p. 401S. J. Meld, for appellant.
1st. The equity of redemption is inseparable from a mortgage, and cannot be disconnected, even by agreement of parties; 2 Story’s Eq. Jur. sec. 1019; 4 Kent’s Com. 159. 191; Colkins v. Colkins, 3 Barb. N. Y. Rep. 310; Holdings v. Gillespie, 2 Johns. Ch. 34 .2nd. Defendant Rowe sets up to defeat plaintiff’s right of redemption : 1st. A sale under the power contained in the mortgage. 2nd. A part performance of a parol contract with Ellet for the mortgaged property. As to the first, the condition pre-, cedent to the exercise of the power, was never complied with. Second, No sale in fact ever took place. Third, Had there been a sale under the power, the mortgagees could not have been interested directly or indirectly, in the purchase. The power in the mortgage authorises a private, or public sale, “after ten days notice to the party of the first part, of such intended sale.” This power must be strictly construed; the notice is a condition precedent to the exercise of the power. Notice of a private sale, must contain the name of the individual purchaser, the price, and day of sale, to enable the party to pay the mortgage in the mean time, if dissatisfied. Notice of public sale, must state time and place, that the party may see to it, and prevent a sacrifice of his property; the object in both cases is to ensure good faith and prevent fraud in the sale; 1 Kent’s Com. 330, 331; Hawkins v. Kemp, 3 East, 410; Doe v. Peach, 2 Maule & Selw. 576; Wright v. Barlow, Ib. 572; Wright v. Wakefield, 17 Ves. 434; Sugden on Powers, 205, 206. 220. 229, 230. 252. No notice was served on Field, the grantor of the power. The notice to Ellet, does not state whether the property will be sold at private sale, or public auction. It states no person, time or place. “ On the 1st day of February, or as soon thereafter as convenient,” is not very definite. It was served on Ellet, January 17th, 1851, but not on Benham, until April 16th.No sale ever in fact took place under the power. The power only authorises a sale for cash. It directs a disposition of the proceeds, after payment of the mortgage. The conveyances were executed solely to make title, and no sale was ever made nor money consideration passed; 4 Kent’s Com. 331. Mortgagees in possession are under like obligations to account for rents,
p. 403the money; 2 Story’s Eq. Jur. sec. 760, and authorities cited. Our statute does not “ abridge,” neither does it “ enlarge,” the powers of the Courts of Equity, to decree a specific performance of contracts, in cases of part performance; 2 Story’s Eq. Jur. 756, 7, 8. 760. 1, 2. 5 and 6. Defendants have always treated the mortgage as subsisting. The conveyance to Rowe of April 28th, so recites it, and it is under this he holds; and this was executed more than two months after the alleged part performance. As late as May 30th, he published a notice in the Marysville Herald and in the streets, that the sale would be made to “ satisfy in part, an amount due me by said Field, on his note and mortgage;” and in June he sells under the mortgage; 3 Barb. N. Y. Rep. 308, 9..If, then, no title passed to Rowe under the conveyance from Goodwin and Ford, nor on the ground of part performance, &c., he still holds as mortgagee; and plaintiffs seek to redeem the property by paying the debt, whatever it may be.The Court erred in setting aside the report of the referees; because the exceptions were not taken in the progress of the trial, but were drawn up and filed seventeen days after the report had been filed; Tyson v. Wells and Skinner; See Practice Act, sec. 188. But the ground on which it was set aside, is not taken in the exceptions, to wit, that the amount, if not collected by Rowe, is not stated in round numbers, but can only be ascertained from the report by calculation. The reference was made upon consent.Rowe appealed before the referees, and examined witnesses: in his motion to set it aside, he did not pretend it was not by consent. The objection is too late; 10 Johns. Rep. 486 ; 10 Wend. 560 ; 6 Hill, 17 ; 3 Ib. 221.The Court erred in ordering the cause to be tried at a continued general term in May. And erred in compelling the plaintiff to take the negative on the trial, because the issues call for proof on the part of the plaintiff in the first instance. And the plaintiffs alleging payment to defendants necessarily had the affirmative; and would have had if the action had been brought by Rowe to enforce the debt from plaintiff.
