Robert K. Greenfield, Thomas F. Devine, Sundheim, Folz, Kamsler & Goodis, Philadelphia, for appellant.
Simon Mustokoff, Philadelphia, for appellee.
Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross, Arnold and Gunther, JJ.
[ 169 Pa. Super. Page 449]
Harry Stern, appellant, filed his bill in equity against Louis Sanet and Aaron Sanet, appellee, to compel an accounting for rents received as mortgagee in possession. The trial judge sitting as a chancellor, after full consideration of the testimony, entered a decree directing appellant to pay appellee the sum of $1,913.79 on the ground that appellee was entitled to credits for repairs and improvements made. Exceptions filed to the chancellor's adjudication were dismissed and a final decree entered.
The bill avers, inter alia, that appellant acquired title to premises 738 Mercy Street, Philadelphia, on November 26, 1948, subject to a mortgage in the sum of $800; that appellee, Aaron Sanet, became holder of the mortgage by assignment dated September 11, 1935, through Louis Sanet, admittedly a straw party; that the rents received by appellee as mortgagee in possession are more than sufficient to discharge the indebtedness secured by the mortgage, and that there is a balance to which appellant is entitled.
The evidence discloses, and the chancellor so found that at the time the mortgagee entered into possession on September 11, 1935, the property had no rental value whatsoever, it was vacant, had been skeletonized
[ 169 Pa. Super. Page 450]
by vandals and was in a dilapidated condition. The property lacked doors, windows, floors, a heating system and an electrical system. The exterior walls were in a state of disrepair, the rear wall was gone, a new roof was needed, together with plastering, papering and painting throughout. There is evidence to support the finding that the mortgagee expended $3,200. for such repairs and improvements as were necessary to preserve the estate; that $2,016. was received as rentals from the premises from June, 1938, to January, 1949; that taxes, sewer rent and water rent totaling $838.14 had been paid by appellee. The mortgage had been in default since April, 1933. The debt plus interest amounted to $1,491.65. The court below allowed credits for repairs and improvements in amount of $1,600 and entered the decree requiring appellant to pay appellee the sum of $1,913.79. It is contended by appellant that the rental income from the property must be applied to the reduction of the mortgage. With this argument we cannot find fault, but by the same rule of equity we cannot ignore a claim for costs of repairs, taxes and other improvements which although not set forth specifically as to dates and amounts were reasonable and necessary to maintain the property. The appellee in this case was an elderly man, unable to read or write any language, and unable to keep records. He did, however, establish by his own testimony and that of his witnesses that large sums of money were spent for repairs, improvements and taxes. Appellant himself admits that at least $700 should be allowed appellee for the repairs in question. No testimony was presented to contradict the mortgagee or his witnesses that the amounts for repairs were spent or that they were unreasonable.
The question, therefore, becomes whether under the evidence and the law the chancellor erred in allowing the mortgagee in possession credits for repairs, taxes
[ 169 Pa. Super. Page 451]
and water rents, and failed to charge appellee for sufficient amounts regarding rentals received. In regard to allowance for repairs, it was said in Harper's Appeal, 64 Pa. 315, at page 321, that: '* * * the mortgagee is to be allowed the expense of necessary repairs, and beyond that the rule is not inflexible; but it is subject to the discretion of the court, regulated by the justice and equity arising out of the circumstances of each particular case'. There is abundant evidence in the record establishing that appellee initially expended $2,000 to make the property habitable, and $1,200 thereafter for periodic repairs. The court below reduced these repairs to $1,600 or one-half the amount claimed on the ground that an owner should not be subjected to heavy charges and perhaps improved out of his estate by one who ...