Eureka Min., Smelting & Power Co. v. Lewiston Navigation Co.

• Citation: 86 P. 49,12 Idaho 472
• Parties: EUREKA MINING, SMELTING AND POWER COMPANY et al., Appellants, v. LEWISTON NAVIGATION COMPANY et al., Respondents
• Decision Date: 23 June 1906
• Court: Idaho Supreme Court

86 P. 49

12 Idaho 472

EUREKA MINING, SMELTING AND POWER COMPANY et al., Appellants, v. LEWISTON NAVIGATION COMPANY et al., Respondents

Supreme Court of Idaho

June 23, 1906

APPOINTMENT OF RECEIVER PENDING APPEAL-WASTE-FAILURE TO INSURE-REMOVAL OF PROPERTY FROM JURISDICTION.

1. Where a mortgage provides that the mortgagor shall keep the property insured, and that in case he fails to do so the mortgagee may insure, and that all sums paid by the mortgagee for insurance shall become a part of the mortgage debt and be secured by the mortgage lien, a failure to insure by the mortgagor will not amount to such waste of the security as to authorize the appointment of a receiver to take charge of the property.

2. Where A takes a mortgage on a boat that is plying on an interstate stream in such manner that its use in navigating such stream must necessarily take it beyond the jurisdiction of the state in which the mortgage was executed, and it is stipulated in the mortgage that the mortgagor shall not remove the "vessel beyond the limits of the United States," a removal beyond the jurisdiction of the state and its use in navigation of a portion of the same stream where it is no more dangerous or perilous will not constitute grounds for the appointment of a receiver to take charge of the property, where it appears that the vessel is in charge of a competent and skillful captain and crew.

3. Where a mortgage provides that the mortgagee shall insure a boat which it is understood shall ply on certain designated waters, and he fails to do so for the reason that the risk is so great on a vessel plying on those waters that insurance cannot be obtained, the failure of the mortgagor to insure will not of itself warrant the appointment of a receiver for such property.

(Syllabus by the court.)

ORIGINAL application for appointment of a receiver pending appeal. Application denied.

Application denied, and costs awarded in favor of the respondent, Allen.

John O Bender and K. I. Perky, for Applicant.

It was a want of good faith on the part of the mortgagors to neglect to pay the taxes and insurance upon the property, and yet remain in possession and appropriate all the profits of the use of the estate to their own purposes. (Winkler v Madgeburg, 100 Wis. 421, 76 N.W. 332, 335.)

A receiver will be appointed where there is even imminent danger of waste to realty; it follows that where actual waste is being perpetrated or a continued neglect to properly preserve the mortgaged personal property exists, like a failure to keep it insured, a receiver should be appointed. (Kelly v. Steele, 9 Idaho 141, 72 P. 887.)

The plaintiffs are entitled to a receiver on this ground alone, that the property is in danger of being removed, and it is immaterial whether the property be sufficient to discharge the mortgage debt; it is only necessary to add to the statutory ground that the condition of the mortgage has not been performed. (Clark v. Brown, 119 F. 132; High on Receivers, par. 9; State v. District Court, 22 Mont. 241, 56 P. 281; Loaiza v. Levy, 85 Cal. 11, 20 Am. St. Rep. 197, 24 P. 707, 9 L. R. A. 376.)

A receiver might not be appointed merely because the mortgagor failed to provide insurance, but the property is in very great danger of being lost, and there is no other property out of which to satisfy the indebtedness. The fact that the property covered by the mortgage is personalty, and not realty, should not be lost sight of. (Jones v. Quayle, 3 Idaho 640, 32 P. 1134; Alderson on Receivers, sec. 422; 17 Ency. of Pl. & Pr., 731 et seq., and notes and cases therein cited.)

A receiver will be appointed where there is fraud or bad faith on the mortgagor's part in the management of the property, as in appropriating rents and profits to other purposes than in keeping down the interest on the encumbrances. (2 Jones on Mortgages, sec. 1533; Smith on Receivership, p. 278.)

Where the mortgagor refused to pay interest and taxes and so forth on the mortgaged property, and the plaintiffs, upon discovering such facts, applied to the trustee to take action, and the trustee had failed and neglected to take any steps, a case was made for the appointment of a receiver. (Putnam v. Jacksonville etc. R. Co., 61 F. 440.)

It is held in Sacramento etc. R. R. Co. v. Superior Court of San Francisco, 55 Cal. 456, under a statute exactly like ours, that a receiver may be appointed in an action to enforce the specific performance of the terms and conditions of a mortgage.

