An owner of two adjoining parcels obtained on one of them a
building loan and erected an apartment house so near the line of
the property mortgaged that ten feet of his adjoining parcel was
absolutely necessary for properly conducting the apartment. During
the erection of the building, and after it was evident that such
ten feet adjoining was essential thereto, he obtained money for its
completion on a second mortgage; subsequently he conveyed both
parcels subject to the two mortgages on the parcel built on and
also to a separate mortgage on the adjoining vacant parcel. The
mortgages conveyed the property, together with the improvements,
ways, easements, rights, privileges and appurtenances appertaining
thereto. On foreclosure of the mortgages
held that:
Although an easement for light and air may not have been created
by implication, still, under the wording of the conveyances and the
circumstances of the case, an easement was created in favor of the
mortgagees of the parcel built on against the original owner, and
also against his grantee who tool with notice, in the ten-foot
strip adjoining the parcel on which the building was erected.
Page 200 U. S. 258
It was not necessary that both parcels should be sold as an
entirety, but, adequate proportionate protection as to the easement
being provided for the mortgagee of the vacant plot, the plot with
the building should be sold together with the easement on the ten
feet adjoining as one parcel, and the vacant parcel subject to the
easement, as another parcel, separately.
These are appeals from a decree of the Court of Appeals of the
District of Columbia, affirming a decree of the Supreme Court of
the District. The bill in the original case was filed by Grayson
and others against Wood, Talbott, Duke, and others, for the
appointment of a receiver for certain property situated in
Washington, known as the Victoria Flats; also praying an injunction
to restrain the sale of the property by the trustees of the first
mortgage; to have an adjudication of the right of an easement
alleged to be appurtenant to the property, and for the sale of the
Victoria Flats and certain property adjacent thereto, for the
marshaling of encumbrances, and for general relief. The facts
necessary to an adjudication of the case, as we view it, being
principally those found in the Court of Appeals, are as follows:
Mrs. Alice S. Hill was the owner of Lots 1 and 2 in Block 45 of
Hill's Subdivision, University Park, City of Washington. A diagram
of these lots is herewith given:
image:a
These lots fronted 150 feet (75 feet each) on Fourteenth Street,
and 190 feet on Welling Place (now Douglas Street). On January 13,
1897, Mrs. Hill conveyed these lots to Nicholas T. Haller. Haller
intended to erect an apartment house, which was subsequently placed
thereon, and became known as the Victoria Flats. To enable him to
build this structure, Haller negotiated a loan of $75,000, and, on
January 22, 1897, executed a deed of trust of that date to B. H.
Warner and Louis D. Wine, as trustees, hereinafter called the
Warner trust, describing in the deed the north 120 feet of the two
lots, and running westwardly to the depth of 124 feet, as shown on
the plat. At the same time, Haller executed a deed of trust to
McReynolds and Meriweather, as trustees, hereinafter known as the
McReynolds trust, upon the remaining portion of said Lots 1 and 2,
to
Page 200 U. S. 259
secure his notes to the amount of $12,315. There were no
improvements on the lots 1 and 2 at the time of making these deeds
of trust. Thereafter Haller erected the apartment house on the
portions of lots 1 and 2 described in the deed of trust to Warner.
In the erection of the building, Haller had become indebted to
mechanics and materialmen in the sum of $30,087.65, and in the
further sum of $10,350 for borrowed money. To avoid mechanics'
liens on the property and to secure the borrowed money, a second
deed of trust was placed on the property by the same description
contained in the Warner deed, Grayson and Heald being the trustees
named therein, hereinafter
Page 200 U. S. 260
known as the Grayson trust, and bears date December 20, 1897.
These deeds of trust were duly recorded. When the Grayson trust was
executed and delivered, the building had been erected by Haller,
the mortgagor. The building contained, upon the south and west
sides, in connection with which an easement is said to arise, a
large number of doors, windows, and porches, the porches
encroaching over the line of the property deeded in the McReynolds
trust 4=four feet and nine inches, and it is averred in the bill,
and not denied in the answers, that the areaways encroach five
feet. There are thirty-six windows in the west wall, nineteen in
the south wall, twenty-two doors in the west wall, five doors in
the south wall, four cellar windows each in the west and south
walls. It was stipulated in the case when it went back for final
decree in the supreme court as follows:
"The areaways on the west, and south sides mentioned by the
witness, William J. McClure, consist of excavations from the
surface of the ground downwards, projecting into the cement walk,
and protected by wooden platforms, on grade with and forming part
of the said walk, and provided with interstices or openings
admitting light to the windows below."
"On the south side of the building there is one doorway or
entrance, and on the west side four doorways or entrances opening
out upon the said cement walk, and not otherwise accessible from
the exterior of said building."
