Court Opinion

ID: 9576109
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:21:01.096859+00
Date Added: 2024-06-11T12:59:02.774957
License: Public Domain

ON REHEARING
*97Don Walker, Portland, for the petition.
Before Perry*, Chief Justice, and Warner, McAllister**, Sloan and O’Connell, Justices.
*98Opinion modified ; petition denied.
SLOAN, J.
Defendants Emery petition for rehearing and ask that if the petition is denied, in the alternative, the amounts-we allowed as setoffs be applied on the debt secured by the mortgage foreclosed as of the date of the filing of the complaint herein. They further urge if the amount thereof equals or exceeds the amount of the default in payment of the debt, that the foreclosure be denied. This court has previously held that an equity court may allow a setoff in a suit to foreclose a mortgage when the equities of the parties require it. Pearson v. Richards, 106 Or 78, 94, 211 P 167. In fact, in this ease the right to claim these setoffs has not been challenged. See Hanna, v. Hope, 86 Or 303, 307, 168 P 618. We believe the facts of this case warrant the application of the setoffs here allowed to the debt due.
As mentioned in our former opinion, there were two mortgages which the plaintiff was attempting to foreclose. The suit to foreclose the mortgage on the property identified as the Emery Motel was denied. This was for the reason that payments made to plaintiff by a lessee of that property and credited on that mortgage were in excess of the amount of payment then due. Consequently, when the trial court determines the amount defendants are entitled to have credited on the foreclosed mortgage the excess of these payments should likewise be credited on the amount due plaintiff on the foreclosed mortgage. The plaintiff should not be entitled to apply all the payments on the one mortgage under these circumstances. As of the date of the filing of the complaint herein these excess payments would be the equivalent of an over*99payment of the total amount of the indebtedness due. In that event the defendants would be entitled to recover any overpayment by an appropriate action at law. In this instance, therefore, it is only equitable that the defendants are entitled to have this excess applied on the defaulted indebtedness. 3 Jones on Mortgages, 627 et seq., § 1899.
We come now to the question of interest. It should be borne in mind that the principal relief sought by defendants was a determination that a deed to real property, absolute on its face, was, in fact, a mortgage. We sustained the finding of the trial court that defendants were not entitled to this relief. However, we did allow defendants to recover the reasonable value of labor and materials used in the construction of a building on the property in question, for which plaintiff had never paid. By reason of the prayer for general equitable relief a court of equity will exercise the power to award interest when, “under all the circumstances of the case, [it] seems equitable and just * * 47 CJS 14, Interest §3; Ruth v. Hickman, 214 Or 490, 330 P2d 722. If, in this case, we had held the deed in controversy was a mortgage then, in that event, defendants would have been entitled to reasonable rental for the occupancy of the premises. We have held that defendants do not own the building and are not entitled to compensation for its use. However, we have held that plaintiff and defendant furniture company have not paid full consideration for the building and thereby have had the effect of the use and benefit of defendants’ money for the period of time they have occupied the building. We believe that with regard to this particular item we should exercise our equitable discretion and allow interest on the sum the trial court finds is still due defendants from the *100date of the defendant furniture company’s occupancy of the building. Sedgwick on Damages (9th ed) 625, § 315. The same rule should apply to the item of $3,500 allowed as the value of the lot upon which the building was built.
As to the amount allowed for the failure of plaintiff to insure and the resultant damage by windstorm, interest shall run from the date of the trial court’s decree. Interest on this item we believe is governed by Calcagno v. Holcomb, 181 Or 603, 185 P2d 251, and similar cases.
As to the excess payments on the Emery Motel mortgage we believe interest on this should date from the date the excess payments were made. This sum was unknown but readily determined by computation. Public Market Co. v. Portland, 171 Or 522, 625, 130 P2d 624, 138 P2d 916.
The former opinion is thus modified and the petition for rehearing denied.