Court Opinion

ID: 6235506
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:31:35.781982+00
Date Added: 2024-06-11T08:58:02.286108
License: Public Domain

Mr. Justice Mercur
delivered the opinion of the court,
This is a case of distribution. The fund was raised by a sheriff’s sale of the real estate of Garner & Christian. The claim in contention arises on a judgment entered on a bond and warrant of attorney executed by Garner & Christian, in favor of the appellee. The bond was in the penal sum of $8000, conditioned for the payment of “ all moneys borrowed from the said The Ashland Banking Company, or which may from time to time be borrowed from the same, lawful money as aforesaid, at, or upon, the days and times when the same shall fall due.” It was entered, of record prior to the date of the mortgage on which the appellant claims. At the date of the bond, the appellee held notes against Garner & Christian for borrowed money, equal to the amount of the notes on which it now claims. They have been renewed from time to time. The discount charged on each renewal was in excess of six per centum, and a large proportion of the consideration of the renewed notes, now presented for payment, is usurious. The auditor reported in favor of the payment of the whole amount of the notes. The court affirmed the report, and' decreed accordingly. This is assigned for error.
The question is not one of indebtedness only, but is also one of lien. The right of the appellee to a share of the fund, rests on the lien only. It therefore can extend to the payment of no claim not sustained by the lien. The validity of the lien is to be decided by the record. Within the limits prescribed by the recorded obligation, the indebtedness is secured by the lien. Beyond these limits, whatever may be its validity between the parties, it is no judgment lien. This judgment states no certain amount of indebtedness as being thereby secured; but it cannot exceed the sums of money borrowed. The lien by virtue of which the appellee claims, is not a judgment obtained on the notes in question, and therefore there is no judicial liquidation of the amount due. The judgment created a lien for such sums only as might be due for money borrowed of the appellee. The important question then is how much money was borrowed and remains unpaid ? The notes were no more than presumptive evidence of the sum borrowed. The auditor found as a fact that the sums of money borrowed by Garner & Christian, with lawful interest thereon, are much less than the amount of the notes on which the appellee claims.
It is claimed on the of Verner v. Carson et al., 16 P. F. *146Smith 440, Good v. Grant, 26 Id. 52, and Miners’ Trust Co. Bank v. Roseberry, 31 P. F. Smith 309, that, in the absence of fraud, none but Garner & Christian can set up the usury against the notes. That inasmuch as they do not, and the auditor has found there was no proof that the contract for the excess of interest was intended to defraud creditors, or that the parties thereto could reasonably have presumed such would be the effect of taking th’is excessive interest, therefore the amount called for by these notes is conclusive on the appellant. If the recorded lien described these notes, or if it specified a certain sum of money to be paid, or if judgment had been recovered on these particular notes and the validity of that judgment was questioned, then the case would admit of the application of the authorities cited. But under the facts of this case they do not apply. The record proves a lien for no specific sum. To ascertain the supi thereby secured, resort must be had to other testimony. As evidence, the appellee presents certain notes, which represent an amount greater than the sum borrowed.
Conceding that the appellant cannot attack the validity, or consideration, of the judgment, except for fraud, yet we answer, he makes no attempt to attack the judgment for any purpose. He gives it full effect. He concedes its validity according to its terms, and for all the money borrowed on the strength thereof. For so much only is it a lien. The appellee and the debtor cannot, even by an agreement, in regard to the notes, made in good faith, create a lien security to the injury of other lien creditors for more than the sums of money actually borrowed. No contract other than that shown by the record can be set up to establish the amount secured by the lien. To that extent the judgment was notice of a valid lien. Beyond that, it was no notice. The appellee cannot say, “ the debtor and I have agreed that there is a certain sum due and the appellant cannot controvert it.” In so far as that agreement may be invoked to enlarge the lien to his prejudice, the appellant may object to it. To the extent of the excessive interest charged, the judgment never was a lien. No subsequent agreement between the parties, not duly entered of record, could create or enlarge the lien to the prejudice of the appellant.
It is further contended that the auditor had no right to disregard a judgment regular on its face. This is true. But here the auditor is not asked to set it aside or to disregard it. The record was indefinite as to the extent of the sum covered by the lien. The appellee gave evidence to prove and establish the just sum. The appellant controverts the truthfulness of that evidence. He in no manner denies the validity of the judgment. He shows the appellee claimed, and the court allowed, a sum greatly in excess of the sum borrowed or secured by the lien. The error arose in not distinguishing between the personal contract of the parties to *147the notes and the recorded lien. The appellant is concluded by the latter only.
Decree reversed and record remanded, with instructions to decree distribution conformably with this opinion; and it is ordered that the appellee pay the costs of this appeal.