Court Opinion

ID: 6965786
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:53:40.292028+00
Date Added: 2024-06-11T16:08:36.617860
License: Public Domain

Mr. Justice Macruder delivered the opinion of the Court : First, the point is made, that it was a contempt of court to file the bill to foreclose the mortgage against the receiver appointed in the chancery suit, theretofore instituted to set aside the title of the mortgagor, without first obtaining the leave of the court for that purpose. Arnold states in his answer, that he was appointed receiver of the personal property. The order appointing him recites, that he is appointed receiver of the personal property ; and he is therein directed to take charge of the personal property only. While, however, the pleadings and proofs leave it somewhat doubtful whether a receiver of the land was actually appointed or not, yet, in the consideration of the first point thus made by counsel, it may be assumed, that the receivership included the realty, as well as the personalty. The receiver’s possession is subject to all valid liens existing upon the property at the time of his appointment, and does not divest a lien previously acquired in good faith. (High on Receivers, sec. 138.) The distinction between the right to enforce a lien against real estate, which has accrued before the possession thereof by a receiver, and the right to enforce a lien accruing after the appointment of the receiver, is recognized in Richards v. The People, 81 Ill. 551. Here, the appellee’s mortgage was a lien upon the property before the receiver was appointed, and before the proceeding, in which he was appointed, was commenced. Both pai’ties to that proceeding—Daniel Mulcahey, Jr., the mortgagor, holding the legal title to the land, and Daniel Mulcahey, Sr., claiming to be the equitable owner thereof —recognized the mortgage as a prior lien, which was valid and should be paid. A receiver is an officer of the court by which he is appointed, and his possession is regarded as the exclusive possession of the court. Consequently, he will be protected by the power of the court in the discharge of his duties, and no interference with his possession will be permitted without leave of court being first obtained for that purpose. (High on Receivers, sec. 139.) It has been held, that a court will not permit a claimant of real estate, which is in the ¡Dossession of its receiver, to bring an action of ejectment without first obtaining leave. (Angel v. Smith, 9 Ves. 335.) If it is desired to institute a proceeding against a receiver for the purpose of enforcing a lien against property in his possession, leave to do so should he obtained from the court appointing him. (High on Receivers, sec. 139.) The institution of such a proceeding against a receiver in his official capacity, without leave, is a contempt of court. (Richards v. The People, supra.) But while it is true, that it is a contempt of the appointing court to make its receiver a party defendant to a suit without leave first obtained for that purpose, it does not necessarily follow that the court, in which such suit is brought, is without jurisdiction. The appointing court may protect its officer either by punishing the party bringing the suit for contempt, or by enjoining him from the prosecution of the suit. But the failure to obtain leave is no bar to the jurisdiction of the court in which the suit is brought. This is certainly true in all cases, where there is no attempt to interfere with the actual possession of the property held by the receiver. A different doctrine seems to prevail in the Federal courts. (Wiswall v. Sampson, 14 How. 52; Barton v. Barbour, 104 U. S. 126.) But we are disposed to adopt the rule, laid down in quite a number of decisions in the State courts, that the failure to obtain leave does not affect the jurisdiction. The question is one of contempt, and not of jurisdiction. “The ordinary jurisdiction of other courts is in no manner taken away or affected by the appointment of a receiver.” (St. Jos. & D. C. R. Co. v. Smith, 19 Kans. 225; Chautauqua County Bank v. Risley, 19 N. Y. 369; Kinney v. Crocker, Recr., 18 Wis. 74; Lyman v. Central Vermont R. R. Co., 59 Vt. 167; Allen v. The Central Railroad of Iowa, 42 Iowa, 683.) The protection, which a court of equity thus gives to the possession of its receiver, will only be accorded upon the application of the receiver. (Blumenthal v. Brainard, 38 Vt. 407.) The objection, that leave of court was not first obtained before bringing suit against a receiver, may be waived by the appearance of the receiver. After such appearance, a motion to dismiss on that ground will not be entertained, as the defendant thereby admits that he was regularly brought into court. (The Elkhart Car Works Co. v. Ellis, 113 Ind. 215; The Ohio & Miss. R. R. Co. v. Nickless, 71 id. 271; Hubbell et al. v. Curran, 9 How. Pr. Rep. 424; High on Receivers, sec. 261. ) In the present case, Arnold answered the bill, merely setting up the fact that he had been appointed receiver of the personalty, and disclaiming any further interest in the matter. He made no motion to dismiss because leave had not been obtained to file the bill for foreclosure, nor was any action taken, in the proceeding in which the receiver had been appointed, to enjoin the complainant in the foreclosure suit from prosecuting it, or to call her to account for contempt of court. In Wiswall v. Sampson, 14 How. 52, it was held that, where a receiver in a chancery cause was in possession of land, parties holding prior judgments, and who had issued and levied their executions thereunder upon said land before the appointment of the receiver, and made sale of the land while it was in the receiver’s possession, without obtaining leave of the appointing court, were not