Jarmulowsky v. Rosenbloom

This is an action brought to foreclose a mortgage on real estate. The order appointing a receiver pendente lite of the rents and profits of the property covered by the mortgage was made ex parte. The mortgage contained the following clause:

“That the holder of this mortgage in any action to foreclose it shall be entitled, without regard to the adequacy of any security for the debt, to the appointment of a receiver of the rents and profits of said premises; and said rents and profits are hereby, in the event of any default or defaults in paying said principal, installment, or interest, assigned to the holder of this mortgage as further security for the payment of said indebtedness.”

Section 714 of the Code of Civil Procedure provides that:

“Notice of an application for the appointment of a receiver in an action, before judgment therein, must be given to the adverse party, unless he has failed to appear in the action, and the time limited for his appearance has expired. But where an order has been made, as prescribed in section 438 of this act, the court may, in its discretion, appoint a temporary receiver and preserve the property, without notice or upon a notice given by publication or otherwise, as it thinks proper. But where the action is for the foreclosure o ' a mortgage, which mortgage provides that a receiver may be appointed without notice, notice shall not be required.”

When the order appointing a receiver was made, the time limited for appearance in the action of the adverse party had not expired, no order directing the service of the summons by publication, as provided m section 438 of the Code of Civil Procedure, had been made, and the mortgage at bar did not provide that a receiver might be appointed without notice. Furthermore, this record does not disclose any affidavit among the papers upon which the order was granted showing the value of the property, or that there was any likelihood that it did not furnish sufficient security for the mortgage debt. This court said, in Eidlitz v. Lancaster, 40 App. Div. 446 , 59 N. Y. Supp. 54 , that it was well established that the existence of a receiver clause in a mortgage gave no absolute right to the appointment of a receiver. We said, in Dazian v. Meyer, 66 App. Div. 575 , 73 N. Y. Supp. 328 :

“Since the adoption of the Code the appointment of receivers is regulated by the provisions of sections 713 and 714, which are exclusive so far as the provisions cover the subject. Colwell v. G. N. Bank, 119 N. Y. 408 , 23 N. E. 739 . There is no doubt but that the provisions of section 713 cover the sub

ject-matter involved in this action; but before a receiver could be appointed it was essential that notice should be given to the owner of the property, the provisions of section 714 in this respect being mandatory, and an order appointing a receiver without such notice is void. It is otherwise when the service of the summons has been by publication. Fletcher v. Krupp, 35 App. Div. 586 , 55 N. Y. Supp. 146 .”

The foregoing proposition was expressly approved by this court in Woerishoffer v. Peoples, 120 App. Div. 319 , 105 N. Y. Supp. 506 .

It follows that the order denying the motion to vacate the ex parte order appointing the receiver should be reversed, with $10 costs and disbursements, and the motion granted, with $10 costs. All concur.