Moshier v. Norton

• Decision Date: 30 September 1881
• Citation: 100 Ill. 63,1881 WL 10596
• Parties: TIMOTHY MOSHIERv.DAVID NORTON et al.
• Court: Illinois Supreme Court

100 Ill. 63

1881 WL 10596 (Ill.)

TIMOTHY MOSHIER

v.DAVID NORTON et al.

Supreme Court of Illinois.

Filed at Ottawa May 14, 1881.Rehearing denied September Term, 1881.

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the Second District;--heard in that court on appeal from the Circuit Court of Stark county; the Hon. DAVID MCCULLOUGH, Judge, presiding.

This was a bill in chancery, filed September 6, 1866, by Timothy Moshier, against David Norton and others, to foreclose a mortgage of certain lands in Henry county, executed by the latter to the former on November 4, 1857, to secure the payment of a promissory note of the same date made by Norton to Moshier, for $6000, payable two years after January 1, 1858, with interest payable annually, at the rate of 10 per cent per annum. Norton had given a prior mortgage on the premises for $1000, at the same rate of interest, to one Miles, which the latter foreclosed by scire facias, and on August 4, 1866, Moshier redeemed therefrom by payment of the sum of $2782.50, and in his bill sought to recover likewise this redemption money, with 10 per cent interest thereon. In March, 1862, complainant took possession of the mortgaged premises, and has remained in possession ever since. The defendants answered, setting up usury in the $6000 mortgage, and that complainant had received his pay for the moneys due him from the rents and profits of the property.

The circuit court found there to be usury in the note and mortgage, and on August 4, 1875, entered a decree for $30.48 in favor of complainant. From this decree an appeal was taken to this court, which reversed the decree of the circuit court, finding that the note and mortgage were free from usury, and also allowing 10 per cent interest upon the redemption money paid to redeem from the Miles mortgage, the circuit court having allowed but 6 per cent. ( Moshier v. Norton et al. 83 Ill. 519.) After the cause was remanded to the circuit court of Henry county, the venue was changed to the circuit court of Stark county. The answer was amended, setting up more specifically the defence of usury, and some further testimony was taken. The latter court, at the March term, 1878, referred the cause to the master, with directions to report upon certain specified points, among which were, the reasonable rental value of the land, the value of the crops raised when the complainant had occupied the land, and when he had rented it what had been received, and the value of the landlord's share of the crops raised. The master made report, to which exceptions were taken by the complainant, and overruled, and at the March term, 1880, the cause coming on to be heard, the court found the note and mortgage to be free from usury, and after other findings, “the court further finds that complainant leased the said land to one Elmore, during 1862; that in 1863 he put said premises into the possession of his son, with the intention of giving him the rents and profits; that in 1864 complainant farmed the same himself, under the supervision of hired help, and that from 1865 to 1879, inclusive, complainant leased the same to one Osgood for a share of the products; but the court finds it impossible, for want of proper accounts and the insufficiency of the evidence, to ascertain the actual products of said land from year to year, or the value thereof to be charged to the complainant, in an accounting between the complainant and defendants. The court further finds, that in addition to the rents specified in the master's report, complainant has received from the crops of 1878 the sum of $983.15, and from the crops of 1879 the sum of $1409.40, and no more; but the court can not, from the evidence, find the amount of the actual products of said land, or the value thereof, for these years; wherefore it is considered by the court that said complainant ought to account for the reasonable rental value of said lands from the first day of March, 1862, to the first day of March, 1880. The court finds that there are in said mortgaged premises 489 acres of tillable land, and that the reasonable rental value thereof, in cash or grain rent, taken one year with another, is, for the years 1862 and 1863, $1 per acre; for the years 1864 to 1867, inclusive, $3 per acre, and for the years 1868 to 1879, inclusive, $3.50 per acre.”

There was a further reference to the master to state the account on this basis. The master reported, that in accordance with the rule prescribed by the court for making the computation, the rents of the premises had overpaid the complainant his whole claims against Norton, principal, interest and taxes, the sum of $2111.62, which the master reported was due from the complainant. The court, after overruling complainant's exceptions to the report, approved the same, found that complainant had received of rents $2111.62 more than his mortgage debt and all disbursements, and dismissed the bill. On appeal to the Appellate Court for the Second District the decree was affirmed, and complainant appeals again to this court.

