DEXTER et al. v. ARNOLD et al., 7 F. Cas. 597

STORY, Circuit Justice. The exceptions have been argued by the learned counsel at large; but our opinion will be briefly stated upon all of them, as we do not think, that they .involve any serious difficulty. We shall first consider the exceptions of the plaintiffs. 1. The first exception is utterly unmaintainable. It is too loose and general in its terms, and points to no particulars. It comes to nothing, unless specific errors are shown in the report; and those errors, if they exist, should have been brought directly to the view of the court in the form of the exception itself.

At present it amounts only to a general assignment of errors, and the argument on this exception has shown none. 2 and 3. The second and third exceptions apply to the refusal of the master to inquire into the original consideration of the mortgage. Under the circumstances, the master was perfectly right. In the first placo, in the account settled between the original parties, on 31st of March, 1801. the mortgage was treated as a good subsisting mortgage for the full amount of the debt stated therein.

In the next place, the bill does not charge, that the consideration of the mortgage was nominal, or less than the amount stated therein; or that there is any error or mistake .therein; neither does it ask for any examination or overhauling of the original consideration upon any alleged error or mistake. It .was clearly, therefore, a matter not properly in issue before the master. See Chambers v. Goldwin, 9 Ves. 265, 266. 4.

The fourth exception is on account of the master’s having made a deduction of the supposed rent, upon the ground, that the premises were out of repair, and partly unten-antable, while in possession of the mortgagee and his representatives. The argument seems to proceed upon the ground, that the mortgagee was bound to keep the premises in good repair; and therefore ought to be accountable for such rents, as might have been obtained, if he had done his duty in regard to repairs. We know of no universal duty of a mortgagee to make all sorts of repairs upon the mortgaged premises, while in his possession.

He is bound to make reasonable and necessary repairs. But what are reasonable and necessary repairs must depend upon the particular circumstances of the case. If a house is very old and dilapidated, he is not bound to go to extraordinary expenses to put it into full repair, if those expenses will be greatly disproportionate to the value of the estate, or to his own interest therein. Certainly it cannot be pretended, that he is bound to make new advances on the estate. In Godfrey v.

Watson, 3 Atk. 518, Lord Hardwicke said, that a mortgagee in possession is not obliged to lay out money further than to keep the estate in necessary repair. In Russel v. Smithies, 1 Anstr. 96, it was decided, that a mortgagee, after long possession, was not bound to leave the premises in as good a condition as lie found them. The fact also, that there has been a diminution of value of the rents, was there declared not to be sufficient proof of a want of proper repairs. See Chambers v. Goldwin, 9 Ves. 265, 266.

It is quite a. different question, whether, if the mortgagee lays out money in proper permanent repairs for the benefit of the estate, he may not be allowed to claim an allowance therefor. That is *a point dependent upon other considerations. See 1 Pow. Mortg., by Coventry & Rand, 189a; 3 Pow. Mortg. 956. note a; Saunders v. Frost, 5 Pick. 259; Moore v. Cable, 1 Johns. Ch. 385; Trimleston v. Hamill, 1 Ball & B. 385; Marshall v. Cave, cited 3 Pow. Mortg. 957a. But where a mortgagee is guilty of wilful default or gross neglect as to repairs, he is properly responsible for the loss and damage occasioned thereby.

That was the doctrine asserted in Hughes v. Williams, 12 Yes. 495. And there is the stronger reason for this doctrine, because it is also the default of the mortgagor himself, if he does not take care to have suitable repairs made, to preserve his own property. In the present case, however, the point does not arise, for there is no evidence in the master’s report, which establishes any fact of wilful default or gross negligence in the mortgagee. 5.

These remarks dispose also of the fifth exception, which is founded upon the supposed dilapidations of the buildings, while in possession of the mortgagee. ' There is no proof whatever, that these were caused by his wilful default or gross negligence; but they were the silent effects of waste and decay from time. 6, 7, 8, 10. The sixth, seventh, eighth, and tenth exceptions are disposed of by two ■simple considerations. (1.) They all relate to matter which had been already disposed of in a former suit Dexter v.

