The Chancellor.
There is no dispute as to the facts in this case. The only questions for consideration on this appeal therefore are, whether the decision of the vice chancellor is correct in relation to the right of the complainant to be endowed of the equity of redemption in the mort[67]*67gaged premises ; and if so, whether the proper provision has been made in this decree to protect the equitable interests of both parties. The vice chancellor is undoubtedly correct in supposing that, at the death of her husband in January 1825, the complainant was entitled to dower in the equity of redemption of the mortgaged premises. At that time the husband was seized of an estate in fee; subject to the payment of the mortgage which had been given for a part of the purchase money, and of the subsequent incumbrance thereon to E. W. King. Where a deed is given, and a mortgage upon the premises is executed at the same time, to secure the whole or a part of the unpaid purchase money, it is considered as one transaction only so far as is necessary to protect the rights of the mortgagee. Its effect therefore in relation to previous judgments against the grantee, or mortgagor, is the same as if such previous judgments had been recovered subsequent to the giving of the mortgage. And its effect upon the wife’s right of dower, in the mortgaged premises, is the same as if the mortgage had been given by the husband before the marriage.
What would have been the effect of an actual foreclosure and sale of the equity of redemption, during the lifetime of the husband, under a decree of this court to which the wife was not a party, it is not necessary to decide here. For in this case she had a vested interest in this equity of redemption, so as to entitle her to an immediate assignment of her dower therein as against the heirs at law of her husband, who died in possession, several months previous to the foreclosure and sale. The right of the wife to be endowed of an equity of redemption has been put at rest in this state ever since the cases of Hitchcock v. Harrington, (6 John. Rep. 290,) and Collins v. Torry, (7 Idem, 278,) decided by the supreme court in 1810.
It is true those were cases at law in which the persons contesting the wife’s right to dower derived their title to the equity of redemption from the husband; and not from the mortgagee, as in the case now under consideration. But as a general rule equity follows the law. And where [68]*68the heir has the right to redeem, and the wife is entitled to dower in the equity of redemption, she has the equitable right to redeem her dower, as against the mortgagee and those claiming under him, upon the payment of such portion of the incumbrance as is equitable and just. (Van Dyne v. Thayer, 19 Wend. Rep. 162.) Where that equitable right is actually vested in her, by the death of her husband in possession of the premises, as in this case, I can discover no principle of law or equity which authorizes the mortgagee to deprive her of it, except by the institution of such proceedings against her, to foreclose the equity of redemption, as are by law required to bar the equity of redemption of the heirs at law in the same premises.
For all substantial purposes the mortgagor in possession, and those who have derived title to the mortgaged premises, or any interest therein, under him, are considered as the real owners of the property, to the extent of their several interests therein. And the mortgagee is considered as a mere creditor who has a specific lien upon the premises for the payment of his debt. At the time Blackwell went into possession under the master’s deed, in. this case, however, as the mortgage money was not paid when it became due, he had, as mortgagee of the premises, the further right to take possession of the mortgaged premises, either on a voluntary surrender of the heirs at law, or by foreclosing the equity of redemption as against them ; and to hold that possession subject to the equitable right of this complainant to redeem her life estate in one-third thereof. The effect of the foreclosure in this case, to which she was not a party is, as between her and the defendants the grantees of Blackwell, the same as if Blackwell had taken possession of the premises, as mortgagee, without a foreclosure, and had then assigned all his interest in the mortgage and in the mortgaged premises to these defendants, at the time that he conveyed to them with warranty, in 1828.
Having arrived at the conclusion that the complainant was entitled to redeem her dower interest in the mortgaged [69]*69premises upon just and equitable principles, it remains to be considered whether the decree which the vice chancellor has made is in accordance with the legal and equitable rights of both parties.
The vice chancellor seems to have acted upon the supposition that a mortgagee who takes possession of the mortgaged premises, without actual foreclosure, after the mortgage money-has become due and payable, is to be considered as assenting to receive only that rate of interest which he had contracted to receive during the time for which the original credit was given. This I think was erroneous. And it was most unquestionably wrong to allow the complainant to redeem her life interest upon payment of five per cent only, upon one-third of the amount due on the mortgage, for the residue of her life; and to direct the possession of one-third of the premises to be delivered to her immediately, and without an actual redemption.
