Farmers' Nat. Bank of Owatonna v. Backus

• Decision Date: 29 January 1896
• Citation: 64 Minn. 43,66 N.W. 5
• Parties: FARMERS' NAT. BANK OF OWATONNA v BACKUS ET AL.
• Court: Minnesota Supreme Court

64 Minn. 43

66 N.W. 5

FARMERS' NAT. BANK OF OWATONNAvBACKUS ET AL.¹

Supreme Court of Minnesota.

Jan. 29, 1896.

(Syllabus by the Court.)

1. In an action to foreclose a mortgage, the insolvency of the mortgagor, the inadequacy of the security, and the failure to apply the rents of the mortgaged premises in keeping up the security, by paying delinquent taxes and interest past due on the prior mortgage, is a sufficient ground for the appointment of a receiver pendente lite to collect the rents and so apply them.

2. That the mortgagor, at the time of making the first mortgage, gave the mortgagee therein named a written assignment of these rents cannot be urged by the mortgagor as a reason why a receiver should not be appointed.

3. Held, the court below, after giving the parties ample opportunity to present affidavits on the motion, did not abuse its discretion in refusing to hear any more affidavits, not presented at the proper time.

4. Held, the appellant, who was not originally a party to the action, voluntarily appeared, and became a party by appearing and opposing the motion on the merits, and submitting to and complying with an order then and there made making him a party, notwithstanding his claim that he was appearing specially only.

Appeal from district court, Ramsey county; J. J. Egan, Judge.

Action by the Farmers' National Bank of Owatonna against Hiram Backus and others. From an order appointing a receiver, C. W. Burdic appeals. Affirmed.

William G. White, for appellant.

Herchmer Johnston, for respondent.

CANTY, J.

This is an action to foreclose a mortgage made in the form of an absolute deed with an agreement to reconvey. The defendant Burdic appeals from an order appointing a receiver pendente lite to collect the rents and apply them in payment of delinquent taxes and of interest due on the first mortgage on the premises, and ordering any balance of such rents remaining in his hands to be disposed of under the further order of the court.

1. It appears by the undisputed evidence that, when the motion for the appointment of a receiver was made, the taxes for one year were unpaid and delinquent, that a considerable amount of interest was past due on the first mortgage on the premises, that the mortgaged premises were wholly inadequate as security for the first mortgage and plaintiff's second mortgage, and that the mortgagors were insolvent. There was also evidence from which the court was justified in finding that the mortgagors had collected the rents from some of the tenants for several months in advance at a very large discount, in anticipation of an application for the appointment of a receiver, and had failed to apply all of the rents to the payment of taxes and interest on the first mortgage or in keeping up the security. We are of the opinion that it was a proper case for the appointment of a receiver. See Haugan v. Netland, 51 Minn. 552, 53 N. W. 873. The point is made by appellant that it does not appear that the defendant Burdic, who is grantee of the mortgagors, is insolvent. In answer, we will say that it does not appear that Burdic is in any manner liable personally for the payment of the mortgage indebtedness, and there is no presumption that he is.

2. A written assignment of the rents of the premises to the mortgagee in the first mortgage, and made at the same...