Scott v. Webster

"Waste. (1-i) Persons holding land both as mortgagees and as grantees of the mortgagor, held liable for waste to second mortgagee. INJUNCTION. (5) Who bound bij injunction. 1. Two mortgages of the same land were made at the same time to X. and T., respectively; but that to Y. was expressly declared therein to be subject to the other. A. and B. purchased an undivided half of the X. mortgage, and had such half assigned to A., and afterwards purchased the equity of redemption, and had the conveyance made to B., and thereupon they went into possession of the premises; and in this action by X. and A. to foreclose the X. mortgage, brought when only part of the mortgage debt was due, to which B. and Y. were made defendants, it was held that the title of A. and B. under the X. mortgage did not merge in their title by the subsequent deed from the mortgagors, and that they were not bound in such action to account for the use and occupation of the premises. 44 Wis., 185. The remainder of the mortgage debt having become due, and X. and A. having asked for. an order of sale of the premises to satisfy it, Y. alleges that since the judgment of foreclosure A. and B. have cut from the premises a large amount of pine timber of great value, and which constituted the chief value of the lands, and that, in consequence of such waste, the premises will not now sell for a sufficient sum to pay the X. mortgage, and that the mortgagors are insolvent. Held, that A. and B. must account herein. 2. The X. mortgage stipulates that the mortgagors may cut from the premises pine timber not to exceed three millions of feet per year, but that such right shall cease upon default in any of the payments, and upon notice to quit. There is a like stipulation in the Y. mortgage, but with a condition that one thousand feet of pine timber shall be kept standing on certain of the lands for every dollar of the mortgage moneys remaining unpaid. Held, that the obvious design of these stipulations is to enable the mortgagors to pay the mortgage debts without destroying or impairing the security; that the waste complained of cannot be justified by these stipulations; and that A. and B., whether as owners of the equity of redemption or as mortgagees in possession, are not entitled to impair the security of the second mortgage, beyond what is necessary to satisfy their own mortgage. 1!. Whether the right of the mortgagors to cut timber, stipulated in the mortgages, was not a, personal right, which would not pass to the purchasers of the equity of redemption, is not here considered. 4. The fact that A. is plaintiff while B. is made defendant in the action, has no influence upon their rights here in question. 5. Both A. and B. were also substantially bound by an injunction heretofore granted in this action restraining the defendants from committing waste on the premises, and would have been so even if their rights in the property had really been antagonistic.

APPEAL from tbe Circuit Court for Wood County. Foreclosure of a mortgage. Thomas B. Scott and Wm. O. Whorton were plaintiffs, and H. W. Webster and John H. Whorton defendants. A judgment of foreclosure was affirmed by this court on appeal therefrom. See 44 Wis., 185-197. The present appeal was taken by Webster from so much of an order of the court, subsequently made, as directed a sale of the mortgaged premises for the whole of the judgment, and denied said appellant’s motion that the Whortons be required to account for the timber cut by them on the mortgaged premises since the entry of the judgment. 1. The Whortons were mortgagees in possession. Being owners of the equity of redemption and also of half of the first mortgage, they were entitled to possession under either right. The court will refer the possession to such right as will do substantial justice. Rexv. Phillips, 1 Burr., 301; Al-derson v. Temple, 4 id., 2239. It will lean toward that right which requires the party in possession to account for profits. Brayton v. Jones, 5 "Wis., 11T, 123; Bemarest v. Berry, 16 N. J. Eq., 481; Moore v. Begraw, 5 id. (1 Halst.), 346; Ten Byelc v. Casad, 15 Iowa, 524; Anderson v. Lanterman, 27 Ohio St., 104; Green v. Bixon, 9 Wis., 534; Buptonv. Almy, 4 id., 242; Chalabre v. Cortelyou, 2 Paige, 605; Hilliard v. Allen, 4 Cush., 532; Holabird v. Burr, 17 Conn., 556. This rule is in analogy to the law of application of payments. Robinson v. Allison, 36 Ala., 525; Millilcen v. Tufts, 31 Me., 497; Livermore v. Claridge, 33 id., 428; Ciarle v. Mer-shon, 2 N. J. L., 70; Thurlow v. Qilmore, 40 Me., 378; Pieroe v. Sweet, 33 Pa. St., 151; Field v. Holland, 6 Cranch, 8; Smith v. Wood, 1 N. J. Eq., 74; Pattison v. Hull, 9 Cow., 