Harrison v. Wyse and others.

gagee, having purchased the equity, has united in one person both the legal and equitable title. The second mortgagee has a mere equitable lien. If the owner of the equity is not liable to account to the first mortgagee, even though he has the record-title in fee, a fortiori, he ought not to be so liable to the second mortgagee. There is no case where the owner of the land is required to account to one who has a mere lien. Such liability is inconsistent with the very nature of ownership. The reason why a mortgagor, in possession, is not required to account, is that the mortgagee ought to take the legal remedy to get possession himself. 2 Sw. Dig., 211. But this reason applies as well to the second mortgagee as to the first. All he has to do is to redeem the first mortgagee, and then he will be the first mortgagee.

3. To hold the defendants liable to account to the plaintiff, is to hold that they are bound to manage the property for the benefit of the plaintiff. But this is inconsistent with the rights of an owner, who is at liberty to manage as he pleases. As owner, the defendants, like any other owner, may occupy the property themselves, may lease it, or may let it go unoccupied. They may give away the use of it if they please. They are not liable for waste. They are not bound to exercise their judgment, or their diligence, for the benefit of one who has a mere lien.

4. There is no privity between the first and second mortgagees. The mortgagor still remains primarily liable to the second mortgagee. Non constat that he will not pay the debt. Why should the purchaser of the equity of redemption keep an account of the rents and profits of his own land, for the benefit of a third party who very likely may get his debt from the mortgagor? The first mortgagee, buying the equity of redemption, may, if he sees fit, keep his two titles distinct, and afterward sell the equity, subject to both mortgages. In this case, his purchaser would not be liable to account, nor would the seller be liable to account for the money he received for it.

Harrison v. Wyse and others.

5. The purchase of the equity of redemption by the defendants, though it may have extinguished the mortgage debt, as against the mortgagor, did not have that effect against the second mortgagee. Baldwin v. Norton, 2 Conn. R., 161. And the debt, being thus kept alive, continues with all its incidents, one of which is the accumulation of interest; the debt, in this case, consisting of notes drawing interest, and the interest being as much a part of the debt as the principal.

WAITE, C. J. The principles, relating to the accountability for the rents and profits of mortgaged premises, are well settled. The only difficulty, in the present case, is, as to their application. If the mortgagor is suffered to remain in possession, he is not accountable for them to any one. He is considered, in equity, as the owner of the property, and the mortgagee as having but a lien, for the security of his debt. If the latter wishes to appropriate them to his own use, he must, in the first place, obtain the possession of the property. Until that is done, he has no claim to the income.

On the other hand, if the mortgagee takes possession, and receives the rents and profits, he becomes accountable for them, and is bound to apply the net proceeds, in reduction of his debt. As soon as they are received, equity makes the application, and they have the same effect, as any payment made by the mortgagor.

When the latter applies to redeem, he is required to pay no more than the balance of his debt, remaining due after the application of all payments made by him, and the net proceeds of all rents and profit, received by the mortgagee, while in possession.

Whenever a second mortgagee applies to redeem a prior mortgage, he stands in the same situation as the mortgagor; is entitled to the benefit of all payments made by him, and all rents received by the prior mortgagee, and is bound to

Harrison v. Wyse and others.

pay no greater sum, than the mortgagor would, upon an application made by him.

In this case, the defendants held the prior mortgages, and under them, entered and took possession of the premises, and thereupon became accountable for the rents and profits, in any suit, brought either by the mortgagor, or the subsequent mortgagee, for the redemption of their mortgages. And this is admitted by their counsel, at least so far as the mortgagor is concerned.

But after they had thus taken possession, they purchased the equity of redemption, and thus, in equity, became the owners of the whole property, subject only to the mortgage now holden by the plaintiff. They now claim that, from the time of such purchase, they stand in the situation of the mortgagor, and became no longer accountable for the rents and profits.

The

This question becomes important only in one event. defendants, upon the present application, are put to their election, either to pay the plaintiff's debt, and take the property to themselves, or submit to be foreclosed of their equity of redemption, and permit the plaintiff to take the property upon payment of their debts secured by the prior mortgages.

In the former case, it is perfectly immaterial, whether they received the rents as mortgagees, or as assignees of the equity of redemption. In either case, they take the property upon the payment of the plaintiff's debt.

But, on the other hand, if they elect to be foreclosed of their right to redeem, and permit the plaintiffs to redeem their mortgages, and take the property, the inquiry becomes material, for the purpose of determining the amount which the plaintiff is required to pay, or in other words, the amount of their debts remaining unsatisfied.

As the defendants entered into possession of the property, in their character of mortgagees, received the rents and profits as such, and thereby became bound to apply them in part satisfaction of their debts, we are inclined to think, that, so

The Maritime Bank of Bangor v. Richard Rand & Son.

far as the plaintiff is concerned, they have not changed their position or accountability, by the mere act of purchasing the equity of redemption, but are to be considered as continuing in possession, in the same manner as when their occupancy commenced, and, of course, as accountable for all the rents. and profits by them received. Our advice therefore is, that the decree be made, in conformity with the opinion here expressed.

In this opinion the other Judges STORRS and HINMAN concurred.

Decree accordingly.

THE MARITIME BANK OF BANGOR US. RICHARD RAND & SON.

A writ against "R. P., doing business under the name and firm of R. R. & Son," is not a writ against a copartnership, but against R. P. only, and can not be amended by inserting the names of A and B and C as copartners with R. P.

THIS was an action on a bill of exchange.

On the 7th day of December, 1854, the Maritime Bank of Bangor prayed out a writ of attachment against Robert P. Rand, doing business under the name and firm of "Richard Rand & Son." Said writ was served by the attachment of real and personal estate, and by leaving a copy with Robert P. Rand. At the term of the superior court for the county of Middlesex, holden in March, 1855, to which the writ was duly returned, the plaintiffs moved to amend said writ, alleging in their motion, that, "having been informed since the bringing of the suit, that besides Robert P. Rand, who was served with the process thereon, Sarah W. Rand, Rebecca

The Maritime Bank of Bangor v. Richard Rand & Son.

G. Rand, and George Rand, of Middletown, Richard M. Rand, of Waterbury, and Charles S. Rand, now or lately of said Middletown, were at the time of the making of the several promises declared on by the plaintiff, secret, or dormant partners in the firm of Richard Rand & Son, and liable as such in said suit, they moved, in pursuance of the statute, in such case provided, within the first three days of the present term of the court, to which said suit was brought, to amend their writ, by inserting the names of the said several persons, as parties defendant in said suit."

This amendment, being objected to by the defendant, the question of its allowance was reserved for the advice of this

court.

Baldwin and Cowdry, in support of the motion.

1. It being assumed, for the purpose of this motion, that the persons, whose names are proposed to be added, were in fact dormant partners of the firm of Richard Rand & Son, it was not necessary that their names should have been inserted in the writ, in order to constitute a valid attachment of the property under his control. Dormant, or secret partners, need never be made a party to the suit, either plaintiff or defendant, because they are supposed to be unknown to the dealers with the firm.

They may be made parties, because, though unknown, they share in the profits, and therefore may justly be made liable, when discovered, to the responsibilities of the firm.

The present suit was, of necessity, instituted against "Robert P. Rand, doing business under the name and firm of Richard Rand & Son." Had the suit been in form against "Richard Rand & Son," Richard Rand being dead, and service made only upon the son, it would have been in effect the same. The suit is commenced by the service, and of course, only against those upon whom the service is made. In either case, the property of the concern, under the control of the party using the name, and served with the process,