Nos. 9873-(125) | Minn. | Jun 8, 1896
This action was commenced and prosecuted to-final judgment upon a note which was secured by a mortgage on real estate which has not been foreclosed. Execution was issued' to the sheriff of the county where the defendant resided, and duly returned wholly unsatisfied. The defendant was then brought up on supplementary proceedings and examined concerning his property, and upon the close of such examination the judge made an order appointing a receiver of the defendant’s property not exempt from execution, and restraining any transfer or other disposition thereof until the further order of the court. From this order defendant ap pealed.
It does not follow that, the mortgagee creditor is entitled in every •case, as a matter of right, to have a receiver appointed. That is a matter resting in the sound discretion of the court. Flint v. Webb, supra. Equitable principles, which are always very flexible, should
In the present case we are unable to’ say that the court abused its discretion. The principal of the debt had been due over 8 months, and the interest was overdue and unpaid for about 15 months. The defendant was largely indebted, and either. unable or unwilling to pay his debts in the ordinary course of business as they matured. Plaintiff’s claim amounted to nearly $3,800. At the time this debt was contracted, defendant owned quite a large amount of property in St. Paul, which, in September, 1892, — after the debt was contracted, — he estimated worth about $125,000, and stated that it was incumbered to the extent of $15,000 or $20,000, and that he owed an additional $15,000 of unsecured indebtedness. All of this property, except an “equity” that does not appear to be of any substantial value, he had conveyed away or disposed of,' — mostly to personal friends, — under circumstances strongly tending to show that it was done for the purpose of putting the property beyond the reach of creditors. Hence, when plaintiff obtained her judgment and issued execution, there was nothing in sight, except the mortgage security, out of which any part of the debt could be realized. The mortgaged premises are unimproved and unproductive. The only evidence as to their value is the affidavit of the defendant himself that he considers them reasonably worth $4,000, and the affidavits of two real estate dealers, one of whom says that he considers them worth $4,000, and the other that he considers them worth $4,000 to $4,500. It is noticeable, however, that none of them say what they think the premises would sell for. The fact that this security is of doubtful adequacy to satisfy plaintiff’s claim is indicated,
If, on foreclosure sales, real estate was sold to third parties for cash, it would be an easy and short matter to ascertain what the property would bring, and what the deficiency would be. But it is a matter of common knowledge that such sales are a mere form; that the property is generally bid in by the mortgagee, who has to wait for a year before he gets either money or property. By that time plaintiff’s claim would amount to nearly $4,300, even if she should foreclose immediately. It is also a matter of common knowledge that the value of unimproved real estate — that is, what it will bring — is to a considerable extent a matter of opinion; also, that the amount which mortgagees will bid it in for often depends very much upon their chance of ever getting any more on their debt. If they think there is no such chance, they will usually bid up, in order to be sure, in case of a redemption, of realizing all that there is in the property. On the other hand, if they are assured that they can collect the deficiency from their debtor, they will bid in the property only for what they feel reasonably sure they can realize out of it.
Now, if plaintiff is compelled to first exhaust her mortgage before having a receiver appointed, the act of the defendant in putting all his other property out of his hands has placed her in just this position : If she should bid in the property for less than it proved to be worth at the end of a year, and it should be redeemed, the loss would fall on her, unless she was able to collect the deficiency out of the defendant. On the other hand, if she should bid it in for the full amount of her debt, say $4,000, and the property should prove to be worth less at the end of the year, the loss would still fall on her. In short, if, as the evidence tends to show, defendant has disposed of his other property for the purpose of placing it or its proceeds beyond the reach of his creditors, this wrongful conduct on his part has placed plaintiff, if she is compelled to first exhaust her security, where she has to take all the risks of loss, while defendant retains all the chances of gain. This, to our minds, is the strongest reason vvhy we think it would be inequitable to deny the plaintiff the aid of
Order affirmed.
I cannot concur in the foregoing opinion. There is, in my opinion, a sufficient showing that the security is adequate; so that it is an abuse of discretion to appoint a receiver.