Case Name: Neeves, Appellant, vs. Boos and another, Respondents, Gregory, Appellant, and others
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1893-11-07
Citations: 86 Wis. 313
Docket Number: 
Parties: Neeves, Appellant, vs. Boos and another, Respondents, Gregory, Appellant, and others.
Judges: 
Reporter: Wisconsin Reports
Volume: 86
Pages: 313–319

Head Matter:
Neeves, Appellant, vs. Boos and another, Respondents, Gregory, Appellant, and others.
October 18
November 7, 1893.
Receivers: Order directing foreclosure of mortgage: Discretion: Regularity of appointment: Collateral impeachment.
1. Plaintiff had purchased land from defendant G. and given back a mortgage securing notes for a part of the purchase price. Defendant B. claimed to own said notes and mortgage, and had got possession thereof and pledged them to defendant G. Defendant G., the payee, also claimed them. Plaintiff, in his complaint, offered to perform all the conditions of the notes and mortgage, and asked for the appointment of a receiver thereof, with power to receive payments, and that defendants interplead for the determination of their rights. The complaint also alleged false representations as to the land by G., and asked damages therefor and that the notes and mortgage be canceled down accordingly. The receiver was appointed as prayed. Afterwards, plaintiff having failed to make payments as they became due, an order was made directing the receiver to foreclose the mortgage unless plaintiff should pay the amount due within twenty days. On appeal by plaintiff and defendant G.. such order is held not an abuse of discretion.
2. The regularity of the appointment of the receiver could not be questioned on the appeal from the order directing him to foreclose the mortgage.
APPEAL from the Circuit Court for Milwaukee County.
It appears from the pleadings in this action that the plaintiff, William B. Neeves, on the 29th of September, 1890, purchased of the defendant Gregory a large number of lots in Hyde Park in the town of Wauwatosa, near the city of Milwaukee, for $30,000, and received a warranty deed of them, and for the unpaid portion of the purchase money he' executed to the defendant Gregory his five promissory notes in the aggregate of $22,500, secured by a mortgage on the same premises and payable, with interest, at various periods. The first note was paid January 1, 1892, and a second one matured January 1, 1893, as well as the annual interest on $18,500 on the 1st day of October, 1892, which note and said interest remain unpaid.
The .plaintiff, in his ■ complaint, states that the defendant Gregory claims to be the owner of the notes and mortgage, and that the defendants Imre Boos and the Cobimereial JBemh of Milwaukee also claim the same, and the said bank has possession of them, indorsed in blank by said Gregory, by one Luscomb as his agent; that Gregory has forbidden him to make payment of the same to any other person than himself, except so much as might be necessary to extinguish a debt of one Luscomb of about $7,000, for security of payment of which to one Levinson said notes had been hypothecated; that Boos and the ■ Comme?'dal Ba/nk had knowledge that said notes belonged, subject as aforesaid, to said Gregory, that Gregory claims payment of the notes, and so also do Boos and the said bank, and the plaintiff claims that, on account of the conflicting claims of the parties, he fears they will be transferred by either Boos or the bank to some Iona fide purchaser without notice of the claims of the respective parties.
The plaintiff claimed damages by reason of certain false representations made to him at the time' of the sale by Gregory, to the effect that certain streets marked on the plat of said premises, and staked out, had been dedicated to public use as streets throughout their entire length and breadth as thus indicated; that six certain lots had been graded as and for a street, and dedicated by the said Gregory for that purpose, subject only to a right of way of a certain motor company for the purpose of operating its railway and maintaining its track or tracks, and this way-over the lots furnished the only practical means of access to and egress from the premises so purchased by him of said Gregory; that in violation of such representations, and in fraud of the plaintiff’s rights, he conveyed said lots to said motor company in fee, excepting no easement over the same to tbe plaintiff or tbe public, and tbe motor company refused to recognize any sucb easement, and excluded tbe plaintiff from passage over said. lots, whereby be was obliged to purchase- said lots from said motor company at an expense of §3,000, and was in all damaged by reason of tbe premises in tbe sum of $5,000, and be claimed an abatement or deduction from said notes and mortgage of that sum, and alleged that Gregory was not a resident of tbe state of Wisconsin, but it was not claimed that be was insolvent.
Tbe plaintiff asked judgment for' tbe appointment of a receiver of tbe notes and mortgage, with power to receive payments thereon according to the terms thereof, and with power generally to carryout and effectuate the terms of tbe mortgage on tbe part of tbe mortgagee named therein to be performed; that the defendants transfer to tbe receiver all their rights in and to tbe same, and that- they in-terplead for tbe determination of their rights in tbe premises, and that tbe plaintiff be permitted to pay into court tbe amount then due for interest on said notes and mortgage; that tbe damages of tbe plaintiff by reason of tbe wrongful acts and representations of tbe defendant Gregory be assessed and determined and the notes and mortgage be canceled down in tbe amount of sucb damages when so ascertained, and for other and general relief. Plaintiff offered in bis complaint to perform any and all tbe conditions of tbe notes and mortgage, and to bring into court tbe sum of $1,110, then due as interest, for tbe benefit of tbe person or persons entitled thereto.