only guilty of contempt, but that the sale itself was illegal and void, and passed no title to the purchaser. It appeared there, that the judgment creditors so proceeding under their judgments had notice of the pending suit in chancery. The action was ejectment, brought by the purchasers at the execution sale against the purchaser at a sale, made by the master in the chancery cause where the receiver had been appointed. The judgment of the lower court was in favor of the plaintiffs, but was reversed on appeal. In the case at bar, the chancery suit, in which the receiver was appointed, was settled and the receiver was discharged before the decree of foreclosure, from which the present appeal has been prosecuted, was entered. Therefore, the question whether a sale made under the foreclosure decree would be void if made while the receiver was in possession of the land, cannot arise here. In accordance with the authorities already referred to, which criticise and decline to follow the case of Wiswall v. Sampson, supra, we think, that the court below had jurisdiction, under the circumstances of this case, to proceed with the foreclosure suit, notwithstanding the failure of the complainant therein to obtain leave to make the receiver, appointed in the preceding cause, a party defendant; and that the failure to obtain such leave can not avail here as an objection" to the entry of the foreclosure decree. Second, it is claimed that, inasmuch as the property was in the hands of a receiver when the first note and the interest due on the whole debt fell due, therefore the mortgagor, Daniel Mulcahey, Jr., was not responsible for the default in their payment, and that the appellee had no right to declare the whole amount of the mortgage due. The mortgage and notes were signed by Daniel Mulcahey, Jr. He agreed to all the terms and conditions of the mortgage. Upon his default, the appellee had a right to take advantage of the powers conferred upon her by the mortgage. She was not obliged to look to or call upon the receiver to pay her what was due to her. The receiver was not appointed at her instance, nor for her benefit. He was appointed in a litigation brought against the mortgagor by a party claiming his title, but conceding the rights of appellee. The property was put into the hands of the receiver, because the parties to that litigation could not agree among themselves as to the ownership of it. The mortgagor’s liability to pay his debt was not transferred or suspended by the appointment of the receiver. If there was money enough in the hands of the receiver at any time to pay what was due on the mortgage, those, who procured his appointment, should have applied to the court for an order on him so to apply the funds in his hands. The obligation of the mortgagor to pay the notes and interest was not limited to such amounts of money as he should derive from the land, mortgaged, or from the personal property upon the land. His obligation was general, and his liability on the notes was enforcible against him, independently of his interest in the stock on the farm, or the crops raised therefrom. Third, the claim is made that a cross-bill to foreclose the mortgage should have been filed in the chancery suit wherein the receiver was appointed. We are not prepared to hold, that the appellee was obliged to assert her rights by such a cross-bill, rather than by an original bill. But if there is any force in this point, it is sufficient to say that it was not raised in any way in the court below. Where a defendant answers a bill, and contests the equities which it sets up upon their merits, and goes to hearing on pleadings and proofs, without objecting in some proper mode that the bill was improperly filed, he will be deemed to have waived such objection. ( Van Wert v. Boyes, 140 Ill. 89; Senft v. Mo. Ry. Co., 14 New York Sup. 876.) Fourth, it is objected that the decree is erroneous, in holding Daniel Mulcahey, Jr., liable for such deficiency as may remain after a sale of the mortgaged premises. We think, there was no error in the decree in this respect, as the notes secured by the mortgage were executed by Daniel Mulcahey, Jr., and he was, therefore, personally liable for their payment. It is true that, by the decree entered at the November term, 1892, Daniel Mulcahey, Jr., was ordered to execute a deed of the land to his father, and was to be released from any personal obligation to pay the mortgage, the payment of which was to be assumed by his father. But this decree was finally changed and modified, and the land was conveyed back to Daniel Mulcahey, Jr., and he executed a declaration of trust, in which he acknowledged, that he held the land in trust “to pay the mortgage debt now due on said premises.” Even if the decree of the November term, 1892, could have had the effect of releasing Daniel Mulcahey, Jr., from his personal obligation to appellee, and as between her and himself, we think that, by the subsequent change in the decree, and the deed and declaration of trust executed in pursuance of the settlement between the parties, such release was abrogated, and the original obligation created by the notes and mortgage was restored-. Fifth, the decree is not erroneous in allowing a solicitor’s fee to be taxed as a part of the costs, because the mortgage expressly provides, that, in case of foreclosure, “the court shall tax up with the costs a sum not to exceed $50.00 as an attorney’s fee to be collected as part of the debt hereby secured.” Sixth, the amount for which the decree was entered by the Circuit Court is alleged to have been too large by $16.66. This objection is met by the remittitur of $16.66, which was entered in the Appellate Court. The judgment of the Appellate Court and the decree of the Circuit Court are affirmed. Judgment affirmed.