Case Name: John M. Felder vs. John D. A. Murphy, et al.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1845-06
Citations: 2 Rich. Eq. 58
Docket Number: 
Parties: John M. Felder vs. John D. A. Murphy, et al.
Judges: Before Johnston, Ch. at Lexington,
Reporter: South Carolina Equity Reports
Volume: 19
Pages: 58–63

Head Matter:
John M. Felder vs. John D. A. Murphy, et al.
Where a party mortgaged land to secure the payment of a bond, and afterwards became a bankrupt, and the land was sold by his assignee, held that the mortgagee had the right to foreclose the mortgage against tho purchaser from the assignee, although it appeared that he had sued and recovered judgment on the bond, and that the sheriff had sold other property of the mortgagor, and had in his hands sufficient of the proceeds to satisfy the plaintiff’s debt, it at the same time appearing that a junior judgment creditor of the mortgagor had, by proceedings in Equity, enjoined the plaintiff from receiving the money in the sheriff’s hands, until he should have exhausted his mortgage lien: held further, that the bill to foreclose was properly filed by the mortgagee alone, and that the junior judgment creditors of the mortgagor were properly not made parties, complainants, thereto.
Before Johnston, Ch. at Lexington,
June, 1845.
The Chancellor. This is a bill for the foreclosure of a mortgage under the following circumstances :
The mortgage (which is of certain real estate lying in Lexington District, more, particularly described in the pleadings,) was executed by the defendant, Murphy, then owner of the premises, to the plaintiff, on the 14th of April, 1839, the better to secure the payment of a bond cotemporaneously given to the latter, conditioned for the payment of a large sum of money in in-stalments ; upon which, as appears from the report of .the commissioner, there remained due on the 23d of June, 1845, of principal and interest, the sum of $3,452- 04, of which amount, the sum of $2,818 72 was to bear interest from that date.
Some time in 1843, upon an application of the said defendant, he was declared a bankrupt, under the Act of Congress, then recently passed, and the defendant, Pooser, was appointed his as-signee, and took upon himself the duties of his ’trust. In August of that year, under an order of the district court, he advertised the property of his principal for sale, and on the 4th of December following, in conformity to his advertisement, proceeded to make sale of the premises included in the plaintiff’s mortgage. It is charged and proved, that the plaintiff attended on that occasion, and forbade the sale, and gave explicit notice of his lien. Nevertheless, the sale proceeded, and the premises were bid off by the defendant, Hilliard, at a very inconsiderable price : the diminution being occasioned, as Mr. Stroman, a most respectable witness, testifies, by the incumbrance ; but for which he, himself, would have given a large sum -for the property.
It was not pretended, at the hearing, that the lien of the mortgage was divested by the assignment, or salé in bankruptcy: and, indeed, the Act of Congress expressly reserves the liens of mortgages and judgments.
It will not be denied, that the property of a debtor in the hands of his alienee, is still liable to all legal incumbrance which attaches to it in the hands of the debtor himself; and that all pre-existing equities of which the alienee has notice at the time of the alienation, attend the property into his possession.
But the defence here takes other grounds : and they were argued with a sincerity which I cannot doubt: although I have not been convinced of their sufficiency.
A great many judgments and executions were obtained against Murphy, the debtor, from as early as February, 1841, down to the 'middle of October, 1843. The plaintiff himself, had in March 1842 taken a confession and entered up judgment and execution for the instalments then due. Murphy was in possession of a large property, real and personal, in Orangeburg and' Lexington districts. Sometime before the assignee’s sale of the mortgaged premises, the sheriff of Orangeburg district had levied these executions upon part of his slaves, <fec. in his bailiwick, and sold a part, sufficient to raise a sum of money, which, if applied to the executions in their order, would have satisfied the plaintiff’s; and but a few days before the assignee’s sale aforesaid, he had levied on other property, and was about to make a further sale when one Phillip Chartrand, a junior execution creditor interposed.
This creditor, whose execution stood posterior to that of the plaintiff, filed a bill for the purpose of displacing the plaintiff’s execution, as against the unmortgaged property, until the specific lien of his mortgage should have been enforced and exhausted, upon the familiar equity principle, that a creditor having a lien common to himself and other creditors, and also a lien peculiar to himself, shall not be allowed to select the remedy, common to all, to the injury of other just creditors ; but shall be driven to his own peculiar remedy, so long as it can avail him; and only allowed to come back to the remedy common to all, when he has no other resort.
An order was passed, that the fund arising from the sheriff’s sale should be locked up from him until he shall have exhausted his mortgage lien.
Upon this statement, which, I believe, embraces all the facts relied on, it was contended that the plaintiff has no right to enforce his mortgage lien.
It cannot be said that his debt has been paid. That could not be, unless he had been allowed to receive the money under his execution ; but that is precisely what he was not allowed to do. He was in the course of enforcing his execution for that purpose, but was arrested in his course, and his remedy rendered fruitless.
A case has been .quoted, Davis vs. Barkley, 1 Bail. 140, to shew that the reception of the money by the sheriff was a satisfaction to him, because it was held at law, that such receipt satisfies the debt. And no doubt, when there is nothing to intercept it from the creditor, and nothing to rebut the presumption of its regular application, that is correct. But here the evidence is directly the contrary.
