Court Opinion

ID: 6558366
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:04:53.516025+00
Date Added: 2024-06-11T15:56:25.278273
License: Public Domain

Johns, Sr., Chancellor.
The two important questions arising are,
1st. Had the complainants an equitable lien on the real estate of James M. Broom ?
2nd. If they had, is this equitable lien to be preferred to the legal liens of the creditors of James M. Broom ?
*3961. The first question depends on facts as well as law. As to the facts—It is contended that the lands of James M. Broom, though purchased in his own name, were purchased with money belonging to the legatees of Jacob Broom, in the hands of James M. Broom their trustee. The sufficiency of the proof is denied; and hence, the Court is called on to decide important questions of fact.
The case must be considered as twofold; 1st, as a controversy between the complainants and James M. Broom, their trustee, and his assigns; and 2nd, as a controversy between the complainants, as legatees, and the judgment creditors of James M. Broom. It is the same in effect as if the controversies were embraced in two suits. Proof which would be not only competent but satisfactory to establish a trust as against James M. Broom, and his assigns, may be incompetent, and if competent hot to be credited or not satisfactory, when used to establish a trust estate in the lands of James M. Broom, so as to affect the rights of his judgment creditors.
Row,—without deciding whether the declarations of James M. Broom in the assignment, or the facts stated in the bill which are to be taken to be confessed by James M. Broom, are competent evidence against his judgment creditors,—it will be sufficient to say that, in the opinion of the Chancellor, the evidence is not satisfactory to prove the investment of the money of the legatees in the lands purchased by James M. Broom. There is no certainty as to the question what money or funds were so invested. The Chancellor must judge of the credibility of the evidence, as well as of its competency; but, admitting the latter, he is not convinced of the investment of the funds of the legatees. It is probable that the means which James M. Broom derived from his father’s estate enabled him to raise money to make the purchase of the lands, but how or to what extent is not proved. With respect to the law *397of trust, as the facts are not proved, it is unnecessary for the Court to express any opinion.
2. But, suppose a trust to be established as between the legatees and Broom, the decisive question in this cause remains; that is, whether the equitable lien on the lands held in trust should be preferred to the legal liens of the creditors of James M. Broom ? Must his judgment creditors be postponed, and the equitable lien of the legatees be first paid out of the proceeds of the sales of James M. Broom’s lands ?
The principal ground on which the counsel for the complainants rest, for the support of the affirmative of this question, is that there is a distinction between mortgages and judgments. It is admitted that, by the English authorities and under the laws of Delaware, a mortgage will be preferred to an equitable lien. But it is contended that judgments stand on a different ground; that one is a specific and the other a general lien; that a mortgagee is a purchaser, while a judgment creditor has no title to the land but only a right to sell it; that is, to sell such an interest in the land as the debtor has, which, it is argued, is an estate subject to the equitable lien. It is said that there are no decisions here, and that we must resort to English authorities, by which it appears such an equitable lien will be preferred to a judgment.
That there is some difference between a mortgage and a judgment is true; but, that there is a rule of law in Delaware that a judgment shall be postponed and an equitable lien on land be preferred, is not known to the Chancellor. For half a century he believes the law has been considered to be otherwise. The absence of decisions here to establish such a rule is strong negative evidence that no such rule of law has existed. It is not pretended that-, at law, any such rule exists, but that this is a principle of equity. In England, where lands cannot be sold for the payment of debts, and the creditor has no *398legal means by a sale of the land to make .his debt, such a principle of equity may be founded on reason and justice ; but here, such a rule cannot be applied without violating one of the first principles of equity,, to wit; that when two persons stand in equal equity, a Court of Chancery will not interfere.
It may be argued that the judgment creditor in Delaware has no legal remedy,—that he can only sell the land subject to the equitable lien. But such is not the law. In the case of Vickory vs. The State, in the Court of Appeals, at June Term, 1828, the law as to the legal effect of a sheriff’s sale on a junior judgment was settled. It was there decided, that the sheriff’s sale did discharge the land from all prior incumbrances excepting mortgages. In the earlier case of Lewden vs. Sawyer, the same principle had been recognized in the Court of Appeals and similar decisions had been made in the Supreme Court. By the Act of Assembly (Digest Del. Laws, 205) the sheriff’s sale does pass the same title, that is to say, in the words of the Act, “ such estate or estates” as the debtor had. The judgment creditor, therefore, has a legal remedy, and this Court will not interfere to destroy or defeat it.
There is another ground on which the Court ought not to interfere between the claimants and James M. Broom’s judgment creditors.- If any equitable lien existed it was a secret, invisible lien, unknown to the creditors who trusted James M'. Broom on the credit of his visible property; and, therefore, it would be inequitable for this Court to aid in preventing the judgment creditors from recovering their debts.
I can perceive no substantial difference between the position of a bona, fide purchaser from James M. Broom, without notice, or a mortgagee, and that of the judgment creditors. It is the policy of our laws to protect purchasers and creditors, without notice,against secret trusts. To support the secret equitable lien here set up (if one does exist) *399against judgment creditors would be to violate the policy of our law, and would open a wide field for defrauding creditors. I am of opinion that the judgment creditors are to be first paid out of the sales of the land, and that the surplus only should be distributed among the legatees.
Let a decree be entered accordingly.