Upham v. Brooks

WOODBURY, Circuit Justice. It may not be amiss to ascertain, first, the rights of the respondent in this ease. She is not a mortgagee of these premises, to secure any debt due to herself; though both she and Richardson claim that Muzzy was indebted to them; and probably he made the assignment of Boyd’s mortgage to them, with a view of furnishing some security for their claims. In this state of things, as regards third persons, it is well settled, that she has no rights in the mortgage or the mortgaged property beyond the debt or liability named in it in behalf of Muzzy. Loring v. Cooke, 3 Pick. 50; 2 Har. & J. 412; 1 Har. & J. 465; 2 Pick. 520, note; 1 Fairf. 161. And though in England under the doctrine of tacking a third mortgage to a first, the third may gain some advantage over the second (Com. Dig. “Chancery,” 4, A, 10; 2 Vern. 691; 2 Story, Eq. Jur. § 1023, note; 2 Ves. Jr. 376), and though a pledge or assignment of a mortgage to C. held by B. against A. might raise an equity in C. to secure his claims against B., or [830] amount to what is called an “equitable mortgage” (4 Kent, Comm. 180; 2 Myine & K. 417; 2 Ves. & B. 79; 12 Price, 597; 19 Ves. 209; Russel v. Russel, 1 Brown, Ch. 269), yet this could not avail as against A. or third persons who have before acquired interests in redeeming the original mortgage (4 Kent, Comm. 175; 1 P. Wms. 496; 2 Vern. 691, 764; 1 Ves. Sr. 123; 4 Ves. 121; 2 Wash. [Va.] 233; 2 Johns. Ch. 443; 2 Story, Eq. Jur. § 1010). Her rights are the same, then, here as Huz-zy’s, the original mortgagee. She is his assignee, and subject to all the equities against him. U. S. v. Sturges [Case No. 16,414]; Hills v. Eliot, 12 Mass. 26. In the nest place, what are the rights of the complainant? First, they are all which belonged to Boyd, the original mortgagor of the premises, he having released all his to N. G. Upham. In that position, the complainant is entitled to have the mortgage cancelled or to redeem it, on paying the notes to Stetson, which were the nominal condition, or relieving Huzzy, by releases of his covenants, from any risk and liability on account of those notes. Upham v. Brooks [Case No. 16,796]. In either event in equity, the sole design of the original mortgage will be accomplished, and the premises embraced in it ought to be restored to Boyd, the mortgagor, or rather to the complainant, who is now Boyd’s assignee, and holds the equity of redemption. The right to redeem is indispensable from the contract, and is to be favored. 2 Story, Eq. Jur. § 1019. It belongs not only to the mortgagor, but his assigns, and indeed all privies in title or interest. Id. § 1023; Co. Litt. 208, note. Here, both of the former pre-requisites to redeem seem, from the evidence, to have been virtually complied with or performed by Up-ham as holder of that equity. He has let Stetson take the land in payment of the notes; and, till the contrary appears, it is prima facie sufficient in value to satisfy them. It is of no consequence how the debt is extinguished, if it be done. 1 Serg. & R. 312; 2 Burrows, 969; Hatch v. White [Case No. 6,209]; 1 Johns. 580. And he has, likewise, procured and.tendered to Huzzy, or, in other words, to his assignees, releases of Huzzy from all liabilities on his covenants on account of the existence of the Stetson mortgage; and to secure him against these was the object, and indeed the whole gist or essence of the mortgage from Boyd. If any releases from any grantees are omitted, they should be specified, and then obtained, or a good bond of indemnity filed against any damage to' Huzzy from his covenants in such cases. Should these doings be regarded as an entire extinguishment of the mortgage debt or liability, rather than an equitable transfer of it to the complainant, then, as purchaser of the equity, he seems entitled to the premises. And, but for the contrary appearance of the records, he might perhaps rest safely on his rights to the premises, without a reconveyance. 14 Mass. 101; 2 Mass. 493; 4 Kent, Comm. 195. But the records standing otherwise, he seems entitled to a reconveyance or release. The mortgagee or his assigns, after a discharge of the debt or liability, is regarded as a trustee for the mortgagor and his assigns, and holds the property, if at all, under an obligation to reconvey, and thus fulfil that resulting trust. Conard v. Atlantic Ins. Co., 1 Pet. [26 U. S.] 441; Waltham Bank v. Inhabitants of Waltham [10 Metc. (Mass.) 334]; Bronson v. Kinzie, 1 How. [42 U. S.] 318. In the second place, these rights of the complainant, in his capacity or character of the owner of the equity of redemption, are fortified by his position as one of the grantees-of Huzzy under covenants by him against in-cumbrances. Having been evicted by Stetson under the prior incumbrance to Stetson, he has a right as against Huzzy to indemnity, on Huzzy’s covenants. In order that Huzzy might make such indemnity in such an event, these very premises were mortgaged to him by Boyd, and should be applied by him to-that object. In equity this can be enforced. The covenants run with the land (2 Johns. 1; 4 Mass. 408), and the remedy back on Huzzy is by the grantee evicted in the first instance (1 Conn. 244; 1 Fairf. 91); and that would be useless, since the insolvency of Huzzy, if a specific application of these premises was not made to relieve those injured by Stetson’s incumbrance as originally contemplated. Again, if the removal of that incumbrance-by paying it with the land, or getting releases-from the covenantees on account of it, transfers the rights to it in equity to him who-does this, then the complainant having done it, is in this way virtually the holder of the debt, secured by the mortgage to Huzzy, and is in equity entitled to the mortgaged premises. 