Case ID: wis_82/html/0313-01.html
Source: Caselaw Access Project
Author: {"author": "PmsrBT, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Gaynor, Respondent, vs. Blewett and another, Appellants.
    
      May 3
    
    
      May 24, 1892.
    
    
      Mortgages: Foreclosure: Receivers: Rights of tenant of mortgagor.
    
    A tenant who leases mortgaged land after the filing of a notice of lis pendens in an action to foreclose the mortgage, takes the land subject to whatever order the court may make affecting the title or possession; and although he has paid rent for a year in advance, when a receiver is afterwards appointed the court may properly, order that the tenant shall either surrender possession to such receiver or attorn to him and pay to him a reasonable rent for the use of the premises after the date of his appointment.
    ■ APPEAL from the Circuit Court for Winnebago County.
    This action was for the foreclosure of a mortgage, and notice of the pendency of it was filed May 26, 1887. Final decree of foreclosure and sale was entered at the May term, 1891, and an order was made on the 5th of May, 1891, appointing one Hughes receiver of the mortgaged premises, directing him to take possession thereof, manage and control the same, and have, collect, and receive all the rents, issues, and profits arising or growing out of the estate, and to take charge of it during the pendency of the action and until the further order of the court. .
    On or about the 1st day of January, 1891, one John F. Smith entered into possession of the premises as tenant under the defendants, the mortgagors, and has held possession ever since. After the 'appointment of the receiver he exhibited the order of his appointment to the tenant, Smith, and demanded possession and control of the premises, and Smith refused to give possession to him, or to pay rent, or to recognize his rights in the premises. The reasonable value of the rent of the premises is alleged to be about $400 per annum.
    Application was made, upon these grounds, to the court for an order directing the receiver to take possession or secure the rent. The tenant, Smith, opposed the application, stating that he rented the premises from the mortgagor soon after the 1st of April, 1891, for the term of one year, for $275, which he had paid him in full therefor, and which was all it was reasonably worth, and that at the time of making such lease and paying the rent he had no notice of any intention to apply for a receiver in the action. The court ordered that Smith, the tenant, forthwith deliver possession of the premises to the receiver, or else pay or secure to be paid to him the reasonable rent for the use and occupation of said lands for the then current year, and that he attorn to said Hughes as receiver; The mortgagor, Blewett, and the tenant, Smith, jointly and severally appealed from the order.
    
      Edward S. Bragg, for the appellants.
    For the respondent the cause was submitted on the brief of Geo. E. Sutherland.
    
    He cited Boyd ,v. Weil, 11 Wis. 58 — 60; Geljgekev. M. c& E. B. Go. id. 454; Bennett, Lis Pen-dens, secs. 217, 265; Beach, Rec. sec. 230; Thornton v. Wash. Sav. Bank, 76 Ya. 432; High, Rec. sec. 144; Pickett v. Ferguson, 45 Ark. 177; Yates v. Smith, 11 Bradw. (Ill.), 459; Syracuse Gity Bank v. Tollman, 31 Barb. 201; Haven v. Adams, 8 Allen, 363; 16 Am. & Eng. Ency. of Law, 826, subd. 7; Hall Limber Go. v. Gustin, 54 Mich. 624, 634; Wood, Landl. & T. secs. 127, 128.
   PmsrBT, J.

The rents and profits of lands are not pledged by a mortgage of the lands merely, but belong to the owner of the equity of redemption until the court, for equitable reasons, shall appoint a receiver to collect them for the benefit of the mortgagee, or directs the receiver to take possession of the mortgaged premises and the rents and profits of the same, to the end that the rents realized may be applied to the payment of any deficiency that may remain unpaid after applying the proceeds of the sale of the mortgaged premises; and whatever is not needed for that purpose is to be paid to the mortgagor or other person entitled thereto. The appointment of a receiver for that purpose is á matter resting in the sound discretion of the court, and gives the plaintiff in the foreclosure suit an equitable lien upon the accrued and unpaid rents. Kerr, Rec. 177; Rider v. Bagley, 84 N. Y. 461, 465, and cases there cited; Howell v. Ripley, 10 Paige, 43. The appointment of a receiver is equivalent to a sequestration of the rents and profits accruing after the date of the order, and as .to all which have previously accrued and which remain unpaid. Syracuse City Bank v. Tallman, 31 Barb. 201, 212; Lofsky v. Mauier, 3 Sandf. Ch. 69, 71; Johnston v. Riddle, 70 Ala. 219, 225; Argall v. Pitts, 78 N. Y. 242; Thornton v. Wash. Sav. Bank, 76 Va. 432. Rents accrued are rents earned, within the sense and meaning of this rule. The mortgagor cannot evade the rule by anticipating the appointment of a receiver in a suit pending to foreclose the mortgage, and leasing the premises for one or more years, and taking, as in this case, payment of the rent in advance.

The tenant, Smith, one of the appellants, stands in the position of a purchaser or lessee pendente lite from the mortgagor defendant, and had constructive' notice of the action to foreclose by the filing of the notice of Us pendens, and took subject to whatever order or decree the court might lawfully make affecting either the title or possession. He could not get any better right than his lessor, the mortgagor defendant, had. It matters not that he did not know, as he says, that there was any intention to apply for the appointment of a receiver. He knew, or is chargeable with knowledge, that the court'might make such an appointment, and that whatever interest he might acquire in the possession and use of the premises might thereby be cut off, unless be should elect to attorn to the receiver, and pay to him all rents for the use of the premises after the date of the appointment. So far as the possession of the premises is concerned, the appointment of the receiver had the effect of an equitable ejectment. Were this otherwise, the beneficial results of a receivership could be easily defeated by giving a lease of the premises in question long enough to last during the probable duration of the litigation, and by collecting the rent in advance. The receiver, on his appointment, became entitled, as against the appellants, to the possession and use of the premises, and his rights are in no way affected by the provisions of the lease and payment in advance of rent to thereafter accrue under it. As the order appointing the receiver has not been appealed from, we must presume that there was sufficient ground for making the* appointment.

Unless the tenant, Smith, attorns to the receiver and pays rent for the use of the premises from and after the date of the order appointing the receiver, he must surrender possession. The order of the circuit court was correct and must be affirmed.

By the Court.— The order of the circuit court is affirmed^