Hamilton v. Austin

Follett, J.: As between mortgagor and mortgagee, trees grown in a nursery expressly for sale as merchandise, are covered by the mortgage, and those standing on the land when it is sold under a foreclosure, pass with the land to the purchaser. (Maples v. Millon, 31 Conn., 598; King v. Wilcomb, 7 Barb., 263-267; Price v. Brayton, 19 Iowa, 309; Adams v. Beadle, 47 id., 439; Jones’ Mort., §§ 434, 697.) Fixtures placed or emblements grown upon mortgaged premises by a tenant of a mortgagor, entering subsequent to a recorded mortgage, are covered by it, and the tenant’s right of removal is governed by the rules prevailing as between mortgagor and mortgagee, and not by the rules prevailing between landlord and tenant. (Lynde v. Rowe, 12 Allen, 100; Clary v. Owen, 15 Gray, 522; Lane v. King, 8 Wend., 584; Jones’ Mort., §§ 439, 697, 776, 780.) The rule is the same when the tenants are a firm composed of the mortgagor and a third person. (Lynde v. Rowe, supra.) None of the cases cited involve the question as to whether a mortgagee can recover of a mortgagor or of his tenant for trees removed before foreclosure in the due course of business. In Maples v. Millon (supra), the mortgagor began the removal of nursery trees pending a foreclosure, and he was restrained by an injunction issued in the [142] action. In Price v. Brayton and Adams v. Beadle the nursery stock was growing on the land at the time of the foreclosure sale. In King v. Wilcomb (supra), the parties were copartners in a nursery growing on the land of "Wilcomb, which he mortgaged while the firm was in possession and engaged in the business. Upon the foreclosure the land upon which the trees were then standing was sold to Howland, who purchased with notice that King claimed half of the trees. Howland (who was a defendant in the action), failed to allege or prove that the mortgagee under whose mortgage he claimed was' a mortgagee in good faith and for a valuable consideration ; and the court, applying the rule that one who seeks the benefit of the position of a purchaser in good faith,' and for a valuble consideration, must allege and prove the fact (Tan Santv. PI. [Moak’s ed.], 394, 564; Pom.’s Eq. Jur., § 785), held that How-land was not a purchaser in good faith, and that King was entitled to half of the trees. In the case last cited, it is to be observed that King’s interest in the premises was acquired prior to the mortgage, while in the case at bar the mortgage is prior to the interest acquired by the defendants. Trees reared in nursery grounds exjiressly for sale as merchandise possess none of the legal characteristics of fixtures. Fixtures are articles which have an existence independent of a freehold, and are afterwards annexed to and become a part of it. The trees in dispute never had an existence independent of the freehold, wore not designed for use in connection with it, but were there solely for growth, and destined to become a part of other realty. Nursery trees more nearly resemble emblements, though they are not strictly such; emblements being the annual product or fruit of things sown or planted. Hops, berries and the like are emblements, but the roots and bushes from which they grow are perennial, and not strictly emblements. While the rules for determining the rights to fixtures and emblements, as between mortgagors and mortgagees, are not strictly applicable to the question involved, yet they throw some light upon it. Emblements reared by tenants entering subsequent to a mortgage, if growing at the time of the foreclosure sale, pass to the purchaser. But if the tenant, in the usual course of husbandry, gathers the emblements before sale on foreclosure, they belong to him, and he is not liable in an action of waste. [143] Waste is an improper destruction or material alteration or deterioration of the freehold, or of things forming an essential part of it, done or suffered by a person rightfully in possession as tenant, or having but a partial estate, like a mortgagor. It is not waste for a mortgagor of agricultural lands to sell timber, remove or change fixtures, if done in good faith, in the usual course of good husbandry, and before foreclosure is begun, or default has occurred upon the mortgage. Nor is it waste for him to sell stone from open quarries, or minerals from open mines, if done in thé usual course of such business, though the product removed may exceed the value of the remaining freehold. These considerations lead to the conclusion that it is not waste for a tenant of nursery grounds, •entering subsequent to a mortgage, to remove and sell in good faith, and in the usual course of business, growing nursery stock, if done before foreclosure is begun, and not in apprehension of foreclosure or for the purpose of injuring the freehold and the security. (Adams v. Beadle, supra) After foreclosure is begun the plaintiff may, if the security is in jeopardy, intercept, through the aid of . a receiver, the rents or emblements, or both, upon the theory that the whole estate is pledged as security for the debt, and that the creditor is immediately entitled to his money, or the property pledged. (Hollenbleck v. Donnell, 94 N. Y., 347; Bank v. Arnold, 5 Paige, 40.) But in such case a receiver is not entitled to recover for rents collected or emblements removed prior to the date of his appointment, his right being confined to subsequent rents and profits, and to the rents uncollected at the time of his appointment. No case has been found (in the States in which the legal right to possession, and to the rents and emblements continues in the mortgagor until sale), holding that a plaintiff may neglect to enforce his equitable right to intercept, through a receiver, rents and emblements and recover them, or their value, after foreclosure, in an action ar law; After foreclosure the mortgagee’s right to recover of the mortgagor, or his tenant, for acts committed upon the land before the sale, is limited to acts amounting to waste, within the definition above given. Such was the case of Van Pelt v. McGraw (4 N. Y., 110). The undisputed evidence is, that part of the trees for which the plaintiff recovered were removed and sold in the usual course of business. [144] The defendants excepted to the conclusions of the referee, that the plaintiff was entitled to recover for trees so sold, and requested a finding that the plaintiff was not entitled to recover for trees so-sold arid removed, which was refused, and an exception taken. For this error the judgment must be reversed. It would be unwise at this time, in advance of the evidence which will be given and the facts which will be found on the retrial, to attempt a more definite specification of the classes of trees for which, if any, a recovery may be had. The case does not disclose when default occurred in the payment of interest, the number of trees removed before or after foreclosure was begun, what portion was fit for removal and sale in the ordinary course of business at the time of removal, or the number removed and transplanted in other grounds, if any, to escape the consequences of foreclosure. Under the evidence developed on the trial, the statement of the mortgagor to the plaintiff before purchasing the mortgage, that the nursery stock wras subject to it, does not change the rights of the parties. The mortgage was a general lien under the law, and the evidence is insufficient to justify the conclusion that either party understood it to be a specific lien on the stock, independent of its connection with the land. After the date of the plaintiff’s purchase, the mortgagor and his tenants continued the business of growing new trees and selling those fit for market, as before, without objection from the mortgagee, who never claimed a specific lien. A mortgagee may, by acquiescence, w'aive his right to recover for the removal of things belonging to the freehold. (Jones’ Mort., § 692.) The evidence does not warrant the conclusion that the defendants-were tresspassers on the land, instead of tenants. (King v. Wilcomb, 7 Barb., 263; Wood’s L. and T., 67.) The judgment is reversed and a new trial ordered before another referee, with costs, to abide the event. Hardin, P. J"., and Boardman, J"., concurred. Judgment reversed and a new trial ordered before another referee,, with costs to abide the event.