(108 A.) TRENCHARD, J. This is an appeal from STEWART et al. v. FAIRCHILD-BALDWIN orders directing a receiver in a foreclosure (91 N. J. Eq. 86) CO. et al. (No. 38.) proceeding to collect rents that had accrued (Court of Errors and Appeals of New Jersey. prior to the time of his appointment. The Nov. 17, 1919.) (Syllabus by the Court.) 1. MORTGAGES 199(1), 473 RECEIVER'S RIGHT TO RENTS. - Where a mortgage does not expressly pledge the rents, issues, and profits of the mortgaged John facts are these: The American Real Estate Company is the owner of land, with an office building erected thereon and occupied by numerous tenants, in the city of Newark. A. Stewart and others, trustees of the Liverpool & London & Globe Insurance Company, Limited, hold a first mortgage on the property securing the principal sum of $350,000. The premises as further security for the payment of the debt, the rents accrued prior to the ap- Chester Realty Company holds a second mortpointment of a receiver in a foreclosure proceed-gage for $90,000. Hyman Rosensohn, trustee. ing (appointed on the application of the second holds a third mortgage for $15,000. There mortgagee) belong to the mortgagor or the were unpaid taxes and assessments of about owner of the fee, and such receiver will not be $36,000. directed to collect and apply them in payment The bill of complaint was filed by the first either of unpaid taxes or interest on the mort-mortgagee to foreclose their mortgage for de gages. ON BREACH OF CONDITION. Upon breach of condition of a mortgage, the mortgagee's estate has all the incidents of a common-law title, and he has the right to the possession of the mortgaged premises. 4. MORTGAGES 137-THEORY OF MORTGAGE AS SECURITY. The theory always obtains in the court of chancery that until the mortgagor has been foreclosed by decree of and from the right to redeem, the mortgage, even after default, is a security. Appeal from Court of Chancery. Bill for foreclosure by John A. Stewart and others, trustees, etc., under a first mortgage, against the Fairchild-Baldwin Company and others, in which, on application of the Chester Realty Company, a second mortgagee, a receiver was appointed to take charge of the mortgaged property. From orders of the Court of Chancery (106 Atl. 406) directing the receiver to collect rents, the American Real Estate Company, owner, appeals. Reversed, and record remitted to Court of Chancery for modification of orders. fault in the payment of interest, taxes, and assessments, and the second and third mortgagees, as well as the tenants, were brought into court. The bill was filed January 7, 1919. On January 18, 1919, on the application of the second mortgagee, the Chester Realty Company, a receiver was appointed and was ordered "to take charge of the mortgaged premises and manage the same, with power to sue for and collect the rents, issues, and profits thereof," and it was further ordered: "That the tenants in possession of the said premises be and they are hereby ordered and directed to pay the rents now in arrears, if any, and the rents due and to grow due, to the said receiver until the further order of the court." In that order the owner and tenants were directed to show cause on January 28, 1919, "why the appointment of said receiver should not be continued, and why the directions as to the disposal and application of the proceeds should not be confirmed and proper directions given as to their disposal." On the return day of the rule the appointment of the receiver was confirmed and continued, and the directions as to the disposal of the proceeds were confirmed and continued until the further order of the court. Later, on March 11, 1919, the Vice Chancellor ordered, among other things: "That the receiver herein proceed to collect the rents accrued and unpaid at the time of his appointment, that he keep the same in a separate fund and apply them to the payment of taxes and municipal liens which have accrued and remain unpaid, and, second, to the payment of interest on the first mortgage, and that he hold the balance, if any remains after so Samuel F. Leber, of Newark, for appellant doing, until the further order of the court." American Real Estate Co. Pitney, Hardin & Skinner, of Newark, for · respondent Chester Realty Co. On this appeal of the owner, the only question raised is the legality of such parts of the McCarter & English, of Newark, for re- orders as direct the receiver to collect rents spondent John A. Stewart and others. that had accrued prior to his appointment. