Opinion
The defendant having moved to revoke an order appointing a receiver of rents, and having had its day in court on that motion, cannot now raise the objection of lack of notice of the original hearing when the appointment was made. When a defendant chooses to understand a complaint to contain all the facts essential to his liability, and answers those which have been omitted, he supplies the defect in the complaint and submits for the decision of the court the issues raised by his own pleading. Neither the complaint nor the application for the appointment of a receiver contained allegations sufficient to justify an appointment, but the motion to revoke the appointment alleged that the security was ample for the mortgages and that no equitable grounds appeared for the appointment. Held that the court's denial of the motion imports a conclusion that the security was insufficient and that equitable grounds appeared for the appointment.
Argued December 2d 1931
Decided February 16th, 1932.
ACTION to foreclose a mortgage, brought to the Superior Court in Hartford County, where the court ( Peasley, J.) appointed a receiver of rents and denied the defendant's motion to revoke the order of appointment; thereafter judgment of foreclosure was rendered ( Baldwin, J.), and the defendant appealed. No error.
The plaintiffs filed a plea in abatement to the defendant's appeal, a demurrer to which was sustained and the plea overruled.
Benjamin Slade, for the appellant (defendant).
David Levy, with whom, on the brief, was Solomon Elsner, for the appellees (plaintiffs).
This was an action to foreclose a mortgage upon real estate, by writ dated April 8th, 1931, and served upon the defendant on April 9th, 1931. On April 8th, upon application of the plaintiffs, and without notice to the defendant, a receiver of rents was appointed by Judge Peasley. On April 14th, the defendant filed a written motion to revoke the appointment which, after a hearing, was denied on May 12th, 1931, and the defendant appealed.
The defendant contends that there was error in the appointment of the receiver because it was made without notice to it, and that the appointment and the refusal to revoke it were erroneous because neither the complaint nor the application for the appointment alleged any facts justifying such an appointment.
The question of notice has, through the sequence of events, become immaterial. The defendant came voluntarily into court after the order of appointment, and, at the hearing upon its motion to revoke the appointment, had the opportunity to present its objections to the appointment. Having had its day in court, and the benefit of everything it could possibly have obtained had it been present when the original appointment was made, it cannot now raise the objection of lack of notice. The court's refusal to revoke the appointment amounted in substance to a new appointment made after the parties appeared and were heard. Universal Savings Trust Co. v. Stoneburner, 113 F. 251, 51 C.C.A. 208; Elwood v. First National Bank of Greenleaf, 41 Kan. 475, 21 P. 673; Bristow v. Home Building Co., 91 Va. 18, 20 S.E. 946, 947.
Neither the complaint nor the application for the appointment of a receiver contained allegations of facts sufficient to justify the appointment of a receiver of rents and the original the appointment was therefore an improvident one. 1 Wiltsie on Mortgage Foreclosure (4th Ed.) § 557. In the motion to revoke the appointment, however, it was alleged that the property subject to the plaintiffs' mortgage was of sufficient value to furnish ample security for the payment of the first mortgage thereon, as well as the amount due upon the plaintiffs' mortgage, and that no equitable grounds appeared for the appointment of a receiver. This motion required no answer or other pleading, and raised the issue of the insufficiency of the security for the plaintiffs' mortgage and of the existence of equitable grounds for the appointment of a receiver. The defect in the complaint and the application was covered by the allegations of the defendant's motion. When a defendant chooses to understand a complaint to contain all the facts essential to his liability, and answers those which have been omitted, he supplies the defect in the complaint and submits for the decision of the court the issues raised by his own pleading. Wall v. Toomey, 52 Conn. 35; Vickery v. New London Northern R. Co., 87 Conn. 634, 89 A. 277; 49 Corpus Juris, p. 864, § 1274, and cases there cited.
At the hearing upon the defendant's motion to revoke the appointment of the receiver, the court had before it the question of the insufficiency of the plaintiffs' security, and the existence of equitable grounds for the appointment of a receiver. We must assume that the facts as well as the defendant's claims of law, were all before the court upon the argument of the motion to revoke the appointment, and its denial of the motion imports a conclusion that the security was insufficient and that equitable grounds appeared for the appointment of a receiver of rents, and a finding of the issues in favor of the plaintiffs.
This is an action for the foreclosure of a real-estate mortgage brought to the May term, 1931, of the Superior Court by writ dated April 8th, 1931. On that day the plaintiffs sought and obtained from a judge of that court the appointment of a receiver of rents. On April 14th the defendant filed an application to revoke this appointment which, on May 12th, the court denied. On May 28th a stipulation was filed stating the amount of the debt and providing for a foreclosure by sale but containing a reservation by the defendant of the right to pursue the question of the court's refusal to vacate the appointment of the receiver. On the same day judgment for a foreclosure by sale was rendered and the defendant filed an appeal, assigning as sole ground of error, the appointment of the receiver and the court's denial of the motion to revoke that appointment. The plaintiffs have pleaded in abatement, the ground, in brief, being that the order of the court refusing to revoke the appointment was a final judgment which fixed the time within which an appeal must be taken, and the appeal, not having been filed within two weeks from the entering of the order, was not taken within the time allowed by our rule. Rules of Appellate Procedure, § 2.
The order appointing the receiver in this case provided that he should proceed to collect all rents and take all lawful steps within his power to safeguard, secure and preserve the property being foreclosed. This order, so long as it continued in force, necessarily interfered with the control of the property by the defendant, the mortgagor in possession; and it also took from it the right to collect the rents and apply them to its own use while its possession continued, and sequestered them for possible application to the payment of the mortgage debt. Kountze v. Omaha Hotel Co., 107 U.S. 378, 395, 2 Sup. Ct. 911; Astor v. Turner, 11 Paige Ch. (N. Y.) 436, 437; Schreiber v. Carey, 48 Wis. 208, 215, 4 N.W. 124; Haas v. Chicago Building Society, 89 Ill. 498, 504; 2 Clark, Receivers (2d Ed.) § 958. But, as far as the latter effect of the order is concerned, the right to receive the rent was not determined by it; should the defendant have judgment in the foreclosure action or should it redeem the property, it would become entitled to be paid the rents in the hands of the receiver; should the plaintiffs recover judgment and the defendant not redeem, the plaintiffs could only receive them on satisfying the court of their right to do so; and in either event the court would ultimately have to make an order for their disposition. All the parties concerned in the present controversy would still be before the court and the substantial rights of the parties to the rents would then be determined; and an appeal would lie from the order of the court. See Humphrey v. Gerard, 85 Conn. 434, 83 A. 210. From a practical standpoint to allow an appeal from the appointment of the receiver would ordinarily stay the proceedings pending its decision; Zinman v. Maislen, 89 Conn. 413, 94 A. 285; and there might follow a complete denial to the plaintiffs of a right they might have to require that the rents be applied to the payment of the mortgage debt. The appointment of a receiver of rents would not, in an ordinary case such as this, so substantially affect or conclusively determine the rights of the parties as to make the order appointing him a final judgment within the test laid down by us in Banca Commerciale Italiana Trust Co. v. Westchester Artistic Works, Inc., 108 Conn. 304, 307, 142 A. 828. We agree with these courts which deny the right to appeal from the appointment of a receiver of rents in a foreclosure action. Farson v. Gorham, 117 Ill. 137; 1 Clark, Receivers (2d Ed.) § 126.
The grounds on which the plea in abatement is based are not well taken, the demurrer to the plea is sustained and the plea overruled.
In this opinion the other judges concurred.