Opinion
No. CV 04-4000167 S
October 21, 2004
MEMORANDUM OF DECISION RE APPLICATION FOR APPOINTMENT OF RECEIVER OF RENTS (#101)
This is an action by the town of Bolton against Eric P. Mott and Ellen M. Mott a/k/a Ellen Listro, owners of the property known as 262 Boston Turnpike in Bolton. The Plaintiff claims that the Defendants have failed to pay the real estate tax assessments charged against the property for the tax years 1998, 1999, 2000, 2001, 2002, 2003 and 2004. The Plaintiff seeks payment of taxes pursuant to General Statutes § 13-161, attorneys fees pursuant to General Statutes § 12-161a, interest and costs, and such other relief at law or equity the court deems proper.
Pursuant to Practice Book § 21-20 and General Statutes § 12-163a, the Plaintiff has applied for the appointment of a receiver of rents.
A hearing on the application was held on September 7th and September 27th. At that time the parties stipulated that Eric Mott does not object to the appointment of a receiver and that the rental income from the property is $4,400 per month. The court also heard testimony from Laurie Bushnell, tax collector for the town of Bolton, and the Defendant, Ellen Listro, and received three exhibits. Post-hearing memoranda of law were filed on October 12th.
Based on the evidence present the court also finds that the taxes due on the property through September 30, 2004, are $52,299.82 including interest. Ellen Listro is presently the sole owner of the property, Eric Mott having transferred his interest in the property to her in October 2003. The Motts had managed a gas station and repair shop on the property until November 2002. Thereafter efforts were made to sell the property but it is contaminated and the cost to clean it exceeds its value. An appeal of the tax assessment on this basis was denied on March 10, 2004. In November 2003, Ellen Listro secured a tenant for the property who agreed to a five-year lease commencing January 2004 at a rental of $4,400 per month. The only income Ellen Listro has is from the rental income and from that amount she pays certain expenses related to the property as well as the living expenses of her and her two children.
The Defendant, Ellen Listro, argues that the court has discretion as to whether to appoint a receiver of rents and points to a number of cases where this is stated. However those cases involve the appointment of a receiver in a foreclosure action pursuant to the provisions of General Statutes § 52-504. That statute states: "When any action is brought to or pending in the superior court in which an application is made for the appointment of a receiver, any judge of the superior court, when such court is not in session, after due notice given, may make such order in the action as the exigencies of the case may require, and may, from time to time, rescind and modify any such order. The judge shall cause his proceedings to be certified to the court in which the action may be pending, at its next session." In Lasalle National Bank v. Shook, Superior Court, judicial district of New London at New London, Docket No. 0549266S, 29 Conn. L. Rptr. 462 (Hurley, J.T.R., Mar. 28, 2001) the court stated: "`In accordance with Connecticut General Statutes § 52-504, the Supreme Court has held that an application for a receiver is within the sound legal discretion of the court. Chatfield Co. v. Coffey Laundries, Inc., 111 Conn. 497, 501 (1930). However, the Supreme Court has further recognized that the appointment of a receiver is a drastic remedy. Masoth v. Central Bus Corp., 104 Conn. 683, 695 (1926).' Shorrock v. Law, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. 151339 (November 13, 1996, Karazin, J.). `It is not the office of a court of equity to appoint receivers as a mode of granting ultimate relief. They are appointed as a measure ancillary to the enforcement of some recognized equitable right.' Hartford Federal Savings Loan Assn. v. Tucker, 196 Conn. 172, 175, 491 A.2d 1084, cert. denied, 474 U.S. 920, 106 S.Ct. 250, 88 L.Ed.2d 258 (1985). `The object of appointing receivers is to secure the property in dispute from waste or loss.' Id. `The purpose of an appointment of a receiver of rents is to minimize the risk of less than full recovery of plaintiff's debt . . . Factors to consider include a certain deficiency, or a threatened one, as when prior encumbrances are accruing interest or the property's condition is rapidly deteriorating.' (Citations omitted; internal quotation marks omitted.) Elstein v. Attick, Superior Court, judicial district of Danbury at Danbury, Docket No. 303506, (June 2, 1993, McGrath, J.) ( 8 C.S.C.R. 699), citing D. Caron, Connecticut Foreclosures, § 10.01 (1989). Generally, the appointment of a receiver is justified if the security is insufficient to support the debt or if the `assets to which it would naturally look for payment may be wasted or lost during protracted litigation.' Hartford Federal Savings Loan Assn. v. Tucker, supra, 196 Conn. 175." (Footnote omitted.) As the Supreme Court stated in Hartford Federal Savings Loan Assn. v. Tucker, 196 Conn. 172, 175 (1985): "An action of foreclosure is peculiarly equitable and the court may entertain all questions which are necessary to be determined in order that complete justice may be done between the parties. Beach v. Isacs, 105 Conn. 169, 176, 134 A. 787 (1926). The object of appointing receivers is to secure the property in dispute from waste or loss. 2 Swift, Digest, p. 159. It is not the office of a court of equity to appoint receivers as a mode of granting ultimate relief. They are appointed as a measure ancillary to the enforcement of some recognized equitable right."