Arnold [Case No. 3,856]. (2.) If Thomas Arnold (the intestate) was accountable at all for any of these matters, he was so in a suit brought against him as. agent or administrator of Jonathan Arnold, and not in this suit, which is merely a bill to redeem a mortgage. 9. The ninth exception admits of the same answer, with this additional consideration, that the facts referred to in it are not stated in the master’s report. 11. The eleventh exception proceeds upon the objection that the master has allowed interest, where none was due.

This exception proceeds upon the supposition, that the second and third exceptions were well founded. We have already decided, that the master was right in holding the consideration stated in the mortgage deed to be the true sum due, as ascertained in the account settled in 1801. 12. The twelfth exception is, because the books of Thomas Arnold were not produced before the master, or required by him to be produced. This is founded in a clear mistake; for the affidavits of Anna Arnold and James Arnold establish "the fact, that they were produced. 13.

The thirteenth exception is to the supposed denial to the plaintiffs of the right of examining the books of Thomas Arnold, produced under notice before the master. This exception has no facts, on which to rest it in the master’s report. The plaintiffs had no right to examine those books generally; but only such parts as related to entiles, charges and accounts relative to the matters in controversy in the suit.

If we pass aside from the master’s report, it appears by the affidavits, already alluded to, that a full examination, as to these matters, was allowed, so far as any of the books contained entries, charges, or accounts relative thereto. 14. The fourteenth exception is, that the report states no reason for the refusal of Samuel G. Arnold to join in .making repairs on the premises. That was not necessary. It was mere matter of evidence for the ■consideration of the master, in examining the point, whether there was any wilful default, or gross negligence of the mortgagee in not making repairs upon the premises. 35.

The fifteenth exception is to the refusal of the master to open the account settled in March, 1801. No leave was given to surcharge or falsify that account before the master; and after the long lapse of time and the circumstances stated by the master, that that account had already been adjudicated upon by this court in a former suit, we have no doubt, that he was right in his refusal to open the account. See 1 Pow. Mortg., by Coventry & Rand, 390a, note; Chalmer v. Bradley, 1 Jac. & W. 66. 16. The sixteenth and last exception is, that the rents allowed by the master are too low.

There is no évidenee of that; and we are well satisfied with his report on that head. Let us in the next place proceed to the consideration of the exceptions of the defendants. 1. The first exception is, because the master has charged Thomas Arnold’s estate with one third of the amount received by him upon the sale of the Pox Point lots. These lots were a part of the premises included in the mortgage now in question; and Thomas Arnold had sold them in December, 1S10, as his own property, by an absolute deed. In that deed there is a covenant of general warranty.

The argument of the defendants is: First, that this covenant of warranty formed a part of the consideration and price given by the purchaser for the store lots; and secondly, that as the conveyance was absolute, and not an assignment of the mortgage to the purchaser, the representatives of Jonathan Arnold are not now entitled to any part of that price. We think, that the master was right, and that the reasons stated by him for his judgment are sound. Thomas Arnold, the mortgagee, could not lawfully sell this one third of the premises except under his mortgage.

In selling an absolute estate to the purchaser, he was guilty of a fraud and wrong upon the mortgagor; and he ought not now to be permitted to take any benefit or advantage from that misconduct The covenant of warranty makes no difference in the principles applicable to the case. The deed, though absolute in its form, operated as a conveyance of a defea-sible title only to the purchaser as to this one third, and not as a disseisin, as between the mortgagor and mortgagee.

The case is precisely the same, in legal effect between the present parties, as if the mortgagee had elected to sell the one third for the benefit of the mortgagor, who subsequently adopted the act 2. The second exception is, that the decree was. that the master should take an account of the rents and profits received, by the mortgagee, whereas the master has allowed rents and profits not received by him. The master was right.

In- the first place the mortgagee kept no proper accounts of the rents and profits received by him; and, therefore, upon general principles, he was properly chargeable with what he might have received, and must be presumed to have received. In the next place, if the mortgagee was in the personal occupation of the premises, or of any part thereof, he was justly chargeable with an occupation rent, which might properly be considered, under such circumstances, as received by him, in the sense of the decree. See Wilson v. Metcalfe, 1 Buss. 530; 3 Pow. Mortg., by Coventry & Band, 946a, 948b, 949, and note.

