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App. Div.] Second Department, October, 1911. eral incumbrancer. In Howell v. Ripley (10 Paige, 43) it was held that where a junior mortgagee files his bill for the foreclosure of his mortgage subject to the lien of a prior mortgage, and obtains the appointment of a receiver of the rents and profits of the premises, and the prior mortgagee afterwards files his bill of foreclosure and obtains an order appointing the same person as receiver in his suit, the latter was entitled only to the rents and profits due at the time of the appointment of the receiver in his suit and to such as accrued thereafter, the junior mortgagee being entitled to all rents received prior to the appointment of the receiver in the suit of the prior mortgagee.
In Post v. Dorr (4 Edw. Ch. 412) it was held that a mortgagee obtains a specific lien upon the rents by diligently obtaining the appointment of a receiver, and a second or third mortgagee may thus get an advantage of the first mortgagee as to rents collected. In Washington Life Ins. Co. v. Fleischauer (10 Hun, 117) it was held that where, in an action brought to foreclose a mortgage, a subsequent incumbrancer, who is made a party defendant thereto, obtains in his own behalf the appointment of a receiver of the rents and profits of the mortgaged premises, he is entitled to retain the amount collected by the receiver as against the claim of the mortgagee plaintiff, notwithstanding a sale of the property has proved insufficient to satisfy such claim. (See to the same effect Ranney v. Peyser, 83 N. Y. 1.) In that case the plaintiff, the holder of a subsequent mortgage, was held to have a right to retain rents collected by a receiver appointed at his instance, notwithstanding the existence of a prior mortgage claim. The court said (p. 7): “The plaintiff, by his superior diligence, acquired a specific lien upon the rents in question, superior to any equities of the first mortgagee, and we think he is entitled to retain them to apply upon his mortgage.”
The mortgage of the petitioner contains the following clause, namely: “ That if default shall be made in the payment of the principal sum mentioned in the condition of the said bond, or of the interest which shall accrue thereon, or of any part of either, at the respective times therein specified for the payment thereof, the said mortgagee shall have the right forthwith, after any such default, to enter upon and take
Second Department, October, 1911.
[Vol. 146. possession of the said mortgaged premises, and to let the said premises, and receive the rents, issues and profits thereof, and to apply the same, after payment of all necessary charges and expenses, on account of the amount hereby secured, and said rents and profits are in the event of any such default hereby assigned to the mortgagee.” The appellant claims a specific assignment of the rents and profits in question by virtue of this clause, but it is obvious from the language used that the assignment relates only to the rents after the entry and the taking possession of the mortgaged premises. In this respect the case differs materially from the one chiefly relied on by the appellant, namely, Harris v. Taylor (35 App. Div. 462). In that case it appears that the holder of the first mortgage had a separate written assignment of the rents as additional security, and it was held that his rights under that assignment were superior to those of the junior mortgagee claiming under an order appointing a receiver in the interests of the subsequent mortgage. The claim enforced in that action was based upon the written assignment only. The court said (p. 466): “We think that Lesster's right to the rents is plainly superior to the plaintiff's. It is immaterial whether or not the plaintiff's mortgage was executed prior to Lesster's assignment. Even if that were so, it did not give the plaintiff a lien upon the rents. He obtained no right thereto until the appointment of the receiver (Ranney v. Peyser, 83 N. Y. 1), and this was long after the execution of the assignment. The plaintiff relies upon the rule that a prior mortgagee obtains no right to the rents of the premises as against the receiver for a junior mortgagee. (Ranney v. Peyser, supra.) There can be no doubt that such is the rule, but it has no application here. The appellant does not base his right to the rents upon the prior mortgage, but upon his assignment, which conferred upon him an unquestionable right as against the subsequent receivership.”
Since the above was written, the Appellate Division in the First Department has decided the case of Madison Trust Co. V. Axt, No. 1(146 App. Div. 121), wherein it was held in accordance with the views herein expressed that a junior mortgagee, at whose instance a receiver had been appointed in foreclosure, was entitled to a specific lien on the rents collected by such
Second Department, October, 1911. receiver until the receivership was
extended to an action brought
a prior mortgagee for the foreclosure of the prior incumbrance. The principle underlying that case is directly applicable to the one at bar, and the decision is additional authority in support of the views hereinbefore expressed.
The order should be affirmed.
Order affirmed, with ten dollars costs and disbursements.
PENCER LATHROP, Respondent, v. TWELFTH WARD BANK and EUGENE C. GILROY, Appellants, Impleaded with HICKOK PRINTING COMPANY, Defendant.
Second Department, October 20, 1911.
