Union Institution for Savings v. City of Boston

• Decision Date: 30 June 1880
• Citation: 129 Mass. 82
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Union Institution for Savings v. City of Boston & others

129 Mass. 82

Union Institution for Savings v. City of Boston & others

Supreme Court of Massachusetts

June 30, 1880

[Syllabus Material] [Syllabus Material]

Suffolk. Bill in equity, filed November 30, 1878, by a mortgagee of several parcels of land, against the city of Boston, Walter Farnsworth, W. E. Woodward and William H. Piper, to enforce a lien upon money due from the city of Boston for damages for land taken by the city, under the St. of 1873, c. 340. The case was heard by Colt, J., upon a statement of facts, the material parts of which were as follows:

On June 2, 1871, Woodward and Piper, who then owned the several parcels of land, executed a mortgage of them to the plaintiff, the condition of the mortgage being that, if the grantors should pay to the plaintiff "the sum of one hundred thousand dollars in five years from date, with interest semiannually at the rate of seven and a half per cent per annum," "then this deed, as also one note of even date herewith signed by the said W. E. Woodward and W. H. Piper, whereby they promise to pay to the said corporation or order the said sum and interest at the times aforesaid, shall be void." The note referred to was signed by Woodward and Piper, and was as follows: "Boston, June 2, 1871. For value received, we jointly and severally promise to pay to the Union Institution for Savings in the city of Boston or order the sum of one hundred thousand dollars, in five years from this date, with interest, to be paid semiannually, at the rate of seven and a half per centum per annum during said term, and for such further time as said principal sum or any part thereof shall remain unpaid."

On December 2, 1871, Woodward and Piper made a second mortgage of the same parcels of land to the plaintiff, to secure the payment of the further sum of $ 20,000, in four and a half years from that date. The terms of this mortgage deed and of the promissory note given therewith were the same, so far as they related to the payment of interest and the rate, as in the previous mortgage and note.

On October 11, 1873, Woodward and Piper made a third mortgage of the land to William H. Hill, subject to the mortgages to the plaintiff. On October 17, 1874, Hill assigned this mortgage to Farnsworth, who on February 15, 1875, sold the land, for breach of condition, under a power contained in the mortgage, to a person who two days afterwards reconveyed the land to Farnsworth.

Farnsworth never saw the mortgage notes given by Woodward and Piper to the plaintiff, nor knew their tenor, except so far as they were described in the mortgages on record. Interest was paid on both notes to June 2, 1875, and $ 5000 was paid on account of the principal of the second note in 1874.

On September 1, 1873, the board of aldermen of Boston passed an order, under the St. of 1873, c. 340, establishing the grade of the Northampton Street District, in which the parcels of land in question were situated, in order to secure complete drainage, to prevent nuisances and to preserve the public health; and on September 5, 1873, an order passed by the city council, directing the owners of lands in that district to raise the grade of their lands, was approved by the mayor. The city entered upon the lands, raised the grade thereof, and assessed the cost to the owners; and on March 8, 1875, Farnsworth notified the city that he was dissatisfied with the assessment on his lands, and offered to surrender them to the city. On March 22, 1875, the committee of the city council to whom was referred this notice reported that no further action was necessary as all the parties having a legal interest had not joined in the surrender. Two days after this, Farnsworth requested the plaintiff to join in the surrender; and the plaintiff, on the same day, gave notice to the city that the plaintiff "approves of said order of surrender, and desires that said premises may be surrendered to said city, conformably to law; yet not so as to affect or impair the rights or security of this corporation to recover the amount due on the mortgages thereof."

In November 1876, the city council passed an order taking the lands in question, which order was approved by the mayor, and was recorded on December 1, 1876, in the registry of deeds. Farnsworth thereupon, not agreeing with the city upon the damage done to him by such taking, filed several petitions in the Superior Court for a jury to assess his damages. The plaintiff in this action petitioned the Superior Court for leave to join in these petitions of Farnsworth, and for an assessment of its damages by reason of the taking; and this petition was granted. At the trial of one of the petitions, it was agreed between the present plaintiff and Farnsworth that, if the jury found for the petitioner, their verdict up to $ 131,000 should be for the present plaintiff alone, and that, for any excess above that sum, their verdict should be for Farnsworth; the judge instructed the jury accordingly; and the jury returned a verdict in favor of the present plaintiff for $ 131,000, and in favor of Farnsworth for $ 11,000. On exceptions taken by the city, it was held that the present plaintiff, not having taken possession under its mortgages, was not entitled to join in the petition of Farnsworth, and a new trial was ordered. See Farnsworth v. Boston, 126 Mass. 1. At the subsequent trial, the jury assessed the value of the same parcel of land at $ 112,887.87. In both trials, the court ruled that the damages should be assessed for the value of the land in March 1875.

