Sea Insurance v. Stebbins

8 Paige Ch. 565, 1841 N.Y. LEXIS 496, 1841 N.Y. Misc. LEXIS 36

Opinion

The Chancellor.

The affidavit of the mortgagor that he has a good defence to the suit, without stating what that defence is, can have no influence whatever in the decision of this application. For the practice in this court is to require the party to state under oath what his defence is, to enable the chancellor, or the vice chancellor before whom the application is pending, to see whether it is a real or only an imaginary defence to the suit,(a) In applications of this kind the court must also be satisfied beyond all reasonable doubt that the mortgaged premises, upon a master’s sale, will bring sufficient to satisfy the debt due upon the mortgage, with interest and costs, where the petition shows a proper case in other respects for the interference of the court, or a receiver of the rents and profits of the mortgaged premises will be granted ; unless the person in possession consents to give security to account for such rents and profits, as the court shall direct, in case there should ultimately be a deficiency upon the sale of the premises under the decree.

The petition in this case, however, is materially defective in two particulars. The court is only authorized to appoint a receiver where a party to the suit is in possession of the mortgaged premises, either by himself or by his tenants. The petition for a receiver must therefore state who is in possession ; so that the court may not only see that he is a defendant in the suit, but also that he has had due notice of the application, unless he is in default for not appearing in the cause. Where a party to the suit is in possession by his tenant at the time of filing the complainant’s bill, which tenant is not himself a party, the possession of such tenant will not be disturbed by the appointment of the receiver ; but he will be directed to attorn to such receiver and pay over the rents to him, instead of paying them to the former landlord. The petition in this case does not show whether the mortgagor, or some subsequent purchaser under him, is in possession, of the mortgaged premises ; nor does it state that any of the parties to the suit are in possession, either in person or by their tenants. The court therefore cannot see that it has jurisdiction to order any person to deliver possession of the mortgaged premises to the receiver, or to order any persons who are in possession as tenants merely, to attorn and pay over their rents to such receiver.

Again ; to authorize the court to interfere and appoint a receiver where there is a mortgagor, or other party to the suit, who is personally liable for the debt secured by the mortgage in case the amount raised upon the sale shall be found insufficient to pay the debt and costs, the party applying for such receiver must not only satisfy the court that there is a probability that the mortgaged premises will not sell for enough-to satisfy the decree, but also that that the party who is thus individually liable is himself irresponsible for the probable amount of such anticipated deficiency, after paying all his other just debts. But in this case there is no intimation, either in the petition of the receivers of the Sea Insurance Company or in the affidavit of their agent in support of such petition, that Stebbins the mortgagor is not abundantly able to pay the whole amount of the mortgage, with interest and costs, if the complainants shall eventually succeed in this suit.

The petition must therefore be denied with $14 costs ; to be paid by the petitioners out of the funds of the corporation in their hands.

Footnotes

(a)

See Meach v. Chappell, ante, p. 135.