This court has jurisdiction over the subject matter of this suit. (Bogart v. The Steamboat John Jay, 17 How. 399, 15 L.Ed. 95; Schuchardt v. Barbage, 19 How. 239, 15 L.Ed. 625; Rood v. Reartt (The Lottawanna), 21 Wall. 583, 608, 22 L.Ed. 654; Britton v. The Venture, 21 F. 928.) This court has jurisdiction to appoint a receiver, although the property is beyond the jurisdiction of Idaho. (High on Receivers, 3d ed., p. 43; Bayne v. Brewer Pottery Co., 82 F. 394; Alderson on Receivers, sec. 428.) And to compel the defendants to bring the property within the state. (5 Rose's Notes on U. S. Reports, p. 474, and collection of cases.)

C. H. Lingenfelter, contra.

When personal property, which at the time is situated in the given state, is mortgaged by the owner, and the mortgage is duly executed and recorded in the mode required by law, so as to create a valid lien, the lien remains good and effectual, although the property is removed to another state, either with or without the consent of the mortgagee, and although the mortgage is not rendered in the state to which the removal is made; the mortgage lien is given effect, however, in the state to which the property is removed solely by virtue of the doctrine of comity. (Shepard v. Hynes, 104 F. 449, 45 L. R. A. 271, 52 L. R. A. 678.)

It is error to appoint a receiver in any of the cases mentioned in section 4329, Revised Statutes of Idaho where the equities of the complaint are fully denied by the answer, and the evidence introduced by plaintiff on the hearing of the application for the appointment of such receiver is fully met and overcome by counter-evidence introduced by the defendant. (Sweeney v. Mayhew, 6 Idaho 455, 56 P. 85; High on Receivers, 3d ed., sec. 24; Crombie v. Order of Solon, 157 Pa. 588, 27 A. 710; Buchannan v. Comstock, 57 Barb. 568.)

In this proceeding the equities of the plaintiff's complaint are fully denied by the affidavit, which takes the place of the answer. (17 Ency. of Pl. & Pr. 741, and cases cited: White House v. Point Defiance R. R. Co., 9 Wash. 558, 38 P. 152; National Park Bank v. Godard, 131 N.Y. 494, 30 N.E. 566; Williamson v. Monroe, 3 Cal. 383.)

It may be stated as a general rule that a receiver of mortgaged property, or of the rents and profits thereof, will never be appointed where the security is adequate and the receivership is not necessary for its preservation. (23 Ency. of Law, 2d ed., p. 1028.)

When a party is clothed with title and possession such as are conferred by a lease in writing, and is in the enjoyment of rights apparently legal, a receiver will not be appointed unless under urgent and peculiar circumstances. (Chicago Oil etc. Co. v. United States Petroleum Co., 57 Pa. 83, 91.)

AILSHIE, J. Stockslager, C. J., concurs. Sullivan, J., did not sit at the hearing and took no part in the decision.

OPINION

AILSHIE, J.

This is an original application made in this court for the appointment of a receiver pending an appeal and determination thereof. The original action out of which the application arises was commenced in the district court in and for Nez Perce county, for the foreclosure of a mortgage for $ 10,000 on a steamboat plying on the Snake river, known and registered as the "Mountain Gem." The plaintiffs applied for the appointment of a receiver pending the action, and the application was granted by the district judge, and a receiver was accordingly appointed. Thereafter, the defendant, C. F. Allen, applied to the court for a dissolution of the order and discharge of the receiver, and after a hearing and the submission of various affidavits on behalf of both plaintiffs and defendants, the district judge made and entered an order discharging the receiver. The plaintiffs immediately filed and served their notice of appeal to the supreme court, and executed and filed an undertaking on such appeal. They thereafter caused a certified copy of the papers and files used on the hearing in the lower court to be filed in this court, and on that showing applied here for the appointment of a receiver pending the determination of the case on appeal. This application is made under section 9, article 5 of the constitution as construed in Chemung Min. Co. v. Hanley, 11 Idaho 302, 81 P. 619. In that case it was said that: "This court has the power to appoint a receiver to act pending the litigation."

The material facts necessary to an understanding of the issues presented here are as follows: The plaintiff, Eureka Mining Smelting and Power Company, is a Washington corporation engaged in mining operations on the upper Snake river and somewhere above Lewiston, while the defendant, Lewiston Navigation Company, is an Idaho corporation, with its principal place of business at Lewiston, organized and existing for the purpose of constructing and operating boats on the Snake river. The navigation company appears to have constructed the "Mountain Gem" at an expense of some $ 30,000; $ 10,000 of this sum was loaned to the navigation company by various parties as follows: By the Eureka Mining, Smelting and Power Company, $ 7,328; by the plaintiff H. M. Peterson, $ 500.00; by the plaintiff J. A. Husebye, $ 172, and the balance of $ 2,000 by the defendant C. F. Allen. On January 27, 1904, the navigation company...