Scott v. Webster

ORTOM, J. Drake and Girard, the owners of the lands, made a mortgage to Thomas B. Scott, and at the same time another mortgage, on part of the same lands, to Swam W. Webster, subject to the first. William G. and John U. Whorton purchased of Scott one undivided half of his mortgage, and the moneys secured thereby, and had such interest in the mortgage assigned nominally to William G. Whorton; and they afterwards purchased the lands described in the Scott mortgage of Drake and Girard, and the deed for the same was executed nominally to John U. Whorton, and the Whor-tons thereupon went into the possession of the premises. Part of the moneys secured thereby being due, Scott and William G. Whorton brought suit to foreclose the first mortgage against Drake & Girard, John II. Whorton, Hiram W. Webster, and others; an'd Webster answered that the purchase of the equity of redemption of the mortgaged premises by the Whortons merged and discharged their half of the mortgage; and on appeal to this court it was held, in Scott v. Webster, 44 Wis., 185, that such purchase did not have that effect. In his opinion in that case, Mr. Justice Cole said, “ that no accounting by the Whortons for the use and occupation of the mortgaged premises was necessary, as they were the owners of the equity of redemption, and entitled to the possession, and became such owners only seven days before the commencement of the suit.” The right of the Whortons to commit waste upon the premises, or to use the same in any manner so as to impair their intrinsic value or the security of the Webster mortgage, was not involved or considered in that case; and the holding in that case cannot, by any fair construction, affect the question now before this court. All of the mortgage moneys being now due, Scott and William G. Whorton now ask, by motion, for an order of sale of the whole premises to satisfy their mortgage. Webster, in opposition to the motion, charges that the Whortons, since the rendition of the j udgment of foreclosure, have cut from the mortgaged premises a — 61 — large amount of pine timber, of great value, and which, constituted the chief value of the lands, and that the premises, in consequence of such waste, will not now sell for a sum sufficient to pay the first mortgage, and that the mortgagors, Drake' and Girard, are insolvent, and asks that the Whortons account for such waste, to be deducted from their part of the mortgage moneys. It is stipulated in the Scott mortgage that the mortgagors might cut from the premises pine timber not to exceed 3,000,-000 feet per year, but that such right should cease upon default in any of the payments and upon notice to quit. There is also a similar stipulation in the Webster mortgage, conditional, however, that 1,000 feet of pine timber should, be kept standing upon certain of the lands for every dollar of the mortgage moneys remaining unpaid. "Without passing upon the question whether this right to cut three millions' of pine timber on the mortgaged premises per year was not strictly a personal right, and not assignable, there can be no question but that such right was given or reserved to the mortgagors for reasons personal to them. By the first stipulation, the right to cut timber on the premises was conditional upon prompt payment of the mortgage moneys, and was to be lost by default; and by the other, such right was subject to a proviso that 1,000 feet of the timber should be left standing on a part of the premises for each dollar of the Webster mortgage remaining unpaid; which clearly show the intention and design of the parties, in giving or reserving such right, to have been to enable or assist' 'the mortgagors, Drake and Girard, to pay both of the mortgages, and furnish them means, by the use of the pine timber to that extent, to do so. It would be gross perversion of the meaning of these stipulations, and defeat their obvious purpose and intent, to construe them to give the mortgagors the right, by cutting off the timber, to destroy the value of the premises and impair or destroy the mortgage security of either Scott or Webster. — 62 — The waste here complained of cannot, therefore, be justified hj these stipulations. The claims of the Whortons that they ha'd the right to cut off and use the pine timber to the extent complained of, because they were the owners of the equity of redemption and in possession, is equally groundless. The two mortgages were executed at the same time and in the same transaction, with the same general purpose and design, although the Webster mortgage was made subject and subordinate to the Scott mortgage; and Webster, as the junior mortgagee, has a right to insist upon the perfect good faith and fair dealing of both the mortgagors and the owners of the Scott mortgage in respect to the use. and care of the mortgaged premises, and that his security therein shall not be impairedjoy them beyond the necessity of satisfying the prior mortgage. It is too clear for argument, and well settled by the decisions of this court, that mortgagors, or the owners of the equity of redemption, in possession, have no right in law or equity to commit waste upon the mortgaged premises to the detriment of the mortgage security, and that they are liable to injunction when such injury is threatened. Fairbanks v. Cudworth, 33 Wis., 358. Treating the Whortons as the owners of the equity of redemption in possession, they are guilty of having committed the waste complained of, in gross violation of this just and equitable principle, and should be held