White v. Maynard

The opinion of the court was delivered by Rowell, J. The first question made is as to the construction of the mandate. The orator claims that .the words, “ after deducting all indorsements,” relate as well to the notes owned by the defendant James Maynard as to the notes belonging to the orator ; while the defendants claim that said words relate only to the notes belonging to the orator. The mandate is a little ambiguous on its face in this respect; but in view of the fact that the Judge who drew it was the Chancellor who made the decree, whereby the construction claimed by the defendants was given to it; and in view of the further fact that the payments made and indorsed on three of the notes owned by said Maynard, as found by the master, were made and indorsed under such circumstances that equity would not apply them in reduction of said notes, but would treat them as payments towards the purchase thereof, — we hold that the construction contended for by the defendants is the correct one. It is claimed that said Maynard should account for rents and profits from November 10, 1875, the time when Cutting and wife went into possession of the mortgaged premises. But they did not go into possession thereof under Maynard, but under Libby, who, being “ hard up,” conveyed the equity of redemption to Mrs. Cutting, and Cutting “ stepped into Libby’s shoes.” Maynard never claimed nor received any of the rents and and profits, [580] but Cutting and wife took the same to themselves as owners of the equity of redemption. Nor can Maynard be made to account from the timq his decree became absolute on March 1, 1879, to the time he conveyed the premises to Mrs. Cutting on May 29, 1880. Actual possession, either in person or by a tenant, or a receipt of profits, or some fraudulent use of his power as mortgagee to the loss of a subsequent incumbrancer, must be shown, to render a mortgagee liable to account. Dawson v. Drake, 30 N. J. Eq. 601. But if a mortgagee be in possession, or acts mala fide in regard to subsequent incumbrancers, or refuses to enter, but suffers the mortgagor to take the profits, and protects his possession by means of his mortgage, he will be charged, not only with all profits received, but with all that he might have received by the use of reasonable diligence and prudence. Demarest v. Berry, 16 N. J. Eq. 481; 2 Jones Mort. s. 1121. Prior to May 29, 1880, Maynard did not take' possession, either in person or by a tenant. He made no fraudulent use of his power as assignee of the first mortgage as against the orator. The orator had a light to take possession of the premises at any time as against all persons but Maynard, and could have taken possession as against Maynard if he had not objected. But he never attempted to take possession, and was not prevented by Maynard from taking possession. He seems rather to have been relying on the promise that he claims Maynard made to pay his notes. But when Maynard conveyed the premises by warranty deed to Mrs. Cutting on May 29, 1880, he must be deemed thereby to have taken possession, or to have done an act equivalent thereto, and to have asserted his superior title in such a manner as to prevent the orator’s taking possession; and he must account from that time, and will be allowed for all necessary repairs from the same time. The master reports nothing for necessary repairs since that time except an item of five dollars for digging about twenty rods of drain from the house in the summer of 1880, which he finds was a necessary expense. ■ Decree reversed, and cause remanded, with mandate. Ross, J., was absent.