"On the said west wall, projecting out upon the said cement
walk, there are three garbage chutes for collection of garbage from
the building, and two openings into the cellar, through which the
coal supply of the building is received, the said garbage chutes
and coal cellars being accessible from the exterior only by means
of the said cement walk."
In both deeds of trust, in addition to the conveyance of the
parcels of ground described, there is the following language:
"Together with all and singular the improvements, ways,
easements, rights, privileges, and appurtenances to the same
belonging, or in any wise appertaining, and all the estate,
Page 200 U. S. 261
right, title, interest, and claim, either at law or in equity,
or otherwise, however, of the parties of the first part, of, in,
to, or out of the said land and premises, to have and to hold the
said land, premises, and appurtenances unto and to the only use of
the parties of the second part, the survivor of them, his heirs and
assigns."
A default having been made in the payment of interest due upon
the notes secured by the deeds of trust, it was arranged that
Warner and Wine were to collect the rents from the building, and
afterwards Woods collected the rents of the building for a while.
There is considerable testimony in the record tending to show an
alleged combination on the part of Wood and Talbot, who had
acquired the interest of Haller, to scale down the second, or
Grayson and Heald, trust, and to prevent the property's being sold
advantageously, all of which we deem unnecessary to consider in
determining the rights of the parties, and shall not undertake to
state the details concerning the same. It appears that Haller
originally intended to place the building so as to leave ample
space on the west and south, between the building and the lines of
the lot as covered by the trust deeds, but, being notified that a
space of 40 feet must be left on the east of the property and 20
feet on the north side, because of restrictions in the title of the
property, the building was placed practically on the lines of the
premises on the west and south, as described in the deeds of trust.
The porches and areaways thus necessarily encroached on the
adjoining property, as hereinbefore stated. In the view we take of
the case, it is important to state how Wood and Talbot acquired
their interest in the property. In March, 1898, Wood obtained from
Haller, in exchange for an equity of Wood's in another property, an
undivided one-half interest in the flats property, and Haller
conveyed the premises as described in the deed of trust to Warner,
together with a ten-foot strip of ground on the south and west
sides of the building (see plat), the deed being made for the same
by Haller to one Duke, who executed a declaration (dated April 9,
1898) that he held the
Page 200 U. S. 262
property in trust for Haller and Wood, one-half each. About the
same time, an arrangement was undertaken to be made by Haller, with
the knowledge of Wood, by the terms of which, upon the payment of
$4,000 upon the McReynold's trust, the 10-foot strip would be
released therefrom, and $4,000 was borrowed from a bank upon the
security of $4,000 of the McReynold's notes, which loan, not having
been paid, the release has not been obtained. On the first of
April, 1899, Talbot purchased Haller's remaining one-half interest
in the Victoria Flats property, and also one-half interest in that
covered by the McReynold's trust, and Wood purchased Haller's
remaining one-half interest in the McReynold's equity. The purchase
price paid by Talbot was $3,100, and by Wood, for the remaining
one-half interest in the McReynold's equity, $250. Thus, Wood and
Talbot became the owners of the equities of redemption in both
lots.
The Supreme Court gave the Warner trust a lien upon the ten-foot
strip as part of the mortgage premises, a second lien to the
Grayson trust, and ordered the property sold as an entirety at the
option of the trustees appointed to sell.
When the case was in the Court of Appeals upon appeal from the
original decree of sale, that court modified the decree below
insofar as it gave the Warner trust any lien upon the ten-foot
strip on the south and west sides, and ordered a decree in favor of
the Grayson trust upon this strip as an easement, and that the
property be sold as an entirety or in parts, according to the
discretion of the trustees ordered to sell. 22 App.D.C. 432. When
the case went back to the Supreme Court, the modified decree of
sale was entered, from which an appeal was taken to the Court of
Appeals, which affirmed the decree of the Supreme Court, 24
App.D.C. 55, and these appeals were sued out to this Court.
Page 200 U. S. 267
MR. JUSTICE DAY, after making the foregoing statement, delivered
the opinion of the Court.
These appeals raise practically three questions:
1st. Was the Warner trust entitled to an easement, and, if so,
to what extent, in the lands on the south and west of the flats
building?
2d. Was the Grayson trust entitled to a like easement in the
same premises? and,
3d. Was the property properly authorized to be sold as an
entirety, in the discretion of the trustees?
As to the first proposition, the Supreme Court was of opinion
that the Warner trust was entitled to ten feet on the south and
west sides of the property. The Court of Appeals was of the opinion
that, as the lots were not built upon at the time when the deed of
trust was executed, and it was not then known that an easement
would be necessary to the enjoyment of the property as constructed,
the Warner trust took only the conveyances of the land by metes and
bounds, without an easement, which that court held arose from the
manner in which the building and its appurtenances were
subsequently constructed and used.