This action here is not a foreclosure and the request for relief now pending before the court is not made pursuant to General Statutes § 52-504. This action is brought pursuant to General Statutes § 12-161. That statute provides: "All taxes properly assessed shall become a debt due from the person, persons or corporation against whom they are respectively assessed to the town, city, district or community in whose favor they are assessed, and may be, in addition to the other remedies provided by law, recovered by any proper action in the name of the community in whose favor they are assessed."
Although the prayer for relief refers to "C.G.S. § 13-161," it also refers to "C.G.S. § 12-161a," and the nature of the complaint reveals that this reference is a typographical error since there is no "C.G.S. § 13-161."
The application for appointment of a receiver of rents is made pursuant to General Statutes § 12-163a. That statute provides, in part, that: "(a) Any municipality may petition the Superior Court or a judge thereof, for appointment of a receiver of the rents or payments for use and occupancy for any property for which the owner, agent, lessor or manager is delinquent in the payment of real property taxes. The court or judge shall forthwith issue an order to show cause why a receiver should not be appointed, which shall be served upon the owner, agent, lessor, manager, mortgagees, assignees of rent and other parties with an interest in the rents or payments for use and occupancy of the property in a manner most reasonably calculated to give notice to such owner, lessor, manager, mortgagees, assignees of rent and other parties with an interest in the rents or payments for use and occupancy of the property as determined by such court or judge, including, but not limited to, a posting of such order on the premises in question. A hearing shall be had on such order no later than seventy-two hours after its issuance or the first court day thereafter. The sole purpose of such a hearing shall be to determine whether there is an amount due and owing between the owner, agent, lessor or manager and the municipality. The court shall make a determination of any amount due and owing and any amount so determined shall constitute a lien upon the real property of such owner. A certificate of such amount may be recorded in the land records of the town in which such property is located describing the amount of the lien and the name of the party who owes the taxes. When the amount due and owing has been paid, the municipality shall issue a certificate discharging the lien and shall file the certificate in the land records of the town in which such lien was recorded. The receiver appointed by the court shall collect all rents or payments for use and occupancy forthcoming from the occupants of the building in question in place of the owner, agent, lessor or manager. The receiver shall make payments from such rents or payments for use and occupancy, first for taxes due on and after the date of his appointment and then for electric, gas, telephone, water or heating oil supplied on and after such date. The owner, agent, lessor or manager shall be liable for such reasonable fees and costs determined by the court to be due the receiver, which fees and costs may be recovered from the rents or payments for use and occupancy under the control of the receiver, provided no such fees or costs shall be recovered until after payment for current taxes, electric, gas, telephone and water service and heating oil deliveries has been made. The owner, agent, lessor or manager shall be liable to the petitioner for reasonable attorneys fees and costs incurred by the petitioner, provided no such fees or costs shall be recovered until after payment for current taxes, electric, gas, telephone and water service and heating oil deliveries has been made and after payments of reasonable fees and costs to the receiver. Any moneys remaining thereafter shall be used to pay the delinquent real property taxes and any money remaining thereafter shall be paid to such parties as the court may direct after notice to the parties with an interest in the rent or payment for use and occupancy of the property and after a hearing. The court may order an accounting to be made at such times as it determines to be just, reasonable and necessary . . ."