The Court erred in excluding evidence of the amount of rents Rowe might have received from the mortgaged property, from
p. 4045th April to October 1st, 1851, with ordinary diligence and care. The mortgagee in taking possession assumes ownership, and is bound to manage it as a prudent owner would. Bell v. Mayor of N. Y. 10 Paige, 73; Van Burén v. Olmstead, 5 Paige, 1; Rogers v. Rogers, 1 Paige, 188. And erred in substituting the words “the county” for the word “Marysville” in the' first instruction asked by plaintiff; also in refusing the 3d instruction and to the qualifications attached thereto by the Court. Gould v. Tancred, 2 Atk. 534; Buckman v. Astor, 9 Paige, 517. In refusing the 4th instruction, and in giving the charge it did to the 9th instruction asked by defendant. The refusal and charge led the jury to disregard the item of county warrants, under the impression that the lot would be restored to Field. The sale to House could not be set aside without his being made a party to the record. And in refusing the 5th instruction. Hungerford v. Clay, 9 Mod. 1; 1 Hilliard on Real Prop. 393. In refusing the 6th instruction, and in giving the 4th instruction asked by defendant. 4 Kent’s Com. 166; Bonethon v. Hackman, 1 Vern. 316; French v. Bacon, 2 Atk. 120; Godfrey v. Watson, 3 Atk. 517; Longstaff v. Fenwick, 10 Yes. 405; Clark v. Robbins, 6 Dana’s Ken. Rep. 350; Moor v. Cable, 1 Johns. Chan. 388. And in refusing the 8th instruction. The payment of $2000 was made by Ford and Goodwin; Rowe’s proportion was paid by relinquishing to them half of Field’s house. The payment must therefore enure to Field’s and not to Rowe’s benefit.
The Court erred in giving the 1st instruction asked by defendant. Rowe was called on repeatedly for an account of rents, &c., which he refused, insisting on a quit claim deed for the property as a condition—on receiving which, he expressed a willingness to relinquish all personal liability of Field upon the notes. The suit is brought to compel a recognition of plaintiff’s rights, and an account, &c., which Rowe denies and refuses, and sets up his fraudulent acts, which he seeks to sustain, in order to confiscate plaintiff’s rights, &c. It would therefore be inequitable to allow him interest beyond the date of the commencement of the suit. The plaintiff could tender no amount, because Rowe denied that there was any debt, and plaintiff could not ascertain any amount. Defendant cannot, therefore, insist on the enormous rate of in
p. 405terest. To allow him interest for want of a tender would be to allow him to gain by his own wrong.The Court erred in the form of the judgment. It does not cover the issues. It does not set aside the conveyances of Ford and Goodwin, or of Rowe. It does not decree a cancellation of the mortgages and notes; nor hold the mortgages as subsisting, or the title of the property in the plaintiff; or decree restitution upon payment of the balance; but simply orders a sale of the property to pay the balance. And in allowing interest upon interest at the rate of ten per cent, a month—and in not allowing costs to plaintiff, there was error.W. S. Martin, for respondent.
The District Court set aside the sale of the mortgaged property from Goodwin and Ford to Rowe, and Rowe’s re-conveyance of half of it to Goodwin and Ford. This cannot be made the subject of review by appellants, for these conveyances were held void by the Court, precisely in accordance with the prayer of plaintiff’s complaint. (See Interlocutory Decree of District Court, folio 371.)As respondents never consented to the reference, the order of Court authorizing it was void—they were never bound by it, and it was totally inoperative. Pollock v. Smith and Wilson, Sup. Ct. Cases. But if regular, respondents took these exceptions at the proper time—the grounds of exception only occurred after the trial had concluded. And viewing the report in the light of an award, or special verdict, the exceptions were filed in time. Tidd’s Pract. 442; Ib. 762; 2 Wheat. Rep. 221 . 228; Porter (Ala.) Rep. 218; 6 Smedes and Marshall’s Rep. 218; 5 Wend. Rep. 102 and 520.If the record shows an adjournment of the Court of Yuba, to hold a Court at ‘Sutter, still it also shows that the term of the Court at which this cause was tried, commenced on the very day which is certified in the record, to have been the day fixed for holding the Court in Sutter. As the time for holding the Court in Sutter county is fixed by the judge, any term commencing a week after the time so appointed must be irregular; but this should not be made the ground of vacating judgments, &c., had before the District Court in Yuba.
