Wartell v. Novograd

• Decision Date: 25 April 1928
• Docket Number: No. 6481.,6481.
• Citation: Wartell v. Novograd, 49 R.I. 191, 141 A. 461 (R.I. 1928)
• Parties: WARTELL v. NOVOGRAD.
• Court: Rhode Island Supreme Court

141 A. 461

WARTELL

v. NOVOGRAD.

No. 6481.

Supreme Court of Rhode Island.

April 25, 1928.

Exceptions from Superior Court, Providence and Bristol Counties; Charles A. Walsh, Judge.

Action by Nathan Wartell against David Novograd. Directed verdict for plaintiff, and defendant brings exceptions. Exceptions sustained and new trial granted unless plaintiff file remittitur, in which case judgment may be entered on the verdict as reduced by remittitur.

Cooney & Cooney, of Providence, for plaintiff.

Greene, Kennedy & Greene, of Woonsocket, for defendant.

BARROWS, J. This case after a second jury trial is before us on defendant's exceptions (1) to refusal to direct a verdict for defendant, (2) to alleged errors in rejecting certain evidence offered by defendant, and (3) to the direction of a verdict for plaintiff for $7,161.36.

It was formerly here on a state of facts showing plaintiff to be a third mortgagee and defendant to have foreclosed on a fifth or sixth. The priority of plaintiff's mortgage appeared from its recitals. Then we said that defendant might be liable in assumpsit if he agreed to use money in his possession belonging to Terkel for the specific purpose of paying Terkel's debt to plaintiff. We said the fact that the action followed a mortgage foreclosure by defendant was only incidental. We spoke of the action as one contractual in form of procedure, but equitable in its nature. Wartell v. Novograd, 48 R. I. 296, 137 A. 776. Because of erroneous direction of a verdict for defendant on the ground that an action at law would not lie we ordered a new trial, declining to grant plaintiff's motion for direction of a verdict because his testimony was somewhat hazy and inconsistent and defendant did not testify.

1. At the present trial it appeared that defendant was in possession of a surplus after foreclosing a second mortgage of which he was assignee. Plaintiff was the holder of a fifth mortgage. We do not think that this alters the principle controlling the former decision as to plaintiff's right to sue at law. Plaintiff is not suing in the capacity of a subsequent mortgagee seeking an accounting. He is basing his action on defendant's obligation created by his alleged agreement to use Terkel's money to pay plaintiff. There is no merit to the contention that plaintiff, in order to bring this suit at law, should have, joined the several prior mortgagees. They were not joint promisees with plaintiff of defendant's implied promise to pay the plaintiff's note. As stated in Jerome v. McCarter, 94 U. S. 734, at page 736 (24 L. Ed. 136):

"It can never be indispensable to make defendants of those against whom nothing is alleged, and from whom no relief is asked."

Clapp v. Pawtucket Institution for Savings, 15 R. I. 489, 8 A. 697, 2 Am. St. Rep. 915, to which defendant refers, was an action of assumpsit by one of several joint mortgagor copartners to recover a portion of the surplus from the mortgagee who had foreclosed. The court held that such partner alone could not recover his share of the surplus because the power of sale created an obligation on the mortgagee to pay the surplus to all parties jointly, and not to pay it pro rata to the individual partners! The language of the court has no application to an action at law by one of a series of successive mortgagees against a predecessor. Such mortgagees are not tenants in common of the equity of redemption. Their rights are not collective. They are distinctly several and separate. This is shown in proceedings to foreclose by a junior mortgagee where senior mortgagees are not necessary parties because nothing of theirs is sold. Jerome v. McCarter, supra; Wartell v. Novograd, supra.

Where successive mortgages are given, the duty rests upon a senior mortgagee to account to his successors seriatim for the surplus above the mortgage indebtedness. Such accounting may be in equity, either at the instance of the senior or junior mortgagee or the owner of the equity of redemption, and all parties should be joined in such proceeding where their rights can be adjusted in a single action. De Wolf v. Murphy, 11 R. I. 630. When, however, the surplus in the mortgagee's hands after foreclosure sale is liquidated and held to the use of one owner of the equity of redemption, it is established that assumpsit will lie; that resort need not be had to equity. Reynolds v. Hennessey, 15 R. I. 215, 2 A. 701; Fudim v. Kane, 48 R. I. 155, 136 A. 306. A junior mortgagee is entitled to an accounting like the owner of the equity of redemption. If there be several successive junior mortgagees, their liens attach to the surplus in the same order as they originally did to the land. Merkey v. Langley, 92 U. S. 142, 23 L. Ed. 701. If the evidence shows that the senior mortgagee after a foreclosure sale admits that he has in his hands an amount sufficient to pay his immediate junior's liquidated claim no reason is apparent why the latter should not be permitted to recover at, law as is the owner of the equity of redemption, and it has been so held. Webster v. Singley, 53 Ala. 208, 29 Am. Rep. 609. Application of the same principle is made in Knowles v. Sullivan, 182 Mass. 318, 65 N. E. 389 (suit at law by holder of mechanic's lien against senior mortgagee). There is no reason why the senior mortgagee after foreclosure may not admit possession of specific funds to pay several junior mortgagees and either undertake to settle with them or to promise each one severally to pay his claim, without resort to a court of equity. Plaintiffs claim here was that defendant admitted possession of an amount sufficient to pay plaintiff's note, and that he agreed to make such payment as a part of his efforts to assist his sister, Mrs. Terkel. If plaintiff established these facts, he brought himself within the principle of Wartell v. Novograd, supra. Defendant did not need to admit possession of plaintiff's money, but if he did so he could not object when plaintiff acted upon the admission. As senior mortgagee, defendant could have protected himself by bringing a bill in equity against all subsequent mortgagees for determination of their respective rights. East Greenwich Inst, for Savings v. Shippee, 20 R. I. 650, 40 A. 872.

2. Before considering the evidence admitted, it may be well to notice the...