Baldwin v. Tuttle

Mr. Justice G-ridley delivered the opinion of the court. It is here contended by counsel for appellant that the court had no authority under the facts and under the law to appoint the receiver and to.direct said receiver out of the rents to be collected to apply the balance, after making the necessary repairs, towards the satisfaction of said deficiency decree. The argument is, in substance, that the trust deed in question in this case does not pledge the rents and profits to the mortgagee during the redemption period, and that, where the rents and profits are not therein so pledged and where it appears that the owner of the equity of redemption is not personally liable for the indebtedness and there is no deficiency decree against him, such owner of the equity of redemption is entitled to such rents and profits during said redemption period. In the case of Longley v. Wilk, 171 Ill. App. 419, Longley, the owner and holder of the principal note secured by a trust deed, filed his bill to foreclose and, pending the suit, a receiver was appointed to collect the rents and profits. Subsequently the premises were sold under a decree of sale and Longley was the purchaser at such sale. The sale was approved and a deficiency decree was entered in favor of Longley and against one Sarah A. Bartlett, the original mortgagor. One Walter M. Cowell, trustee, was the owner of the equity of redemption. Longley filed a petition asking that a balance of money in the receiver’s hands be applied upon said deficiency decree. ■ On this petition the court found that said Cowell, the owner of the equity of redemption, had not assumed in any way to pay the mortgage debt, and that the balance in the receiver’s hands belonged of right and by law to said Cowell, and the court ordered the receiver to pay said balance in his hands to said Cowell. Prom this order Longley appealed to this Appellate Court, where the order was affirmed. Prom an examination of the opinion in the case it appears that the provisions of the said Bartlett trust deed are almost identical with the provisions of the trust deed in the present case. Mr. Justice P. A. Smith in delivering the opinion said, p'. 423: “The provisions in the trust deed referring to the rents, issues and profits of the premises do not pledge or create a lien thereon in favor of the complainant for the rents, issues and profits collected after the foreclosure sale and before the time of redemption expires, but provides that they shall be paid to the purchaser or purchasers of the premises at such sale. It cannot be claimed or contended successfully that because the complainant was the purchaser of the premises at the sale this provision of the trust deed pledged the rents covered by the decree or order under review to the complainant as such purchaser.” (Citing Schaeppi v. Bartholomae, 217 Ill. 105, 110.) “The decree of sale in this case does not give the purchaser at the sale the rents, issues and profits, if any, during the redemption period. It does not dispose of them in any manner. In our opinion, the case of Standish v. Musgrove, 223 Ill. 500, controls the question presented by the order under review. * * * There was no deficiency decree against Walter M. Cowell, and moneys belonging to him could not be applied in payment of the deficiency decree against Sarah A. Bartlett. ” In Standish v. Musgrove, 223 Ill. 500, 505, it is said: “The substance of the provision of the trust deed referred to is, that the grantors waived all right to the possession of and income from the premises pending foreclosure proceedings, and in case of sale until the equity of redemption expired, and agreed that a receiver might be. appointed to take charge of the premises and collect the income therefrom, and, after paying the expenses of receivership, pay the same to the person entitled to a deed under the certificate of sale. In Schaeppi v. Bartholomae, 217 Ill. 105, where the mortgage contained a similar provision, it was held that the purchaser at the sale took title under and by virtue of the decree, and could claim no right to the rent by virtue of the provisions of the mortgage. * * * The appellant, so far as disclosed by the record, was the owner of the equity of redemption. There was no.deficiency judgment against the appellant and she is not made personally liable for the incumbrance by the decree. Under such circumstances, if she was in fact the owner of the equity of redemption, she was entitled to the rents and profits of the premises until the time for redemption had expired. The appointment of a receiver did not divest her of that right. She was still entitled to the rents and profits pending redemption, less such expenditures as were necessary and proper in preserving the property, but not in bettering its condition. ’ ’ In Owsley v. Neeves, 179 Ill. App. 61, the trust deed there in