CHAPTER XXXIX. RECEIVERS. SECTION I. In what Cases appointed. A RECEIVER is an indifferent person, between the parties, ap- Nature of the pointed by the Court to receive the rents and profits of real estate, office. or to get in and collect personal estate, or other things in question, pending the suit, where it does not seem reasonable to the Court that either party should do it;1 or where a party is incompetent to do so as in the case of an infant. A Receiver is bound to account for and pay what he receives or gets in, as the Court shall direct; and, to secure his doing so, he is commonly ordered to enter into a recognizance, with sureties.2 The appointment of a Receiver is a matter resting in the discre- Appointment tion of the Court; and the Receiver, when appointed, is treated in Court. discretionary as virtually an officer and representative of the Court, and subject to its orders. Lord Hardwicke considered this power of appoint 1 Edwards Receivers, 2; H. K. Chase's Case, 1 Bland, 213. 2 Ord. XXIV. 1; Wyatt's P. R. 355, 356; Harr. by Newl. 499. As to Receivers, see Adams on Eq. 447; Chambers on Infants, 547-564; Fisher, 227-290; Jeremy on Eq. 248-253; Lewin on Trusts, 660662; Macpherson on Infants, 266-268; Seton, 1002-1039; Story Eq. Jur. §§ 827838; Woodfall, 51. 3 Skip v. Harwood, 3 Atk. 564; and see Owen . Homan, 3 M'N. & G. 378, 412; 15 Jur. 339; 4 H. L. Ca. 997; 17 Jur. 861; Nichols v. Perry Patent Arm Co., 3 Stockt. (N. J.) 126; Oakley v. Patterson Bank, 1 Green Ch. 173; Milwaukee &c. R.R. Co. v. Soutter, 2 Wallace U. S. 510; Rawnsley v. Trenton Mut. Ins. Co., 1 Stockt. (N. J.) 347; Lottimer v. Lord, 4 E. D. Smith (N. Y.), 183; see Verplank v. Caines, 1 John. Ch. 57. In Orphan Asylum v. M'Cartee, 1 Hopk. 485, the Court remark: "It is said, that the appointing of a Receiver rests in discretion. This proposition does not teach much. A Receiver is proper if the fund is in danger; and this principle reconciles the cases found in the books. There is no case in VOL. II. 48 which the Court appoints a Receiver, As a general thing, under the law in 4 Angel v. Smith, 9 Ves. 335; Hutchin- He is at all times entitled to and must CH. XXXIX. ment to be of great importance, and of most beneficial tendency: § 1. saying, "It is a discretionary power exercised by this Court, with as great utility to the subject, as any sort of authority that belongs to it; and is provisional only, for the more speedy getting in of a party's estate, and securing it for the benefit of such person who shall appear to be entitled; and does not at all affect the right.” 1 In what cases usually granted: Where the litigants have only equitable interests, rights of party having legal estate The most ordinary cases in which Receivers are granted by the Court, are those in which the suit arises out of claims by parties having equitable interests in the property, the subject of litigation. In such cases, the Court will appoint a Receiver, for the purpose of protecting the property, till the question between the parties shall have been determined. And, in general, it may be taken as a rule, that where the legal estate is vested in a person claiming an interest paramount to that of the litigant parties, so that the litigant parties can only have equitable interests, the Court will grant a Receiver: although, in doing so, it will always take care not to interfere with the rights of the party having the prior estate. Therefore, where a man has an equitable mortgage, "that is, if there is a prior mortgagee: then, if the prior mortgagee is not in possession, the other may have a Receiver, without prejudice to his taking possession." In Berney v. Sewell, Lord Eldon said: "I remember a case, where it was much discussed whether the Court would appoint a Receiver, when it appeared by the bill that there was a prior mortgagee who was not in possession. I have a note of that case: there, Lord Thurlow made the appointment, without prejudice to the first mortgagee's taking possession, and that was afterwards followed by Lord Kenyon." 5 Ins. Co., 6 Paige, 102; Hooper v. Winston, supra. 1 Skip v. Harwood, ubi sup.; and see Story Eq. Jur. § 831. 2 Cheever v. Rut. & Burl. R.R. Co., 39 Vt. 653. The power to appoint a Receiver is most usually called into action either to prevent fraud, save the subject of litigation from material injury, or rescue it from probable destruction; and there is no necessity to appoint a Receiver, except for one of these purposes. Baker v. Backus, 32 Ill. 79; see Haight v. Burr, 19 Md. 130; Voshell v. Hynson, 26 Md. 83, 92. The appointment of a Receiver alters no right, not even so as to prevent the running of the Statute of Limitations. Williamson v. Wilson, 1 Bland, 421. But though the appointment of a Receiver does not involve a decision upon any right, still it can only be made at the instance of a party who has an acknowledged interest or a strong presumption of title, in himself alone, or in common with others; and where the property itself, or its rents and profits, are in danger of being materially injured, or totally lost. H. K. Chase's Case, 1 Bland, 213; Williamson v. Wilson, 1 Bland, 421; see State v. Northern &c. Railway Co., 18 Md. 193. Generally, a Receiver will only be appointed on bill filed for that purpose, and rarely before answer, except under provisions by particular statutes. He will be appointed on petition, only in cases of infants, whose positions as wards of the Court gives them the right to apply by petition, or in cases similarly situated. A Receiver will not be appointed, as against a plaintiff, upon the application of the defendant. Leddel v. Starr, 4 C. E. Green (N. J.), 159. 