Grether v. Nick

• Decision Date: 11 October 1927
• Citation: 193 Wis. 503,215 N.W. 571
• Parties: GRETHER v. NICK ET AL.
• Court: Wisconsin Supreme Court

193 Wis. 503

215 N.W. 571

GRETHER

v.NICK ET AL.

Supreme Court of Wisconsin.

Oct. 11, 1927.

Appeal from Circuit Court, Milwaukee County; Otto H. Breidenbach, Judge.

On rehearing. Former opinion adhered to.

For former opinion, see 213 N. W. 304.--[By Editorial Staff.]Wheeler, Witte & Bark, of Milwaukee, for appellant.

Nohl, Nohl & Petrie, of Milwaukee, for respondent Grether.

Miller, Mack & Fairchild, of Milwaukee, for respondent receiver.

OWEN, J.

This case was decided on the assumption that the mortgage contained no clause pledging rents and profits. Upon motion for rehearing, our attention was called to the fact that the mortgage did pledge “all of the rents, issues, and profits which may arise or to be had therefrom.” Our erroneous assumption arose from a misunderstanding that the absence of such clause was conceded upon the oral argument. It being apparent that what was said in the opinion was not in response to the true facts, a rehearing was granted, and counsel were requested to thoroughly brief the question of the effect of a clause pledging rents and profits in an ordinary real estate mortgage. Our labors have been greatly facilitated by the able briefs presented on rehearing.

[1][2] It seems to be universally recognized that the right to rents and profits follows the legal title and the right of possession. At common law, and in some jurisdictions in this country, a mortgage operates to convey the legal title to the mortgagee with the right of possession upon breach of the covenants of the mortgage. Originally this right of possession on the part of the mortgagee was enforced by ejectment, but this rule was changed by statute in England so that a mortgagee might have a receiver appointed whenever a condition of the mortgage was breached for some definite period of time. Schreiber v. Carey, 48 Wis. 208, 4 N. W. 124. Even at common law the mortgagee was not entitled to collect the rents and profits until possession was taken, and his right to collect the rents and profits followed as a matter of course from the possession, whether or not rents and profits were pledged by the mortgage, but the rents and profits were to be applied in the discharge of the debt, and the mortgagee was required to account to the mortgagor for the same.

[3][4][5][6] In jurisdictions where the mortgagor retains the legal title and right of possession, as here, it follows that the right to collect rents and profits remains in the mortgagor until he is deprived of possession in the manner provided by law, and this notwithstanding the fact that the mortgage may pledge the rents and profits. This must be true, unless the clause pledging rents and profits should be construed as sufficient to pass the legal title and right of possession to the mortgagee. This has never been held in any jurisdiction, and should not be, as it would afford an easy way of evading the policy of our Statutes which makes a mortgage a mere lien upon land, leaving the legal title and right of possession in the mortgagor. It is plain in this jurisdiction that, under a mortgage pledging rents and profits, the benefit of such rents and profits does not inure to the mortgagee until possession has passed from the mortgagor. Under the principles established here, the mortgagor may not be deprived of possession except under circumstances discussed in the former opinion. In order to accomplish such dispossession the mortgagee must invoke the aid of a court of equity. Upon the application of the mortgagee, the court may appoint a receiver to take possession of the premises to prevent waste and to collect rents and profits.

It is generally stated in the cases that the receiver may be empowered to collect such rents and profits as accrue after his appointment. Notwithstanding the fact that it must frequently happen that the...