Where a mortgagee has contracted to receive a particular rate of interest, less than the legal rate, during the time of credit agreed upon by the parties, if he suffers the mortgagor to remain in possession añer the mortgage money becomes due and payable, it may perhaps be reasonable to presume that the understanding of the parties is that the interest shall continue at the same rate until the creditor thinks proper to demand payment. But there can be no such presumption where, as in this case, the mortgagee attempts to foreclose, and takes possession of the mortgaged premises under the supposition that he has actually acquired the equity of redemption as a substitute for his debt. It is true that, by a slip of his solicitor, the right of the widow to equitable dower, in the interest which her deceased husband had in the premises after the giving of the mortgage, has not been foreclosed ; and she is therefore entitled to redeem her dower therein upon equitable terms. That, however, does not entitle her to redeem upon payment of interest at the rate of five per cent only, down to the time of the probable termination of her life estate. For that would be making an entire new contract for the mortgagee, which he has never assented to either actually or impliedly.
[70]*70If this was a case between the mortgagee in possession, or those claiming title under him, and the mortgagor or his assigns who were entitled to the whole equity of redemption in the premises, the terms upon which a redemption should be allowed would be very simple. In that case, the amount due upon the mortgage at the time the mortgagee took possession under the supposed foreclosure, including the last instalment, not then due,but deducting therefrom two pér cent interest for the time it had to run, would have constituted the amount upon which interest should be computed, at the legal rate, for the purpose of ascertaining what was due upon the mortgage at the time of redemption;
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The Chancellor.
There is no dispute as to the facts in this case. The only questions for consideration on this appeal therefore are, whether the decision of the vice chancellor is correct in relation to the right of the complainant to be endowed of the equity of redemption in the mort[67]*67gaged premises ; and if so, whether the proper provision has been made in this decree to protect the equitable interests of both parties. The vice chancellor is undoubtedly correct in supposing that, at the death of her husband in January 1825, the complainant was entitled to dower in the equity of redemption of the mortgaged premises. At that time the husband was seized of an estate in fee; subject to the payment of the mortgage which had been given for a part of the purchase money, and of the subsequent incumbrance thereon to E. W. King. Where a deed is given, and a mortgage upon the premises is executed at the same time, to secure the whole or a part of the unpaid purchase money, it is considered as one transaction only so far as is necessary to protect the rights of the mortgagee. Its effect therefore in relation to previous judgments against the grantee, or mortgagor, is the same as if such previous judgments had been recovered subsequent to the giving of the mortgage. And its effect upon the wife’s right of dower, in the mortgaged premises, is the same as if the mortgage had been given by the husband before the marriage.
What would have been the effect of an actual foreclosure and sale of the equity of redemption, during the lifetime of the husband, under a decree of this court to which the wife was not a party, it is not necessary to decide here. For in this case she had a vested interest in this equity of redemption, so as to entitle her to an immediate assignment of her dower therein as against the heirs at law of her husband, who died in possession, several months previous to the foreclosure and sale. The right of the wife to be endowed of an equity of redemption has been put at rest in this state ever since the cases of Hitchcock v. Harrington, (6 John. Rep. 290,) and Collins v. Torry, (7 Idem, 278,) decided by the supreme court in 1810.
It is true those were cases at law in which the persons contesting the wife’s right to dower derived their title to the equity of redemption from the husband; and not from the mortgagee, as in the case now under consideration. But as a general rule equity follows the law. And where [68]*68the heir has the right to redeem, and the wife is entitled to dower in the equity of redemption, she has the equitable right to redeem her dower, as against the mortgagee and those claiming under him, upon the payment of such portion of the incumbrance as is equitable and just. (Van Dyne v. Thayer, 19 Wend. Rep. 162.) Where that equitable right is actually vested in her, by the death of her husband in possession of the premises, as in this case, I can discover no principle of law or equity which authorizes the mortgagee to deprive her of it, except by the institution of such proceedings against her, to foreclose the equity of redemption, as are by law required to bar the equity of redemption of the heirs at law in the same premises.
