Court Opinion

ID: 3551391
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:03:57.735781+00
Date Added: 2024-06-11T14:23:23.733315
License: Public Domain

One ground for the motion is this. One of the lessees bought the property from the mortgagee after the latter acquired full title to it through the foreclosure sale. The referee made no finding whether this lessee was a party in interest with the mortgagee before the sale. The plaintiff asserts, however, that the evidence demonstrates the interest.
This position cannot be upheld. On the contrary the evidence tends only to show that no such interest existed. Not until after the foreclosure sale was any contract made for the lessee to buy. If there were negotiations between him and the mortgagee before the sale, they resulted in no arrangement creating obligations on the part of either. The lessee's interest to become the owner and notice to the mortgagee of such interest did not make him a party in privity *Page 111 
with the mortgagee in the latter's purchase at the foreclosure sale.
The referee has found that after the sale the mortgagee's agent consulted the lessee and a price for the latter to pay was finally agreed upon. The only conclusion from this finding is that no relations of a legal or equitable character between the lessee and the mortgagee existed at the time of the sale. The mortgagee was at full liberty to sell to others or not to sell at all, and the lessee was equally free either not to buy or to say for what price and on what terms he would buy.
It therefore becomes unnecessary to consider how far the lessor's acknowledgment in the lease that he owned subject to the primary lien of the mortgage bars him from claiming the benefit of an estoppel on the lessee to deny his full title.
The plaintiff now presents evidence that the payments of rent to the mortgagee were a required duty of the lessees under the lease. Conceding the duty, it was owed to the lessor, and not to the mortgagee. Security for the latter in addition to the mortgage was not an object of the requirement, and it was not intended to be an assignment of the rent to the mortgagee. Nor was there any assumption by the lessees of the lessor's liability for the mortgage debt, by which the debt became theirs in any respect. The mortgagee was not in contemplation as a beneficiary of the direction to pay the rent to it, and could therefore claim no legal or equitable right to the rent by virtue of the direction. The provision was one which secured no interest in anyone other than the parties to the lease.
The lessor had the right to revoke the direction at any time, and this he did when he assigned his rights in the lease to secure certain creditors. By its terms the assignment transferred the lease with the premises it described and with all "covenants, . . . rights, . . . discretions and powers therein contained" which the lessor might exercise with respect to the property and lease, subject to the rights of the lessees. The lessor is in no position to take advantage of the order to pay rent to the mortgagee subsequent to the assignment when the assignment in obvious implication demanded that further observance of the order cease. The assignment reserved no rights of the mortgagee to the rent because none had been granted or created.
It is argued that the cases are in point which hold that a tenant violating his covenant to pay taxes can acquire no valid title against his landlord from a purchaser at a sale of the property for non-payment of the taxes. The argument fails since here the lessor discharged the lessees from the duty further to pay rent to the mortgagee.
The further contention is made that the lessor's assignment of the *Page 112 
rent was only partial and the lessees' covenant to pay rent created a direct contractual relation with the lessor unaffected by the assignment. The theory seems to be advanced that because the rent was not paid to the assignee, it became due the lessor. Such a view must be rejected. The assignment vested in the assignee the right to receive the rent until its debt should be paid. Until the right was discharged the lessor had no valid claim to the rent. It might be discharged by payment or by its surrender. No discharge has been shown. So far as the record discloses, the lessees remain liable to the assignee for the rent accrued during the period dating from the assignment to the foreclosure sale. Failure to pay the assignee the rent, although a breach of the lessees' covenant with the lessor, did not revest the right to the rent in the lessor, and no claim of damage by reason of the failure is presented in the case. The lessor relies upon failure to pay rent to the mortgagee as the cause of the foreclosure sale.
As the lessor's assignment of the rent operated to terminate the lessees' obligation to pay it to the mortgagee, no estoppel arises against them on the ground that the lessor relied upon such payment after the assignment.
Former result affirmed.
All concurred.