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes We are of the opinion that the appeal is (gaged premises is not entitled to rents accrued well taken. It is important, in the first place, to clearly bear in mind the relationship between mortgagor and mortgagee, and the rights of a mortgagee in this state. [2] The common-law rule that a mortgage created an immediate estate in the mortgagee, and vested in him immediately, upon the execution and delivery of the mortgage, an actual estate with a right of immediate possession, subject only to be defeated by the payment of the mortgage money, has not been adopted by our courts. Woodside v. Adams, 40 N. J. Law, 417; Shields v. Lozear, 34 N. J. Law, 496, 3 Am. St. Rep. 256; Sanderson v. Price, 21 N. J. Law, 637. before the date of taking possession, it follows that a receiver is not. The mortgagee is not entitled to any special favor. He is a secured creditor and has dealt with open eyes. He must look to the security. It follows therefore, when, as here, a mortgage does not expressly pledge the rents, issues, and profits of the mortgaged premises as further security for the payment of the debt, the rents accrued prior to the appointment of a receiver in a foreclosure proceeding (appointed on the application of the second mortgagee) belong to the mortgagor or the owner of the fee, and such receiver will not be directed to collect and apply them in payment either of unpaid taxes or interest on the mortgage. over v. Grover, 31 N. J. Eq. 539. In the case of Leeds v. Gifford, 41 N. J. Eq. 464, 5 Atl. 795, affirmed 45 N. J. Eq. 245, [3] However, upon breach of condition, the Such is the rule to be gathered from the mortgagee's estate has all the incidents of a cases. Northrup v. Roe, 10 N. J. Law J. 334; common-law title, and he has the right to the Leeds v. Gifford, 41 N. J. Eq. 464, 5 Atl. 795, possession of the mortgaged premises. Wood-affirmed 45 N. J. Eq. 245, 19 Atl. 621; Conside v. Adams, 40 N. J. Law, 417; Shields v. Lozear, 34 N. J. Law, 496, 3 Am. St. Rep. 256. [4] The mortgagee, after breach of condition, having a title in the mortgaged premises | 19 Atl. 621. Vice Chancellor Van Fleet says: possessing all the incidents of a common-law title, and only subject to be divested by the equitable proceeding to redeem, and having the right to possess the property, has the right, from the date of taking such possession, to the profits arising from the estate. At common law, he could not be compelled to account to the mortgagor for the value of the profits taken by him. This was a hardship upon the mortgagor, and so a court of equity will compel the mortgagee to credit to the debt the profits received by him. This was done upon the theory, always obtaining in the Court of Chancery, that, until the mortgagor has been foreclosed by decree of and from the right to redeem, the mortgage, even after default, was a security. "According to the rule now in force, a prior incumbrancer has an unquestionable right, as against the mortgagor and subsequent incumbráncers, in case his security is uncertain or precarious, to have the rents of the mortgaged premises, accruing subsequent to the appointment of the receiver, sequestered for his benefit." necessary to the decision in the Leeds Case, It may be said that this statement was not but it is the opinion of an eminent equity judge, and this court affirmed that case on his opinion. In the case of Northrup v. Roe, 10 N. J. Law J. 334, the same Vice Chancellor had before him the sharp and direct question for decision. This was a foreclosure case, and a motion was made for the appointment of a [1] Since after default the mortgagee can receiver. It appeared from the petition that take possession or obtain possession by eject- the mortgaged premises had been conveyed ment of the mortgaged premises, it follows to a grantee, who had died intestate leaving as a matter of course that not until the mort-a widow and children; that the widow died gagee has obtained possession by either one of and the children were in possession; and that the above methods can he take rents or profits the mortgaged premises, which consisted of arising from the lands. To hold otherwise a farm, were worked by a tenant for one-half would destroy the rights of the mortgagor up of the crop. Petitioner proved insolvency of to the date of default and taking possession. It obligor and the inadequacy of the security. is only when the mortgagee acts upon the de- The Vice Chancellor said: fault, and takes possession, that he puts to an end the rights of the mortgagor to the incidents that arise out of possession, subject, of course, to redemption by the mortgagor. Now, a receiver appointed by a court of equity in a foreclosure proceeding is a substitute for taking possession under the common law. It is a convenient substitute, because, in cases where several mortgagees hold liens upon the premises in question, their rights in the rents and profits can better be adjudicated. But such a receiver has no more rights than the mortgagee himself would have, and, "The complainant is entitled to the aid of the court. The mortgaged premises are occupied by a tenant, who, in lieu of a money rent, delivers a share of the produce of the land. The application in this case was not made until nearly all the labor required to put the crops in, care for them, and gather them had been expended. It is obvious, I think, that the mortgagee should not, under such circumstances, be allowed to take the whole of the mortgagor's share of the produce. He should not be permitted, in a case where he does not ask for the