The Plaintiff argues that pursuant to this statute the court has no discretion as to whether a receiver should be appointed once the court makes the findings required by the statute. The statute states that: "The sole purpose of such a hearing shall be to determine whether there is an amount due and owing between the owner, agent, lessor or manager and the municipality. The court shall make a determination of any amount due and owing . . ." (Emphasis added). Once the court determines that there are taxes due, the court appoints a receiver who shall collect " all rents" (Emphasis added) and pay from those rents first, the taxes due on and after the date of his appointment, and then the bills for electric, gas, telephone, water or heating oil supplied on and after such date, then the fees and costs of the receiver, next the reasonable attorneys fees and costs of the plaintiff, then any excess income from the rents is paid on the delinquent taxes. Only after all these sums are paid is any money remaining "paid to such parties as the court may direct after notice to the parties with an interest in the rent or payment for use and occupancy of the property and after a hearing." Pursuant to the language of the statute, the purpose for the appointment of the receiver is to ensure that the taxes are paid. This is unlike the receiver of rents in a foreclosure action whose purpose is to secure the property, which is security for the debt, from waste and loss, not to pay the debt itself. Different from the appointment of a receiver of rents in a foreclosure action, the court's discretion concerning appointment of a receiver of rents in a tax collection action is restricted by specific statutory language. Under the statute, little discretion is left to the court.
As the Plaintiff notes, the language of General Statutes § 12-163a is very similar to that of General Statutes § 16-262f. That statute provides, in part, that: "(a)(1) Upon default of the owner, agent, lessor or manager of a residential dwelling who is billed directly by an electric, electric distribution, gas or telephone company or by a municipal utility for electric or gas utility service furnished to such building, such company or municipal utility or electric supplier providing electric generation services may petition the Superior Court or a judge thereof, for appointment of a receiver of the rents or payments for use and occupancy or common expenses, as defined in Section 47-202, for any dwelling for which the owner, agent, lessor or manager is in default. The court or judge shall forthwith issue an order to show cause why a receiver should not be appointed, which shall be served upon the owner, agent, lessor or manager or his agent in a manner most reasonably calculated to give notice to such owner, agent, lessor or manager as determined by such court or judge, including, but not limited to, a posting of such order on the premises in question. (2) A hearing shall be had on such order no later than seventy-two hours after its issuance or the first court day thereafter. The sole purpose of such a hearing shall be to determine whether there is an amount due and owing between the owner, agent, lessor or manager and the company, electric supplier or municipal utility. The court shall make a determination of any amount due and owing and any amount so determined shall constitute a lien upon the real property of such owner. A certificate of such amount may be recorded in the land records of the town in which such property is located describing the amount of the lien and the name of the party in default. When the amount due and owing has been paid the company, electric supplier or municipality shall issue a certificate discharging the lien and shall file the certificate in the land records of the town in which such lien was recorded. (3) The receiver appointed by the court shall collect all rents or payments for use and occupancy or common expenses forthcoming from the occupants of the building in question in place of the owner, agent, lessor or manager. (4) The receiver shall pay the petitioner or other supplier, from such rents or payments for use and occupancy or common expenses for electric, gas, telephone, water or heating oil supplied on and after the date of his appointment. The owner, agent, lessor or manager shall be liable for such reasonable fees and costs determined by the court to be due the receiver, which fees and costs may be recovered from the rents or payments for use and occupancy under the control of the receiver, provided no such fees or costs shall be recovered until after payment for current electric, gas, telephone and water service and heating oil deliveries has been made. The owner, agent, lessor or manager shall be liable to the petitioner for reasonable attorneys fees and costs incurred by the petitioner, provided no such fees or costs shall be recovered until after payment for current electric, gas, telephone and water service and heating oil deliveries has been made and after payments of reasonable fees and costs to the receiver. Any moneys from rental payments or payments for use and occupancy or common expenses remaining after payment for current electric, gas, telephone and water service or heating oil deliveries, and after payment for reasonable costs and fees to the receiver, and after payment to the petitioner for reasonable attorneys fees and costs, shall be applied to any arrearage found by the court to be due and owing the company, electric supplier or municipal utility from the owner, agent, lessor or manager for service provided such building. Any moneys remaining thereafter shall be turned over to the owner, agent, lessor or manager . . ."
