Court Opinion

ID: 5459810
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:31:44.641398+00
Date Added: 2024-06-11T08:32:49.686593
License: Public Domain

By the Court, Pratt, J.
If necessary to the determination of this appeal, I should be inclined to hold the judgment in favor of Pruyn & King void, as not being authorized by the code. The contingent liability mentioned in the code^.and to secure which* a judgment by confession is authorized, is a liability already contracted and inchoate, such as the liability created by indorsement, guaranty or other suretiship. It was not, in my opinion, designed to be extended to contracts or liabilities thereafter to be created. But it is not necessary to decide this point, as the judgment in favor of Stevens, against which no such objections can be taken, was older than the judgments of the appellants. And I can perceive no reason why it is not as available to the plaintiff as the former. Both are judgments against, two of three partners, to secure a partnership liability. And there is no stronger equity in the one than in the other, in favor of making it a lien upon the interest in the land of all three-of the partners. It is said that Hotaling knew that the judgment was given to Pruyn & King to secure them for their indorsements for the firm, and that he knew of and assented to the assignment to the plaintiff to sequre him for indorsing for ¿the firm. But I find no evidence that he agreed or consented to its being made a lien upon his own interest in the premises. Although he knew of the judgment, and for what purpose it was given, he also knew that it was a" legal lien only on the interest of the defendants, in the premises. I cannot, therefore, conceive how his knowledge of it, or his consent that the lien upon the shares of his partners should be transferred to the plaintiff to secure him, should have the effect to extend the lien to his own interest in the land. *293The two judgments, therefore, in my opinion, conceding both to be valid, stand upon precisely the same footing, and secure to the plaintiff the same rights. The question then comes up, What are those rights ? I assume that the judgment to the plaintiff was given to secure a partnership liability, and that the land was purchased for partnership uses and paid for with partnership funds. The plaintiff’s judgment, since the order-of Judge Allen striking out Hotaling’s name as a defendant therein, is a judgment against two of these partners, and is prior in point of time to the judgments of the appellants, which were confessed by all of the defendants. The fund is to be treated precisely as if it had been the proceeds of the sale of the land upon all the judgments. Under these circumstances, the rights of the parties must be determined according to the legal priority and extent of the liens of all the parties. The suit was not brought to settle up the partnership concerns and distribute the assets. In such a case equality would be equity. But it is brought based upon the lien of the plaintiff, and to enforce it against the land, which has been converted into money. And that lien only extends to the interest of two of the partners. To that extent it should be limited. I cannot perceive how, upon any principles of equity, it can be extended beyond that. So far as the interest of Hotaling is concerned, the plaintiff’s demand, if it is not merged in his judgment, is a mere contract debt, and can have no precedence, at least over the demands of the banks, if their demands had not been put in judgment. But having put them in judgment and thus acquired a lien upon the land, the appellants have acquired a preference over all creditors by simple contract.
But it is claimed, on the part of the appellants, that as their judgment is against the firm, and a lien upon the lands of the firm, it should have a preference over the judgments of individual creditors, although prior in point of time. There may be some question whether this would be true as an abstract proposition, (Meech v. Allen, 17 N. Y. Rep. 300;) *294whether a court of equity could thus modify the legal effect of the lien which the statute gives. But in this case the equity upon which it is claimed that the priority of the judgment, which is first in point of time, should he postponed to give place to junior judgments, is met by a counter equity growing out of the fact that the plaintiff’s judgment was given to secure a partnership liability; that if two thirds of the surplus money be applied upon that, it will be applied in extinguishing so much of the partnership liability. That liability is in nowise discharged by the judgment; for it was only given as a collateral security, and does not merge the debts held against the firm for which the plaintiff is liable. Thus this assumed equity on the part of the appellants being met by an equal equity on the part of the plaintiff, the rights of the parties must be determined by the. priority of their legal liens. The result is that. the plaintiff is entitled to two thirds of the funds, and the appellants to one third. The judgment must therefore he reversed, and a new trial granted, unless the parties consent to a modification of the judgment as above suggested. In such case it should he modified without costs of the appeal.
[Onondaga General Term,
October 4, 1859.
Pratt, W. F. Allen and Mullin, Justices.]