For all substantial purposes the mortgagor in possession, and those who have derived title to the mortgaged premises, or any interest therein, under him, are considered as the real owners of the property, to the extent of their several interests therein. And the mortgagee is considered as a mere creditor who has a specific lien upon the premises for the payment of his debt. At the time Blackwell went into possession under the master’s deed, in. this case, however, as the mortgage money was not paid when it became due, he had, as mortgagee of the premises, the further right to take possession of the mortgaged premises, either on a voluntary surrender of the heirs at law, or by foreclosing the equity of redemption as against them ; and to hold that possession subject to the equitable right of this complainant to redeem her life estate in one-third thereof. The effect of the foreclosure in this case, to which she was not a party is, as between her and the defendants the grantees of Blackwell, the same as if Blackwell had taken possession of the premises, as mortgagee, without a foreclosure, and had then assigned all his interest in the mortgage and in the mortgaged premises to these defendants, at the time that he conveyed to them with warranty, in 1828.
Having arrived at the conclusion that the complainant was entitled to redeem her dower interest in the mortgaged [69]*69premises upon just and equitable principles, it remains to be considered whether the decree which the vice chancellor has made is in accordance with the legal and equitable rights of both parties.
The vice chancellor seems to have acted upon the supposition that a mortgagee who takes possession of the mortgaged premises, without actual foreclosure, after the mortgage money-has become due and payable, is to be considered as assenting to receive only that rate of interest which he had contracted to receive during the time for which the original credit was given. This I think was erroneous. And it was most unquestionably wrong to allow the complainant to redeem her life interest upon payment of five per cent only, upon one-third of the amount due on the mortgage, for the residue of her life; and to direct the possession of one-third of the premises to be delivered to her immediately, and without an actual redemption.
Where a mortgagee has contracted to receive a particular rate of interest, less than the legal rate, during the time of credit agreed upon by the parties, if he suffers the mortgagor to remain in possession añer the mortgage money becomes due and payable, it may perhaps be reasonable to presume that the understanding of the parties is that the interest shall continue at the same rate until the creditor thinks proper to demand payment. But there can be no such presumption where, as in this case, the mortgagee attempts to foreclose, and takes possession of the mortgaged premises under the supposition that he has actually acquired the equity of redemption as a substitute for his debt. It is true that, by a slip of his solicitor, the right of the widow to equitable dower, in the interest which her deceased husband had in the premises after the giving of the mortgage, has not been foreclosed ; and she is therefore entitled to redeem her dower therein upon equitable terms. That, however, does not entitle her to redeem upon payment of interest at the rate of five per cent only, down to the time of the probable termination of her life estate. For that would be making an entire new contract for the mortgagee, which he has never assented to either actually or impliedly.
[70]*70If this was a case between the mortgagee in possession, or those claiming title under him, and the mortgagor or his assigns who were entitled to the whole equity of redemption in the premises, the terms upon which a redemption should be allowed would be very simple. In that case, the amount due upon the mortgage at the time the mortgagee took possession under the supposed foreclosure, including the last instalment, not then due,but deducting therefrom two pér cent interest for the time it had to run, would have constituted the amount upon which interest should be computed, at the legal rate, for the purpose of ascertaining what was due upon the mortgage at the time of redemption; after offsetting the rents and profits of the premises received by the mortgagee, and those claiming under him, in the mean time. And upon that balance being ascertained, the defendants would be entitled to a decree that it be paid within such time as the court should direct or that the complainant’s equity of redemption be absolutely foreclosed. Or at least they would be entitled to a decree for a sale of the mortgaged premises, to satisfy the amount thus ascertained to be due. But in neither case should the defendants, as grantees of the mortgagee, be divested of the possession of any part of the premises until their claim thereon was fully satisfied.
