al value or profits arising from improvements made by himself, with the cost of which he is not credited.160

In order thus to charge one, as a mortgagee in possession, with the profits which he might have received by the exercise of reasonable diligence, it is necessary that he be in possession as mortgagee, and with knowledge that he occupies such a relation, and he is not so liable if he is in possession otherwise, or he believes himself to be a purchaser, and it afterwards turns out that he has merely a mortgage or other lien on the land.161

Annual rests.

The mortgagee is usually required, in accounting for the rents and profits received, to make a rest at the end of each year, if at that time the rents and profits received exceed the interest due, and to deduct such excess from the principal sum in determining the amount to bear interest during the following year, since otherwise the mortgagee would have the use of such excess without paying therefor.162 Occasionally the court will require the rests to be made more frequently than once a year.

163

160 4 Kent's Comm. 166; Moore v. Cable, 1 Johns. Ch. (N. Y.) 385, Kirchwey's Cas. 524; Jones v. Fletcher, 42 Ark. 422; Dozier v. Mitchell, 65 Ala. 511; Montgomery v. Chadwick, 7 Iowa, 114; McArthur v. Franklin, 16 Ohio St. 193; Hidden v. Jordan, 28 Cal. 302.

161 Parkinson v. Hanbury, L. R. 2 H. L. 1, Kirchwey's Cas. 550; Morris v. Budlong, 78 N. Y. 555, Kirchwey's Cas. 559; Daniel ▼. Coker, 70 Ala. 260; Young v. Omohundro, 69 Md. 424; Gaskell v. Viquesney, 122 Ind. 244; Hall v. Westcott, 17 R. I. 504. See Barnard v. Jennison, 27 Mich. 230.

162 Van Vronker v. Eastman, 7 Metc. (Mass.) 157, Kirchwey's Cas. 561; Moshier v. Norton, 100 Ill. 63, 73; Shaeffer v. Chambers, 6 N. J. Eq. 548, 47 Am. Dec. 211, Kirchwey's Cas. 548; Gladding v. Warner, 36 Vt. 54; Snavely v. Pickle, 29 Grat. (Va.) 27; Green v. Wescott, 13 Wis. 606; Gordon v. Lewis, 2 Sumn. 143, Fed. Cas. No. 5,613. 168 Adams v. Sayre, 76 Ala. 509; Gibson v. Crehore, 5 Pick. (Mass.) 146.

521. Effect of a lease of the land-Lease before mortgage.

In the case of a lease made by the mortgagor before making the mortgage, the mortgagee, if entitled to the possession as having the legal title, may at any time demand that the lessee pay the rent to him instead of to the mortgagor, and the lessee, after such notice, is liable to the mortgagee for rent, accruing since the date of the mortgage, which is due and as yet unpaid, and likewise for all rent thereafter becoming due,164 unless, perhaps, this has been paid in advance.165 The rights of the tenant under such lease to possession of the premises cannot, however, be affected by the making of a subsequent mortgage.160

Lease after mortgage.

After making the mortgage, the mortgagor cannot, even though in possession, make a lease of the land which will affect any right which the mortgagee may have, by virtue of his legal title, to obtain possession, and the latter may, if entitled to possession, eject the lessee.167 In the case of a lease thus made by the mortgagor, the mortgage previously

164 Moss v. Gallimore, 1 Doug. 279, Kirchwey's Cas. 316; King v. Housatonic R. Co., 45 Conn. 226, Kirchwey's Cas. 338; White v. Whitney, 3 Metc. (Mass.) 87; Mirick v. Hoppin, 118 Mass. 582; Kimball v. Lockwood, 6 R. I. 138, Kirchwey's Cas. 332; Comer v. Sheehan, 74 Ala. 452.

185 By some decisions, he is liable to the mortgagee for rent due after the notice, even though he paid it in advance before receiving notice. De Nicholls v. Saunders, L. R. 5 C. P. 589; Cook v. Guerra, L. R. 7 C. P. 132. Contra, Stone v. Patterson, 19 Pick. (Mass.) 476, Kirchwey's Cas. 331.

