Case ID: ohio-st_58/html/0480-01.html
Source: Caselaw Access Project
Author: {"author": "Shauck, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Coons v. Clifford et al.
    
      Independent notes — Different payees and different dates of execution and maturity — Secured by mortgage — Payees participate in mortgage avails proportionately — No priority op lien.
    
    On foreclosure of a mortgage executed by a principal debtor to his sureties for their indemnity with respect to independent notes previously executed to different payees and having different dates of execution and maturity, the payees of such notes are entitled by subrogation to participate in the proceeds of the sale in proportion to the sums respectively due them, there being no priority of lien incident to the note of earlier maturity.
    (Decided June 7, 1898.)
    Error to the Circuit Court of Hancock county.
    This cause having been appealed from the common pleas court to the circuit court, was tried on the pleadings and the evidence. The facts appearing therefrom, and from the findings of the court, are as follows:
    L. C. Smith and William McKinnis, with their wives, executed to A. L. Davis, J. G. Mills and C. F. Gruel their mortgage on lot number 1272, in Findlay, to indemnify the mortgagees, as sureties for the mortgagors, on two promissory .notes previously executed, one held by Vincent H. Coons, plaintiff in error, on which Davis and Gruel were sureties, which became due May 3, 1891; the other, on which Davis and Mills were sureties, being held by Isabella Clifford, the defendant in error, which became due August 14, 1891.
    The parties herein, as holders of the notes, claim to be entitled to resort to the indemnity given by the principal debtors to their sureties; and the mortgaged premises having been sold, and the proceeds of sale, after satisfying prior liens, found to be insufficient to pay the amount of the two notes in full, it was claimed on behalf of Coons that he was entitled to be paid in full before distribution to Mrs. Clifford. Other facts appearing’ in the record are not material to the point decided.
    In the circuit court it was adjudged that the parties here were entitled to resort to the mortgage given by the principal debtors to their sureties upon the notes, and that the holders thereof were entitled to the proceeds of sale in proportion to the amounts respectively due them. To this Coons excepted. He now seeks such modification of the judgment as shall accord to his claim priority to that of Mrs. Clifford.
    
      Mehan & Coons, for plaintiff in error.
    
      A. Zugschwert, for defendant in error.
   Shauck, J.

The only question deemed entitled to consideration in this report relates to the soundness of the contention of the plaintiff in error, that because of the earlier maturity of the note held by him he is entitled to full payment out of the proceeds of the sale of the property mortgaged to indemnify the sureties of the mortgagors, before Mrs. Clifford is entitled to any portion thereof. The proposition is said to be supported by the decisions of this court in The Bank of the U. S. v. Covert et al., 13 Ohio, 240, and Winters & Son v. The Franklin Bank of Cincinnati, 33 Ohio St., 250.

These cases should be regarded as placing it beyond controversy in this state, that where a single indebtedness is made the consideration for several notes, from the debtor to the creditor, maturing at different dates, and secured by the same mortgage, and the notes are held by different persons at the time of foreclosure, priority of lien belongs to the note first maturing, unless a different intention is expressed by the parties. The statement of the rule shows that it arises from a consideration of the intention of the parties, as it may be inferred from the transaction. It seems to have no other foundation.

While the rule thus defined should be adhered to as a rule of property, it should not be extended to cases not within its reason. The mortgage in the case before us was given to secure conditional liabilities, upon wholly distinct debts, due originally to different parties and contracted at different times, and we are not able to infer from the transaction any intention that priority of lien should exist in favor of the holder of the note first maturing. The rule established in the cases above cited is followed in Indiana; but in that state its application to a single mortgage, given to secure obligations to different parties, maturing at different dates, has been denied. Shaw et al. v Newsome et al., 78 Ind., 335.

Judgment affirmed.