Case ID: ind-l-rep_1/html/0446-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Elliott.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Louis Manns et al. v. The Brookville National Bank et al.
    1. Shares of Stock.—Shares of slock in a corporation are personal property, and may be mortgaged as suchj
    2. Foreclosure.—In foreclosure the mortgage lien is not merged in the decree so as to break the continuity of the lien or supplanting it with a new one springing into existence at the time.
    3. Lien of Execution.—An execution issued subsequent to the execution of the mortgage is merely a lien on the debtor’s equity of redemption.
    Filed May 24, 1881.
    Appeal from Franklin Circuit Court.
   Opinion of the court by

Mr. Justice Elliott.

The complaint of appellant alleges that they recovered judgment against one Herman Linck, in October, 1875, and August, 1876, amounting in the aggregate to $655; that in September, 1876, executions were issued on said judgments and delivered to the proper officer; that the officer levied the executions upon ten shares of capital stock of the Brookville National Bank; that the said stock was duly advertised for sale; that the officer demanded access to the books of the bank for the purpose of making sale of said stock; that his demand was met by a refusal; that John Masters and John G. Adair claimed to be the holders of mortgage liens on said stock; that they foreclosed said liens, and that Henry C. Kimball claims to be the owner of said stock by purchase at a sale upon such foreclosure, and that his title is paramount to that lien of appellant’s executions.

The appellee, John Masters, answered in two paragraphs. The first is a general denial. The second alleges that prior to the issuing of appellant’s executions Herman Linck was indebted to him in the sum of $3,5U0; that to secure said indebtedness Linck executed to appellee a mortgage upon the said capital stock; that the mortgage was properly recorded on the 27th day of August, 1875; that on the 29th day of April, 1876, appellee obtained judgment against Linck for the indebtedness secured by said mortgage and a decree foreclosing said mortgage; that the judgment and decree is unsatisfied: that he has never prevented nor attempted to prevent a sale of the equity of redemption of the said Linck in the said capital stock.

The single question presented is the sufficiency of the paragraph of the answer under immediate mention, to which a demurrer was overruled by the trial court.

The position of appellants’ counsel is that no interest in the capital stock in controversy could be transferred by way of mortgage. The broad doctrine is asserted that interest in the capital stock of banking or other corporations can only be transferred upon the books of the corporation and in the manner prescribed by law. Starting from this assumption the appellants reason themselves into the conclusion that no interest in such capital stock can be transferred in any other way.

Shares of stock in a corporation are personal property. Tap-pan v. Merchants Nat. Bit., 19 "Wall. 490; Hobbs v. Westen Nat. Bk., 9 Rep. 467 (U. S. C. C.) § 5139, National Bank Act; Meyer v. Bank of Franklin, 57 Ind. 198. The general rule is that, “All property, real or personal, corporal or incorporal, may be the subject of mortgage.” 1 Hill. Mort. «4. Hermann says, Everything which may be considered property, whether by the technical language of the law denominated real or personal, may be the subject of a mortgage.” Hermann Chattel Mortg. § 36. In another section of the same work it is said that choses in action may be mortgaged, and among the various kinds are enumerated “ stock in corporations, bank shares, and shares in a public library.” Ibid. § 8 ; Sherman v. Dodge, 28 Vt. 126. The stock was the subject of mortgage, and the mortgage executed to the appellee conveyed a valid lien.

John B,. McMahan and Thomas H. Smith, for appellant.

Berry & Berry, for appellee.

The appellee’s answer does not assert that he is the owner of the stock, but that he has a lien paramount to that of the appellants’. There can be no doubt as to the right of appellants’ to seize and sell Linck’s equity of redemption. But that is not the point in controversy here. The right asserted by appellants’ is to have the lien of their executions declared to be superior to the lien of appellee’s mortgage. They claim a greater right than the law will award.

Judgment-creditors have a right only to such interest as the debtor had in the property when the lien attached. Monticello Hydraulic Company v. Lowry, this term. When the lien of the appellants’ executions attached, Linck, the execution-debtor had only a mere equity of redemption, and this was all the executions could reach.

The decree of foreclosure did not merge the lien of the appel-lee’s mortgage. The decree preserved and enforced this lien. It would be rank injustice to permit judgment-creditors to break the continuity of a mortgage lien by treating the judgment as merging the mortgage lien and supplanting it with a new one springing into existence with the decree. The great weight of authority is against such a doctrine. Evansville Gas Light etc. Company v. State ex rel, this term; Teal v. Henchman, 69 Ind. 385.

Judgment affirmed.