Court Opinion

ID: 6407536
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:07.891248+00
Date Added: 2024-06-11T15:51:15.759425
License: Public Domain

Shaw C. J.
delivered the opinion of the Court. It is not stated in the facts agreed, whether the form of action is covenant or debt, nor is it perhaps very material; it is an action for a quarter’s rent, claimed to be due on a lease admitted to have been executed by both of the defendants. The question whether this rent is due, depends upon the construction of the release and agreement, set forth in the case stated. To ascertain that construction it is necessary to consider the terms of the agreement, the recitals contained in it, and the existing facts and circumstances, constituting the relations, in which the parties stood towards each other, and to which those agreements and recitals refer, either in terms or by necessary implication.
In looking at the lease, dated the 2d of February, 1835, and the recitals contained in it, it will appear that Wiggin held two mortgages on the estate called Tudor’s building, which were then due, that he had entered for condition broken, by the consent of the mortgagor, and it follows as a legal consequence, that the mortgage would be foreclosed and the right of redemption gone, if not redeemed within three years from that day, by February 2d, 1838. The lease is for the rent of $ 5000 a year for the same term of three years, with a proviso, that *440the lease should become void, whenever the mortgages therein mentioned, should be redeemed. There was also a provision, that the lessees should not assign the lease, except by one of the lessees to the other, if he saw fit. They were therefore themselves to become debtors, for the payment of these quarterly rents, to the plaintiff, being mortgagee, until redemption, that is, until payment of the mortgage debt.
The legal relation of a mortgagee in possession, as well after entry for foreclosure as before, is, that he is to account for the rents and profits as part payment of the mortgage debt, to be applied in the first instance to the payment of the interest, and if more than sufficient for that purpose, then to be applied pro tanto, to the reduction of the principal. But even if the mort gaged estate should not be redeemed, and if after foreclosure the mortgagee should bring his action on the personal security, on the ground that the mortgaged property was not equal in value to the debt, and in order to recover the difference, the rents and profits received by the mortgagee before foreclosure would be added to the value of the mortgaged premises, in determining what part of the mortgage debt had been paid by the mortgagee. Such being the relation in which the parties stood, and such the nature and provisions of this lease, it seems apparent that the lease was incident to the mortgage, was intended as a means of enabling the mortgagee to obtain, in part, his mortgage debt, and that as between mortgagor and mortgagee, it must be deemed incidental to, and dependent upon the mortgage, and as a collateral security, like the mortgage deed itself, for the payment of the interest and principal of the mortgage debt. As a necessary consequence of this character, it seems to follow, that whatever would satisfy and discharge the mortgage, would determine the lease.
Still the question recurs, upon the agreement of the 9th of November, 1837, by which the whole debt due on the mortgages, for balance of account and all claims, was consolidated and liquidated at the sum of $ 110,000. By this agreement, it was provided, that upon the payment of that sum, in the manner therein stipulated, to wit, $ 10,000 in cash and notes, and another species of security by deeds of trust, on the same mortgaged estate in Boston, and another estate in New Orleans, *441for $ 100,000, all previous mortgage debts should be released and discharged. The provision in effect was, that the mortgaged estate should be discharged, with one reservation only, in relation to the title, which was, “ that in case of any intervening incumbrance upon the title, the legal estate created by the original mortgage might be kept on foot, as a protection to the legal title, intended to be made to the trustees. Such agreement, therefore, when executed, was to be a complete satisfaction and discharge of all the debts secured by the mortgages, of all personal and collateral securities, given for the same debt, and of the mortgaged estate itself, unless it should be necessary to keep up the bare legal title, for the protection of the new security to be given, which exception does not affect the present question. Then the question is, whether the parties intended to compromise and consolidate the whole debt to be paid and secured, at $ 110,000, without further payment or accounting on the one side or the other, or whether any further rents and profits were to be paid on the one side and accounted for on the other, or any interest to be computed after that day. There being nothing explicit in the agreement on the subject, the question, depending upon construction and legal inferences, is not without its difficulties ; but the Court are of opinion, that it was the intention of the parties to consolidate and liquidate the whole debt, by a compromise, at the sum of $ 110,000 as of that day, and thereby to dispense with all computations of the actual sum due to the mortgagee, or of the sums received by him, by way of rents and profits, in discharge of interest and principal. As far as rent had been received, that had already gone in satisfaction of the debt, by means of which the debt was reduced pro tanto, and a compromise and adjustment of the debt was an effectual accounting for these rents. All the rents therefore previously received on this lease, were to be considered as accounted for and to be retained by the plaintiff as mortgagee. The question can therefore affect only the rents not received at the time of the settlement.
It is a well settled rule of equity and convenience, upon taking an account with a view to the redemption of a mortgage, that if the mortgagor himself stands responsible for the *442rents, as where he has been in under a lease, the mortgagee is to account only for such rents, as he has actually received, if he had let the premises to a third person, a different rule might prevail, and he might be responsible for due diligence in col lecting the rents which he might have received. But where the mortgagor himself, on coming to redeem, stands responsible for the rents, the mortgagee accounts only for what he has received. And in such case it would be idle for the mortgagee to demand a sum of the mortgagor by way of rents and profits, which he must immediately account for, towards his mortgage debt. The payment therefore of his mortgage debt, is a discharge of all further claim of rents and -profits of the mortgagor.
