Camden Trust Company v. Handle

• Decision Date: 25 June 1942
• Docket Number: No. 211.,211.
• Citation: Camden Trust Co. v. Handle, 154 A.L.R. 602, 132 N.J.Eq. 97, 26 A.2d 865 (N.J. 1942)
• Court: New Jersey Supreme Court
• Parties: CAMDEN TRUST COMPANY, trustee for bondholders, complainant-respondent, v. MORRIS HANDLE et ux., defendants, and WARNER BROS. THEATRES, INC., defendant-appellant

26 A.2d 865

132 N.J.Eq. 97

CAMDEN TRUST CO.

v. HANDLE et al.

No. 211.

Court of Errors and Appeals of New Jersey.

June 25, 1942.

[Copyrighted material omitted.]

[Copyrighted material omitted.]

Appeal from Court of Chancery.

Suit in equity by the Camden Trust Company, trustee for bondholders, against Morris Handle and wife and Warner Brothers Theatres, Incorporated.From an adverse decree advised by Vice Chancellor Berry, 130 N.J.Eq. 125, 21 A.2d 354, the defendantWarner Brothers Theatres, Incorporated, alone appeals.

Reversed and remanded with directions.

Starr, Summerill & Lloyd, of Camden (Alfred E. Driscoll and Runyon Colie, both of Newark, of counsel), for appellant.

Waddington & Tilton, of Camden (E. C. Waddington, of Camden, of counsel), for respondent.

HEHER, Justice.

Unless it constitutes a breach, of duty arising out of contract, the unassuming grantee of mortgaged lands is not liable to the mortgagee for permissive waste, even though the mortgage security is thereby rendered insufficient.

Such liability is unknown to the common law; and in this State it has not been imposed by statute.Waste at common law "is a spoil or destruction in houses, gardens, trees or other corporeal hereditaments, to the disherison of him that hath the remainder or reversion in fee simple or fee-tail."2 Blackstone'sCom. 281.By the early common law, the writ of waste lay only against the tenants of estates created by the law, as distinguished from those which came into being through act of the owner.The law thus safeguarded the inheritance against waste at the hands of the particular tenant where it established the particular estate.In all other cases, it left the protection of the freehold to the party creating the partial estate.Originally, only tenants by the courtesy, tenants in dower and guardians in chivalry were chargeable with waste.Lessees for life or for years were not under such disability, since their estates "came in by the act of the owner, who might have provided in his demise against the doing of waste by his lessee, and if he did not it was his own negligence and default."2 Min.Inst. 299, 302;Co.Litt. 54;2 Blackstone'sCom. 282;Townshend v. Moore, 33 N.J.L. 284."Those tenants of particular estates who come in by the act of the parties are at common law liable not otherwise than upon their covenants; and if the landlord make no provision, by express agreement, against waste, he is in those cases(independently of statute) without remedy, and is left to suffer the consequences of his neglect."Minor & Wurts on Real Property, sec. 390.

Since the owner of the inheritance is dispunishable of waste, neither the owner of a defeasible fee nor a tenant in tail is accountable for waste at common law, although a tenant in tail after possibility of issue extinct may be enjoined from committing waste.Co.Litt. 54;2 Roll.Abr. 826, 828;Attorney-General v. Marlborough, 3 Madd. 498, 56 Eng.Reprint 588;Garth v. Colton, 3 Atk. 751, 26 Eng.Reprint 1231;Id., 1 Ves.Sen. 524, 546, 27 Eng.Reprint 1182, 1196;Cook v. Whaley, 1 Eq.Cas.Abr. 400, 21 Eng.Reprint 1132;2 Min.Inst. 614;2 Blackstone'sCom. 115, 116.And a tenant by elegit is not subject to a writ of waste, but may be restrained from committing waste.Scott v. Lenox, 21 Fed.Cas. page 840, No. 12,538, 2 Brock. 57;Wilds v. Layton, 1 Del.Ch. 226, 12 Am.Dec. 91.

By the statute of Marlbridge, adopted in the year 1267, the class thus liable for waste was enlarged to include tenants for life and for a term of years; and by the later statute of Gloucester, enacted in 1278, the punishment for waste was fixed at forfeiture of the thing or place wasted and treble damages.St.52 Hen. III, c. 23;St.6 Edw. I, c. 5.Tenants at will were not comprised within this statutory modification of the common law; and, while not punishable for waste eo nomine, it was early laid down that the commission of such act of destruction as would be waste if done by a tenant for life or for a term of years determines the estate of the tenant at will, "and he is then liable to an action for the waste as for a trespass," although not chargeable with permissive waste under the cited statutes, "but only by virtue of express stipulations."2 Min.Inst. 619;1 Th.Co.Litt. 644, 645, note (19); Bac.Abr.Waste (H);Gibson v. Wells, 4 Bos. &P. 290;Heme v. Bernbow, 4 Taunt. 764;Jones v. Hill, 7 Taunt. 392; Countess of Shrewbury's Case, 5 Coke 13;Townshend v. Moore, supra;Minor & Wurts on Real Property, sec. 391.