The plaintiff contended that it was entitled to the principal of the mortgage debt, and to interest at seven and one half per cent from June 2, 1875. Farnsworth admitted the plaintiff's claim, except as to the amount of interest, which he contended should be but six per cent from that date. Since the filing of the bill the plaintiff had been paid the entire amount of its claim except the difference between the two rates of interest, which amounted to the sum of $ 6943.12.

The judge made a decree for the plaintiff for that sum and costs; and the defendant Farnsworth appealed.

Decree affirmed.

J. A. Maxwell, for the plaintiff.

J. P. Treadwell, for Farnsworth. There was no contract of any kind between the plaintiff and Farnsworth, and the plaintiff could not have maintained any action against him for the principal or interest of the debt. The obligation of Farnsworth, if any, arises from the equity of the case, and the plaintiff, seeking equity, must do equity. The lien of the plaintiff is on the lands or their proceeds for the debt as it appears by the mortgages, and not as it appears by the notes.

In Brannon v. Hursell, 112 Mass. 63, the defendant was the maker of the note, and the case was simply an interpretation of the contract made by him. The rule adopted in that case is contrary to many decisions. See Cook v. Fowler, L. R. 7 H. L. 27; Miller v. Burroughs, 4 Johns. Ch. 436; Morgan v. Jones, 8 Exch. 620; Keene v. Keene, 3 C. B. (N. S.) 144; Moreland v. Lawrence, 23 Minn. 84; Cecil v. Hicks, 29 Gratt. 1; Eaton v. Boissonnault, 67 Me. 540; Duran v. Ayer, 67 Me. 145; Rushing v. Sebee, 12 Bush 198; Ashuelot Railroad v. Elliot, 57 N.H. 397; Burnhisel v. Firman, 22 Wall. 170. See also Ayer v. Tilden, 15 Gray 178.

A court of equity will take into consideration the fact that, on account of the illegal act of the plaintiff in joining in the petition of this defendant, there was a long delay in the payment of damages, and the damages were materially reduced.

Gray, C. J. Ames & Lord, JJ., absent.

OPINION

Gray, C. J.

This is a bill in equity by a mortgagee of land taken by the city for the public use, and the equity of redeeming which from the plaintiff's mortgages is owned by the defendant Farnsworth, to enforce a lien upon the money due from the city for damages for such taking. By the terms of these mortgages, the amounts of the mortgage debts were to be paid in five years, which had elapsed some time before the filing of the bill, "with interest semiannually at the rate of seven and a half per centum per annum;" and the question is, at what rate the interest is to be computed for the time since the principal sums became due.

By the St. of 1867, c. 56, § 1, the legal rate of interest in this Commonwealth is six per cent a year, when there is no agreement for a different rate; and by § 2, it is lawful to contract for any rate of interest, "provided, however, that no greater rate of interest than six per centum per annum shall be recovered in any action, except when the agreement to pay such greater rate of interest is in writing."

When a written agreement is made, as authorized by the statute, to pay a greater rate of interest yearly than six per cent, the intention of the contract and the effect of the statute appear to us to be that the creditor shall receive the stipulated rate of interest so long as the debtor has the use of the principal; and that, in an action upon the contract, the creditor shall recover interest at that rate, not merely until the time when the principal is agreed to be paid to him, but until it is actually paid, or his claim for principal and interest judicially established.

In Brannon v. Hursell, 112 Mass. 63, it was accordingly held, in an action upon a promissory note payable in four months, "with interest at ten per cent," that interest was to be computed at that rate, not merely to the maturity of the note, but to the time of the verdict; and upon reconsideration of the authorities there referred to and examination of the numerous decisions cited at the argument of the present case, we see no reason to overrule or qualify the point adjudged, although the statement in the opinion that "the plaintiff recovers interest,...