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WEBBER V. RAMSEY.
(100 MICHIGAN, 58.] MORTGAGES—TIMBER AS PART OF MORTGAGE SECURITY-LIABILITY OF
PURCHASER. -A purchaser from a mortgagor of timber standing on the mortgaged premises and forming a valuable part of the mortgaged se. curity, with constructive notice of the mortgage at the time of his purchase, and with actual notice of its existence and of the insolvency of the mortgagor at the time he commences to cut such timber, is liable to the mortgagee for the value of the timber taken, in the event that upon foreclosure and sale of the mortgaged premises the pro
ceeds are not sufficient to satisfy the mortgage debt. MORTGAGES_RECORD OF As NOTICE OF LIEN ON TIMBER.-A record of a
mortgage of land on which is growing timber is constructive notice to the purchaser of the timber from the mortgagor of the lieu of the mort
gagee thereon. MORTGAGES-IMPAIRING SECURITY.-A mortgagee has a right to the whole
security to meet the amount of his mortgage encumbrance, and cannot be compelled to take a part. G. E. Nichols and F. D. M. Davis, for the appellant. W. O. Webster, for the respondent.
60 LONG, J. September 16, 1885, Levi Shotwell and wife executed a mortgage to the plaintiff for seven thousand dollars, with interest at seven per cent, payable annually. The mortgage covered two hundred and fifty-four acres of land, and was recorded in the office 61 of the register of deeds on the day of its execution. The mortgage contained an interest clause providing that, should any default be made in the payment of the interest, or any part thereof, on any day when payable, and the same should remain unpaid for twenty days, the principal, with all arrearages of interest thereon, should, at the option of the holder of said mortgage, become due and payable. September 16, 1889, Shotwell made default in the payment of the annual installment of interest. October 21, 1889, defendant in this suit purchased from Shotwell the timber on twelve acres of the mortgaged land, paying two hundred and twenty-five dollars therefor, and taking a bill of sale of said timber froin Shotwell. At the time of this purchase the defendant had no actual knowledge of the plaintiff's mortgage, though it was of record, but he was informed of it before he entered upon the land, and cut and removed the timber. October 24th of that year Shotwell made a common-law assignment of all his property to Laban A. Smith, and on the final settlement of that estate it paid only one cent and forty-eight one hundredths on a dollar of his unsecured indebtedness. October 26th defendant saw Shotwell, and ascertained that he had made such an assignment. He then called upon the assignee to get his permise sion to cut the timber, and was advised by him that the plaintiff would be injured by the cutting of the timber. On Sunday, October 27th, defendant entered upon this twelve acres with a force of men, and commenced to cut the timber. While proceeding with this work, and on November 1st, the plaintiff exercised his option under the interest clause in his mortgage, and commenced a suit in the circuit court for the county of Ionia, in chancery, to foreclose the mortgage, and made Shotwell and his wife, the assignee, and the defendant herein defendants in that suit. An injunction was allowed by the court, restraining the defendant from cutting or removing the timber in question, but it was afterward modified, and the defendant 62 allowed to remove the timber already cut, but restraining him from any further cutting. Subsequently, the complainant, in the foreclosure suit, by a stipulation between the solicitors and the order of the court thereon, dismissed his bill of complaint as to defendent Ramsey without prejudice, and thereupon the suit proceeded to a decree against the other defendants. The decree of foreclosure was for eight thousand one hundred and sixty-three dollars, and was dated December 22, 1890. On February 21st following, the premises were sold under said decree, and struck off to the plaintiff here for six thousand five hun. dred dollars, he being the highest bidder, and that being the highest sum offered for them. The circuit court commissioner who made the sale reported a deficiency of one thousand eight hundred and thirty-seven dollars and eightyfour cents, and the sale was duly confirmed. No execution was ever issued for the collection of this deficiency.
