McKee v. Angelrodt

RylaNd, Judge, delivered the opinion of the court. 1. It will be seen from the foregoing statement of the case, that the main question for the decision of this court is in regard to the liability of a person to whom a lease has been assigned by way of mortgage, for the payment of rent to the lessor, without such assignee ever having possession of the premises leased. This question is embarrassed by authorities being found on both sides of it, both in the affirmative and in the negative. In the case of Eaton v. Jaques, Douglas, 455, Lord Mansfield and Justices Willes, Ashhurst, and Buller, held, that the assignee of the lease by way of mortgage, without having had possession, was not liable to the lessor for rent. Lord Mansfield said, numberless inconveniences would arise, if such a doctrine could be supported. The mortgagee never asks whether the rent be paid ; he only looks to his security, and when the principal and interest be paid he re-assigns. But if the plaintiff is right, a mortgagee might be called upon years after such re-assignment, for arrears or breaches of covenant during the assignment. The consequences would be terrible. Justice Buller declared, that even if the assignment were absolute, the action, in his opinion, would not lie without possession. He referred to Dane’s Abridgment, title, “ Rent,” where the court declared that the ground upon which assignees are made liable, is because they have enjoyed the profits. “ In leases, the lessee, being the party to the original contract, continues always liable, notwithstanding any assignment. The assignee is only liable in respect to his possession of the thing. He bears 'the burthen while he enjoys the benefit, and no longer. To do justice between men, it is necessary to understand things as they are, and to construe instruments according to the intent of the parties. What is the effect of this [292] instrument between these parties ? The lessor is a stranger to it. He shall not be injured, but he is not entitled to any benefit under it. It was a mere security, and it was not, nor ever is, meant, that possession should be taken until default of payment, and the money has been demanded.55 Such is the language of Lord Mansfield in the case of Eaton v. Jaques. In the case of Williams v. Bosanquet and others, Broderip & Bingham, 238, 5 Com. Law Rep. 72, the case of Eaton v. Jaques is overruled by a large majority of judges, who, decide that when a party takes an assignment of a lease, by way of mortgage as security for money lent, the whole interest passes to him and he becomes liable on the covenant for payment of rent, though he has never occupied or become possessed in fact. It is a principle of law, that the assignee of a léase is subject to the performance of all the covenants contained in such lease, so that where a lease is assigned by way of mortgage, the mortgagee would become liable to the covenants in the lease, unless a distinction were made between an absolute assignment and one by way of mortgage. This distinction was recognized in the case of Eaton v. Jaques, and though it was overturned in the case of Williams v. Bosanquet, it, nevertheless, has more of equity and good sense to support it, than the contrary doctrine. It is well settled, as a general rule, that a mere legal ownership does not make the assignee liable in such cases, without some evidence of his possession or actual agency. This principle is clearly recognized in the law of shipping —■ the rule being settled that the mortgagee of a ship does not incur the liabilities of an owner, until he takes possession, or actively interferes in the employment of the vessel. Chinnery v. Blackburne, 1 Hen. Black. 117. Briggs v. Wilkinson, 7 B. & C. 30. Westerdell v. Dale, 7 Term Rep. 306. Brooks v. Bondsey, 17 Pick. 441. Colson v. Bonzey, 6 Greenl. 474. McIntyre v. Scott, 8 Johns. 159. [293] It seems to us tbe better opinion that the mortgagee of a term of years, who has not taken possession, has not all the legal right, title and interest of the mortgagor, and therefore is not treated as a complete assignee, so as to be chargeable on the real covenants of the assignor. The case of McMurphy v. Minot, in 4 N. H. Rep. 251, is an authority against this view of the subject. In this case, Richardson, Chief Justice, says, the case of Eaton v. Jaques has been long questioned, and cites 7 Term Rep. 312, and also the case of Williams v. Bosanguet. The doctrine of Williams v. Bosanquet stands on purely technical principles. It is conceded that, if the assignee by way of mortgage have all the term of the lease except one month, or one day only, assigned to him, he is not liable. The whole interest and estate of the lessee would not pass by the assignment, if one day of the term still remained in him. The doctrine in Eaton v. Jaques is founded in substantial justice and equity, and supported by strong common sense. Under the doctrine of Williams v. Bosanquet, a mortgagee might lose his capital and interest and still be compelled to pay rent without deriving a farthing from the estate. In the case before us, the lease was assigned by way of mortgage ; it was a mere security for the payment of money. The assignee never took possession; it never entered into the heads of the assignees, that the mortgage to them, in order to secure the money due to them, made them liable to pay the rent under the lease. We hold, therefore, that possession in the assignee is necessary in order to create a liability to payment; that the assignee must be in a situation to receive the benefits, before he can be made to suffer the burden. Possession is the mother of his liability, to borrow a maritime idea about freight and wages. Greenleaf’s Cruise on Real Property has afforded much light on this subject, title 15, Mortgages, chap. 2, page 110, note 1; and I have adopted and used the language of the courts and elementary works as far as suitable to the subject embraced [294] herein. I do not think it necessary to review the authorities any further on this subject. We have examined and compared many cases, and the conclusion we have formed is contained in this opinion. The other judges concurring, the judgment of the court be- ■ low is reversed, and the cause remanded.