293 Mass. 121 | Mass. | 1936
This bill in equity was brought by the owners of two apartment house properties in Cambridge to restrain the defendant from foreclosing a second mortgage and a third mortgage, each of which covered both parcels, and for an accounting with respect to the third mortgage. The only matters now in dispute are whether the second mortgage has been paid and satisfied and certain items in the accounting.
As to the second mortgage the facts found by the trial judge are these: On May 20, 1930, the plaintiffs borrowed $8,000 from the defendant and as security for the loan gave him an instrument under seal wherein they appointed him their agent and attorney to collect all rents from the premises until any indebtedness of the plaintiffs to the defendant should be paid in full, authorized the defendant to pay the operating charges of the properties and out of any surplus to make monthly payments of principal and interest on the second mortgage (then held by a mortgage and loan company) and to pay himself interest at the rate of one per cent per month, and gave the defendant the option either to apply any surplus which might still remain upon the plaintiffs’ indebtedness to the defendant or to pay it to the plaintiffs. On January 18,1932, with the consent of the plaintiffs, the defendant paid to the mortgage and loan company the amount due on the second mortgage out of funds in his hands under the instrument and took from the mortgage and loan company an assignment of that mortgage to himself. The plaintiffs did not desire the second mortgage to
It is the plaintiffs’ contention that these facts show a payment of the second mortgage by the plaintiffs, who owed it, out of their own money, that the mortgage was extinguished as matter of law and that the attempt to assign it to the defendant was futile. We cannot agree with this contention. The money in the defendant’s hands under the instrument of May 20, 1930, with which he procured the assignment, was not the plaintiffs’ money. The defendant was more than the plaintiffs’ agent. By the terms of the instrument he had an interest in the money as security for his loan which was superior to the plaintiffs’ interest. He was under no personal obligation to pay the second mortgage. Except for the monthly instalments provided for in the instrument, the plaintiffs had no right to compel him to apply any of the money in his hands to that mortgage. The defendant paid out of his own security, and it was right that the mortgage should be kept alive for his benefit. Where, as here, the money has been advanced by one under no obligation to pay, “such an assignment shall be held to constitute an extinguishment or an assignment, according to the intent of the parties.” Brown v. Lapham, 3 Cush. 551, 555. Gibson v. Crehore, 3 Pick. 475, 482. Strong v. Converse, 8 Allen, 557. McCabe v. Swap, 14 Allen, 188. Ryer v. Gass, 130 Mass. 227. Cheffee v. Geageah, 253 Mass. 586, 589. Cases like Carlton v. Jackson, 121 Mass. 592, and Lydon v. Campbell, 198 Mass. 29, where a person obligated to pay does so with his own money, are distinguishable. The judge rightly ruled that the second mortgage was not extinguished. The intent of the parties prevails.
We have examined all items in the accounting which have been argued. We think the defendant should not have been allowed $136.50 for interest upon overdue interest. Although compound interest may sometimes be allowed in equity where justice requires it, Ellis v. Sullivan, 241 Mass. 60, 64, the circumstances of this case do not call for any
With the modification mentioned above, the final decree should be affirmed with costs.
Ordered accordingly.