No doubt again, when the sheriff receives money, properly applicable to the demand of a given creditor, the debtor shall not be the loser, though the sheriff fails to pay it over. But here the debtor will not lose, though the sheriff never pays the fund to the plaintiff; it stands to the debtor’s credit, and he has the benefit of every cent of it, in the application of it to other creditors.
But the real state of the case is this: that no disposition, whatever, has been made of the fund. It is yet in transitu, and it may be, that on a contingency yet to be determined, (I mean if the mortgaged property should prove insufficient,) a portion at least, of it, may be adjudged to the plaintiff; and in that case (where the principle contended for, will be truly applicable) the receipt of the sheriff will be a satisfaction of the plaintiff, even though the sheriff should prove a defaulter.
But give the argument what turn you may, it is a singular proposition to be urged to this court, that it is bound to pronounce a creditor satisfied, whom its own order forbade to receive the money.
Again, it is urged that it is not the plaintiff’s right, to come here by himself, while he has a sufficient lien in another court. The evidence is, that his lien there is not sufficient. If I understand the argument, however, it is rather this:
That as the resort to this court on the score of the mortgage, is not for the peculiar benefit of the plaintiff, but for that of the other general creditors, it is not he, but they who should have filed this bill; at least, that they should come in with him.
I may misconceive the argument: but if this is its tendency, (and I can make nothing else of it,) neither reason nor authority has been brought to support it.
Shall we say, in every case where creditors drive one of their companions from a general to a specific remedy, that they must either enforce it for him, or go with-him to see it done? And if not in all cases, why' in this ? For what purpose should the other creditors join in the bill ¶ Certainly not for the purpose of shewing the existence of the mortgage. That the plaintiff is as competent to establish as they. Nor for the purpose of shewing an insufficiency of funds to p'ay all without resorting to the mortgaged property. That too, he is as fully competent to prove as they can be ; and he has proved it; if, indeed, it were not necessarily implied in the bankruptcy 'of the debtor. In short, what earthly functions would the other creditors subserve in this Court, which the plaintiff cannot accomplish ?
Prima facie, the mortgaged property is liable to the mortgagee, whether he have another remedy or not. That is the import of the mortgage contract. If the alienee of the mortgaged premises can point out other property liable to the debt, and sufficient to pay it, he has a right to turn the creditor to that in the first instance ; but that must be so, always, upon the supposition that the creditor, thus turned round, is not made to disappoint, or come in conflict with other creditors having equal equities with the alienee himself.
It may be in this case, that if the plaintiff be allowed to raise his whole debt out of the mortgaged land, the proceeds of the other property may exceed the amount of the general liens ; (the plaintiff’s execution being out of the way) in which case, Hil-liard will have been deprived of part of his purchase without necessity.
But if he has any reason to apprehend this or any other circumstance calculated to reduce the amount of his liability, this is matter of defence, and it is for him, and not for the plaintiff to bring in the parties necessary to make it out.
There was one point of the defence which I excluded, by overruling a motion to continue the case for the absence of the witness, who was to prove it.
Chartrand was summoned to prove that his bill was filed at the plaintiff’s instance ; and if that evidence should have affected this case, I was wrong, and have excluded the merits of the case. I state this for the benefit of the defendants.
But I could not conceive that the plaintiff’s right could be impaired by his voluntarily doing what this court would have compelled him to do.
Chartrand was not summoned to prove that the statements of his bill were untrue, but to prove that, under a given state of facts, admitted to be true (and proved to be true in this case) Felder had voluntarily yielded to the equities arising from those facts. I did not, and do not conceive that this was a good de-fence.
Suppose the other creditors were co-plaintiffs, would it be a defence to this bill that they came in at Felder’s instance ?
It is ordered and decreed, that the commissioner’s report of the mortgaged debt be confirmed : and that unless the defendant shall, on or before the first day of March next, pay the same, with the interest thereon, according to the report, the mortgaged premises described in the pleadings, be sold by the commissioner, after duly advertising the same twenty-one days, for cash or on credit, as the plaintiff shall direct, for satisfaction thereof; the residue of the proceeds of sale, if any, to be paid to the defendant, Hilliard, and that the defendants pay the costs; for which the said Hilliard is, as among themselves, to be primarily liable.
Th'e defendants appealed, on the following grounds :
1st. That the mortgage of the complainant was satisfied before his bill was filed to foreclose the same.
2d. That even if it should be considered that the levy and sale by the sheriff under the executions at law, of the complainant, for the same debt which was secured by the mortgage, —and the collection by the sheriff of more than enough to satisfy the same, was not an extinguishment of the mortgage;— still, the facts of the case did not warrant any application to the court of equity to foreclose the said mortgage in favor of the other judgment creditors of Murphy; — inasmuch as the mortgaged property was as subject to their executions, if the mortgage was discharged, as it could have been at any time to the said mortgage, and the proceeding was altogether unnecessary and vexatious.
Northrop, for the defendants.

Opinion:
Curia, per JohnstoN, Ch.
This court feels no hesitation in affirming the decree and dismissing the appeal: and it is so ordered.
Johnson, Harper and Dunkin, CC. concurred.