Court Opinion

ID: 8000516
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:48:52.791928+00
Date Added: 2024-06-11T16:35:42.434045
License: Public Domain

NaptON, Judge,
delivered the opinion of the court.
The facts of this case, as assumed in the petition, are these: Somerville and Ray were partners. Anthony, the plaintiff, was security for Somerville for about1 $804, and Ray was also his security for about $695. Somerville, to secure these liabilities, executed to Anthony and Ray a mortgage of his interest in the partnership effects, consisting of lands, moneys, goods, accounts, &c., with authority in Anthony and Ray, or either of them, to take possession, and, in the event of Somerville’s not paying off these debts for which the mortgagees were bound as securities, to apply the property or its proceeds to their payment. At the same time Ray gave to the plaintiff a separate obligation in writing, agreeing that the debt for which plaintiff was bound should be first paid out of the mortgaged property, and Anthony the plaintiff received also the verbal assurances of Ray that this property was amply sufficient for this purpose. Ray took sole possession of this property. The note for which plaintiff became security has been long since due, and Ray has paid no part of it, but has, it is charged, paid off a portion of the $695 note with it, and refuses to give any account of the partnership. Somerville is insolvent. The prayer is for discovery of the condition of the partnership, the amount of the mortgaged property, what has become of it, and an appropriation, or security for its due appropriation, to the payment of the $804 debt. To this petitiou there was a demurrer and the demurrer was sustained.
The principal objections to this petition are, that Somer-ville is an improper party; that there is no allegation that plaintiff has himself paid off the $804 note ; that the mort*113gage was void for uncertainty ; and that the bill is a fishing bill, pot sufficiently pointing out any substantial grounds of complaint, or showing very clearly what distinct relief is desired.
In relation to the alleged invalidity of the mortgage, it is sufficient to say that the defendants are not entitled to any such defence. One of them, Somerville, is the mortgagor, and the other is the mortgagee, and took possession of the property and undertook to discharge the trust. It certainly is not competent for Ray to allege the invalidity of an instrument of which he has already availed himself, and under which he has acted, so far, apparently without objection. The creditors of Somerville do not appear to object, and it is not for the mortgagee or trustee and the mortgagor to make such an objection. Whether the description of the property is sufficient or insufficient is, therefore, a matter of no importance in this case.
We are not of opinion that it was necessary for the plaintiff to pay off the $804 debt before he could have the relief sought for in this petition. This is not a suit by a security to obtain a general judgment against his principal, in which he must of course first show that he has satisfied the debt. But the proceeding is to prevent anticipated mischief, some future injury to his rights. It is in the nature of a bill quia timet, of which Judge Story says : “ The object of the bill in all such cases is to secure the preservation of the property to its appropriate uses and ends, and, wherever there is danger of its being converted to other purposes, diminished or lost by gross negligence, the interference of the court becomes indispensable. It will accordingly take the fund into its own hands, or secure its duo management and appropriation, either by the agency of its own officers or otherwise. Thus, for instance, if property in the hands of a trustee for certain specific uses or trusts, either express or implied, is in danger of being diverted or squandered to the injury of any claimant having a present or future fixed title thereto, the administration will be duly secured by the court, accord*114ing to the original purposes, in such a manner as tbe court may, in its discretion, deem best fitted to the end — as by the appointment of a receiver, by payment of the fund (if pecuniary) into court, or by requiring security for its due preservation and appropriation.” (Story on Eq. § 827.) In this case, Somerville, the principal debtor, is insolvent, the debt has been due for some time, the mortgaged property has not been applied to its extinguishment, but on the contrary has been used to pay off another debt not properly chargeable to this fund until an entire satisfaction of plaintiff’s demand; and this is the only fund to which the plaintiff can look for relief. He has a right to see that it is duly administered by the trustee to whose charge it has been confided. He was a joint trustee himself with Ray, but he has thought proper to acquiesce in the exclusive possession and management of Ray; but by this course he has not lost his right to call upon Ray for an account of this trust. Whether the court would,, under the circumstances, appoint a receiver or not, can not be now foreseen. That is very much a matter of discretion with the court, and of course must depend on the facts which transpire at the hearing of the case. ,
Somerville was properly made a party, for two reasons : first, he may ultimately be entitled to any surplus of the mortgaged property, and, secondly, he has at all events a right, as the principal debtor, to see that his burdens are not improperly increased.
Upon the whole, we do not see any substantial objections to this petition, and think the defendants should have been made to answer. Judgment reversed and remanded;
Judge Richardson concurring.