Case ID: sc-eq_20/html/0173-01.html
Source: Caselaw Access Project
Author: {"author": "Dunkin, Ch.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bank of Hamburg v. Howard & Garmany.
    
    
      A party indebted to the Bank of Hamburg mortgaged his real estate to secure the payment, and afterwards sold certain negroes to the defendants — he then confessed a judgment to the Bank for the debt secured by the mortgage of .the real estate, under which it was sold by the Sheriff and purchased by the Bank. It was subsequently discovered that there was a judgment in the office against thé mortgagor, older than that under which the real estate had been sold; the Bank then ordered the negroes to be sold to satisfy this judgment — defendants then, to protect their purchase, executed a forthcoming bond to the Sheriff, obtained an assignment of the judgment, and instituted a suit at law and obtained ajudgment against the Sheriff for so much of the amount of the sales of the real estate as would satisfy the said older judgment. The Court ordered and decreed, that the defendants be perpetually enjoined from prosecuting their judgment at law against the Sheriff, and that they pay the cost of these proceed- • ings.
    
      If one against whom there is a judgment, sell a portion of his property, and afterwards sell his remaing property, the property last sold is first chargeable, in equity, with the payment of the judgment debt.
    
      Before Dunkin, Ch. at Edgefield, September, 1846.
    Dunkin, Ch. The material facts of this case are detailed in the pleadings. The argument of the complainants is, that they are entitled, under the circumstances, to have the case considered as if the execution of C. M. Furman, Cashier, was still in full force — that the negroes, purchased by Howard & Garmany from their co-defendant, or his vendee, Holmes, in the Spring of 1840, were subject to the lien of Furman’s execution, but that they were not subject to the lien of the complainants’ execution, entered in October, 1840, — that Furman’s execution having a lien on the negroes as well as on Sullivan’s real estate, and the complainants’ judgment having a lien on the latter fund only, the complainants have an equity to require that Furman’s execution should be satisfied from the negroes. The general principle is fully considered and recognized in Aldrich vs. Cooper, 8 Yes. 382. But the Court is not aware that it has been enforced to the prejudice of third persons, who were bona fide purchasers. In Aver all vs. Wade, 10 Eng. C. C. R. 498, Sir Edward Sugden declined to throw the prior judgments on a settled estate for the benefit of judgments subsequent to the settlement.
    But there is another ground on which the complainants’ claim to the interposition of this Court must be considered. The execution of Furman was lodged in November, 1837.— Prior to October, 1839, H. W. Sullivan conveyed his real estate to the complainants, for valuable consideration, by way of mortgage. In the Spring or Summer of 1840, he sold the negroes now in possession of the defendants.
    In Clowes vs. Dickenson, 5 J. C. R. 235, the relative rights of successive purchasers from an embarrassed vendor were much considered by Chancellor Kent. From the principles established in Sir William Harbut’s case, (3d Coke, 116,) he deduces these conclusions, viz: “ If there be a judgment against a person owning at the time three acres of land, and he sells one acre to A, the two remaining acres are first chargeable in equity with the payment of the judgment debt. If he sells another acre to B, the remaining acre is then chargeable, in the first instance, with the debt; and, if it should prove insufficient, then the acre sold to B ought to supply the deficiency, in preference to the acre sold to A.: because when B purchased, he took his land chargeable with the debt, in 'the hands of the debtor, in preference to the land already sold to A.” He says further that “it cannot be in the power of the debtor, by the act of selling his remaining land, to throw the burden of the judgment, or a rateable part of it, back upon A.” In that case, too, the Junior purchaser had become the owner of the judgment, and had, under it, caused the land of the elder vendee to be sold. On this transaction the Chancellor remarks, “ But the purchasers under that sale have since acquired the ownership of Kimberly’s judgment, and wielded it with a very inequitable hand. They have, by execution under it, sold the lots of the plaintiff, and purchased them in for their common benefit. As owners of Kimberly’s judgement they have sold the plaintiff’s lots in part satisfaction of it, whereas it ought, in justice and equity, to have been entirely and exclusively satisfied out of the residue of the property of U, of which the defendants were themselves the subsequent purchasers.”
    In principle, the Court is unable to distinguish this case from Clowes vs. Dickenson. When the defendants purchased the negroes, they took them, in the language of Chancellor Kent, chargeable with the payment of the execution “in preference to the land already sold to the complainants.”— Their subsequent proceeding in purchasing the judgment of Furman cannot change or extinguish this equity of the complainants. The defendants were clearly entitled to their judgment at law against the Sheriff. The relief of the complainants is of peculiarly equitable cognizance, and depends on the application of principles proper to this tribunal.
    It was suggested that the complainants had not exhausted the real estate specifically mortgaged to them — that there were still fifteen acres of pine land which had not been sold.
    The facts in relation to this matter seem to be as follows: The fifteen acres are a piece of pine land at a short distance from Hamburg. It was part of the land mortgaged to the complainants — and was also, as the Court understood, included in a mortgage from Sullivan to Fair & Covington, dated 10th February, 1839, which latter mortgage was either the property of the Bank, or they had paid the debt to secure which it had been executed. On the 19th June, 1840, Sullivan, with the consent of the complainants, sold the fifteen acres of pine land to Hiram Hutchinson, for one hundred dollars. The conveyance from Sullivan to Hutchinson was'adduced in evidence.
    Afterwards, and after the Sheriff’s sales, to wit: on the 12th August, 1842, the Bank of Hamburg, reciting the premises, that the sale had been made to Hutchinson, with the knowledge and consent of the Bank, and that they had received the purchase money, and also, that they had bought the whole property at Sheriff’s sale, on 5th January, 1842, released all their interest, or claim, in the said fifteen acres to the said H. Hutchinson. It was said that so much of the recital was erroneous, as stated that the'se fifteen acres were sold by the Sheriff to the Bank. It is not perceived that this would alter the result. Hutchinson paid the Bank a fair price for the land in the condition in which he bought from Sullivan, and the money was applied to his debt to the Bank — -making this and all other deductions, the balance due on the debt of Sullivan to the complainants is about fourteen hundred dollars, with interest from 1842. If the defendants are permitted to enforce their judgment, it would increase the loss of the complainants by the amount thus recovered.
    It is ordered and decreed, that the defendants, John Howard and G. W. Garmany, be perpetually enjoined from prosecuting their judgment at law, against the said Simeon Christie, the late Sheriff; and that they pay the cost of these proceedings.
    The defendants appealed from the decree in this case, and moved the Court of Appeals to reverse the same, on the following grounds:
    1. Because all the rights and claims of the complainants asserted in their bill were barred by the Statute of Limita- . tions.
    ■ 2. Because the complainants have no equitable right to insist that the negroes purchased by the defendants of Holmes and the Sheriff, and which they held for more than four years before the filing of this bill, are liable to the satisfaction of Furman’s execution, at all, and especially so until the real estate embraced in the mortgage to the complainants, including the improvements of H. Hutchinson, which were put up after the sale of the negroes, by Sullivan to Holmes, and by him to the defendants, and with full knowledge of such sale, has been sold and applied to the satisfaction of their claims.
    3. Because, in the most favorable aspect of the case for the complainants, the equities of the parties were no more than equal, and for that reason, and upon the pleadings and proof, the bill should have been dismissed.
    Griffin & Wardlaw, for motion.
    Bauskett, contra.
    
