Prudential Insurance Company v. Bliss
| Decision Date | 19 July 1932 |
| Docket Number | 28031 |
| Citation | 243 N.W. 842,123 Neb. 578 |
| Parties | PRUDENTIAL INSURANCE COMPANY, APPELLEE, v. CLARENCE G. BLISS, RECEIVER, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Boone county: LOUIS LIGHTNER JUDGE. Reversed.
REVERSED.
Syllabus by the Court.
1. The only court possessing jurisdiction to foreclose a mortgage on realty is the district court for the county in which the mortgaged realty, or some part thereof, is situate.
2. In an action for foreclosure of a mortgage on realty, the mortgagee, upon a showing that the mortgaged premises are probably insufficient to discharge the mortgage debt, is entitled to the appointment of a receiver for the premises.
3. A mortgagee, in an action to foreclose his mortgage on realty, can have a receiver appointed for the mortgaged premises only in the foreclosure action and by the court in which such action is pending.
4. A mortgagee of realty can only reach the rents and profits of mortgaged premises by the appointment of a receiver in the foreclosure action.
5. It is a general rule that, where all the property of an insolvent debtor is in possession of a receiver, duly appointed, another court of concurrent jurisdiction will not, in a subsequent action, interfere with such possession. This rule is inapplicable where one holds a mortgage on a part of such property which, by statute, he is entitled to foreclose and to have a receiver appointed in the foreclosure action, and where such relief may be had only in another court. In such case, the mortgagee is entitled to the appointment of a receiver in the foreclosure action, regardless of the prior general receivership.
Appeal from District Court, Boone County; Lightner, Judge.
On rehearing.
Former judgment vacated, and cause remanded for further proceedings.
For former opinion, see 122 Neb. 561, 240 N.W. 766.
F. C. Radke and Moyer & Moyer, for appellant.
Quintard Joyner, Williams & Williams and Raymond J. Gibbons, contra.
This cause is before the court on motion for rehearing, orally argued, and will be treated as though a rehearing had been formally allowed. The former opinion is reported in 122 Neb. 561, reference to which is made for a statement of the facts.
Grave doubts have arisen as to the soundness of the principles announced in our former opinion, as well as those announced in Wells v. Farmers' State Bank, 121 Neb. 462, 237 N.W. 402, and Wells v. Farmers' State Bank, 121 Neb. 466, 237 N.W. 403. For that reason it is deemed proper to reexamine the questions there considered.
Foreclosure of a real estate mortgage can only be had in the district court for the county in which the mortgaged realty, or some part thereof, is situated. Comp. St. 1929, sec. 20-401. The district court only is vested with jurisdiction to decree foreclosure of a real estate mortgage, and only that court, sitting for the county where the mortgaged realty, or some part thereof, is situate.
Where title to mortgaged real estate is in an insolvent state bank which is under receivership, the district court for the county appointing the bank receiver is powerless to entertain a proceeding to foreclose the mortgage, unless the mortgaged premises, or some part thereof, is situate in that county, and such court, while having general jurisdiction of the bank receivership, is powerless to appoint a receiver for the mortgaged premises in a foreclosure proceeding pending in another county.
Section 20-1081, Comp. St. 1929, provides for the appointment of a receiver "In an action for the foreclosure of a mortgage, when the mortgaged property is in danger of being lost, removed or materially injured, or is probably insufficient to discharge the mortgage debt." The provision is for the receiver to be appointed in the foreclosure action, not in some other action or in some other court.
It is a well-recognized rule that the appointment of a receiver in a foreclosure action is ancillary to the main action. The receiver is appointed for the purpose only of conserving the mortgaged property and applying the rents and profits of the mortgaged premises to the satisfaction of the debt secured by the mortgage. While the mortgagee of the mortgaged premises is entitled to the appointment of a receiver for such premises under the conditions named in section 20-401, Comp. St. 1929, it has been held that rents and profits of mortgaged premises cannot be diverted from the mortgagor or tenant lawfully in possession, except by the appointment of a receiver, pursuant to the provisions of said section 20-401. Huston v. Canfield, 57 Neb. 345, 77 N.W. 763. The holding in that case is cited with approval in Sanford v. Anderson, 69 Neb. 249, 252, 95 N.W. 632, and in City of Lincoln v. Lincoln Street R. Co., 75 Neb. 523, 527, 106 N.W. 317.
