gagee was indebted to him, and asked for an account and a cancelation of the mortgage, the court refused a receiver. See infra, under heading "Discretion of court." Discretion of court. It has been stated in a number of cases that the appointment of a receiver rests in the discretion of the court. United States.-Morrison v. Buckner (1843) Hempst. 442, Fed. Cas. No. 9,844; Tysen v. Wabash R. Co. (1878) 8 Biss. 247, Fed. Cas. No. 14,315; Farmers Loan & T. Co. v. Winona & S. W. R. Co. (1893) 59 Fed. 957; Central Trust Co. v. Chattanooga, R. & C. R. Co. (1899) 36 C. C. A. 241, 94 Fed. 275. Alabama.-Lehman Bros. v. Tallassee Mfg. Co. (1879) 64 Ala. 567; Ashurst v. Lehman, D. & Co. (1888) 86 Ala. 370, 5 So. 731; Warren v. Pitts (1896) 114 Ala. 65, 21 So. 494; Albritton v. Lott-Blackshear Commission Co. (1910) 167 Ala. 541, 52 So. 653. District of Columbia. Wood v. Grayson (1900) 16 App. D. C. 174. Illinois. Garrett v. Simpson (1904) 115 Ill. App. 62. Indiana. - Brinkman v. Ritzinger New York. Syracuse City Bank v. Tallman (1857) 31 Barb. 201; Ross v. Vernam (1896) 6 App. Div. 246, 39 N. Y. Supp. 1031. North Carolina.-Whitehead v. Hale (1896) 118 N. C. 601, 24 S. E. 360. Wisconsin. Peters v. Bossmann (1923) Wis., 192 N. W. 465. The general rule applies in such cases that the appellate court will not interfere with the lower court's determination unless there is an abuse of discretion. There was held to be no abuse of discretion in appointing a receiver in Patterson v. Clark (1892) 89 Ga. 700, 15 S. E. 641, a case involv ing an absolute transfer which was admitted to be a mortgage. In Throckmorton v. Slagle (1882) 3 Ohio Dec. Reprint, 550, it was held to be within the discretion of the court to appoint a receiver in an action to foreclose a mortgage, to which the assignee in insolvency of the mortgagor is a party defendant, if the land is probably insufficient to satisfy the mortgage debt; or to refuse the appointment of a receiver and order the assignee to collect the rents and profits, keep an account of them separately, and, on final distribution, order the assignee to pay the same to the mortgagor. A receiver was refused in Whitehead v. Hale (N. C.) supra, where the mortgaged property consisted of a newspaper, together with its press, types, subscription lists, etc., including its good will, and it was shown that the property was not depreciating, but in fact was appreciating in value, and that to appoint the receiver would be really to destroy the chief value of the property. The fact that the mortgagor was insolvent was held not to require a different ruling, where there was no allegation that he intended to conceal or destroy the property. A reluctance to appoint a receiver for a railroad company is manifested in some cases. Milwaukee & M. R. Co. v. Soutter (1865) 2 Wall. (U. S.) 510, 17 L. ed. 900; Tysen v. Wabash R. Co. (1878) 8 Biss. 247, Fed. Cas. No. 14,315. This does not mean that a receiver of railroad property will not be appointed in a proper case. But a receiver will not be appointed in an action to foreclose a mortgage upon a railroad, because of dissatisfaction with the management of the road, or because the mortgagee's contract may not have been as favorable as it was American supposed to have been. Loan & T. Co. v. Toledo, C. & S. R. Co. (1886) 29 Fed. 416. When a court of chancery is asked by railroad mortgagees to appoint a receiver of railroad property pending proceedings for foreclosure, the court may, as a condition of issuing the necessary order, impose such terms in reference to the payment from the income, dur ing the receivership, of outstanding debts for labor, supplies, equipment, or permanent improvement of the mortgaged property, as may, under the circumstances of the particular case, appear to be reasonable. Union Trust Co. v. Souther (1883) 107 U. S. 591, 27 L. ed. 488, 2 Sup. Ct. Rep. 295. The mortgagee of a railway company was held entitled to a receiver in Gray v. Manitoba & N. W. R. Co. (1896) 11 Manitoba L. R. 42, but there is little discussion on this point. The appointment of a receiver in a mortgage foreclosure upon a homestead was held to be a matter within the discretion of the trial court in Peters v. Bossmann (1923) Wis. —, 192 N. W. 465. It does not follow as a matter of course, because there is a default in interest, that a mortgagee has a right to the appointment of a receiver. Wabash, St. L. & P. R. Co. v. Central Trust Co. (1884) 22 Fed. 272. The appointment of a receiver of the property of a railroad company is not necessarily one of the consequences of its failure to pay its interest coupons at maturity, although such failure gives the right to foreclose the mortgage. Farmers' Loan & T. Co. v. Winona & S. W. R. Co. (1893) 59 Fed. 957. In such a case the existence of a reasonable dispute as to whether the conditions of the