Court Opinion

ID: 7276243
Source: CourtListenerOpinion
Date Created: 2022-07-25 19:59:48.058856+00
Date Added: 2024-06-11T16:18:52.272944
License: Public Domain

Mr. Justice Shepard
delivered the opinion of the Court:
The determination of the questions raised by the allegations of the bill and of the response to the rule to show cause, respecting the equitable rights, in relation to the “ten foot, strip,” of the beneficiaries of the second trust upon the flats property in which Grayson is trustee, will probably become a matter of very great importance in the settlement of the final decree in this litigation, and it must be deferred until that time.
The sole question necessarily involved in this appeal is the propriety of the order appointing receivers for the property pendente lite, as between the claimants of the equitable title and the right of possession, on the one hand, and the rights of the beneficiaries of the second trust, on the other. And the only consideration that can be given to the uses of the strip, and the several conveyances relating to it, is in respect of their weight as circumstances, in connection with the general conduct of the appellants, tending to show that *183thejr were engaged in a reprehensible scheme to force the public sale of the flats property, under the first deed of trust, at a great disadvantage, and thereby destroy the value of the second incumbrance represented by the trustee, Grayson.
It is to be inferred from the general tenor of the bill, though there is no express allegation, that the first deed of trust requires the application of the rents of the flats property to the payment of taxes, insurance and accrued interest; for it is alleged that the second trust to Grayson covers the rents, and provides that he shall, as trustee, collect said rents over and above the amounts necessary to pay the said charges for taxes and insurance, necessary expenses, and on account of interest on the said first trust.
If the effect of the second trust was to charge the rents with the payments aforesaid, and to create an equitable lien in favor of its own beneficiaries upon the surplus that might exist, the appointment of the receivers would, apparently, be justified by the exigencies of the case.
It is true, as contended, that there is no allegation, in express terms, that Haller is insolvent, that the property is not of sufficient value to insure sale, under auspicious circumstances, for the amounts secured by both trusts, and that Wood and Talbott have been guilty of fraud in mismanaging the property and diverting the rents. If, however, these necessary conclusions are clearly deducible from the specific facts relating to each that are set out in the bill, nothing more is required. 5 Encyc. Pl. & Pr. 567; 9 Idem, 688, 694.
In this view, the allegations of the bill, as shown in the preliminary statement, are ample. Haller’s insolvency, as also the apparent inadequacy of the security of the corpus of the flats property, arising in part from the insufficiency of its rents to meet the interest on the first trust, are inevitable inferences from those allegations; and they-remain unchallenged, either directly or indirectly, by the answer.
As regards the conduct of Wood and Talbott, who claim *184to hold the equitable title to the propertj'- subject to the two trust deeds, the allegations are likewise sufficient.
The secret conveyances of the property in the parcels, as alleged; the trust deed purporting to secure an indebtedness of $34,000 that did not exist; the feigned suit with their secret trustee Duke, to abate the nuisances occasioned by the encroachment of the flats building upon the adjacent strip; the attempt to purchase the claims of the second trust for 20 per cent, of their face value; the threat made to prevent the realization of anything on their account; the manner in which they came into the possession of the rents of the flats, and their refusal to pay the surplus thereof upon the interest accruing due upon the first trust, even after Grayson had offered to advance whatever additional sum might be necessary to meet the entire instalment, all tend to establish the existence of a scheme on their part to force the sale of the property, under the first trust, under such circumstances as would seriously endanger the security of the second — a scheme which it would be superfluous to characterize with an epithet.
Whether, however, the second trust deed does in fact subject the income of the flats building to its lien, must depend upon the construction of the terms of that instrument. As it is not made an exhibit in the case, and all the information we have of its purported effect is that claimed for it in the -bill, we prefer, especially on this intermediate appeal, not to rest an approval of the order appointing the receivers upon that ground.
Leaving out of consideration, then, the question of the equitable lien upon the income of the flats buildings, that was being withheld by the equitable owners in possession, we pass to the second ground upon which the appointment of the receivers is supported.
Default had been made in the payment of interest upon both trusts, and it seems quite clear that the facts heretofore stated respecting the insufficiency of the security and the *185conduct of the appellants in possession were ample to confer jurisdiction upon the court to appoint receivers if deemed necessary for the protection of the interests of the beneficiaries of the second trust. Sage v. Memphis, etc., RR. Co., 125 U. S. 361, 375; Grant v. Phoenix Ins. Co., 121 U. S. 105, 117; Kountze v. Omaha Hotel Co., 107 U. S. 378, 395.
It is hardly necessary to say that the possession of property by one claiming title thereto ought not to be lightty taken away, and that the power to appoint a receiver is one not to be exercised except with great circumspection. But where the power exists, no positive rule can be laid down as to whether the court will or will not interfere with possession, pendente lite, through the appointment of a receiver. In all such cases the court must of necessity exercise a sound discretion to be governed by all the circumstances of the particular case.
Again, when this discretion has been exercised and the receiver appointed, the impropriety of the order should be made quite clear to justify an appellate court in setting it aside. Clark v. Bradley Co., 6 App. D. C. 437, 444.
As this is an appeal from an interlocutory order, and the whole case may come before us again with final answer and proofs, we have attempted to confine our discussion of it within the bounds necessary to the elucidation of the questions actually involved, namely, the power of the court to appoint, and the soundness of the discretion exercised in appointing receivers to administer the property pending the litigation.
We have found no abuse of discretion in the order; on the contrary, it seems to have been providently made. It will therefore be.affirmed with costs, and the cause will be remanded for further proceedings as the parties may be advised. It is so ordered. Affirmed.