MUTUAL LIFE INS. CO. v. BELKNAP

MUTUAL LIFE INS. CO. v. BELKNAP. N. Y. Supreme Court, First District, Chambers ; February, 1887. 1. Receiver in forecl/sure ; rents accrued before appointment.] It seems, that a receiver of the rents and profits of the mortgaged promises "appointed in an action of foreclosure, cannot reach rents accrued and in arrear prior to the commencement of the suit. 2. The same.] Where grave questions are involved as to whether the relation between the owner of the foe, and the occupants is that of landlord and tenant, and as to the measure of the liability of the occupants, they should not bo determined on motion for payment of back rents to the receiver, but in an action in which all parties interested can be heard. Motion that defendant Belknap be- required to pay to the receiver herein rent alleged to have been due and in arrear at the time of the receiver’s appointment. This action was brought to foreclose a mortgage made to the plaintiff covering premises known as “ The Madrid,” an apartment house in the city of Mew York. The rcceiv-. er’s clause in the mortgage provided that upon foreclosure proceedings being commenced, the mortgagee should be entitled to the appointment of a “ receiver of the rents and profits of the said promises, with power to lease said premises, or such part thereof as may not then be under lease, • and with such other powers as should be deemed necessary.” The order in this action appointed a “ receiver of the rents and profits of the mortgaged premises described in the complaint in this action, with all the rights, powers, and duties conferred by law upon such receivers.” It appeared upon the motion that the fee of the premises stood in the name of a corporation known as the Madrid Apartment Association. Each share of stock in that corporation was represented by an apartment in the building, and the right to occupy the same accompanied the share, subject to the payment of a proportionate share of the actual running expenses of the building, to bo paid in advance upon a computation by the trustees of the probable running expenses for the ensuing year. The defendant Belknap was in occupation of two apartments of the building, under a so-called lease from the corporation. Belknap has paid a portion of the running expenses of the building, based on the trustee’s estimate, for the time of his occupation since the receiver’s appointment, the order of court under which these payments were made providing that “ such payments shall be without prejudice accruing thereupon to the rights of the said receiver, or of any party to this action.” Edward C. Perkins (Gray & Davenport, attorneys), for the receiver, and the motion. De Forest & Weeks, for defendant Belknap, opposed'. , Charlton T. Lewis and James McKeen, for other defendants, opposed. [MAJORITY — Patterson, J.] Patterson, J. Under the circumstances disclosed by the affidavits read in opposition to the petition of the receiver, I think the motion to require the defendant Belknap to pay over rents accrued prior to August 1, 188G, should be denied. The grave questions involved of the relation of the shareholders to the corporation as the owner of the apartment house, and the peculiar method of fixing the yearly contributions of shareholders occupying apartments, should not be disposed of on a motion of this character, but in an action in which all parties interested can be heard. It is admitted that such an action is pending before a referee appointed by this court. It is extremely doubtful whether a receiver of the rents and profits in a foreclosure case can reach rents accrued prior to the commencement of the suit in which he was appointed. There is authority for the affirmative of the proposition in the many English cases which have been cited, and in the decisions of the court of chancery of this State. But in Argall v. Pitts (78 N. Y. 239), the court of appeals has broadly stated the rule that such a receiver “ will be confined to the rents and profits accruing during the pendency of the suit.” Although the precise question involved here was not directly before the court, the strong, statement of the rule there made indicates the view of the court of last resort to be against the practice of extending receiverships of the rents and profits to rents accruing before suit. The receiver’s clause in the mortgage does not in terms refer to the rents in arrear at the time of default, and the order of this court appointing the receiver defines his rights and powers to be those of receivers in foreclosure cases. The motion is denied, but without costs.