Tbe defendant Boos sets up a claim to tbe sole and exclusive ownership of tbe notes and mortgage; that they were made in tbe name of tbe defendant Gregory for tbe convenience of Boos; that Gregory bad no interest in them, but took tbe same in bis name, under an agreement made through one Luscomb to bold tbe same solely for tbe ben efit of Boos, and that he, Boos, afterwards acquired possession of the notes, and pledged and hypothecated them to the defendant Commercial Bank. The bank set up its claim as a Iona fide assignee of the notes and mortgage as security for a loan to Boos of $10,000, by assignment from the said Gregory as well as the said Luscomb. The defendant Gregory, answering, among other things admitted the claim of the plaintiff to have a rebate allowed him, by reason of the sale of the lots to the motor company and the representations in regard to other streets, in the amount of $3,000, but not admitting any fraud or- misrepresentation on his part in making the sale, and set up at length the particulars of the controversy between himself and Boos in regard to the ownership of the notes and mortgage.
A receiver was appointed by the court, as prayed by the plaintiff; and, $3,500 having afterwards beeomedue on the mortgage, upon proof that the receiver had called upon the plaintiff for payment of it, but he had failed to pay the same or any part of it, application was made, upon affidavits to that effect and the record in the action, for an order authorizing and directing suit to be brought by the receiver for the foreclosure of the mortgage mentioned in the pleadings, on the hearing of which motion affidavits of George A. Neeves -and S. S. Barney were read, the latter being the counsel of the defendant Gregory, as well as affidavits of witnesses, to the effect that the mortgaged premises were worth over $50,000. The court made an order accordingly, unless within twenty days from its date the plaintiff should pay all sums due upon said notes and mortgage. Both the plaintiff and the defendant Henry Edson Gregory appealed from the order.
For the appellant Neeves there was a brief by C. W. Briggs; for the appellant Gregory there was a brief by Barney c& Kuechenmeister; and the cause was argued orally by Mr. Briggs.
They contended that the order directing the -foreclosure of the mortgage should not have been granted, for the reason, among others, that, all the questions in controversy would have to be litigated in a foreclosure action, and could be settled much sooner and at less expense in this action; also because of the great uncertainty as to whether there was anything equitably due upon the notes and mortgage, the uncertainty of the establishment by Boos of the claim of ownership, the concession by Gregory that a scaling down of $3,000 would be just and equitable, and the protest of Gregory against the making of the order, and because Gregory had not been served with-process, nor had he appeared in the action, at the time the receiver was appointed.
For the respondents there was a brief by Winkler, Flanders, Smith, Bottum <& Vilas; also a brief by Glenway Maxon for the respondent Commercial Bank; and the cause was argued orally by F. O. Winkler and Mr. Maxon.

Opinion:
PiNNEY, J.
The plaintiff has secured the appointment of a receiver, who, as such, is an officer of the court, exercising his functions for the common benefit of all the parties, and his custody and control is the custody and control of the court for their benefit and subject to its orders and directions. The order appealed from is plainly a discretionary one, and will not be reversed unless the court in making it has abused its discretion. ¥e think, in view of the circumstances and the frame and purpose of the action, that the court was fully justified in making the order. It is evident that the action and complaint in it are not framed so that a judgment can be given foreclosing the mortgage, and the action is not, therefore, calculated to do entire justice to all the parties; for, after the expense and delay of this action, whatever its result may be, the owner will have been prevented from foreclosing his mortgage in the mean time by reason of the receivership, and in the end will be subjected to the delay and expense of another action for that purpose. The plaintiff, so far from paying into court the money admitted to be due on the mortgage for interest, has also failed to respond to the receiver's demand of payment of the $3,600, the principal sum of one of the notes, which became due January 1, 1893. The order appointing the receiver, obtained by the plaintiff, provides "that the receiver collect the sums due or that may fall due upon the said notes and mortgage from time to time, and account tfierefor;" and the order directing the receiver to foreclose the mortgage unless the plaintiff should pay the amount due on it within twenty days is certainly no hardship to the plaintiff, for he can assert in such action, by way of defense or counterclaim, all his rights in the premises, and the rights of the different claimants may also be adjudicated. It is said that Gregory does not want the mortgage foreclosed. In this respect the plaintiff entirely agrees with him, but the matter has been placed by the receivership under the control of the court for the benefit of all the parties in interest, and neither the plaintiff nor the defendant Gregory has the right to dictate in the premises. We do not think that in point of discretion the order appealed from is fairly subject to criticism.
It is said that the order appointing the receiver was made without notice to the defendant Gregory. The order would not on that account be void, but merely erroneous and subject to be set aside on application to the court; and if the court improperly denied the application an appeal would lie. Gibson v. Martin, 8 Paige, 481. The defendant Gregory appeared and answered before the order directing the receiver to sue was made, and was heard in opposition to it, but has taken no steps to vacate or avoid the order appointing the receiver. The regularity of the receiver's appointment cannot be collaterally questioned, but must be impeached, if at all, in a' direct proceeding for that pur pose. In a suit by the receiver in relation to matters connected. with his trust, the order of appointment will be conclusive. High, Receivers, § 203; Vermont & C. R. Co. v. V. C. R. Co. 46 Vt. 792; Attorney General v. Guardian Mut. L. Ins. Co. 77 N. Y. 272.
For these reasons we hold that the order of the circuit court must be affirmed, and the cause remanded for further .proceedings according to law.
By the Court.- — It is ordered accordingly.