Northern Brewery Co. v. Princess Hotel

Opinion by Mr. Chief Justice Moore. 1. It is contended by appellant’s counsel that when the plaintiff’s agent was appointed receiver and took possession of the leased premises, thereby ousting the tenant, the landlord was restored to its original estate, and, this being so, no charge in excess of $3,000, the amount of rent in arrears when this suit was commenced, could legally have been impressed on the mortgaged personal property, and an error was committed in decreeing a recovery of $5,000, the face value of the larger note. It is insisted by plaintiff’s counsel, however, that since the receiver was appointed with the appellant’s consent, the rule invoked by him — 461 — is not applicable herein. It will be remembered that the defendant Gardner F. Elliott was the tenant in possession of the leased premises, April 18, 1913, when this suit was commenced, and that he did not acquiesce in the appointment of the receiver. A receiver is a ministerial officer of the court of equity which appoints him. He is presumed to be indifferent as between the parties to the suit, and holds the property committed to him in trust for all the parties interested therein; his title and possession being that of the court: State v. Norfolk etc. R. Co., 152 N. C. 785 (67 S. E. 42, 21 Ann. Cas. 692, 26 L. R. A. (N. S.) 710). “The general principle, very well settled in the books,” says Mr. Chief Justice Winslow in Bartelt v. Smith, 145 Wis. 31 (129 N. W. 782, Ann. Cas. 1912A, 1195, 1197), “is that a party to the cause will not ordinarily be appointed receiver unless both parties consent, or there are special circumstances present which make such an appointment clearly for the best interest of all concerned. The reason is that the receiver is an officer of court, whose business it is to administer his trust impartially for the benefit of all concerned, and hence he should have no special interests which might influence him in his conduct, of the-trust in matters where his interests and the interest of any party to the action may clash.” The plaintiff herein, being a corporation, could act only by its agents, one of whom was Paul Dauschel, its treasurer. Though the defendants Anderson, Paget and Thacher consented to the appointment of a receiver, it cannot be said, from an inspection of the transcript before us, that they acquiesced in Dauschel’s selection, or waived any objection they might have had against him by reason of his interest in the subject matter of the suit as the plaintiff’s representative. — 462 — 2, 3. The lease under which Elliott held possession of the building until he was evicted by the receiver, pursuant to the order of the court, is not before us, and hence it cannot be stated with certainty that the demise contained any express covenants on the part of the lessor. A text-writer, in discussing this subject, remarks : “It is immaterial in all cases whether or not a lease contains an express covenant of quiet enjoyment so far as the rights of the tenant are concerned. For a covenant of quiet enjoyment is implied in every lease for a term, by whatever form of words the lease is created. In other words, from the fact of the letting together with the entry by the tenant into possession with the consent of the lessor, it will be implied or presumed, not only that the landlord had a right to lease, but that he covenanted to secure the lessee against eviction by a paramount title, as well as against his own acts, which would destroy the beneficial enjoyment which the lessee expects to have of the demised premises”: 2 Underhill, Landlord & Tenant, § 427. The legal principle thus asserted does not contravene the provision of our statute that no covenant shall be implied in any conveyance of real estate (Section 7105, L. O. L.), for a lease of land is not a conveyance within the meaning of this section, and hence every demise, unless expressly negative words are contained therein, embraces an implied covenant that the lessor will protect the lessee in the quiet enjoyment for the term of the lease; Edwards v. Perkins, 7 Or. 149. 4. When Elliott, the tenant in possession of the building, was evicted by the receiver, pursuant to the order of the court, the consideration for the payment of any rent thereafter accruing, as long as the pos — 463 — session of the premises was withheld from him, failed: Osmers v. Furey, 32 Mont. 581, 590 (81 Pac. 345). In such case he was not liable for the rent during that time: Mariner v. Chamberlain, 21 Wis. 253, 256. In that case, Mr. Justice Downer, speaking for the court, said: “The order of a court of equity appointing a receiver and requiring a tenant to deliver possession to him, when he takes possession under it, as effectually ousts the tenant during the possession of the receiver as the execution of a writ of possession on a judgment at law; and the same effect must be given to it as a protection or defense to the tenant in an action 'by his landlord for rent accruing during such possession of the receiver.” In Yuen Suey v. Fleshman, 65 Or. 606 (133 Pac. 803, Ann. Cas. 1915A, 1072), it was ruled that the election of the lessor to terminate a lease for the nonpayment of rent, and to eject the lessee, put an end to the term so as to release the tenant from liability for rent not due when he was ousted. Analogous to the principle invoked in the case at bar, it has been held that a receiver of a decedent’s estate, who takes possession of real property under a lease to the deceased, becomes liable, but not personally, for the rent of the premises, which compensation for such use must be paid out of any funds lawfully coming to his hands: 2 Underhill, Landlord & Tenant, § 666. The tenant herein having been evicted, no charge for rent subsequently accruing could have been legally impressed by the receiver upon the personal property described in the second chattel mortgage so as to augment the amount due when possession was taken. The sum of $3,000, so due at that time, limits the plaintiff’s recovery as against Elliott, the evicted tenant, and Anderson, the holder of his chattel mortgage. — 464 — 5-7. It is argued by plaintiff’s counsel that though the mortgaged property at the sale thereof was bought by their client for $5,000, such purchase price exceeded the worth of the goods by $2,000, and, this being so, the sale should be set- aside and a resale of the personal property decreed. If the sale had been of real estate, which is subject to redemption, a reason might be given for bidding the full sum awarded by the decree. A sale of personal property under an execution, or pursuant to a decree, generally transfers the legal title, and no redemption is allowed by law. A receiver being a ministerial officer, sales of property conducted by him are in effect made by the court, and must be confirmed by it in order to be valid. In the case at bar, if the furniture, etc., had been bid in for an insufficient consideration, the sale might thus have been set aside, to avoid which it is reasonable to infer that the plaintiff bid for the property nothing more than its reasonable value. Anderson is therefore entitled to recover of the plaintiff $1,450, with interest thereon from December 1, 1912, at the rate of 7 per cent per annum. The.attorney’s fee of $150, allowed him upon the foreclosure of his mortgage, should not be recovered from the plaintiff, since it was not responsible for the payment of his promissory note, and is not held liable therefor only on the ground that it has obtained property upon which that defendant had a right to rely for security. The conclusion thus reached renders it unnecessary to consider whether or not the indorsers of the note held by Anderson are liable for the payment thereof. The decree will therefore be modified in accordance with the view here expressed, and no disposition of the surplus of $2,000, if any remain after discharging — 465 — Anderson’s demand, will be made, since the parties entitled thereto have not appealed. Modified. Rehearing Denied. Mr. Justice Bean and Mr. Justice Eakin concur.