Summary
In Kelly v. Clement National Bank, 111 Vt. 65, 10 A.2d 201 (1940), we held that once the condition of a mortgage is broken, "the mortgagee becomes at law the absolute owner of the property and is entitled to immediate possession, and may, without notice, enter upon the property and take possession thereof, if he can do so peaceably and unresisted."
Summary of this case from Rassman v. American Fidelity CompanyOpinion
Opinion filed January 2, 1940.
Foreclosure. — 1. Chancellor upon Foreclosure Decree Can not Affect Vested Title. — 2. Extension of Redemption Restores Mortgagor-Mortgagee Relation. — 3. Mortgagee Becomes Legal Owner after Condition Broken, and Entitled to Possession. — 4. Tenant Paying to Mortgagee After Foreclosure Attorns. — 5. Attornment Constructive Eviction. — 6. Mortgagee's Right to Possession not Affected by Foreclosure. — 7. Mortgagee Must Account for Rents before Decree. — 8. Mortgagee not Liable at Law for Rents Pending Foreclosure.
1. It is difficult to infer anything relative to the modification of a decree of foreclosure after it had become absolute that conferred upon the chancellor power to disturb a title to real estate which had vested.
2. The effect of modification of a decree of foreclosure of a mortgage upon real estate which extends the period of redemption is to restore the relation of the parties to that of mortgagor and mortgagee.
3. After condition of a mortgage of real estate is broken the mortgagee becomes at law the absolute owner of the property and is entitled to immediate possession and may, without notice, enter upon the property and take possession thereof if he can do so peaceably and unresisted.
4. The tenant of premises upon which a mortgage has been foreclosed who, after notice so to do, pays his rent to the mortgagee attorns to him and becomes his tenant.
5. Attornment by a tenant to the mortgagee after the condition is broken is a constructive eviction which extinguishes the tenant's liability to the mortgagor, and he thereafter can be considered as holding possession of the property only for the mortgagee.
6. A mortgagee has the same right after a decree of foreclosure as before to take possession of the mortgaged property and to get the tenants to attorn.
7. A mortgagee is liable to account upon the mortgage debt for rents received before a decree of foreclosure finally becomes absolute.
8. A mortgagee who collects rent during foreclosure proceedings is not accountable at law for such rents.
GENERAL ASSUMPSIT, specifications for rent received, brought on appeal from a justice of the peace to and heard by Rutland Municipal Court, Christopher A. Webber, Municipal Judge. Judgment for the defendant. Plaintiff took exceptions, execution stayed and cause passed to Supreme Court. Affirmed.
William L. Scoville for the plaintiff.
Fenton, Wing Morse and R. Clarke Smith for the defendant.
Present: MOULTON, C.J., SHERBURNE, BUTTLES, STURTEVANT and JEFFORDS, JJ.
In 1934 the plaintiff gave the defendant a mortgage upon a piece of land in the city of Rutland. Upon the default of the plaintiff the defendant commenced foreclosure proceedings and obtained a decree on February 9, 1937. The time fixed for redemption is not found, but, as suggested by the plaintiff, we assume that it was the usual period of one year according to Chancery Rule 38, sec. 4. Prior to March 9, 1938, the defendant had not interfered with the plaintiff's possession of the property or with her collection of rents from the tenant thereon; but on that date the defendant had a certified copy of its foreclosure decree recorded in the city clerk's office, and notified the tenant then in possession of the property to pay rent to it. Thereafter the tenant paid to the plaintiff the unpaid balance of his rent for March, 1938, and in April and May paid to it the rent for those months. Later the decree of foreclosure was modified so as not to expire until August 31, 1938, and by agreement between the parties hereto the rents for June, July and August after being paid to the defendant were turned over to the plaintiff. This suit is for the recovery of the rents paid to the defendant for March, April and May.
Although the plaintiff admits that she did not redeem, she insists that the conclusions of the court below, that she was not entitled to recover, and that the defendant was entitled to the rents and profits after the notice to the tenant and his payment of the rent to the defendant, are erroneous.
The findings relative to the modification of the decree of foreclosure after it had become absolute are scant, and it is difficult to infer anything that conferred upon the chancellor power to disturb a title to real estate which had vested. See People's Trust Co. of St. Albans v. Billado, 108 Vt. 27, 182 A. 206. However, so far as the right of the plaintiff to recover in this action is concerned, we will take the position most favorable to the plaintiff and assume that the decree was properly modified. The effect of such modification was to restore the relation of the parties to that of mortgagor and mortgagee.
The condition of the mortgage was broken. After condition broken the mortgagee becomes at law the absolute owner of the property and is entitled to immediate possession, and may, without notice, enter upon the property and take possession thereof, if he can do so peaceably and unresisted. Crahan v. Town of Chittenden and Manning, 82 Vt. 410, 415, 74 A. 86; Fuller v. Eddy, 49 Vt. 11; Lull v. Matthews, 19 Vt. 322. When a lessee of the property in such case attorns to the mortgagee and becomes his tenant, as was done in this case when the tenant after notice to do so paid his rent to the defendant, there is a constructive eviction which extinguishes his liability to the mortgagor, and thereafter he can only be considered as holding possession of the property for the mortgagee. Stedman v. Gassett, 18 Vt. 346; Mason v. Gray, 36 Vt. 308; Trask v. Fountain, 93 Vt. 83, 106 A. 559.
The defendant had the same right after the decree of foreclosure, as before, to take possession of the mortgaged property and to get the plaintiff's tenant to attorn to it, and it was liable to account to the plaintiff upon the mortgage debt for the rents received before the decree finally became absolute. Hill v. Hill, 59 Vt. 125, 128, 129, 7 A. 468. But it is not accountable at law for such rents. Chapman v. Smith, 9 Vt. 153; Seaver v. Durant, 39 Vt. 103; Hill v. Hill, supra. Judgment affirmed.