The record discloses that the loan secured by the Warner trust
was made for the purpose of erecting a hotel or apartment building.
It is established that the first purpose of the proprietor was to
construct the building so as to leave an adjacent space and way for
its accommodation and use, between
Page 200 U. S. 268
its outer walls and the lot lands adjacent on the west and
south. This purpose was changed upon notification that restrictions
in the title of the property required the building to be set back
from the streets. The building was thereupon constructed by the
mortgagor in the manner shown. The deed of trust was a mortgage
security, and Haller continued to be the owner of the property to
the full extent of the lots. The building was constructed in such
wise that the use of some of the adjacent property, even
independent of an easement for light and air, was absolutely
necessary to the use and enjoyment of the building as constructed.
It did not need the expert testimony which was introduced in the
case to establish the fact that, if another structure should be
erected, practically even with the wall of the building, it would
prevent access to, and greatly impair the use of, the south and
west sides thereof. It would require the closing of the areaways,
the shutting of the windows and doors, and must necessarily greatly
depreciate the value of the property. The Warner trust contained
the language (above quoted) conveying the described premises, with
all and singular the improvements, ways, easements, rights,
privileges, and appurtenances to the same belonging or in anywise
appertaining, etc., to have and to hold, to the second party, their
heirs and assigns. It is true that there was no building upon the
property at the time when this deed of trust was executed, but it
is equally true that it was within the knowledge and purpose of the
parties that a building should be constructed, which would be the
principal security for the money loaned. And no one disputes that,
when Haller constructed the building upon the property, it became
immediately subject to the mortgage. He was the owner of the
adjacent premises, and when he abandoned the design to leave
sufficient space about the building for its proper use and
enjoyment, and erected it in such manner, and so close to and
overlapping upon other parts of his own property, as to require the
use of an easement therein in order to occupy the building, and
permit the enjoyment and use of it as constructed, we
Page 200 U. S. 269
see no reason why the express language of the conveyance above
quoted would not carry with the building thus constructed the
improvements, ways, appurtenances, rights, and privileges necessary
to the enjoyment of the same. The principle upon which subsequent
buildings and fixtures annexed to the realty become a part thereof
for the benefit of the mortgagee is thus stated in
Butler v.
Page, 7 Met. 40:
"All buildings erected and fixtures placed on mortgaged premises
by the mortgagor must be regarded as permanently annexed to the
freehold. They go to enhance the value of the estate, and will
therefor inure to the benefit of the mortgagee so far as they
increase his security for his debt, and to the same extent they
enhance the value of the equity of redemption, and thereby inure to
the benefit of the mortgagor.
Winslow v. Merchants Inc.
Co., 4 Met. 306. There is no necessity to adopt any liberal
rule in regard to fixtures to enable a mortgagor to remove what he
has erected at his own expense, because he had the full benefit of
all such improvements when he regains the estate by redemption,
which he may do, simply by payment of his actual debt. The general
rule of the common law, therefore, that what is fixed to the
freehold becomes part of the realty and passes with it has its full
effect in regard to things erected on the land by an owner who
subsequently mortgages the land, and also in regard to things
erected by the mortgagor after the mortgage."
To the same effect is
Graeme v. Cullen, 23 Gratt. 266.
Had Haller not owned the surrounding premises, but acquired the
adjacent ten-foot strip with a view of remedying the fault which he
had committed in putting the building flush upon the line, and
constructed his building so as to make the easement necessary to
its use, we think there could be no question that the easement thus
acquired would inure to the benefit of the mortgagee. Such is the
principle stated in
Hankey v. Clark, 110 Mass. 262. In
that case, tenants in common owned two adjoining tracts of land on
a river, the lower one
Page 200 U. S. 270
subject to a mortgage. They sold the upper tract, reserving to
themselves, their heirs and assigns, the right to draw water from a
reservoir on the upper for the use of the lower (mortgaged) tract.
The equity of redemption of one of them in the lower tract was sold
and vested in A, who also acquired title in that tract through
mesne conveyances under a foreclosure of the mortgages. The court
held that A was vested with the title to draw water from the
reservoir under the reservation. The court said:
"Incorporeal rights of this description, acquired by the
mortgagor subsequent to the date of the mortgage for the permanent
improvement of the estate and annexed by the terms of the
conveyance to the realty may be considered as passing to the
mortgagee by the foreclosure, to be exercised by him at his
election. There is no reason why incorporeal rights annexed to the
realty should not inure to the benefit of the mortgage security in
the same manner as improvements in the nature of fixtures inure.
Winslow v. Merchants Ins. Co., 4 Met. 306, 310. Until
foreclosure, the mortgage is deemed a lien or charge, subject to
which the estate may be conveyed, improved, and in other respects
dealt with as the estate of the mortgagor."
