Northwestern & Pacific Hypotheek Bank v. Dalton

I concur in the result. On the evidence the court did not abuse its discretion in dissolving the temporary restraining order. By the lapse of time, the receivership matter has become moot, and a further discussion should have been unnecessary. I cannot concur in the necessity of holding "that jurisdiction to appoint a receiver cannot be conferred on a court by stipulation or consent of the parties," or that the stipulation herein conferred jurisdiction, or that the rule stated is "well settled," or that the citation of California authorities alone settles the rule.

The appellant and the decision lose sight of the fact that after sale the appellant is no longer mortgagee, and such stipulation cannot take the place of the statutory provisions for appointment of a receiver or restraint of waste after a sale.

The decision, however, purports to decide that a receiver may not be appointed in a mortgage foreclosure upon the stipulation involved, whereas the foreclosure was complete and a sale had been had, and the rights of a purchaser (chancing here to be the mortgagee) are to be gauged by the law applicable to purchasers at judicial sales and redemption, and not under mortgage foreclosures.

The full context of the stipulation is not quoted in the decision. The mortgage further provided, immediately following the quoted portion:

". . . . And all rents and profits derived from such premises shall be applied, after payment of the costs and expenses of such receivership, including costs and expenses of caring for and protecting said property and collecting of such rents and profits, first: towards the payment of all taxes or assessments imposed upon said premises; and, second, toward the debt secured hereby."

Stipulations not distinguishable from this one have been held to create a lien upon the rents and profits, and even to authorize the appointment of a receiver, regardless of the insolvency of the mortgagor (Bagley v. Illinois Trust SavingsBank, 199 Ill. 76, 64 N.E. 1085; Cullen v. Minnesota Loan Trust Co., 60 Minn. 6, 61 N.W. 818; 2 Jones on Mortgages, 7th ed., sec. 771), and as an agreement to surrender possession (Michigan Trust Co. v. Lansing Lumber Co., 103 Mich. 392, 61 N.W. 668. See, also, 1 Tardy's Smith on Receivers, 2d ed., sec. 245.)

Clark's Law of Receivers, vol. 1, sec. 157, ascribes the position of California and Michigan to a statute in those states prohibiting mortgagees from taking possession, yet Michigan has held that a receiver may be appointed under a stipulation. (1 Clark's Law of Receivers, sec. 162; Beecher v.Marquette Pacific R. M. Co., 40 Mich. 307; Michigan Trust Co.v. Lansing Lumber Co., supra.)

California itself has been none too consistent or unwavering in the interpretation or application of the rule referred to. In McLane v. Placerville S. V. R. Co., 66 Cal. 606,6 P. 748, which is hardly distinguishable from a mortgage foreclosure, the court, although holding that the action was not one to foreclose a mortgage, enforced similar provisions upon the theory that the suit was one "brought to enforce the specific execution of the terms and stipulations of a mortgage, by which, on the happening of a specific event, the trustees, or the survivor of them, are entitled to take possession of the property mortgaged, hold it, receive and collect the income and profits arising from it, and apply such income and profits as are stated above."

The court therein held that the lower court did not err in appointing the trustee receiver, saying:

"This is so clearly within the province of a court of equity, that we can see no reason to doubt its power, or the regularity of the proceeding. It comes within the provisions of section 564, subdivision 6, of the Code of Civil Pro. cedure, authorizing such appointments, where receivers have heretofore been appointed by the usages of courts of equity."

The subdivision referred to is the same as C. S., sec. 6817, subd. 6. In support of its position, the California court cited: Shepley v. Atlantic St. Lawrence R. R. Co., 55 Me. 395;Shaw v. Norfolk County R. Co., 5 Gray (Mass.), 162;American Bridge Co. v. Heidelbach, 94 U.S. 798, 24 L. ed. 144;Gilman v. Illinois Tel. Co., 91 U.S. 603, 23 L. ed. 405;Andrews v. Scotton, 2 Bland (Md.), 629, 665. Turning to those cases, we find the rulings therein such as would support the appointment of a receiver in this instance, as stipulated for, upon the breach of conditions of the mortgage, up to the time of foreclosure and sale. (See, also, Sacramento Placerville R. Co. v. Superior Court,55 Cal. 453.)

The supreme court of Michigan, in Union Trust Co. v.Charlotte General Electric Co., 152 Mich. 568, 116 N.W. 379, although again citing the rule referred to, and the established policy of that state to prohibit a mortgagee securing possession of mortgaged property, reiterates that it is "within the power of the parties to stipulate that such possession and management of the business may precede foreclosure, and that in such case a court of equity may enforce specifically such an engagement," citing in its support: Shepley v. Atlantic St.Lawrence R. R. Co., supra; Shaw v. Norfolk County R. Co.,supra; Sacramento Placerville R. Co. v. Superior Court,supra; McLane v. Placerville S. V. R. Co., supra; Rice v. St.Paul Pacific R. Co., 24 Minn. 464.

I object to the court going out of its way to decide a moot question, but I more strenuously contend that if it is to do so, the question should be correctly decided upon a correct assumption that the receivership was properly denied because not supported by facts, and because the stipulation, although in my opinion capable of supporting the appointment of a receiver before the sale, cannot be imported into and support a case wherein the receiver is sought to be appointed after sale, and in any event that the court did not abuse its discretion.

Another question squarely presented was the contention that the facts with relation to the acts of the mortgagor constituted waste, and that appellant was entitled to an injunction under C. S., sec. 6937, against waste committed during the period of redemption. This point, although vital, and, if decided in favor of appellant, sufficient to have sustained an injunction, is not decided at all. Courts have decided that the acts complained of constitute the commission of waste (Cullen v. Minnesota Loan Trust Co., supra), and entitle a purchaser to an injunction during the period of redemption, under similar statutes. (1 Tardy's Smith on Receivers, 2d ed., sec. 243.)

Petition for rehearing denied.