5 N. H. 432; 8 Mass. 557, 558; Upham v. Brooks [Case No. 16,796]; 2 Burrows, 978, 979; 4 Johns. 41; 2 Story, Eq. Jur. 291, note; 5 Johns. Ch. 590; Waltham Bank v. Inhabitants of Waltham [10 Metc. (Mass.) 334]. But it is not necessary to press that view of the case to a definite decision. Finally, in another view still of the facts, the complainant is strengthened in his claim on equitable grounds. Huzzy not only had’, these premises as security against Stetson’s' incumbrance, but was bound in honesty and good faith to apply them in discharge of it,, or to relieve his own and the subsequent grantees from loss through that incumbrance. Beside this, any other course would be injurious to Boyd, who furnished them, and' who, if they are not so applied, would lose them, and still be liable on his own covenants. So it would be an advantage or gain-to Huzzy never intended: as he would obtain and use these premises without ever paying-any thing for them, and would apply them to discharge his own debts rather than the in-cumbrance of Boyd; and being insolvent, would never pay any thing for them even to-subsequent grantees on their covenants. [831] against him. Until Muzzy paid something on account of the Stetson mortgage, he would be entitled to only nominal damages (12 Mass. 304), and $20 was tendered here to cover that. It would, therefore, be no very forced view to consider Muzzy in equity as trustee of these premises for the purpose of discharging the Stetson mortgage, or relieving any grantee of that land from loss by means of the Stetson mortgage. 2 Story, Eq. Jur. § 730; 6 Johns. Ch. 398; Flight v. Cook, 2 Ves. Sr. 619; 2 Brown, Ch. 321. Much less would this be a strained construction, when Muzzy not only promised verbally to indemnify the grantees against the Stetson mortgage, and covenanted generally against all incumbrances, which of course included Stetson’s; but made a special and additional covenant in his deed to Dorance & French, “to redeem or cause to be redeemed” that mortgage. Not doing this,' he has, therefore, caused to the complainant the loss of the land he obtained from Muzzy; and a specific execution of that trust by Muzzy, or by those to whom he has assigned the premises, seems demanded by general considerations of justice no less than his express contract. On the power to enforce this specific performance, see U. S. v. Sturges [Case No. 16,414], and cases there cited. Under these different aspects of the case, all adding force to the equities of the first view of it, we think the plaintiff entitled to a redemption of the Boyd mortgage. He must file the releases of the several grantees, as well as the evidence of Stetson’s foreclosure, and then he will be entitled to a reconveyance or release from the respondent. The offer to redeem was properly made to her, as assignee and in possession. Wing v. Davis, 7 Greenl. 33; 7 Johns. Ch. 147. Should any of the grantees be shown before the master not to have released, the plaintiff must file a satisfactory bond of indemnity to save the respondent and Muzzy harmless from the covenants in such case. In respect to the account required and to be rendered by the respondent, the master is to consider the evidence already in the case, concerning the rents received, since Muzzy or Richardson took possession of the premises under the Boyd mortgage. He is authorized to examine the respondent and others under oath as to the sums received for rents, and the application of them, and as to any taxes paid, or permanent improvements made by them. 10 Pick. 398; 4 Kent, Comm. 167, 168, and note; 2 Burge, Col. Law, 205. If the premises were at any time not rented from negligence, or were occupied by the mortgagees or their assigns, he will compute a reasonable rent during such periods. Coppring v. Cooke, 1 Vern. 270; Gordon v. Lewis [Case No. 5,613]; 5 Pick. 159; Jenkins v. Eldredge [Case No. 7,-268]. He will allow interest on each side from the time of any payments made, or receipts, or dues of certain amounts, from either party. 10 Pick. 398; Finch v. Brown, 3 Beav. 70. And after his report is made, unless the parties agree upon the same, the court will decide what amount the respondent is liable to pay for rents and profits. Some of the cases look like holding the last occupant liable for all the previous rents, probably because he is in possession of the trust property, and should not take it without being responsible for every thing chargeable on it. Whitney v. M’Kinney, 7 Johns. Ch. 144; 2 Cow. 297; 2 Johns. 612; Pow. Mortg. 152, 904, 953. If the responsibility is regarded rather as personal, it would seem unjust to extend the liability beyond the length of time the respondent herself has occupied or received rents. So if the entry by the mortgagee be merely to foreclose, and not to take the rents and profits towards extinguishing interest on the debt, the liability would seem to be limited to the actual receipts or actual occupation, and to the time since such an entry. Gibson v. Crehore, 5 Pick. 159. If it should turn out, that a balance is due from the respondent to the complainant on account of rents and profits, a still further question may arise, whether a judgment and execution for it can be given in this bill to redeem. Under some statutes it has been held, that this cannot be done in some states, but the party is obliged to sue at law for it. Taylor v. Weld, 6 Mass. 268. But it may be in this bill and in this court, that a judgment for it can be asked and sustained on general principles of equity, without reference to any particular statute. Or that the statute of this state is broad enough to warrant such a judgment; or that the powers vested in the courts of Maine are broad enough, and should be executed by us. On this last see Smith v. Babcock [Case No. 13,-009]; Clark v. Sohier [Id. 2,835].