White v. Wear

• Decision Date: 03 July 1877
• Citation: 4 Mo.App. 341
• Parties: S. H. WHITE ET AL., Respondents, v. J. H. WEAR ET AL.; E. J. BEARD, Appellant.
• Court: Missouri Court of Appeals

4 Mo.App. 341

S. H. WHITE ET AL., Respondents,

v.J. H. WEAR ET AL.; E. J. BEARD, Appellant.

St. Louis Court of Appeals, Missouri.

Jul. 3, 1877.

1. A mortgagee cannot, before entry for condition broken, recover rent due from the tenant of the mortgageor, which accrued under a lease made subsequent to the mortgage.

2. Where the mortgagee is entitled to possession for condition broken, he must adopt the mode provided in the mortgage for enforcing his right of entry and for the collection of the rents and profits.

3. “Where the mortgagee and those claiming under him have always recognized the validity of a lease made by the mortgageor when he had the equitable, but not the legal, title to the premises mortgaged and leased, they are estopped to deny the lease on an interplea to determine whether the assignee of the mortgagee or the assignee of the mortgageor is entitled to the rents.”

APPEAL from St. Louis Circuit Court.

Affirmed.

HITCHCOCK, LUBKE & PLAYER, for appellant: Rights of the mortgagee to rents after condition broken.--1 Pow. on Mort. 171-175; 1 Hill. on Mort., sec. 28; Caker v. Pearsall, 6 Ala. 542; Smith v. Taylor, 9 Ala. 637; Hutchinson v. Deering, 20 Ala. 802, and cases cited; Masony v. United States Bank, 4 Ala. 735; Henshaw v. Wells, 9 Humph. 582; Johnston v. Jones, 9 Ad. & E. 809; Babcock v. Kennedy, 1 Vt. 457; Coote on L. & T. 519, 605; Taylor on L. & T., 6th ed., sec. 119; Honacker v. Shough, 55 Mo. 472. Subrogation.-- McQueen v. Peay, 58 Mo. 56; Wolff v. Walter, 56 Mo. 295. The beneficiary in a deed of trust, who has obtained possession after condition broken, holds the title against the grantor in the deed until performance of the condition.-- Johnston v. Houston, 47 Mo. 227.

S. HERMANN and G. M. STEWART, for respondents: The mortgageor, until entry by the mortgagee, is entitled to the profits of the land.-- Kennett v. Plumer, 28 Mo. 145; Wilder v. Houghton, 1 Pick. 88; Mayo v. Fletcher, 14 Pick. 525; McKirchen v. Hawley, 16 Johns. 290; Field v. Swan, 10 Metc. 113; Galveston R. Co. v. Cowdrey, 11 Wall. 483. Mortgagee cannot recover until demand.-- Peters v. Elkins, 14 Ohio, 345; Noyes v. Rich, 52 Me. 116; Rogers v. Humphreys, 4 Ad. & E. 315; Evans v. Eliot, 9 Ad. & E. 355; Kimbal v. Lockwood, 6 R. I. 138; Trent v. Hunt, 9 Exch. 21. The mortgagee must adopt the mode of enforcing his right of entry provided by the mortgage.-- Gilman v. Telegraph Co., 1 Otto, 603; Douglas v. Cline, Cent. L. J., Oct. 14, 1876; American Bridge Co. v. Hilderbach, 4 Cent. L. J. 367.

BAKEWELL, J., delivered the opinion of the court.

The plaintiffs sued Wear & Co. for the rents of a building on the corner of Fifth and Washington Avenue, St. Louis. The sum claimed is $1,735, being rent for June, and up to July 9, 1876. The defendants Wear & Co. admitted that the amount claimed was due by them for rent for the period named, but said that it was claimed by Eleazer J. Beard, as holder of a deed of trust upon the property. Wear & Co. were permitted to pay the money into court, and Beard was directed to interplead. The question at issue is whether this rent belongs to White & Hermann, as assignees of the lessor, or to Beard, as mortgagee after condition broken. There was a decree below in favor of plaintiffs; and the interpleader appeals.

It appears from the evidence that one White owned a lot of ground on the south-west corner of Fifth Street and Washington Avenue, in St. Louis, which he demised to Reilly, Fletcher, and Seitz, for a term of forty years, at an annual ground-rent of $4,000 a year, the taxes to be paid by the lessees, the rent payable quarterly, any failure to pay the rent or taxes to give a right of forfeiture to the lessor.

On September 16, 1874, the lessees, Reilly, Fletcher, and Seitz, having meanwhile erected a valuable building on the lot, conveyed their leasehold interest to the Guardian Building Company, which, on the same day, borrowed from the Boatmen's Savings-Bank $2,600, and secured the same by deed of trust on the property in question. This deed of trust was made to one Leavy, as trustee, and contained a covenant that any failure to pay the notes, or to pay ground-rent, taxes, liens, or insurance, should entitle the trustee to take immediate possession, and, after default, the mortgagee should be entitled to immediate possession, and the mortgageor should hold the premises only as tenant of the trustee in the deed of trust. Afterwards Reilly became the owner of all the stock of the Guardian Building Company, and, although he had not the legal title to the premises in question, or to the leasehold interest mortgaged, he, on January 2, 1875, gave a written lease of the main portion of the building to Wear & Co. for five years, at a rent of $1,375 a month. On January 5, 1875, Reilly, who was practically the Guardian Building Company, as he owned all its stock, in the name of the company borrowed $18,000 of the Guardian Savings-Bank, giving a note in the name of the Guardian Building Company, secured by a second deed of trust on the same premises. The trustee was the same, and the conditions as to possession in case of nonpayment of notes, taxes, etc., were the same as in the first deed of trust. On November 15, 1875, Reilly was adjudicated a bankrupt. The Guardian Savings-Bank had also become insolvent. On December 18, 1875, proceedings were commenced in the Circuit Court to obtain a decree confirming the deeds of trust which Reilly had executed, as president of the Guardian Building Company, on the leasehold. Reilly made opposition, and seemed disposed to give as much trouble as he could. A receiver was appointed by the Circuit Court to collect the rents, and pay ground-rent and taxes to prevent forfeiture of the lease, and to keep down interest on the mortgage debt. Meanwhile Reilly was endeavoring to make a compromise with his creditors, and made an assignment of various assets to plaintiffs as trustees for various persons who advanced him money to enable him to effect this compromise. This assignment embraced, among other things, the equity of redemption in the leasehold. On April 3, 1876, Reilly withdrew his opposition to a decree confirming the deed of trust; not, however, until he had got the Boatmen's Savings Institution, whose note was overdue, to stipulate that it would not foreclose until the expiration of seventy days from the date of the decree, which would defer foreclosure until June 10th. The receiver was discharged when the decree was entered.

It is claimed by plaintiffs that before the money was obtained which enabled Reilly to compromise with his creditors they had an interview with the president of the Boatmen's Savings Institution, in which he disclaimed any intention on the part of his bank of claiming any rents from the mortgaged premises. They say that on the faith of this statement they concluded their transaction with...