appointment of a receiver until all the labor necessary to make the crops has been (108 A.) 2. MUNICIPAL CORPORATIONS 652-BURDEN OF PROOF ON CITY TO SHOW HEARING ON DE- in such cases, as it seems to me, is this: To | ordinance will be set aside which determines the consider the value of the produce, which the boundaries of a street without notice to adjamortgagor or landlord receives, as the fair cent lot owners and without a hearing. rental of the premises for the year, and then give the mortgagee such part thereof as represents, on the basis above stated, the rental value of the premises from the time a receiver is appointed, that is to say, if six months of the year have expired when a receiver is appointed, only six months' rent shall be sequestered for the benefit of the mortgagee. * * *The rental of the mortgaged premises for the year ending April 1, 1888, will be apportioned in the manner indicated above." In the case of Conover v. Grover, 31 N. J. Eq. 539, Chancellor Runyon said: "After the filing of the bill, application was made to the court for the appointment of a receiver of the rents, issues, and profits of the mortgaged premises, which was granted. The assignment by Grover to Leggett of the lease was made October 30, 1877, six days after the bill was filed. The mortgagees are entitled to the rents and profits which have accrued since the appointment of the receiver, if necessary, for the satisfaction of their mortgages." In the present case, the learned Vice Chancellor thought that to permit the owner of the land to collect the rents that had accrued before the commencement of the foreclosure suit, and which remained uncollected, would work a fraud upon the mortgagee, in view of the fact that the owner had allowed taxes and interest to accrue. But, as we have pointed out, that view does not comport with the legal or equitable relationship of mortgagor and mortgagee. The record of a proceeding by a borough to determine the boundaries of a street should show that adjacent owners had notice and were given an opportunity to be heard, and in the absence of anything appearing in this respect upon the face of the record, the burden of proof is upon the borough to establish that such notice was given. Certiorari by Maie B. Chain against the Borough of Merchantville, to set aside ordinances. Ordinances set aside so far as they affect property of the prosecutrix. Argued June term, 1919, before TRENCH- William Early, of Camden, for prosecutor. The Vice Chancellor looked upon the case at bar as an extraordinary one and as such not controlled by the ordinary rule which, of course, he clearly recognized. But we see nothing extraordinary about it except the fact that, by reason of the neglect of the owner to pay interest, taxes, and assessments, the security had become "uncertain or precarious," which fact justified the appointment of a receiver of the rents, issues, and profits thereafter accruing during the pendency of the foreclosure proceedings. Leeds v. Gifford, 41 N. J. Eq. 464, 5 Atl. 795, affirmed, 45 N. J. premises in her possession and of which she Eq. 245, 19 Atl. 621. The orders appealed from will be reversed, with costs, and the record remitted to the Court of Chancery for modification of the orders in accordance with this opinion. (93 N. J. Law, 326) CHAIN V. BOROUGH OF MERCHANT- (Supreme Court of New Jersey. Oct. 21, 1919.) Determination of the boundaries of a street requires action of a judicial nature, and an ant. KALISCH, J. The prosecutrix seeks to set aside three ordinances of the borough of Merchantville so far as they affect certain claims to be the owner. The borough of Merchantville, it appears, brought an action in ejectment against the prosecutrix to eject her from the possession of a certain strip of land, which the borough claims to own by virtue of certain proceedings taken by it under several ordinances enacted by it. Application for a certiorari was made to Mr. Justice Garrison, by the prosecutrix, for the purpose of permitting her in a direct proceeding to attack the validity of the said ordinances so far as they appeared to affect her title to and right of possession of the premises claimed by the borough as its own, and in aid of her defense in the action of ejectment. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes In allowing the writ Mr. Justice Garrison said: "As mere legislative enactments they could not be so used, being self-serving acts of the plaintiff. Whether or not as judicial acts of the plaintiff they could be used against the prosecutrix in the action of ejectment need not be decided until it has been determined that the ordinances were judicial in character. To have this character they must have adjudged that the title to the locus in quo was in the borough, after notice to its apparent owner. Such notice, being essential to the judicial character of the ordinances, must be shown by the party who relies upon their judicial nature-in this case the borough. This has not been shown. Hence the writ should be allowed unless the right to it has been lost