Hyde Park Savings & Loan Co. v. Cowles

168 N.E.2d 602, 111 Ohio App. 343, 14 Ohio Op. 2d 323, 1960 Ohio App. LEXIS 737

• Court: Ohio Court of Appeals
• Decided: May 2, 1960
• Docket: 8703
• Status: Published

Opinions

Matthews, P. J.

This is an appeal on questions of law and fact, and the issues were presented at the trial de novo on a stipulation of facts.

The only parties affected by our decision are the plaintiff, the owner of the mortgage sought to be foreclosed in this action, and Louis Oskamp, a judgment creditor.

Harold A. Cowles and his wife borrowed $9,000 from the plaintiff on September 2, 1955, and gave their note therefor, secured by the mortgage which plaintiff seeks to foreclose in this action. This mortgage contained the usual provisions found in such mortgages, including a recital that the conveyance included 4 ‘ all the privileges and appurtenances to the same belonging, and all the rents, issues and profits thereof.” It also contained a covenant by the mortgagor that he would keep the premises in repair.

The mortgagor had leased the premises to one Ziegel for a period of three years, commencing on May 1, 1956, at a rental of $100 per month. On October 11, 1956, he transferred and assigned all his right, title and interest in the rents accruing under this lease to the plaintiff as further security, and at the same time the lessee accepted the assignment and agreed to pay the rent to the plaintiff mortgagee. In this lease there was a provision authorizing the lessee to make necessary repairs and deduct the cost from the rent.

Thereafter, that is, on August 6, 1957, the defendant acquired a judgment lien on the premises in the sum of $1,533.12.

The stipulation of facts discloses that the mortgagor was in default and had broken the provisions of the mortgage, and that the entire amount had been due during all this time.

In this situation, the lessee paid the rent to the plaintiff and the plaintiff paid the cost of the repairs. Finally, the lessee notified the plaintiff that certain repairs were needed to the roof, the floor and certain minor work on the furnace and some plumbing, totaling $1,204.21, and that unless these repairs were made he would vacate the premises and terminate the lease. The lessee had paid the entire rent to the plaintiff as he was authorized to do by the assignment, and therefore the plaintiff paid for these repairs. The mortgagor did not consent to the making of these repairs, but there is no suggestion that they were not necessary. Since the repairs were made, the plaintiff has collected from the lessee as rent an amount greater than the cost of the repairs.

On this statement of facts, it is the claim of Oskamp that in determining the amount of the debt secured by the mortgage, the amount paid for the repairs ($1,204.21) must be disregarded, but that credit for all the rent paid must be considered as a credit.

On the other band, it is the contention of the plaintiff that the transaction must be treated as entirely separate and distinct from the mortgage debt, each of the parties, mortgagee and lessee, exercising rights expressly given by the mortgagor to it.

We think the latter contention is the sound one.

But it is urged that only a mortgagee in possession has authority to make repairs and add the cost to the mortgage lien. We do not think this principle is applicable to the facts, although it is worthy of note that there is a concession in the Oskamp brief that the plaintiff was a mortgagee in possession. As already stated, we think this transaction relating to the repairs and the payment therefor is based upon collateral agreements having nothing to do with the amount of -the mortgage debt.

But it is pointed out that the plaintiff upon its books treated this as one transaction embracing the mortgage debt, the cost of repairs and payments of rent. We do not think this is of any legal significance. The plaintiff and the lessee were free to make whatever arrangement they desired relating to necessary repairs and the use of the rent to pay therefor, and the plaintiff was at liberty to adopt any bookkeeping system that it saw fit. The method it adopted correctly showed the balance due on the' mortgage debt.

For those reasons, we are of the opinion that in calculating the amount of the plaintiff’s lien, the costs of the repairs should be deducted from the rent collected by the plaintiff and the balance of the rent applied as a credit upon the mortgage debt.

A decree may be presented in accordance with this opinion.

Judgment accordingly.

Long, J., concurs.