Spencer v. Levering

| Minn. | Jul 15, 1863

By the Court.

Emmett, C. J.

The facts of this case are in substance as follows :^-Some time in the year 1856, one William H. Randall was the owner of certain property described in the complaint, and as sncb mortgaged the same to one John Randall, to secure the payment of a sum of money. Afterwards in the year, 1858,*Wm. H. Randall conveyed said premises to the Plaintiffs below, who have since that time to the commencement of this action been seized in fee of the same. John Randall assigned his said mortgage to one Bradford, but at what time does not appear. It does appear, however, that, intervening the 20 th of June, 1861, and the 9 th of February, 1862, (the day when the summons was served,) the Defendants below, as the agents, and by instruction of said Bradford, the assignee and holder of the mortgage, but without the knowledge or consent of the owners of the fee, collected from the tenants of said premises rents to the amount of $600, which they refused to pay over to said owners on demand, although at the time of such demand, the money thus collected was still in their possession or under their control. They also, about the time of making these collections, paid on behalf, and as the agents of said Bradford, about $2,000 of taxes assessed against said premises. It further appears that Bradford had foreclosed his mortgage, by a sale of the mortgaged property, the proceeds of which, however, were insufficient to satisfy the claim, and that there is still an unpaid balance of $1-0,000. When this sale on foreclosure took place is not stated, but it is admitted that, at the time of the trial, April 21, 1863, the time for redemption, which could have been one year only, had not expired; consequently it must have happened'within the year immediately "preceding. This would bring the sale under the statute of March 12, 1860, so far as regards the possession of the property, during the time allowed for’redemption, and would leave the right of possession for the first year of that time with the mortgagor or his successors in interest. Stone vs. Bassett, 4 Minn., 298; Heyward vs. Judd, id., 183.

The action was brought directly against the agents who collected the rents; and they set up as defences that they acted as agents merely of said Bradford, the assignee of the mortgage, and as such had applied and appropriated all the moneys so collected to the payment of taxes due upon the property. They further claim that as Bradford was the real party who collected these rents, he has the right to set off against any demand for them an equal amount of the taxes by him paid ; and also that he may set off against the same a portion of the sum remaining yet unpaid, after exhausting the property mortgaged.

The issues were tried by a Beferee, who reported the facts above recited, and also a judgment tor the amount of rents collected, in favor of the Plaintiffs. The Defendants bring the case here by writ of error.

There can be very little doubt that the Defendants below were liable directly to the owner of the'fee for the rents collected, so long as the money remained in their hands, or under their control; and that such liability became fixed when demand wasjmade. The cases referred to in the brief of the Defendants in Error are fully up to this doctrine. It is readily admitted, however, that they can avail themselves of almost any defence which their principal may have; and this brings us at once to a consideration of the rights which Bradford had in the premises. In what capacity, or by what authority, did he assume to collect the rents through his agents, the Defen dants below ? The facts found show that he was the assignee of the mortgage, and that he sold the property to satisfy his mortgage claim; but when the property was so sold, or to whom, nowhere appears. It is equally uncertain whether the taxes were paid, and the rents collected before said sale or af-terwards.

The Plaintiffs in Error endeavor to take advantage of this very uncertainty in regard to the character in which Bradford interfered, etc., but we are of the opinion that it tells heavily against them. As the simple owner of the mortgage, Bradford would have no right to interfere with the mortgaged property before foreclosure, without the consent of the mortgagor or his assigns. Before the sale, therefore, he could not legally collect the rents himself, nor authorize any one else so to do. He might, however, have had authority to pay off the taxes and add the amount, thus paid to his original mortgage lien, and collect it as a part thereof. See Stat. of 1862, p, 40, see. 4; also, Com. Stat., 244, sec. 101, And there is every reason to believe that the taxes were so paid with this intent alone, and that this took plac^ before the sale. After the property was exhausted by the sale, the holder of the mortgage would have no interest in paying the taxes due on the property sold, unless he had become the pur-ffr.’r.or at the sale, in which event, having necessarily bought subject to the taxes due thereon, he would pay them off in his capacity of purchaser only, and for the sole purpose of protecting his purchase.

It is apparent, therefore, that Bradford, in order to have the shadow of a claim for reimbursement for taxes paid, must have paid them before foreclosure, and in his capacity of as-signee of the mortgage lien. This he could do only by virtue of the statutes above referred to ; and the only claim they have provided for reimbursement is by way of adding the amount so paid to the original lien, and collecting it as a part thereof. He acquired thereby no personal claim against the mortgagor, but must look to the mortgaged property alone for reimbursement. The amount became a part of or was merged in the original mortgage lien; and, if it cannot be said to have been first paid out of the proceeds of the sale, forms a part of the amount remaining unpaid. We do not see therefore how these taxes can be set off against the demand for rents collected.

But cannot a portion of the $40,000 which still remains unpaid be offset against this claim ? We do not think that it can. The lien of Bradford was upon the the land mortgaged or, if he had any personal claim for the amount remaining unpaid, it is against the mortgagor, and not against those to whom he has conveyed the premises. The Plaintiffs below as the grantees of Wm. PI. Randall, were, as against the mortgagee and his assigns, entitled to the rents, uses and profits of the premises, from the time of the conveyance to them o^ the fee up to the day of the sale on foreclosure, and for one year thereafter. They were not personally responsible for the taxes, and, for aught that appears, the taxes which were paid might all have accrued prior to their purchase. The whole value of their purchase may have consisted in the rents and profits up to the time of sale on foreclosure, and during the time given for redemption. It would be a great injustice, therefore, to permit the holder of the mortgage to collect the rents during this time and apply them on a claim which, if it is not confined to the property alone, cannot be enforced against the parties to whom the rents are due and payable.

On the other hand, even supposing that no assignment of the property had ever been made, and that Randall, the mortgagor, was the Plaintiff in this action, it is by no means clear that such set off could be made ; for it does not appear that the remedy of the assignee of the mortgage is not confined to the property mentioned in the mortgage. Com. Stat. 398, sec. 6.

The other point made by the Plaintiffs in Error, to wit, that the record does not show an order referring the cause to a referee for trial, should have been urged in the Court below; it cannot be made here for the first time.

The judgment of the District Court must be affirmed.