C. B. Keogh Manufacturing Co. v. Whiston — 26 Abb. N. Cas. 358

Majority

p. 358

C. B. KEOGH MANUFACTURING CO., v. WHISTON.

N. Y. Supreme Court, First Department, Special Term;

February, 1891.

Headnote

1. Receiver under mortgage.] Although a court of equity will not enforce a provision in a mortgage for the appointment of a receiver when under all the circumstances it is inequitable to take the property out of the owners’ possession pending foreclosure, yet the fact that the parties have agreed upon the appointment of a receiver should have some weight in determining the application for one.

2. The same; when appointed!] Equity requires that such provision should be specifically enforced, where it appears that the mortgage sought to be foreclosed is a second mortgage ; that the parties in possession of the premises receive the rents but refuse to pay the interest on the first mortgage, and the taxes on the property.

Motion for the appointment of a receiver oi mortgaged property in action by the C. B. Keogh Manufacturing Company to foreclose a mortgage against John Whiston, Mary A. Poole and others.

p. 359

Myndert A. Vosburgh, for plaintiff, in support of the motion.

George W. Carr, for defendant, opposed.

Although a court of equity will not enforce a provision in a mortgage which provides for the appointment of a receiver when under all the circumstances it is inequitable to take the property out of the owner’s possession pending an action to foreclose the mortgage, the fact that the parties have agreed that in case of a default a receiver shall be appointed, should have weight when an application for a receiver is made. When such a provision is contained in a mortgage, and it further appears that the mortgage sought to be foreclosed is a second mortgage, that the parties in possession of the premises refuse to pay the interest on first mortgage and the taxes and assessments on the property, but receive the rents and refuse to apply them for the benefit of the property, the appointment of a receiver becomes necessary for the protection of the mortgagor, and equity, requires that the agreement should be specifically enforced. The motion for a receiver is therefore granted and receiver appointed. As to the application of the defendant to be allowed to answer, I am very doubtful whether the defense set up in the proposed answer is good, but under the circumstances I will allow the defendant to answer on payment of $10 costs of motion, and, if plaintiff desires, on condition that defendant stipulates to refer the action and that the trial shall proceed from day to day upon two days’ notice, and that the defendant will not apply to postpone the trial before the referee. If these terms are not accepted by the defendant the motion for leave to answer is denied, with $10 costs.