by laches. Whether or not the prosecutrix has lost the right to challenge the ordinances as legislative enactments is not now material, since I have reached the conclusion that she has not lost her right to question them in their judicial as pect as affecting her property rights. Bill Posting Co. v. Atlantic City, 71 N. J. Law, 72 [58 Atl. 342]." The learned justice allowed the writ and limited its scope to the judicial character of the ordinances and the question relating thereto. es her land is in such location as to include in the street a strip claimed by the prosecutrix and within her fence running along its entire frontage, being 2.7 feet in depth at one end of her lot and running to a depth of 8.7 feet at the other end, claiming that the borough is entitled to the possession of said strip of land as a portion of said street." The testimony taken in this proceeding justifies us in finding that the prosecutrix had lived upon the property for 40 years; that during that entire period the property was fenced in on the Maple avenue side, first by a wooden fence, then by an iron one on the exact location of the former; that these fences included within their bounds the strip claimed by the borough under the ordinances; that no attempt was made by the borough to have either of the fences removed; that prior to the passage of the September ordinance of 1901 the father of the prosecutrix died, and thereafter she continued to live with her mother upon the property, and they were in possession when the September ordinance of 1901 was enacted; that neither she nor her mother had any notice or knowledge of the passage of the ordinance; that the prosecutrix was in a position to have known if her mother had received notice of the inten By stipulation, between counsel the fol- tion to pass or passage of the ordinance; that lowing facts appear: "(1) On September 3, 1901, the council of the borough of Merchantville passed an ordinance entitled 'An ordinance to determine and establish the grades and boundaries of the streets and roads of the borough of Merchantville.' "(2) On January 6, 1912, the council of the borough of Merchantville passed an ordinance entitled 'An ordinance to determine and establish the grades and boundaries of the streets and roads of the borough of Merchantville.' "(3) On December 30, 1915, the council of the borough of Merchantville passed an ordinance entitled 'An ordinance to determine and establish the grades and boundaries of Maple avenue in the borough of Merchantville.' "(4) The minutes of the three meetings of council do not show that any testimony was taken concerning the boundaries of the streets therein mentioned. "(5) That one of the streets or roads of said borough is Maple avenue, which was formerly the Moorestown and Camden turnpike, that the said turnpike was incorporated by an act of the Legislature of New Jersey approved February 28, 1849, and that in said act and in the return of the surveyors afterward filed the lines of said turnpike was described by metes and bounds." this is made to appear by the fact that the mother confided all business she was called upon to transact to her daughter, and that nothing was ever said by the mother to the daughter concerning any ordinance or any change to be made in the Maple avenue fence; that the mother of the prosecutrix died in 1903, and that the prosecutrix has been living upon the property since her mother's death and until very recently, and that she never had any notice or knowledge of the two later ordinances, of January, 1912, and December, 1915. As to the ordinances of December 30, 1915, the defendant agrees that they be set aside, and such an order will accordingly be made. This leaves for our consideration the validity of the ordinance of 1901 and 1912 so far as they affect the property rights of the pros ecutrix. [1] For the defendant, it is argued, first, that the prosecutrix is barred from having the benefit of the writ of certiorari to test the validity of the ordinance for the reason that she has been guilty of laches. tain this position it is declared that large sums of money have been expended by the municipality since the passage of the ordi(6) That the prosecutrix, "Maie B. Chain, is nances; that a sewerage system has been conat present in possession of a certain lot of structed and intersecting streets have been land, with a twin dwelling house and stable improved with reference to the lines fixed by thereon erected, situated at the southeast cor- the ordinances which were passed as necner of Maple and Chapel avenues, in the borough of Merchantville. That on or about March essary preliminary to the doing of this work. 21, 1916, said borough of Merchantville insti- It is argued that the reason now assigned for tuted an ejectment suit in the New Jersey Su- setting the ordinance aside existed at the preme Court against prosecutrix, claiming that time that it was passed, and hence the prose (108 A.) her to relief. In Voorhees v. Bound Brook, [ and that the charge of laches made against 55 N. J. Law, 548, at page 549, 26 Atl. at page her is not sustained. 