Case ID: ohio-st_31/html/0036-01.html
Source: Caselaw Access Project
Author: {"author": "Welch, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Farmers National Bank of Salem v. Richard W. Teeters.
    1. A bona fide purchaser of a debtor’s land from a fraudulent vendee, without notice of the fraud, or of the rights of the creditor, acquires an equity superior to that of a creditor who obtained a judgment against the debtor, and levied his execution on the land, after the date of the fraudulent sale and prior .to that of the bona fide purchase.
    2. A surety of the debtor, who takes a mortgage for Ms indemnity as' such surety, is to be regarded in equity as a bona fide purchaser, within this ■ rule, and will be protected to the extent of his liability as surety.
    3. Such mortgage executed to one or more of several sureties on the official bond of an officer, inures to the benefit of all the sureties, as well to those who subsequently became such under an order of court requiring “additional sureities,” in pursuance of law, as to those who were sureties at the dale of the mortgage.
    MoTioN-for leave to file a petition in error to the District Court of Stark county.
    The original case was a petition filed by the Farmers National Bank of Salem against J. B. Nixon and his wife, to set aside a fraudulent conveyance of real estate made by-Nixon to his wife, and to subject the same to the payment of judgments which the bank had recovered against Nixon. Subsequently to the execution of the fraudulent conveyance, and to the recovery of the judgments and the levy of executions upon the land, Nixon and wife executed to C. K. Greiner and John Hunter, who had become sureties on his bond as guardian of a minor, a mortgage on the property, conditioned for the guardian’s discharge of his duties as such, and for their indemnification as such sureties, the sureties being ignorant of the fraud, and supposing the wife to be the bona fide owner of the property. At a still subsequent date, Nixon and his said sureties having become insolvent, the probate court ordered Nixon to procure “ ad-ditional sureties,” and the defendant, Teeters, became such additional surety, in like ignorance of the fraud, and relying upon Nixon’s “ assurance ” that the' mortgage would inure to his benefit and indemnity.
    Greiner, Hunter, and Teeters were made co-defendants, and Nixon, having become a defaulter to the amount of some $2,000 in his accounts as guardian, Teeters claimed the benefit of the mortgage made to Greiner and Hunter to indemnify him against this deficit, and that his equity in that behalf was superior and preferable to that of the bank. The court below allowed this claim and decreed accordingly, ordering a sale of the property, and in the distribution of the proceeds giving Teeters a preference as between him and the bank. It is now claimed that the court erred in giving-this preference to Teeters, and that the j'ugdmenl should be reversed on that account.
    
      J. T. Brooks for the motion.
    
      James Amerman contra.
   Welch, C. J.

We see no error in this decree. That a bona fide purchaser of a debtor’s property from a fraudulent vendee, without notice of the fraud, or of the rights ■of the creditors, acquires an equity unaffected by the fraud, is too well settled to need the citation of authority. Such was admittedly the character and position of the mortgagees here. They took their mortgage in the full belief that Mrs. Nixon was the bona fide owner of the land, and without any actual or constructive knowledge that it had been seized in execution as the property of the husband. As between the bank and the mortgagees, Greiner and Hunter, it is quite plain to us, therefore, that the latter are to be preferred, to the extent that they are or may be damnified by their suretyship.

But counsel contend, that even if such bo the law of the ease, the benefit of the mortgage can not be extended to Teeters, because he was not a party to it, and because Nixon’s verbal “assurance” at the time Teeters became additional surety, that he should have the benefit of the mortgage, can not have the effect to give him the status or rights of a mortgagee. We do not suppose that this assurance of Nixon had any effect whatever, at least not otherwise than as merely showing the good faith of the transaction. But we hold it to be a well established general rule in equity, that where a mortgage is executed, or caused to be executed, by the principal to one or more of several joint sureties, it inures to the benefit of all the sureties alike. And this is so because -equity regards the mortgage as a security for the performance of the promise, or. discharge of duty by the principal, as well as an indemnity for the sureties. It makes no difference, therefore, when the sureties become such, provided they all undertake for the same thing—for the performance of the same act or duty by their principal. All the sureties here undertook for the same thing, namely, that Nixon would 4 faithfully discharge his duties as guardian; ” and Teeters, and also the minor ward of Nixon are entitled to the benefit of the mortgage, equally as would be Greiner and Hunter, in case they should pay the debt.

Motion overruled.