question, unlike the trust deed in the present case, expressly secured to the mortgagees a lien on the rents during the redemption period, and the question was whether the trial court had erred in ordering the rents accruing after foreclosure sale and before the expiration of the redemption period paid to said mortgagees (appellees) towards the satisfaction of the deficiency decree in their favor. It was held that under the particular facts in the case the trial court had not erred. But the court in the opinion (p. 65) said: “When the rents and profits are not expressly mortgaged to secure the debt, they, during the period of redemption, belong to the owner of the equity of redemption, if he is not personally liable for the mortgage debt and there is no deficiency judgment against him.” In Stevens v. Pearson, 202 Ill. App. 22, it appears that Stevens (appellant) had filed a bill in the Superior Court of Cook county to foreclose a trust deed given by Pearson and wife; that pending foreclosure a receiver had been appointed; that subsequently a foreclosure sale was had and a deficiency decree entered in favor of Stevens against Pearson and wife; that subsequently the court ordered the receiver within 30 days to pay the balance of moneys in his hands, which had been collected from the rents and profits during the redemption period, to Cagney (appellee) the owner of the equity of redemption; and that from tin's order Stevens appealed to this Appellate Court. It further appears, both from the original opinion and the additional opinion filed on petition for a rehearing, that the trust deed in question did not expressly secure to the mortgagees a lien on the rents during the redemption period, and that Cagney was not personally liable for the mortgage debt or for the deficiency by the decree. The order of the trial court was affirmed. In the present case it appears that, immediately after the deficiency decree for $337.10 was entered in favor of complainant (appellee) and against Lester F. Tuttle and wife only, the complainant filed her petition for a receiver. And it clearly appears that she filed that petition, not as the purchaser at the sale, but as the holder of said deficiency 'decree, for the sole purpose of obtaining satisfaction, full or partial, of the amount of said deficiency decree out of the net rents, to be collected during the redemption period by a receiver appointed under an order of the court. In view of the facts in the present case, viz., that the trust deed in question did not expressly secure to the complainant a lien on the rents during the redemption period and that appellant, Stella Wood, owner of the equity of redemption, was not personally liable for the indebtedness and no deficiency decree was rendered against her, and in view of the prior decisions of this court and of the Supreme Court above referred to, we are constrained to hold that the court erred in appointing the receiver “until the period of redemption from the sale of said premises expired,” and authorizing him out of the rents to be collected to make necessary repairs to preserve the premises, and “to apply the balance in his hands towards the satisfaction of said deficiency decree.” In our opinion, after the foreclosure sale in this case and until the period of redemption expired, the owner of the equity of redemption was entitled to the rents and profits from the premises; and was also entitled, subject to the equitable rights of the purchaser at such sale or her assigns, to the management and control of the property. (Bogardus v. Moses, 181 Ill. 554-558; Haigh v. Carroll, 209 Ill. 576-580.) Counsel for appellee cites several decisions of the Supreme Court of this State and contends that they authorize the appointment of a receiver in such a case as the present one for the purpose of having the net rents applied towards the satisfaction of the deficiency decree. Among the cases cited are Haas v. Chicago Building Society, 89 Ill. 498; First Nat. Bank of Joliet v. Illinois Steel Co., 174 Ill. 140; Bagley v. Illinois Trust & Savings Bank, 199 Ill. 76, and Prussing v. Lancaster, 234 Ill. 462. An examination of the first three cases,- however, discloses that either the owner of the equity of redemption was also the original maker of the notes and mortgage, and therefore personally liable for the debt, or, the rents and profits during the redemption period had been expressly mortgaged by the provisions of the trust deed to secure the debt. In the Prussing case it is not disclosed what the provisions of the trust deed were. These cases, therefore, are to be distinguished from the present case. For the reasons indicated the order of the Superior Court appointing the receiver is reversed and the cause is remanded for further proceedings not inconsistent with the views herein expressed. Reversed and remanded. Mr. Presiding Justice Matchett dissents.