Edwards v. Wray

• Decision Date: 01 May 1882
• Citation: 12 F. 42
• Parties: EDWARDS, Trustee, v. WRAY and others.
• Court: United States Circuit Court, District of Indiana

12 F. 42

EDWARDS, Trustee, v. WRAY and others.

United States Circuit Court, D. Indiana.

May, 1882

Baker Hord & Hendricks, for complainant.

Dailey & Pickerill, for defendant T. W. Hill.

GRESHAM D.J.

This is a suit to foreclose a mortgage. In addition to the usual averments the complainant alleges that in September, 1879 and some time before the filing of his bill, by an agreement between the mortgagor and himself the possession of the mortgaged premises was turned over to him and has been ever since retained by him. He sets out an itemized statement of the rents collected which have been applied towards the payment of the interest on his mortgage debt. His right to so apply a part of these rents is denied by the defendant T Wiley Hill, who, in his answer, claims that he is entitled to all the rents that have accrued since the third day of July 1880, at which time he bought the mortgaged premises on an execution sale made on a judgment junior to complainant's mortgage. This claim is based upon the provisions of section 1 of an act which went into effect March 31, 1879, relative to the redemption of real estate sold on execution or decree of sale. That section is as follows:

'Section 1. Be it enacted by the general assembly of the state of Indiana, that, whenever real estate or any interest therein shall be sold on execution, the sheriff or other officer making the sale shall issue to the purchaser a certificate of purchase. The certificate shall entitle the purchaser, his heirs, or assigns to a deed of conveyance, to be executed by the proper officer, at the expiration of the time allowed for redemption, unless the property sold shall have been previously redeemed. The owner of the property shall be entitled to the possession thereof during the time the same is subject to redemption; but if the same is not redeemed, he shall be liable to the purchaser, his heirs, or assigns for the reasonable rents, profits, or use thereof; provided, if such owner is not the actual occupant of the premises sold, but the same be occupied by a tenant or other person, such tenant or other person shall be liable to the purchaser for the reasonable rent or use and occupation of the premises, and may be treated in all respects as the tenant of the purchaser, who shall, in case the property is redeemed, allow, as a payment upon his judgment, the amount of the rent by him collected.'

Hill insists that under this section from the time he obtained his certificate of purchase the complainant became liable to him as the occupant of the property. In other words, his position is that the agreement between the mortgagor and the complainant, although made in good faith, must give way to the provisions of the statute.

The question, then, is, does the section of the statute quoted apply to the complainant's possession? It is admitted that the complainant is a mortgagee in possession with the consent of the mortgagor, and that aside from the statute under consideration he has a right to hold that possession and collect the rents on the property until his mortgage is paid. This is the rule at common law, even where the lien theory of mortgages obtains. Russell v. Ely, 2 Black, 575; Witherell v. Wiberg, 4 Sawy. 232; Phyffe v. Riley, 15 Wend. 248; Hubbell v. Moulson, 54 N.Y. 225; Hennesy v. Farrell, 20 Wis. 42; Dutton v. Warschauer, 21 Cal. 609; Roberts v. Sutherlin, 4 Or. 219.

In this state there is a statutory provision that 'unless a mortgage specifically provide that the mortgagee shall have possession of the mortgaged premises he shall not be entitled to the same. ' The mortgage in suit did not contain such a provision. Notwithstanding this fact, the parties to this mortgage could enter into a parol agreement that the mortgagee should take possession of the mortgaged premises and could carry out such an agreement by putting the mortgagee in possession. Parker v. Hubble, 75 Ind. 580. This was in fact done in this case, and when this parol agreement was so executed by the surrender of possession on the part of the mortgagor the contract between the parties to...