Ensign v. Batterson

Baldwin, J. On August 24th, 1894, the plaintiff held a mortgage lien upon the land now in question, and also—as against that mortgage—the fee-simple estate in the same land. The mortgage he received from his father, for a valuable consideration, in 1878; the fee-simple estate he had inherited as his sole heir at law, in 1893. The merger of the two estates which would naturally fol305 law from unity of ownership, was, in equity, prevented by the fact that it would result in the virtual destruction of the interest derived from the mortgage lien. The delivery of the first mortgage to the Society for Savings left in the mortgagor an equity to redeem that mortgage, which, as against every one but the mortgagee, was equivalent to a fee-simple estate. The delivery of the plaintiff’s mortgage left also in the mortgagor an equity to redeem it, which, as against every one but the mortgagees, was equivalent to a fee-simple estate. The foreclosure of the first mortgage cut off the original equity to redeem it; but as the plaintiff was not made a party to the suit, it did not affect the equity to redeem his mortgage. The mortgagor, therefore, had he redeemed the plaintiff’s mortgage, could have proceeded to redeem the first, because that had been the right of the subsequent mortgagee, in whose shoes he would then stand. Goodman v. White, 26 Conn. 317; Colwell v. Warner, 36 id. 224; Loomis v. Knox, 60 id. 343. The plaintiff’s mortgage, having been duly recorded in 1878, every subsequent purchaser of any interest in the land took with constructive notice of its existence. The defendants who are now in possession cannot defeat his lien on the ground that they had no actual knowledge of the incumbrance, because the attorney at law, whom they employed to search the title, failed to discover or to disclose it. Booth v. Barnum, 9 Conn. 286, 289. Whatever in fact appeared upon the records, they were, so far as his legal title is concerned, conclusively presumed to know. Hunt v. Mansfield, 31 Conn. 488. At the time of Sidney A. Ensign’s decease, the statute of limitations would have been a defense to any action on the note for $2,600, which the plaintiff’s mortgage was given to secure, unless its effect could have been avoided by proof of a new promise. The letter' of May, 1887, was not sufficient evidence of such a promise; and Oral acknowledgments by a debtor cannot, under our statutes, support an action against his estate. General Statutes, § 1094. This section, while in terms referring only to actions against the representatives — 306 — of a deceased person, must, to carry out the manifest intent of the legislature, be construed to embrace claims presented against estates; for no such claim ought to be allowed if it could not be enforced by an appropriate suit. An executor or administrator is in the position of a trustee, and cannot give away the rights of others. Peck v. Botsford, 7 Conn. 172, 178. The plaintiff, it is true, was the sole heir to his father’s estate, as well as the administrator; but had he sought to diminish it by exhibiting and allowing this note, it would have reduced the share which the widow would otherwise enjoy. His mortgage therefore was his only means of collecting the debt; and the lien which it had given him upon the land was still in full force, the mortgagor having been in possession and having made payments on the note within fifteen years prior to the commencement of this action. The mortgage of the Society for Savings never having been foreclosed against the plaintiff, it remained, as against him, a mortgage still. The conveyances to Ballard and to Mrs. Batterson were each in the form of a quitclaim deed of all the grantor’s right, title and interest in and to the premises released, and therefore covered any 'interest derived from the first mortgage. Mrs. Batterson was then, as respects the plaintiff, in the position of a prior mortgagee in possession. He had the right to redeem her mortgage; but upon bringing his action for that purpose in a court of equity, he came under the operation of the rule that he who would have equity must do equity. She had made improvements upon the land mortgaged, which greatly enhanced its value, and liad begun to make them in good faith, believing that she was the absolute owner of the lot. Her constructive notice of the plaintiff’s lien, given by the record of his mortgage, was sufficient to make his legal title fully effectual against her; but her want of actual knowledge was important in determining the equities between them which were to be settled by the decree. Until August, 1894, the plaintiff was under no obligation to give any other notice of the existence of his mortgage to prior incumbrancers or their grantees, than that afforded by — 307 — the land records of the town. At that time he first learned that Mrs. Batterson had begun to make expensive improvements upon the mortgaged premises, and he wrote promptly to inform her of his claim of title. It was held by this court in one of its early decisions, that a junior incumbrancer, seeking to redeem from a mortgagee in possession, who had improved the property, must pay the value of the betterments. Wheat v. Griffin, 4 Day, 419. The plaintiff in that action had asked in his bill for an account both of the rents and profits and the betterments, and therefore could not complain if he were taken at his word. In ordinary cases at the present time, a mortgagee in possession is not thus permitted to profit by improvements made without the acquiescence of the party seeking to redeem; but it is often equitable that he should be, when he acted in the honest, though mistaken, belief that he was the absolute owner, with an unincumbered title. In the Roman law, this equity was deemed so clear, that if the real owner brought suit for the land, while refusing to allow for the added value which the betterments had given it, this was treated as a fraud on his part, which justified the court in rejecting his demand. Dig. 41, 1, de acquirendo rerum dominio, 7, § 12. American law, without either imputing fraud, or requiring proof of it, is content with holding it inequitable to allow a man to be enriched under such circumstances by expenditures which another has made, as he supposed, for his own benefit, while acting in good faith and in ignorance of any adverse claim or title. 