Reed v. Jones

C. Allen, J.

The substance of the provisions contained in the condition of this mortgage is as follows:

*119 1. The mortgagor is to pay to the mortgagee the sum of $21,201 in five years, with interest at the rate of seven per cent per annum, payable semiannually.

2. The mortgagor is also to pay all taxes and assessments upon or on account of the mortgaged premises.

3. The mortgagor may at his option pay the whole or any part of the mortgage debt at any time within the five years.

4. The mortgagee will at any time release to the mortgagor any portion of the premises, upon payment of a sum not exceeding the rate of twelve cents per foot for the portion so released, which sum shall be indorsed upon the mortgage note.

The last provision has been treated by the parties as if the sum contemplated was at the rate of precisely twelve cents per foot, and no question arises upon the phraseology “ not exceeding” twelve cents per foot.

In order to determine the true construction of these various stipulations, and especially of the last, in its relation to the others, and whether it is an independent or dependent stipulation, the whole instrument is to be taken together, and reference is to be had to its objects and purposes. Cadwell v. Blake, 6 Gray, 402 . Knight v. New England Worsted Co. 2 Cush. 271 , 286. Howland v. Leach, 11 Pick. 151 .

Looking at this instrument in view of this general rule, it is apparent that the general purpose of the mortgage is to make a security for the mortgage debt. This debt is due at a specified time, with the privilege on the part of the mortgagor of paying the whole or any part of it before it becomes due. If, for example, the value of the premises increases, either from a general rise in the value of real estate, or by reason of increasing demand for dwellings or for business purposes in the neighborhood, or of special improvements or additions upon this particular estate, the mortgagor retains the opportunity to go into the market and secure a loan on better terms if he can, and thus pay off the mortgage debt. In addition to this, he may also call for releases of portions of the mortgaged premises from time to time, upon making a stipulated payment therefor; thus enabling himself to make sales of small lots to purchasers, and to convey a clear title. It is to be observed, however, that this stipulated payment is the same in amount, at whatever time it may be made *120 and the release called for. That is to say, whether the mortgagor demands such release at the end of six months, or at a later period, he is in either case to pay at the rate of twelve cents a foot. There is a further provision that the sum so paid shall be indorsed upon the mortgage note. This excludes the idea that it can be appropriated towards the payment of taxes or assessments. The provision does not in terms specify that such payment shall be so indorsed in reduction of the principal of the I note, and that it shall not be applied upon the interest; but this also is perhaps to be inferred. The mortgagor is at all events to pay certain sums; namely, the semiannual interest, and taxes and assessments, and the principal of the debt at its maturity. He reserves to himself the privilege of paying other sums. The payment of the former is a positive duty. The payment of the latter is a privilege which he secures to himself for his own convenience or advantage. If, under these provisions, even within the five years, the mortgagor were in default in the payment of interest or taxes, it would be a grave question whether a court of equity would assist him, during the continuance of such default, to obtain a release of any portion of the mortgaged premises upon the payment merely of the stipulated rate per foot. But that question does not arise here. In the present case, the time for the payment of the whole of the principal debt has expired, and the mortgagor is in default as to the payment, not only of the interest and taxes, but also of the principal. ISTo demand for a release of the portion of the mortgaged premises now in controversy, nor tender of the stipulated rate per foot for the same, was made until more than two years after the expiration of the time for the payment of the principal. There is no averment or proof of any act done or assurance given by the defendants within the five years, which would give the mortgagor a right to suppose that his privilege of demanding such release would be extended after a failure to pay the principal debt at its maturity. The master finds that the defendants have not, by any acts of theirs, waived or deprived themselves of any rights under their mortgage. The plaintiffs do not now offer to pay the debt, or the arrears of interest or taxes; but seek to obtain a release of a particular portion of the premises, without such payment. But a majority of the court are of opinion, *121 that, under these circumstances, the mortgagor is not entitled to avail himself of this privilege. If he were, he might demand a release of the most desirable and valuable selected portions of the premises, upon the payment of only twelve cents per foot, and the whole amount so paid might be less than the unpaid interest and taxes; and leave the whole principal of his debt unpaid, and the mortgagee’s security for its payment greatly impaired. The provision giving to him the privilege of obtaining such release, upon such terms, is not an independent stipulation, which he can have the aid of a court of equity in enforcing while he is in such default, and while he disregards all the promises made by him in the same contract. See Butman v. Porter, 100 Mass. 837 ; Marble Co. v. Ripley, 10 Wall. 339, 358 ; Colson v. Thompson, 2 Wheat. 336 ; Story Eq. Jur. §§ 736, 771; Chit. Con. (11th Am. ed.) 1084.

The plaintiffs, as assignees of the equity of redemption, took their title with notice of what the mortgagees were entitled to receive, and subject to the payment of the sums stipulated for in the condition, and their equity is no greater than that of the original mortgagor.

This view of the true construction of the condition of the mortgage renders it unnecessary to consider the other questions argued. Bill dismissed.