Opinion
October 22, 1936.
November 13, 1936.
Mortgages — Rents — Collection — Application to taxes — Time of credit — Negligence — Set-off by real owner — Deposit to secure lease.
1. In an action by plaintiff as mortgagee to recover from the defendant as real owner the sum which plaintiff was obliged to pay at a foreclosure sale of the mortgaged premises in order to clear the title of the lien of delinquent taxes, the defendant was properly allowed as a set-off the amount of rents collected by plaintiff from the tenant of the mortgaged premises, where it appeared that plaintiff had not attempted to credit such rents on account of the principal of the mortgage debt until after judgment had been entered in the foreclosure proceedings, and after the present suit had been commenced.
2. Evidence offered by defendant that before the plaintiff took over the property the defendant had successfully collected the rents, and that after the foreclosure sale, when the title had passed to the plaintiff, a new lease was made with the same tenant and the latter paid rent under the new lease, was not competent to establish negligence on the part of plaintiff in failing to collect rents due from the tenant at an earlier date.
3. Where the tenant had deposited with defendant, as security for the rent under the first lease, a sum in excess of the amount claimed by defendant as a set-off because of the alleged negligence of plaintiff in collecting the rents, defendant could not keep such deposit and also be entitled to the set-off claimed.
Appeal, No. 259, Oct. T., 1936, by defendant, from judgment of C.P. No. 3, Phila. Co., Dec. T., 1933, No. 3461, in case of The Real Estate-Land Title Trust Company, Edward P. Loughran et al., original and succeeding trustees under deed of trust from John Loughran, v. Homer Building and Loan Association, successor to Fellowship Building and Loan Association.
Before KELLER, P.J., CUNNINGHAM, BALDRIGE, STADTFELD, PARKER, JAMES and RHODES, JJ. Judgment affirmed.
Assumpsit. Before GORDON, P.J.
Verdict directed for plaintiffs in amount claimed, less credit allowed defendant, and judgment entered thereon.
The facts are stated in the opinion of the lower court, by GORDON, P.J., as follows:
This is a suit by the plaintiff as mortgagee to recover from the defendant as real owner $4,370.77 which the plaintiff had been compelled to pay at a foreclosure sale of the mortgaged premises in order to clear the title of the lien of delinquent taxes. The defendant admitted liability for the amount in suit, but set up as a counterclaim, first, the sum of $2,400 in rents collected by the plaintiff from the tenant of the mortgaged premises, and, second, a similar amount representing rents which had accrued, and which the plaintiff had not collected from the tenant during the time the plaintiff was collecting the rents. The basis of the second claim was alleged negligence on the part of the plaintiff in failing to collect said rents.
With respect to the first of these defenses, the plaintiff attempted to credit them on account of the principal of the mortgage debt, by entering a credit on the judgment after this suit had been commenced. We think the trial judge properly refused to permit such an attempted credit to stand, because, under the authority of The Integrity Trust Company v. St. Rita B. L. Association, 112 Pa. Super. 343, the rights of the parties were fixed by the entry of the judgment (at which time the plaintiff retained the rents and gave no credit for them on the judgment). The plaintiff was, therefore, bound as a prudent trustee to apply the rent to the reduction of the overdue taxes. The trial judge did not err, therefore, in allowing this set-off and reducing the amount sued for by the amount of the rents so collected by the plaintiff.
With respect to the second defense, the defendant was given the opportunity to prove the plaintiff's negligence in the collection of the rents, but offered no competent evidence whatsoever to that effect. We think the court's action was proper in excluding the evidence actually offered. It amounted to no more than proof that, before the plaintiff took over the property, the defendant had successfully collected the rents, and that, after the foreclosure sale, when the title had passed to the plaintiff, a new lease was made with the same tenant. The defendant's success in collecting rents had no probative value in an issue involving the alleged negligence of the plaintiff at another time, and, similarly, the reletting of the property to the same tenant and the payment of rent by him under the new lease was not competent evidence of the plaintiff's negligence at an earlier date.
In addition, the tenant had deposited with the defendant $2,500 as security for the rent under the first lease, and the defendant still holds that sum. This was sufficient to meet the unpaid rent, and the defendant cannot keep the money and also have his set-off in this suit.
For these reasons we discharged the defendant's rule for a new trial and entered judgment on the verdict.
Defendant appealed.
Errors assigned, among others, were various rulings on evidence.
B.I. deYoung, with him B. Leon Brenner, for appellant.
Edward P. Loughran, for appellee.
Argued October 22, 1936.
The judgment is affirmed on the opinion of President Judge GORDON.