Jarmulowsky v. Rosenbloom

Clarke, J.: This is an action brought to foreclose a mortgage on real estate. The order appointing a receiver pendente lite of the rents and profits of the property covered by the mortgage was made expcvrte. The mortgage contained the following clause: “ That the holder of this mortgage in any action to foreclose it shall be entitled, with [543] out regard to the adequacy of any security for the debt, to the appointment of a receiver of the rents and profits of said premises; and said rents and profits are hereby, in the event of any default or defaults in paying said principal, installment or interest, assigned to the holder of this mortgage as further security for the payment of said indebtedness.” Section 714 of the Code of Civil Procedure provides that “ Notice of an application for the appointment of a receiver in an action, before judgment therein, must be given to the adverse party, unless he has failed to appear in the action, and the time limited for his appearance has expired. But where an order has been made as prescribed in section four hundred and thirty-eight of this act, the court may, in its discretion, appoint a temporary receiver, to receive and preserve the property, without notice, or upon a notice given by publication or otherwise, as he thinks proper. But where the action is for the foreclosure of a mortgage, which mortgage provides that a receiver may be appointed without notice, notice shall not be required.” When the order appointing a receiver was made, the time limited for appearance in the action of the adverse party had not expired, no order directing the service of the summons by publication, as provided in section 438 of the Code of Civil Procedure, had been made, and the mortgage at bar did not provide that a receiver-might be appointed without notice. Furthermore, this record does not disclose any affidavit among the papers upon which the order was granted showing the value of the property, or that there was any likelihood that it did not furnish sufficient security for the mortgage debt. This court said in Eidlitz v. Lancaster (40 App. Div. 446) that it was well established that the existence of a receiver clause in a mortgage gave no absolute right to the appointment of a receiver. We said in Dazian v. Meyer (66 App. Div. 575): “Since the adoption of the Code the appointment of receivers is regulated by the provisions of sections 713 and 714, which are exclusive so far as the provisions cover the subject. (Colwell v. G. N. Bank, 119 N. Y. 408.) There is no doubt but that the provisions of section 713 cover the subject-matter involved in this action; but before a receiver could be appointed, it was essential that notice should be given to the owner of the property, the provisions of section 714 in this respect being mandatory, and an order appointing a receiver [544] without such notice is void. It is otherwise where the service of the summons has been had by publication. (Fletcher v. Krupp, 35 App. Div. 586.)” The foregoing proposition was expressly approved by this court in Woerishoffer v. Peoples (120 App. Div. 319). It follows that the order denying the motion to vacate the ex parte order appointing the receiver should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs. Ingbaham, Laughlin, Houghton and Scott, JJ., concurred. Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.