Court Opinion

ID: 6235498
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:31:34.715963+00
Date Added: 2024-06-11T08:58:02.271611
License: Public Domain

Mr. Justice Woodward
delivered the opinion of the court,
Mr. Piatt’s claim to control the fund for distribution by the auditor rested exclusively on the lien of his judgment against Stark. His rights stood on no higher ground than those of Wall and of Bunnell & Co.j the assignees of Reed, the other judgment creditors. Reed’s judgments were founded on notes amounting to $4250, which Mr. Piatt had guarantied. To secure him for this guaranty Stark executed to him a judgment note for the same amount. The cotemporaneous agreement explanatory of the transaction which Mr. Piatt signed, contained this provision: “If said Stark pays said notes, then the judgment of $4250 is to be cancelled by said Stark paying the costs.” Judgments were entered on the three notes to Reed, on the note to Piatt, and on a note to Wall for $360(5, on the 29th of March 1872. When the distribution was made, the amount due to Reed’s assignees was $945.97, and the amount due *103to Wall was $2111.30. The balance of the fund after satisfying prior liens, was $1455.16. Of this balance the auditor appropriated $945.97 to the payment of the sum remaining due to Bunnell & Oo, assignees of Reed; $4.25 to the costs of the Piatt judgment; and $505.94 to the judgment of Wall.
By express stipulation, the note to Piatt was given to protect him against the identical debt represented by the three notes which Stark had executed in favor of Reed. Confessedly, payment in full of the principal debt would have worked the satisfaction of the cumulative security. Credits on account of the one, therefore, were necessarily credits pro tanto on account of the other. There was due to Bunnell & Co., as assignees of Reed, the sum of $945.97 at the date of the sheriff’s sale. For that sum only was Mr. Piatt then liable as guarantor. If the fund had been such as to permit the legitimate appropriation of the balance due them to Bunnell & Co., the whole original indebtedness would have been satisfied, with the effect of extinguishing at once the ancillary and the principal judgments. The parties stood, then, as if the $1456.16 for distribution had been claimed by one creditor under a judgment for $945.97, and by another creditor under a judgment for $2111.30, with liens of a common and equal date. And so standing, their rights obviously consisted in a pro rata appropriation of the fund.
While the views of the auditor were not fully developed, his 'decision was apparently controlled by the principle settled in a class of cases extending from Morris v. Olwine, 10 Harris 441, to Bair and Shenk’s Appeal, 1 Norris 113. In each one of these cases, however, the question decided involved the rights of creditors under a voluntary assignment; and in each case it was held that the assignment created a right of property and not a lien. Thus it was said in Miller’s Appeal, 11 Casey 481, that “ a creditor is entitled to a dividend under an assignment, not, merely as a creditor, but as an equitable owner of the assigned estate; and the extent of the ownership is fixed by the amormt of the claim when the assignment was made.” It is manifest that no element is embraced in the present case to warrant the application of the principle of Morris v. Olwine and Miller’s Appeal in its determination. On the contrary, it is within the rule of Smith’s Appeal, 24 P. F. Smith 191. There one Herr had sold to Smith four bonds of Grerth and guarantied their payment. Herr made an assignment for the benefit of his creditors. Smith received the amount of one bond by a sale of Grerth’s property. It was held that he was entitled to a dividend only on the three bonds unpaid. “The satisfaction of the judgment out of the proceeds of the sheriff’s sale,” Mr. Justicé Williams said, in entering the judgment of this court, “ extinguished the obligor’s liability for the whole debt for which it was obtained; and it follows as a necessary corollary that the assignor’s liability on the contract of guaranty was also extin*104guished.’] The appellee here relies on his simple lien, and his case is not so strong as was that of the claimant in Smith’s Appeal, who asserted the rjghts of an equitable owner under a voluntary assignment. It is indifferent that Mr. Piatt’s demand was made under a single judgment. He held it to indemnify himself against liability on his guaranty of the three judgments Stark had confessed to Reed, and of these two had been fully paid. In adjusting the equities of parties litigant, the law has regard to substance and not to form.
The decree of the Court of Common Pleas is reversed at the costs of the appellee; and thereupon it is ordered and adjudged that the sum of $1456.16, being the amount of the fund in controversy, be appropriated fro rata to the judgment of Thomas B. Wall, No. 335, April Term 1872, on which the sum of $2111.30 remains unpaid; to the costs, amounting to $4.25, of the judgment of William M. Piatt, No. 337 April Term 1872; and to the judgment of O. J. Reed, assigned to E. C. Bunnell & Co., No. 340, April Term 1872, on which the sum of $945.97 remains unpaid.