The adjustment of the equitable rights of the parties becomes more complicated, in this case, from the circumstance that the complainant has only a life interest in an undivided portion of the premises, and that there has been a valid foreclosure as to every other estate or interest. And the statute limiting a widow’s claim for arrears of dower, to the time when her dower is demanded, and declaring that she shall only recover the arrears for six years, renders the adjustment of her rights still more complicated. Still I think the rights of the parties can he adjusted without departing from the general principles upon which the court permits a redemption in other cases. In the ordinary case, of a life estate in the equity of redemption existing in one person and the remainder in fee belonging to another, if the mort[71]*71gagee has foreclosed the equity of redemption of the remainderman, but has, through inadvertence, neglected to make the owner of the life estate a party to the foreclosure, the latter cannot claim possession of the premises during the continuance of his life estate, upon paying the interest on the amount due upon the mortgage, from year to year, for life. But the court should in such case direct the master to fix a gross sum, upon the principles on which the present value of a life annuity is calculated, considering the annual interest on the amount then due on the mortgage as the annuity. And the proportion of the mortgage money which the owner of the life estate ought to pay being thus ascertained, he should be permitted to redeem his interest in the mortgaged premises by the payment of that amount; and then to be let into the possession during the continuance of his particular estate in the premises. Or the decree might direct his life estate to be sold, for the purpose of satisfying his proportion of the debt thus ascertained, and that the surplus arising from such sale should be paid to him. The same mode would have to be adopted, to settle the relative proportions which the owner of the life estate and the remainderman ought to pay, to redeem the premises, where the mortgage has not been foreclosed as to either. If the mortgagee has been in possession of the mortgaged premises, in such a case, the mode of ascertaining the balance due upon the mortgage at the time of redemption will also be precisely the same as if the equity of redemption of the whole premises, in fee, had belonged to one person.
Where the widow is entitled to dower in an equity of redemption and the mortgagee does not wish to enforce payment of the principal of his debt, the rule is, that as between her and the heir, or other owner of the equity of redemption, she must contribute sufficient to keep down one-third of the interest on the amount due. But where the mortgagee insists upon payment of his debt, as a condition upon which the owner of the general or of a particular estate in the mortgaged premises shall be permitted to [72]*72redeem, I am not aware of any principle upon which this court can be justified in requiring him to relinquish the possession of any part of the mortgaged premises, and to receive payment of a proportion of his debt, which is chargeable on that part of the premises, in periodical payments during the life of the party entitled to redeem. In the case of Russell v. Austin, (1 Paige’s Rep. 192,) where the person who ought to have assigned dower to the widow in the estate of which her husband died seized, afterwards bought in an outstanding mortgage against that estate, this question was not duly considered. And the language of the court in-that case has probably misled the vice chancellor in settling the decree in the case now under consideration.
In the assignment of'the widow’s dower, in case she elects to redeem upon paying a gross sum equal to her proportion of the interest on the amount due for life, or if it shall appear that her equitable right of dower is already redeemed by the rents and profits which have been received, or in the case of a sale of her life interest in one third of the premises to satisfy the defendants for that portion of the mortgage money and to give her the surplus, the admeasurement must be made upon the principles adopted by the legislature in the 2d subdivision of the 13th section of the title of the revised statutes relative to proceedings for the admeasurement of dower : (2 R. S. 490 :) That is, the master, in making the admeasurement, is to take into view the permanent improvements made upon the mortgaged premises since the master’s sale, in June 1825, by Blackwell, or by any one claiming under him ; and if practicable, to assign to the widow for her dower that part of the premises which will not include such improvements. But if it is not practicable to set off to her one-third in value of the premises independent of such improvements, without including some part of the permanent improvements which have thus been made within the part of the premises allotted for the complainant’s dower, a deduction is to be made in the lands assigned for her dower, in proportion to the benefits that share will receive from such [73]*73part of-the improvements so made, by Blackwell, or those claiming under him, as shall be included in the portion so assigned for dower.
The principles upon which a mortgagee, who takes possession of the mortgaged premises without a regular fore-closure, is to account, are substantially the same as those which the revised statutes have adopted in relation to the damages of the doweress in cases where her dower has been withheld from her after it was demanded : That is, the mortgagee is to be charged with the net rents and profits which he has received, or which might have been •received without any negligence on his part, after payment of taxes and ordinary repairs and other expenses of that character; but without charging him with the increased ¡rents and profits arising from the use of any permanent improvements made by him. (Moore v. Cable, 1 John. Ch. Rep. 385. 1 R. S. 743, § 21.)