mortgage have been broken is sufficient cause to refuse a receiver. American Loan & T. Co. v. Toledo C. & S. R. Co. (Fed.) supra. The court in Romare v. Broken Arrow Coal & Min. Co. (1902) 114 Fed. 194, refused the appointment of a receiver pending foreclosure, where the evidence did not show that the value of the property was being impaired, or that the mortgagor was insolvent, stating that on the supposition that the mortgagor, which was a coal-mining company, was insolvent, still there was no claim that the mines were being unskilfully, imprudently, or dishonestly worked. It is further stated to have been admitted that the mines should be worked, and the court concludes that if the mines are to be operated at all it should be done by the then management, subject to the The right to the appointment of a receiver is dependent, in a certain degree, upon the theory prevailing as to the effect of a mortgage. The ancient theory of a mortgage, viz., that the legal title passed thereby, is the explanation of some early cases denying the appointment of a receiver on the ground that the mortgagee could, by an action at law, obtain possession of the property, where the mortgagor was in possession. Morrison v. Buckner (1843) Hempst. 442, Fed. Cas. No. 9,844; Williams v. Robinson (1844) 16 Conn. 517; Sturch v. Young (1842) 5 Beav. 557, 49 Eng. Reprint, 694, 12 L. J. Ch. N. S. 56; Berney v. Sewell (1820) 1 Jac. & W. 648, 37 Eng. Reprint, 515, 21 Revised Rep. 265. In Williams v. Robinson (1844) 16 Conn. 517, supra, one who took a mortgage from the owner of an undivided interest in real estate, who was in possession thereof, was denied the right to a receiver on the theory that the mortgagee should be left to his action at law to recover possession and take the rents and profits for himself. The court in Morrison v. Buckner (Fed.) supra, does not adopt this rule to its fullest extent, but says that receivers in mortgage cases will never be appointed unless it is clearly shown that the security is inadequate, or that the rents and profits have been expressly pledged for the debts, or that there is imminent danger of the waste, removal, or destruction of the property. There must, according to this court, be some very strong special reason for the appointment. There being no special reason in this case, the court refused an appointment, on the ground that the mortgagee had another adequate remedy by ejecting the mortgagor. The mortgage involved in this case was of a slave. It has been held that equity will not aid the mortgagee in obtaining possession pending the litigation; the most that will be done is to appoint a receiver, for the purpose, only, of pre serving the property and its rents and profits from waste and diversion. Cheever v. Rutland & B. R. Co. (1867) 39 Vt. 653. It is the theory of some cases that after the mortgagor makes default in the payment of the mortgage, the mortgagee can claim the rents, income, and profits, and the right to a receiver to take charge thereof seems to be assumed as a matter of course. Johnston v. Riddle (1881) 70 Ala. 219 (obiter). But other cases in this jurisdiction require the showing discussed in the succeeding subdivisions of this annotation. In one such case it is expressly held that the appointment of a receiver is not a mere matter of course. Scott v. Ware (1880) 65 Ala. 174. The above view, prevailing under the ancient theory of mortgages, is set forth, also, in Cortleyeu v. Hathaway (1855) 11 N. J. Eq. 39, 64 Am. Dec. 478, although a receiver was authorized in that case. A first mortgagee was held entitled to a receiver in Mahon v. Crothers (1877) 28 N. J. Eq. 567, where it appeared that she had no personal security for the debt, that the mortgaged premises were an insufficient security, that the mortgagor, who was in receipt of the rents and profits, not only had not yet paid the interest, but had not paid the annual taxes, whereby a lien on the premises therefor, paramount to that of the mortgage and bearing a high rate of interest, had been created and still existed-a lien which, unless the property were redeemed therefrom, would extinguish the mortgage. Warwick v. Hammell (1880) 32 N. J. Eq. 427, a receiver was appointed at the instance of a second mortgageè who had obtained a decree for the sale of the mortgaged premises, on which execution had been issued and the property advertised for sale, when a third person attacked his title to the mortgage and obtained a stay of the sale, where the mortgagor, who was insolvent, was in possession of the mortgaged premises, paid no interest, and allowed the taxes to remain unpaid, and it was doubtful whether the property, at a forced sale, would bring enough to pay off the encumbrances. In In Bidwell v. Paul (1875) 5 Baxt. (Tenn.) 693, a receiver was appointed. at the instance of a beneficiary