Del-New Co. v. James

• Decision Date: 28 July 1933
• Docket Number: Nos. 410, 411.,s. 410, 411.
• Citation: 167 A. 747
• Parties: DEL-NEW CO. v. JAMES. SAME v. WHILT.
• Court: New Jersey Supreme Court

167 A. 747

DEL-NEW CO.

v. JAMES.

SAME

v. WHILT.

Nos. 410, 411.

Supreme Court of New Jersey.

July 28, 1933.

Appeal from District Court of Camden. Actions by the Del-New Company, a corporation, against William James and against George Whilt. Judgment for plaintiff, and defendants appeal.

Reversed.

Argued January term, 1933, before TRENOHARD, CASE, and BROGAN, JJ.

Edwin Field Crane, of Camden (Richardson A. Roberts, of Camden, of counsel), for appellant Wm. James.

Mark Marritz, of Camden (Patrick H. Harding, of Camden, of counsel), for appellee.

BROGAN, Justice.

The plaintiff and the defendant occupy the relationship of landlord and tenant, the defendant being the tenant. The premises, when rented, were incumbered by a mortgage which thereafter became in default. The mortgagee served notice upon the tenant directing that he pay rent thereafter to the mortgagee. The tenant did pay rent to the mortgagee. Later a demand was made upon him by the plaintiff owner (mortgagor) for rent for the same period which the tenant refused to pay, stating that he had paid the rent for that particular month to the mortgagee. Thereupon the owner brings this suit.

These facts were stipulated in open court between the respective parties, and the court gave judgment for the plaintiff, owner of the property.

It would perhaps have been better had the mortgage itself been printed as an exhibit in the state of case, but, not being benefited by that exhibit the case must be determined on the issues presented.

The defendant tenant appeals on the ground that the court erred as a matter of law in giving judgment in favor of the plaintiff under these circumstances.

There are two methods by which a mortgagee may, after default in his mortgage, acquire the right to collect rents: First, by an appropriate action wherein the rents are collected for him through a receiver appointed by a competent court; and, secondly, by taking possession of the mortgaged premises after default on the part of the mortgagor. Cf. Bermes v. Kelley, 108 N. J. Eq. 289, 154 A. 860; Freedman's Saving & Tr. Co. v. Shepherd, 127 U. S. 494, 8 S. Ct. 1250, 32 L. Ed. 163.

Obviously, the first method was not pursued herein and need not concern us. The question is whether, under the circumstances, the mortgagee had the right to collect the rent or, to put it another way, the tenant effected a legal attornment.

In the case before us, it appears that notice of the mortgagee for rent collection was served only on the tenant. So far as the record discloses, no notice was served upon the mortgagor-owner.

Attornment is an act by which a tenant acknowledges his obligation to a new landlord. At common law it never became effectual without the consent or knowledge of the landlord or by due process of law. At common law the owners could not alienate without the consent of a tenant, which consent was called an attornment, nor could the tenancy be substituted by the act of the tenant without the consent of the lord. It will be seen that mutuality of consent, either voluntary or constructive, was necessary to make out an attornment. This rigid rule was later relaxed (cf. Stat Anno. (1705) 4 and 5, c. 16) when attornment ceased to be necessary to complete a voluntary conveyance. See, also, Eleven Geo. II, c. 19.

Much has been written in many cases, going all the way back to the old English authorities, concerning attornment. In fact, the provisions of the two statutes, above mentioned, have been written into our own Landlord and Tenant Act, 3 Comp. St. § 26, p. 3076.

Our authorities agree that a mortgagee, after default, is entitled to possession. Price v. Armstrong, 14 N. J. Eq. 41. It is also well settled that a mortgagee, after default, may eject a mortgagor or those that hold under him, as in this case, the defendant tenant. Cf. cases collected in the N. J. Digest Annotated, vol. 7, Mortgages, 213, pages 668 and 669. Now since a mortgagee, after default, has the right to maintain ejectment, it follows the tenant may attorn to such mortgagee in order to avoid ejectment and to keep himself in possession of the leased premises. V. C. Van Fleet, discussing the proposition generally, says: "The mortgagee does not acquire the land as owner, but simply acquires a right to hold it as security for his debt, and the utmost dominion that he can exercise over it is either to appropriate it, or have it appropriated, to the payment of his debt." Marshall's Ex'rs v. Hadley, 50 N. J. Eq. 547, at page 549, 25 A. 325, 326. In the case of Leeds v. Gifford, 41 N. J. Eq. 464, at page 469, 5 A. 795, 798, the same Vice Chancellor stated: "Taking possession is simply a method of payment. It is one of the remedies a mortgagee may resort to, to obtain payment of his debt."

Our Court of Errors and Appeals of this state, in an opinion by Mr. Justice Trenchard, deciding the case of Hinck v. Cohn, 86 N. J. Law, 617, 92 A. 378, Ann. Cas. 1916D, 200, in addition to holding that, after there has been a default, the mortgagee is entitled to possession, upholds his right to collect rents after he is put into constructive possession by the attornment of the tenant. Mershon v. Castree. 57 N. J. Law, 484, 31 A. 602; Shields v. Lozear, 34 N. J. Law, 496, 3 Am. St. Rep. 256; Sanderson v. Price, 21 N. J. Law, 637, etc.

In Stanton v. Metropolitan Lumber Co., 107 N. J. Eq. 345, 152 A. 653. 654, the court held that the mortgage, without more, does not carry rents. "A mortgagee is not entitled to rents of the mortgaged premises, accruing after default unless and until he takes possession, personally or by a receiver duly appointed" by the court (cf. Bermes v. Kelley, 108 N. J. Eq. 289, 154 A. 860; Paramount B. & L. v. Sacks, 107 N. J. Eq. 328, 152 A. 457; Stewart v....