The New Jersey Title Guarantee and Trust Company v. Cone & Company and Belle Feldmark

• Decision Date: 03 October 1902
• Citation: The New Jersey Title Guarantee and Trust Company v. Cone & Company and Belle Feldmark, 53 A. 97, 64 N.J.Eq. 45 (N.J. Ch. 1902)
• Court: New Jersey Court of Chancery
• Parties: THE NEW JERSEY TITLE GUARANTEE AND TRUST COMPANY v. CONE & COMPANY and BELLE FELDMARK

53 A. 97

64 N.J.E. 45

NEW JERSEY TITLE GUARANTEE & TRUST CO.

v. CONE et al.

Court of Chancery of New Jersey.

Oct. 3, 1902.

Bill by the New Jersey Title Guarantee & Trust Company against Cone & Co. and another.Motion by complainant to appropriate money in the hands of a receiver to a deficiency after foreclosure sale.Allowed in part and refused in part.

Charles L. Corbin, for complainant.

Charles E. Hendrickson, Jr., for defendant Peldmark.

PITNEY, V. C.The complainant filed a bill to foreclose a first mortgage on land, and made the defendant Mrs. Feldmark a party as second mortgagee.She applied to the court to appoint a receiver of the mortgaged premises, which was done.The order appointing is the usual one adopted in New Jersey, and does not indicate any disposition which shall be made of the moneys collected by the receiver.The defendant Peldmark did not answer, and no decree was entered in her favor, though it is not disputed that her mortgage is valid, and that she would be entitled to any surplus money over and above the amount due the complainant.At the time of the sale the premises were subject to two years' taxes, amounting to a considerable sum, and when sold were purchased by the complainant, and failed to produce enough to satisfy the complainant's mortgage by $80.77.The receiver has filed his report showing a considerable sum in his hands, and asks to be discharged.Application is now made on behalf of the complainant to pay, first, the deficiency on his mortgage, and, second, the taxes in arrear.This motion is resisted by Mrs. Peldmark, who claims that she is entitled to the whole of the fund in the receiver's hands.

With regard to that part of the motion which asks that the arrears of taxes be paid out of the fund in the receiver's hands, I think it must fail.The complainant's mortgage did not contain any clause authorizing it to pay taxes and add them to the mortgage; and, if it had contained such a clause, I do not wish to be understood as intimating that it would have made any difference in the present motion.Such a clause would probably be construed as simply authorizing it to increase the amount due on its mortgage by actually paying the taxes, and, without such actual payment before decree, no allowance can be made therefor.In the present situation the taxes were a lien upon the premises at the time they were purchased, and the complainant stands in the same situation in that regard as would a stranger purchasing the premises.I can perceive no right which the complainant can have to have the amount of that lien reduced at the expense of a Junior incumbrancer.The presumption is that, if there had been no incumbrance for taxes at the time of the sale, the property would have produced Just so much more, and that Increase in the product would have Inured to the benefit of the junior incumbrancer.That part of the motion must be denied.

The other part of the motion, namely, to pay to the complainant the sum of $80, the deficiency due on its decree, stands upon an entirely different footing.I understand the general rule in New Jersey to be that, where a receiver of mortgaged premises is appointed in a foreclosure case, to which there are several parties claiming an interest in the premises, it is not usual to determine, at the time the order of appointment is made, upon what account the money received shall be applied, but to retain it to be applied as each party to the suit shall appear to be entitled at the final hearing of the cause.The mere fact that the receiver is appointed upon the application of the second or any subsequent mortgagee who is a party to the suit does not give him any superior right to the proceeds of the receivership.This was distinctly stated by Chancellor Williamson in his opinion in the case of Cortleyeu v. Hathaway, 11 N. J. Eq. 39, at page 42(s. c, 64 Am. Dec. 478).He there says: "Where, upon the application of a subsequent mortgagee, a receiver is appointed, it is without prejudice to any prior mortgagee or other incumbrancer, and the receiver will be directed to keep down the interest upon the prior incumbrances;" citing auth pities.In opposition to this doctrine the counsel for Mrs. Feldmark relies on a line of cases in the state of New York, the leader of which is Howell v. Ripley, decided by Chancellor Walworth, and reported in 10 Paige, 43.But a careful examination of that case does not sustain the defendant's contention.In fact, at the outset of his opinion Chancellor Walworth states the very doctrine laid down by Chancellor Williamson, in these words: "When a receiver is appointed in a suit, he is appointed for the benefit of such of the parties in that suit as it shall afterwards appear were entitled...