Equitable Trust Co. v. Wetsman

I concur in the result reached by Mr. Justice McDONALD, but on other grounds.

When given, the instrument at bar was not a trust mortgage. When the mortgagee sold the bonds, it became trustee for the bondholders on foreclosure, both by operation of law and under the power in the instrument to bring the proceedings. Consequently, when the suit was commenced, the instrument, in legal effect, was a trust mortgage, because the holder of the mortgage was trustee for the bondholders. Its character in this respect had been recognized by a court through appointment of a successor-trustee to the original mortgagee. The mortgagee and plaintiff, after sale of the bonds, were in the position described in Union Guardian Trust Co. v. Rau, 255 Mich. 324, as necessary to set in motion the equitable jurisdiction of the court to prevent waste, under Nusbaum v. Shapero, 249 Mich. 252.

Act No. 228, Pub. Acts 1925 (3 Comp. Laws 1929, §§ 13498, 13499), is not involved either in the respect of fixing the test of a trust mortgage or the remedies to be extended. The case is one involving wholly the equitable jurisdiction of the court to prevent waste as it existed prior to and irrespective of the act of 1925.

In my opinion, the facts bring the controversy within theNusbaum Case and warrant the appointment of a receiver to collect the income for the purpose of paying taxes and insurance and to prevent waste.

POTTER and BUTZEL, JJ., concurred with FEAD, J.