Merriam v. Goss

Holmes, J. The clauses in the decree for redemption directing that the defendants be allowed for the improvements made upon the premises, and that the master report the value of such improvements, &c., is merely a less formal equivalent for a direction that the master inquire whether the defendants had made any, and what, lasting or permanent improvements on the premises, &e., as in Webb v. Rorke, 2 Sch. & L. 661, 676. It is proper that such a special direction should be inserted in the decree if a prima facie case is made for it at the hearing, but in itself it does not determine that there are improvements to be allowed for. That question is now before us. Even if this decree was intended to go further than is usual at that stage, practically it leaves everything open, as it does not specify what things are to be allowed for under the name of improvements. Upon the facts, as we shall show, it must be taken to mean by improvements “ lasting or beneficial improvements on the estate; ” Gordon v. Lewis, 2 Sumner, 143, 150; that is to say, those of which the plaintiff actually receives the benefit. Reasonable improvements may be allowed for, apart from contract, upon principles of equity, and, in this Commonwealth, by statute. Pub. Sts. e. 181, § 23. When the allowance is made, however, it is made, not for the expenditure, with which ex hypothesi the mortgagor had nothing to do, but for the benefit which’ he actually receives from that expenditure. The mortgagor’s having actually received the benefit is the only ground for charging him, and it follows that, although justice will ordinarily be done by crediting the mortgagee in account with the sums expended, which is the usual direction in decrees, and is sanctioned by our statute, yet that “ the true rule undoubtedly is, that the mortgagor should be charged no more of the cost, than that which is beneficial to the estate.” Reed v. Reed, 10 Pick. 398, 400. Boston Iron Co. v. King, 2 Cush. 400, 405. See also Gordon v. Lewis, 2 Sumner, 149. Shepard v. Jones, 21 Ch. D. 469, 478. Of course a different rule could be established by contract, and a mortgagor might bind himself by words or conduct to pay the cost of structures at all events. It is said, in England, that notice given by the mortgagee to the mortgagor, and acquiescence on the part of the mortgagor, render unnecessary an [83] inquiry whether the expenditure was reasonable. Shepard v. Jones, 21 Ch. D. 479. It does not follow that notice and acquiescence alone would change the rule as to the amount to be allowed. But if they ever would have that effect, there is nothing that can do so in this case. All that appears is, that the plaintiff knew (not that Lockey gave him notice) that Lockey was making improvements, and made no objections. But at that time both parties were expecting that a bargain was going through for the release of the equity of redemption to Lockey, so that, even if Lockey knew that the plaintiff knew that he was making improvements, it was understood by both that he was making them on his own account, on the strength of that anticipation. Hence any implication of an undertaking to pay the cost of the structures is out of the question, and the allowance to the defendants must be determined by the general principles of equity as to reasonable improvements. In this view, as the dwelling-house was destroyed by fire before the account was taken, and the mortgagor, when he gets back the property, will get it without that improvement, he ought not to pay for it. It makes no difference that the house was burned after the decree for redemption. The ground on which the mortgagor is charged is inconsistent with such a distinction, and no case has been brought to our attention which sanctions it. See Nixon v. Porter, 38 Miss. 401; Dungan v. Von Puhl, 8 Iowa, 263, 271; Stark v. Starr, 1 Sawyer, 15, 20. We have assumed in favor of the defendants, without deciding, that the case stands as if Lockey had already purchased the mortgage when he moved the house upon the land, as it seems probable that he had made some arrangement looking to that end, and that his act is not to be regarded as that of a stranger. Merriam v. Barton, 14 Vt. 501. The plaintiff properly makes no claim to the money received by the defendants for insurance upon the house, if he is not charged for the house. Also he does not dispute that he was properly charged in the account with the present value of the improvements still on the land, nor that, when such improvements are estimated according to their deteriorated value, the occupant is only to be charged for the rent of the land without the improvements. We do not reopen these questions. See [84] Dungan v. Von Puhl, and Nixon v. Porter, ubi supra; Moore v. Cable, 1 Johns. Ch. 885. This disposes of all the points which have been argued before us except a matter which probably was not called to the attention of the justice who signed the final decree. It seems proper that the decree should be modified so far as to require only the defendants Putnam and Goss, who hold the mortgage and have received the surplus, to pay it over ; and they alone should be charged with costs. In other respects it will stand, with such modifications as are necessary to bring it down to the date of the decree. Decree accordingly.