#### Green vs. Wescott.

On an accounting by a mortgagee in possession, in an action to redeem, where the annual rents exceed the annual interest on the mortgage debt, annual rests should be made, and interest allowed to the mortgagor on the *surplus.*

Where both parties hare claimed too much, a court of equity will sometimes allow costs to neither.

APPEAL from the Circuit Court for *Dodge*County.

This was an action to redeem mortgaged premises in the possession of the mortgagee. Upon the second trial (after the decision of this court upon the first appeal, 9 Wis., 532), the circuit court adjudged that the complainant, *Mary A. Green,*be permitted to redeem the premises upon paying within six months, to the defendant *Wescott,*$60617, for the plaintiff’s proportion of the mortgage debt, $142 50 for taxes paid on said premises, and interest on the same, and the value of the permanent and beneficial improvements made *607on said premises by said defendant, deducting from tbe amount of said sums $953 09, tbe value of tbe rents profits of said premises, and deducting also $351 03, tbe costs of tbis suit, leaving a balance of $344 55, with interest from tbe date of tbe decree. From tbis decree tbe defendant *Wescott*appealed. •

*S. JJ.*Pinney, for appellant.

*Cutler &*Harris, for respondent.

May *15.*

*By the Court,*

PAINE, J.

Since ouri former decision in tbis case, 9 Wis., 532, sustaining tbe right of tbe respondent to redeem, and of tbe appellant to pay for bis improvements, a reference bas been bad to take an account, and to determine tbe value of tbe improvements. Mu'eh evidence was taken, and a report made by tbe referee, upon wbicb judgment was entered, wbicb is again brought here by appeal.

It is claimed by tbe appellant’s counsel, that the report of tbe referee was erroneous in not adding $100 with interest to tbe amount due on tbe mortgage. We are inclined to think tbis objection is correct. Tbe mistake arose from applying on tbe last notes, certain payments wbicb must have been made upon tbe first. Tbe mortgage was given to secure eight notes, tbe first two for $50 each, one payable in one year, and tbe other in two years after their date. These two notes were not included in tbe foreclosure suit, because they bad been paid. Tbe notes, and mortgage were given June 1st, 1848, and tbe receipts showing tbe payments, wbicb were allowed by tbe referee on tbe last, are dated in 1849, 1850, and 1851. We think It more probable that $100 of tbe amounts mentioned in them went in payment of tbe first two notes, than that the entire amounts were advanced upon tbe last notes, none of wbicb were due until tbe 1st of June, 1851. Tbis conclusion also corresponds with tbe allegations, as to tbe amount of payments that bad been made, in tbe complaint filed by the plaintiff to redeem. And we do not think it necessary for tbe appellant to have produced tbe first two notes. For, having been paid, tbe presumption is, that they were taken Up, and were no longer in tbe possession of tbe mortgagee or of tbe appellant Yet *608existence originally fully appears, and was not dis-

THe appellant also objects to tbe finding of tbe referee as to tbe value of tbe rents and profits. Upon this question tbe witnesses were numerous, and tbe testimony conflicting. Tbe finding migbt have been greater or less, and no appellate court, looking at tbe testimony simply as written upon paper, without seeing tbe witnesses, could feel any degree of certainty that they were right in disturbing it. Tbe same remarks apply to tbe finding upon tbe value of tbe improvements, and we are not inclined, upon tbe evidence, to disturb tbe finding upon either point.

Tbe appellant’s counsel further objects, that tbe referee was wrong in making annual rests, and allowing interest on tbe amount of tbe rents and profits. He contends that no interest should be allowed on tbe rents and profits until tbe entire mortgage debt was paid. But such a rule would in many cases be productive of gross injustice, and we do not think it is tbe law. Suppose a mortgage debt of $10,000, and tbe mortgagee takes possession. Suppose tbe rents and profits each year to be enough to pay off all tbe interest due, and $1,000 of tbe principal. If no annual rests were made, and no interest allowed on tbe rents, tbe mortgagee could remain in possession ten years with the entire mortgage debt drawing interest all tbe time, when be bad in fact received $1,000 of tbe principal each year; so that during tbe last year there would be only $1,000 unpaid. Tbe injustice of such a rule is apparent. Tbe true rule is, that when tbe amount of the annual rents exceeeds the annual interest on tbe mortgage, tbe mortgagor should .be allowed interest on the surplus, “ to keep pace with the interest on the debt.” *Gordon vs. Lewis et al., 2*Sum., 147; *Shephard vs. Elliot,*4 Mad., 254; *Gibson vs. Crehore,*5 Pick., 160; *Reed vs. Reed,*10 id., 398.

Tbe referee, in bis report, stated the amount of tbe annual rents, without interest, and also tbe amount of tbe interest on each year’s rent, leaving it to tbe court to determine whether tbe interest should be allowed or not. Tbe court allowed tbe interest on tbe whole amount of the annual *609rents. This should not have been done, but the annual interest due on the mortgage should have been first and interest allowed only on the balance of each year’s rent. As compound interest is not allowed on the mortgage debt, the mortgagor ought not to be allowed interest on so much of the annual rents as ought to be applied in paying the interest on the debt So far as there is a surplus applicable to the principal, it ought to be allowed, because the principal continues to draw interest. And the fact that *Wescott*believed himself to have a good title, cannot affect this question. Being really .only a mortgagee in possession, he is liable to account, and must account, on the same principle as any other mortgagee, until the mortgage debt is paid. The fact that he believed he had title, is allowed all its legitimate effect, when it gives him the right to pay for his improvements.

When the case was here before, we allowed costs to the appellant at that time, who is now the respondent, because she was obliged to come here to maintain her right to redeem, which was resisted by *Wescott.*The amount of those costs taxed in her favor should be deducted from the amount required to be paid by her to redeem. But we do not think that *Wescott*should be charged with all the costs in the case. As a general rule, a mortgagor coming to redeem pays costs, though successful. *Brockway vs.*Wells, 1 Paige, 617. But we have come to the conclusion, inasmuch as *Wescott*resisted the plaintiff’s right to redeem when she was entitled to that right, and as she resisted his right to pay for Ms improvements, to which he was entitled, that with the exception of those formerly allowed in this court to the plaintiff, costs should be allowed to neither party. This rule has been sometimes adopted where both parties have claimed too much. *Righter vs.*Stall, 3 Sandf. Ch., 608; *Cuppen vs. Heermance,*9 Paige, 211; *Vechte vs.*Brownell, 8 id., 212.

It follows that the decree appealed from should be modified, by adding to the amount of the mortgage debt one hundred dollars, with interest from the time of the payment in 1850 ; by reducing the amount of the interest allowed on the annual rents to such sum as it would amount to, when *610computed on each year’s rent, after first deducting therefrom tbe amount of tbe annual interest on tbe mortgage debt; also by reducing tbe amount of costs to be deducted from tbe sum to be paid by tbe plaintiff, to tbe amount formerly taxed in ber favor on ber appeal to tbis court, and providing that beyond that neither party should be entitled to costs. As it will require new computations and adjustments of tbe various items mentioned in tbe judgment, to accomplish tbis result, we shall leave that to be done after tbe cause is remanded.

Tbe judgment is modified as above stated, and tbe cause remanded that it may be enforced accordingly.