Hozz v. Varga

SCHOTTKY, J.

This is an appeal from orders discharging a receiver, directing the payment of all funds in his custody, and approving the receiver’s accounts.

Louis Hozz and his wife, Ettie Hozz, were the assignees of the beneficial interest of a deed of trust and the assignees of a note executed by Victor Varga. The deed of trust provided that upon default the beneficiary could personally or through a receiver appointed by the court take possession of the property, operate it, conduct the business (a motel), collect the rents and income and perform such acts as would be necessary to conserve the value thereof. The Hozzes, after an alleged default in the payments due on the note, applied to the superior court for an order appointing a receiver. An order to show cause was issued, and after Varga failed to appear, a Harry Heifetz was appointed receiver on May 7, 1954, and empowered “To take charge of, use, operate, manage and control the property ... to conduct the business thereof, to collect the rents, issues, profits and income thereof, to apply the same to the payment of all unsual (sic) and necessary expenses of said property, including taxes, mortgage payments, management costs and all other regular and necessary costs of the operation of the business operated on said premises.” On August 10, 1954, Varga and Henry J. Kleefisch filed a motion to vacate the order appointing a receiver. On November 19,1954, Kleefisch abandoned his attempt to vacate the order and at the same time, after having received permission of the court, filed a complaint in intervention in which it was alleged that he was a party in interest against the original plaintiffs and Abe Hozz, the son of Louis and Ettie Hozz, who was named a defendant; that when the original note in the amount of $44,000 and the deed of trust were executed only $42,175 was actually due; that Varga was induced to sign a note for an amount $1,825 greater than the amount actually due; that on June 3, 1953, Varga executed a second note in the amount of $42,500 and delivered a deed of trust

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as security which provided that the trustees could sell the property if a default occurred in the payments of the note; that this second deed of trust and the note were assigned to Abe Hozz; that at the time Bttie and Louis Hozz became the assignees of the first note and deed of trust the payments were in default; that they took the note and deed of trust subject to the set-off of $1,825; that in February, 1954, before any action was commenced, Varga conveyed his interest in the property to the intervener; that Heifetz was appointed a receiver and took possession of the property; that Abe Hozz prepared a notice of default which alleged that the junior obligation was in default because of a failure to pay interest when due; that foreclosure proceedings were had; that the power of sale was exercised and the property sold to the Hozzes, acting through and by Abe Hozz; that the sale was contrary to equity and contrary to and in disregard of law; that the intervener’s rights were not divested by the sale; and that the amount in default on the second note, if any, was not a liquidated amount. The intervener asked that the rights of the parties be determined, that it be decreed that his rights were not divested, that the sale be adjudged void, and that his title be determined.