Woodall v. North Carolina Joint Stock Land Bank of Durham

ClauksoN, J. C. S., 860, in part, is as follows: “A receiver may be appointed (1) before judgment, on the application of either party, when he establishes an apparent right to property which is the subject of the action and in the possession of an adverse party, and the property or its rents and profits are in danger of being lost, or materially injured or impaired; except in eases where judgment upon failure to answer may be had on application to the court.” N. 0. Prac. & Proe. (McIntosh), sec. 887, p. 1002; see. 888, p. 1003. C. S., 861: “In all cases where there is an application for the appointment of a receiver, upon the ground that the property or its rents and profits are in danger of being lost, or materially injured or impaired, or that a corporation defendant is insolvent or in imminent danger of insolvency, and the subject of the action is the recovery of a money demand, the judge before whom the application is made or pending shall have the discretionary power to refuse the appointment of a receiver if *432 tbe party against whom such relief is asked, whether a person, partnership or corporation, tenders to the court an undertaking payable to the adverse party in an amount double the sum demanded by the plaintiff, with at least two sufficient and duly justified sureties, conditioned for the payment of such amount as may be recovered in the action, and summary judgment may be taken upon the undertaking. In the progress of the action the court may in its discretion require additional sureties, on such undertaking.” Upon application for a receiver it is proper to allow a defendant to continue in possession of property upon giving a sufficient bond to protect the other claimants. Frank v. Robinson, 96 N. C., 28. Where there is danger of loss of rents and profits, instead of appointing a receiver the court may allow the defendant to execute a bond to secure the rents and profits and such damages as may be adjudged the plaintiff, and require an account to be kept. C. S., 861; Roper Lumber Co. v. Wallace, 93 N. C., 22; Durant v. Crowell, 97 N. C., 367; Lewis v. Roper Lumber Co., 99 N. C., 11; Ousby v. Neal, 99 N. C., 146. The court erred in directing a receiver to take possession and control of the mines, and machinery for operating the same, without giving the defendant an opportunity to file a bond to secure the payment of any proceeds therefrom, as the court might subsequently direct. Stith v. Jones, 101 N. C., 361. In Lumber Co. v. Wallace, supra, at p. 30, we find: “It is against the policy of the law to restrain industries and such enterprises as tend to develop the country and its resources. It ought not to be done, except in extreme cases.” Hurwitz v. Sand Co., 189 N. C., 1. In Ellington v. Currie, 193 N. C., at p. 612, it is written: “In 23 R. C. L., part section 3, p. 9, it is said: ‘The appointment of a receiver is part of the jurisdiction of equity, and is based on the inadequacy of the remedy at law, being intended to prevent injury to the thing in controversy, and to preserve it, pendente lite, for the security of all parties in interest, to be finally disposed of as the court may direct. It is held to be a proceeding quasi in rem. . . . The right to the-relief must be clearly shown, and also the fact that there is no other safe or expedient remedy/ Twitty v. Logan, 80 N. C., p. 69; Hanna v. Hanna, 89 N. C., 68; Thompson v. Pope, 183 N. C., p. 123.” In Clark on Receivers, Yol. 1 (2d ed.), part section 59, at pp. 67 and 68, the following observations are made: “The appointment of a receiver is ordinarily a harsh remedy because it takes custody of the defendant’s property out of his hands on an interlocutory order, before the court has had an opportunity to hear the merits of the case discussed, testimony relative to the merits introduced, and to pass on the final relief prayed for against the defendant. The appointment of a receiver should. *433 only be granted in a clear case. If it is in tbe power of tbe court to protect tbe plaintiff by granting- a less drastic remedy tban tbe appointment of a receiver, tbe court will usually do so. . . . Tbe appointment of a receiver, being a barsb and extraordinary remedy, might in many cases be dispensed witb by tbe defendant giving bond to tbe plaintiff to protect tbe plaintiff and to pay to tbe plaintiff tbe amount of any judgment plaintiff might secure against tbe defendant, which judgment might otherwise be made good out of tbe property if a receiver should be appointed.” Tbe defendants contend that they are entitled to have enforced in their favor tbe plain unequivocal language contained in section 7 of tbe mortgage or deed of trust duly executed by tbe plaintiffs, and providing in certain terms for tbe appointment of a receiver to take charge of tbe premises conveyed in tbe event of foreclosure of tbe deed of trust or mortgage. We think not under tbe facts and circumstances of this case. Tbe appointment of a receiver is a part of tbe jurisdiction of equity, then again, C. S., 861 was enacted long prior to tbe deed of trust in controversy, therefore it enters into and becomes a part of tbe conventions of tbe parties. Bateman v. Sterrett, ante, at p. 61. In 55 A. L. R., at p. 1028, citing a wealth of authorities, tbe following principle is stated: “A stipulation pledging tbe rents and profits and providing a receiver has been generally held insufficient of itself to entitle tbe mortgagee to tbe appointment of a receiver, unless further facts justifying such appointment are shown.” See 4 A. L. R., pp. 1417, 1418. Tbe plaintiffs’ farm was a going concern. Tbe appointment of a receiver is ordinarily a barsb and extraordinary remedy. Tbe court below has large discretionary powers, yet in view of tbe statute allowing bond and tbe facts and circumstances of this case, we think that tbe plaintiffs should have been allowed to execute such reasonable bond, witb sufficient security, as tbe court may deem proper, payable to tbe parties affected, conditioned to secure to them such damages as tbe court may adjudge in their favor upon tbe determination of tbe action. In tbe event of failure to give such bond, tbe court to make such order or orders in tbe cause by tbe appointment of a receiver, or otherwise, as will protect tbe rights of tbe parties pending tbe litigation. Tbe learned and careful judge in tbe court below, who tried tbe case, no doubt considered that tbe provision in tbe deed of trust was controlling, but not so (C. S., 861), and tbe equitable aspect should have been considered. Legal and equitable rights are now determined in one and tbe same action. Const., Art. IV, sec. 1. For tbe reasons given, tbe judgment of tbe court below is Reversed.