Court Opinion

ID: 3655225
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:08:35.988957+00
Date Added: 2024-06-11T14:08:21.538675
License: Public Domain

On 1 February, 1842, the defendant purchased of Robert H. Burton, the testator of the plaintiff, a tract of land on the       (218) Catawba River, and six negroes, at the price of $15,325. Mr. Burton conveyed the property to the defendant, who, to secure the payment of the purchase money, transferred to Mr. Burton 50 shares of bank stock, and also two notes to R. M. Johnson and Joel Johnson of Kentucky, for $5,000 each — one due 20 April, 1841; the other 20 April, 1842; and, as further security at the same time executed the mortgage of the land and negroes. The defendant did not endorse the notes, but covenanted to guaranty their payment, "in case the insolvency or inability to pay of the obligors is ascertained by legal process." And Mr. Burton, at the same time, executed a deed of defeasance, by which "he agreed not to call on the defendant, or hold him liable, until the insolvency or inability to pay of the obligors is ascertained by legal process." *Page 156 
The condition of the mortgage deed is, "in case the said R. H. Burton shall receive the full amount of said stock and the amount which is due upon both of said bonds, either from John H. Wheeler or the said R. M. Johnson or Joel Johnson, then these presents are void and of no effect."
The notes were duly presented and protested for nonpayment by the executors of Mr. Burton, he having died shortly after the sale. The bank stock was sold for $5,500, and a credit entered for that amount. In June, 1842, the executors and the defendant entered into an arrangement, by which the defendant was to take the notes and go to Kentucky, for the purpose of collecting them. The defendant received the notes and gave a receipt for them, as follows: "The within are true copies of two notes, which I have received of W. Hoke and H. W. Burton, executors of R. H. Burton, for the purpose of collecting the same and accounting for. Jno. H. Wheeler." In July, 1847, the defendant paid the sum of $1,750, as the amount then collected on the notes; (219) and in December, 1847, he paid $1,800 as a further amount collected.
The plaintiff, who is the surviving executor, avers, that the amount due on the mortgage is $11,020.28 1/2; and insists, that the defendant has collected the amount from R. M. and Joel Johnson, and failed to pay over and account for it, or has by his default and negligence made himself liable for the payment thereof, as R. M. and Joel Johnson are now totally insolvent.
The defendant avers that he took the notes to Kentucky and employed two eminent counsel to attend to the collection, under whose advice a bill was filed against R. M. and Joel Johnson, in the Circuit Court of the United States, and a decree was obtained in January, 1845, sequestering the property of R. M. Johnson, in value $36,000, which property is now subject to the payment of the debt, which is, "thus rendered safe beyond all contingencies;" and the property of Joel Johnson, in value $100,000, is also bound for the debt. He avers, that the two sums paid over by him in 1847, are all that he received; and insists, that the plaintiff must look to the proceedings in equity and ascertain by legal process the insolvency and inability of the obligors to pay, before he can call on him, or is entitled to foreclose the mortgage.
The defendant files, as an exhibit, a letter from one of his counsel in Kentucky, dated 4 February, 1851, in which he says, "nothing remains to put the collection of your debt in vigorous process, but the return of the Messrs. Johnson from their Southern plantation. I fear I will have some delay in a regular reviver, as no one has administered upon Col. Johnson's estate," c.
"The debt is entirely safe, beyond all contingencies, and every exertion will be made to bring it to a speedy close." *Page 157 
Replication was taken to the answer, and the case set down for hearing upon bill, answer, replication, and the exhibits filed.        (220)
The case turns upon the construction of the mortgage, taken in connection with the deed of Mr. Burton, called a defeasance; for, although the words of the deed have a more particular reference to the guaranty of the notes, yet all of the instruments were executed at the same time, and must be construed together. We think it clear, that the mortgage was not to be enforced, until "the insolvency and inability to pay" of the two Johnsons was ascertained by legal process; and the question is, what was meant by legal process? Without some express stipulation, the guaranty or mortgage might have been resorted to as soon as the notes were presented, and protested for nonpayment. Mr. Burton, therefore, stipulated that he would not resort to the guaranty or mortgage, until a judgment at law was taken on the notes, and fieri facias was issued, and returned "nulla bona."
This is what was meant by "legal process." It never was intended, that, after the remedy given by law proved unavailing, recourse should then he had to Equity, and all the remedies given in that Court, which, by possibility, might reach property fraudulently conveyed, or otherwise put out of the reach of the process of law, should be exhausted, before the defendant could be called on for payment. Such a construction is unreasonable, and is not justified by the language used.
If we suppose the defendant was under a misapprehension as to the proper construction of the deed, his conduct is fully explained. But, according to the construction we put on it, he is in default and the plaintiff is entitled to have the mortgage foreclosed, unless the defendant pays the balance of the purchase money, which still remains unpaid.
When the defendant took the notes to Kentucky for the purpose of collecting them, if the money could have been made out    (221) of the Johnstons by legal process, his duty to the plaintiff and his own interest required him to take a judgment at law, and have the money made by a fieri facias; but, if this could could not be done, then his duty to the plaintiff required him to take a judgment at law, issue afieri facias, and have it returned, "nulla bona," so as to give the plaintiff a right to proceed on the guaranty or mortgage; but his own convenience would strongly tempt him not to do it. It is for him to say how he acted. He says, by the advice of eminent counsel, he filed a bill in equity, and obtained a decree of sequestration against one of the obligors in 1845, upon which two payments have been realized, and the *Page 158 
balance of the debt is fully secured. He does not file a copy of the proceeding in equity, but is content with filing a letter from one of his attorneys. He does not aver that a judgment has not been obtained, and a return of "nulla bona" made on the fieri facias; and we presume, such is the case, and that a copy of the proceedings in equity would show it; because, it was necessary to proceed in that way at law, for the purpose of establishing the debt, and showing that the legal remedy was inadequate, in order to give jurisdiction to the Court of Equity. But, if it has not been done, it was the duty of the defendant (having undertaken to act as agent of the plaintiff), to have done it; and, in either case, he is in default, and is no longer entitled to insist upon the stipulation of the plaintiff's testator, as set forth in the defeasance.
There must be a reference to ascertain the amount due upon the mortgage, to the end that it may be foreclosed, unless the amount is paid by the defendant.
PER CURIAM.                                 Decree accordingly. (222)