Case ID: ny-super-ct_52/html/0360-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THOMAS MacKELLAR, Respondent, v. GEORGE W. ROGERS, Impleaded, &c., Appellant.
    
      Mortgage—covenant for the appointment of a receiver.
    
    A defense that the mortgage was given to secure advances to be used in the erection of buildings on the mortgaged premises; that the mortgagee failed to make the advances as required by the mortgage, in consequence whereof the mortgagor was compelled personally to advance a large sum to complete the work, and then, to save his credit, to sell the houses erected at a large reduction from their actual value, is not a good objection to the granting a motion made, pursuant to a covenant to that effect in the mortgage, for the appointment of a receiver.
    Before Sedgwick, Oh. J., Van Vorst and Freedman, JJ.
    
      Decided December 7, 1885.
    Appeal from an order appointing a receiver of the rents and profits of the mortgaged premises during the pendency of the action to foreclose the mortgage.
    The motion was founded upon a covenant in the mortgage, that after default in payment of principal or interest, the mortgagee or his assigns should be at liberty, immediately after any such default, upon a complaint filed on the foreclosure of said mortgage, to apply for, and should be entitled, as a matter of right, and without regard to the value of the mortgaged premises, or the solvency or insolvency of any owner of said premises, or of the mortgagors, and on ten days’ notice to the mortgagors, to the appointment by any competent court of a receiver of the rents, issues and profits of said mortgaged premises.
    
      Martin J. Keogh, attorney, and of counsel for appellant,
    after citing as to the general principles appertaining to the appointment of receivers when there is no covenant in the mortgage, the cases of Sea Ins. Co. v. Stebbins, 8 Paige Ch. 565 ; 1 Hillard Mort. 467, and cases cited; Shotwell v. Smith, 3 Edw. Ch. 588 ; Warner v. Gorman’s Executors, 1 Barb. 36 ; Callanan v. Shaw, 19 Iowa, 183,—argued :
    A valid defense to this action interposed by sworn answer, and not met by affidavits affirming the validity of the mortgage and denying the truth of the facts set-forth in the answer, and opposing affidavits, even where the mortgage contains a stipulation that a receiver shall be appointed as a matter of right, is a sufficient and controlling reason for not disturbing the possession of the mortgagor and denying this motion (Knickerbocker Life Ins. Co. v. Hill, 2 Hun, 680; Hollenbeck v. Donnell, 94 N. Y. 342).
    
      George M. MacKellar, attorney, and of counsel for respondents,
    cited : Jones on Mortgages, § 1516 ; Quincy v. Cheeseman, 4 Sand. Ch. 404 ; Shotwell v. Smith, 3 Edw. 588 ; Bank of Ogdensburgh v. Arnold, 5 Paige, 40 ; Hollenbeck v. Donnell, 94 N. Y. 342.
   By the Court.—Sedgwick, Ch. J.

Practically, the parties by contract have made the rents and profits of the kind referred to in the order appointing a receiver, a part of the security for the payment of the amount of the bond and its interest. Unless the receiver asked for should be appointed, the mortgagee would not get the lien upon the rents that the contract intends he should.

Possibly an answer supported by affidavits, that the mortgage itself and the covenant referred to, had never been made, and were, if made, void or invalid for a sufficient reason, might justify the denial of such a motion. In this case, however, the objection to the motion is, “that the mortgage was one given for a builder’s loan ; that the mortgagee omitted and failed to advance the moneys represented by the mortgage ; and that, in consequence of that default of the mortgagee, the mortgagor had been compelled to personally advance $30,000 to com-' píete the work, and then, to save his credit, to sell at a large reduction from their actual value the houses so erected.” The affidavits to support this objection are vague, and it is impossible to extract from their general statements enough of particular fact to enable a court to say that the defense is valid, and will probably succeed. If the court should hold that the mere possibility of success is .reason for denying the motion, the plaintiff might be deprived of all benefit of the covenant.

My opinion, however, is that such a defense is not in its nature a good objection to the appointment of a receiver. The covenant means that the mortgagee shall have the benefit while the litigation is pending, down to the only sufficient and competent mode of deciding the issues of an action.

The order should be affirmed, with $10 costs.

Van Vorst and Freedman, JJ., concurred.