Case ID: nc_42/html/0217-01.html
Source: Caselaw Access Project
Author: {"author": "Pearson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HENRY W. BURTON, EX'R. &c. vs. JOHN H. WHEELER.
    A executed a mortgage to B, to secure the payment of « certain debt (hf<l front A to B, add also transferred to B, without endorsement, four notes op ft third péísOn. fi, at the sardo time, executed a deed, id Which it was stipulated that B should not call od A, or hold him liable, until the ipsolv * ency or' inability to pay Of the' obligor's is ascertained by legal process.” '
    jffeMj'that the mortgage and the deed being executed M the saute tijpe, raittJfc be construed together
    
      Held, further, that collection by legal process referred only to a judgment aficf execution at law, and that the party was pot bound to resort to a Court of Equity, to remove arty impediments to a satisfaction of a judgment an4e¡seí cation at law,such asa fraudulent coUy’eyattCe, of the iifee.
    Appeal from the Court of Equity of Lincoln Coutííy ■) Spring i’erm, 1851, his Honor Judge Battue presiding,
    
      On the 1st of February, 1842, the defendant purchased of Robert H. Burton, the testator of the plaintiff, a tract of land on the Catawba rivei\ and six negroes, at the price of $15,325. Mr. Burton conveyed the property to the defendant, who, to secure the payment of the purchase money, transferred to Mr. Burton fifty shares of. bank stock, and also two notes on R. M. Johnson,and Joel Johnson, of Kentucky, for $5000 each — one due the 20th of April 18411 the other, the 20th of April j.842; and, as further security, at the same time executed the mortgage of the land and negroes. The defendant did not endorse the notes, but covenanted to guaranty their payment, “in case.the solvency or inability to pay of the obligors is ascertained by legal process.” And Mr. Burton, at the same time, executed a deed of defeasance, by which “ he-agreed not to call on the defendant, or hold him liable, until the insolvency or inability to pay of the obligors is ascertained by legal process.”
    The condition of the mortgage deed is, “in case the said R. H. Burton shall receive the full amount of said stock and the amount which is due upon both of said bonds, either from John H. Wheeler, of the said 11. M. Johnson or Joel Johnson, then these presents are void and of no effect,”
    The notes were duly presented and protested for non payment by the executors of Mr. Burton, he having died shortly after the sale. The bank stock was sold for $5500, and a credit entered for that amount. In June, 1842, the executors and the defendant entered into an arrangement, by which the defendant was to take the notes and go to Kentucky, for the purpose of collecting them. The defendant received the notes and gave a receipt for them, as follows; “ The within are true copies of two notes, which I have received of W. Hoke and H. W. Burton, executors of R. H. Burton, for the purpose of collecting the same and accounting for. “Jno. H. Wheeler.” In July, 1847, the defendant paid the sum of $1750, as the amount then co>l-•lectedo'n the notes ; and in December, 1847, he paid $1800 as a further amount collected.
    The plaintiff, who is the surviving executor, avers, that the amount due on the mortgage is $11,020,28 1-2 cts'.; and insists, that the defendant lias collected the amount from R. M. and Joel Johnson, and failed to pay over and.account for it, or has by his default and negligence made- himself liable for the payment thereof, as R. M. and Joel Johnson are now totally insolvent.
    The defendant avers, that he took the notes to Kentucky and employed two eminent counsel to attend to the collection, under whose advice a bill was filed against R. M. and : Joel Johnson, in the Circuit Court of the United States, and a decree was obtained in January, 1845, sequestering the property of R. M, Johnson, in value $38,000, which property is now subject to the payment of the debt, which • is “thus rendered safe beyond all contingencies;” and the property of Joel Johnson, in value $100,000, is also bound .for the debt. He avers, that the two sums paid over by him in 1847, are all that he received ; and insists, that the plaintiff must look to the proceedings in equity and ascertain by legal process Ihe insolvency and inability of the' obligors to pay, before he can call on him, or is entitled to foreclose the mortgage.
    The defendant files, as an exhibit, a letter from one of his counsel in Kentucky, dated 4th February, 1851, in ■ which he says, “ nothing remains to put the collection of .your debt in vigorous progress, but the return of the Messrs. Johnson from their Southern plantation. I fear I will have some delay in a regular reviver, as no one has administered upon Col. Johnson’s estate,” &c. “ The debt is entirely safe, beyond all contingencies, and every exertion will be made to bring it to a speedy close.”
    Replication was taken to the answer, and the case set down for hearing upon bill, answer, replication, and the exhibits filed.
    
      Thampsan and Guian fot* plaintiff!
    Lander, B.oyden and Atery for the defendant.
   Pearson, J.

The case turns upon the construction of the mortgage, taken in connection with the deed of Mr. Burton, called a defeasance; for, although the words of the deed have a more particular reference to the guaranty of the notes, yet all of the instruments were executed at the same time, and must be construed together. We think it clear, that-the mortgage was not to be enforced, until “the insolvency and inability to pay” of the two Johnsons was ascertained by legal process ; and the question is, what was meant by legal process ? Without some express stipulation, the guaranty or mortgage mighfhave been resorted to as soon as the notes Were presented, and protested for non-payment, Mr, Burton, therefore, stipulated that he would not resort to the guaranty or mortgage, until a judgment at law was taken on the notes, and a fiert facias was issued, and returned “ nulla bonej.” This is what was meant by “legal process.” It never wag intended, that, after the remedy given by law proved unavailing, recourse should then be had to Equity, and all the remedies given in that Court, which, by possibility, might reach property fraudulently conveyed, or otherwise put out of the reach of the process of the law, should be exhausted, before the defendant could be sailed an tor payment. Such a construction is unreasonable, and is not justified by the language used.

It we suppose the defendant was under a misapprehension as to the proper construction of the deed, his conduct js fully explained. But, according to the construction we put on it, he is in default; and the plaintiff is entitled to have the mortgage foreclosed, unless the defendant pays the balance of the purchase money, whicjh still remains unpaid.

When the defendant to.ok the notes to Kentucky for the purpose of collecting them, if the money could have been made out of the Johnsons by legal process, his duty to the plaintiff and his own interest required him to take a judgment at law, and have the money made by & fieri facias; but, if this could not he done, then his duty to the plaintiff required him to take a judgment at law, issue & fieri facias, and have it returned, “ nulla bona,” so as to give the plaintiff a right to proceed on the guaranty or mortgage; but his own convenience would strongly tempt him not to do it. It is for him to say haw he acted. He says, by the advice of eminent counsel, he filed a bill in equity, and obtained a decree of sequestration against one of the obligors in 1845, upon which two payments have been realized, and the balance of the debt is fully secured. He does not file a copy of the proceeding in equity, but is content with filing a letter from one of his attorneys. He does not aver that a judgment has not been obtained, and a return of “ nulla bona,” made on the fieri facias; and we presume, such the case, and that a copy of the proceedings in equity would show it; because, it was necessary to proceed in, that way at law, for the purpose of establishing the debt, and showing that the legal remedy was inadequate, in order to give jurisdiction to the Court of' Equity, But, if it has not been done, it was the 4duty of the defendant, (having Undertaken, to, act as agent of the plaintiff,) to have done it; and, in either case, he is in default, and is. no, longer entitled to insist upon the stipulation of the plaintiff’s testator, as set forth in the defeasance.

There must be a reference f<o ascertain the amount due upon the mortgage, to the end that it may be foreclosed, Unless the arnp.un.t is paid by the defendant.

Recree accordingly. Tee CyitiAM.