Court Opinion

ID: 6696868
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:54:22.54078+00
Date Added: 2024-06-11T16:01:16.682554
License: Public Domain

Plaintiff’s appeal.
Stacy, J.
There are only two questions presented by plaintiff’s appeal, and they arise upon the following exceptions and assignments of error:
“1. For that his Honor erred in holding that the claim of plaintiff is allowable against the estate of W. M. Moore only to the extent of the balance due thereon after crediting dividends received in settlement of the partnership estate of Corbett & Moore.
“2. For that his Honor erred in holding that the defendant, Sue E. Moore, has not waived her dower right.”
It is the general rule in equity that partnership creditors are entitled to have the partnership assets first applied to the payment of the debts of the partnership, and the separate and private creditors of the individual partners are entitled to have the separate and private estate of the partners, with whom they have made individual contracts, first applied to their debts. The individual property of the respective partners is not to be applied in extinguishment of partnership liabilities until the separate and individual creditors of said partners have been satisfied, so that neither class of creditors may be allowed to trespass on the fund primarily liable to the, other, until the claims of that other shall have been paid in full. Thus, only the excess of either fund would go in aid of the other; and this' upon the principle that joint creditors should first look to the joint estate, and individual creditors to the separate estate of the partners, as joint creditors have presumably ex*821tended credit upon the faith of the firm assets and the individual creditors on the faith of the separate .estates of the respective partners. Hassell v. Griffin, 55 N. C., 117; 20 R. C. L., 1026.
But this reasoning does not obtain with respect to general partners where, by statute, as with us, they are made jointly and severally liable for the debts of the partnership, for the very good reason that the force and effect of the statute, to all intents and purposes, is to convert the creditors of the firm into individual creditors of each member of the partnership. C. S., 3259; Norfleet v. Ins. Co., 160 N. C., 327; Allen v. Grissom, 90 N. C., 90; Mode v. Penland, 93 N. C., 292; Hassell v. Griffin, supra. Hence, where the liability of partners is both joint and several, the inference is entirely permissible, and so understood among our merchants and in business circles, that credit is extended quite as often upon the reputed solvency of the individual members of a partnership, as upon the strength of the assets of the firm.
Speaking to this question in Rankin v. Jones, 55 N. C., 169, Pearson, J., said: “In Hassell v. Griffin, ante, 117, it is decided that the English doctrine, i. e., where, in consequence of the death or bankruptcy of a partner, a fund composed of the effects of the firm and individual effects is to be applied under the direction of a court of equity, the firm creditors are first to be paid out of the effects of the firm and the individual creditors out of the individual effects, the excess of either fund, if any, going in aid of the other, is so far affected by our statute making all contracts joint and several, and giving an action at law against the personal representative of a deceased joint obligor, that in this State individual creditors hav$ no equity to insist that the individual effects shall be first applied to the payment of their debts. Whether the other branch of this doctrine obtains here, so as to give firm creditors an equity in regard to firm effects, is a question that we are not now called on to decide, because the doctrine, even in England, is not applicable to a ease like that now under consideration.”
And in Hassell v. Griffin, 55 N. C., p. 119, the same learned Justice further observed: “So, according to our law, a creditor of the firm is under no necessity of coming into equity, and of course the court of equity has no right to impose any terms upon him; and it is also a matter of course that a court of equity cannot, at the instance of an individual creditor, interfere and direct that the two funds should be applied, the one to pay firm debts in the first instance and the other to pay individual debts in the first instance, and the surplus of either fund to come in aid, for the plain reason that by the force and effect of the statute a creditor of the firm is made, to all intents and purposes, an individual creditor of each member of the firm.
*822“It being tbe pleasure of tbe makers of our law to put tbe creditor of a firm upon tbe footing both of a creditor of tbe firm and a creditor of eacb and every one of tbe members of tbe firm, tbe English doctrine can bave no application, for tbe very ground upon wbicb it is built is taken away, and a creditor of a firm, under our law, must be supposed to deal as well upon tbe credit of eacb member of tbe firm as of that of tbe firm, because be bas a direct legal remedy against eacb and all of tbem.”
Where tbe liability of general partners is joint and several, and tbe firm assets are not sufficient to pay tbe firm debts, tbe creditors of tbe partnership are entitled to bave their claims allowed in full, both as against tbe assets of tbe firm and also as against tbe individual assets of a partner, to the end that they may thus concurrently enforce tbe two liabilities and obtain their ratable share- of eacb fund. See In re Peck, 206 N. Y., 55. This rule is stated by Walker, J., in Chemical Co. v. Edwards, 136 N. C., p. 76, as follows: “If a.creditor bas a right to resort to a fund wbicb is open to him alone, be shall not be thereby precluded from coming in upon tbe assets of an insolvent estate wbicb are common to all tbe creditors of tbe deceased debtor and obtaining a dividend on tbe full amount of bis debt, subject to tbe common sense and necessary qualification that be does not receive more than tbe sum due.”
It follows, therefore, that plaintiff’s first exception, to tbe extent above indicated, must be sustained.
