law, he cannot be allowed to set up the illegality of the dealings be. tween himself and Hooker & Co. as a defence to these guaranties in the hands of a bona fide holder. He has put this paper, with his guaranty affixed to it, afloat upon the market. Unless.a clear case of violation 01 the statute is made out, and the burden of making such a case is upon the defendant, this guaranty in the hands of a bonafide holder is valid, and not tainted by any of the defences between the original parties. I may say further that it se6ms from the defendant's own testimony and from the accounts rendered-,-a transcript of S. G. Hooker & Coo's books-that the settlement in question and upon which these notes and guaranties were given, was for an account into which cash paid, commissions, and other elements entered which were not of a gamblinR nature; and it is ex.tremely doubtful in my mind, even if suit had been brought by S. G. Hooker & Co. against the defendant, he could, upon the showing now made upon this trial,. have successfully defended against their claim. The issues are found for the plaintiff.
See Melchert v. Am. U. Tel. Co. 11 FED. REP. 201, note.
(Oircuie Oourt, D. Indiana.
MORTGAGEE IN POSSEBSION-EN'rITLED TO POSSESSION AND RENTS.
Amor.tgagee in possession of the mortgaged premIses with the consent 01 the mortgagor is entitled to keep such possession and collect the rents on the property until the mortgage debt is paid, even though the mortgage be held to be a mere lien.
SAME-PAnOL AGREEMENT FOR POSSESSION'.
If a mortgage does not provide that the mortgagee shan be entitled to the possession of the premises, a subsequent parol agreement to that effect can be . made, and if the mortgagee goes into possession under it the contract between the parties then stands as though this prOVision were contained in the mortgage.
SAME-PRIOR RIGHT TO RENTS OVER PURCHASER m
Possession so taken cannot be disturbed by a purchaser of the property on execution·sale on a judgment, the lien of which attached after such POSsesliion' was taken, and such \Uortgagee is entitled to hold any rents collected by him as against such purchaser, notwithstanding a statutory provision which \Uakes the occupant of property sold at judicial sale the tenant of the purchaser of the same.
Submitted on Bill and Answer.
EDWARDS V. WRAY.
Baker, Hortl HendrickB, for complainant. Dailey x Pickerill, for defendant T. W. Hill.
GRESHAM, D. J. This is a suit to foreclose a mortgage. In addition to the usual averments the complainant alleges that in September, 1879, and some time before the filing of his bill: by an agreement between the mortgagor and himself the possession of the mortgaged premises was turned over to him tmd has been ever since retained by him.· He sets oui an itemized statement of the rents collected which have been applied towards the payment of.the interest on his mortgage debt. His right to so apply a part of these rents is denied by the defendant T. Wiley Hill, who, in his answer, claims that he is entitled to all the rents that have accrued since the third day of July, 1880, at which time he bought the mortgaged premises on an execution sale made on a judgment junior to complainant's mortgage. This claim is based upon the provisions of section 1 of an act which went into effect March 31, 1879, relative to the redemption of real estate sold on execution or decree of sale. That section is as follows: "Section 1. Be it enacted by the general assembly of the state of Indiana,
that, wheneverreal estate or any interest therein shall be sold on execution, the sheriff or other officer making the sale shall issue to the purchaser a certifi· cate of purchase. The. certificate shall entltle the purchaser, his heil'!l, or assigns to a deed of conveyance, to be executed by the proper officer, at the expiration of the time allowed for redemption, unless the property sold shall have been previously redeemed. The owner of the property shall be entitled to the possession thereof during the time the same is snbject to redemption; but if the same i" not redeemed, he shall be liable to the purchaser, his heirs. or assigns for the reasonable rents, profits, or use thereof; provided, if such owner is not the actual occupant of the premises sold, but the same be occu· pied by a teIlllont or other person, such tenant or other person shall be to the purchaser for the reasonable rent or use and occupation of the premises, and may be treated in all respects as the tenant of the purchaser, who shall, in case the property is allow, as a payment upon his jUdgment, the amount of the rent by him collected."
