In a suit in equity for redeeming unoccupied and unenclosed city
lots from a mortgage, the mortgagee in constructive possession is
chargeable only with the amounts actually received by him for use
and occupation.
It would be unreasonable to charge him with interest on the
loans secured by the mortgage.
Respondent defended against complainant's claim to redeem by
setting up that the alleged mortgage was an absolute conveyance.
This being decided adversely,
held that, in accounting as
mortgagee in constructive possession, he was not liable for a
temporary speculative rise in the value of the tract, which
subsequently declined -- both during the time of such
possession.
Page 113 U. S. 543
The facts which make the case are stated in the opinion of the
Court.
MR. JUSTICE MILLER delivered the opinion of the Court.
This case was before us at the October term, 1877, and the
question then was whether certain instruments of writing, made by
Peugh to Davis constituted an absolute conveyance of lots in the
District of Columbia or were in the nature of a mortgage security
for loan of money. The court was of opinion that, on all the facts
of the case, the latter was the true construction of the
transaction between the parties.
The court below was directed to permit the plaintiff Peugh to
redeem the property by the payment of the loan, with interest at
six percent per annum, and, as it appeared that the defendant had
taken possession of the property, it was said in the opinion that
he
"should be charged with a reasonable sum for the use and
occupation of the premises from the time he took possession in
1865, and allowed for the taxes paid and other necessary expenses
incurred by him."
Peugh v. Davis, 96 U. S. 332.
Upon the return of the case to the Supreme Court of the District
of Columbia, it was referred to an auditor to ascertain the sum
necessary to redeem on that basis. Two reports were made, neither
of which were entirely acceptable to the parties or to the court,
which finally, by a decree in general term, allowed nothing for use
and occupation by defendant, but did make an allowance for a sum
received from the United States for its use, after deducting from
this latter sum the amount paid to an agent for its collection.
The appellant assigns for error that no allowance was made him
for the use and occupation by defendant.
The reply to this is that he never used and occupied it or
Page 113 U. S. 544
received any rents except the amount for which he is charged as
received from the government.
The lots were open, unenclosed, with no buildings on them, and
no actual possession or use of them was had by the defendant. His
possession was merely constructive under his interpretation of the
contract, that the land was his own. The witnesses say it was worth
nothing in its actual condition, and no evidence is given to the
contrary.
It is urged that a sum equal to the interest on the money
borrowed by Peugh should be allowed as rent, or for occupation,
from the time Davis asserted his ownership and possession. We can
see no reason for this, and it would have been in conflict with the
instruction contained in the opinion of this Court that he "should
be charged a reasonable sum for the use and occupation." If this
was worth nothing, that was the end of that matter.
It is said that during the period in question, the land rapidly
rose in value and afterwards declined; that Peugh could have sold
it, and probably was offered a sum for it which would have left him
a large profit, and that he ought in this transaction to set off
this loss against the amount he must pay to redeem.
This is not allowance for use and occupation. It is damages for
a tort. It cannot be recovered in this suit, if it could be
recovered in any.
The short answer to all this is that Mr. Peugh owed the money he
had borrowed from Davis. What he is now claiming in the original
suit is the right to pay the money and have a reconveyance of the
land. Nothing hindered during all this time that he should pay this
money, and if, as he alleges, Davis denied his right to do so, then
he should have made a regular and lawful tender of the amount
due.
If he had done so, the interest would have ceased to run against
him, and the amount that he is now required to pay would have been
diminished by more than one-half
A lame attempt is made to show that he did make this tender.
Some evidence is offered that he told Davis that he was ready to
account with him and pay what was due, and that he had the money
with him.
Page 113 U. S. 545
But in order to make a tender that would have caused the
interest to cease, he should have ascertained for himself the sum
due, or have fixed upon a sum which was sufficient and then made a
formal tender by counting out or offering that sum to Davis
distinctly and directly as a tender.
The fact that he did not do this is the answer to all that he
now claims in this Court. He has been permitted to redeem. His own
assertion of that right has been allowed him; but if he ever had
this money and was ready and willing to pay it, he did not do so.
He did not produce or show it. He did not fix the amount he was
ready to pay, but he took the money away with him, and used it
himself, and there is no hardship in requiring him to pay six
percent interest on it if he wishes to redeem the lots.
The decree of the Supreme Court of the district is
Affirmed.