Majority
p. 872FARMERS’ LOAN & TRUST CO. v. STATEN ISLAND BELT-LINE R. CO. et al (Supreme Court, Special Term, Kings County. May, 1896.)
Headnote
Mortgages—Right of Mortgagee after Appointment of Receiver.A mortgagee, by asking for the appointment of a receiver in an action to foreclose, submits to the discretion of the court in the management of the property, and cannot afterwards object that the court has no power, as to him, to do any act in the management of the property without his special consent.
Action by the Farmers’ Loan & Trust Company, as trustee), against the Staten Island Belt-Line Railroad Company and others, to foreclose a mortgage.
Julien T. Davies, for the motion.
Albert Renaud and A. S. Bacon, opposed.
A fair statement of the rule seems to be that when a mortgagee, in an action to foreclose his mortgage, invokes the extraordinary aid of equity by the appointment of a receiver of the mortgaged property in his interest, he thereby submits to the reasonable discretion of the court in the management and control of
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the property, through its receiver, and that the action of the court in that respect represents and binds the mortgagee as well as the owner. High, Rec. § 394a. After thus generally submitting the property to the discretion of the court, the mortgagee may not say that the court has no power as to him to do any act in the conservation and management of the property which lessens the lien of the mortgage, without his special consent. That was the position this plaintiff put itself in by having the court appoint the receiver. The defendant railroad company and the plaintiff (the owner and the mortgagee) had the power to bind themselves by making the agreement which the receiver made under the court’s order, for the perpetual joint use with the said defendant company of less than 1,000 feet of its route in question, by the Port Richmond & Prohibition Park Electric Railroad Company; and the act of the court was for and binding upon both of them. If the court’s order was improvident or an abuse of discretion, the only way to be relieved from it was by appeal, all parties having been heard upon notice, and the plaintiff having opposed the making of it. It cannot be said that the said order and agreement do not affect the mortgagee, though binding upon the owner, and that, therefore, the judgment of foreclosure barred the said agreement or lease made under the said •order.
This motion of the purchaser at the foreclosure sale to vacate the said order, or to limit the duration of the said agreement or lease to the time of going into possession by the purchaser under the foreclosure, and for an order putting the said purchaser into exclusive possession of the portion of the route in question, is therefore denied.