As to whether tbe individual and private creditors of tbe deceased partner, W. M. Moore, are entitled to share ratably with tbe creditors of tbe partnership in the deceased partner’s interest in tbe firm assets, as well as in tbe separate assets of tbe estate of tbe deceased partner, is not before us for decision, -and. we refrain from any discussion of tbe matter. A determination of this question would call for a consideration of tbe rights of tbe surviving partner as well as those of tbe firm creditors, and tbe point is not raised by any exception appearing on tbe present record.
Plaintiff’s second exception and assignment of error must be overruled as there is nothing in tbe facts agreed to show any waiver, on tbe part of Sue K. Moore, widow of W. M. Moore, of her right to dower. Trust Co. v. Stone, 176 N. C., 270; Lee v. Giles, 161 N. C., 541.
Error.
DEFENDANTS’ APPEAL.
Staoy, J. The questions presented by tbe appeal of tbe defendants arise upon tbe following exceptions and assignments of error:
“1. For that bis Honor erred in bolding that tbe claim of Yirginia-Carolina Chemical Company against tbe partnership of Corbett & Moore *823should prQrate with tbe individual, open and unsecured claims against tbe estate of tbe deceased partner, ~W. M. Moore, after crediting tbereon tbe dividends from tbe estate of Corbett & Moore.
“2. For tbat bis Honor erred in'bolding tbat Sue K. Moore, widow of W. M. Moore, was not entitled to prove ber claim for tbe value of ber dower interest in tbe land conveyed to B. T. Pittman, trustee, to secure purchase money.”
It follows from what is said above, in disposing of plaintiff’s appeal, tbat tbe defendants are not in position to complain at tbe court’s ruling in regard to allowing plaintiff’s claim to share ratably with tbe claims of individual creditors in the. separate estate of W. M. Moore, tbe deceased partner. This exception, therefore, must be overruled.
Tbe second exception and assignment of error presents a more difficult question.
Dower, under our statute, is tbe life estate to which every married woman is entitled, upon tbe death of ber husband intestate, or in case she shall dissent from bis will, to one-third in value of all the lands, tenements and hereditaments, both legal and equitable, of which ber husband was beneficially seized, in law or in fact, at any time during coverture, and which her issue, bad she bad any, might have inherited as heir to tbe husband. Pollard v. Slaughter, 92 N. C., 12; Allen v. Saunders, 186 N. C., 349; Thompson v. Thompson, 46 N. C., 430; C. S., 4100, and cases cited thereunder. See, also, Corporation Commission v. Dunn, 174 N. C., 679. And it is further provided, by C. S., 4098, tbat tbe dower or right of dower of a widow, and such lands as may be devised to ber under ber husband’s will, if such lands do not exceed tbe quantity she would be entitled to by right of dower, although she has not dissented from such will, “shall not be subject to tbe payment of debts due from tbe estate of ber husband, during tbe term óf ber life.”
In tbe settlement of insolvent estates, involving tbe rights of creditors, secured and unsecured, and those of a widow, it would seem tbat tbe creditors are entitled to a sale pf tbe two-thirds of land, not embraced in tbe dower, and tbe reversion in tbe one-third dower land, tbe proceeds of each sale to be applied first to tbe mortgage debt, or lien upon tbe particular tract, and any excess left after discharging said lien to go into tbe bands of tbe administrator as assets. But should any piece, at tbe sale of tbe interests aforementioned, bring less than enough to pay tbe mortgage encumbrance upon said tract, then tbe balance due on said lien would share ratably with other debts in tbe personal estate, or assets in' tbe bands of tbe administrator; and if there still be any part of tbe mortgage debt unsatisfied, it would then be a charge, to tbe extent' of the residue unpaid, upon tbe dower land embraced in tbe particular mortgage, but not upon tbe dower in any other lands. And tbe *824widow must take ber dower in eacb tract separately and woi;b out ber equity against eacb mortgagee as be seeks to enforce bis security. It therefore follows tbat in determining tbe widow’s dower, tbe value of tbe land, without deducting tbe mortgage debt, would form tbe basis of computation. Caroon v. Cooper, 63 N. C., 386; Creecy v. Pearce, 69 N. C., 67; Gwathmey v. Pearce, 74 N. C., 398; Askew v. Askew, 103 N. C., 285.
Tbe widow’s dower is not liable for tbe debts of ber husband, except as she may charge tbe same by conveying ber right of dower as collateral security for said debts or any part thereof. "When a wife executes a mortgage with ber husband she thereby conveys ber dower in tbe property described therein as security for tbe payment of tbe debt mentioned in tbe mortgage. Gore v. Townsend, 105 N. C., 232. Prior to tbe execution of any mortgage tbe wife’s inchoate right of dower was in tbe whole land. Tbe fact tbat she executes tbe mortgage does not reduce ber dower right to tbe excess over and above tbe mortgage encumbrance, but ber dower in tbe whole tract is conveyed as security for tbe payment of tbe debt. Tbe husband’s “legal rights of redemption and equities of redemption” (C. S., 4100) were in tbe whole tract, and hence tbe widow’s claim for dower extends to tbe whole tract.
