Charles v. Dunbar

Dewey, J.

The plaintiff insists that the defendant ought tc account with him for the rents and profits of the mortgaged premises, after December 3d 1836.

It appears by the facts stated by the auditor, that no rents or profits came to the hands of the defendant; the actual occupation having continued in the mortgagor.

The alleged liability of the mortgagee to account for the rents and profits arises, therefore, not from the fact that he has received them, but is supposed necessarily to result from his relation to the premises, after the formal possession taken by him, and the record, in the registry of deeds, of his entry for breach of condition. The position assumed is, that, the mortgagee, by taking such measures, ipso facto makes himself accountable for reasonable rents and profits. Is this a correct view of the matter ?

The' language of the Rev. Sts. c. 107, requiring the mort gagee to account for rents and profits, would seem to embrace cases only of actual possession ; and in the case of a mortgagor permitted by the mortgagee to continue in possession and to take the profits, after a formal entry by the mortgagee, equity would clearly forbid that the mortgagee should be held to account for them with the mortgagor. Does the law require a different rule when applied to the case of one holding as a second mortgagee, by a conveyance from the mortgagor ? Where one, who has made two mortgages of his estate, is left in possession by both the first and second mortgagee, and takes the *502rents and profits without disturbance from the second mortgagee, clearly so long as no formal entry for condition broken is made, the first mortgagee is not liable to account for rents and profits, m favor of the second mortgagee. This being so, we think a mere formal entry, avowedly to foreclose, but in fact leaving the mortgagor in possession and enjoying the profits, will not, of itself, charge the first mortgagee to account with the second. The second mortgagee may take the possession, as against that of the mortgagor, if the latter holds in his own right, and thus exclude him and take the rents and profits to his own use. If such second mortgagee should be prevented from making such entry, by the previous entry and actual occupation of the first mortgagee, or by his claiming to exclude the second mortgagee by virtue of the superior title conferred by the first mortgage and the occupation under it; then he would be held to account, in favor of the second mortgagee, for the rents and profits. But it does not appear that the second mortgagee, in the present case, made any attempt to enter on his own account.

A second mortgagee has also full power, by paying off the first mortgage and taking the entire control of the mortgaged premises, as against the mortgagor, to protect himself- against any apprehended injury from the neglect of the first mortgagee to take and continue actual possession, so as to render the income of the premises available towards the discharge of the debt secured by the first mortgage. This would effectually secure him against any collusion between the first mortgagee and the mortgagor.

The only difficulty, if any, that exists in this case, arises upon the question, whether the formal possession taken, and the record thereof made in the registry of deeds, estop the defendant to show that he was not in the actual possession. If the defendant is estopped, it must be either upon the ground that the possession, after such entry and record, must necessarily, in legal contemplation, continue in the mortgagee until foreclosure is perfected, or the mortgage debt is paid ; or on the ground that the defendant has, by his own act, misled the plaintiff, (the second mortgagee) and induced him to lie by and forbear to *503make an entry on his own account, or to take any other measures to secure to himself the benefit of an appropriation of the rents and profits towards the payment of the mortgages.

It is clear that the first of these grounds cannot be maintained. Possession may be abandoned by a mortgagee, either by his own voluntary act of an unequivocal character, or by an arrangement between him and the party holding the equity of redemption. What would be the effect of such relinquishment of possession upon the foreclosure, it is not necessary now to consider.

The other ground presents, perhaps, greater difficulty, and the argument is not without its weight. The liability of the mortgagee to account for rents and profits arises under the Rev. Sts* c. 107, § 15 : “ If the mortgagee, or any person under him, has had possession of the premises, he shall account for the rents and profits thereof.” The party is not charged by reason of his formal entry, &c. but on account of his actual possession. And although the formal entry is in itself a strong circumstance tending to show that the party was holding a continued possession under such entry; yet as such entry might well have been made, and the possession have been abandoned without fraud, we think that a mortgagee cannot, by reason of such entry, be treated as one who by his conduct induced another to part with his property, or to forego the enforcement of his rights ; and that it was the duty of the second mortgagee, if he would charge the first with the rents and profits in such a case, to take further steps, by attempting to enter under his own mortgage, or by tendering the debt due to the first mortgagee. If, upon such attempt to enter, he should be prevented by the first mortgagee, or any person claiming under him, then clearly, as before mentioned, the first mortgagee would be chargeable with the rents and profits : But without some assertion or manifestation of having the actual possession, and exercising his rights, to the exclusion of others wishing to take possession, we think he is not, by the mere force of the entry and the record thereof, to be taken to be in the actual possession and estopped from showing that, in fact, he permitted the mortgagor to continue in the possession and improvement of the mortgaged premises, taking the profits thereof wholly to himself.

*504Nor do we think that the purpose of the formal entry, namely, to aid the mortgagor in withholding from the attachment of other creditors the produce of the farm, affects the present question. If the possession was not in fact in the mortgagee, the creditors might have made valid attachments of the produce of the farm. They did not interfere, however; and we think the purpose of the first mortgagee’s entry does not enlarge "the rights of the second mortgagee as against the first, nor authorize the second to charge the first with the use and income of the premises during the time that the mortgagor actually retained the possession.