of a deed of trust, the court holding that a deed of trust is, in substance, a mortgage, though some immaterial differences may be found between them. In other cases a receiver has been appointed, although the legal estate vested in the mortgagee upon default. Hill v. Robertson (1852) 24 Miss. 373. This was held, in this case, to be a ground for the appointment of a receiver, independently of the fact that the premises were inadequate security and the mortgagor insolvent. Oldham V. First Nat. Bank (1881) 84 N. C. 304; Henshaw V. Wells (1848) 9 Humph. (Tenn.) 568; Bristow v. Home Bldg. Co. (1895) 91 Va. 18, 20 S. E. 946, 947. Where the mortgage includes real, personal, and mixed property, the remedy by ejectment is held not adequate, and a receiver may be appointed in a proper case. Dow v. Memphis & L. R. R. Co. (1884) 20 Fed. 260, modified on other grounds in (1887) 120 U. S. 287, 30 L. ed. 595, 7 Sup. Ct. Rep. 482. That a receiver will not be appointed where the mortgagor is solvent and able to pay any deficiency has been held true. Myers v. Estell (1873) 48 Miss. 373. That a receiver will not be appointed as a matter of course, however, see Pope v. Hazen (1914) 4 Tenn. C. C. A. 224, and Mercantile Trust Co. v. Missouri, K. & T. R. Co. (1888) 1 L.R.A. 397, 36 Fed. 221, supra, I. It is stated in the North Carolina case, Kerchner v. Fairley (1879) 80 N. C. 24, that after the day of default a mortgagee is entitled to enter into the possession of the mortgaged premises, and take and apply the rents and profits in liquidation of his debts, his right to do so being incident to his legal estate, and part of his security. A receiver appointed where the common-law theory of mortgages prevailed was held to acquire the right to the rents and profits of the mortgaged premises, although a tenant thereof had given rent notes to the mortgagor, which had passed into the hands of a bona fide holder. Henshaw v. Wells (1848) 9 Humph. (Tenn.) 568. An equitable mortgagee or a junior mortgagee (as to which, see VIII., infra) stood in a more favorable position, so far as the appointment of a receiver is concerned. A receiver was appointed at the instance of an equitable mortgagee in Meaden v. Sealey (1849) 6 Hare, 620, 67 Eng. Reprint, 1310. A receiver was appointed in Aberdeen v. Chitty (1838) 3 Young & C. Exch. 379, 160 Eng. Reprint, 749, 8 L. J. Exch. in Eq. N. S. 30, at the instance of an equitable mortgagee, before the defendant, who had entered an appearance, had put in an answer, where it appeared to the court that the plaintiff would be in a worse situation if the appointment of a receiver were delayed. According to the court in Tanfield v. Irvine (1826) 2 Russ. Ch. 150, 38 Eng. Reprint, 292, it is the unquestioned rule of equity that an equitable encumbrancer who will take possession may have a receiver, care being taken at the same time that the order for the receiver shall not prevent any who have a better title to the possession from ousting him, if they please. In an action to foreclose a lien which was enforceable only in equity, the court in Price v. Dowdy (1879) 34 Ark. 285, says, as to the right to a receiver, that this "arises from no legal right to possession in the holder of the lien, which the receiver exercises in his stead, but ex æquo et bono from the nature of the case. The court impounds the property by virtue of its inherent power to enforce the equities which come within its cognizance." Three conditions are laid down in Union Bank v. Engen (1917) 10 Sask. L. R. 185, 33 D. L. R. 435, as conditions precedent to the appointment of a receiver, upon the application of an equitable mortgagee, viz.: (1) That he has an equitable mortgage; (2) that a sum of money is due on the mortgage at least, that the interest is in arrears; and (3) that his action is to enforce his security. These three things being shown, and it being shown, in addition, that the holder of the legal title as well as the mortgagor was in a poor financial condition, a receiver was appointed. It is stated in Beverly v. Brooke (1847) 4 Gratt. (Va.) 187, a case involving a deed of trust: "It may be doubted whether a deed of trust which only authorizes a sale upon nonpayment, and contains no clause of entry and distress, would enable the encumbrancer, through his trustee, to hold the possession for the purpose of taking the rents and profits; but that is immaterial upon the effect of the order appointing a receiver. Such an encumbrancer has the more prompt and effectual remedy of foreclosure by sale in pais, through the agency of the trustee." A receiver of a newspaper plant was appointed in Chaplin v. Young (1862) 6 L. T. N. S. (Eng.) 97, upon the motion of the executor of the mortgagee, who had taken possession of the plant, leaving the mortgagor to manage it at a salary. The executor was appointed