287 Mass. 317 | Mass. | 1934
This is a suit in equity wherein the plaintiff asks the court in effect to determine for the parties what sum they ought to agree upon, and the plaintiff ought to pay and the defendant to accept for a partial release from a mortgage, held by the defendant upon real estate said to be owned by the plaintiff, of a portion of the premises described in said mortgage. The judge dismissed the suit and the case is before this court on appeal by the plaintiff.
The pertinent facts found by the trial judge are in substance as follows: On February 1, 1928, the defendant sold and conveyed to The Republican Company, a domestic corporation, certain land with the building thereon located at the corner of Main and State streets in the city of Springfield, Massachusetts, and by this same deed conveyed certain other land adjoining on the west of State Street and extending to Bliss Street for the sum of $925,000. The Republican Company paid $800,000 of this sum by its note of February 1, 1928, secured by a first mortgage upon the entire real estate, which was described in both deed and mortgage as one parcel. By the terms of this note The Republican Company promised to pay interest at the annual rate of five per cent on the first days of February
The mortgage deed contains this language: “In the event that said mortgagor shall sell a portion of the aforesaid premises, the mortgagee shall release the portion so sold from the lien of this mortgage upon payment by said mortgagor of a sum to be mutually agreed upon by said mortgagor and mortgagee.”
On June 12, 1930, The Republican Company conveyed the mortgaged premises to the plaintiff, subject to the mortgage. The plaintiff’s deed does not contain any promise or agreement on its part to assume and pay the mortgage or to perform any of the obligations of the mortgagor, and the plaintiff has not signed any collateral or guarantee note or otherwise in any manner obligated itself in respect to the mortgage or note.
The plaintiff was incorporated under the laws of this Commonwealth in May, 1930, “to acquire by purchase . . . lands or any interest therein; to erect . . . buildings ... on any land of the company . . . .” Its incorporators were employees of The Republican Company. The plaintiff’s authorized capital is five thousand shares without par value, none of which has ever been issued. The plaintiff paid nothing and furnished no consideration for the conveyance. The real estate conveyed by the defendant to The Republican Company and conveyed by the latter to the plaintiff is bounded easterly by Main Street about eighty-six feet, northerly by State Street about three hundred twelve feet, westerly by other owners about two hundred seventeen feet, and southerly by Bliss Street nearly one hundred sixty-nine feet. A portion of the mortgaged premises, bounded easterly by Main Street eighty-six feet and northerly by State Street one hundred ninety feet, had been occupied since 1908 by an eight-story office building which the defendant erected. In the years 1919-1922 the defendant acquired, in five separate parcels,
In the spring or summer of 1927, the defendant put the entire property on the market and The Republican Company shortly thereafter entered upon negotiations for its purchase. These negotiations were conducted for The Republican Company by one Sherman H. Bowles with William W. McClench, then president, and with other officers of the defendant. It was contemplated by both parties that the buyer would probably build on the vacant land, and during the preliminary negotiations Bowles inquired what sum would be required for a partial release thereof in that event. McClench said that his company would probably require that about $187,000, representing the net cost of the vacant land, be paid, but Bowles said that his principal could not agree to pay what the vacant land had cost the defendant; and no agreement relative thereto was reached. On October 1, 1927, the negotiations culminated in the execution of a written agreement for sale and purchase on the terms which were subsequently carried out. 'The only reference in this contract to a partial release is in these words: “The party of the first part further agrees that the mortgage herein referred to, to be given as part consideration of the purchase price, shall provide that in the event that party of the second part shall sell a portion of the premises, that a partial release of mortgage shall be given by party of the first part upon the payment therefor of a sum to be mutually agreed upon by said parties.”