Corversion debtor and creditor supplementary proceedings
receiver – sale of debtor's property covered by chattel mortgage liability of one receiving proceeds — limitation of action.
receiver in supplementary proceedings who without leave of court replevies, seizes and sells property of the judgment debtor which is
covered by a chattel mortgage duly filed is guilty of conversion. The judgment creditor which has received and retains the proceeds of the
sale of such property is liable to the holder of the chattel mortgage for
the damages sustained by him. It seems, that this would be so even if the receiver had acted under
authority of the court. But any action against the receiver individually to recover damages for
the taking of the property is barred (Code Civ. Proc. S 383, subd. 4) after
APPEAL by the defendants, Twelfth Ward Bank and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Westchester on the 13th day of June, 1910, upon the verdict of a jury, and also from an order entered in said clerk's office on the 8th day of June, 1910, denying the said defendants' motion for a new trial made upon the minutes.
L. M. Berkeley, for the appellant Twelfth Ward Bank.
Second Department, October, 1911.
[Vol. 146. Allan C. Rowe [Sumner Bowman with him on the brief], for the appellant Eugene C. Gilroy.
Hugh M. Hewson, for the respondent. HIRSCHBERG, J.:
In the month of July, 1902, the defendant Hickok Printing Company executed a chattel mortgage on certain personal property belonging to it to secure the sum of $3,605,51 and interest. The mortgage was duly filed on the day of its date and was thereafter assigned to the plaintiff by the mortgagees for value. It provided that until default the chattels covered by it should remain in the possession of the mortgagor. In June, 1902, the appellant Eugene C. Gilroy was duly appointed receiver in supplementary proceedings on a judgment recovered by the appellant the Twelfth Ward Bank against the Hickok Printing Company, and as such receiver he thereafter commenced an action against said company, in which action he replevied, seized and sold the mortgaged chattels and paid over to the bank the net proceeds of the sale. The sale was made on October 4, 1902. No notice of these proceedings was given to the plaintiff, nor does it appear that he had any knowledge of it until shortly before the commencement of this action. The proceeds of the sale remain in the possession of the bank, and the mortgaged chattels have been and remain effectually dispersed to the undoubted pecuniary injury of the plaintiff as mortgage assignee.
The bank, as appellant, claims immunity from liability on the ground that as the receiver was an officer of the court, and acted as such in the seizure and sale, it is not liable for the consequences of his act. It does not appear, however, that in the replevy and sale the receiver acted under any authority given him by the court, and it would seem that, even had he done so, the fact that the bank has received and retains the proceeds of the sale would be sufficient to impose liability on it. The act of the receiver was clearly tortious, and the case of Hamill v. Gillespie (48 N. Y. 556), relied on by counsel for the bank, is not applicable, as in that case the sale was clearly lawful.
The action, however, as against the appellant Gilroy was App. Div.] Second Department, October, 1911. barred by the provision of section 383 of the Code of Civil Procedure, which provides (subd. 4) that an action against a receiver to recover damages for taking, detaining or injuring personal property by him, or the person whom he represents, shall be instituted within three years. The present action was commenced in September, 1908, and the defense was duly pleaded and overruled upon the trial. Although the action is brought against the appellant Gilroy individually, he is clearly entitled to the benefit of the limitation. This was held in the case of an executor sued individually for a wrong in Matter of Van Slooten v. Dodge (145 N. Y. 327), followed by this court in Reimers v. Schmitt (68 App. Div. 299.) The same construction has been given to subdivision 1 of section 385 of the Code of Civil Procedure requiring an action against a sheriff for liability incurred in his official capacity, or for the omission of an official duty, to be instituted within one year. (See Cumming v. Brown, 43 N. Y. 514; and, to the same effect, Murphy v. Callan, 69 App. Div. 413; Conley v. Carney, 126 id. 337.)
The judgment and order should be affirmed as to the appellant Twelfth Ward Bank, and reversed as to the appellant Gilroy.
JENKS, P. J., THOMAS, CARR and RICH, JJ., concurred.
Judgment and order affirmed with costs, as to the appellant Twelfth Ward Bank, and reversed and new trial granted, costs to abide the event, as to the appellant Gilroy.
JOHN O. MATTILA, Respondent, v. HERBERT J. CALLISTER,
Second Department, October 20, 1911.
Vendor and purchaser - sale of land — change in deed after execution
— ratification – recovery of money paid.
A vendee who had contracted to buy land being obliged to leave the
country gave his brother a power of attorney to act for him in the matter. The vendor executed and delivered to an agent a deed of the premises wherein the vendee was named as grantee. Without the vendee's knowledge, but with the consent of his brother, the latter's name was substituted as grantee in the deed. The vendor later learned of