214 N.W. 886 | Minn. | 1927
There was a $15,000 first mortgage upon a 240-acre farm in Jackson county, Minnesota, when in January, 1922, the owner, Albert Reno, gave a second mortgage to plaintiff to secure the payment of $5,564. Thereafter Reno conveyed the farm to D.E. Kulp of Iowa, subject to mortgages of record. There was no covenant to pay taxes or interest on the first mortgage in the second mortgage. The deed to Kulp was not recorded, when on February 16, 1925, plaintiff, because of default in the condition of its mortgage, brought this action to foreclose, and filed notice of lis pendens. A receiver for the rents and profits was appointed upon an ex parte application. Kulp thereafter appeared and moved to vacate the order appointing the receiver. The motion was denied. He answered. One Gadd, who claimed to have an assignment from Kulp of the landlord's share in the crops and rent for 1925, filed a complaint in intervention. At the trial of the action both Kulp and Gadd appeared and consented to a decree foreclosing the mortgage; but it was agreed that the disposition of the rents and profits collected by the receiver should be determined later. Pursuant to the decree the mortgaged premises were sold on November 28, 1925, to plaintiff, its bid being for the full amount of its debt, including the costs of the foreclosure. The sale was confirmed December 7, 1925. Thereafter and in October, 1926, the disposition of the rents and profits collected by the receiver came on for hearing and was *195 not concluded until in December after the year of redemption from the sale had expired. The receiver had charge of the farm during two cropping seasons — the one of 1925, prior to the sale; and the one of 1926, while the period of redemption was running. The court approved of the disposition made by the receiver of the proceeds of the 1925 rent and crops not only as to interest which fell due and was paid by him upon the first mortgage prior to the sale, but also upon interest and taxes accruing thereafter. For instance, in January, 1926, the receiver paid over $1,000 in such interest and taxes, and filed an affidavit of such payment so as to tack the same to the amount required to be paid on redemption in case someone should desire to redeem. The court also ordered that the receiver might retain some $200 out of the proceeds of the 1926 crop and rent to reimburse himself for what the income for the previous year did not cover.
Appellants attack the jurisdiction of the court to appoint a receiver on the ground of certain irregularities — the order being dated on February 16, one day before the lis pendens was filed, and the summons and complaint with the order not being filed until some days later. It is apparent that some confusion of dates occurred because of the fact that the judge and plaintiff's attorney did not reside in the same county, and the action was brought in still another, and the attorney and court sent the documents by mail. But the irregularities cannot avail appellant Kulp, for he appeared generally and moved to vacate the order appointing the receiver. The motion was heard on the merits and denied. There was no appeal. He is concluded, and may not now question the regularity or propriety of the appointment. The record does not disclose any proof of Gadd's claim to the rents and profits of the farm, and he intervened after Kulp's motion to vacate the appointment had been submitted. Here both appellants came in and submitted to the jurisdiction of the court, and one made a direct but unsuccessful attack on the order appointing the receiver. He had his remedy but did not use it, and waited until the receiver had acted nearly two years, when on the presentation of his final account *196
the capacity in which he has served is questioned. We do not think Greenfield v. Hill City L.L. L. Co.
The order appointing the receiver directed that out of the money received from the rents and profits of the farm he "shall pay all taxes on said premises now due or which shall fall due during his receivership, and also any interest due on prior mortgages." Ordinarily a receiver will be protected who follows the order of the court. Pulver v. Commercial Sec. Co.
It was also wrong to permit the receiver to reimburse himself from the rents and profits of the farm accruing during the year of redemption. These belonged to Kulp. Neither the mortgagor, Reno, nor Kulp had covenanted to pay taxes or interest on prior mortgages; therefore the rents and profits during the year of redemption were Kulp's. Plaintiff, the respondent, had absolutely no interest as a creditor in the rents and profits, for its debt was paid in full by the sale; nor as purchaser, for it bought subject to *197 the right of redemption and subject to subsequent accruing taxes and interest on prior encumbrances.
Appellants make a further contention which is deemed erroneous, namely, that nonpayment of taxes and interest on prior mortgages should not be considered as waste at common law so as to justify either the appointment of a receiver or the application of the rents and profits to the repair or prevention of such waste. It is true that nonpayment of taxes and interest on prior encumbrances alone do not justify the appointment of a receiver at the instance of a second mortgagee. Still, such omissions have been considered in this state in the nature of waste when taken in connection with insolvency of the owner of the premises and his refusal to devote the rents and profits to payment of such taxes and interest, and rightly so, for to the second mortgagee the nonpayment thereof is apt to result in more serious consequences than a mere physical deterioration or damage to the premises. Lowell v. Doe,
There are other questions raised by the assignments of error, but the ones already considered are controlling and indicate the disposition to be made of the rents and profits collected by the receiver. Rather than attempt to modify the order appealed from we deem it advisable to reverse the same with direction to the court below to enter an order in harmony with this opinion if it can be done *198 upon the record as it now stands, and if not to take additional testimony.
Reversed and remanded.