JEFFREY E. CAGAN and CAGAN REALTY, INC., Petitioners-Appellees, v. MUTUAL BENEFIT LIFE INSURANCE COMPANY, Respondent-Appellant., 28 F.3d 654

Summary

Appellant mortgagee held a first mortgage on an apartment building. Appellee receiver was appointed as the receiver for the building because of fraud committed by the original mortgagors. Appellee expended a large sum of money to improve the property. Appellant sought to foreclose its mortgage and appellee filed a declaratory judgment action in district court, seeking to declare that his expenditures created a lien superior to appellant's interest that could be satisfied out of proceeds generated by an eventual foreclosure sale by appellant. The district court granted judgment in favor of appellee and appellant sought review. The court affirmed, holding that the money expended by appellee for the improvement of the apartment building created a lien superior to appellant's lien, which was reimbursable to appellee in any subsequent foreclosure sale. The court found that appellee's expenditures were prudent and his evidentiary showing of that was unopposed. The court noted that it was ...