Court Opinion

ID: 7895379
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:52:10.418158+00
Date Added: 2024-06-11T16:32:03.739730
License: Public Domain

Bartol, C. J.,
filed the following opinion, concurring in part and dissenting in part:
One of the questions raised hy the appellants’ exceptions to the auditor’s report, is as to the amount for which the Bank is entitled to prove against the mortgaged estate of George Wells. The solution of this «question depends *132upon the true construction of the agreement dated February 3rd 18T7.
The Bank having received from George Wells two mortgages for the purpose of securing the payment of his several debts and liabilities due the Bank, therein enumerated, upon some .of which he was principal debtor, and upon others surety, by the agreement assented that the appellants and others, unsecured creditors of George Wells, should have the benefit of the mortgage security held by the Bank. The object of the agreement as stated on its face was to effect “ an equitable distribution of the estate of George Wells among said creditors.”
It provided that the mortgaged property should be sold, and by the Mh Article, “ that the net proceeds of sale * * * shall be applied towards the pro rata discharge of the claims of the several creditors enumerated herein, the exact amount of the unascertained claims (meaning thereby all claims herein enumerated, except those named in said mortgages,) to be particularly ascertained in the progress of the cause.”
It appears that for some.of the liabilities of George Wells enumerated in the mortgage, upon which he was surety, the Bank held mortgages from the principal debtors.
It further appears, the property conveyed by these last mentioned mortgages had been sold, and a portion of these debts had been paid to, or received by the Bank out of the proceeds of these sales. Notwithstanding this, it appears by the auditor’s account, that in distributing the proceeds arising from the sales of the property mortgaged by George Wells, the Bank has been allowed a dividend upon the whole amount of the debts, without any deduction or abatement for the moneys received from the property of the principal debtors. It seems to me that in this respect, the auditor’s account is erroneous. If the fund in Court had arisen under a deed of trust from George Wells, for *133the benefit of his creditors equally, the equitable rule of distribution would require that the Bank should apply as a credit upon its claims against Greorge Wells where he was surety, any moneys actually received from the principal debtors in part payment of the debts, and it would he allowed to prove against his estate only for the balance.
This equitable rule is well' established by the authorities, and I do not understand that it is questioned by the appellee’s counsel.
• The same rule would apply, if the original mortgages had been made in favor of the appellants as well as the Bank.
This is precisely the effect of the agreement as I construe it.
It is argued that this equitable rule of distribution is to-be departed from in this case, because of the terms of the agreement, and to support this view the Ath Article before cited is relied on.
By this Article, it is said the right of the Bank was secured to claim under all circumstances, a dividend out of Greorge Wells’ estate, on the whole amount of the debts mentioned in the mortgage. I do not so construe it. The effect of this provision was to admit that his liabilities to the Bank were correctly stated in the mortgage, and to leave the exact amounts due from him to the other creditors to he thereafter ascertained, and to provide for a pro rata distribution among his creditors. If it had turned out that any of his debts to the Bank enumerated in the mortgage, upon which he was liable, as surety, had afterwards been actually paid by the principal debtors, it could hardly he successfully maintained that the Bank would he allowed to prove such debts and receive a dividend thereon. In the same manner, where a part of the debts has been paid by the principal debtors, or which is the same thing, has been in part satisfied out of the property of the principal debtors held by the Bank as security, it *134seems to me there is nothing in the agreement to entitle the Bank to prove against George Wells’ estate for the ■whole amount of the original debts. To give the agreement such a construction would defeat the end which it was intended to accomplish, and which is expressed on its face, viz., “ an equitable distribution of the estate of George Wells among said creditors.”'
Of course in all cases where he is the principal debtor, the right of the Bank is to prove for the whole, for the benefit of the sureties, who are parties to the agreement.
Eor these reasons I dissent from the opinion of the majority of the Court upon this question. In other respects I concur in that opinion.