Larson v. Orfield

• Decision Date: 27 April 1923
• Docket Number: No. 23332.,23332.
• Citation: 193 N.W. 453,155 Minn. 282
• Parties: LARSON v. ORFIELD et al.
• Court: Minnesota Supreme Court

155 Minn. 282

193 N.W. 453

LARSON

v.ORFIELD et al.

No. 23332.

Supreme Court of Minnesota.

April 27, 1923.

Appeal from District Court, St. Louis County; Bert Fesler, Judge.

Action by Mildred W. Larson against Ida Florin and others to foreclose a mortgage. From an order appointing a receiver, defendant D. J. Orfield alone appeals. Affirmed.

Syllabus by the Court

The owner, under usual circumstances, is entitled to possession of mortgaged property until the expiration of the period of redemption after the foreclosure sale. If necessary to prevent waste resulting in such an impairment of the property as to render it inadequate security a receiver of accruing rents may be appointed. A failure to pay taxes and insurance, and interest on a prior mortgage, and permitting the property, an apartment building valuable only as it produces rents, to be neglected and become in disrepair so as to deteriorate in value and result in the loss of tenants, constitute waste. The appointment of a receiver is a harsh measure and the power of appointment, under our theory of a mortgage, is exercised cautiously.

Within the rules stated and the facts shown, the trial court was justified in appointing a receiver. M. N. Orfield, of Minneapolis, for appellant.

Fryberger, Fulton, Hoshour & Ziesmer, and John Swinland, all of Duluth, for respondent.

DIBELL, J.

The defendant D. J. Orfield appeals from an order of the district court of St. Louis county, made September 23, 1922, appointing a receiver in a foreclosure action.

[1] 1. During foreclosure and until title has passed by the expiration of the period of redemption the landowner, under usual circumstances, is entitled to the possession of the mortgaged land. This is the necessary effect of the statute. G. S. 1913, § 8077. A receiver in foreclosure may be appointed on recognized equitable grounds. The proceeding which results in taking the possession from the owner is harsh and if not strictly limited in its application is at war with our theory of a mortgage. A receiver cannot be appointed to pay the mortgage under foreclosure or interest upon it. Marshall & Ilsley Bank v. Cady, 76 Minn. 112, 78 N. W. 978;Cullen v. Minnesota Loan & Trust Co., 60 Minn. 6, 61 N. W. 818. But equity regards the commission of waste, if so substantial as to impair and render inadequate the security, as a ground for the appointment of a receiver of rents accruing; and the failure to pay taxes, or insurance, or overdue interest on a prior mortgage, and permitting the mortgaged property, an apartment building, to be neglected and become in disrepair so as to deteriorate in value and result in the loss of tenants, constitute waste. Donnelly v. Butts, 137 Minn. 1, 162 N. W. 674;Justus v. Fagerstrom, 141 Minn. 323, 170 N. W. 201;Justus v. Fagerstrom, 145 Minn. 189, 176 N. W. 645;Nielsen v. Heald, 151 Minn. 181, 186 N. W. 299, where the cases are discussed.

[2] 2. With these principles for our guidance we come directly to the facts of the case.

On August 16, 1921, the defendant Florin gave to one Donald a purchase-money mortgage for $17,000 on an apartment building in Duluth known as Park Terrace. This mortgage was assigned to the plaintiff. There was a prior mortgage of $16,000 which became due on May 8, 1922. The defendant Orfield acquired title on June 1, 1922.

On August 7, 1922, foreclosure was commenced and application was made for a receiver, and a temporary restraining order against the collection of rents was issued. There was then $480 overdue interest on the first mortgage. There were taxes of $600, to which the penalty attached on June 1, 1922, and there was unpaid insurance amounting to $120. After a hearing on August 26, 1922, there was an adjournment to November 4, 1922, and the temporary restraining order against the collection of rents was discharged. It is gathered from the records that the continuance was had that the defendant might relieve the property of some of the charges upon it, and remedy the apparent bad condition of the building. On September 15, 1922, another application for a receiver was made. On September 23, 1922, a receiver was appointed. The court found that the defendant had collected rents at the rate of $433 per month, that he had committed waste in failing to pay the interest on the first mortgage, in failing to pay the taxes, in failing to pay insurance premiums, in failing to furnish janitor service and necessary heat, and in failing to keep the property in proper tenantable condition; and that the plaintiff's mortgage security was being impaired. These findings are sustained. The trial court...