In Armstrong v. Mayer, 60 Neb. 423, 83 N.W. 401, it is held: "Where a right is given by statute and a specific remedy is provided designating the tribunal for the enforcement thereof, the jurisdiction of such tribunal is exclusive unless the law otherwise provides."
It is a general rule that, where property is in the actual or constructive custody of a court, another court will not, in a subsequent action, interfere with such custody. Ordinarily, the one first acquiring jurisdiction and custody of the property will retain it to adjudicate all rights with respect thereto; but such rule has its limitations and exceptions. Where a court has jurisdiction and custody of property, and one, not a party to the proceeding in that court, has a superior right in or to such property which the court is powerless to adjudicate or protect, such party, to enforce his right, may apply to another court which has jurisdiction and power. A common illustration of such a situation is presented when an administrator or executor, duly appointed, has taken possession of the decedent's real estate which is subject to a mortgage. In such case the county court appoints the administrator or executor and has exclusive original jurisdiction in the administration of decedent's estate, but the county court is powerless to grant foreclosure of a mortgage on real estate or to entertain a proceeding therefor. When such a situation arises, the mortgagee may bring an action in the proper district court for the foreclosure of his mortgage. Notwithstanding the real estate may be said to be in the custody and control of the county court, that custody and control must yield where the mortgagee has a right superior to that of the administrator or executor. In such case the district court, at the suit of the mortgagee, necessarily interferes and takes from the county court the jurisdiction and custody of the mortgaged premises to the extent that it may be necessary to satisfy the mortgage. If there be a surplus after satisfaction of the mortgage and costs in the foreclosure action, such surplus, of course, would revert to, and should be placed in the custody and control of, the administrator or executor, and should be subject to the order of and disposition by the county court.
It is true that district courts for the various counties and districts have like jurisdiction, but, as respects certain classes of cases, only the district court for a given county is possessed of jurisdiction. One of these is for the foreclosure of a real estate mortgage. The district court for any county, other than that in which the mortgaged real estate, or some part thereof, is situate, has no jurisdiction to entertain an action for the foreclosure of the mortgage. In this sense, the jurisdiction of the various courts is not concurrent. The district court appointing a receiver for an insolvent bank, which holds legal title to realty in another county, possesses no jurisdiction to entertain a proceeding for foreclosure of the mortgage. That the mortgagee of realty, when default has been made in the conditions of the mortgage, is entitled to a foreclosure thereof cannot be questioned. He can have foreclosure only in the county where the realty, or some part thereof, is situated.
In the instant case, the affairs of the insolvent Newman Grove State Bank were in process of liquidation under a receiver, appointed by the district court for Madison county in the ninth judicial district. The mortgaged land in controversy is situate in Boone county in the sixth judicial district. The legal title to this land was in the insolvent bank, and its receiver was in constructive possession thereof. Plaintiff was the owner and holder of a mortgage on said land, executed by the bank's grantor. There had been default in the conditions of the mortgage. Plaintiff exercised the right given it by statute to institute a proceeding to foreclose the mortgage in the district court for Boone county, that being the only court that had jurisdiction to grant such relief. The receiver was made a party, filed an answer, and filed a request for a stay of sale under the decree of foreclosure. The receiver recognized that that court had jurisdiction to hear and determine the foreclosure action. No one questions the right of the plaintiff to a foreclosure of its mortgage, nor that such foreclosure action must be prosecuted in the county where the realty is situated.
The pivotal question is: May the court, where the foreclosure action is pending, appoint a receiver for the mortgaged premises, when they are in the constructive possession of a receiver, previously appointed by the district court for another county in a proceeding for liquidation of the affairs of an insolvent state bank?
On behalf of the...
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