Case ID: h-g_2/html/0473-01.html
Source: Caselaw Access Project
Author: {"author": "Martin, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Hoye vs Penn.
    June, 1828.
    Where a creditor has a right to resort to the joint and several funds of two debtors for the payment of his claim, the court of chancery has no authority to limit that right, and to decree, that if the funds of one of the debtors shall not be sufficient to discharge one-half the debt, the creditor shall not look to the other debtor for the deficiency.
    Arpead from the Court of Chancery. On the 24th of March 1812, certain real estate, conveyed to Charles Penn and JOfe* 
      
      -than Waters, was by the court of chancery decreed to be sold, or so much thereof as would raise the sum of £’934 10 9J, With interest from the 1st of May 1802 till paid, and the costs ’of the suit, and the amount of the trustee’s commission as far as the same could be estimated; and in determining on the quantity of each part to be first sold, the trustee should sell the land held by the heirs of Penn, in the first instance, to raise one-half of the debt, costs and commission, and should sell the land devised to Nathan Waters, in the first instance, to raise the other half, as far as that way might be found practicable; but with power, according to the decree, to raise the amount by a sale of the whole at a succeeding period, if it could be done, or in the first instance, if it should appear absolutely necessary. The report of the trustee stated, that a sale was made on the 23d of Noyember 1818, and that he'had sold the whole of the •lands decreed to be sold, for the sum of $10,711 50, to various purchasers, and among others, part of Snowden’s Second Addition to his Manor, containing 260 acres, to James Ferree, for $6,500. On the 26th of January 1819, the report of the trustee was confirmed. On the 26th of February 1819, the auditor made his report, and stated an account between the estate of Penn and Waters, and the trustee, in which the proceeds, of the sale of each estate wére applied to the payment of one-half of the complainant’s claim, &c. and the balances respectively distributed to Nathan Waters, and the representatives of Charles Penn, deceased, viz. $1,306 04, to be distributed to the representatives of Penn, and $3,515 06, t© Waters. The auditor’s report was ratified by the chancellor, and the proceeds directed to be applied accordingly, &c. 0» the 25th of October 1823, James Ferree, one of the purchasers of part of the land sold by the trustee, with his sureties in the bond by him given for the purchase money, and the said trustee, filed their petition, in which they stated, that the bond s® • given by Ferree had been sued — -judgments thereon obtained, and fieri facias’s issued on the judgments. That Ferree had sold his right to the land to one of his sureties, and that the sheriff, being unable to find any other property of Ferree and his sureties, had levied the execution on the land purchased as aforesaid, and that if the land was sold at the sheriff’s sale fe easb, the debt could not be raised-, &e. They prayed- that the land might be sold on a credit. The chancellor, by his order of the 25th of October 1823, stated that the trustee was authorised to suspend the sheriff ’s sale, as he was the legal creditor, and had control over the judgments, and could give such directions as should appear most advisable. That as the trustee,, through whom the legal title must pass, believed it would be most advantageous for the property to be sold by the trustee, any sale which should be made, not prejudicial to the interest of the complainants, would be confirmed. The trustee afterwards reported, that he had suspended the executions on the judgments against Ferree and his sureties, and had himself, on the 7th of June 1824, sold the land formerly purchased by Ferree, to John Hoye, for $4,275. On the 9th of June 182.4, the original complainants, to satisfy whose claims the original decree-for a sale of the lands of Penn and Waters was passed, petitioned the chancellor, stating that the land decreed to be sold,, as belonging to Nathan Waters, and resold, would be insufficient to pay one half of the complainants’ debt, &c. and wishing, in that case, resort should be had to Penn’s estate, and praying that no payments should be made- to the representatives of Penn until the debts of the complainants, should be paid. On this petition the chancellor ordered, that the trustee should make no further payments to the representatives of Penn, without the further order of the court, &c. On the 28th of February 1825, the Chancellor, Bland, passed the following order: In this case the lands of two debtors, Waters and Penn, have been sold under a decree of this court, to pay the proportion due from each of a joint debt. The proceeds of the sales, thus made, were reported to be more than sufficient to answer the whole demand. The securities for the purchase money were the lands themselves, and the purchasers with personal securities. The purchaser of Waters’s land being, as is alleged, unable to pay, or insolvent, that land itself was again gent into the market, but owing to the general depreciation of such property, it has not sold for any thing like the original purchase money, or indeed a sufficiency to pay the proportion of the debt with which Waters was charged. But when this property was taken out ef the bands of Waters, and sold, the parties .tacitly conceded, and the court solemnly adjudged, by confirming the trustee’s report, that a sufficiency of Waters’s property had been taken to pay the debt due from him. This debt, as to him, was then satisfied; for the property being under the control, or having been disposed of by the court, he, the original debtor, was not the guarantee of its sufficiency or safety, and consequently cannot be held liable for any loss that has happened to the fund, which has been so taken into the eustody of the court. To seize any more of Waters’s property in such case would, therefore, be to make him pay his debt over again. But it is said there is an unappropriated surplus of the proceeds of Penn’s property in court, and that Penn and Waters, being jointly liable, this surplus may be applied to make good the ultimate deficiency in the proceeds of sale of Waters’s property. Now if it would be unjust, as we have seen, to take any more of Waters’s property to make good this deficiency, it cannot be at all equitable to take Penn’s property for that purpose, since Penn and Waters, as to this debt, being jointly liable, are as one and the same debt- or, and consequently Penn’s property could not be touched on any principle which would not in like manner authorise the taking of Waters’s property. The confirmed report of the trustee shows that more than enough of Penn’s property liad been sold, and consequently he is a claimant to the amount of the surplus stated to have arisen from that sale, and is, in that respect, a creditor of the fund taken by the court, who must be permitted here to stand upon as high ground as any oí those creditors who brought him here as a defendant, and whose claims the court has taken this his property to satisfy; and, therefore, if there should be any deficiency, in collecting the proceeds of the property of Penn, which has been sold, such loss must be borne pro rata; that is, by Penn in proportion to his surplus, and by his creditors in proportion to their several established claims. It may then be regarded as a general rule, that where the property of a debtor has been sold under a decree to pay his debts, and the report of the trustee, as finally ratified, shows that enough of the debtor’s property has been taken and sold fully to satisfy such claim, the debt, as relates to the debtor, must be considered as satis-. tied. And no subsequent failure, from any cause whatever, in collecting the full amount of the proceeds of such sale, can justify the original creditor in again resorting to his debtor, and making a further seizure, after his property had been thus taken and sold. Therefore, it is ordered and adjudged, that the several receipts or assignments of the respective representatives of Penn, shall be and are hereby allowed in favour of the assignee claiming under them; and that the trustee apply the proceeds, as heretofore directed by an order made on the 29th of January 1823, ratifying the auditor’s report. And further, that the petition of Hoye and others, be and the same is hereby dismissed. From which decree or order Hoye, one ®f the petitioners, appealed to this court.
    The cause was argued before Buchanan, Ch. J. and Eaeie, Martin, Archer, and Dorsey, J. by
    