166 Moss v. Gallimore, 1 Doug. 279, Kirchwey's Cas. 316.

187 Keech v. Hall, 1 Doug. 21, Kirchwey's Cas. 314; Doe d. Roby v. Maisey, 8 Barn. & C. 767; McDermott v. Burke, 16 Cal. 580; Com、 er v. Sheehan, 74 Ala. 452; Russum v. Wanser, 53 Md. 92; Stedman v. Gassett, 18 Vt. 346; Gartside v. Outley, 58 Ill. 210; Henshaw v. Wells, 9 Humph. (Tenn.) 568; Downard v. Goff, 40 Iowa, 597; Lane v. King, 8 Wend. (N. Y.) 584, Finch's Cas. 197,

made is not regarded as vesting in the mortgagee a title to the reversion to which the rent is incident, and consequently, since there is no privity of estate or contract between him and the lessee, he cannot, by action or by distress, proceed for the recovery of rent.168 The tenant under such lease may, however, in order to avoid eviction by the mortgagee, "attorn" to the mortgagee by recognizing him as his landlord, thus creating a new tenancy, and such attornment is a good defense to the claim of the mortgagor for rent.169 Such a new tenancy under the mortgagee has been held to be sufficiently shown by the fact that the mortgagee has notified the mortgagor's lessee to pay the rent to him, and the latter has not repudiated the demand;170 and likewise by the fact that the tenant continues to occupy the premises after the mortgagee has entered thereon under his mortgage.171

522. Expenditures by mortgagee.

The mortgagee is entitled to pay off an incumbrance on the land prior to his mortgage, in order to protect the latter, and may claim a credit for the amount so paid;172 and

168 McKircher v. Hawley, 16 Johns. (N. Y.) 289; Massachusetts Hospital Life Ins. Co. v. Wilson, 10 Metc. (Mass.) 126; Teal v. Walker, 111 U. S. 242, Kirchwey's Cas. 332; Kimball v. Lockwood, 6 R. 1. 138, Kirchwey's Cas. 332; Evans v. Elliot, 9 Adol. & E. 342; Drakford v. Turk, 75 Ala. 339; Stedman v. Gassett, 18 Vt. 346; Hogsett v. Ellis, 17 Mich. 351; Bartlett v. Hitchcock, 10 Ill. App. 87.

169 Jones v. Clark, 20 Johns. (N. Y.) 51, Kirchwey's Cas. 322; Magill v. Hinsdale, 6 Conn. 464a; Sanderson v. Price, 21 N. J. Law, 637; Gartside v. Outley, 58 Ill. 210; Kimball v. Lockwood, 6 R. I. 138, Kirchwey's Cas. 332; Comer v. Sheehan, 74 Ala. 452. Contra, Hogsett v. Ellis, 17 Mich. 351.

170 Brown v. Storey, 1 Man. & G. 117; Stedman v. Gassett, 18 Vt. 346. Compare Bartlett v. Hitchcock, 10 Ill. App. 87.

171 Massachusetts Hospital Life Ins. Co. v. Wilson, 10 Metc. (Mass.) 126; Gartside v. Outley, 58 Ill. 210.

172 McCormick v. Knox, 105 U. S. 122; Harper v. Ely, 70 Ill. 531, Kirchwey's Cas. 563; Weld v. Sabin, 20 N. H. 533, 51 Am. Dec. 240;

178

on this principle he is entitled to be repaid, as part of the mortgage debt, any expenditures by him for taxes on the property.1 He is also entitled to recover reasonable expenses incurred in defending the mortgagor's title.174 He can claim reimbursement for insurance premiums paid by him when the mortgagor agreed to insure, and failed to do 80.175

The mortgagee is not usually allowed for personal services in connection with the management of the premises, though he may charge for the services of a bailiff whom it is necessary to employ.176

Repairs and improvements.

The mortgagee in possession is allowed for the cost of any necessary repairs made by him.177 He can claim to be reimbursed for improvements, as distinct from repairs, if these are necessary for the proper enjoyment of the premises, but

Davis v. Winn, 2 Allen (Mass.) 111; Hubbell v. Moulson, 53 N. Y. 225, 13 Am. Rep. 519, Kirchwey's Cas. 334; Comstock v. Michael, 17 Neb. 288.

178 Sidenberg v. Ely, 90 N. Y. 257, Kirchwey's Cas. 564; McCormick v. Knox, 105 U. S. 122; Mix v. Hotchkiss, 14 Conn. 32; Williams v. Hilton, 35 Me. 547, 58 Am. Dec. 729; Gooch v. Botts, 110 Mo. 419. 174 Godfrey v. Watson, 3 Atk. 517, Kirchwey's Cas. 563; Miller v. Whittier, 36 Me. 577; Riddle v. Bowman, 27 N. H. 236; Clark v. Smith, 1 N. J. Eq. 122.

