Raun v. Reynolds

Baldwin, J. delivered the opinion of the Court

Field, C. J. and Cope, J. concurring.

The history of this case and most of the facts upon which the questions rest, appear in the opinion rendered at the January Term, 1860. After the case had been returned to the District Court, the proceedings were taken which are the subjects of present review.

The original opinion and judgment of this Court affirmed the right of Kirk and Reynolds to claim that the sale made under the decree of foreclosure of the mortgage executed to Raun should be held for naught, and that they be restored to the property sold. The question as to rents and profits received by Harris between the sale and the reversal, was not passed upon. The general direction upon the reversal of the judgment was, that the District Court should proceed to dispose of the case remitted, in pursuance of the principles of the opinion. The District Court, upon the filing of the remittitur, proceeded to enter a decree, setting aside and annulling the sale which had been made, restoring the defendants to the position, lights, franchises and estates of which they had been deprived, directing the plaintiff to deliver up possession to the defendants, awarding a writ of restitution upon refusal, vacating the credit upon the former decree of foreclosure, and appointing a referee to take an account of the rents and profits of the property while in the hands of Harris.

The directions of this decree, except the last one, are in express accordance with the decision of this Court. In respect to this last direction, which involves the question of the rents and profits, no express decision was made here; and the question was left open, not because we felt any serious doubt upon it, but because the amount involved was considerable, and the point had not been fully argued.

The general direction to the lower Court, to proceed in pursuance of the principles announced in the opinion, is a mere formality, which, of itself, neither gives authority nor limits the power of the inferior tribunal. Without such direction, the principles being adjudged, the same duty would devolve upon that Court. It could legally act in no other manner than in subordination to the principles declared by the stiperior tribunal. But the order in this case was for a decree by the Court below upon the facts as they appeared here; but this order did not prevent that Court from taking such a course of proceedings as would give full effect to the principles of the opinion of this Court; and the fact that this question as to the rents and profits was left open, sufficiently indicated that it was to be passed upon by the Court below, as that Court might consider accordant with the principles decided here. The District Judge has, accordingly, acted in the matter ; and the propriety of his action is now the matter before us.

1. We can see no reason for holding a distinction as to the respondents’ right between the restitution of the corpus of the property, and the restoring of the rents and profits received from its use. These, indeed, are but the income and revenue issuing from the property. The principle of our former decision was, that upon the reversal of the judgment under which the sale was made, the defendants, whose property was improperly sold, were entitled to be restored to the position which they occupied before, or would have occupied but for such sale; that the equity of Kirk and Reynolds was to be made whole in respect to this matter; and this, it is evident, could not be done without the surrender by Harris of what he received by the use of the premises, after deducting proper credits. In order to this end, it is necessary that an account should be taken of these rents and profits, and this has been ordered.

2. The first point taken by the appellant is, that although a Sheriff's sale may be set aside on motion, a party cannot be called upon in this form to account for rents and profits, but these must be recovered by suit. We were impressed by this argument when urged at the bar; but we think, on a more full examination, that it is not sound when applied to the facts of this case. Upon a mere question of remedy, the right being clear, we do not feel inclined unnecessarily to complicate and prolong this protracted controversy by affirming a right, and then doing justice piecemeal by sending the petitioners to another forum for the determination of this matter of account, especially as the account in this case determines nothing more than the amount received by Harris from the property, and therefore may be considered not so much as compensation, as restitution of what he actually got by the use of this property—as by sales of water, etc.

The opinion disposes of the question of the power of the Court in this way to order restitution of the property in specie, and we cannot see why a distinction should be made in a ease of this sort, between the power to restore property taken, and the power to restore money received by or from sales of the property, or of parts of it, as water.

The case of Cummings and Wife v. Noyes (10 Mass. 433) is relied on by the appellant. In that case it was held that the tenant, in a real action, against whom judgment has been rendered, may, after a reversal of such judgment by writ of error, maintain assumpsit for the mesne profits against the original demandant or his executors. Jackson, J. delivering the opinion of the Court, said: “ There is no doubt of the plaintiff’s right to recover the value of the mesne profits taken by the defendant, by virtue of the first judgment, which was afterwards reversed. The award or entry on reversal is that the plaintiff in error be restored to all things which he has lost by the judgment aforesaid; or, in case of a real action, it may be more particular, viz: That he be restored to the tenements aforesaid, with the appurtenances, together with the issues and profits thereof received in the meantime between the judgment aforesaid and reversal thereof, and to all things, etc. At common law, a writ of restitution then issues to the Sheriff, commanding him to restore the plaintiff in error to his seizin of the land, and also to inquire, by a jury, of the value of the issues and profits for the meantime; and the amount, when ascertained by this inquisition, to levy of the land and chattels of the defendant, and to pay the same to the plaintiff. This mode of recovering the mesne issues has never been adopted in this State. The inquiry of damages in other cases is always by a jury in Court, and not before the Sheriff; and indeed, the Sheriff never exercises this kind of judicial authority, except in certain cases, as of highways and mills, where he is specially authorized by statute. The only mode, therefore, under our laws, of ascertaining the value of the issues and profits, is by the verdict of a jury upon a trial in open Court.”

