Court Opinion

ID: 7130084
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:17:52.692064+00
Date Added: 2024-06-11T16:14:26.293725
License: Public Domain

JUDGE WILLIAMS
delivered the opinion op the court :
Parker executed a mortgage to Richardson to indemnify him as his surety in several debts. Richardson desiring to be released, after having indorsed for Parker some two years, and being willing that any one who should become Parker’s indorser and release him from liability should have the same indemnity, it was agreed, in general terms, between Richardson, Parker, and Moore, that the latter should become Parker’s indorser, release Richardson from liability, and thereupon he should be secured the same as Richardson; but the *248exact manner of perfecting this indemnity seems not to have been agreed upon. All these, parties seemed to be under the impression that Parker would have to execute a new mortgage to Moore, and Richardson continued under this impression until a short time previous to this litigation, when, on consulting with his attorney, he became convinced that he could assign the mortgage to Moore.
At this time Moore had only released him from a portion of the liabilities, leaving him still responsible on the largest debts, and refused to become indorser on these.
It is therefore safe to assume that a specific agreement was never made that Richardson should assign the mortgage to Moore, or if it ha(J- been, still Moore had not placed himself in a position to demand the assignment, as he had not complied with the agreement.
Parker being sued, and being in doubtful circumstances, executed a deed of trust to Moore for the benefit of his creditors, who, as trustee, accepted and undertook .the execution of the trust. The property was sold by order of court, and a portion of the proceeds applied to the discharge of the debts for which Richardson was still bound.
Moore, claiming to be assignee of Richardson, set up the mortgage, and insisted that the debts for which he had become bound should also be regarded as preference claims, and paid before a pro rata distribution should be ordered to the general creditors, and which the court allowed.
There being no assignment in fact of the mortgage by Richardson to Moore, and no express agreement that there should be, or if so, Moore, having failed to comply with the agreement, he has failed to make good his claim as assignee.
To the extent that Moore had become bound as Parker’s surety, and thereby released Richardson, the mortgage and lien became extinguished both as to Richardson and the creditors.
The extinguishment of Richardson’s lien extinguished the equitable lien of the- creditor, hence Moore cannot be entitled to preference by subrogation, as his creditor bad no equitable lien to which Moore could be substituted.
We have not determined the consequences resulting from *249Moore’s accepting the deed of trust, because it is not essential to do so, and because the deed is not copied into the record; therefore, we do not know what are its rehearsals.
The court properly adjudged that the debts for which Richardson was still bound should be paid as preference claims, but erroneously directed that the debts for which Moore was bound should also be paid as preference claims. As to these, Moore must abide the pro rata distribution of the remnant of the fund among the general creditors, embracing those to whom he is bound.
Wherefore, the judgment, so far as it gives Moore preference, is reversed.