Wright v. Matters

Mr. Justice Gridley delivered the opinion of the court. First. As to the payment by the receiver of $1,735.65 for taxes for the year 1913, it appears that before the foreclosure sale and on April 29, 1914, the receiver was ordered by the court to pay said taxes, and that the payment was actually made on July 30, 1914, after the foreclosure sale. No attempt was made to have this order vacated nor was any notice served upon the receiver that he would be held responsible if he obeyed it. It further appears that on October 14, 1912, the court, following the provisions of the trust deed, appointed the receiver with power to collect the rents for a period of time not exceeding the equity of redemption from any sale and to pay all taxes becoming due during that period. The legality of the receiver’s appointment and of the powers conferred upon him were not questioned until the suing out of the writ of error in this Appellate Court on October 13, 1915, about 2 months after the expiration of said redemption period, and in that proceeding the action of the circuit court was subsequently affirmed. In Rearden v. Youngquist, 189 Ill. App. 3, 12, it is said: “A receiver is an officer of the court and subject to its orders. The real custody of the property in his hands is in the court, of which he is an officer. * * * He must obey the orders of the court so long as they are unimpeached. * * * Expenditures made in pursuance to such orders cannot be questioned on the receiver’s accounting. * * * Neither can the propriety of entering the order be challenged on exceptions to the master’s report on the receiver’s account. * * * Obedience to such orders is his sufficient protection. * * * It was clearly the duty of appellees, if they desired to oppose the payment of those various items by the receiver out of the funds in his hands, to have opposed the entry of the order by showing to the court why it should not or could not legally be entered, or at least to have sought its vacation on motion and a showing. Failing in this they should have notified the receiver that they would hold him responsible for a misapplication of the funds, if he obeyed the order.” We think that in the present case the chancellor erred in not allowing the receiver credit in his final account for this payment. Second. As to the payment by the receiver of $1,680.18 for taxes for the year 1914, it appears that this payment was made out of funds in the hands of the receiver, without any order of court authorizing the same, on July 22,1915, more than a year after the foreclosure sale and shortly before the expiration of the redemption period. In Stevens v. Hadfield, 90 Ill. App. 405, 406, it is said: “The purchaser at the foreclosure sale took the title with all its infirmities and burdens, and it was not for the receiver to apply' the rents and profits accruing during the period of redemption to the removing of such infirmities or burdens for the benefit of such purchaser.” (Citing Davis v. Dale, 150 Ill. 239; Stevens v. Hadfield, 178 Ill. 532.) And, in referring to a payment for taxes made by the receiver in the Hadfield case, it is further said (p. 407): ‘‘ The same reasons which preclude the receiver from assisting the purchaser at the foreclosure sale by an application of the rents and profits accruing during the period of redemption upon the first mortgage' lien also preclude him from assisting here in the matter of taxes. This item was also properly disallowed.” This Hadfield decision was affirmed by the Supreme court (196 Ill. 253) and that court in its opinion says (p. 256): “The receiver held the money received as rents and profits for the holder of the equity of redemption, subject only to the payment of such proper charges against it as might be allowed by the court, and not, in any sense, for the benefit of the purchaser at the foreclosure sale.” In the present case we think that credit to the receiver in his final account for this payment was properly disallowed. Third. As to the holding of the chancellor that the receiver “wrongfully, improperly and illegally withheld the amount of the deficiency decree, namely $1,482.91,” it appears that at the foreclosure sale on May 14, 1914, the premises did not sell for an amount sufficient to satisfy the mortgage debt and interest thereon due to said Omar H. Wright and the costs and expenses, and that on June 3, 1914, the court entered a deficiency decree against said Matters and in favor of said Wright. It further appears that the receiver, in his amended final report, filed October 4, 1915, after showing his cash balance on hand on August 14, 1915 (the expiration of the redemption period), asked that out of said balance he be authorized to pay said deficiency decree with interest thereon from the date of said foreclosure sale; that on October 13, 1915, Matters and wife sued out a writ of error in this Appellate Court in which they attacked the validity of said deficiency decree entered against said Matters, but were unsuccessful in that attack (Wright v. Matters, 204 Ill. App. 398); that the petitioner, Holverson, was not a party to the bill to foreclose; and that it was not until August 17, 1915 (after the expiration of the redemption period), that she first appeared and filed her petition in which she claimed an interest in the premises derived by deed from Matters to Moore and by deed from Moore and wife to her, dated March 13, 1914. We think that the deficiency decree, as against any claims of Holverson, should be satisfied out of the funds in the receiver’s hands. (First Nat. Bank of Joliet v. Illinois Steel Co., 174 Ill. 140; Trussing v. Lancaster, 234 Ill. 462; Townsend v. Wilson, 155 Ill. App. 303; Ellison v. Miller, 137 Ill. App. 208.) And, under the facts and circumstances disclosed, we think that the chancellor erred in holding, that the receiver wrongfully and illegally “withheld” the amount of the deficiency decree. Fourth. As to the holding that “the receivership herein terminated on May 14, 1914,” etc., we think that therein the chancellor also erred. While it is true that on or after the date of the foreclosure sale, May 14, 1914, no order was entered extending or continuing the receivership during the period of redemption, it is also true that in the original order appointing the receiver, October 14, 1912, he was directed to take possession of the premises and to collect the rents “for a period of time not exceeding the equity of redemption from the sale which may be had in this proceeding,” that there was a deficiency, that he continued to act as receiver in obedience to the court’s order, and that no objection was made by any one to his so continuing to act until after the expiration of the redemption period. Furthermore, in the writ of error proceeding, commenced by Matters and wife in this Appellate Court on October 13, 1915, one of the points made and argued was that the circuit court erred in appointing the receiver for the period of time mentioned, and the decision was adverse to Matters, and res adjudicata as to him, and we think that under the circumstances disclosed, Holverson, as grantee of Matters or assignee of his rights, should not have been allowed to again raise the question in the present proceeding. Fifth. As to the holding that certain disbursements of the receiver, aggregating $1,007.87, were for “betterments and not necessary repairs” to the premises, we have reached the conclusion after careful examination that therein the chancellor also erred. We think that these disbursements should be allowed the receiver as a credit in his final -account. And we also think that other disbursements allowed to the receiver by the court, complained of by the appellees, Matters and wife and Hoi vers on, were proper. Sixth. We are of the opinion that the chancellor should have allowed the receiver the fee of $975 claimed by him. And we think that the two allowances for fees of the receiver’s solicitors, viz., $500 for services from October 14, 1912 to October 4, 1915, and $750 for services after October 4, 1915, on the hearing before the master in the contest over' the receiver’s account, were proper, but we think that the court should have allowed in addition a reasonable fee for the services of the receiver’s solicitors for the 5 days spent on the hearing before the chancellor on exceptions to the master’s report. And we are of the opinion that it was proper to allow Holverson to file objections and exceptions to the master’s report. For the reasons indicated the decree of the circuit court is reversed and the cause remanded with directions to enter a decree approving and confirming the master’s report, except as to the allowance to the receiver of the item of $1,680.18, payment for taxes for the year 1914, and allowing to the receiver a reasonable fee for the services of his solicitors on the hearing before the chancellor on exceptions to the master’s report. Reversed and remanded with directions. Barnes, P. J., and Matchett, J., concur.