First National Bank v. Cranmer

WHITING, J. In an action brought by the plaintiff against the Cranmers and others, wherein plaintiff sought the foreclosure of a real estate mortgage given it by the Cranmers, one Gannon was appointed as receiver, both -pendente lite and [407] until deed upon foreclosure issued, with authority to preserve the property and collect the rentals therefrom. .He collected large sums of money from the rentals. At the time of the rendition of the judgment of foreclosure, the receiver made a report to the court, reporting rentals collected, moneys paid for taxes and repairs, and the balance on hand. Of this report the Cranmers then had no notice. The court directed the payment of such balance, $307.96, to the plaintiff, and, in rendering judgment, credited that amount on the mortgage indebtedness. After the deed on foreclosure issued, the receiver made a report covering the period subsequent to the aforementioned judgment. He reported the rentals collected, the moneys paid out for taxes and repairs, and he sought to be allowed to pay out the balance in his hands for various and sundry things, among which was the satisfaction of the deficiency judgment left on foreclosure sale. This report also recited the former payment of the $307.96 that was applied on the mortgage indebtedness. To these reports the Cranmers interposed an answer, 'objecting to the allowance of cexdain of the payments that had been made by the receiver, and also objecting to the receiver being allowed to make certain other payments mentioned 'by him. in his report. On the issues so raised trial was had, the receiver appearing by plaintiff’s council. Findings of fact, conclusions of law, and judgment were entex'ed upon this receivership matter. From such judgment and from an order denying a new trial this appeal was taken by the Cranmers; the plaintiff and receiver being' named as respondents. [1] The motion for new trial was based upon tbe minutes of the court. The notice of intention to move for new trial set forth the specifications of -alleged error. There was therefore no record settled prior to the hearing. of the motion for new trial. Before there was axiy attempt to settle the record, the trial; judge died. His successor undertook to settle the record, -but acted without authointy from this court. Section 2553. Rev. Code 1919. Respondents condend, and -correctly, that because of such fact there is no settled record. Furthermore, from appellaxits’ brief it does not affirmatively appear that it contains a statement of all the material evidence. These defects rexrder it impossible for us to review the sufficiency of the [408] evidence to support the findings (section 3149, Rev. Code 1919); but such defects do not prevent our considering the sufficiency of the finding's to support the judgment — a matter that could be raised if there had. 'been neither motion for new trial nor settled record. The notice of appeal specifier particularly the portions of the judgment appealed from, and thus eliminates from our consideration several of the alleged errors specified below as well as several assigned in this court. Appellants question the propriety of the receiver’s expenditure of money for. a certain repair. As this presents a question of fact, the reviewi of which would necessitate our passng- upon the sufficiency of thie evidence to support the court’s finding in relation thereto, we cannot, for reasons hereinbefore set out, review same. The only other matters from which appeal was taken were those parts of- the judgment approving the payment of the $307.96 to apply on the mortgage debt, and directing the receiver to pay plaintiff $117.62 — the amount of deficiency judgment. [2] Appellants -contend, and correctly, that the rents and profits of the mortgaged premises accruing prior to issuance of the deed on foreclosure belonged to- them, and that the trial court was without power to authorize the receiver to use any part thereof to pay- the mortgage indebtedness. They cite Rudolph v. Herman, 4 S. D. 283, 56 N. W. 901; Siems v. Barde, 7 S. D. 338, 64 N. W. 167; Kettering v. Barber, 37 S. D. 602, 159 N. W. 133. It is true that this court has held, in Roberts v. Parker, 14 S. D. 323, 85 N. W. 591, and. Sherman v. Wichner, 35 S. D. 436, 152 N. W. 700, that a receiver of mortgaged property can be appointed in foreclosure proceedings. . This is specifically provided for by section 2475, Rev. Code 1919. But - while, under such statute, the court can unquestionably appoint a ret ceiver, this is for the sole purpose of preserving the property arid doing that in relation to the .security which, under the mortgage contract, the mortgagor should do, namely, preserve the security and see to it that no liens having priority over the mortgage are created. In order that the receiver may so pre [409] serve the security and keep it free from superior liens he may be authorized to collect the rents and profits coming from, the property. But there is nothing in section 2475, supra, that by any fair inference can be held to authorize the court to take hold of such rentals or profits and pay same over to the mortgagee. As was well said in Marshall & Ilsley Bk. v. Cady, 76 Minn. 112, 78 N. W. 978: “A mortgage binds only the land, and the rents and profits of the premises do not enter into, or form any part of, the security.” . The only question before this court in Roberts v. Parker or Sherman v. Wichner was the authority of the court. to appoint a receiver in foreclosure action. Whether rents and profits collected by -such receiver could be applied to the mortgage debt was not before this court for consideration in either case, and nothing is said in either case in relation thereto. [3] Respondents make no contention that the law is otherwise than as above stated — in fact they make no claim • nor set up an)' grounds for the support, upon the merits, of these two provisions of the judgment now under consideration. Their only contention, other than such as are based upon claimed defects in procedure, is, in effect, that the claims of appellants have been adjudicated, that the item of $307.96 was covered by the judgment on foreclosure, and that, “appellants having' entered! their appearance herein, said respondents were entitled to the payment of their deficiency judgment. * * *” And respondents claim that’appellants’ sole remedy was by appeal from such judgment. [4] Appellants are nonresidents, and the ‘court never acquired jurisdiction over them prior to the foreclosure judgment — they only became parties to the proceedings upon the referee’s report. Such foreclosure judgment was, in' its wording, a personal judgment against appellants; but the want of personal service and the failure of appellants to enter an appearance -is disclosed by the judgment roll' in the foreclosure action. The moneys paid by the receiver to the plaintiff were moneys belonging to appellants- — -they were moneys' which the court could not rightfully have applied to the mortgage indebtedness, even if appellants had appeared prior to foreclosure judgment. The [410] foreclosure judgment, in so far as it purported to be a judgment in personam andl in so far as it attempted to apply to the mortgage debt moneys of appellants upon which plaintiff had no lien, was an absolute nullity, and could not bar appellants. As ,regards the $117.62 directed to be paid to satisfy the deficiency judgment, the receiver’s sole authority for such payment is tire judgment from which this appeal was taken, and therefore the determination of the trial court in relation thereto, even though appellants were parties to the trial resulting in such judgment, is not yet final as to appellants. [5, 6] Respondents having injected into their brief some matters relating to the present ownership of the moneys in the receiver’s hands. These matters are not- properly before us, and demand no further consideration. Respondents also contend that appellants’ brief does not conform to the present rules of this court. This brief must have been prepared about the time the new rules were published. To disregard the brief because of failure to comply with requirements not contained in the old rules would not be justified under the circumstances. No reason exists for directing a new trial. It is ordered that the judgment appealed from be modified, so that it direct the receiver to pay to the appellants, in addition to the amount now directed to be paid them by such judgment, the additional sum of $307.95 and interest at 7 per cent, per annum from the date of the judgment on foreclosure and the sum. of $117.62, with interest at 7 per cent, per annum from the date of the judgment appealed from herein. As so modified, the judgment is affirmed, without costs to either party.