accountable therefor, at least to the extent of their mortgage interest. In one sense, their possession may have been that of the owners of the equity of redemption, by a conveyance from the mortgagors; but that is not, by any means, all there is of it. By the above decision of this court, they may, notwithstanding such ownership of the legal title, still retain their mortgage relation to the property; and now, after they have thus secured the right to remain as mortgagees as well as owners, and the advantage of keeping alive their mortgage interest, it is quite too late to ignore their mortgage relation and insist that they had the — 63 — possession, and Rave committed the waste, and are to be protected in so doing, as the owners of the equity of redemption in possession, and not to be held liable to account for such waste as mortgagees in possession. They are not to be thus permitted to keep their mortgage interest alive and in preference to the Webster mortgage, and at the same time hold the possession only as the owners, or for any other purpose than to obtain their mortgage moneys, and especially not for the purpose of destroying the value of the property by waste, and enjoying its product to the utter destruction of Webster's mortgage security, under the pretext and excuse of being the owners of the property. It did not and could not change their real and true relations to the property, and to their half interest in the Seott mortgage, and their legal or equitable rights and liabilities as the joint owners of both, that they, in mere form, severed, and one became a plaintiff, and the other a defendant, in the suit for the foreclosure of the Seott mortgage. They both, substantially, as plaintiffs and mortgagees, obtained the benefit of the judgment of foreclosure in the name of one; and both, substantially, as defendants and owners of the equity of redemption, were bound by the judgment rendered in form against one. The confusion is merely nominal, and their separation for the purposes of the suit of foreclosure was merely fictitious, and their true relations to the property were both as mortgagees and owners, and their possession and use of the mortgaged premises, so far as they affect the claims of the Webster mortgage, must be held to have been their possession and use as mortgagees in possession. In respect to the Webster mortgage, one of two results must follow from their relations to the mortgaged property, and not both. Their mortgage interest must have merged in their legal title, and been discharged, and their possession was that of owners; or their mortgage interest is kept alive, and their possession is that of mortgagees. In the suit of foreclosure they have — 64 — chosen the latter relation, and it has been sanctioned by this court, and by it they must abide; and, so far, as this proceeding is concerned, they must be dealt with as mortgagees in possession, and held accountable for the waste complained of. Under the circumstances, to now claim the right to obtain by foreclosure the paj^ment of their mortgage moneys, and also to strip the land of its timber and diminish its value, to the destruction of Webster's mortgage security, and use the decision of this court on the former appeal as a pretext and justification of it, is not only an attempted wrong and injustice, but a most unwarrantable attempt to hold this court responsible for their commission. The equity and justice of holding the Whortons accountable for the value of the timber cut from the premises by them since the judgment of foreclosure, are so clear and unquestionable, that it may detract from the importance of the case, lower the grounds of the decision, and imply a doubt of a self-evident principle, to state another ground of their liability, equally conclusive, but more technical, and that is, that the waste complained of was committed by them in violation of the injunction which was made a part of the judgment of foreclosure. ¥e have already seen that, in respect to the property, they were both mortgagees and owners, and in respect to the suit of foreclosure they were both plaintiffs and defendants substantially: plaintiffs as mortgagees, and defendants as owners; and, in relation to the injunction, both obtained it, and both are bound by it. Jofm H. Whorton was one of the defendants, and of course bound by the injunction; and William G. Whorton being alike interested in the subject matter as a joint owner and mortgagee, he is also bound. But even if their rights in the property were antagonistic, and in a suit in respect to it one is plaintiff and the other defendant, and the plaintiff obtain an injunction against the defendant for committing waste upon the premises in controversy, both are substantially bound — 65 — by the injunction, and tbe plaintiff may not disregard its spirit and object. Haight v. Lucia, 36 Wis., 355. In any view which can be properly taken of this case, the Whortons should be held to account for the value of the pine timber cut by them, or either of them, from the mortgaged premises since the rendition of the judgment of foreclosure, to the extent of their mortgage interest, and, when ascertained, it should be applied pro tanto in satisfaction of their half of the mortgage: and the circuit court erred in granting the motion without such accounting and application of such value, as asked by the appellant Webster. By the Court.— That part of the order of the circuit court appealed from is reversed, with costs, and the cause remanded for further proceedings according to this opinion.