Hollenbeck v. Donell

Hardin, J.: Appellants’ counsel contends that “ the Code of Civil Procedure contains no provision which authorizes the appointment of a receiver in such a case, because of the inadequacy of the security and insolvency of the mortgagor.” We are of the opinion that section 713 of the Code of Civil Procedure confers power upon the court to appoint a receiver in such a case. It expressly declares a receiver “ may be appointed by the court * * * before final judgment on the application of a party who establishes an apparent right to or interest in the property when it is in possession of ■ an adverse party and there is danger that it will be * * * lost, materially injured or destroyed.” In the latter portion of the section is found, viz., “the word * property’ includes the rents, profits or other income and the increase of real or personal property.” It appears that the mortgaged premises are in the possession of the defendant Donell, the [95] mortgagor. It appears that the plain tiffs have an apparent right to have the property, including the rents and profits,'to the extent needed to pay their mortgage. It appears that they have an “ interest in the property,” including the rents and profits, and that such rents and profits are in the possession of the defendant, and that they may be lost or materially injured or destroyed unless a receiver takes possession thereof pending the proceedings to foreclose the mortgage. The section applies to such a case. That it should so apply is made clear by the language, and the note of Mr. Throop sheds light upon the intent of the codifiers, and that light leads in the direction we have already taken in the interpretation of the statute. In this State the mortgagor retains the title to the land, to the rents and profits, until the same is cut off by a foreclosure. (Hubbell v. Moulson, 53 N. Y., 228.) However, prior to the actual sale in foreclosure by virtue of the mortgage the mortgagee has an interest “ in the land and to the rents, issues and profits thereof so far as is necessary to secure and satisfy the mortgage debt, and the use of the- words ‘ interest in ’ may be apt to express the right of the mortgagee in the pi-emises and the rents and profits; and we are told by Mr. Throop’s note that the words ‘ or interest5 have been inserted in subdivision 1, lest the words ‘ an apparent right ’ might be construed to mean an exclusive right and exclude mortgage and partnership cases,” etc. It had been held in many cases before the section was adopted that the legal estate in the land and in the rents was in the mortgagor, and that the mortgagee had only an interest in, or an equitable title to, the lands and profits to the extent needed to satisfy the mortgage debt, (Packer v. The R. and S. R. R. Co. 17 N. Y., 295 ; Kortright v. Cady, 21 id., 366; Hubbell v. Moulson, supra; Syracuse City Bank v. Tallman, 31 Barb., 201; Sherman v. Willett, 42 N. Y., 146; Trimm v. Marsh, 54 id., 599.) The legislature in the light of these cases, used the language we have quoted, and thereby conferred a power upon the court to appoint a receiver in cases where the property was an inadequate security and the mortgagor was insolvent, and the law has been and remains such that the court has ample power to appoint a receiver pendente lite. (Nealis v. Bussing, 10 Weekly Dig., 289; Meigs v. Davis, 8 id., 381; Smith v. Tiffany, 13 Hun, 671; Rider v. Bagley, 84 N. Y., 461.) And when such a receiver [96] is appointed, lie acquires a specific lien upon the rents and profits which may be enforced through- the instrumentality of the receivership by the courts. (Ranney v. Peyser, 83 N. Y., 1, 7.) Upon the proofs before the' Special Term, in the exercise of -its discretion it was held that a proper case had been made for the appointment of a receiver. While we may review the discretion there exercised, we find upon looking into the proofs that there was evidence that the debt was inadequately secured, and that the mortgagor had defaulted in the payment of interest, had received money paid for buildings burned from the mortgaged premises and failed to apply it upon the mortgage debt, and that the property was deteriorating. Notwithstanding some of these facts were disputed, we are satisfied with the direction in which the discretion of the Special Term went, and believe it to be our duty to uphold the order appointing a receiver. (Smith v. Tiffany, supra) Smith, P. J., and Haight, J., concurred. Order affirmed, with ten dollars costs and disbursements.