In Massachusetts, we believe, the English Chancery system never prevailed. At common law, as would seem from the extract just given from the judgment of the Court, a proceeding nearly analogous to this before us prevailed. The Sheriff, by an inquisition of damages, proceeded to execute the writ of restitution, by ascertaining and levying the damages. In this case, in whatever form this action to recover these profits be brought, it would be impracticable for a jury to settle the account, at least, without great delay and embarrassment. The account must necessarily be a long and complicated one, involving, probably, an inquiry into receipts of every day for a considerable length of time, and also an inquiry into the payments, expenses, disbursements, etc., made. This is in its nature an equity proceeding, at least, to be disposed of according to equity practice—even if there were no circumstances which imparted the character of a trust to the tenure of Harris, who entered into possession of the property by virtue of a sale by the Sheriff, it is true, but that sale made under and n enforcement of a mortgage. It is forcibly argued that Harris is in no better position than if he had entered directly under this mortgage; that, having taken the proceeds of this property, which was bound by the mortgage, and appropriated them to his own use, he cannot claim to hold the mortgaged property bound, and at the same time refuse to give the mortgagor the benefit of the amounts received from that property, which amounts go to diminish to that extent the value of the security, and which sums he could not have received but for this mortgage, and by a claim to enforce it; and that, in equity, it is wholly immaterial whether he used this mortgage property before or after the illegal sale of it; that he cannot claim to charge the mortgaged premises by his lien, and refuse to discharge them by money received from that property, and the assertion of his claim to it through the mortgage. If, without any sale of these mortgaged premises, he collected this money, by going into possession of the premises, or otherwise, it is clear that he must credit the debt charged on the property with what he so received; and we cannot see that the manner in which he entered—that manner being unwarranted— makes it any the better for him. He claims to be a purchaser, but in equity he was not a purchaser, but only a mortgagee. It is of no importance that the sale was not set aside until after the receipt of these rents or profits; when the sale was set aside, the order took effect upon the relations of the parties as they existed before the sale—the mortgagors and mortgagee having the same rights they had before. This leaves Harris, without any valid adverse claim, in possession of a portion of the mortgaged property pledged to pay the mortgaged debt, and hence the mortgagees have a right to call upon him to account for the sum so received.

Probably the principle might be even more broadly stated. When the mortgage is to be foreclosed, the controversy is to be settled upon equitable principles, and by these all the dealings of the parties, in connection with the mortgage or the mortgaged premises, are involved in the consideration and judgment of the Court. If the mortgagee has already derived from the mortgaged premises payment, or part payment of his debt, it would be inequitable to enforce the mortgage by a sale for the original amount of the debt. He must account, of course, for what he has got from the fund pledged to secure him, and it is not important how he got it. If he got it by contract, or the consent of the mortgagor, of course he must account; and surely he is in no better condition when he took without right, or by an invalid claim, than if he took justly and legally. If he went into possession, having no right to go in, as intimated before, he cannot insist upon his want of right to protect him in his acquisitions.

It is not very important, therefore, to consider the point so much insisted upon, that the decree of foreclosure merged the mortgage. We think, for all purposes of this inquiry, it did not. Harris or his assignor was as much mortgagee after the decree as before, as will be seen from the suggestion that the reversal of the decree would not affect the mortgage, and that if he had entered into possession after the decree, but before any sale, he would have been bound to account for what he received as mortgagee. The lien of the mortgage might, possibly, have been destroyed by the judgment, as the counsel suggests, but the mortgage was not destroyed; nor the relations of the parties as mortgagor and mortgagee; if so, what would become of warranties of titles, estoppels, etc., contained in or wrought by the covenants and terms of the instruments ?

The Court of Equity having jurisdiction of the mortgage suits should close the whole controversy, by settling and adjusting the accounts of these parties.

In view of these considerations, it becomes unnecessary to notice minor points. The District Court, upon the showing made, was right in its decree of restitution and for an account; and also in its order for an injunction, pending the taking of the account.

Perhaps the amount of the bond was not as large as should have been required. But on the coming in of Harris’ answer, this objection may be remedied, upon a proper case, by the District Court.

The decree and supplemental order, in both cases of appeal brought here, are affirmed, and the proper entries will be made accordingly by the Clerk.