Mortgage, Of real estate. Equity Jurisdiction, To compel discharge of mortgage. Evidence, Extrinsic affecting writings. Trust, Damages for breach. Equity Pleading and Practice, Amendment.
In a suit in equity to compel the defendant to discharge a mortgage of certain land made to him by the plaintiff, it may be shown by oral evidence that the only consideration for the mortgage was an agreement in writing by the defendant to pay off certain prior incumbrances on the land.
In a suit in equity the bill alleged a conveyance of land to the defendant in trust to secure the defendant for the performance of an agreement to pay off certain incumbrances on the land. One of the breaches of trust alleged to have been committed by the defendant was his failure to pay off a mortgage, of which it was alleged that a foreclosure sale was advertised. After the filing of the bill this foreclosure sale took place, and the plaintiff was allowed to amend his bill by alleging such sale for a price much less than the value of the land and the consequent loss to the plaintiff. The defendant filed an answer to the bill as amended. Held, that the part of the bill added by amendment was to be treated as a supplemental bill, by means of which all the matters in controversy might be determined in one suit.
In a suit in equity to compel the defendant to discharge a mortgage of land made by the plaintiff to the defendant, it was shown that the mortgage was made to the defendant as trustee, in consideration of his agreement to pay off certain incumbrances on the land, including two prior mortgages on different portions of it, that the defendant committed breaches of the trust by allowing one of such prior mortgages to be foreclosed and the land covered by that mortgage to be sold for much less than its value, and by procuring an assignment of the other prior mortgage to himself. Held, that the plaintiff was entitled to a decree ordering the defendant to discharge the mortgage made by the plaintiff to the defendant and also the prior mortgage wrongfully obtained by the defendant by assignment, and also ordering the defendant to pay damages to the plaintiff for the loss of the plaintiff's equity of redemption through the foreclosure sale wrongfully permitted by the defendant, deducting therefrom such amount as was due to the defendant for payments properly made by him.
BRALEY, J.
The actual consideration of the mortgage, even if it purported to be security for the payment of the plaintiff's promissory note, could be shown by parol evidence. Gray v. McClellan, ante, 92.
It appears from the averments of the first, second and fifth paragraphs of the bill as amended, which are admitted by the answer, that the defendant held the mortgage as trustee under an agreement in writing requiring him to pay a prior mortgage on a portion of the property to one Travers, with the accrued interest fixed at a certain sum, and also a mortgage on another portion of the land to one Johnston, with a further amount for taxes due under a tax sale of other property which is not particularly described. If at the date of filing the bill the mortgage to Travers had not been foreclosed, the amendment setting forth the subsequent foreclosure to which the defendant has answered generally, may be treated as in the nature of a supplemental bill whereby all matters in controversy under the agreement can be determined in one suit. McMurtrie v. Guiler, 183 Mass. 451, 454, 455.
The defendant having become bound to preserve and protect the plaintiff's title, a breach which goes to the essence of the contract, or misconduct in discharge of the trust, entitles her to full relief, which may include the assessment of damages. Ginn v. Almy, 212 Mass. 486, and cases cited. Ashley v. Winkley, 209 Mass. 509. While the evidence has been reported the usual rule obtains. Manheim v. Woods, 213 Mass. 537. And the judge's findings of fact not being plainly wrong, it is manifest, that, although he paid the taxes and discharged the tax title, the defendant instead of paying the mortgage to Johnston procured an assignment to himself. It is also found, that acting in bad faith as fully pointed out in the sixth paragraph of the memorandum, he permitted the mortgage to Travers to be foreclosed, causing the plaintiff, who was given no opportunity to safeguard her rights, to lose a valuable interest in the equity of redemption. If the question of damages had not been in issue, the defendant, upon payment of the amount of the mortgage to Johnston, the taxes, and the incidental expenses connected with the examination of the title, should be ordered to discharge this mortgage, and also the mortgage given to him by the plaintiff, which, through his own deliberate failure in performance, left no debt remaining unpaid or obligation to be performed. Walton v. Ruggles, 180 Mass. 24. Indeed it would be anomalous, if after losing her estate through the defendant's contractural breach, as well as by abuse of his trust, the plaintiff also must pay the amount of the mortgage note as a gratuity. Paro v. St. Martin, 180 Mass. 29, 31. Rolikatis v. Lovett, 213 Mass. 545. But, as the damages assessed for the loss of the equity of redemption exceeded the total amount due the defendant, he was properly charged with the difference, and the decree ordering the discharge of both mortgages, and payment of the damages being in accordance with what has been said, it should be affirmed with costs. American Stay Co. v. Delaney, 211 Mass. 229, 233. Newburyport Institution for Savings v. Puffer, 201 Mass. 41.
Ordered accordingly.