Carpenter & Carpenter, Inc. v. Kingham

• Decision Date: 21 January 1941
• Docket Number: 2172
• Citation: 110 P.2d 824,56 Wyo. 314
• Parties: CARPENTER & CARPENTER, INC. v. KINGHAM
• Court: Wyoming Supreme Court

110 P.2d 824

56 Wyo. 314

CARPENTER & CARPENTER, INC. v. KINGHAM

No. 2172

Supreme Court of Wyoming

January 21, 1941

56 Wyo. 314 at 350.

Original Opinion of January 21, 1941, Reported at: 56 Wyo. 314.

Rehearing denied.

BLUME Justice. RINER, Ch. J., and KIMBALL, J., concur.

OPINION

ON PETITION FOR REHEARING

BLUME Justice.

A petition for rehearing has been filed herein by plaintiff. We held in the original opinion, which appears in 109 P.2d 463 that a mortgagee holding an inferior lien has the right to purchase a superior lien, or purchase the property under such superior lien, without becoming a trustee for the benefit of the mortgagor. To the same effect as the cases cited in the original opinion are the following Ten Eyck v. Craig, 62 N.Y. 406; Cornell v. Woodruff, 77 N.Y. 203; Williams v. Townsend, 31 N.Y. 411; Woodlee v. Burch, 43 Mo. 231, 234; Walthall's Executors v. Rives, Battle & Co., 34 Ala. 91, 97; Harrison v. Roberts, 6 Fla. 711; Shaw v. Youmans, 105 A.D. 329, 94 N.Y.S. 178; Darcey v. Hill, 1 Vern. 49, 23 Eng. Rep. 302; Parkman v. Hansbury, 1 Drew. & Sm. 143, 52 Eng. Rep. 332; Simmons v. Henderson, 207 Ala. 692, 93 So. 624; Jones, Mortgages (8th ed.) Sec. 881; 41 C. J. 983. Counsel for the plaintiff in their brief on rehearing argue that the rule is different, if the mortgagee has gone into possession, as was true in the case at bar, and they cite 41 C. J. 615, where it is stated that a "mortgagee in possession is generally regarded as a constructive trustee." It will be found, however, upon examination of the cases cited, that the statement must be understood in a limited sense. They have no bearing on a situation such as that before us except Ten Eyk v. Craig, supra, which will be referred to later. We did not specifically refer to the point of a mortgagee in possession in the original opinion. Counsel had argued that the defendant's indebtedness was paid off some time during 1934--in other words, that he then ceased to be a mortgagee. No theory such as advanced now was mentioned in their former argument, and we did not think it necessary, or it did not occur to us that it was necessary, to consider that phase of the case. A mortgagee whose indebtedness has been paid ceases to be a mortgagee, and hence, if he has possession he ceases, in a sense at least, to be a mortgagee in possession. However, we find it stated in Hubbell v. Moulson, 53 N.Y. 225, 229, that "in the absence of an agreement between the parties there is no legal satisfaction of the mortgage by the receipts of rents and profits by a mortgagee in possession to an amount sufficient to satisfy it, and his character as mortgagee in possession is not divested until they are applied by the judgment of the court in satisfaction of the mortgage." We need not decide whether that is a correct statement, and shall assume that for some purposes at least the defendant in this case may be considered as still a mortgagee in possession, though his mortgage was paid, and shall inquire whether or not the fact of possession makes any difference in the conclusions which should be reached herein. We think not. Parties may, of course, by contract enlarge the duties of a mortgagee who goes into possession. But that is not the situation herein. It is difficult to see that if a mortgagee who is not in possession may purchase a prior lien, or the property under a sale thereunder, why he should be deprived of these rights by the mere fact of going into possession. We can not think of any consideration, legal or equitable, which would require the application of a different rule of law. A mortgagee who goes into possession does so not for the purpose of entering into any fiduciary relation with the mortgagor, but for the purpose of collecting his debt. Their interests are antagonistic; they clash. Of course, when the mortgagee takes possession, he takes upon himself certain responsibilities which he would not have otherwise--e.g., not to commit waste, to collect the rents--and so, in a limited sense, may be considered a trustee, but no good reason is perceived why he should be considered as such for the purpose of depriving him of the rights above mentioned which he had previously. The exact point was discussed and considered at great length in the case of Ten Eyck v. Craig, 62 N.Y. 406, where the court held contrary to the contention of plaintiff herein. The court cites Chalmondely v. Lord Clinton, 2 Jac. & W. 183, 37 Eng. Rep. 527, 593, and Kirkwood v. Thompson, 2 D. G. J. & S. 613, 46 Eng. Rep. 513. In the first of these cases the court stated that "no trust is expressed in the contract; it is only raised by implication in subordination to the main purpose of it; and after that is fully satisfied its primary character is not fiduciary. * * * The mortgagee when he takes possession is not acting as a trustee, but independently and adversely for his own benefit." In the latter of these cases the court stated that taking possession would make no difference in the relation of the parties; that "being in possession could only make a difference if it created an obligation between the mortgagee and mortgagor, which would not have existed if he had not been in possession. Nothing of this sort is suggested; no...