Cullen v. Minnesota Loan And Trust Company
| Decision Date | 08 January 1895 |
| Docket Number | 8986,9009 |
| Citation | 61 N.W. 818,60 Minn. 6 |
| Parties | MATTHEW CULLEN v. MINNESOTA LOAN AND TRUST COMPANY, Trustee, Intervenor |
| Court | Minnesota Supreme Court |
Two actions for rent in the district court for Ramsey county brought by Cullen against Foot and others. The facts are stated in the opinion. In the first action the defendants paid into court the amount claimed in the complaint, and the trust company, as trustee, was thereupon permitted to intervene as claimant. This action was tried before Kelly J., without a jury, and judgment was entered in favor of the plaintiff and against the intervenor. In the second action the same company intervened, and both plaintiff and defendants answered its complaint in intervention. A motion of the plaintiff for judgment upon the pleadings against the defendants, and also against the intervenor, was granted by the same judge, and judgment was entered accordingly. From both judgments the intervenor appealed. Reversed.
W. J Hahn, J. M. Martin and Chas. N. Bell, for appellant.
The power of attorney given by Ryan was intended to place the income in the hands of the trustee to discharge any fixed charges remaining in default for 60 days. See American L. & T. Co. v. Billings, 58 Minn. 187, 59 N.W. 998. It is competent for the parties to provide for payment of rents and profits to the mortgagee while the mortgagor remains in possession. Freedman's Saving Co. v. Shepherd, 127 U.S. 502; Edwards v. Woodbury, 3 F. 14; Galveston R. R. v. Cowdrey, 11 Wall. 483. Cullen having actual notice, cannot repudiate Ryan's agreement. Childs v. Clark, 3 Barb. Ch. 58. The cases cited by respondent are all cases of railroad mortgages, and are distinguishable on the ground that railroads require operation to produce income; and of necessity it has been held that in such cases the party operating is entitled to the income notwithstanding that it has been pledged.
C. D. & Thos. D. O'Brien, for respondent.
The trust deed was notice to respondent only of an incumbrance for which the two lots in question might be charged in their proportion in a foreclosure proceeding, after appellant had exhausted all other securities. Johnson v. Williams, 4 Minn. 183 (260). The power of attorney was not entitled to record, and was not notice. Even as between the parties the trustee had no right to the rents, but could merely claim them under the mortgage. Spencer v. Levering, 8 Minn. 410 (461). The owner of the fee is entitled to possession and to the rents and profits even after sale up to expiration of the equity of redemption. Pioneer Savings Co. v. Farnham, 50 Minn. 315; U. S. Trust Co. v Wabash Ry., 150 U.S. 287; Rice v. St. Paul & P. R. Co., 24 Minn. 464; De Graff v. Thompson, 24 Minn. 452.
On December 1, 1887, Dennis Ryan was the owner of the 10 city lots on which the Ryan Hotel in St. Paul is situate, and also of two other lots, known as "Lots 11 and 12 in Block 28," which are a separate tract some distance from the hotel property. On that day he made and signed 350 bonds for $ 1,000 each, and, to secure the payment of the same, then made a trust deed or mortgage of all of said property to the intervenor trust company, as trustee. By the terms of this mortgage Ryan also agreed to keep the buildings on the premises insured, and to pay all taxes and assessments on the property when they shall come due and payable, and further agreed to give the intervenor, as trustee, a power of attorney of the same date as the mortgage authorizing it, "in case of default for 60 days in any of the conditions of this mortgage, to demand, receive, and receipt for at any time, and as often as such default shall occur, any rents due or to become due from any tenant of said premises, or any part of the same," and apply the same in payment of such sum as was or may then be due under the terms of such bonds and mortgage. Such power of attorney was then duly made to the trust company, and it and the mortgage were duly recorded on December 31, 1887; and thereupon Ryan duly issued, sold, and negotiated all of said bonds for the full amount thereof to divers persons, and all of the same are still outstanding and unpaid. On August 22, 1889, Ryan conveyed said lots 11 and 12 to the plaintiff, who, on May 15, 1890, rented the same to the defendants Foot, Schultz & Co., for the term of five years from that date, at a rental of $ 5,500 for the first year and $ 5,750 for each of the remaining four years, payable in monthly installments in advance. On October 16, 1893, the trust company demanded of Foot, Schultz & Co. the rent thereafter to become due under their said lease, and thereupon they refused to pay the rent to either plaintiff or the trust company; and plaintiff in the following December brought the first action against Foot, Schultz & Co. for two months' rent, and they caused the trust company to be substituted as defendant, and paid the rent due into court. The plaintiff brought the second action against Foot, Schultz & Co. for subsequent rent, and the trust company intervened. Both actions were decided against the trust company and in favor of plaintiff, -- the first after a trial, and the second on the pleadings, -- and it appeals to this court from the judgments entered thereon. Both appeals involve the same question and were argued together.
It appears from the findings that on October 16, 1893, when such demand was made, there was a default in the payment of taxes and assessments on the hotel property, and of interest on the bonds, and such default has ever since continued, and, at the time the trust company answered in the first action, there was delinquent and unpaid over $ 40,000 of such taxes and assessments on such hotel property; that the trust company was then collecting the rents of that property, but there was not sufficient of the same to pay the taxes and insurance on that property, and the interest on the bonds. There has never been any default in the payment of the taxes or assessments on said lots 11 and 12. We are of the opinion that this power of attorney should be considered, for all purposes, as a part of the mortgage, and of the same force and effect as if inserted in it. But we are of the opinion that, under the statute of this state, the power of attorney cannot be given the effect of pledging the rents in question for the payment of either the interest or principal of these bonds. G. S 1894, § 5861, provides: "A mortgage of real property is not to be deemed a conveyance, so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure." It is well settled that the effect of this short section is to change the nature of a mortgage, so that it is but a mere lien and not a conveyance of the legal title. Yet this...
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