintiff to Gately was not $11,528.62, but $11,458.55, plus $539.24, making the sum of $11,997.79. This interpretation of the report is not satisfactory. We think that the only reasonable interpretation of this entry that the $539.24 was in excess of the note is that it was in excess of the principal of the note. If it is to be thus interpreted, then it seems plain that some portion of the interest on this note has been charged twice against the plaintiff. It well may be that the $70 above named may have been for costs and expenses which may have been incurred by Gately. The result is that the second exception must be sustained.

The third, fourth and seventh exceptions are based upon the alleged state of the evidence. As the evidence is not reported and the facts upon which the exceptions are respectively based are not set out in the report, these exceptions must be overruled.

The fifth exception raises the question whether the plaintiff should be charged with the cost incurred by the defendant in providing for the Bowdoin Street property a new heating apparatus, new window screens, and also new receptacles for garbage and ashes. It appears that the master ruled that McNeil stood in the position of a mortgagee in possession, and the plaintiff in that of a mortgagor seeking to redeem. The statute R. L. c. 187, § 20, provides that the mortgagee shall be allowed for all amounts “expended in reasonable repairs and improvements, . . . and for all other necessary expenses in the care and management of the land.” The master has found all these expenses to be necessary and proper. The evidence is not reported and there is no fact stated in the report which is inconsistent with such a finding. This exception therefore is overruled. Woodward v. Phillips, 14 Gray, 132.

For similar reasons the sixth and eighth exceptions also must be overruled. It is true that the master does not distinctly say that the charges to which these exceptions respectively relate were necessary, but the correspondence, set out in the report, which took place between the plaintiff and the defendant indicates that there was need of a new heating apparatus, in the St. Botolph Street house, and we understand that the finding that the change was beneficial, when taken in connection with the facts reported, is in substance a finding that it was a reasonable repair. There is more doubt as to the cost of cutting the doorway of the house and substituting a door for the middle window in the front of the lower apartment, but upon the facts appearing in the report we cannot say that the master was wrong in charging the plaintiff with the cost of the changes.

The ninth exception must be overruled because it appears from the decree that the mortgage on the Sharon property had been discharged before the decree was passed.

The result is that the seven last exceptions are overruled, but the first and second exceptions are sustained. The final decree must be reversed, and the case is to stand for further hearing upon the matters to which the first and second exceptions respectively relate.

So ordered.

* From the master’s statement of the account it appears that, by sales of the collateral which secured the Reddy note, the amount of the note and interest was paid on November 7, 1904. The account charges the plaintiff with the principal of the note and with interest-thereon, figured by partial payments, from its date to November 7, 1904. The first item of interest is “Int. on same to February 1, 1902, . . . at 8 % —5 m. 25 d. — $427.36.”