Opinion
Decided June 24, 1929.
Receivership — Foreclosure of mortgage — Rents and profits pledged as additional security — Section 11894, General Code.
In action for foreclosure of mortgage, appointment of receiver held authorized under Section 11894, paragraph 2, General Code, where rents and profits were pledged as additional security, and statement in affidavit in support of motion for appointment of receiver that notes were in peril because of deficiency in mortgage securities was unchallenged, since, where there are mortgage clauses pledging rents and profits, there is sufficiency of fact for appointment of receiver.
ERROR: Court of Appeals for Cuyahoga county.
Mr. Herman Spielberg, for plaintiffs in error.
Mr. M.W. Kastriner, for defendants in error.
This cause is here on error from the common pleas court of Cuyahoga county, and the question to be determined is whether that court committed error in the appointment of a receiver, and in order to determine the question we find from an examination of the pleadings that the defendants in error, Samuel Z. Brown and others, commenced an action in the common pleas court against plaintiffs in error, Edward B. Birmingham and Anna Birmingham, and one William D. Powers, seeking judgment upon the promissory note duly executed and past due, and for the foreclosure of a mortgage executed by plaintiffs in error to Wm. D. Powers to secure the payment of the note.
The Firestone Bank appears in the action as a cross-petitioner, and the cross-petition sets up a promissory note in its favor, signed by plaintiffs in error and Wm. D. Powers, secured by mortgages on the premises described in plaintiff's petition. A judgment was asked upon a note and a foreclosure of the mortgage. There was an answer by plaintiffs in error and Wm. D. Powers, denying the default in the bank's mortgage. There was no prayer for a receivership, but, subsequent to the filing of these pleadings, a written motion supported by affidavit was filed, praying for the appointment of a receiver, and setting up amongst other things a clause in the mortgage pledging the rents and profits as additional security, and it was further stated, under oath, in the affidavit, that both mortgages reached a total that was either equal to or in excess of the mortgage value of the land, and that this situation, together with additional costs, such as taxes and assessments, made the legal status hazardous as to the security for the payment of the notes, but it is claimed that, inasmuch as the journal entry does not make a proper finding of inadequacy of security, the journal entry is therefore controlling, because its foundation is the finding of the court with respect to the reason for its judgment.
There were no counter affidavits filed as to the affidavit to support the motion for a receivership, and there was no other evidence of any kind that was offered, so far as the record is concerned, although it is stated, and it would appear to be confirmed by the journal entry, that counsel made a statement as to the value of the land that made the security sufficient for the payment of the notes. It makes no difference what the reason for a judgment of the court is, if the judgment is right. The reason may be wrong and the judgment correct, and, as was said by former Associate Justice Hughes of the Supreme Court of the United States, there should be a paucity of opinion instead of an abundance, because the tendency of the times is to give a wrong reason as a basis for a judgment, and ofttimes the reason is wrong but the judgment right. It appears unchallenged, in the affidavit for the support of the motion, that the notes were in peril because of the deficiency in the mortgage securities, and, so far as the record is concerned, this situation seems to justify the court in its appointment of a receiver upon the motion supported by the affidavit, especially as it is our judgment that, where it appears, as in the instant case, that the rents and profits have been pledged as additional security, and the same has been so set forth in the mortgage, the necessity of showing inadequacy of security does not arise, and, if it appears that the security is in peril, a receivership is the logical outcome and the usual procedure, and outside of the statute receivers are appointed where established precedent has made it the usual course of procedure, and we think that in the instant case this doctrine was sufficient for the appointment of a receiver. However, if we turn to the power of the court under the statute for the appointment of a receiver, which is Section 11894, General Code, we find that under paragraph 2, in an action by a mortgagee for the foreclosure of a mortgage and the sale of the mortgaged property, a receiver may be appointed if it appears that the mortgaged property is in danger of being lost and that the property is insufficient to discharge the mortgage debt after all taxes, assessments, and other costs are paid. This law was laid down in an able opinion by Ruhl, J., in the case of Ohio Mutual Savings Loan Co. v. Public Construction Co., dated October 6, 1926, 26 N.P. (N.S.), 371, and in Sage v. Mendelson, 42 Misc. Rep., 137, 85 N.Y.S., 1008, Lyng v. Marcus (Sup), 118 N.Y.S., 1056, and in Ortengren v. Rice, 104 Ill. App. 428, it was laid down that, where there are mortgage clauses pledging the rents and profits, there is a sufficiency of fact for the appointment of a receiver.
In Ohio and Illinois the statutes are similar, and we are content to rest our opinion upon Ortengren v Rice, supra.
It is claimed that the appointment of a receiver was unlawful because the appointee was an interested party. We do not find any facts in the record that justify this conclusion because we find no interest that the appointee has or might have in any of the property or the litigation concerning the same.
Holding these views the judgment of the lower court is hereby affirmed.
Judgment affirmed.
VICKERY, P.J., and LEVINE, J., concur.