   Dunkin, Ch.

delivered the opinion of the Court.

In order to understand the judgment of the Court, it is necessary to state that H. W. Sullivan was a merchant of the town, of Hamburg. Being indebted to the Bank of Hamburg in about the sum of ten thousand dollars, he, on the 6th .Tune, 1839, mortgaged to them his real estate, consisting of four lots in the town of Hamburg, and two pine tracts in the neighborhood. In May or June, 1840, Sullivan sold to William Holmes the woman Mary and her two children, and in June Holmes sold them to the defendants, Howard <fc Garmany.— The defendants boarded with Sullivan, and the negroes remained as they had been previous to the sale.

On the 1st October, 1840, Sullivan confessed judgment to the Bank for ten thousand nine hundred and sixty-nine dollars, which was duly entered, and execution lodged on the same day. Under this execution, the Sheriff levied on the real estate, and sold it, on the 5th January, 1842, for eight thousand seven hundred and ninety-four dollars. The Bank of Hamburg were the purchasers, who gave a .receipt to the Sheriff, and credited their execution with that amount.

It was soon afterwards ascertained that there was in the Sheriff’s office an execution against H. W. Sullivan, of an elder date than that of the Bank, to wit: of the 2d November, 1837, in favor of O. M. Furman, Cashier of the Bank of the State, for about six hundred and fifty dollars, and which had been overlooked in the settlement between the Sheriff and the Bank of Hamburg. With the consent of the attorney of C. M. Furman, the Bank of Hamburg, on the 7th April, 1842, caused Furman’s execution to be levied on the negroes in the defendants’ possession. The defendants executed to the Sheriff a forthcoming bond. They then, to'wit: on the 20th August, 1842, paid Furman the amount of his execution, stayed all further proceedings in the case, and instituted a suit at law against the Sheriff for the amount of so much o'f the sales of the real estate as would pay the amount of Furman’s execution, and have obtained judgment against the Sheriff, which they are about to enforce.