p. 406The respondents held the affirmative of the issues in the beginning, and it was by establishing the indebtedness of the appellants in the first place, that there was any basis of indebtedness from the respondents. The complaint of appellants commences with their indebtedness to respondents, and then sets up the other matters by way of set-off or recoupment.The District Court properly refused to permit evidence to show the amount of rents “ which might have been received” by Rowe from April 5th to October 1st, 1851, with ordinary care, &c. Because a mortgagee is not bound to exercise ordinary care and prudence in the management of mortgaged premises, and Rowe exhibited leases showing the precise amount he actually received. Coots on Mortgages, 152-3; Davy and Barker, 2 Atk. Rep. 2; 1 Yern. 45; Mad. Chan. 533 and 537.The Court properly refused plaintiff’s first instruction, because at the time this cause was tried, Marysville was not more than three years old; and it can hardly be said, that any custom had become so firmly established, as to govern the construction of contracts. But if so, still Rowe was not bound to let the premises on the most favourable terms—(see authorities last cited.) Was five months an unreasonable time to lease property?The third instruction asked by plaintiff, even with. the. qualification of the Court, was too strong against defendants. A mortgagee is not even liable for the actual value of the mortgaged premises, but only for the amount of rents and profits received by him; and he is not required to use due diligence in procuring rents, &e., for the property. The only event in which he can be charged with more is, when he is guilty of wilful default. So long as he remains passive he can be chargeable with no neglect. (See last authorities.)The effect of the qualification was nothing more nor less than to instruct the jury, to add the difference between the actual value of the property and what was received. Appellant was permitted to show what the property would have brought with due diligence. (See folio 414.) The jury could have drawn no other inference than that Rowe had rented for as much as the property was worth, as he at the time thought it his own.The Court properly refused to recognise the sale to House as
p. 407it was sold for scrip. By the ruling of the Court, this lot is still in Field, and Rowe is responsible to House for the price of it.The 5th instruction asked by plaintiff, was entirely abstract, . and could have no bearing upon the case; argued as to 1st instruction asked by defendant; Chitty Plead.; Stephen on Plead.
As to the pretended tender of appellants to stop interest, the bare declaration contained in plaintiff’s complaint upon which they urge the fact of tender, does not even approach the requisites of a legal tender. In setting up a tender to stop interest and costs, the party must prove himself ready and willing to pay, &c. A mere question as to how the accounts stood, will not be sufficient; and Field, so far from expressing himself ready to pay, &c., insisted that Rowe was in his debt. Gammon v. Stone, 1 Ves. Rep. 339; Johnson v. Batter, 4 Bibb, Ky. Rep. 97; Carley v. Varee, 17 Mass. Rep. 389 , 392; Bacon v. Coon, 1 Meade’s & Mor. Miss. Rep. 348..As to the objections to the judgment as not cancelling the mortgages, this we say the judgment operates per se. But if not, then this Court, under sect. 8 of the Practice Act, can modify it by ordering the mortgages to be cancelled, &c.delivered the opinion of the Court, in which Murray, Chief Justice, and Anderson, Justice, concurred.
Where a power of sale is contained in a mortgage, and under a sale by virtue of such power, the mortgagee becomes the purchaser, the equity of redemption still attaches to the property in favour of the mortgagor.
The Court below therefore treated this case properly as one in which the plaintiff ’a right to redeem was clear.
The errors complained of arise mainly upon the charges given and refused by the Court. The first three charges asked by the plaintiffs, were properly refused. The complainant does not charge the defendant Rowe with negligence or improper conduct in leasing the mortgaged premises. It requires him to account for the rent he actually received and no more. But even if he had been called on to answer a charge of that character, the instructions given by the Court were as favourable to the plaintiffs as the rules of law will admit.
p. 408The fourth charge was also properly refused; but the one given by the Court on the question embraced in it, was equally erroneous. The bill did not seek to set aside the sale made to House, and as Rowe had the power to sell, the sale must stand when the mortgagor does not complain of it.
As however the defendant Rowe did not affect the sale for money, but received instead an article of fluctuating value, he is clearly chargeable with the highest market value of the property sold, to be credited to the account of the plaintiff; and the Court erred in not so deciding.
The fifth instruction asked by the plaintiff, was also properly refused. It embraces a question which is entirely abstract, in reference to the facts of this case. It might arise hereafter between Field and the tenant, but can have no place in this decision.
The sixth instruction asked by the plaintiff, ought to have been given. Where a mortgagee takes possession of the mortgaged premises, his care and trouble are bestowed for the furtherance and protection of his own interests. He is not like a mere naked trustee, nor is his capacity that of an agent. He is, while in possession quasi, its owner. It is a charge which he has taken voluntarily upon himself, and for which he has no right to seek a compensation out of the mortgagor.
There is but one other error which it seems proper to notice. The Court decided that the defendants held the affirmative, and therefore gave them the opening and conclusion of the causes.
This was clearly wrong; the plaintiff, always in contemplation of law, has the affirmative, and has the right to open and conclude.
For the errors that have been pointed out, the judgment is reversed, and the cause remanded with costs.