receiver and manager of the newspaper until the hearing of the cause, upon his agreement to print, publish, and edit the newspaper in the meantime, and forthwith to register himself as proprietor according to the statute. Apparently there was no action to foreclose. The right to a receiver is limited to a receiver of the mortgaged property. Central Trust Co. v. Worcester Cycle Mfg. Co. (1902) 114 Fed. 659; St. Louis, A. & T. R. Co. v. Whitaker (1887) 68 Tex. 630, 5 S. W. 448. According to the court in Smith v. McCullough (1881) 104 U. S. 25, 26 L. ed. 637, a receiver in a foreclosure action is not receiver of any property except that covered by the mortgage, and has no authority to contract for municipal aid in the construction by him, as receiver, of the unfinished portion of a branch road. It is stated generally in State v. Jacksonville, P. & M. R. Co. (1875) 15 Fla. 201, that a mortgagee cannot be said to have any equitable right looking to receivership, in the property of the mortgagor, beyond that included in the mortgage. b. Sustaining right to receiver. 1. In general. The ancient theory of mortgages to which reference is above made has quite generally been abandoned. The majority of American cases proceed upon the theory that the mortgage is a mere security, and that the mortgagor is entitled to the rents and profits prior to foreclosure and sale, and, in some instances, until the expiration of the period of redemption. Statutes in many jurisdictions confirm possession -and consequently the right to the rents and profits-in the mortgagor. The effect of this change of theory has not been uniformly determined, as appears from subsequent subdivisions. It is the view of some courts that, although the right of the mortgagee to obtain possession of the mortgaged premises is abolished, the mortgagee is not thereby deprived of the right to a receiver; a receiver may still be appointed in a proper case. United States.-Kountze v. Omaha Hotel Co. (1883) 107 U. S. 378, 27 L. ed. 609, 2 Sup. Ct. Rep. 911; Davidson v. Allis (1877) Fed. Cas. No. 3,600; American Nat. Bank v. Northwestern Mut. L. Ins. Co. (1898) 32 C. C. A. 275, 60 U. S. App. 693, 89 Fed. 610, certiorari denied in (1899) 172 U. S. 650, 43 L. ed. 1184, 19 Sup. Ct. Rep. 883; Elmira Mechanics' Soc. v. Stanchfield (1908) 87 C. C. A. 585, 160 Fed. 811. Colorado.-Moncrieff v. Hare (1906) 38 Colo. 221, 7 L.R.A. (N.S.) 1001, 87 Pac. 1082. Florida.-Pasco v. Gamble (1876) 15 Fla. 562. Illinois. Haas v. Chicago Bldg. Soc. (1878) 89 Ill. 498. Minnesota. Lowell v. Doe (1890) 44 Minn. 144, 46 N. W. 297. Nebraska. Philadelphia Mortg. & T. Co. v. Goos (1896) 47 Neb. 804, 66 N. W. 843. (1879) 48 Wis. 209, 4 N. W. 124; Sales v. Lusk (1884) 60 Wis. 490, 19 N. W. 362. The general power of the courts to appoint receivers in foreclosure actions is recognized in White v. Suggs (1914) 56 Ind. App. 572, 104 N. E. 55. In Latimer v. Moore (1846) 4 McLean, 110, Fed. Cas. No. 8,114, a bill to foreclose a mortgage, it is stated generally that the court will sometimes appoint a receiver of the rents of the mortgaged premises, who will be required to pay the interest and the annual charges upon the land. Where the mortgaged premises are in the possession of a tenant, and, after the receiver has been appointed, the mortgagor assigns the right to the rent, the assignee acquires rights subject to the rights of the receiver. Citizens' Sav. & Loan Co. v. French (1896) 4 Ohio S. & C. P. Dec. 443, 4 Ohio N. P. 61. The United States Supreme Court has said: "Courts of equity always have the power, where the debtor is insolvent, and the mortgaged property is an insufficient security for the debt, and there is good cause to believe that it will be wasted or deteriorated in the hands of the mortgagor, as by cutting of timber, suffering dilapidation, etc., to take charge of the property by means of a receiver, and preserve not only the corpus, but the rents and profits, for the satisfaction of the debt." Omaha Hotel Co. v. Kountze (1883) 107 U. S. 378, 27 L. ed. 609, 2 Sup. Ct. Rep. 911, followed in Grant v. Phoenix Mut. L. Ins. Co. (1887) 121 U. S. 105, 30 L. ed. 905, 7 Sup. Ct. Rep. 141. In Other Federal courts have also sustained the right to a receiver. Central Trust Co. v. Chattanooga, R. & C. R. Co. (1899) 36 C. C. A. 241, 94 Fed. 275, the court says that when the mortgaged property is not of value sufficient to secure the payment of the mortgage debts, or when its sufficiency has become doubtful and the mortgagor is insolvent, accruing interest matured and unpaid, like accruing taxes due and unpaid, takes the character of waste as clearly and Wisconsin. Schreiber v. Carey distinctly as deterioration by the New York.-Post v. Dorr (1845) 4 Edw. Ch. 412; Hollenbeck v. Donnell (1884) 94 N. Y. 342; Ross v. Vernam (1896) 6 App. Div. 246, 39 N. Y. Supp. 1031. |