There is more of technical nicety than solid justice in this exception, and we should not be disposed to encourage it, when it had no bearing on the merits. 3. The third exception is, that the master has allowed a much larger amount of rents than is contained in the accounts of the ad-ministratrix of the mortgagee, and admitted to have been received by him. We are of opinion, that the master was right, for the reasons stated by him.

The mortgagee kept no regular accounts; and the master has, therefore, been compelled to exercise a sound discretion upon the whole evidence as to the amount, with which he should be charged for rents and profits. The doctrine contained in Hughes v. Williams, 12 Ves. 493, and in Williams v. Price. 1 Pow. Mortg., by Coventry & Rand, 949a. note, 1 Sim. & S. 581, and Anon., 1 Vern, 43. shows the true grounds, on which courts of equity proceed in cases of this nature. 4.

The fourth exception insists, that the master should not have estimated the rents, for which the mortgagee is charged upon his general judgment; but should have charged only such a rent as might have been obtained by a letting at public auction. We think otherwise. The master was bound to charge the mortgagee with a reasonable rent. What, under all the circumstances, was a reasonable rent was matter for the exercise of a sound discretion, upon all the circumstances of the case.

An auction rent would not in many cases.afford either a just or a satisfactory standard of the real value, for which the premises might be let, or at which the mortgagee should be entitled to occupy them. 5. The fifth exception is, that the master has reported, that Thomas Arnold kept no regular accounts, which is an incorrect statement. We see no proof of that The master was the proper judge of that fact upon examining the books and the other evidence in the case. There is no evidence before us, that establishes in the slightest degree, that his conclusion was incorrect. 6.

The sixth exception is founded on the supposed incorrectness of the charge of cellar rent But there is not any evidence whatsoever upon the face of the report, which shows any such error of the master; and, therefore, the report must stand., We cannot presume errors, or go into evidence in support-of them, which was not laid before the master, or brought by him to the notice of the court. Exceptions must be made to matters apparent upon the face of the report, or upon the accompanying documents and proofs laid before the court upon the allegations and objections of the parties. 7, 8, 9, 10. 11.

All the other exceptions are founded in objections to the master's estimate and allowance of rents charged against tiie mortgagee. We are of opinion that, upon the circumstances stated in his report, that estimate was perfectly just and reasonable. It was a matter for his judgment; and there are no facts in the case, which impugn the propriety or soundness of his conclusions. Upon the whole our judgment is, that all the exceptions on both sides ought to be overruled, and the report ought to stand confirmed.

Decree: This cause came on to be heard on the report of the master, and the exceptions filed by the parties, and was argued by counsel, on consideration whereof it was ordered, adjudged, and decreed by the court that the exceptions, filed by the parties respectively, be, and the same are hereby overruled, and that the report of the master do stand confirmed, and thereupon it is further ordered by the court that the plaintiffs be at liberty to redeem the said premises by paying to the defendants the said sum of $1300.66, being the sum reported by the said master to be due on the said mortgage (together with interest thereon until the same is paid at six per cent), within ninety days from the day of rendering of this decree; otherwise, that plaintiffs be foreclosed of their right of redemption.

And if any of the plaintiffs shall pay towards the redemption of the said mortgage more than his propor- i tion of the money due thereon, he shall be deemed to have a lien thereon to the extent of the moneys so paid by him more than his proportion thereof, and that the plaintiffs do recover their full costs in the premises. Decree accordingly. S. P. Wragg v. Denham, 2 Younge & C. 117, 121. In the latter case, Mr.

Baron Alder-son, in delivering his judgment, said: “It is clear, that a mortgagee ought not to be charged with deterioration arising in the ordinary way, by reason of houses and buildings of a perishable nature, decaying by ruin, as was the case in Anstruther,” (above cited). He added, “I think, also, that a mortgagee ought not to be charged exactly with the same degree of care as a man is supposed to take, who keeps the possession of his own property.

But if there be gross negligence, by which the property is depreciated in value, the mortgagee, who is in possession, is trustee to the mortgagor to that extent, that he ought to be made responsible for the deterioration during the time of his possession.’’ (The above has been added since the original opinion was given by Mr. Justice Story.)