Court Opinion

ID: 5185180
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:47:24.871155+00
Date Added: 2024-06-11T08:26:43.207895
License: Public Domain

Ingraham, J. (dissenting):
I think this motion was properly denied. The defendant Lesster was a proper party defendant to this action, which was to foreclose a junior mortgage upon certain real property. At the time of the commencement of the action to foreclose Lesster was collecting the rents of the property under an agreement not recorded, which in effect assigned the rents to Lesster and authorized him to retain thereof $200 per month, to be received on account of a prior mortgage held by him upon the property.. Lesster was not a proper party as holder of a prior mortgage, but was a proper qiarty as being entitled to receive a portion of the rents under his unrecorded agreement with the mortgagor and under which he was collecting the rents of the property. That agreement was unrecorded, and unless the plaintiff had actual knowladge of its existence upon the record of his mortgage, under the Recording Act, his mortgage took priority over Lesster’s agreement, and that agreement was subject to it. When the action was brought, Lesster, being in possession of the property, was, as before stated, a proper party. Upon the motion of the plaintiff the court appointed a receiver of the mortgaged premises pending final judgment in this action. That order contained a provision that the receiver should pay the rents collected to the plaintiff. Lesster moved to vacate that order appointing a receiver, it having been made without notice to him, and upon that motion being denied appealed to this court where the order appointing the receiver was affirmed ; but the provision directing the pay*470ment of the rent to the plaintiff was stricken out upon the ground that such a direction could only be given when it appears that there was a deficiency upon the sale of the property under the judgment of foreclosure, and then only to the extent of such deficiency. The action proceeded to judgment, and upon a sale of the property a deficiency was found due the plaintiff of $545.55, with interest from the 24th day of June, 1897. Whether or not this agreement, under which Lesster was in possession of the premises and collecting the rents, was an incumbrance upon the property prior to the plaintiff’s-mortgage, which was to be disposed of in the foreclosure suit, a judgment in that action against Lesster was conclusive that the plaintiff’s mortgage was-superior to the agreement under which Lesster was collecting the rent of the premises.. By the appointment of the receiver, on the motion of the plaintiff in this action, the rents of the premises accruing during the pendency of the action were sequestrated to protect the plaintiff against any loss in consequence of there being a deficiency in the amount that the property realized upon a sale to* pay the amount due upon the mortgage. The receiver was not appointed for the benefit of the defendant Lesster as a junior incumbrancer, or of the parties who held prior mortgages, but to protect the plaintiff’s mortgage; and as the judgment of foreclosure in this action is an adjudication that Lesster’s agreement was subject to the plaintiff’s mortgage, I can see no principle upon which Lesster was entitled to this fund sequestrated by the appointment of a receiver for the protection of the plaintiff to satisfy his subsequent incumbrance. If this agreement of Lesster’s was made under the circumstances detailed by him in his affidavit, with the understanding between the plaintiff and the mortgagor and Lesster that it should be superior" to the plaintiff’s mortgage, or if plaintiff had knowledge of the agreement and the understanding under which it was- executed at the time he received his mortgage and recorded it, plaintiff’s mortgage would then be subject to the agreement between the mortgagor and Lesster. The plaintiff, however, denies the existence of such understanding, or that he had any knowledge of the Lesster agreement when the mortgage was delivered to him and was recorded; but, as before stated, I tliiulc the judgment in this action under which Lesster’s interest, whatever it was in the property under this agreement, was sold by the referee, was *471an adjudication-that this interest of Lesster under the agreement was subordinate to the plaintiff’s mortgage. And it being subordinate to the plaintiffs mortgage, as between plaintiff and Lesster, Lesster could have no right to the rents collected by .the receiver, and which by the order appointing the receiver had been sequestrated for the protection of the plaintiffs mortgage.
For this reason I think the order appealed from should be affirmed.
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.