Court Opinion

ID: 6504644
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:16:58.400218+00
Date Added: 2024-06-11T15:54:42.149535
License: Public Domain

CHILTON, J.
The only question.in-this case is, whether the deed of assignment executed by Robert C.-Macon conferred such an interest upon the Bank as entitled it to come in as a beneficiary under the decree and share in--the distribution of the trust fund 1 *
After a careful examination of the provisions of the deed, we do not entertain a doubt but that the chancellor misapprehended its import. It is true the deed purports to have been executed for the avowed object of saving harmless and indemnifying the securities of the grantor, against, their liability upon certain enumerated demands, among-, which are the claims of the Bank ;■ but while this is true, it by no means follows that these securities shall have the right to. appropriate the fund as they see proper. We must look to the deed and see what direction it gives as to the application of the funds, in the event there should not.be sufficient means to discharge the whole of the debts for which they ar.e liable, and against which it proposes to indemnify them.. The deed is.made for their protection and indemnity, but the manner in which they are to be protected and indemnified is particularly set forth,, and we are pleased to see that it accords with strict justice and equality..
The deed,.after providing for a sale of the property conveyed,’, in the event of default of payment of the debts secured:by the same, on the part of the grantor,, and for the appropriation of the proceeds by the trustees to the payment, of all the debts for 'which the securities were liable, then proceeds as follows: “Anal *802.if the fund arising from the sale of tbe land and property hereby conveyed, should not be sufficient to pay off and satisfy in full all the foregoing'debts intended to be secured and paid by this trust, then it shall be the duty of said trustees to appropriate the fund arising from the sale ratably among the several debts and liabilities herein named.” And, as if the grantor anticipated the .very state of case presented by this record, he proceeded to declare .that “If either of the said debts shall have ibeen paid by any-of the securities of the said Macon, such security so having paid said -debt shall be entitled to his fro rata share of said fund.” This provision in the deed is too clear to need the aid of argument to show that the fund, being in adequate to discharge all the debts secured, must be apportioned ratably among the several creditors, and the security who has paid any of the debts can receive no greater share than the creditor whom he has paid would have been entitled to.
In the absence, however.,-of such a provision in the deed for a ratable distribution of the fund, the grantor being insolvent and no preference being secured to any particular creditor, the Chancery Court, which proceeds upon the maxim that “ equality is equity,” would make a pro rata division of the proceeds among .all the creditors whose debts are provided for.
But, considered in another view, the decree of the chancellor is erroneous, since it overlooks the well established principle that the creditor is entitled to the benefit of all pledges and securities which the principal debtor places in .the hands of his surety to be applied to the payment of the debt. — 1 Story’s Eq. Ju. § 638; Per Sir Wm. Grant, in Wright v. Mosley, 11 Ves. 22; Per Lord Ch. Cowper, in Parsons v. Briddock, 2 Ver. 608; Toulmin et al. v. Hamilton et al., 7 Ala. 367-8, and cases cited.
Let the decree of .the .chancellor be reversed, and the cause ¡'remanded.