Hill v. Robertson

Mr. Justice Fisher delivered the opinion of the court. This is an appeal from an interlocutory decree of the chancellor appointing a receiver. The complainants below filed their bill in the superior court of chancery against Isaac Sellars, the intestate, to foreclose a certain mortgage by him executed on the land and slaves therein specified. The bill alleges the insolvency of the mortgagor, and the insufficiency of the property to pay the debts seemed, which appear to be large. The execution of the mortgage and notes therein named, is admitted by the answer, but the insolvency is denied. This denial, however, is argumentative, and the question of solvency or insolvency is made to depend upon the result of this and two other suits in the superior court of chancery. But one deposi-, tion appears to have been taken, and it shows that the property covered by the mortgage is not worth more than $50,000, while the debts secured greatly exceed this sum. The appellant filed a supplemental answer, after she was admitted a defendant to the bill, setting up, among other things, that the complainant Robertson, as trustee of the Commercial Bank of Natchez, had been discharged, and satisfied all debts and liabilities of said bank ;and having thus satisfied the purposes of his trust, he had no power or authority to collect the debts secured by the mortgage. This part of the answer is in [375] no manner responsive to any allegation in the bill, and is wholly unsustained by proof; till proven, it presents only a question of fact, and therefore calls for the application of no legal principle. The court can only apply the law to facts which have been admitted by the pleadings of the parties, or established by competent testimony. The answer presenting facts which are not established by either of these modes, must be excluded from our present examination; and we will, therefore, examine the case as it appears by the bill, answer, and deposition. The bill and answer agree as to the debt secured, and the execution of the mortgage to secure it; the deposition settles the question of fact as to the value of the property, and shows it to be wholly insufficient to pay the debt due. The case, then, stands thus. The pleadings of the parties agree as to the execution of the mortgage and the notes; also as to the amount of the debt due. The parties disagree as to the value of the property, and the complainant has introduced proof which settles the issue in this respect. Upon this state of facts the present controversy must be decided. 'The debt is very large, and bearing interest. Equity not only looks to present security, but to'security which will be sufficient when the final decree shall be pronounced. The property may have been sufficient to accomplish the original design of the parties, to pay the debt and interest at maturity, but it by no means follows that it will continue sufficient for this purpose; to do so, it must increase in value in proportion as interest accumulates on the debt. This is not to be expected, as the income is not employed for this purpose. The property for its-increase in value must depend upon the fluctuations of the market, and other causes which would aid but little, without a judicious investment of the annual income- Independent, however, of the plain case made by the pleadings and proofs, the complainant may rest his claim to a receiver upon another ground; upon the maturity of the debt and a failure to pay, the legal title became absolute in the complainant. The legal title draws to it the right of possession, which, if enjoyed, would give the income of the property to the mortgagee, to keep down the annual interest; and the surplus, if [376] any, to apply to the principal. The chancellor, in appointing the receiver, merely conferred upon him those rights and powers which a court of law at the same time would have conferred upon the complainant, whose title was sufficient to give him the possession, and consequently the use, of the property. But equity, looking to the original design of the parties, in creating the mortgage, as only a security for a debt, will permit neither to enjoy a legal right to the prejudice of the other, and will adopt that course of proceeding which will attain the proper end. This end is, the payment of whatever is justly due • of principal and interest to the creditor. The property must be managed so as to accomplish this end. Under no view of the case can it be considered more than sufficient to pay the principal. Interest is an incident which the law gives the creditor, upon failure of the debtor to pay the principal. ''Upon this failure to pay, the legal estate vests in the mortgagee, as an incident to which is the right of possession, which is necessary to be enjoyed either by the mortgagee himself, or managed for his benefit by the court, to meet the debt which the law creates in the shape of interest, and which we must suppose was not provided for in the mortgage ; because it could only accrue by a breach of contract, on the part of the debtor, in failing to pay at the time stipulated; and the law, presuming that every man intends to perform in good faith his contracts, would not presume that the mortgage was more than a sufficient security for the principal and interest to maturity of the debt. Other questions are made against the appointment of the receiver; but they are not important to be noticed at this time. We will, however, notice one. The appellant applied for the appointment, and offered to execute a bond with good security, to account for the income of the property, which the chancellor refused to receive. The chancellor, in making the appointment, should have been guided by a sound discretion, and, of course, was at liberty to exercise it in making the selection. The law gives the possession to the person who holds the legal title; as to all others it is silent. The appellant could certainly present no greater claims to the appointment than the appellee. It was in the discretion of the chancellor to disregard the claims of both, [377] and to appoint a disinterested person. It was a matter of but little moment who was appointed; the same duties had to be performed, and the trust faithfully executed. Decree affirmed.