Jones v. Costigan , 12 Wis. 677 ( 1860 )

By the Court,

PAINE, J.

Tbe question presented in this case is, whether tbe owner of a mortgage upon land, who has obtained a judgment of foreclosure and sale, can maintain an action for an injury committed upon tbe premises before tbe sale, wbicb impairs the security and prevents tbe full amount of the debt from being realized, tbe mortgagor being insolvent, and wbicb was committed wrongfully and fraudulently,witb tbe intent to injure tbe bolder of tbe mortgage. Such is substantially the case made by the complaint, and the court below dismissed it as not stating facts to constitute a cause of action.

It was contended, with much ingenuity, by the counsel for the respondent, that the action is not maintainable. And his conclusion was based upon what he claimed to be the result of the American authorities, that is, that a mortgagee has no interest in the land, and therefore cannot support an action for an injury to it. But we think this is making an extreme application of the doctrine alluded to, and one which ought not to be sustained.

It may be conceded that the mortgagor is the owner of the fee, and the mortgagee has only a lien or incumbrance on the land, In progressing from the common law rule, that the mortgagee was the owner of the legal title, and the mortgagor had only an equitable interest remaining, to the equitable rule, that the mortgagor is to be considered as the owner and the mortgagee as having a mere security, there has been much confusion and uncertainty as to the precise character of the interests of both. But it will be observed that these questions have generally arisen in settling other collateral questions arising out of the existence of the mortgage, such as the descent of the legal title, rights of dower, or rights of execution creditors against the mortgagor or mortgagee. And the conclusion which has been arrived at, that the mortgagor is to be regarded as the owner of the land, has not been based upon any diminution of the rights of the mortgagee, but upon the assumption that this conclusion was entirely consistent with the preservation of all his rights, according to the real intent of the contract, which was merely that he should have a security upon the land for his debt. When, therefore, it is said that the mortgagee has no interest in the land, this general language must be held to mean that the mortgagor is considered for most purposes as the owner,1 subject, however, to the right of the mortgagee to preserve and enforce his lien. And this right seems to us all that should be required to sustain this action.

For it is the boast of the law that there is no right without a remedy. And for the purpose of practically carrying out max'™, ao^orL on case a^ —n law was devised and beld in reserve, to redress those wrongs wbicb did not find a remedy in any of the established forms of action. The right here is conceded. The mortgagee has a valid in-cumbrance on the land,' which gives him the- legal right to subject it to the payment of his debt. The wrong must also be conceded for the purposes of the case. Eor it is alleged that the defendants fraudulently and wrongfully, and with intent to injure the plaintiff, diminished the value of the land by removing buildings and destroying trees, so that the plaintiff was prevented from subjecting the whole land, and all its value, to the payment of his debt, as he had a legal right to do. Now if there is no remedy for this, the law boasts of what it does not perform. The right is clear, and is a legal right. The wrong is palpable — but there is no redress. If there was any thing in the nature of the case that made such redress impracticable, of course that would be a good answer, for the law neither requires nor undertakes to perform impossibilities. . But when the facts present what would have been properly the subject of an .action on the case, and the redress is entirely practicable in such an action, we think that justice ought not to fail by an extreme application of the doctrine relative to the rights of a mortgagee, which was established to reduce him to the position of an incumbrancer, but was not designed to deprive him of protection as such.

Regarding this action in this light, the substance of the injury is the destruction or impairing of the security. Sustaining it is, therefore, not at all inconsistent with the cases which hold that the mortgagee, not having the right of possession, cannot maintain an action for a trespass on the land. A trespass might be committed, and a considerable injury caused, and yet the security remain unimpaired. The argument of the counsel would hold good as to such an action. Because the fact might be admitted, and it would not follow that any right of the mortgagee had been injured. But when it appears that the injury is such as lessens the security and renders it inadequate, then it does appear that he is injured, and unless he can maintain an action, his interest may be wantonly or maliciously destroyed with, impunity.

Eor it is no answer to say that he may resort to an injunction; it being conceded that courts of equity would restrain the commission of such waste as impairing the security. Eor it is obvious that it might in many cases be committed without the party’s knowledge. And the very fact that courts of equity will interfere in such cases to prevent the injury, seems to sustain the right of action for it after it is committed. Eor it is difficult to comprehend any reasoning by which the interference in the one case could be justified, which would not at the same time sustain the right of action in the other. Counsel seemed to feel the difficulty of this position, and attempted to explain the action of courts of equity, by saying that they enjoined the waste, not because the mortgagee had any legal right in the land which was injured by it, but because it was a violation of good faith on the part of the mortgagor. But surely courts of equity do not interfere to enforce the observance of good faith, where no rights are to be interfered with by its violation. And their interference at all can be justified only on the assumption that the mortgagee has an1 interest which is entitled to protection, and is injured by such a destruction of the value of the property, as leaves it an inadequate security. And it would seem a most inexplicable anomaly for the law to say to him through one of its tribunals, that if he could ascertain before hand that such an injury was contemplated, it would protect him by the extraordinary remedy of injunction ; and yet when it was inflicted before he became aware of the intention to commit it, to tell him through another tribunal, that he had no right which had been violated, and was entitled to no redress. We think, therefore, upon principle, that the action should be sustained. • .

And the authorities justify the same conclusion. It is conceded by the counsel for the respondent, that it is supported by the following: Van Pelt vs. McGraw, 4 Coms., 111; Gardner vs. Heartt, 3 Denio, 102. The principle on, which the action rests, is also established in Yates vs. Joyce, 11 John., 136, which was an action by a judgment creditor for arL rea^ esta*e 011 the judgment was a lien, debtor being insolvent, and the defendant Raving committed tbe injury wrongfully, with, a view to impair the plaintiff’s security. The same doctrine is also approved in Lane vs. Hitchcock, 14 John., 213. See also Smith vs. Moore, 11 N. H., 55.

These cases'not only fully sustain this action, but their reasoning, particularly that in Van Pelt vs. McGraw, furnishes a satisfactory answer to the cases most strongly relied on by the respondent. The same remarks there made in regard to Peterson vs. Clark, 15 John., 205, are applicable to Cooper vs. Davis, 15 Conn., 556. That was an action where the title to mill-stones was involved, which had been severed from the premises and sold by the mortgagor while in possession. The case turned upon the title to the mill-stones, and the question whether an action like the present could be sustained, was not involved. The language of the court relied on, relates to the action for waste, as known at the common law, for an injury to the property, without reference to the question whether the security was injured.

The right of action seems entirely clear, where the injury is committed by a mere trespasser. It is not at all impeached by the fact that the mortgagor might also sustain an action for the same injury. It is frequently the case that different persons, having different interests in property, have each a right of action for an injury to it, each recovering the damage to his own interest. The only difficulty that could arise, would be where the injury is committed by the mortgagor, or under his direction. He being the owner, and having the right to treat the property for all purposes as his own, subject, however, to the rights of the mortgagee, the difficulty would be to define precisely what acts should render him, or those acting under his authority, liable to an action. But we think that Van Pelt vs. McGraw establishes the true rule, and that where an injury is committed by the mortgagor, or other? acting by his direction, knowing his insolvency, and the existence of the security, and knowing that the act complained of will impair it, the action should be sustained.

The objection that the appellant cannot maintain the action as trustee, for tbe reason that it was a tort, and tbe right of action therefor could not be assigned, is not valid. If injury had been committed before the assignment, then it would be good; but here it was committed after the assignment, and the assignee, holding the title for the benefit of all the parties for whom it was made, is the proper plaintiff.

The judgment is reversed, with costs, and the cause remanded for further proceedings.