Jenks v. Hart Cedar & Lumber Co. , 143 Mich. 449 ( 1906 )

Montgomery, J.

For the purpose of presenting the legal questions in this case, the facts may be briefly stated. In 1897 John V. Cahill was the owner of 160 acres of land in Oceana county subject to two mortgages. The first mortgage was owned by Mary Groff and Margaret Zoller of Ft. Plain, N. Y. The second mortgage was owned by one Skeels and the present plaintiff. Cahill sold to defendant the hardwood timber on 15 acres of land, and defendant, during the fall and winter of 1897-98, cut and removed the timber. The mortgages were of record, and defendant was given notice after the first payment of $25 on the timber, and before the balance was paid, that the second mortgagee would not assent to the impairment of the security. Defendant replied that the owner of the fee claimed the right to sell the timber, and requested the second mortgagee to take prompt action if any was contemplated. No proceedings were then instituted. Plaintiff and Mrs. Skeels in 1902 filed a bill to foreclose the second mortgage. A decree was obtained and sale had on September 28, 1903, of the land, subject to the mortgage of Groff and Zoller, at $1,200. A deficiency of $647 was reported. Mrs. Skeels assigned to plaintiff her interest in the deficiency and also all right of action against defendant to recover for the timber taken. June 15, 1904, this suit was instituted to recover for the impairment of the security of the second mortgage. Judgment passed for the defendant on a special finding of above facts, and plaintiff brings error.

The circuit judge was of the opinion that the prior right of action for impairing the security rested in the first mortgagee, and that, in the absence of a discharge of that right on assignment thereof to plaintiff or a waiver of the right, the second mortgagee could not maintain the action, and also that, if a right of action ever did exist in plaintiff, it was barred by the statute of limitations.

Plaintiff maintains that a second mortgagee has such an interest in the land mortgaged as entitles him to maintain an action, and cites in support of this contention the case of Gooding v. Shea, 103 Mass., 360, which sustains the contention. It was there held that a second mortgagee had the right to maintain the action, and that the fact that the first mortgagee had a prior right would not, in the absence of a showing by the defendant of a satisfaction of the demand of such prior mortgage, defeat the action. See, also, 1 Jones on Mortgages (6th Ed.), § 684. Whether the case of Gooding v. Shea states the correct rule, or whether the right of the second mortgagee should be subordinated to the right of the first mortgagee, and not enforceable without the assent of the first mortgagee or a waiver of his prior right, we find it unnecessary to decide. As sustaining the view that the assent of the first mortgagee is essential to the right of the second mortgagee to maintain the action, see Sanders v. Reed, 12 N. H. 558.

In the present case, however, it appears that, if the Tight of action existed independently of the assent of the first mortgagee or waiver of his prior right, the action accrued more than six years before the suit was instituted. If, on the other hand, the assent of the first mortgagee or the waiver of his prior right was essential, the record shows no such assent. In the one view the action is too late, and in the other no right of action has as yet accrued.

It is sought to avoid the force of the statute of limitations in this case by the claim that the act of the defendant was not legally injurious until the mortgage matured, and that the removal of the timber was not in and of itself wrongful in a sense to entitle the mortgagee to immediately bring an actiofi. We are not able to see why one who has his security interest in property impaired by the wrongful act of another has not suffered a present injury.

The circuit judge reached the correct conclusion, and judgment is affirmed.

McAlvay, Grant, Blair, and Moore, JJ., concurred.