215 N.W. 736 | Iowa | 1927
Lead Opinion
This controversy involves the question of priority between the first and second mortgagees, to procure the appointment of receiver under and by virtue of the authority 1. MORTGAGES: granted in the respective instruments, upon rents: prio- application therefor. The usual receivership rity between clause is incorporated in each. Appellee, senior and holding the junior incumbrance, filed its junior amended petition September 5, 1925, asking mortgagees. foreclosure and the naming of receiver. Service of the original notice was made on defendant Donahoe, October 12th in said year. Judgment and decree was entered in said cause January 4, 1927, wherein the receivership phase of the litigation was continued.
Appellant commenced her proceeding November 24, 1925, to foreclose her first mortgage, including prayer for designation of said trust officer, and the original notice therefor was served November 25th of said year. For the purpose of preventing such appointment, appellee appeared in appellant's action, February 3, 1926, asserting priority of its own right to said relief in the other case. Accordingly, two days later, judgment and decree of foreclosure was entered in favor of appellant, commissioning a receiver as against all defendants, but continuing the issue as between appellee and appellant. Supplemental decree was entered March 4th in said year, foreclosing the first mortgage as against the second, again, however, preserving the point concerning the rents and profits. Sale was had under special execution under the junior foreclosure suit March 13th, leaving a deficiency; while that growing out of the senior was held April 3d, also showing a shortage. Defendants, the Donahoes, were insolvent, and unable to pay said balance on either judgment. *539 Finally the undetermined contention was heard between the present parties, August 2d, and adjudicated August 12th, in favor of appellee. Wherefore the appeal was taken.
Argument for reversal is founded upon the ground that appellant's mortgage, being the superior, must necessarily carry with it, when in conflict with an inferior, the right stipulated for the selection of said receiver to control the "rents and profits" for the year beginning March 1, 1926. On the other hand, appellee's position is that, because of our previous decisions concerning the general subject-matter, the logic of the occasion requires an affirmance in the case at bar.
The clause relied upon in the written contractual obligations does not create a lien upon the "rents and profits" prior to the right acquired when the litigation is instituted. Kooistra v.Gibford,
"The rights of the mortgagee to the rents under a mortgage pledging the same came into being when the action was commenced."
Said institution of the "action," and not the actual "appointment of the receiver," fixes the time when the individual mortgagee first obtained an interest in the "rents and profits."Kooistra v. Gibford, supra; Young v. Stewart, supra.
So in this case, appellant having no lien upon or interest in the subject of the legal quarrel, appellee, by its vigilance, was the first to procure such equity and privilege therein as to amount to a paramount title. Having thereby established this priority, it became so well confirmed that the future course of appellant was not sufficient to take away the benefits thereof. To hold otherwise would be declaring a lien in favor of a senior mortgage under circumstances already said not to constitute the same. Through the belated assertion of said legal remedy, *540 appellant automatically thereby brought down on said "rents and profits" her contractual rights therein, subject to the burden previously placed thereon by appellee. Again, describing the situation in another way, the result, in reversal, would amount to arming her with a weapon she does not have, suggesting the use of it without license, for the purpose of driving the junior incumbrancer from its established position. True, the lien second in time must yield to the first. Yet this doctrine cannot be sound unless there is a "lien." Consistency, in view of the many adjudicated cases, compels us to say there is no "lien" on the "rents and income," because of the record facts. If no right arose except by the "commencement of an action," and none had been taken by appellant, then there was nothing, so far as the particular paragraph of her mortgage under discussion was concerned, which could become a first, to which appellee's instrument must be a second. Protection for the lender of money is easily afforded by adding suitable words similar to and the equivalent of those contained in a chattel mortgage, and then recording the twofold undertaking as an incumbrance both of personalty and realty.
Authorities cited to show error are: 41 Corpus, Juris 634;Howell v. Ripley, 10 Paige's Ch. (N.Y.) 43; Goddard v. Clarke,
Judgment of the district court should be, and hereby is, affirmed. — Affirmed.
EVANS, C.J., and STEVENS, FAVILLE, and WAGNER, JJ., concur.
Addendum
On rehearing, appellant earnestly argued that the second mortgage was expressly made subject to the first, and therefore the priority of rights to the appointment of a receiver must necessarily be in the senior holder.
We have made special investigation of the exhibits referred to in the abstract of record, and find that the junior incumbrance contained the following reservation only:
"And we [John Donahoe and Rose Ann Donahoe, the mortgagors] do hereby covenant with the said Williamsburg Savings Bank, its successors and assigns [the second mortgagee] that we are lawfully seized of said premises; that the same are free from incumbrance * * * except a mortgage in favor of the Midland Mortgage Company [first mortgagee] * * *."
Manifestly, the only subjection relates to "incumbrance" on real estate, but not on the rents and profits. As has been previously and many times held by this court, the right to a receivership in the premises is not "a lien or 2. MORTGAGES: incumbrance" on the "rents and profits," rents: re- including those arising under an existing lease, ceivership: even though extending into the future, until priority application therefor in the foreclosure of right. proceeding. See Keokuk Tr. Co. v. Campbell,
Decision in this case is not made whether or not a different proposition might be offered for solution, were the question here argued one embracing the higher right of the appellant to oust *542 the mortgagee and take possession of the premises under the mortgage and manage the land for the purpose of reducing the secured indebtedness. This proposition is not submitted, under the record as presented to us, and we do not, therefore, consider it. Appellant, in stating the nature of the action, defense, and issues, and then finally in making her discussion, confines the scope of the present investigation to the right of a receiver for the collection of rents and profits.
The appellant's petition for rehearing is overruled.