This action was brought by the plaintiff to recover from defendant Ramsey the value of the timber taken from the land. The cause was heard before the court without a jury, and the court made findings of fact and law, and entered judgment for plaintiff for three hundred dollars, finding that sum to be the value of the timber taken. The court found as a fact that the trees and timber standing and growing upon the mortgaged premises constituted a valuable part of the security for said mortgage indebtedness, and that the cutting of the same injured and deprived the plaintiff of his said security to the extent of the value of said trees and timber cut down and removed. Exceptions were taken to the conclusions of law, and the points raised for consideration here, as claimed by defendant's counsel, are: 1. That, as matter of law, the defendant is entitled to the judgment; 2. That, by reason of there never having been issued any execution for the deficiency on the sale on said foreclosure, the plaintiff is not entitled to recover; 3. That, defendant having purchased the timber of Shotwell in good faith, and paid for the same before notice of 63 the mortgage, he was entitled to remove such timber from the land; 4. That plaintiff had no interest in the land that would enable him to recover from the defendant for the alleged trespass by way of taking the timber that defendant had purchased, and that the plaintiff had no possessory rights before foreclosure.
The main contention upon the part of defendant is that the facts found by the court below do not warrant a recovery; that in order to enable the plaintiff to recover it niust appear that the defendant, at the time of his purchase of the timber, knew that the mortgagor was insolvent, and that the taking of the timber would impair the plaintiff's security; and that, inasmuch as the court found the mortgaged premises to be worth about eight thousand dollars at the time the timber was cut, and there was no finding that defendant knew of Shotwell's insolvency, judgment should have been given for defendant, It is conceded that circumstances may exist under which a mortgagee might recover for the removal of timber or other things from mortgaged premises by another; but it is claimed that such facts are not shown here; that, in order to recover, it must be shown that the purchasing and cutting of the timber was done by the defendant, knowing that the mortgagor was insolvent, and that the mortgagee's security would be impaired.
The findings of fact made by the court amply support the judgment. The mortgage was duly recorded before the sale of the timber was made to the defendant. He had construct. ive notice of the mortgage, therefore, before the purchase was made by him. Before any timber was cut he had actual notice of the mortgage and of the insolvency of the mortgagor. Notwithstanding such notice he went upon the premises on Sunday with a force of men and did the cutting. He knew at this time that the removal of the timber would impair the security of the 64 mortgagee. The mortgage was a valid encumbrance upon the land, and the mortgagee had the right to the whole security to meet the amount of his mortgage encumbrance, and could not be compelled to take a part. The facts found by the court below show conclusively that the defendant was not acting in good faith in cutting the timber, and in attempting to remove it. Upon the sale of the premises it was demonstrated that the mortgage security was lessened by the act of the defendant. It is not like some of the cases cited by defendant's counsel, where the property removed had gone into the hands of an innocent purchaser after its removal, and the action was commenced to recover against such third party. Here the party committing the act by which the mortgage security was lessened in value is made the party defendant, and the action is to recover from him the value of what he has taken away. The case falls within the principles laid down in Van Pelt v. McGraw, 4 N. Y. 110, in which the action was permitted to be maintained. Any other rule than this would permit the lands to be stripped of valuable timber, and even of the buildings, to the damage of the mortgagee. The buildings or timber frequently are the main part of the mortgage security; and, if twelve acres of timber could be cut and removed under the circumstances here stated, then the whole might be removed, or all the buildings removed, and the mortgagee would be without remedy. The bill upon which the injunction was allowed was dismissed as to defendant here without prejudice, and the defendant thereupon removed the timber cut. He must answer for its value.