On this state of facts the decree of the Circuit Court was pronounced. The defendants occupy a double character. — ' They are the assignees of Furman’s execution, and they are the purchasers of the negroes from H. W. Sullivan. It is not questioned that as between Furman, or his assignees, and the Bank of Hamburg, the equity is plain, and that, prior to the sale of the real estate in January, 1842, the Bank could have required Furman, having a general lien on the estate of the d.ebtor, to resort to his other property before interfering with their specific lien. But the defendants are purchasers, although of a subsequent date to the mortgage of the Bank, and it is insisted that there is no such principle as that indicated in the decree, and that the doctrine of Clowes vs. Dickenson is law only in New York, and has not been sanctioned by any decision in this State. This seems a misapprehension. The general principle was applied in Stoney vs. Shultz, 1 Hill C. R. 465. But in Gist vs. Pressly, 2 Hill C. R. 318, the doctrine is elaborately examined and affirmed both at the Circuit and in the Court of Appeals.— The complainants held the eldest mortgage against their debt- or on two negroes. The defendants held a junior mortgage of certain real estate. But there was an execution elder than both. Defendants, to save the property mortgaged to them, purchased the execution, and under it, sold the negroes mortgaged to the complainants — Chancellor Johnston held that the complainants were entitled to reimbursement out of the proceeds of the real estate mortgaged to the defendants. Chancellor Harper, in delivering the judgment of the Appeal Court, says “ the principles of the Chancellor’s decision are perhaps less distinctly seen, because the defendants, Allston and Hodges, sustain the characters both of senior execution creditors and junior mortgage creditors of the deceased John B. Pressly. If the execution creditors were different persons, and were now seeking to enforce their executions against the slaves in question, the plaintiff would have a clear equity to restrain them, and to compel them to resort to the property mortgaged to the defendants” — “ and if the executions had been enforced against this property, the defendants would have had no redress or claim for contribution against the plaintiff.” “The principle,” says he, “is.fully explained by Chancellor Kent in Gill vs. Lyou, 1 J. C. R. 407, and Clowes vs. Dickenson, 5 J. C. R. 235. When the intestate mortgaged (that is, conditionally sold,) the slaves to plaintiff, his execution creditors were bound, on equitable principles, to exhaüst the property which remained in his hands, before pursuing that to which plaintiff had acquired a title. Among this property was the land and mill and house and lot in question. When the intestate, afterwards, conveyed these to defendants, he could only convey them subject to the equitable burthen to which they were liable in his own hands.” In the language of Chancellor Kent, they sit in the seat of their grantor. The burden is that the property must be liable to the execution creditors in preference to that conveyed to plaintiff” The Court then proceed to determine that if the plaintiff omitted to restrain the execution creditor, but permitted his property to be sold, he was entitled to maintain his bill for reimbursement against the defendants.

It is urged, however, that the defendants, Howard & Gar-many, have held more than four years adverse possession prior to the filing of this bill. It would be very difficult, under the circumstances detailed in the evidence, to infer a title by adverse possession alone in the defendants as against the execution creditors of Sullivan. But in the view which the Court takes, this is not a material inquiry. The defendants purchased in June, 1840. On the 7th April, 1842, less than two years afterwards, the execution of Furman was. levied on the negroes in their possession, and they executed a bond to the Sheriff for their forthcoming, and then obtained the assignment and instituted their suit at law against the Sheriff, who is one of the parties complainant. It could hardly be said that their possession was adverse to the execution creditor, whose claim they thenceforth represented. But on the principles heretofore announced, as between the Bank of Hamburg and themselves, they did no more in August, 1842, than they were bound to do, by paying off Furman’s execution in order to protect their own purchase. The equity of the Bank did not arise until, in the language of Chancellor Kent, “the defendants attempted to wield this execution with a very inequitable hand,” by (substantially) enforcing payment out of the property mortgaged to' them. Four years had not elapsed since that time, and in no view could the complainants be barred.

If the slaves, Mary and her children, were not of value sufficient to satisfy Furman’s execution in April, 1842, it might be necessary to modify the decree, and limit the responsibility of the defendants in that way. But on this point it seemed to be conceded that there was no doubt, and that a reference would only serve to protract the litigation. It is, therefore, ordered and decreed, that the decree of the Circuit Court be affirmed, and the appeal dismissed.

Johnston, Ch. and Harper, Ch. concurred.

Decree affirmed.