The Supreme Court has not addressed the discretion of the court pursuant to General Statutes § 12-163a, however, regarding the discretion of the court pursuant to General Statutes § 16-262f, the Supreme Court, in Connecticut Light and Power Co. v. DaSilva, 231 Conn. 441, 446-47 (1994), stated: "In light of the language, the acknowledged purpose and the sui generis nature of § 16-262f the trial court was mistaken in its assumption that the appointment of a rent receiver for the protection of a utility is governed by the same wide-ranging equitable and discretionary principles that govern rent receiverships in ordinary mortgage foreclosure proceedings. See, e.g., Hartford Federal Savings Loan Assn. v. Tucker, 196 Conn. 172, 175, 491 A.2d 1084, cert. denied, 474 U.S. 920, 106 S.Ct. 250, 88 L.Ed.2d 258 (1985). Once the plaintiffs presented factual evidence to establish a default in utility payments with respect to residential property, they were entitled to the appointment of a rent receiver without having to demonstrate any further equitable right such as a threat of waste or loss. The trial court, in light of its own findings in the companion foreclosure proceedings, was also mistaken in its conclusion that the plaintiffs had adequate security to collect the amounts that were in default because of their ability to avail themselves of the defendants' note, guaranty and mortgages." The court went on to state: "We recognize that, even when a default has been incontrovertibly established, extraordinary circumstances may warrant a withholding of judicial relief." Although the Court left open the possibility that a trial court has some discretion to deny the application for appointment of a receiver of rents where extraordinary circumstances exist, the Court gave no guidance as to what type of circumstances would meet this test nor has this court found any cases where such a test has been applied.
Although not referencing the Court's decision in DaSilva, the Defendant Ellen Listro would have this court, in essence, determine that extraordinary circumstances exist in this case which call for the court to deny the application or apportion only a certain amount of the rental income to the receiver. First, pursuant to the language of the statute, if a receiver is appointed, the receiver is to collect "all rents" and pay them out as the statute directs. This court does not have the discretion to order otherwise. Second, although the court is sympathetic to the Defendant's situation, the court does not find that they amount to extraordinary circumstances. Taxes have not been fully paid on the subject property for over seven years. Even when Ellen Listro took the property as sole owner taxes were already in arrears six years. It does not appear that any significant efforts have been made to pay the taxes. The mortgage on the property is in default and has been for sometime. Even though the Defendant claims that the rental income from the property is her only source of income, that income has been available to her only since January of this year, long after the bulk of the debt to the Plaintiff had accrued. The Defendant also claims that she has been unable to work, yet the report from her doctor indicates that she has not seen her in two years. It is therefore of limited probative value as to the reasons for her current situation. Lastly, the Plaintiff has had no part in creating the Defendants' present situation.
Therefore, the court finds that there is due and owing, as of September 30, 2004, between the Defendants and the town of Bolton, property taxes in the amount of $52,299.82 including interest. The application for appointment of receiver of rents is granted. The court appoints Michael Darby as receiver. Pursuant to Practice Book § 21-21, said appointment shall not become effective until the receiver files a bond with the court in the amount of $10,000 in accordance with the conditions of such section. The receiver shall file an accounting with the court and the parties every two months after the effective date of the receivership.
Jane S. Scholl, J.