Pursuant to this agreement The Republican Company immediately took possession of the building and began making extensive alterations and improvements, and as a result it secured many new tenants. It erected a garage building on the Bliss Street side of the premises, and refunded the cost of its erection by borrowing $125,000 from a local savings bank. In January, 1929, The Republican
According to the terms of the note The Republican Company was obligated to pay the defendant on February 1, 1933, an instalment of $25,000 on account of principal. The Republican Company did not pay this amount when due and was in default after February 1, 1933, not only for this instalment of principal but also for a balance of interest. The defendant never agreed to postpone payment of the instalment of principal that came due February 1, 1933, and never did anything amounting to a waiver of, or to estop itself from, asserting the right to the payment when due. On May 8, 1933, the defendant entered upon the mortgaged premises for the purpose of foreclosing its mortgage and caused a certificate of such entry to be duly recorded. On May 11, 1933, it notified The Republican
The plaintiff’s bill was dismissed with costs. The decree further ordered that the plaintiff pay to the defendant the amount of rents collected by the plaintiff since the defendant’s entry, and enjoined the plaintiff from interfering with the defendant’s possession under its mortgage and from collecting the rents and profits.
Passing the defendant’s appeal from the interlocutory decree denying its motion to dismiss the plaintiff’s appeal for want of due prosecution, we proceed at once to a consideration of the case made by the plaintiff, on its merits. The main issue as posited by the plaintiff is, Can the partial release clause be resorted to by the plaintiff? The defendant contends that the plaintiff cannot resort to the partial release clause in the mortgage because it was a personal agreement between the defendant and the mortgagor. The plaintiff contends that it can do so because the clause is a covenant which runs with the land.
We assume in favor of the plaintiff that a provision of partial release contained within a mortgage, in form a
In the case at bar the agreement of partial release contained in the mortgage is not with the mortgagor or his assigns. Some jurisdictions attach no importance to the omission of the word “assigns.” Vawter v. Crafts, 41 Minn. 14. Title Ins. Co. v. Cowan Lumber Co. 226 Ala. 485, 486. Jones, Mortgages of Real Property (8th ed.) Vol. 1, § 98. Other jurisdictions consider the absence of the word “assigns” as important evidence of an intention of the parties not to make the covenant run with the land. Squier v. Shepard, 11 Stew. (N. J.) 331, 334, 335. Pierce v. Kneeland, 16 Wis. 672, 678. Gilman v. Forgione, 129 Maine, 66. See Clarke v. Cowan, 206 Mass. 252, 253, 255, where the grantee agreed to “release and quitclaim any lot upon the payment of $150 per lot of 7,000 sq. ft.,” and it was held that the agreement “was with the mortgagor, not with him and his assigns, and must be regarded, therefore, as a personal agreement for his benefit and not for the benefit of any one claiming through or under him.” See, also, in affirmation Rugg v. Record, 255 Mass. 247. In the present case it is not necessary to determine whether Clarke v. Cowan, supra, and Rugg v. Record, supra, hold that where the word “assigns” is omitted in a partial release clause in a mortgage the covenant is personal as matter of law. If it be assumed, as the plaintiff contends, that these cases hold that whether the covenant runs with the land is largely a matter of intention, and upon the facts found in Clarke v. Cowan the intention of the parties indicated that the covenant be personal between the parties, the plaintiff is nevertheless not aided. The omission of the word “as
The plaintiff contends that the judge was inconsistent in ruling that the “partial release clause in this mortgage was a personal agreement with the mortgagor, and as such cannot be resorted to by this plaintiff,” and then finding and ruling “that the plaintiff’s relations to the mortgagor are such, notwithstanding it is a different corporation, as to affect it with the mortgagor’s default.” The plaintiff’s contention is that if its relations with the mortgagor were such as to affect' it with the mortgagor’s default then it can resort to the partial release clause because it has the rights of the mortgagor. There is nothing in this position.
We are of opinion that the circumstances which preceded and. were attendant upon the delivery of the deed show a clear intention that the partial release covenant should be a personal covenant not running with the land. We, therefore, find that there is no occasion to consider the contention of the defendant that the covenant could not be enforced by the mortgagor, or by the plaintiff, after a default in both principal and interest, if we were to assume that a covenant running with the land could be enforced after default at any time before there is a complete foreclosure of the mortgage, as the plaintiff contends. See
The final decree includes items of rent collected by the plaintiff for March, April and May preceding May 8, 1933, and items of rent for those months not separated from collections rightly made after May 8, 1933. These collections are included in the sum of $3,846.30 which the plaintiff is ordered to pay the defendant. These errors should be corrected and the amount found deducted from the sum ordered paid. The final decree thus modified is affirmed with costs.
Ordered accordingly.