Opinion ID: 1935867
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Heading Rank: 2

Heading: Plaintiff's Standing as a Creditor

Text: The defendant Micro Data contends the plaintiff has no standing to maintain a creditor's bill because of its mortgage on the First Cadco property in Lincoln, which gives it the status of a fully secured creditor. There is some evidence in the record which indicates that at the time the loan to First Cadco was made the Lincoln property had a value of $500,000. There is no evidence of its value at the time of the commencement of this action several years later. Whatever its value, the plaintiff apparently insisted upon personal guarantees and was not relying solely on its security. Micro Data's contention is not well taken. The fact that the plaintiff in a creditor's bill action does have security does not deprive it of its standing as a creditor under section 36-401, R.R.S.1943. Lincoln Trust Co. v. Sweeney, supra. Whether the creditor mortgagee will be required to first exhaust the property which it has taken as security before subjecting the fraudulently transferred property to satisfaction of its judgment lien is in equity a matter for the sound discretion of the court. Lincoln Trust Co. v. Sweeney, supra. The Nebraska statutes pertaining to mortgage foreclosures seem to contemplate that the mortgage foreclosure proceedings shall be stayed until the proceedings for the collection of the judgment in the law action have been completed and that judgment is satisfied in whole or in part. § 25-2143, R.R.S.1943. We find that under the circumstances of this case the plaintiff will not be required to exhaust its security by completing the foreclosure proceedings prior to further proceedings in this action. Other courts apparently have taken different views. See AnnotationFraudulent ConveyancesSecured Creditors, 116 A.L. R. 1048. There is an additional reason in this case why Micro Data's contention cannot prevail. During the course of these proceedings the plaintiff and Lukovsky entered into a settlement agreement which was in the nature of a covenant by plaintiff limiting its remedies and the properties to which it could have recourse. Under the terms of this agreement Lukovsky and his wife paid the plaintiff $100,000 in partial satisfaction of the judgment. The settlement agreement specifically provided that the plaintiff reserves the right to pursue all claims asserted by it against Micro Data Corporation and any property transferred to it by Charles C. Lukovsky, including the proceeds of any such property and any amounts or any property that may be found by the Court or by agreement of the First National and Micro Data Corporation to be due to Charles C. Lukovsky or subject to First National's judgment against Charles C. Lukovsky shall be subject to execution, garnishment or any legal process by First National. Provided, however, it is the intention of the parties hereto that the reservation provided pertains only to the property and the proceeds thereof now or at any time held by Micro Data Corporation and nothing herein shall be construed to give First National the right to pursue any other property of Charles C. Lukovsky. Any amount or property that may become available to First National through its prosecution of its action against Micro Data Corporation shall be the property of the First National and shall be applied toward the satisfaction of the judgment at Doc. 386 No. 98 in the District Court of Douglas County, Nebraska. By this agreement Lukovsky in effect waived whatever right he may have had to require the plaintiff to first exhaust its mortgage security. As a fraudulent grantee Micro Data's rights cannot rise any higher than those of the fraudulent grantor. We point out that if there is in fact a surplus in the First Cadco property Lukovsky as a paying guarantor would be entitled to reimbursement from the property mortgaged by his principal, First Cadco, to secure the debt which Lukovsky has in part paid. Micro Data also contends that the settlement agreement itself operates to completely deprive the plaintiff of standing because it is no longer a creditor of Lukovsky. It cites no authority. The provisions of the agreement which we have above quoted, plus those of which we will not make mention, defeat such a position. The agreement specifically provides that the judgment against Lukovsky is not satisfied until either (a) the pending actions are settled, or (b) the judgment itself is satisfied.