Case ID: ky_41/html/0372-01.html
Source: Caselaw Access Project
Author: {"author": "Chief Justice Robeetson", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bowles et al. vs Schoenberger, and Same vs Clark.
    Chancery.
    
      Case 121.
    
    Appeal from the Louisville Chancery Court.
    
      Mortgages. Parties. Chancery.
    
    
      May 13.
    
    Two bills are filed by creditors against mortgagor and mortgagee requiring an accountbetween them and a sale and decree for the remainder of the proceeds of the mortgaged effects—the first charges fraud, the second does not, the suits are consolidated; the charge of Iraud made in the second shall inure to the benefit of the complainant in the first.
   Chief Justice Robeetson

delivered the Opinion of the Court.

As these cases seem to have been consolidated, they will be considered in this Court as one case.

G. & J. H. Schoenberger & Co., who filed the first bill attaching the estate of McClerg, mortgaged to Bowles, did not charge that the mortgage was fraudulent. They prayed however, for an account and settlement between the mortgagor and mortgagee, and either a foreclosure or a sale of McClerg's interest; but no satisfactory basis for an account and foreclosure has been presented. Even the names of the creditors to whom Bowles is alledged lo be liable as McClerg’s endorser, have not been disclosed, although Bowles and McClerg were required, among other things, to identify those creditors.

Nor is it shown when these notes or bills were drawn, or when they became due, or who is now entitled to them, nor why they have not been paid, nor that there is any probability that Bowles will be compelled to pay any thing on account of them, nor that he has not ample available means in his own unpaid notes to McClerg, for indemnifying himself. What then were these complainants to do? They could not force a foreclosure without making the holders of the alledged notes parties; they could not make them parties because neither McClerg nor Bowles would disclose even their names. Must they then wait indefinitely and in the dark, and way those alledged notes, even if yet unpaid, be renewed indefinitely, and the mortgage thereby continued as an incumbrance as long as the parties to it.shall choose, and when too, the mortgagee has paid nothing for the mortgagor and owes him largely? Had this been the only bill might not the Chancellor have decreed, therefore, that this mortgage, under these circumstances, should not be considered as a subsisting incumbrance in equity, and that therefore, these attaching creditors should not be obstructed by it?

The mortgagee in such case failing to exhibit the claims and liabilities intended to be secured by the mortgage, and showing an. unwillingness to settle, adjust and disclose the balance. The mortgage held to be only colorable.

But as both bills progressed pari passu as one case, and were understood and intended to be but one, the Schoenbergers are entitled to the benefit of the charge of fraud in the bill of Clarke; and if that charge be sustained, then there is certainly nothing in the mortgage which can entitle Bowles to any priority over any credit- or of McClerg, or to any foreclosure of his mortgage as against such creditor; and thus the Schoenbergers would be entitled to a decree, even on their prayer for a settlement between mortgagor and mortgagee, and a decree for a sale of McClerg’s interest as available on such settlement.

And- it does seem to us, that, presented as the morfc. gage now is, it should be deemed merely colorable, not only for the reasons already intimated, but because, also, the consideration is loosely and rather indefinitely expressed, because’ it refers to a bond of indemnity for $25,000, which would probably disclose the true state of case as to the alledged liabilities, and that bond has not been shown, and because the mortgage was never given until 1839, was not then sought by Boioles, and he seems not then to have even known that he was still liable for McClerg, or exactly how or to what extent; and there is no satisfactory proof that his indorsements' were not made whilst he was McClerg’s partner, or that all that matter was not settled between them when Bowles executed to McClerg his notes for $23,000.

Pirtle for .appellant; Loughborough for appellee.

But there is a supplemental consideration which is persuasive; why do both Bowles and McClerg seem unwilling to adjust the alledged liabilities and foreclose the mortgage, if any portion of them shall necessarily, or in good faith, finally fall on and be discharged by Bowles.

We are, therefore, of the opinion that the decree as to all parties should stand; and it is consequently affirmed.