Court Opinion

ID: 8183992
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:06:11.98057+00
Date Added: 2024-06-11T16:40:20.866815
License: Public Domain

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 *315remain 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 *316cut 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^