Heath v. Haile

The opinion of the Court was delivered by Mr. Chief Justice McIver. The plaintiffs are the owners and holders of a mortgage on certain real estate, •executed by one R. W. Draffin, on the 30th of January, 1888, to secure the payment of a note for $7,000. On the 4th day of July, 1891, the said Draffin conveyed the mortgaged premises to the defendant herein; and after the death of .said Draffin, to wit: on the 30th day of October, 1893, the plaintiffs commenced an action against his heirs at law for a foreclosure of said mortgage, to which action the defendant herein was made a party defendant. In that action the plaintiffs obtained a judgment of foreclosure on the 5th day of November, 1894, and under that judgment the mortgaged premises were ordered to be sold, and were sold on the 3d December, 1894, for a sum insufficient to pay the mortgage debt, the deficiency largely exceeding the damages claimed in this action. In the meantime, to wit: on the 29th of November, 1894, the defendant, after dne notice of the judgment of foreclosure, but before the sale, removed from the mortgaged premises two small dwelling houses which had been erected thereon, of the value of $750 (as alleged in the complaint), and the object of this action is to recover damages for the injury done to the mortgagees in impairing the value of their lien by the removal of the buildings ■covered by said lien. The foregoing facts are set out in — 647 — the complaint much more fully and in detail than it has been deemed necessary to state them here, inasmuch as a copy of the complaint should be embraced in the report of this case. At the hearing of the case, which came on for trial before his Honor, Judge Benet, and a jury, the defendant demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action, “In that it showed upon its face that plaintiffs had no title, and were not in possession of the premises from which the buildings were alleged to have been removed; but, on the contrary, showed that the title to the said premises was in the defendant, and that he was in the possession thereof, at the time of the removal of the buildings, as the purchaser from the mortgagor.” The Circuit Judge overruled the demurrer, and the parties proceeded to offer their testimony. Under the charge of the Circuit Judge, the jury found a verdict in favor of the plaintiffs for $150. The defendant appeals upon the several grounds set -out in the record, which need not be repeated here as they should appear in the report of the case. The first question presented, which is in fact the main question in the case, is whether the Circuit Judge erred in overruling the demurrer. While it is very easy to understand that where, as in this State, a mortgage is regarded as nothing more than a security for the payment of a debt, and not as a conveyance of the legal title, the mortgagee having neither the legal title nor the possession, nor the right of possession, could not maintain an action for a trespass upon the mortgaged premises committed either by the mortgagor or by a third person; yet the inquiry still remains whether the legal rights of a mortgagee are not such as, if invaded, he would not have a cause of action for the redress of any injury which may be done to such rights, either by the mortgagor or a stranger. What, then, are the legal rights of the mortgagee? In Annely v. DeSaussure, 12 S. C., at page 517, Willard, C. J., uses this language, in — 648 — speaking of the rights of the mortgagee: “It is true, that he does not hold the legal title to the land while the mortgagor remains in possession, but he holds the lien or security on the land by a legal title (Simons v. Bryce, 10 S. C., 354). It is erroneous to suppose that a mortgagee holds only an equitable title to his security.” That case also recognizes and affirms the doctrine that where improvements, which become a part of the freehold, are put upon the mortgaged premises, either by the mortgagor or a purchaser from him, such improvements become subject to the lien of the mortgage, and constitute a part of the security for the mortgage debt; and the same doctrine was again recognized when the case came again before the Court. See 17 S. C., 394. Now, if this be so, then the buildings alleged to have been removed from the mortgaged premises by the defendant, even if put there by him, constitute a part of the security for the mortgage debt, and if such security was damaged or impaired, as alleged in 'the complaint, by the removal of the buildings, then, clearly, the legal rights of the plaintiffs have been invaded by the defendant, and, if so, the plaintiffs have a cause of action for the damages thus done to their legal rights. It is not denied in the argument of counsel for appellant that if the buildings had remained upon the mortgaged premises, they would have passed to the purchaser at the foreclosure sale. Why? Because they were