Doyle v. Di Medio

No doubt can exist touching the obligation of a mortgagee in possession to allow a credit on his mortgage for rents and *Page 24 profits received by him, or in the absence of rents or profits to allow a credit for a fair amount as occupation value. The assertion of the duty of the mortgagee to allow that credit, whether the claim be made by a subsequent mortgagee or by the mortgagor, cannot be regarded, in strictness, as either an independent set-off or recoupment. The duty to allow the credit flows from the status of a mortgagee in possession, and is of the same nature as a payment on the mortgage; the claim of a right to a credit is merely a matter of ascertainment of the amount due on the mortgage. When a mortgagee is or has been in possession as mortgagee, the ascertainment of the amount of the credit flowing from that possession, though unliquidated, becomes a necessary part of the foreclosure suit; an action at law to establish the claim is not necessary. In Onderdonk v. Gray, 19 N.J. Eq. 66, Chancellor Zabriskie, in commenting on the proper practice in such cases, gives approval to a cross-bill (now called a counter-claim) by the mortgagor praying for an account, and to be allowed to redeem on paying the balance. The situation here presented is radically different. Complainant's foreclosure bill discloses that her mortgage is only due by reason of default in the payment of an interest installment, which default matures the principal by the terms of the mortgage. The mortgagor's answer sets up by way of affirmative defense that the mortgage is not due, since a proper credit for the occupation by the mortgagee will more than satisfy the interest installment. If this be found to be true the bill will necessarily fall. Since no redemption is sought by the mortgagor, and his defensive claim relates alone to the credit which flows from the mortgagee's possession, there appears to be no necessity for the employment of a separate counter-claim. The motion to strike out the answer will be denied. I think the most expeditious and advantageous course will be a reference to a master to ascertain the length of time, if any, that the mortgagee was in possession as mortgagee, and the amount due from her, if anything, for such occupation, as well as the payments which the mortgagor has made. *Page 25