Winnisimmet Trust, Inc. v. Libby

Crosby, J. This action was brought, in the Municipal Court of the City of Boston, to recover rent from April 2, 1918, to and including November 2, 1918, reserved under a lease to the defendants from the plaintiff’s assignor, one Duval. The trial judge found for the defendants and the case was reported to the Appellate Division, which dismissed the report. At the trial the material facts were not in dispute. The record shows that Duval, who was the owner of an estate known as the “ Dream Theatre,” on March 2, 1916, mortgaged it to Rufina M. Jordan by a power of sale mortgage in the usual form; that on the same day, but after the execution and delivery of the mortgage, he leased the estate to the defendants for the term of three years, at an annual rental of $600, payable $50 monthly in advance, and the mortgagee signed the following clause, written on the lease: “ I hereby assent to the foregoing lease.” It further appears that upon the execution and delivery of the lease the defendants entered into possession of the premises; that on or about April 27, 1916, Duval assigned all rents (except the last three instalments falling due to him under the lease) to the plaintiff, as security for certain indebtedness then and thereafter to be contracted; that the defendants were duly notified of the assignment, on or about November 28,1916, and payment of the rent was demanded by the plaintiff; that on May 31, 1917, the mortgagee, for breach of the conditions of the mortgage, made an entry [563] on the premises for the purpose of foreclosure; that on July 10, 1917, the mortgage was foreclosed and the premises were sold under the power of sale therein; that on the same day the purchaser reconveyed the property to Bufina M. Jordan, who has ever since been the owner; that all rent falling due from December 2, 1916, to March 2, 1918, inclusive, has after litigation been paid to the plaintiff by the defendants; " that the defendants continued to occupy and enjoy the demised premises under said lease without interruption until May 2, 1918, except that on frequent occasions after foreclosure and prior to April 2, 1918, Mrs. Jordan and her attorney demanded payment of the rent and threatened to evict the defendants unless payment was made, and that in consequence of these demands and threats the defendants on May 2, 1918, entered into an agreement with Mrs. Jordan ” by the terms of which the tenancy of the defendants was to terminate on that day, and they were to attorn to her for rent previously due: and that on the same day the defendants vacated the premises. It also appears that the "defendants have not paid rent, under the lease or otherwise, to any one since the payment of the balance of the rent due March 2, 1918. It is their contention that thereafter they were under no liability to the plaintiff, and were hable to Mrs. Jordan only for the rent due April 2, 1918. Certain questions, previously arising under this lease between the same parties, were considered by this court in 232 Mass. 491, and in 234 Mass. 407. "No rule of law is plainer than that a mortgagor of real estate has a right to the rents and profits, while he is allowed to remain in possession. Wilder v. Houghton, 1 Pick. 87. And when a lease is made by a mortgagor, after the mortgage, it does not bind the mortgagee, nor in any manner affect his right. There is no privity between him and the lessee, and no right in him to demand the rent reserved by the lease. ... In order to give him such right, there must at least be an entry by him, and notice to the tenants to pay rent to him, or some act equivalent thereto.” Tilden v. Greenwood, 149 Mass. 567, 569. Knowles v. Maynard, 13 Met. 352. [564] After a mortgagee has entered for the purpose of foreclosure and has demanded rent from the tenant of the mortgagor, the tenant is not liable to the latter for rent. Cook v. Johnson, 121 Mass. 326. Adams v. Bigelow, 128 Mass. 365. Winnisimmet Trust, Inc. v. Libby, 234 Mass. 407, 410. Such exemption from liability does not depend upon recognition by the tenant of the paramount title of the mortgagee in possession. In the last mentioned case, which was for the recovery of rent under the lease, the plaintiff was held entitled to recover after the foreclosure of the mortgage, on the ground that the mortgagee in possession had not notified the lessees to pay him rent and had not threatened eviction; and for the further reason that the lessee had not agreed to attorn to the mortgagee in possession. But it was said in that case, at page 410: “ The tenants cannot avoid paying rent to the assignee of their original landlord unless and until the mortgagee in possession notifies them to pay rent to her, or threatens'to evict them, or they have agreed to attorn to her in recognition of her paramount title.” It appears in the case at bar “ that on frequent occasions after foreclosure and prior to April 2, 1918, Mrs. Jordan [the mortgagee] and her attorney demanded payment of the rent and threatened to evict the defendants unless payment was made . . . . ” It follows that after such demands and threats the defendants were no longer liable to pay rent to the plaintiff, as assignee of the original landlord, but they were obligated to make such payment to Mrs. Jordan. Although the mortgagee in possession did not actually evict the lessees, threats to do so were equivalent to an evibtion. Smith v. Shepard, 15 Pick. 147, 149. It remains to consider the effect of the assent of the mortgagee written upon the lease at the time it was executed and delivered. The assent did not have the same effect upon the rights of the tenants as if the lease had antedated the mortgage. Such assent is to be construed as an agreement not to take possession of the premises in the event of foreclosure so long as the tenants perform the covenants of the lease. The assent cannot properly be held as postponing for the term of the lease the mortgagee’s right to collect [565] the amount of the debt, secured by the mortgage by foreclosure and sale of the property, including the right to rents which might thereafter accrue from its occupancy. The assent was not for the benefit of the mortgagor or his assignee, but was for the protection of the lessees in the event .of foreclosure; and while they could not be evicted so long as they performed the covenants of the lease, yet such assent did not operate to prevent the mortgagee from taking possession after foreclosure, and requiring the tenants to pay rent to her in accordance with the terms of the lease. It follows that the plaintiff’s requests for rulings were rightly denied. Order dismissing report affirmed.