The Court are of opinion, upon the agreement, that the par ties intended this compromise and consolidation of the mortgage, as a substitute for an account, and that all debts on the one side and allowances on the other, must be regarded as embraced in it, in the same manner as they would have been embraced in such an account. It is therefore immaterial, whether, the balance of account actually due to Wiggin, was much larger than the amount embraced in the compromise", or not, as the whole of such balance, together with the mortgage debts, of which Wiggin was the assignee, were intended to be embraced in it. Had the sum of $110,000 been actually then paid, and a release of the mortgage debts executed, similar to the one relied on, we have no doubt that it would have been a bar to this claim of rent. It would have been a release of the debt, for the quarter’s rent then due, by force of the terms of the release itself; and it would have been a discharge in equi ty, because the mortgagee would be no longer entitled to receive any rents and profits of the mortgagor. It would be a discharge of the rent to become due on the 2d of February, by the operation of the clause of defeasance, as the time wot.ld. thereby expire. And we think, that in like manner, if the-agreement had been made to consolidate the amount at $110,000 instead of taking an account, and it had been provided, that upon the payment of that sum in cash, on or before the 2d of February, the mortgages should be discharged, and it should be paid and the mortgages discharged accordingly.. *443the claims for rent due both on the 2d of November and the 2d of February, would be discharged, unless there were some stipulation in regard to the payment of interest, or accounting for rents and profits. And we can perceive no substantial difference between the payment in cash and the payment in the special manner stipulated for by the agreement. It was the creation of a new security, and a discharge and redemption of the old mortgages, and there was no stipulation, that in case Tudor should take the whole time to the 2d of February, any interest should be allowed in the mean time, on the $110,000. This being the express provision of the contract, there is no room to inquire whether it was equitable or not. The Court are therefore of opinion, that upon making the payment and giving the security contemplated, on the 2d of February, within the time limited, and upon the release of the mortgage, made in conformity with that agreement, the claim of the plaintiff upon this lease was discharged. Had the mortgaged premises been let to a third person for the same term, it might have presented a different question. It might perhaps have been plausibly argued, that the amount was consolidated at $ 110,000, leav-> ing the mortgagee to receive to his own use, the rent then actually due him, and that which would become due on an absolute and unconditional contract to himself. It might with more color be contended, that in the absence of any express agreement either that the mortgagee should receive such rents to his own use or account for them, as he was to receive them in the first instance, he was to receive them to his own use. But. in this case, the rents, if to be paid at all, were to be paid by the mortgagor himself. This agreement was made on the 9th of November, seven days after the rent now sued for, became due. No provision was made for its payment, or for the payment of any further interest on the liquidated mortgage debt, for which the rents of the mortgaged estate would be the appropriate fund. The words of the release apply in terms to the rent due in November, being a claim which the plaintiff then held against Tudor. And we consider that the same words, of release, are broad enough to include the quarter’s rent due in February. Supposing the most favorable construction for the plaintiff, that the release was intended to take ef*444feet at the then future time at which it should be executed, it could not be postponed further than the 2d of February, and it was then to be executed and take effect. But the quarter’s rent was then to be due, and being due when the release was to be executed and when it was in fact executed, it in terms released it, as a claim or demand then due. And this renders it unnecessary to consider whether such release would discharge covenants not broken. The words of this release are therefore directly applicable to both of these demands, and are sufficient in their legal operation and effect, to discharge them; and the Court are of opinion that there is nothing in the recitals or stipulations of the agreement, or in the relations of the parties, to control or restrain them.
Several cases were cited to show that the general words of a release will be controlled and limited by the recitals, or by any other part of the instrument, applied to the subject matter, by which it is made manifestly to appear to be the intent of the parties, that it shall be so limited. Lyman v. Clark, 9 Mass. R. 238; Simons v. Johnson, 3 Barn. & Adolph. 175. This principle is extremely well settled bv these and a great variety of cases ; but we can perceive nothing in the terms, recitals or subject matter of this agreement, indicating that it was the intent of the parties, that these arrears of rent should be paid, in addition to the $110,000, for the redemption of the mortgages.
But it was contended that this was a release to Tudor alone, and not a discharge to the other lessee ; but we think this position cannot be maintained. The rule of law is, that a release of one of two joint or joint and several debtors, is in legal operation a discharge of both, because the debt is entire, and when once satisfied or released, can no longer be enforced against any party to it. Tuckerman v. Newhall, 17 Mass. R. 581. Being a discharge of the debt and claim for rent, by the release to Tudor, it necessarily discharges Gardiner by operation of law. It was argued upon the authority of Solly v. Forbes, 2 Brod. & Bingh. 46, that a release of one of two joint debtors was not a release of both. But we think that case, rightly understood, establishes no such principle. A compromise was made with one of two partners, and a sum received in full sat*445isfaction of all claims against him. In that case, although the word “ release ” was used, the Court proceeded expressly on the ground that it was not used technically ; that taken in connexion with the whole instrument, it was not intended to be used technically ; that it was not a release of the debt, but only of all right to charge the person or property of that party, reserving to the plaintiff all claims against the other party, and expressly reserving the right to commence and prosecute a joint action as far as necessary, against both partners, so as legally to avail himself of the responsibility of the other partner. It was therefore in legal effect, not a release, either of the debt, or of the party, but an agreement not to charge the person or property of the partner with whom the composition was made, and these were the grounds on which the case was decided.
But in the present case, if it was intended by the agreement to release Tudor, it must be because it was intended that the arrears of rent should not be claimed against the mortgagor, and of course, if it was intended to release the rent, the release of Tudor, by its legal operation, was a release of Gar-diner.
On these grounds the Court are of opinion, that the plaintiff is not entitled to recover either the rent due November 2d, or that due February 2d, and that a nonsuit be entered in both actions.