747. Since the judgment in this case, the Whortons cannot claim to have cut timber as owners of the equity of redemption. As such owners they are defendants, and are also “ persons claiming under” the principal defendants. The judgment enjoins the defendants and all persons claiming under them from dping any act to impair the value of the premises. And the Whortons will not be heard to say that they have disobeyed this j udgment and committed contempt. Broom’s Leg. Max., 279; State v. Cleric, 25 N. J. L., 209; Rogers v. Paterson, 4 Paige, 450; Johnson v. Pinney, 1 id., 646; Hazard v. Burant, 11 R. L, 195; Winn v. Albert,2 Md. Ch., 42; Towner v. Gatewood, 8 B. Mon., 613; Taylor v. Hoplcins, 40 Ill., 442; Seottv. Carr, Riley’s Law Cas. (S. C.), 193; Gant v. Gant, 10 Humph., 464. A defendant may invoke a j udgment protecting him against a co-defendant as freely as if he were a plaintiff. R. S., sec. 2883; Ogden v. Glidden, 9 Wis., 49. 2. Suppose the Whortons were in possession as owners of the equity of redemption. When they purchased the land subject to both mortgages, they bound themselves to hold it as the primary fund for the payment of the mortgages, even though they did not assume or agree to pay them. Weber v. Zeimet, 30 Wis., 283; Sweetzer v\ Jones, 35 Yt., 317; Jumel v. Jumel, 7 Paige, 591; Hartley v. Harrison, 24 N. Y., 170; Harrison v. Wyse, 24 Conn., 1; Webb v. Meloy, 32 Wis., 319; Thompson v. Thompson, 4 Ohio St., 333; Bussell v. Allen, 10 Paige, 249; Yanderkemf v. Shelton, 11 id., 28; Greither v. Alexander, 15 Iowa, 470; Freeman v. Auld, 44 N. Y., 50. Having converted the mortgaged property itself into cash, they hold the proceeds for the same use ( Webb v. Meloy, supra), and must apply such proceeds to the satisfaction of their interest in the first mortgage. As holders of the first mortgage, they are liable to the second mortgagee for all the profits which they permitted themselves to receive as owners of the equity of redemption. Hitchcock v\ Fortier, 65 Ill., 239; Chapman v. Tanner, 1 Yern., 267; Coppring v. Cooke, id., 270; Richardson v. Wallis, 5 Allen, 78; Miller v. Lincoln, 6 Gray, 556. 3. Equity seeks to avoid a multiplicity of suits. Woodruff v. Fisher, 17 Barb., 224; Haggin v. Pede, 10 B. Mon., 210; Green v. Creighton, 23 How., 90; Garrison v. Ins. Co., 19 id., 312. If the Whortons are not compelled to account in this suit, then Webster must sue the mortgagors; and if he can collect of them, they must, in turn, sue the Whor-tons for the value of the timber cut. If Webster cannot collect of the mortgagors, he must sue the Whortons for the value of the timber. That the mortgagors are entitled to have the Whortons account for the value of the timber cut, and reduce their indebtedness on the mortgages by the amount of such value, is well settled. Ackerman v. Lyman, 20 Wis., 455; Jumel v. Jumel, 7 Paige, 591; Yanderkemp v. Shelton, 11 id., 28; Freeman v. Auld, 44 N. Y., 50; Fleming v. Collins, 2 Del. Ch., 230. 4. The mortgagee in possession must account for rents and profits in favor of the second mortgagee, as well as in favor of the owner. Webb v. Meloy, 32 Wis., 319; Moore v. Degraw, 1 ITalst., 346; Yan Burén v. Olm-stead, 5 Paige, 9; Ten Eyck v. Casad, 15 Iowa, 524; Hitchcock v. Fortier, 65 Ill., 239; Anderson v. Lanterman, 27 Ohio St., 104; Harrison v. Wyse, 24 Conn., 1. And especially for such use of the premises as takes the very property itself. Guthrie v. Kahle, 46 Pa. St., 331; Givens v. M'Gal-mont, 4 Watts, 460; Irvñn v. Davidson, 3 Ired. (N. C. Eq.), 311;- Onderdonk v. Grey, 19 N. J. Eq., 65. 5. The fact that the timber was cut after judgment, during the time allowed for redemption, does not defeat 'Webster's claim to have an account of the profits, and an application thereof to the reduction of the judgment. Chapman v. Smith, 9 Yt., 153; Huolc-man v. Astor, 9 Paige, 518; Ten Eyck v. Casad, 15 Iowa, 524; Hill v. Hewett, 35 Iowa, 563. 6. It is not necessary that mortgagee in possession should receive rents from another, to render him liable to account. Green v. Dixon, 9 Wis., 534; Green v. Weseott, 13 id., 606; Ackerman v. Lyman, 20 id., 455; Moore v. Degraw, 1 Halst., 346; Van Burén v. Olmstead, 5 Paige, 9; Vanderkemp v. Shelton, 11 id., 28, 40. 1. The timber was cut by the Whortons as owners. As mortgagees they had no light of possession, and only obtained such possession by purchase of the equity of redemption. Wood v. Trask, 7 Wis., 566. 2. On the trial and upon the former appeal it was held that, as owners of the equity of redemption, they were entitled to the possession, and that no accounting should be had. 44 Wis., 196; Du Pont v. Davis, 35 id., 638. 