710, Mr. Justice Garrison, speaking for this court, said: [4] Lastly, it is insisted, by counsel for the defendant that the ordinances must be either affirmed or set aside as a whole, and cannot be separated as to their effect. This proposition is untenable. It rests upon a bare assumption. In so far as the ordinances operate to affect the location of the lines of Maple avenue and particularly affect the property of the prosecutor, they can be easily separated as to their effect. "It is the settled law of this state that the determination of the boundaries of a street requires action of a judicial nature to ascertain the precise character and extent of the encroachments, and that parties to be affected by the adjudication have a right to be heard. Furthermore, that this judicial function must be assumed and exercised by the proper municipal body with special reference to the particular street affected, and a mode must be pro-part and affirmed in part is no longer an open That an ordinance may be set aside in vided in which the adjacent lot owners may be heard. Bodine v. Trenton, 7 Vroom [36 N. J. Law] 198; Dawes v. Hightstown, 16 Vroom [45 N. J. Law] 127, 501; Stretch v. Hoboken, 18 Vroom [47 N. J. Law] 268." The stipulation in the present case discloses that the minutes of the council do not show that any testimony was taken at the time of the passage of the ordinance in question as to the boundaries of the streets mentioned therein. Nor do the minutes show that notice was given to the prosecutrix or her mother of the proposed action of the council so as to afford either an opportunity to be heard. [2, 3] We think, therefore, that in a proceeding of this character the record of the borough should show that the adjacent owners had notice of the proposed ordinances and were given an opportunity to be heard. The burden of proof, to establish that notice was given, in the absence of anything appearing in this respect upon the face of the record, was on the borough. The prosecutrix testitied that no notice was given of either proposed ordinance. It follows, as a matter of course, where it appears, as it does here, that there is an utter absence of any proof that notice was given to the prosecutrix or her predecessor in title of the proposed ordinances the charges of laches cannot be successfully urged. The fact that improvements were made in the avenue seven years after the passage of the ordinance of 1901, as above referred to, does not appear to have been of such a nature as to charge the prosecutrix with notice that there was such an ordinancè, and that it affected her property rights. No acts done by the borough, after the passage of the ordinance of 1901 and of 1912, show any attempt by the municipality to change the boundary line of the property of the prosecutrix on Maple avenue; the fences, as originally located upon the property indicating the boundary line, having never been disturbed. In the various respects pointed out the present case differs from Hopewell v. Flemington, 69 N. J. Law, 597, 55 Atl. 653. question in this state. Trowbridge v. Newark, 46 N. J. Law, 40; Schwarz Bros. Co. v. Board of Health, 84 N. J. Law, 739, 740, 87 Atl. 463. The views herein expressed lead to the conciusion that the ordinances in question so far as they affect the property of the prosecutrix, must be set aside, with costs. (93 N. J. Law, 307) FORT v. DILKS. (Supreme Court of New Jersey. Oct. 14, 1919.) 1. FOOD (Syllabus by the Court.) 16-JURISDICTION OF JUSTICE OF THE PEACE OF PROCEEDING FOR ILLEGAL SALE OF FRUIT. A justice of the peace has no authority to hear and determine an action for the recovery of a penalty for the violation of the provision of chapter 248 of the statute of 1914 (P. L. p. 517). Jurisdiction in such cases is vested by the statute in a police magistrate or a district court, and no express power to enforce a penalty for the violation of the act is given a justice of the peace. (Additional Syllabus by Editorial Staff.) 2. FOOD 16-SALE OF FRUIT IN UNMARKED CONTAINERS. A conviction, under Act April 17, 1914 (P. L. p. 517), cannot be sustained where record does not show defendant's sale or delivery of any fruit in unmarked containers, but only the complaining officer's finding at an exchange store of empty baskets, most of them marked with defendant's name, but one bundle not containing any manufacturer's name, without proof that they were made by or belonged to defendant, and the only proof being that they did not. 3. FOOD 16-SALE OF FRUIT IN UNMARKED CONTAINERS. (P. L. p. 517), for the sale or delivery of fruit in The penalty provided by Act April 17, 1914 containers, unless they shall have marked on On this branch of the case we conclude them the capacity thereof and name and adthat the ordinances are judicial in character, dress of manufacturer, or a symbol furnished affecting property rights of the prosecutrix, by superintendent of the weights and measures, For other cases see same topic and KE1-NUMBER in all Key-Numbered Digests and Indexes 108 A.-20 |