176 Harper v. Ely, 70 Ill. 581; Stinchfield v. Milliken, 71 Me. 567; Fowley v. Palmer, 5 Gray (Mass.) 549.

176 4 Kent's Comm. 166; Godfrey v. Watson, 3 Atk. 517; Benham v. Rowe, 2 Cal. 387, 56 Am. Dec. 342; Eaton v. Simonds, 14 Pick. (Mass.) 98; Harper v. Ely, 70 Ill. 581; Elmer v. Loper, 25 N. J. Eq. 475; Moore v. Cable, 1 Johns. Ch. (N. Y.) 385; Turner v. Johnson, 95 Mo. 431, 6 Am. St. Rep. 62. By some cases, however, the mortgagee has been allowed a commission on rents collected by him. Waterman v. Curtis, 26 Conn. 241; Gerrish v. Black, 104 Mass. 400.

177 McCumber v. Gilman, 15 Ill. 381, Kirchwey's Cas. 536; Caldwell v. Hall, 49 Ark. 508, 4 Am. St. Rep. 64; Sparhawk v. Wills, 5 Gray (Mass.) 423; Harper's Appeal. 64 Pa. St. 315; Dewey v. Brownell, 54 Vt. 441. Contra, Barthell v. Syverson, 54 Iowa, 160.

prop

not usually if they are merely calculated to render the erty more desirable.178 But a mortgagee in possession or one standing in his place, as a purchaser under a void foreclosure sale,179 who, in the reasonable belief that he has the absolute title to the land, makes lasting improvements thereon, is usually allowed therefor in a proceeding by the mortgagor for redemption,180 on the general equitable principle

before referred to.181

$523. Insurance-By mortgagor.

The mortgagor has an insurable interest in the land,182 and may insure to the full value of the property, even though

178 Moore v. Cable, 1 Johns. Ch. (N. Y.) 385, Kirchwey's Cas. 524; Horn v. Indianapolis Nat. Bank, 125 Ind. 381, 21 Am. St. Rep. 231; Bradley v. Merrill, 88 Me. 319; Malone v. Roy, 107 Cal. 518; Dougherty v. McColgan, 6 Gill & J. (Md.) 275; McCumber v. Gilman, 15 Ill. 381, Kirchwey's Cas. 536; Miller v. Curry, 124 Ind. 48; Adkins v. Lewis, 5 Or. 292; Wells v. Van Dyke, 109 Pa. St. 330.

The mortgagor is, of course, bound to allow for the improvements if he consented to the making of them by the mortgagee. Bradey v. Merrill, 88 Me. 319; Cazenove v. Cutler, 4 Metc. (Mass.) 246; Shepard v. Jones, 21 Ch. Div. 469, Kirchwey's Cas. 514, per Jessel, M. R.

In England the rule is more liberal to the mortgagee, and he is allowed for lasting improvements of a reasonable character, increasing the value of the property. Sandon v. Hooper, 6 Beav. 246, Kirchwey's Cas. 511; Shepard v. Jones, 21 Ch. Div. 469, Kirchwey's Cas. 514; Henderson v. Astwood [1894] App. Cas. 150.

179 See post, § 554.

180 Mickles v. Dillaye, 17 N. Y. 80, Kirchwey's Cas. 526; Morgan v. Walbridge, 56 Vt. 405, Kirchwey's Cas. 539; Hicklin v. Marco, 46 Fed. 424; Ensign v. Batterson, 68 Conn. 298; Bradley v. Merrill, 88 Me. 319; Gillis v. Martin, 17 N. C. 470, 25 Am. Dec. 729; McSorley v. Larissa, 100 Mass. 270; Millard v. Truax, 73 Mich. 381; Harper's Appeal, 64 Pa. St. 315; Bacon v. Cottrell, 13 Minn. 194 (Gil. 183); Had. ley v. Stewart, 65 Wis. 481. But see Miller v. Curry, 124 Ind. 48. 181 See ante, § 241.

182 Royal Ins. Co. v. Stinson, 103 U. S. 29; Strong v. Manufactur ers' Ins. Co., 10 Pick. (Mass.) 40, 20 Am. Dec. 507; Jackson v. Massachusetts Mut. Fire Ins. Co., 23 Pick. (Mass.) 418, 34 Am. Dec. 69;