fixtures, which had become part of the freehold (Reid v. Kirk, 12 Rich., 54), and thus subject to the lien of the mortgage. If so, then the security afforded by such lien was impaired to the extent of the value which such buildings imparted to the mortgaged premises; and if the plaintiffs suffered any loss or damage thereby, as is alleged in the complaint, it is difficult to see why the person who caused such a loss or damage should not be held responsible therefor. In sec. 519 of Pom. on Rem., at page 555, it is said: “The cause of action, therefore, must always consist of two factors: (1) The plaintiff’s primary right, and the defendant’s corresponding pri — 649 — mary duty, whatever be the subject to which they relate, person, property, character or contract; and (2) the delict or wrongful act or omission of the defendant, by which the primary right and duty have been violated.” This doctrine has been repeatedly recognized in this State, since the adoption of the Code of Procedure. See Hayes v. Clinkscales, 9 S. C., at page 453; Chalmers v. Glenn, 18 S. C., 471; Suber v. Chandler, 18 S. C., 530, and many other cases. In this case, the primary right of the plaintiffs was to subject the mortgaged premises, including the buildings in question, to the payment of the debt secured by the mortgage, and the delict or wrongful act of the defendant was the impairment of the security afforded by the mortgage by the removal of the buildings constituting a part of the security held by the plaintiffs. If, then, the allegations of the complaint be accepted as true, as they must be under the demurrer, the plaintiffs have stated a complete cause of action against the defendant. While, therefore, it is true, as has been stated, that this is a novel action, in this State at least, its novelty constitutes no sufficient objection to its maintainance, provided it is shown (as it has been) that upon well settled legal principles such an action is maintainable. But while there does not appear to be any authority in this State upon the question involved, yet cases are to be found in other States, holding the same view as to the nature and effect of a mortgage of real estate which prevails here, which fully sustain an action like the present one. In Lavenson v. Standard Soap Co., 80 Cal., 245-reported also in 13 Am. St. Rep., 147— it was held that a mortgagee, after he has foreclosed his mortgage and ascertained what deficiency remains due him, may maintain an action to recover damages against a person who has impaired the value of the security afforded by his mortgage by removing fixtures from the mortgaged premises. In the notes of that case, as reported in the Am. St. Reports, several cases are collected, notably the case of VanPelt v. McGraw, 4 N. Y., 110, which is characterized as the leading — 650 — case upon the subject, all of which hold the same doctrine. There can be no doubt, therefore, that there was no error on the part of the Circuit Judge in overruling the demurrer. All the other exceptions are practically disposed of by what has already been said, unless it be as to the measure of the damages. As to that, the Judge charged in conformity with plaintiff’s sixth request, as follows: “That the measure of the damages which the mortgagee may recover in such a case, is the amount of the loss which he has suffered by the injury to his security, caused by the act of the defendant in removing from the mortgaged premises any building or other permanent improvement thereon. That the amount of loss is to be ascertained in such case by finding the difference between the value of the land with the buildings thereon, and its value after the removal of the buildings, and that the mortgagee is entitled to recover the amount so ascertained, if the same is not in excess of the balance due upon the mortgage debt, after applying the remaining mortgaged property.” This instruction was clearly unexceptionable; for if,, as has been shown, the buildings, when erected upon the land mortgaged, whether built by the mortgagor or by his grantee, the defendant, at once became a part of the mortgaged premises, and, as such, a part of the securit}' for the payment of the mortgage, then, of course, the loss or damage done to the plaintiffs by the removal of the buildings was the diminished value of the real estate caused by such removal, and if such loss did not exceed the balance due on the mortgaged debt, after exhausting the mortgaged premises remaining, the plaintiffs were entitled to recover the same. As to the third exception, it may be said, in justice to the Circuit Judge, that he did' not refuse to charge defendant’s second request, “that by security in this instance is meant the thing mortgaged;” but, on the contrary, he did charge that request, with an explanation as to the meaning of the terms used. — 651 — The judgment of this Court is,-that the judgment of the Circuit Court be affirmed.