3 Pomeroy’s Equity Jurisprudence, § 1241; 2 Jones on Mortgages, § 1128 ; Mickles v. Dillaye, 17 N. Y. 80; Thomas v. Evans, 105 id. 601, 614, 59 Am. Rep. 519, 12 Northeastern Rep. 571. The decree of the Superior Court therefore rightly took into account the betterments which Mrs. Batterson had placed upon the land. But there was error in including such as; were added after her receipt of the letter of August 24th, 1894. That gave her full notice of the plaintiff’s lien, and of what he claimed under it. For what she had laid out up to that time in improving the property, and for liabilities already. — 308 — incurred for the same purpose, she had an equitable right to be made good, to the extent of the enhancement of value, in accounting with the plaintiff. But she could not, to prevent waste and loss to herself, should her title prove the better, go forward and incur new expenses, which, in a contrary event, would throw on him any additional burden. To allow that would be to permit her to speculate on the chances of a lawsuit, at his risk. Ramsden v. Dyson, L. R. 1 H. L. 129, 140; Inst, of Justinian, II. 1, 30; Dig. VI. 1, de rei vindieatione, 37; Jones on the Law of Real Property in Conveyancing, §1528. Her position is analogous to that of one who, after making a contract to purchase, is notified of a defect of title, but still goes forward and pays the agreed price. It is well settled that such an one cannot claim the rights of a bona fide purchaser. Hayden v. Charter Oak Driving Park, 63 Conn. 142. It is found by the Superior Court that a stoppage of the work would have been of no benefit to any one concerned ; but it also appears that its completion involved an additional outlay considerably exceeding the value of the lot. It is obvious that this wholly changed the character of the plaintiff’s security. He might have been willing and able to redeem by reimbursing her for what she had spent up to the date of his letter, and unwilling or unable to pay the larger sum. It may be assumed that the money previously spent and contracts previously made by Mrs. Batterson, enhanced the value of the land only as they might contribute to the erection of a building which, until completed, would be worthless ; but it would still be true that it was for the owner of the lot, alone, to determine whether to complete it or not. As between the parties to this suit, Mrs. Batterson occupied, with relation to these improvements, the position of owner, up to her receipt of the letter of August 24th, 1894; but after that date she lost it, and the rights of the true owner to regulate the future disposition of the property became in equity superior to hers. It was only for moneys already paid and liabilities already incurred, so far as they enhanced its valüe, that she had an equitable lien; but, in determining — 309 — as to sucli enhancement, the trier would take into consideration the character and value of the building, of which the structures already made (so far as they were permanently attached to the soil) were to form a part, and if it was one suitable to the site, might be justified in allowing all that they had cost. On the other hand a half finished house, which, if completed, would be ill adapted to its surroundings, and unlikely to prove a profitable investment, might be absolutely worthless. There is also error in including in the amount required for redemption, the purchase money paid by Mrs. Batterson to Gayton Ballard. She received from him, as he received from the Society for Savings, not the land, but the title of the first mortgagee. McSorley v. Larissa, 100 Mass. 270. This title the plaintiff, as a junior mortgagee, had a right to acquire; but only ou paying the amount, equitably due on the mortgage indebtedness. This, the lot having been wholly unproductive, was the amount of the original note with interest, and all taxes upon the land paid by the Society for Savings and its assigns. It is found that the sum of these items exceeds $12,000, while the purchase money paid by Mrs. Batterson was less than $10,000. Whether the difference in amount, as between Mrs. Batterson and her predecessors in title, belongs to her or them, is of no consequence to the plaintiff. His payment is primarily due to the party from whom he seeks a conveyance of the legal title. We have stated the principles governing the decree that should be passed, upon the issues now closed and the facts now stated' upon the record. Should, however, an application by Mrs. Batterson for leave to file a proper cross-complaint be hereafter made and granted, it is not impossible that it might appear that she has an equity to redeem the plaintiff’s mortgage, superior to that which he asserts to redeem hers. The law of mortgages has been built up on a series of legal fictions. ' These have been created from time to time as a convenient means of defining and regulating the various estates to which such conveyances may give rise. By one — 310 — of these artificial rules, introduced in derogation of the ordinary principles governing tenures of real property, the union in one person of the estates of mortgagor and mortgagee will not always effect a merger. The plaintiff’s mortgage has been thus preserved in existence, notwithstanding his succession to the interest of the mortgagor, in order not to deprive him of a lien on the land which was paramount to his title by inheritance. But this lien was given to secure a debt, and in every such transaction the debt is the principal thing, and the mortgage simply a collateral incident. The right of a mortgagee to redeem prior incumbrances and to foreclose subsequent ones is a means for the collection of his claim against the mortgagor. The plaintiff, at the time of his father’s decease, was his creditor; but by virtue of a debt which was uncollectible, except by enforcing a certain mortgage security. The law will preserve for him the benefit of that security, so far as may be necessary to answer the end for which it was given. But others may have equities in the laud, or equities against him, which will affect the means by which that end is to be accomplished. They may be such as to entitle them, if holders of mortgage incumbrances, to pay off his claim, and become subrogated to his title, even if, in the absence of such equities, he would have been entitled to pay them off and become subrogated to their title. Mrs. Batterson fell into the mistake of assuming that she was the owner of a fee-simple estate in the land now in question. The long silence of Sidney A. Ensign and of the plaintiff, while the Society for Savings and its assigns were dealing with it as their own, and annually paying taxes on it, as such, and the terms of the letter of August 24th, 1894, by which that silence was first broken, may both have contributed to that result. Her mistake, and the expenditures to which it led, cannot defeat a recorded lien; but we do not say that they may not, by force of an estoppel in pais or other equitable doctrines, vary the remedies for its enforcement. The great object of a court of equity is to do equity, and the rules by which it is guided can never require the — 311 — passage of a decree which would make it an instrument of injustice. If such he ever the result of an equitable action, it must be attributable either to the fault of the parties or the error of the judge. The various objections interposed bjr the plaintiff to the admission of evidence were properly overruled, for reasons which have already been sufficiently indicated. There is error in the judgment appealed from, and it is set aside and a new trial ordered. In this opinion the other judges concurred.