Adopting the principles above suggested as those upon which the decree in this case should be settled, the proper mode of ascertaining whether the widow’s dower right in the equity of redemption has been already redeemed by the rents and profits of the premises, and if not, how much still remains to be paid by her to redeem the same, will be as follows :
Firsts to direct the master to ascertain the amount due for principal and interest on the mortgage at the time the mortgagee took possession under the master’s deed, on the 2d of June, 1825, including in that amount the last instalment of $700, less the difference of interest between five and seven per cent from the day of sale to the first of May, 1826, when that instalment was to become due and payable by the terms of the mortgage j that upon the amount thus ascertained he compute interest at the legal rate of seven per cent per annum, from the time of the master’s sale to the 6th of January, 1837, and add it to the amount upon which such interést was computed ; and that the master then compute and ascertain the value of the rents and profits of the premises for the same period, upon the prin[74]*74ciples before suggested : that is, the value of the net rents and profits which Blackwell, and the defendants as his grantees, have received, or which he or they might have received without any fault on his or their- part, but charging nothing for the increased rents and profits arising from the use of any permanent improvements made by Blackwell or those claiming under him subsequent to the master’s sale; and that the master deduct the rents and profits thus ascertained from the amount then due on the mortgage.
The reason for directing the computation to be made up to this time only, in the first instance, is that this was the time when the alleged tender was made, accompanied by a demand of the reconveyance of the whole mortgaged premises to the complainant. That, although invalid as a tender on account of the condition with which the offer was accompanied, was tantamount to a demand to be endowed of the equity of redemption at that time, upon payment of her equitable proportion of what was then due and chargeable on one undivided third of the estate in which she had a life interest. This 6th of January, 1837, is also the time at which the complainant’s right to damages for the detention of her dower should commence, if it turns out that one-third of the rents and profits received subsequent to that time were more than sufficient to redeem her life interest in one-third of the premises. After that time it is proper to offset the rents and profits of one-third of the premises against the interest of one-third of the balance then found to be due on the bond and mortgage. But if the rents and profits should be found to exceed the interest on the balance thus found to be due at the time of the demand of her dower, she will not be entitled to an execution against the defendants for the surplus, unless it is more than sufficient to redeem her life interest in the third of the premises. For a mortgagee in possession can never be required to pay any of the rents and profits of the mortgaged premises to the mortgagor until the whole amount of the mortgage money chargeable on the portion [75]*75of the estate belonging to the mortgagor, or to the person claiming under him, has been fully discharged.
The decree should therefore direct the master; Secondly, ’ ¿n to compute the interest on one-third of the amount of mortgage money which is found to have been due on the 6th of January, 1837, down to the time of taking the account j then to add to such interest a gross sum which will be equal to the then value of an annuity of the amount of one year’s interest for the probable continuance of the complainant’s life, upon the principles of computing life annuities, and at the legal rate of interest •, and then to compute and ascertain the value of the rents and profits of one-third of the premises, from the 6th of January, 1837, to the time of taking the account by the master, upon the principles before directed, and offset one account against the other and state the balance. If it shall be found that the rents and profits sd received subsequent to January, 1837, exceed the amount of the interest from that time including the gross sum allowed as an equivalent for future interest, the defendants must be decreed to pay such balance with interest thereon from the date of the master’s report, and to deliver up to the complainant the possession of that part of the premises admeasured and set off for her dower.
In case the balance should be found to be the other way, the complainant must redeem her dower interest, by paying such balance, with interest thereon from the date of the master’s report, within six months after the confirmation of the report, or her.equity of redemption will be barred. If she redeems, the defendants must surrender the possession of the premises assigned for her dower, and account for the rents and profits of the same subsequent to the date of the report. But in the case supposed, of a balance being found against the widow, she may, if she prefers it, instead of having a decree for a strict foreclosure, have a decree for a sale of the portion of the premises assigned for her dower j with directions to pay her the surplus proceeds of the sale, after paying the balance found due by [76]*76the master and interest thereon, together with the necessary costs and expenses of such sale.
The decree appealed from must be reversed, or rather -it must be remodeled in conformity to these principles and directions. And if the parties cannot agree upon a master to take and state the accounts, and make the assignment of dower, the assistant vice ehanellor of the first circuit, if consistent with his other duties, is designated for that purpose ; or in case he declines, one of the exception masters in New-York must be directed to discharge that duty.
Neither party is to have costs as against the other upon this appeal.