8 Per Lord Eldon, 1 J. & W. 648. 5 lb. 649. In Phipps v. Bishop of Bath and Wells, as reported in 2 Dick. 608 8 cumbrances. ment, in such without preprior legal judice to estates. case will be The same principle is applied to other equitable creditors; and, CH. XXXIX. § 1. indeed, to all other persons having mere equitable estates. The rule, with respect to equitable creditors, is thus laid down by Lord or other Eldon, in Davis v. The Duke of Marlborough: "The rule I take equitable into be, that the Court will, on motion, appoint a Receiver for an Appointequitable creditor, or a person having an equitable estate, without prejudice to persons who have prior estates: in this sense, without prejudice to persons having prior legal estates, that it will not prevent their proceeding to obtain possession, if they think proper; and with regard to persons having prior equitable estates, the Court takes care, in appointing a Receiver, not to disturb equities; and, for that purpose, directs inquiries, to determine priorities among equitable incumbrancers: permitting legal creditors to act against the estates at Law, and settling the priorities of equitable creditors. Provided it is satisfied, in that stage of the cause, that the relief prayed by the bill will be given when a decree is pronounced, the Court will not expose parties claiming that relief to the danger of losing the rents, by not appointing a Receiver of an estate on which it is admitted that they cannot enter."4 And here it may be remarked, that although, where there is a prior mortgagee in existence having the legal estate, the Court will not, by the ap Lord Thurlow refused the appointment of a Receiver at the instance of a second mortgagee: the first not being in possession; but in Bryan v. Cormick, 1 Cox, 422, he came to the determination mentioned in the text. A similar order was also made in Dalmer v. Dashwood, 2 Cox, 378. In Norway v. Rowe, 19 Ves. 144, 153, Lord Eldon states it to be the practice, on motions for Receivers, not to look at mortgagees further than to take care that they are not prejudiced. See Price v. Williams, G. Coop. 31; Brooks v. Greathed, 1 J. & W. 176; see Cortelyeu v. Hathaway, 3 Stockt. (N. J.) 42, 43, in which it was held that the rights of a first and subsequent mortgagee are different. The first mortgagee has a legal right to the rents and profits, and has his remedy at Law by ejectment. A subsequent mortgagee is better entitled to the remedy of a Receiver, because he has no right to the possession at Law as against his prior mortgagee, and if the first mortgagee refuses to exercise his legal rights, there seems a propriety in an interposition of a Court of Chancery. The rule in New York, that where premises are an inadequate security, and the mortgagor is insolvent, a Receiver will be appointed, has not been adopted by the Court of Chancery in New Jersey, no distinction being made between a first and a subsequent mortgagee, whose rights are entirely different. Cortelyeu v. Hathaway, supra; see Warner v. Gouverneur, 1 es. 8 See Dalmer v. Dashwood, 2 Cox, 378, 4 The granting, however, of a Receiver Prior incumbrancer can not object by taking pos session himself. Receivership only for benefit of those who choose CH. XXXIX. pointment of a Receiver, deprive him of his right to possession, it § 1. will not permit him to object to the appointment of a Receiver by any act short of a personal assertion of his legal right, and taking possession himself. And if, after a Receiver has been appointed, he does not think proper to avail himself of his legal right (which he may do by applying to be examined pro interesse suo), he will not be permitted to have the benefit of the Receiver: the appointment of a Receiver being for the benefit of incumbrancers, so far, only, as expressed to be for their benefit, and as they choose to avail themselves of it." to avail themselves of it. Where party or has ab sconded to avoid service. No Receiver appointed against the possession of party having prior legal estate. The Court will grant a Receiver at the instance of a second incumbrancer, in all cases in which the first incumbrancer is not in possession of the property; and the circumstance of the party creating the incumbrance being abroad, and refusing to appear to the suit, will not deprive the second incumbrancer of his right to a Receiver. In Holmes v. Bell, however, Lord Langdale M. R. appears to have entertained some doubt as to his power to appoint a