Fairbank v. Cudworth

LyoN, J.

It clearly appears, by a preponderance of the proofs, that the mortgaged premises are but scanty security for the mortgage debt, and that, should the defendant fail to pay any portion of such debt, and the plaintiff be compelled to foreclose the mortgage, the security would be entirely inadequate. No foreclosure action can be commenced until after a payment becomes due. After the commencement of such action it will require, under favorable circumstances, from six to twelve months to obtain judgment therein, and perhaps a longer- time. Then notice of sale must be published at least six weeks, and the defendant has one year thereafter, in which to redeem from such sale. Hence the earliest probable time at which the purchaser at the foreclosure sale could'get possession of the premises, would be' three years after the date of the mortgage, and then the mortgage debt, principal and interest, and the costs of *362 foreclosure, could scarcely be less than $4,500. Under the proofs, the very highest estimates which we can make of the value of ■ the mortgaged premises, is the sum which the defendant agreed to pay for them, that is, four thousand dollars.

In like manner, it also clearly appears that the removal of the timber from the two pieces mentioned in the answer, over and above what is necessary for the uses of the farm, would be waste, and would damage the farm, and thus impair the plaintiff’s security for the mortgage debt, at -least four hundred dollars.

Under these circumstances, the right of the plaintiff to an injunction, restraining the defendant from committing such waste, can not be successfully denied, unless the right is defeated by the failure of the plaintiff to show that the defendant is insolvent. The answer in this respect contains a positive denial of the averment of insolvency in the complaint, and there being no other proof on the subject, and the legal presumption being in favor of solvency, it becomes a verity in the case that the defendant is pecuniarily responsible and solvent.

Hence the question (and the only one) to be determined, is, whether an injunction to stay waste upon mortgaged premises, may properly issue at the suit of the mortgagee, against a mortgagor who is solvent, where, as in the present case, the security of the mortgage is inadequate, and the threatened injury to the mortgaged premises, if committed, will be irreparable. It is understood that the learned circuit judge resolved this question in the negative, and upon that ground made the order dissolving the injunction.

The general principle upon which courts of equity exercise the jurisdiction invoked by this action, is thus stated by Judge Story: “ If the mortgagor in possession should fell timber on the estate, and thereby the security would become insufficient (but not otherwise), a court of equity will restrain the mortgagor by injunction.” 2 Eq. Jur., § 915.. The authority which he cites is the case of King v. Smith, 2 Hare (24 Eng. *363 Ch. R.), 239. Ia that case the Vice Chancellor said it was an established rule, that if the security of the mortgage is insufficient, and the court is satisfied of that fact, the mortgagor will not be allowed to do that which would directly impair the security, that is, cut timber upon the mortgaged premises. In a note to the same case the American editor cites numerous authorities, both English and American, to the following proposition : “ The general rule in equity is, that the mortgagor in possession has the right to cut timber, and a court of equity will not interfere to restrain him in the exercise of that right, until it is made to appear to the court that he is cutting to an extent calculated to render the land an incompetent security for the amount due upon the mortgage.” The writer no doubt uses the word “ due ” in the above extract, as synonymous with “ unpaid.” Mr. Eden, in his treatise on the law of injunctions, says, that “ where a mortgagor in possession is committing waste, a court of equity will restrain him; for as the whole estate is the security for the money advanced, the mortgagor ought not to be suffered to diminish it.” (p. 119). Mr. Hil-liard lays down substantially the same rule. See Hill, on Inj., 472 ; 1 Hill, on Mortgages, 223 (ch. 10, § 2).

In none of the above authorities is there any intimation that the insolvency of the mortgagor must be alleged or proved before an injunction can properly issue.

The test question seems to be, Is the security of the mortgage about to be impaired? And upon principle, no good reason is perceived why the pecuniary condition of the mortgagor should be a consideration of any importance. The land is the primary fund for the payment of the debt secured by the mortgage. The mortgagee may resort, in the first instance, to the land for payment, and it would be inequitable to permit the mortgagor wantonly to destroy or impair the security, whether he be solvent or insolvent.

In Poertner v. Russell [ante, p. 193], we had occasion to examine a similar question in a contest between landlord and *364 tenant, and we came to the conclusion that an averment of the insolvency of the defendant was not essential in that case to the right of the plaintiff to an injunction to stay waste. It is believed that the reasoning in that case, and the authorities there cited, are applicable to this case.

Only two of the cases cited on behalf of the defendant to support the opposite doctrine have any bearing whatever upon the question. These are Bunker v. Locke, 15 Wis., 635 ; and Robinson v. Russell, 24 Cal., 467 . In Bunker v. Locke, Mr. Justice Cole mentions the fact that the complaint averred, among other things, that the mortgagor was insolvent, but the necessity of that averment was not involved in the case, or considered by the court. Robinson v. Russell comes nearer to being an authority for the defendant than any other case we have found. But in that case the averment of the insolvency of the mortgagor was held necessary on the express ground that the mischief complained of (being the removal of pendant fruit and growing nursery stock) was not irreparable. Had the threatened injury been the cutting down of the fruit trees, it is not believed that the California court would have held that the averment of insolvency was essential, because in such case the injury would be irreparable.

We conclude, therefore, that where the threatened injury, if committed, is irreparable, and will impair the mortgage security so that the same will be inadequate, the mortgagee is entitled to an injunction against the mortgagor to restrain the committing of the threatened waste or injury, without averring or proving that the latter is insolvent.

It follows that the order dissolving the injunction must be reversed, and the cause remanded for further proceedings according to law.

By the Court. — So ordered.