Bermes v. Kelley

• Citation: Bermes v. Kelley, 108 N.J.Eq. 289, 154 A. 860 (N.J. Ch. 1931)
• Decision Date: 08 May 1931
• Court: New Jersey Court of Chancery
• Parties: JOHN A. BERMES, complainant, v. JOHN M. KELLEY et ux., et al., defendants

154 A. 860

BERMES

v. KELLEY et al.

Court of Chancery of New Jersey.

May 12, 1931.

Syllabus by the Court.

At default a mortgagee becomes entitled to possession of the mortgaged premises.

Syllabus by the Court.

That possession, if exercised, entitles him to receive the rents.

Syllabus by the Court.

Possession may he taken by the mortgagee either personally or through a receiver appointed by the court for that purpose in a suit to foreclose the mortgage.

Syllabus by the Court.

Unless and until that possessory right is exercised by a mortgagee, the mortgagor is entitled to the rents as against the mortgagee.

Syllabus by the Court.

As against the mortgagor, that possessory right and its fruits, if and when exercised, obtains in favor of any mortgagee, irrespective of the rank of the mortgage.

Syllabus by the Court.

As between, two successive mortgagees, when one exercises his possessory right, either personally or through a receiver in foreclosure, and the other does not do so, the one exercising the right becomes entitled to the rents received by him through the medium of his possession.

Suit by John A. Bermes against John M. Kelley and wife and others.On application for distribution of funds in hands of foreclosure receiver.

Decree in accordance with opinion.

French, Richards & Bradley, of Camden, for petitioner Economy B. & L. Ass'n.

Thomas F. Salter, of Camden, for respondent Bermes.

LEAMING, Vice Chancellor.

The inquiry here presented is whether a first or a second mortgagee is entitled to receive money which has been collected by a receiver in foreclosure as rents of the mortgaged premises.

Both mortgages contain the usual clause pledging the rents, issues, and profits of the mortgaged premises.The second mortgagee filed a bill to foreclose his mortgage and procured from the court an order appointing a foreclosure receiver to collect the rents.In that suit and proceeding the first mortgagee was not a party.Subsequently the first mortgagee filed its bill to foreclose, making the second mortgagee a defendant, but neither entered into possession nor applied to the court for the appointment of a receiver.Sale was made in the foreclosure suit of the first mortgagee and the proceeds of sale were inadequate to satisfy that mortgage.Both mortgagees now make claim to the rents collected by the receiver.

Controversies of this general nature have been before the courts of this state so frequently and in so many aspects that it is not thought that any doubt can be said to exist touching the question here presented.At default a mortgagee becomes entitled to possession of the mortgaged premises; that possession, if exercised, entitles him to receive the rents.Possession may be taken either personally or through a receiver appointed by the court for that purpose in a suit to foreclose the mortgage.But unless and until that possessory right is exercised by a mortgagee the mortgagor is entitled to the rents as against the mortgagee.As against the mortgagor that possessory right, and its fruits, if and when exercised, obtains in favor of any mortgagee, irrespective of the rank of the mortgage.As between...