Receiver, where one of two mortgagors, who were tenants in common, was abroad: at least, so far as regarded the moiety of the absent party: although he thought the objection removed, by the circumstance of the mortgagor, who was in England, being in the possession of the whole rents. His Lordship's difficulty appears to have arisen from Browne v. Blount, in which Sir John Leach M. R. refused to appoint a Receiver, in the absence of the owner of the estate. The decision in that case, however, was not come to upon an interlocutory application, but upon the hearing of the cause on which occasion, it having been held that the Court could not proceed to make a decree in the absence of the party beneficially interested, it was urged that, although it could not grant the relief prayed, it would go the length of appointing a Receiver. It appears now to be settled, that a Receiver may be granted against a defendant who is out of the jurisdiction of the Court; and where the defendant has absconded to avoid service.s The Court will not, unless under very particular circumstances, appoint a Receiver, where the party having the legal estate is in actual possession of the property. Thus, although a second mort 7 1 Silver v. Bishop of Norwich, 3 Swanst. 112, n. (b); Rhodes v. Lord Mostyn, 17 Jur. 1007, V. C. W. 2 See Anon., 6 Ves. 287; Angel v. 3 Gresley v. Adderley, 1 Swanst. 579. 62 R. & M. 83. 7 Gibbins v. Mainwaring, 9 Sim. 77; Smith v. Smith, 10 Hare Ap. 71; and see Stratton v. Davidson, 1 R. & M. 484. 8 Pitcher v. Helliar, 2 Dick. 580; Maguire v. Allen, 1 B. & B. 75; Dowling v. Hudson, 14 Beav. 423. 9 It seems that this rule will not apply, where the party in possession is merely so upon execution, under a judgment; and that, in such cases, a creditor having taken out execution, cannot hold property against an estate created prior to his debt. Upon this principle, Lord Eldon made an order for the appointment of a Receiver of § 1. But posses sion must be such as to gagee may have a Receiver, where the first is not in possession, CH. XXXIX. yet, if the first mortgagee is in actual possession of the estate, a Receiver will not be appointed: unless it is shown that the first mortgagee has been paid off: in which case, a Receiver may be appointed, on the application of a subsequent incumbrancer.1 In order to defeat an equitable mortgagee of his right to a Receiver, the possession of the party must be such a possession as invests him with a title to receive the rents and profits: a mere possession as tenant will not be sufficient; and where one of the profits. defendants was in the occupation of part of the estate as tenant, and had purchased of the plaintiff a part of his mortgage, the interest of which was about equal to the rent of his occupation, the Court of Exchequer held, that he could not unite his two characters of mortgagee and tenant; and that his possession, being as tenant, could not be set up against the other mortgagee." And here it may be remarked, that as between mortgagees in possession and persons having subsequent interests, the Court will not appoint a Receiver against a mortgagee's own oath that something is due to him, unless the party making the application will offer to pay him off, according to his demand, as he states it himself: in which case, if the party will bring the mortgagee's own confession, that he has been paid off, or that he has refused to accept what is due to him, the Receiver will be appointed; but, for this purpose, the Court will require the mortgagee to state upon his oath what he believes to be due; and, in taking the possession from him upon payment of what he swears to be due, it will make him give security to refund, if it shall appear, upon the account, that so much is not due; and where he will not swear that any thing is due, the Court will appoint a Receiver." The disinclination of the Court to appoint a Receiver, where the property is in possession of a party having the legal estate, is the rents and profits of a rectory, at the instance of a second incumbrancer: although a third incumbrancer was in possession, under a sequestration from the Bishop, which his Lordship considered, in contemplation of this Court, as equal to a judgment. White v. Bishop of Peterborough, 3 Swanst. 109, 116, 117; but see Bates v. Brothers, 2 Sm. & G. 509. As between equitable creditors and judgment creditors, having possession under writs of elegit, it is competent to the Court to appoint a Receiver in favor of the equitable creditors, not disturbing the rights of any of the judgment creditors in possession. Davis v. Duke of Marlborough, 1 Swanst. 74, 84. See Quarrell v. Beckford, 13 Ves. 377; Codrington v. Parker, 16 Ves. 469; Berney v. Sewell, 1 J. & W. 657. Archdeacon v. Bowes, 3 Anst. 752; see Sea Ins. Co. v. Stebbins, 8 Paige, 565; 8 Rowe v. Wood, 2 J. & W. 553, 557; 4 Berney v. Sewell, 1 J. & W. 647. entitle party to rents and Receiver not oath that But mort in suit, gagee, paid may be required to give security to refund. In what cases Court will grant Receiver against legal estate: |