Court Opinion

ID: 4011950
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:15:55.302961+00
Date Added: 2024-06-11T07:44:46.911751
License: Public Domain

While I concur in the views and conclusion expressed in the opinion delivered for the court by Mr. Justice Blume, as well as in the order to be entered as therein directed, I think attention should be called to certain facts of the procedure in the cause, including the terms of the judgment, to avoid any effect thereof as a precedent that our silence concerning the matter might be supposed to justify; but without deciding as to the propriety or sufficiency of such procedure. I think some doubt may reasonably be entertained respecting the remedy granted in the court below; viz: the cancellation of the mortgages executed by Primm to secure his individual debts, and making permanent the injunction against the foreclosure of said mortgages, without any order or proceeding for a sale of the property and disposition of the proceeds, or a marshalling of assets or liens.
The prayer of the amended petition upon which the cause was tried is that further proceedings for the foreclosure of the mortgage by defendant Hays  Co. be enjoined, as well as the collection of the debt secured thereby in any manner from the firm assets; that said mortgages, as well as the mortgage to the bank, be cancelled, held for naught, and an order entered clearing the record thereof; that the defendant bank also be enjoined from collecting its debt from the firm assets, and that all the proceeds of the real estate involved be declared an asset of the partnership and held for the payment of the judgment of the plaintiffs, and then to be applied to such other indebtedness as may be proper.
This prayer, upon a finding that the property was firm property to be first applied to satisfy firm debts, and that the mortgages were inferior to the claims or liens of partnership creditors, might be sufficient upon which to base a direction for the sale of the property and a disposition of the proceeds accordingly, or for a marshalling of assets or securities. See 30 Cyc. 536; Stowe v. Powers, 19 Wyo. 291, *Page 445 116 P. 576. But the findings were limited to a finding that the lands specifically involved were and are partnership property; that the mortgages aforesaid were given for individual debts "and a fraud on the creditors of the firm;" that plaintiffs are entitled to have the land subjected to the payment of their judgment; and that the temporary injunction was properly granted staying the foreclosure of the Hays mortgage. And it was thereupon ordered and adjudged that the mortgages "be and the same are hereby cancelled, set aside and held for naught, and all lien, claim, right, title or interest therein, on account thereof is hereby set aside and held for naught * * * that a copy of this order and judgment be filed for record" and thereupon have the same force and effect as a cancellation and release thereof by the mortgagees, and that the temporary injunction be made permanent.
Thus the judgment stops short of directing the sale of the property and the disposition of the proceeds, by merely cancelling the mortgages and permanently enjoining foreclosure thereof. There does not appear to have been any finding as to the value of the property, or whether or not it was sufficient to more than satisfy the judgment lien adjudged a priority over the mortgages; nor does it appear that an execution had been levied thereon under the judgment, or any proceeding, aside from this action, taken to subject the land to said judgment lien.
I do not understand that the mere fact that a mortgage is found to be inferior in rank to another lien or charge upon the property constitutes a good and sufficient reason for adjudging its cancellation, at the suit of one holding the superior claim. Unless the giving of mortgages by a partner upon firm property, or his interest in it, to secure his own debt, be prohibited, limited or regulated by some provision of statute, it would seem improper to completely set aside and cancel the said mortgages in this action, at least upon the showing made. For, in the absence of some such statutory prohibition, limitation or regulation, it *Page 446 
would seem that these mortgages would be valid, notwithstanding that their lien might be subject to superior claims of firm creditors. See 30 Cyc. 548, where it is said as to such a mortgage:
"A mortgage of a partner's interest in partnership property, although made to secure individual debts of the mortgaging partner, is valid. In other words, it passes only the ultimate share of each partner, that is, the amount due to him after the payment of firm debts and the adjustment of the equities of his co-partners. If firm real estate is allowed to stand in the name of the mortgaging partner, one who loans money to him and takes his mortgage thereon without notice of the firm's rights, acquires a lien prior to the claims of the firm creditors."
I think it may, therefore, be questionable whether the judgment, in its present form, without modification saving the rights of the mortgagees, could have been sustained, even upon the theory that those rights are inferior to the judgment lien of the plaintiffs.