Messrs. MILLER & FROST, and Mr. MILES A. FULLER, for the appellant:

The court erred in making annual rests, and applying the rents to the reduction of the principal annually, when the law is, that if rent be in arrear at the time the mortgagee takes possession, annual rests should not be made until the whole mortgage debt is paid. Story's Eq. Jur. sec. 1016a; Finch v. Brown, 3 Beav. 70; Sheppard v. Elliott, 4 Mad. 254; Wilson v. Cluer, 3 Beav. 136; Gordon v. Lewis et al. 2 Sum. 147; Bennett v. Cook, 2 Hun, (N. Y.) 526; Green v. Westcott, 13 Wis. 606. See, also, Bac. Ab. Title Mort. (sub title F,) vol. 7, 170.

Story, in the section cited, says: “The court erred in charging the complainant with the rental value of the mortgaged premises, instead of the sums actually received by him.” Mr. C. C. WILSON, for the appellees:

It is not the law that annual rests should not be made until the entire mortgage debt is paid, even though the interest be in arrear at the time of the entry, but the rule in this country is, that whenever the rents exceed all the interest then due, annual rests should be made, and the excess applied to reduce the principal, the receipt of rents being like any other payment on the mortgage debt. Jones on Mort. secs. 1139, 1140; Van Vronker v. Eastman, 7 Metc. 157; Green v. Westcott, 13 Wis. 678.

In this State it is the settled rule that a mortgagee in possession is liable to account for the rents actually received, or which might have been received by reasonable care and diligence. McConnel v. Holbook, 11 Ill. 61; Roberts v. Fleming, 53 Id. 196; Harper et al. v. Ely, 70 Id. 581; Mansfield v. Alwood, 84 Id. 497.

If the mortgagee has kept no proper accounts of the rents and profits received by him, he is chargeable with what he might have received, and must be presumed to have received by the use of ordinary care. Jones on Mort. sec. 1124; Dexter v. Arnold, 2 Sum. 108; Van Buren v. Olmstead, 5 Paige, 9.

Also, in the same section, the author says: “If the mortgagee be unable to render an account, he is chargeable with a fair occupying rent,” and cites Montgomery v. Chadwick, 7 Iowa, 114; Gordon v. Lewis, 2 Sum. 150; Clark v. Smith, 1 Saxt. 121.

A mortgagee is bound to keep proper accounts of the rents and profits received by him, and to have them ready to produce when called for; for to this extent, at least, of being required to keep and present a proper and honest account, he is the trustee of the mortgagor, and to hold him to be less would open the door to frauds of the grossest kind. Jones on Mort. sec. 1115; 2 Washburne on Real Prop. 116, (3d ed.); Griffin et al. v. The Marine Co. of Chicago et al. 52 Ill. 142. A mortgagee in possession is not entitled to compensation for taking care of and renting the estate, even where there is such an agreement between himself and the mortgagor. Jones on Mort. sec. 1132; Moore v. Cable, 1 Johns. Ch. 385; French v. Baron, 2 Atk. 120.

The reason given for this rule is, that it would tend directly to facilitate usury and oppression. Jones on Mort. sec. 1132; Scott v. Brest, 2 T. R. 238.

Mr. JUSTICE SHELDON delivered the opinion of the Court:

The court below erred in decreeing that complainant should account for the reasonable rental value of the lands. This was a departure from the rule prescribed by this court when the cause was here before. We then said, “that ordinarily a mortgagee in possession is only required to account for the actual receipts, less such sums as he may have paid out for taxes and necessary repairs, unless where the evidence shows by reasonable diligence more could have been realized. Of course, he would be answerable for any gross neglect which might result in loss to the mortgagor whose premises he holds. Any more stringent rule than this, it seems to us, would be unjust and unreasonable.” 83 Ill. 524.

This is in accordance with the well settled general rule upon the subject. Chancellor KENT thus states it: “If the mortgagee obtains possession of the mortgaged premises before foreclosure, he will be accountable for the actual receipts of the net rents and profits, and nothing more, unless they were reduced or lost by his willful default or gross negligence. By taking possession, he imposes upon himself the duty of a provident owner, and he is bound to recover what such an owner would, with reasonable diligence, have received.” 4 Com. 185. To the same effect 1 Hilliard on Mort. 448-9.

The subject is very fully discussed in 3 Powell on Mort. 949, 1154, where it is said: “A mortgagee will not be obliged to account according to the value of the lands, viz: he will not be bound by any proof that the land was worth so much, unless it can likewise be proved that he actually made that sum of it, or might have done had he not been guilty of fraud or willful default, as, if he turned out a sufficient tenant that held it at so much rent, or refused to accept a sufficient...