      Boyle, for the Appellant, and by
    Magruder, for the Appellee.
   Martin, J.

delivered the opinion of the Court. We cannot sanction the rule laid down by the chancellor in this case, and on which his last decree is founded.

The original decree directed, that the trustee should, in the frst instance, sell so much of the lands-of Penn as would be sufficient to raise the one half of the debt, and so much of the lands of Waters as would be necessary to make the other half; it further ordered, if a sufficient sum should not be produced by the first sale to discharge the debt, the trustee should proceed to sell the residue of the lands of both for that purpose. This course of proceeding was directed for the benefit of the debtors, as a matter of equity between them, but not to operate ultimately to the prejudice of the creditor. It was a joint-debt due by Penn and Waters, each party was answerable for the whole; and we think it a clear position, that w'here a creditor has a right to resort to the joint and several funds of two debtors for the payment of his claim, the chancellor has no authority to limit that right, and decree, if the funds of one debtor shall not be sufficient to discharge the one half of the j|ebt, the creditor shall not look to the other debtor for the deficiency. In this case all the lands of both Penn & Waters v/cre sold under the decree, and a fund, more than sufficient to pay the debt, was produced by the sale. Whether this sum’ was made from the sale of Penn’s lands, or Water’s lands, is a matter of no import to Hoye. He is not interested in the inquiry. There is a fund in the hands of the trustee, or court of chancery, from the sale of lands answerable for his debt, and he is entitled to the whole amount of it, before the representatives of either Penn or Waters can have a claim to any part.

It has been contended that the sale made by the trustee, and the report of the auditor founded on it, and directing how the supposed surplus should be disposed of, having been confirmed by the chancellor, Hoye is concluded by it — that he is now too late — he ought to have made his objection before the confirmation, and while the subject was open for examination. This would be requiring an impossibility of Hoye. ,/2t the time the sale of the trustee and report of the auditor were confirmed, it was not known any objection against the proceedings existed. The inability of the purchaser of Waters’s’ land to pay, did not then appear, nor was it disclosed until long after the confirmation. No laches, therefore, can be imputed to him; and it would be a strange system of equity, t© deprive a man of his debt for not making a defence, at a time ijr/hen no defence existed,

DECREE REVERSE»,