Before tbe mortgagee can enforce bis security' against tbe widow’s dower, after tbe death of tbe husband, be must first take bis claim out of tbe personal estate of tbe deceased (tbe fund primarily liable), if there be sufficient assets to pay said debt. But if tbe estate be insolvent,'the other creditors are entitled to have tbe mortgagee exhaust bis collateral security by sale of tbe two-thirds of land not embraced in tbe dower and tbe reversion in tbe dower land before sharing in tbe personal estate, and tbe mortgagee’s claim will be reduced by whatever amount be derives from tbe sale of bis collateral security, and only tbe balance of bis claim will then share ratably with tbe other creditors in tbe personal estate, and should this be not enough to pay tbe mortgage debt be would then be entitled to collect tbe residue of bis claim out of tbe widow’s dower in tbe land assigned as security for bis debt.
It may be said tbat where tbe estate is insolvent, the unsecured creditors are entitled to have tbe mortgagee exhaust bis collateral security, including bis lien upon tbe widow’s dower in said land, before sharing with them in tbe personal estate. This might be so but for tbe fact that tbe widow’s dower is superior to the rights of unsecured creditors. And with respect to tbe personal estate, creditors have no priority of claim, except those allowed by O. S., 93, and tbe widow is entitled to dower as against unsecured creditors, devisees and legatees. Creecy v. Pearce, supra; Campbell v. Murphy, 55 N. C., 357.
*825We are not inadvertent to the provisions of C. S., 93, by which the personal representatives of a decedent are required to pay, as a first class, having priority over all others, the debts which by law have a specific lien on property to an amount not exceeding the value of such property. Moore v. Byers, 65 N. C., 240. But here the lien in question exceeds the value of the property, and the estate is insolvent.
It is also held with us that where the whole land, including the widow’s dower, as in the instant case, has been sold under the mortgage or trust deed to pay the debt secured thereby, the widow becomes ipso facto a creditor of her husband’s estate to the amount of the value of her dower in the land so sold. Trust Co. v. Benbow, 135 N. C., p. 312; Gore v. Townsend, 105 N. C., 228; Gwathmey v. Pearce, 74 N. C., 398. But as the widow’s dower is not “subject to the payment of debts due from the estate of her husband,” her claim as a creditor to the amount of the value of her dower in the land sold under mortgage or trust deed would be preferred over the claims of unsecured creditors, because her claim to the amount of the value of her dower therein attaches to the fund arising from said sale, which, pro hac vice, is still to be deemed real estate. Creecy v. Pearce, 69 N. C., 67; 19 C. J., 491.
The mortgage or trust deed under which some of the lands here in question were sold was a purchase-money mortgage, or trust deed given to secure the balance of the purchase price, and these lands were sold for less than the purchase-money encumbrance. Hence, it is the contention of the plaintiff that the defendant, Sue K. Moore, widow, of W. M. Moore, is not entitled to claim dower in these lands.
It is generally held that when a vendor conveys property and simultaneously takes back a mortgage to secure the payment of all or a part of the purchase price, and such mortgage is at once registered, the title to the property conveyed does not rest in the purchaser for any appreciable length of time, but merely passes through his hands, without stopping, and vests in the mortgagee. During such instantaneous passage no lien of any character held against the purchaser,, dower or homestead right, can attach to the title, superior to the right of the holder of the purchase-money mortgage. Humphrey v. Lumber Co., 174 N. C., 520; Hinton v. Hicks, 156 N. C., 24; Bunting v. Jones, 78 N. C., 242. This does not change the relative position of mortgagor and mortgagee as between the purchaser and vendor of the land, but it simply gives to the holder of the purchase-money mortgage priority or precedence over other claims and liens held against the vendee, not upon the ground of any superior equity in the vendor or mortgagee as such, but simply upon the ground that the two instruments, having been executed simultaneously, are regarded in law as concurrent acts or as component parts of a single act. Moring v. Dickerson, 85 N. C., 466; Weil v. Casey, 125 N. C., 356.
*826In Overton v. Hinton, 123 N. C., 1, it was beld tbat a widow was entitled to dower, sub modo, in land purchased by her deceased husband, but not fully paid for at his death, and upon which a trust deed had been executed during the lifetime of the husband to secure a part of the purchase price of the land. And to like effect was the holding in Smith v. Gilmer, 64 N. C., 546; Thompson v. Thompson, 46 N. C., 430; Klutts v. Klutts, 58 N. C., 80; Love v. McClure, 99 N. C., 290; Howell v. Parker, 136 N. C., 373.
“The law favors dower, and this Court has held, in Caroon v. Cooper, 63 N. C., 386, that the widow is entitled to have dower assigned out of the whole tract, and cannot be called upon until it is ascertained that the remaining two-thirds and the reversion in the one-third covered by her dower is insufficient to pay off the encumbrance of the purchase money.” Settle, J., in Ruffin v. Cox, 71 N. C., p. 256.
It follows, therefore, that the defendants' second exception and assignment of error must be sustained. The cases of Rhea v. Rawls, 131 N. C., 453, and Bunting v. Jones, 78 N. C., 242, are not at variance with this position.
Each side will pay its costs incurred on this appeal.
Error.