Ranney v. Peyser

27 N.Y. Sup. Ct. 11

• Court: New York Supreme Court
• Decided: January 15, 1880
• Status: Published

Opinion

Barrett, J. :

Ranney commenced this action to foreclose a mortgage upon certain leasehold premises. He obtained an order therein, with the defendant’s consent, appointing him receiver of the rents and profits. We have examined this order attentively and are of opinion that it not merely empowered but required the receiver to pay ground rent and taxes.

The case is distinguishable from the Washington Life Ins. Co. v. Fleisehauer (10 Hun, 117), and the ‘cases there cited, in that Ranney did not obtain the receivership for his own benefit, but for that of all concerned. If there had been a surplus over and above insurance, repairs, ground rent and taxes, such surplus might have enured to his exclusive benefit. But in the collection of the rents and the payments therefrom, which he was ordered to make, bo was acting for the conservation of the estate. Instead of obeying the order under which he was appointed, he declined to pay ground rent and taxes and applied the rents upon his mortgage debt.

It appears that one Maas held a prior mortgage upon the same premises. He was not made a party to the Ranney suit. While that action was pending Maas commenced an independent suit to foreclose his mortgage, making Ranney a party defendant. Maas' suit went- to judgment, thus cutting off Ranney, and upon the sale thereunder Maas himself became the purchaser. We think Maas had a perfect right to rely upon the application of the moneys collected by Ranney, as receiver in his own suit, to the payment of taxes and ground rent.' It is said that Mass bought subject to these taxes, etc. This is not a correct view of the matter. In equity and good conscience he bought subject to whatever remained after the due application by Ranney of the funds in his hands. It must be observed that Ranney hold these moneys as an officer of the court under specific instructions. Any one interested in the estate had a right to demand the performance of his official duty, and in case of refusal to apply against him by petition. This is precisely what happened. Maas having completed his purchase, in reliance upon the order, demanded of the receiver payment of the taxes and ground rent. This was refused, and thereupon, .to preserve his property, Mass was himself compelled to pay them. Can there be a doubt as to what the court ought to do under these circumstances ? Should it permit Ranney to profit by his contempt of the order appointing him ? It seems very clear to us that the rents must be applied to the purpose originally directed. Treat the case as though there was an independent receiver in Ranney's place and the solution is easy. Maas would then be applying against such receiver to compel him in substance to do what he should have done before. Ranney would in effect be applying to compel a continuance and completion of the receiver's disobedience by payment to him. We think that Mass was entitled to have the prayer of his petition granted.

We think too that the exception filed by the defendants to the allowance of a counsel fee should have been sustained. It was an extraordinary piece of advice which was given to Ranney. He was substantially counseled to violate his duty as receiver for his own personal benefit. That advice was certainly personal and be should pay for it out of bis own pocket.

Tbe order must be reversed, with ten dollars costs and clisburse-ments, and an order made disallowing commissions for counsel fee in the accounting, and requiring Ranney to pay the taxes of the year 1877, applying to that purpose the $100 charged in the account for the counsel fee above disallowed, together with such part of the $589.05 found by the referee to be in his hands as may be necessary, and that the balance of the latter sum, after paying the referee, be paid over to Maas.

Davis, P. J., and Bradt, J., concurred.

Order reversed, with ten dollars costs and disbursements, and order directed to be entered as directed in opinion.