James v. City of Worcester
| Decision Date | 31 March 1886 |
| Citation | 141 Mass. 361,5 N.E. 826 |
| Parties | JAMES v. CITY OF WORCESTER. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Rice & King, for plaintiff.
F.P Goulding, for defendant.
The defendant, under authority from the legislature, built a dam and maintained a reservoir for the purpose of supplying its inhabitants with water. This action is brought to recover for damages to the plaintiff's land by water, which escaped from the reservoir in consequence of the giving way of the dam. The land was subject to a mortgage, and the defendant settled with the mortgagee for all the damages, and received a discharge in full from him. The first question is whether the settlement by the mortgagee is a defense to this suit by the mortgagor. In general, the mortgagee of land is entitled to the damages for a permanent injury to the land impairing the value of his security. Searle v. Sawyer, 127 Mass. 491; Wilbur v. Moulton, Id. 509; Page v. Robinson, 10 Cush. 99; Cole v. Stewart, 11 Cush. 181; Gooding v. Shea, 103 Mass. 360; Byrom v. Chapin, 113 Mass. 308. The plaintiff contends that this rule only goes to the extent of recognizing the right of the mortgagee to the possession of things that have been wrongly severed from the realty and converted into personal property, as in the two cases cited above from 127 Mass. But the other cases cited show that the right of action of the mortgagor is based upon his interest in the property, and that his damages are measured by the extent of injury to the property. While the paramount right to sue for and recover the damages was in the mortgagee, yet he would hold what he recovered under the mortgage, and the mortgagor had an interest in the question of the amount to be recovered, and the parties were bound to act with due regard to his interests.
The plaintiff claims that he is not bound by the settlement between the mortgagee and the defendant because it was made under an agreement between them that the amount of damages to the land should be ascertained by arbitration, and that the mortgagee "should discharge the defendant, on the payment of two-thirds of the amount found, and that the amount paid was but two-thirds of the amount of the damages. The rule, as laid down in Byrom v. Chapin, ubi supra, is that "reasonable satisfaction, fairly made in good faith to the first mortgagee, will discharge the claim as to all other interests." The authority of the mortgagee to refuse the claim, or submit it to arbitration, or to compromise and settle it, cannot be questioned; but the plaintiff contends that the agreement to take two-thirds of the ascertained amount was not reasonable, and that the amount paid was inadequate. The court refused to rule, as requested by the plaintiff, that the payment of two-thirds of the damages found by the referees discharged the defendant only...
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