Merchants' & Traders' Realty Co., Inc. v. Stern
| Decision Date | 12 September 1927 |
| Parties | MERCHANTS' & TRADERS' REALTY CO., Inc., v. STERN et al. |
| Court | New Jersey Court of Chancery |
(Syllabus by the Court.)
Suit by the Merchants' & Traders' Realty Company, Inc., against Moses Stern and others. Decree in accordance with opinion.
Isador B. Glucksman, of Newark, for complainant.
Saul Nemser, of Jersey City, for claimant Paramount Inv. Corporation.
BERRY, Vice Chancellor. This is a bill to foreclose a second mortgage, filed June 26, 1926. A receiver to collect rents, etc., was appointed on September 14, 1926. He took immediate possession of the mortgaged premises, an apartment house, and collected the rents until foreclosure sale on June 7, 1927, amounting to $2,785.71. The complainant purchased the mortgaged premises at that sale at a sum which left a deficiency of over $15,000 on his decree. The claimant, Paramount Investment Corporation, on October 28, 1926, purchased the mortgaged premises at a tax sale for delinquent taxes for 1925 in the amount of $1,341.71. The certificate of tax sale was recorded in the Essex county register's office on November 29, 1926, and on that day the receiver was notified of these facts and of the tax purchaser's claim to the rents from the date of the recording of the certificate until redemption, but that no action would be taken to interfere with the receiver's possession under the order of the court. The tax purchaser also notified the tenants of its claim to be entitled to receive the rents and directed them to pay the rents to the receiver in order that there might be no confusion.
The receiver immediately acknowledged receipt of the letter addressed to him, stating that the rents collected would be deposited in his account as receiver, subject to the court's order, and that when his account was filed the tax purchaser would be notified so that the rights of the various parties in interest could be determined.
Pursuant to this arrangement, the receiver collected the rents, as above stated, and made disbursements for water rents, amounting to $246.86, and for incidentals amounting to $18.60. The balance of the rents collected, less the receiver's fee allowed by the court, has been paid into court pending the disposition of the claims of the complainant and the Paramount Investment Corporation. During the period of the receivership, taxes amounting to over $1,500 accrued, but were not paid. Interest amounting to $2,600 also accrued on a prior mortgage. There was also some insurance cost during this period, but the amount is not stated. The amount paid into court by the receiver would show a deficit of some $1,600 after the taxes and other operating expenses of the apartment house were paid for the period of the receivership. The Paramount Investment Corporation claims a portion of the funds deposited in court, amounting to $684.53, representing rents collected after November 29, 1926. The complainant claims that this balance should be applied, first, to the payment of taxed costs amounting to $460.86, and second, to the deficiency on complainant's decree.
In support of complainant's claim it is alleged that the tax purchaser has no right to the rents collected by the receiver after the recording of the certificate of tax sale because he did not enter into actual possession, and cites in support of this claim the unreported cases of Cohn v. Simon et al. and Cohn v. Schrader et al. at the November term of the Supreme Court in 1921 (docket No. 607) in which a per curiam opinion was rendered by Justices Swayze, Black, and Katzenbach.
On behalf of Paramount Investment Corporation it is claimed that it was impossible for it to take actual possession of the premises without contemning the court's order appointing the receiver, and that, under the circumstances, it did all that it was necessary for it to do to assert its rights.
I am convinced that this claim on behalf of the Paramount Investment Corporation is well founded, that it could not interfere with the possession of the receiver without an order of this court, and that what was done was, under the circumstances, the proper practice. The only thing this claimant could have done, other than what it did do, was to have applied to this court to dispossess the receiver and put the tax purchaser in possession. This it chose not to do, resting upon the...
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