3. They were entitled, as owners, to the use and profits of the mortgaged premises until after foreclosure and sale, even though the premises were inadequate security for the debt. Fitchburg Gott. Manufactory Gorp. v. Mel/oen, 15 Mass., 268; Clarke v. Gurtis,A Gratt., 289; Hughes v. Edwards, 9 Wheat., 489; M. V. c& W. JR’y Co. v. H. S. Exp. Go., 81 Ill., 534. 4. Even if it were true that, by cutting the timber as owners of the equity of redemption, the Whortons would disobey the judgment, it does not follow that they cut it as mortgagees. Rut the judgment was, in this respect, for the protection of the plaintiffs only. Nothing was due on the mortgage to Webster. 5. The Whortons, as owners, succeeded to all tbe rights of the mortgagors, including the right reserved in the first mortgage to cut timber not exceeding three millions per year, and the right reserved in the second mortgage to cut timber provided one thousand feet were left standing for every dollar unpaid. These reservations were reasonable, and the rights will be protected. The timber cut in the exercise .of such rights belongs to the Whor-tons as grantees of the mortgagors. Smith v. Moore, 11 N. H., 55^ There is no allegation that the limits of these rights have been transgressed. 6. Nothing being due on the second mortgage until more than a year after the judgment, such judgment could not have affected the agreement and reservation contained in that mortgage, nor, as between Webster and the Whortons, have forbidden the cutting of timber under such agreement. Webster could not have maintained an action to enjoin the cutting under that agreement. How, then, can he obtain, in this action on the first mortgage, relief to which he would not be entitled in an action on his own mortgage? 7. That Webster will lose his debt unless the Whortons are compelled to account, is no ground for holding them to such account. The security, without-the wrongful act of any ■one, has proved insufficient to pay his mortgage. But there is no promise, express or implied, on the part of the Whortons, to pay it. 41 "Wis., 193. 8. As the Whortons owned only an undivided one-half of the first mortgage, and the whole of the equity of redemption in the lands, their possession does not constitute them mortgagees in possession. Davenport v. Turpin, 41 Cal., 100. 9. No accounting can be had in this proceeding. The answer does not ask for any such relief. The affidavits fail to show when the timber was cut. If cut before anything was due on the second mortgage, no accounting could, in any view of the case, be had. It is not shown that the cutting was done on the premises covered by the se'cond mortgage. Plaintiff Scott cannot be compelled, to await the settlement of equities between Webster and the Whortons before be is allowed to collect his part of the judgment. argued, that the provision in the first mortgage that the mortgagors may cut not to exceed three millions per year, must be construed with the provision that they shall pay $5,000 and interest per year in reduction of the mortgage.' The two provisions go hand in hand, the one reducing the debt as fast as the other reduced the security. Gilliom v. Dennis, 4 Ind., 416; Grant v. Johnson, 5 PT. Y., 247; Dean v. Atwater, 4 Conn., S; Brown v. Gammon, 14 Me., 276; 2 Parsons on Con., 528-9. The provision in the second mortgage that timber may be cut on the lands described therein provided one thousand feet be left for every dollar unpaid, relates to the fund to be preserved to pay Webster alone, and does not affect his right to protect the fund pledged to pay the prior mortgage. Both mortgages are to be construed together, and the second is protected by the provisions of the first, since they must both be paid from the same fund. Horabaeher v. Lee, 16 Mich., 169; Hunt v. Livermore, 5 Pick., 395; Adams v. Hill, 16 Me., 215. It is immaterial whether the cutting was or was not on the land covered by the second mortgage. When one party has a first lien on two funds for his security, and another has a second lien on only one, the second lienor has the right to have the fund on which he has no lien, applied to the reduction of the first claim. Deuster v. MeCamxis, 14 Wis., 307; Straight v. Harris, id., 509; Seheyvers v. Teller, 9 Paige, 173, Wise v. Shepherd, 13 Ill., 41; Lngalls v. Morgan, 10 PT. Y., 178; Applegate v. Mason, 13 Ind., 75; Sibley v. Balter, 23 Mich., 312; Wolf v. Smith, 36 Iowa, 454. Hor is it material that the second mortgage was not due at the date of the judgment. It is as necessary to protect a' fund for the payment of a mortgage to become due as of a mortgage past due. The right to an accounting depends on the situation at the time of hearing. Half of the second mortgage was then due.