Boston & Spokane Realty Co. v. Franc Investment Co.
Boston & Spokane Realty Co. v. Franc Investment Co.
Opinion of the Court
The appellant, Boston & Spokane Realty Company, commenced this action against Arthur A. Dunphy and others for the foreclosure of a second mortgage made by Dunphy and wife. Respondent, the holder of the first mortgage, was not made a party to the action.
In its complaint appellant alleged, among other things, that, at the time its mortgage was executed, the mortgagors, by a separate writing, agreed that appellant should be placed in possession of the mortgaged property, should collect the rents and disburse
Thereafter the respondent filed its petition in the action, in which it alleged that it was the holder of a first mortgage on the property, made by the predecessors in interest of the defendants Dunphy and wife; that it began an action to foreclose thereon on April 17, 1919; that then, and at all times since, the owners of the legal title had failed to pay certain taxes and special assessments thereon which were a first lien; that appellant began its action to foreclose a junior mortgage on June 3, 1919, and procured the appointment of a receiver to collect the rents “and apply the rents as shall be directed by the court, and to the pay
It is apparent that appellant, by reason of the written agreement giving it possession and the right to collect and apply the rents, was in a more advantageous position than an ordinary mortgagee, and had that agreement been respected, it would have been a mortgagee in possession and, as against respondent (it not being contended that such agreement was made for respondent’s benefit), it could have held possession and collected the rents up to the day when by virtue of its purchase at sheriff’s sale respondent became entitled to possession, and would have been accountable then, not to respondent, but only to its mortgagor or his successor in interest. This being so, how can it be contended that respondent has any right to, or interest
Moreover, respondent, at its own foreclosure sale, knowing, as it was bound to do from the public records, that the taxes and assessments were unpaid and a first lien upon the land, saw fit to purchase the property, subject to such taxes and assessments, for the full amount of its judgment, which judgment apparently was not against Dunphy and wife, but was against previous owners only, and thus satisfied that judgment in full and has no further claim against any one. So far as appears, and under the usual form of mortgage in use in this state, if respondent’s mortgagees covenanted to pay taxes and assessments, their breach of that covenant might entitle the mortgagee to declare the debt due, or to pay the taxes and add the amount to the mortgage debt, or both, but except under unusual conditions, not here shown to have been alleged or proven in its action to foreclose, it could not reach out and seize the rents prior to the time when its right to possession accrued.
The judgment of the trial court is reversed, with
Holcomb, O. J., Fullerton, Mount, and Bridges, JJ., concur.
Reference
- Full Case Name
- Boston & Spokane Realty Company v. Franc Investment Company
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- 1 case
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- Published
- Syllabus
- Mortgages (223)—Foreclosure—Rents and Profits—Parties Entitled. A senior mortgagee, bidding in tbe property at its own foreclosure sale for the full amount due, is not entitled to rents and profits prior to the time its right of possession accrued, and has no' interest in rents collected by a receiver appointed in a prior foreclosure suit by a junior mortgagee who was entitled to collect rents and apply the same to taxes, interest and a deficiency .judgment to which the senior mortgagee was not party; and hence cannot have the receiver’s appointment vacated on the ground that it was without notice.