More v. W. Conn. Title & Mortgage Co.

• Decision Date: 07 December 1942
• Citation: 29 A.2d 450,129 Conn. 464
• Court: Connecticut Supreme Court
• Parties: MORE et al. v. WESTERN CONNECTICUT TITLE & MORTGAGE CO.

29 A.2d 450

129 Conn. 464

MORE et al.

v. WESTERN CONNECTICUT TITLE & MORTGAGE CO.

Supreme Court of Errors of Connecticut.

Dec. 7, 1942.

Appeal from Superior Court, Fairfield County; Inglis, Judge.

Receivership proceedings by Morgan B. More and others against the Western Connecticut Title & Mortgage Company, wherein the receiver of the defendant filed a motion for advice concerning the status of the holders of certain certificates evidencing a participating interest in mortgage notes held by the named defendant as trustee. From decision on the motion, the Stanwich Congregational Church appeals.

Appeal dismissed.

Before MALTBIE, C. J., and JENNINGS, ELLS, and DICKENSON, JJ.¹

Raymond E. Baldwin, of Bridgeport, for appellant.

Frank J. DiSesa, Asst. Atty. Gen. (Francis A. Pallotti, Atty. Gen., on the brief), for appellee (the receiver).

MALTBIE, Chief Justice.

The defendant corporation, now in receivership, was engaged in the business, among other things, of loaning money on mortgages and issuing against them participation certificates. The manner in which it conducted its business and the nature of the participation certificates appear in our decision in More v. Western Connecticut Title & Mortgage Co., 128 Conn. 360, 23 A.2d 128. We there held that holders of participation certificates owned a share in the mortgage against which they were issued, subject to the terms and conditions of certain agreements made with reference to the respective rights and duties existing between them and the defendant; that as partial assignees of the rights secured by the mortgage, they were vested with a beneficial interest in it although title remained in the defendant; and that whatever would have been the relationship between the parties as regards mortgaged property before it came into the possession of the defendant, it was held by it, after it had been acquired, charged with a trust for the certificate holders so far as their interests were concerned. If the debt secured by a mortgage was paid to the defendant, the certificate holders were entitled to have the amount due them paid to them, and the corporation would hold the money received by it charged with a like trust.

In the case of certain mortgage debts paid to the corporation before the receivership, some of the certificates against the mortgage were not paid but the money was used by the corporation to pay those holding certificates against other mortgages, creditors of the corporation or its expenses. The receiver petitioned the Superior Court for advice, asking whether the holders of these unpaid certificates were entitled to have their claims allowed as preferred claims. The trial court, holding that it was not possible, upon the facts before it, to determine the validity of a contention for a preference which some of the certificate holders might make, advised the receiver that, when a list of the claims was filed in court in accordance with § 240 of the Practice Book 1934, p. 76, it would not allow the claims as preferred, but, if otherwise valid, would allow them as general claims, and that thereafter any of the claimants, pursuant to this section of the rules, might make application for the allowance of his claim as preferred, without prejudice because of its decision upon the motion. One certificate holder in the class under consideration has appealed.

Section 240 makes it the duty of a receiver, when the time allowed to present claims has passed, to file a list of...