Court Opinion

ID: 7181642
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:48:44.034621+00
Date Added: 2024-06-11T16:15:56.038569
License: Public Domain

Same Case — Application por a Ee-hearínc’.
ON an application by the counsel of the appellant for a re-hearing, the opinion of the court was delivered by
Eustis, C. J.
By the petition for a re-hearing which has been presented by the counsel for the third opponent, we are led to believe that we have not succeeded in making ourselves understood in the opinion which has been delivered ; and as the question involved is one of practice, it is very desirable that no mistake, or difference of opinion, should exist as to its extent and meaning.
In the case of Larthet v. Hogan and others, it was determined by this court, that when the property of one against whom a judgment has been rendered, appears to be subject to privileges or mortgages, the judgment creditor, as incidental to the right of having the property sold for the payment of his debt, has-a right to call upon the creditors claiming such privilege or mortgage in preference over his debt, to show cause why it should not be erased, and that this maybe done by way of rule, and to this rule the creditor so called upon is bound to-plead.
We by no means decided thereby that, with this proceeding the litigation* concerning all such privileges or mortgages was tobe cumulated, and that the' right of a trial by jury was to be taken from a party entitled to it, or that of having his right as a creditor tested before any other competent tribunal, by connecting it with the cause in which the rule was taken. But we decided that the party should be bound to plead, and, if a- sufficient reason should not be alleged, the court was authorised to order, the privilege- or mortgage- to be erased,, in order to enable the sale to be effected: under execution,■ The object to be-obtained was to compel the creditor elaiming:an apparent charge- upon the property subject to execution,- to vindicate his-right to determine the validity of his-claims by suit, but not to oblige him to litigate them in the suit in which he is - called upon to answer, if he have, from the nature of his case or otherwise, a-substantive right to litigate them in another form, or before another tribunal.
In this case the dispute between the parties is as to their- respective-rights- as- mortgage creditors, on the proceeds of: property sold under execution ; and we held that the court having, the eontrol over the fund did! not necessarily have the exclusive jurisdiction over the right of the parties growing .out of their different claims, but only the disposition of the fund after they should be determined according to law. The case of reserved dividends of bankrupt estates, which is familiar to the profession, is an illustration of the-idea whick we intended to carry out.
We say, the creditor claiming a preference by mortgage or privilege, when called upon, is bound to plead. The pendency of a suit in which the validity of his debt, mortgage, or privilege is involved, would be a good plea, and would arrest the distribution. But the court can compel the creditor to litigate, or erase from the records an encumbrance, whieh the party refuses judicially to-assert.
Proceedings of this kind, as we have said in Larthet's case, are authorised, as we conceive, by the Code of Practice, and are required by public policy, which forbids that records, which are ordained and established in the interest of bond fide creditors, should be made to perpetuate and keep alive encumbrances which have no existence except for purposes of collusion and fraud.

Ile-hearing refused■