197 Iowa 314 | Iowa | 1924
The facts are not in dispute. In 1919 and 1920, the Sioux Apartment Hotel was erected. It was owned and financed by the Sioux Holding Company. During the construction, the Sioux Holding Company executed a mortgage to the Metropolitan National Bank, of Minneapolis, as trustee, in the sum of $450,000. The mortgage also pledged the rents and profits, and provided for the appointment of a receiver for th.e property and the rents, issues, and profits thereof, in case of
“Received from Donald H. Smith the sum of $4,717, being payment in full for rental named in this lease for Apartment 223 at the rate of $85 a month, ’ ’ etc.
No question is made as to the good faith of the transaction between Wenzlaff and intervener, or that the indebtedness from Wenzlaff to Smith was not bona fide. The lease was in good faith in payment of said indebtedness, and Smith released Wenz-laff from such indebtedness. On the same date, Wenzlaff agreed that intervener might sublet the apartment, which he did to one Krueger, who is now in possession of the apa'rtment. The plaintiff commenced its foreclosure action May 9, 1922. The receiver took possession of the building May 9th. The appointment of a receiver seems not to have been contested, and there was no appearance except for plaintiff, the second mortgagee. On June 1, 1922, on application of the receiver, the court, by an order, authorized the receiver to pay installments due on the
The petition of intervention was filed May 31, 1922, reciting many of the facts before set out, and that the receiver refuses to recognize the lease, and has notified the sublessee, Krueger, to discontinue pajdng any further rents to intervener, and to pay the same to the receiver; that the receiver has notified Krueger that it will be necessary for him to enter into a new lease directly with the receiver, if he expects to continue in the occupancy of Apartment 223. Intervener asks that the receiver recognize the lease, and that he be directed bv the court not to interfere with the Krueger possession, and that intervener be permitted to collect the rent from his sublessee.
The Metropolitan Bank filed its resistance to the intervention, setting up the fact as to the first mortgage to it and the provisions thereof; that its mortgage is unpaid, and is a first and superior lien upon the premises; that the rents were pledged; and that it has a lien on the rents and issues, and is entitled to the same. It alleged that the intervener has no right or interest to the premises or any part thereof, or to any of the
Tbe receiver also filed a separate resistance, reciting practically the same facts as set out by the bank; that monthly installments are payable monthly in the sum of $2,625; 'and that he has obtained-an order to pay such installments. He states als'o that.the third'mortgage also covers rents and profits of. the premises, and that intervener is not entitled to .any relief as against the receiver, nor as against the trust deed or first mortgage and the other mortgages now upon the property.
No-question is raised or argued as to whether a receiver was properly appointed under the second mortgage, or whether any of the parties are now in a position to attack such appointment. The appellee claims that the contest is between the first mortgagee and the intervener. .Though the receiver has filed a resistance to the intervention, it is clear that such resistance is in the interest and on behalf of the first mortgagee, and because of the pledge in the first mortgage of the rents. .
The decisive point in' the case is whether, under the circumstances, the first mortgagee has any standing at this time, and whether it, or -the receiver for it, may collect the rents when there has been no default in the payment of interest to it, or default in any way, and when it has not commenced foreclosure for any default or asked for the .appointment of a receiver, under the provisions of its mortgage. An entirely different proposition would be presented, had there been default, foreclosure suit, and receivership under the first mortgage. It may be that, in such a case, the bank would be entitled to the rents, even as against intervener. But that question is not now before us, and therefore is not determined.
Intervener contends that, under the circumstances shown, Wenzlaff had a right to lease the apartment to him, and he had a right to sublet to Krueger; that the lease is valid, and he is entitled to the possession of the apartment during the year for redemption, and until the right of Wenzlaff, the owner, is cut off. We are inclined to think so, at least unless and until there is default, and proceedings by the first mortgagee. It is quite clear that the bank, as first mortgagee, has no standing in court and no right at this time to contest the rights of the intervener.
“It is the law in this state, in harmony with the general holding, that the right of the holder of a mortgage upon real estate, pledging the rents and income as security to the defendant for the same, does not arise until action has been commenced to enforce collection of the debt” (citing Swan v. Mitchell, 82 Iowa 307; Des Moines Gas Co. v. West, 44 Iowa 23; Sullivan v. Rosson, 4 A. L. R. 1400, note; and other cases).
In the Swan case, we said that the fact that the tenements, hereditaments, and appurtenances, and the rents, issues, and profits, were conveyed to the mortgagee, must be construed with the defeasance of the instrument; and that, where so construed, the instrument plainly provides that the rents and profits are only pledged in case possession is taken by the mortgagee. ■
Further discussion seems unnecessary. The judgment is— Reversed.