MORTGAGEE's Rights AND REMEDIES AGAINST IMPAIRMENT OF VALUB of His SECURITY.—Injun tion. If a mortgagor in possession is about to remove buildings or fixtures from the mortgaged premises, or is about to cut, or threatens to cut, timber therefrom, or to commit other waste thereon, involving serious or irreparable injury to the land, and thus to render the Becurity inadequate to pay the mortgage debt, the mortgagee is entitled to an injunction against such removal or waste without averring or proving the insolvency of the mortgagor: Fairbank v. Cudworth, 33 Wis. 358; Bunker v. Locke, 15 Wis. 635; Scott v. Webster, 50 Wis. 53; Dorr v. Dud. derar, 88 Ill. 107; Nelson v. Pinegar, 30 III. 473; Adams v. Corrislon, 7 Minn. 456-464; Emmons v. Hinderer, 24 N. J. Eq. 39; Brady v. Waldron. 2 Johns. Ch. 148; Verner v. Betz, 46 N. J. Eq. 256; 19 Am. St. Rep. 387; Cooper v. Davis, 15 Conn. 556; Coleman v. Smith, 55 Ala. 369; Knary v. Conaway, 42 Ind. 260. The rule as maintained in these cases is well stated in Sulmon v. Clagett, 3 Bland, 125-180: “It is also well established that if the mortgagor, who holds the possession, commits waste, or in any man. ner attempts to diminish the value of the property, or where it consists of personalty, is about to remove it beyond the reach of his creditor, so as to reuder it unequal to the discharge of the debt, or to place it so as not to be forthcoming for the satisfaction of the debt, he may be restrained by injunction, and an injunction for such a purpose may be obtained at any time before the debt becomes due, for otherwise a fraudulent mortgagor might at his pleasure deprive the creditor of all benefit from his mortgage." To the same effect is Brudy v. Waldron, 2 Johns. Ch. 148. This doctrine has been invoked to prevent the mortgagor from removing buildings from the mortgaged premises, and thus impairing the security of the mortgagee: Dorr v. Dudderar, 88 Ill. 107; also to prevent him from removing machin. ery and other fixtures: Taylor v. Collins, 51 Wis. 123. And quite often to prevent him from cutting and removing timber from the mortgaged prem. ises: Bunker v. Locke, 15 Wis. 635; Fairbank v. Cudworth, 33 Wis. 358; Emmons v. Hinderer, 24 N. J. Eq. 39. In State Savings Bank v. Kercheval, 65 Mo. 682, 27 Am. Rep. 310, it was decided that as between the mort. gagee and mortgagor a frame building erected by the side of a mill for use as an office in connection with the mill is part of the realty, although erected after the mortgage was given, intended to be temporary only, and to be ultimately removed, and not attached to the mill, nor fixed to the ground, but resting upon wooden blocks sitting upon the surface of the earth; and its removal may be enjoined without allegation and proof that buch removal would work an irreparable injury to the land, and although the mortgagor who threatens to remove it is a person of undoubted solvency.
It is sufficient to show that there is no adequate remedy by action for damages. “There are inconveniences and perplexities to which one may be subjected by a trespass such as we are now considering for which a jury could not, under the rules of law, fully compensate him, and we think the provision of our statute broad enough, however the law may have been before its enactment, to authorize a resort to injunction in such cases": State Savings Bank v. Kercheval, 65 Mo. 682-689; 27 Am. Rep. 310.
In many cases it is held, however, that a mortgagor in possession cannot be enjoined from committing waste or removing buildings or fixtures from the mortgaged premises unless the acts complained of are shown to be such as to render the security insufficient for the satisfaction of the mortgage debt, or at least of doubtful sufficiency: Moriarity v. Ashworth, 43 Minn. l; 19 Am. St. Rep. 203; Buckout v. Swift, 27 Cal. 434; 87 Am. Dec. 90; Lavenson v. Standard Soup Co., 80 Cal. 245; 13 Am. St. Rep. 147; Vanderslice v. Knapp, 20 Kan. 647; Coker v. Whitlock, 54 Ala. 180; Harris v. Bannon, 78 Ky. 568. These cases all admit the rule that the mortgagor may be enjoined from committing waste or removing buildings or fixtures from the inortgaged premises in a proper case. They only aild that to entitle the mort. gagee to this remedy he must allege and prove that his security will be rendered insufficient or greatly impaired by such acts, otherwise a court of equity refuses to interfere.
A court of equity does not, unless under very special circumstances, grant an injunction when waste has been committed by the mortgagor in possession to prevent timber which has been cut from being removed. In ordinary cases the remedy by injunction applies only to stay or prevent future waste: Watson v. Hunter, 5 Johng. Ch. 169; 9 Am. Dec. 295. In an action to foreclose a mortgage, after judgment, and while awaiting confirmée
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