Wagner v. Northern Securities Co.

284 N.W. 461, 226 Iowa 568
CourtSupreme Court of Iowa
DecidedJune 21, 1938
DocketNo. 44001.
StatusPublished
Cited by6 cases

This text of 284 N.W. 461 (Wagner v. Northern Securities Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wagner v. Northern Securities Co., 284 N.W. 461, 226 Iowa 568 (iowa 1938).

Opinion

*569 Mitchell, C. J.

Rehearing having been granted in this ease, the original opinion filed, and reported in 280 N. W. 472 is hereby withdrawn.

On December 6, 1919, Jacob Wagner the owner of Lot 5, Block 1, J. C. Savery’s Park Addition to the City of Des Moines, entered into a written lease with Harry Hansen and Clifford DePuy, renting to them the described real estate for a period of ninety-nine years at a fixed rental. On August 26, 1921, the lessees assigned the lease to the Northern Securities Company.

Under the terms of the lease, the lessees were obligated to erect a building on the property costing not less than $50,000, and the lessor agreed to join in a mortgage to the amount of 50% of the cost of the building, but lessor would not be personally liable on the note. The building was completed about the year 1924. As provided by the lease a mortgage for $40,000 signed by Jacob Wagner and the Northern Securities Co. and secured by the real estate and the building thereon was executed by the Equitable Life Insurance Company of Iowa. By its terms it was due October 1, 1927. Later by written agreement this mortgage was extended to October 1, 1932.

The building erected on lot 5 was a part of an apartment house, part of which was built on lot 4, it being operated as a single unit. The part of the apartment house located on lot 4 was incumbered by a first mortgage for $110,000, and there was a mortgage for $50,000 covering both lots and the entire building.

In August 1927 Canfield Bros., a creditor, brought suit to recover judgment on certain bonds which were past due. They also sought foreclosure of the mortgage on lot 4 and the appointment of a receiver for the property covered by the mortgage. The court appointed R. A. Crawford receiver. He was directed to operate the apartment located on the two lots as one building. On November 20, 1933, six years after the commencement of the Canfield suit, the court entered a decree foreclosing the mortgage on lot 4 and ordered the premises sold. This decree appointed a purchasing committee to purchase the property at sheriff’s sale and directed the receiver “on and after the sale to deliver the property to the purchaser and make final report of the receivership”. The sale was had on the 20th day of February and the receiver, Mr. Crawford, ceased to operate the entire property on that date.

*570 On the 29th of December, 1933, Wagner commenced this action by filing a petition praying for the appointment of receiver to take charge of the property, to wit: lot 5 and for general equitable relief. On the same day a temporary receiver was appointed. On the 15th day of March, 1934, the Northern Securities Company answered alleging among other things “that no legal right existed in the plaintiff at the time of the commencing of this action to ask for a receiver”. There wás a trial and the temporary receiver was made permanent, the report of the receiver approved and he was directed to sell certain personal property. Later the Northern Securities Company filed a motion to vacate this order and again evidence was offered. The court overruled the motion, and the Securities Company has appealed.

The main contention of the appellant as set forth in its brief is “that the court was without jurisdiction to appoint a receiver”, and that “the petition fails to state any cause of action other than the request for a receiver, and the appointment of a receiver is merely ancillary to a main cause of action and is not an independent remedy, and can be invoked only in pending suits to obtain the relief the court can grant in a cause of action to which a receiver is ancillary, and the plaintiff’s petition fails to show any cause of action except that he wants a receiver”.

It is the generally accepted doctrine, that in the absence of statutes to the contrary, that a receiver cannot be appointed except for the purpose of preserving property involved in litigation pending the final outcome thereof; and as a result thereof a receiver can only be ancillary to some other or primary relief demanded. In section 51 of Clark, on Receivers, in reference thereto, we find the following statement:

“The appointment of a receiver being an interlocutory decree is, therefore a temporary expedient, and provisional to some other or final determination of the matter by the court. It is only ancillary and auxiliary to the main action, except in the rare case of lunacy or infancy.
“It is not the office of a court of Equity to appoint receivers as a mode of granting ultimate relief.”

There is no claim on the part of the appellee that there is any special statutory provision, and therefore we must turn *571 to the petition filed to ascertain whether a cause of action in equity is pleaded that would justify the appointment of a receiver.

The petition is in twelve counts. It recites plaintiff’s ownership of the real estate, that the Northern Securities Company is an Iowa corporation and that R. A. Crawford has since 1927 been acting receiver of said corporation. That the mortgage covering lot 4 has been foreclosed, and that the lot with the building thereon has been ordered sold at sheriff sale on or about the 20th day of January, 1924, and when sold the receiver will have no further charge or possession of said premises. It then alleges that a lease was entered into for lot 5 for 99 years and attaches a copy of the lease.

Paragraph 4 recites the agreement to pledge the ground and that in compliance with said promise of the lease a $40,000 mortgage was placed on the building and property, and that it became due on or about October 1, 1932, and that the defendant company and receiver are in default on the principal and interest.

Paragraph 5 of the lease is as follows:

“Lessor is hereby given, in addition to the lien given by law, a lien upon the leasehold estate hereby created and rents due lessees from any sub-tenant, to secure the performance of the lessees’ obligation hereunder; and the payment of the lessor of all rent or any amounts due lessor, hereunder, or damage sustained by lessor because of any breach of this lease, and on account of any money advanced by lessor to protect lessor’s rights in and to said premises, caused by the failure of the lessees to strictly comply with all of the terms and conditions in this lease. Lessees shall pay to lessor all cost and expenses incurred in the enforcement of the provisions hereof, and attorney fees, for which the lessor shall have a like lien.”

The petition then alleges that the property can be operated separately, that it has been in receivership for six years, that large amounts have been collected from that part of the building located on lot 5, but that no effort has been made to discharge the mortgage indebtedness. That under the lease the plaintiff is entitled to collect all rents and to apply the same upon said indebtedness and has notified the receiver of his purpose so to do.

It then alleges that the lease has run for fourteen years, *572 that the building is becoming old, run down, • depreciated ánd obsolete, and that plaintiff’s security is gradually depreciating.

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Bluebook (online)
284 N.W. 461, 226 Iowa 568, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wagner-v-northern-securities-co-iowa-1938.