Hill insists that under this section from the time he obtained his certificate of purchase the complainant became liable to him as the occupant of the property. In other words, his position is that th.e agreement between the mortgagor and the complainant,· although made in good faith, must give way to the provisions olthe stattlte. The question, then, is, does the section of the statute quoted apply to the complainant's possession? It is admitted the com· plainant is a mortgagee in possession with the consent of the mortgagor, and that aside from the statute und-er has a
right to hold that possession and oollect the rents on the property until bis mortgage is paid. This is the rule at common law, oven where the lien theory of mortgages obtains. Russellv. Ely, 2 Black, 575; Witherell v. Wiberg, 4 Sawy. 232; Phyffe v. Riley, 15 Wend. 248; Hubbell v. Moulson, 54 N. Y. 225; Hennesy v. Farrell, 20 Wis. 42; v. Warschauer, 21 Cal. 609; Roberts v. Sutherlin, 4 Or. 219. In this sta.te there is a statutory provision that "unless a mortgage specifically provide that the mortgagee shall have ppssession of the mortgaged premises he shall not be entitled to the same." Themorlgage in suit did not contain such a provision. 'Notwithstanding this fact, the parties to this mol'tgage could enter into a parol agreement that the mortgagee should take possession of the mortgaged premises, and could oarry out such an agreementby putting the mortgagee in possession. Parker v. Hubble, 75 Ind. 5$0. This was in fact done in this case, and when thiB parol agreement was so executed by the surrender of possession on the part of the mortgagor the contract tween the parties to the mortgage then ,as though it had been specifically provided ill the that the mortgagee should be entitled to the possession of the mortgaged premises.. The redemption .statute of 1879 was not intended to defeat or abrogate ;rights acquired under sueh a contract. Its effect was meant to be limited to sales of property which should 'be sold independently of any contract pertaining to its use or possession. Its purpose was to furnish. rule which should be a.pplicableto sales of real estate, the dominion over which the judgment debtor or his assigns still held. It does not contemplate an interference with senior rights or equities created prior to the attaching of the judgment lien that i!l to be enforced by the sale. It relates to a remedy for the of judgments, and it, does not and could not inhibit a contract relation that might curtail that remedy. It is true that this statute was in force when the agreement in question was made, but, noJraud being charged, the parties to th/lt agreement had the ;right to enter into it,< and the is .entitled to protected in the rights t1:lu8 secured nothwithstaridipg the statute. Ed'I.Q(1,rds v. Wooclbwry, 1 McCrary 429; [So C. 3 FED·. REP. 14.] this proposition \Vould be true if the lien oOhe, judgment between the had attached prior to the making of th,e mortgagor and the ne.ed not qe decided.. The pleadings show that the agreemeLlt under which complainant went ipto, possession, of the mortgaged premises was made before
under which Hill derives title became a. lien on the real estate. When that lien came into existence it of necessity attached to real estate charged with the burden of the complainant's right of possession. It was a lien only on such au estate in the property in con· troversy as the judgment debtor at that time held, and the execution sale was made subject to any liens, pledges, or rights that he had fastened upon the real estate in favor of any other party. Munticello Hydraulic Co. v. Loughry, 72 Ind. 562. The complainant was in possession by his tenants, and this was notice of his rights. Bank v. Flagg, 3 Barb. Ch. 317; Wright v. Wood, 23 Pa. St. 120; Franz v. Orton, 75 Ill. 100 j Dickey v. :fyon, 19 Iowa, 544; O'Rourke v. O'Connor, 39 Cal. 442. The rights of complainant in the mortgaged premises as modgagee in possession were no more affected by the execution sale his rights under his mortgage. They alike remained intact.' The same equitable principles that authorize the appointment of 8;, receiver of mortgaged property m/l,ybe invoked in this case tos#stain the arrangement between the mortgagor and mortgagee by 'which the latter took possession of the premises. The mortgagor turned over the property to the mortgagee in order that the rents might beapplied to the payment of in'terest, but it appears that the interest' is greatly in default. It is to be presumed, therefore, that the gagor is insolvent or seriou8lyembarrassed, and that the pl'emises are not an adequate securi*y for the debt, and that these facts wete considered by the parties when the arrangement was made.. This court has uniformly held that under these circumstances a receiver should be appointed to protect the interests of the mortgagee. The arrangement made. seouredto the mortgagee without the aid ofa court just what the court would have given him as against not only the mortgagor but as against all junior lienholders. The purposes of the parties to this agreement were' of so equitable a character that they should be effectuated and not defeated. .The provisions of the redemption act ofl879 furnish no reason why thecol1rt should refuse the appointment of a receiver ripon proper' showing, and it is equally clear thfit .an amicable arrangem.ent between a mortgagor and mortgagee; which effected at once' what a receivership] would have indirectly accomplished, should be upheld, although it was made after the statute under ct>nsideration took effect.
(District Oourt, W. D. Tenne88ee.
April 29, 1882 I
CRIMINAL LAW-WITHHOLDL"'fG PENSION-REVISED STATu!rES, § 5485.
The section of the Revised Statutes punishing an agent or attorney, or other person instrumental in prosecuting any claim for pension, who shall wrongfully withhold from a pensioner or claimant the whole or any part of the pension or claim allowed and due such pensioner or daimant, is not confined to with· holding the money actually collected by the agent, but extends likewise to withagainst the will of the pensioner, the check or treasury warrant coming into his hands, and is intended to protect the pensioner againstfrauds until the unconditional payment of the money to him. Held, therefore, where an agent procured a power of attorney authorizing him to receive the letter containing the treasury warrant, received it from the post-office, assumed to have the authority to indorse it in the of the pensioner, and passed it by indorsement to a merchant in payment of a'small account due by the pensioner to the' merchant and in payment of a de.bt due by the agent himself to the merchant,. a.nd took to himself the merchant's. due.bill for the balance, that it was an offenc.eagainst the statute to negleot or refuse to pay the amount due to the Pensioner, and this without regard to·the authority'orthe wanl of authority in the agent to so indorse the check.
Indictment. The indictment in this case, containing two counts, charged thedefendant, as the agent and attorney of one Mary Jane Simmons in the prosecution of her pension claim, with wrongfully withhhoiding from her a certain portion of the pension granted by the United States. The claim was allowed in February, 1881, and on March 4th, following, the pensioner executed the proper vouchers for thesum of $333.86, the amount due her,. which were forwarded to the paying agency at Knoxville. Afterwards, on the same day, the defendant procured Mrs. Simmons to execute to him a power of attorney to receive from the post.office at Dresden all letters addressed to her concerning her pension, and sign "allpapera, acknowledg. ments, receipts, and vouchers" necessary to carry into effect the pow,erof attorney; but this instrument did not authorize defendant to· indorse the, pension check. The defendant then went to a merchant. in Dresden, represented that he Jlaa the power of attorney, and that it authorized him to indorse the check which would soon arrive, and. that Mrs. .8immcllls desired to purchase goods on C1'adit; .the merchant thereupon Bold her some $85 of goods, she agreeing to pay forthe same out of her pension money when it arrived. The pensionerwas an ignorant woman, who could neither read nor write.