The statutes of Marlbridge and Gloucester were early construed to include permissive as well as voluntary waste.Townshend v. Moore, supra;2 Blackstone'sCom. 283;3 Id. 225.But now it seems to be the view in England that these enactments do not render tenants for life punishable for permissive waste.In re Cartwright, [1889]41 Ch.Div. 532.Therein Kay, J., declared that at "the present day it would certainly require either an Act of Parliament or a very deliberate decision of a Court of great authority to establish the law that a tenant for life is liable to a remainderman in case he should have permitted the buildings on the land to fall into a state of dilapidation."And the same has been said of tenants from year to year and for a term of years under a lease which does not contain a covenant to repair.Gibson v. Wells, supra;Heme v. Bembow, supra;Powys v. Blagrave, 41 De Gex, M. &G. 448;In re Parry, [1900]1 Ch. 160;Jones v. Hill, supra; Chitty on Pleading, 159.Yet, under the earlier view, the liability of lessees for life or for years for permissive waste "is grounded, not on the covenants or agreements in the instruments of demise, but on the statute, which subjected them to the action of waste."Townshend v. Moore, supra.

The statutes of Marlbridge and Gloucester have been incorporated into our statute law.Rev.1877, p. 1235;R.S. 1937, 2:79-1, 2:79-2, 2:79-3, N.J.S.A. 2:-79-1 to 2:79-3.They are not in terms em-bracive of a mortgagor or his grantee; nor has there been any subsequent statutory modification inclusive of this class.And, under Article X, par. 1, of the State Constitution, N.J.S.A., the common law and statute laws then in effect, not repugnant to the organic law, remained in force until they expired "by their own limitation," or were "altered or repealed by the legislature."Vide State v. Mairs, 1 N.J. L. 335, reprint page 385; Steward v. Chance,

3 N.J.L. 827, reprint page 396;Loudon v. Loudon, 114 N.J.Eq. 242, 168 A. 840, 89 A. L.R. 904;Stemmer v. Kline, 128 N.J.L. 455, 26 A.2d 489.There are particular reasons why the title to real estate and the incidents of such ownership should be governed by the common law until modified by the legislative authority.It is requisite to a well-ordered society that there be stability and certainty in the law relating to the descent and alienation of real property, the rights and duties pertaining to its ownership and use, and the remedies for injuries thereto; and this requirement is served by the direction of the Constitution that the common law and the statutes then in force should prevail until the legislative power decreed otherwise.The noninclusion of the mortgagor's estate in the last cited statutory provisions, considered in the light of the historic setting, reveals a legislative policy not to subject the mortgagor or his assigns to liability for permissive waste.

A mortgage does not vest in the mortgagee an immediate estate in the lands with the right of immediate possession, defeasible upon the payment of the mortgage money, but merely gives him a right of entry upon breach of the condition, in which event his estate has all the incidents of a common law title, including the right of possession subject to the equity of redemption, and, meanwhile, the mortgagor is deemed the owner of the lands for all purposes.The mortgage is treated as essentially a security for the debt.Sears, Roebuck & Co. v. Camp, 124 N.J.Eq. 403, 1 A.2d 425, 118 A.L.R. 762;Stewart v. Fairchild-Baldwin Co., 91 N.J.Eq. 86, 108 A. 301;Shields v. Lozear, 34 N.J.L. 496, 3 Am.St.Rep. 256.In a court of law, there is no use which "can be made of the legal estate of a mortgagee before foreclosure or entry, save the assertion and maintenance, by himself, his heirs or assigns, of a right to the possession of the land, continuing until payment of the debt."Kircher v. Schalk, 39 N.J.L. 335.See, also, Hutchins v. King, 1 Wall. 53, 17 L.Ed. 544.

Here, as the learned Vice Chancellor found [130 N.J.Eq. 125, 21 A.2d 354, 356], the defendant had not undertaken "to keep the mortgaged premises in operation as a theatre."It was common ground at the hearing that respondent's asserted right of recovery for waste could not be made to rest upon the "covenants in the mortgage."The contention was that the mortgagor's grantee, as such, "owed a duty" to the mortgagee "not to impair the security of the mortgage;" and that its "failure to repair the premises, to pay taxes thereon, and the removal of said fixtures constituted such an impairment of the * * * mortgage security as to amount to actionable waste."

Voluntary or active waste impairing the sufficiency of the security is remediable.Tate v. Field, 57 N.J.Eq. 632, 42 A. 742.Such is actionable as a positive, affirmative wrong injurious to the mortgagee's property; and it is variously held to give rise to a right of action in trespass or in case.Turrell v. Jackson, 39 N.J.L. 329;Schalk v. Kingsley, 42 N.J.L. 32;Verner v. Betz, 46 N.J.Eq. 256, 19 A. 206, 19 Am.St.Rep. 387, 7 L.R.A. 630;41 C.J. 648;Page v. Robinson, 10 Cush., Mass., 99;Thompson on Real Property, sec. 4993; Minor & Wurts on Real Property, sec. 395, 396.It is generally recognized that the primary distinction between waste and trespass is that in the former case the injury is done by one rightfully in possession.It would seem that there cannot be waste unless there is privity of estate or title.Yet see...