We cannot see that it makes any difference in principle that the
easement in the present case is annexed by the mortgagor by
necessity, as the result of the manner in which he has improved the
property. It is not contended that, as against the McReynolds
trust, created at the same time with the Warner trust and before
the erection of the building, an easement was acquired in this
strip, but we are now dealing with rights in the property as
between Haller and the mortgagee, and we think the granting clause
quoted above included not only the improvements, ways, and
easements upon the property at the time, but such as became
necessarily appurtenant thereto upon the adjacent property of the
grantor because of the structure which he has placed upon the
premises, to the enjoyment of which these privileges and rights are
essential. As to the extent of this easement, the conduct of the
parties in undertaking to acquire ten feet, for the obvious purpose
of
Page 200 U. S. 271
this easement, the overhanging porches, the encroaching areas,
seem to us to make ten feet a reasonable width, and no more than is
properly necessary. The unloading of coal, the carrying away of
garbage, and other necessary usages could hardly be accomplished in
a narrower space. In this view of the case, we find it unnecessary
to treat this as an easement exclusively for light and air, or to
enter upon a discussion of the doctrine of easements by
implication. Nor is it an answer to the effect of this annexation
to the property of the easement and rights resulting from the
manner of improving the premises conveyed to say that Haller, as
the owner, could not create an easement for himself in his own
land. The question here is what is the effect of his conveyance,
and what has he added to the realty in favor of his grantee in the
mortgage? We think he annexed not only the building, but the rights
and privileges in his adjacent land essential to its enjoyment.
2. As to the Grayson trust. In addition to the discussion
already had as to the right of the Warner trust to have an easement
in this strip, it is admitted that, when the Grayson trust was
executed, the building was up, the easement was in actual use and,
it is apparent, had become necessary to the building as
constructed. The purpose of Haller to use this part of the property
for the purposes stated is manifested in what he had done, and the
subsequent purchasers of the equity took with full notice not only
of the language of the recorded deed of trust, but had actual
notice of the condition of the property. We think this feature of
the case comes clearly within the doctrine ruled in
Shepherd v.
Pepper, 133 U. S. 626,
133 U. S. 650.
It is important to note in this connection that counsel for the
Grayson trust do not dispute the right of the Warner trust to have
a lien upon the easement in the ten-foot strip, and states that he
does not desire to be heard upon that subject. The persons
contesting that right (and as well the right of Grayson) in this
Court are Wood and Talbot, the successors of Haller, and, upon the
facts shown, standing in his shoes, and with full notice of the
necessity of this right of way or easement to the use of the
Page 200 U. S. 272
property, and Haller's attempt to obtain it by release from the
MeReynolds and Merriweather trust. It was subsequently specifically
covered in the conveyance in trust for Haller and Wood to Duke, and
it is admitted in the answer of Wood and Talbot that it was the
original intent to so place the building as to give room about it;
the rights of Wood and Talbot are no higher or better as against
either Warner or Grayson than Haller's from the facts presented in
this case.
Third. Was the decree right in ordering the sale of the property
in its entirety, in the discretion of the trustees? Sales are thus
ordered in entirety when the interests of the mortgagors and
encumbrancers require it.
Shepherd v. Pepper, 133 U.
S. 626,
133 U. S. 651,
and the authorities there cited. In this case, counsel for the
Grayson trust states in his brief that he does not insist upon such
sale as an entirety, and, in the draft of a decree as submitted by
him, no such sale is provided for. In the view we have taken of
this case, we cannot see that the first encumbrance, the Warner
trust, requires such a sale to protect that interest. There is no
dispute as to the lien of the McReynolds trust upon the property
described in their deed; as against it, no easement is claimed. We
see no reason why, with adequate protection for the McReynolds
trust in a sum to be found sufficient in the court executing the
decree to be retained out of the purchase money of the flats
property with an easement in the ten-foot strip, the flats may not
be sold with the ten-foot strip as one piece, and the remainder of
the property as another. Such a form of decree is suggested in the
brief of a counsel for the Grayson trust, and no encumbrancer seems
to object to it, and the holders of the equity of redemption insist
upon a separate sale. We think it would be the fairer way to all
concerned to order the sale of the property as herein
indicated.
We therefore, upon the whole case, modify the decree of the
Court of Appeals in respect to the Warner trust and the ten-foot
strip, and as to the sale of the property as an entirety, as
Page 200 U. S. 273
hereinbefore stated. In other respects, the judgment of the
Court of Appeals is
Affirmed.
This disposes of the appeals in Nos. 89 and 90, which were taken
from the last and final decree in the Court of Appeals. The appeal
in No. 439 was taken from the decree of the Court of Appeals
remanding the case to the Supreme Court, which was not final, and
it is therefore dismissed. The other appeals raise all the
questions made in the case.
