Warren & Co. v. Pitts

BRICKELL, C. J. —

There are cases in which the appointment of a receiver, is almost a matter of course, although fraud, or imminent danger of injury, be not shown. But the general principle on which courts of equity proceed is, that the appointment is matter of sound judicial discretion, to be exercised in view of all the circumstances of the particular case, “for the purpose of promoting the ends of justice, and of protecting the rights of all the parties interested in the controversy and the subject matter, and based upon the fact that there is no other adequate remedy or means of accomplishing the desired objects of the judicial proceeding. One of the most material circumstances, without which the court would *69hardly make the appointment, is the reasonable probability that the plaintiff asking for a receiver will ultimately succeed in obtaining the general relief sought for by his suit.” — 3 Pomeroy Eq. Jur., § 1331. The right of a mortgagee to the appointment of a receiver pending a suit for foreclosure, rests upon the general principle, that the appointment is necessary for the preservation of the property and its appropriation to pay the mortgage debt. The mortgage under which the complainants deduce title, authorized them upon the default of the mortgagor in saving them harmless from the liability they had incurred as sureties, and upon their payment of such liability, to take possession and make sale of the premises, applying the proceeds of sale to the reimbursement of the payment they had made; there was no specific grant or pledge of the rents and profits, accruing before or after default. Yet, it is the general doctrine of courts of equity in this State, that if the mortgagor is in possession, and is insolvent, and the mortgaged premises are an inadequate security, though there be not a specific grant or pledge of the rents and profits, as between the mortgagor and the mortgagee, the court will intercept the rents and profits, by the appointment of a receiver to take and hold them, pending a suit for foreclosure. — Scott v. Ware, 65 Ala. 174. But if the mortgagor is not in possession; if he has parted with it voluntarily, or has been deprived of it by legal process, and a stranger to it claiming adversely, lias succeeded to the possession, unless he is insolvent, and, in consequence of his insolvency, there is imminent peril of the loss of the rents and profits, the possession will not be disturbed by the appointment of a receiver. When the mortgagor remains in possession, taking the rents and profits, unless he is insolvent, and because of the insolvency, there is peril of their loss, the possession will not be disturbed by the appointment; nor will it be disturbed, though he may be insolvent, and the premises an inadequate security, if he is applying the rents and profits to the reduction of the mortgage debt. — Cortleyeu v. Hathaway, 11 N. J. Eq. 39 ; s. c. 64 Am. Dec. 478 ; Myton v. Davenport, 51 Iowa, 583 ; 2 Jones Mort., § 1516.

If the equity of the bill should be conceded, or that there is a reasonable probability, that the complainants will ultimately succeed in obtaining the general relief *70prayed, a case is not made for the appointment of a receiver. The respondents, Warren & Co., who have succeeded to the possession, and are holding and claiming in hostility to the complainants,-are, as it was-admitted,-solvent, and if liable, can be compelled to answer for the'rents and-profits. The'solvency or insolvency of the party to be affected, is an important consideration with a court of equity, in all cases -guiding, if it does not govern, its discretion in the appointment of receivers. High on Receivers, §§ 11, 18; Thompson v. Tower Manufacturing Co., 87 Ala. 733; Irwin v. Everson, 95 Ala. 64. As Warren & Go. were solvent, removing all peril of the loss of the rents and profits, there was no occasion' for the appointment of the receiver ; the ends of justice, nor the rights of the parties in interest would have been subserved by it.

It is not necessary, and perhaps would be improper to consider other questions of which the case is suggestive. The decree appointing the receiver must be vacated and. annulled,- and the cause remanded.

Reversed and remanded.