Court Opinion

ID: 6962632
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:48:12.391182+00
Date Added: 2024-06-11T16:08:29.578000
License: Public Domain

Mr. Justice Dickey, dissenting: The surrender of the original notes and mortgage by Lynch, and the entry of satisfaction of the original mortgage upon the record by French, administrator, occurred February 14, 1876. At that time Lynch accepted as payment and satisfaction of the old notes and mortgage, new notes, payable on their face to himself, for the amount due on the old notes, secured by adequate personal security and by a new mortgage on the land. The notes thus paid and satisfied were, in law, the property of French, the administrator. He had the undoubted right to accept the new' securities in satisfaction of the old debt, and thus charge himself with the amount due on the old securities, as assets in his hands, and had he transacted this business in person, it is obvious he could not afterwards maintain any action or suit, as such administrator, upon the original notes or mortgage. Now, when we remember that Lynch was the professional adviser and attorney of French, under whose advice and with whose professional aid his appointment as administrator had been consummated and all his subsequent administration had been conducted, and when we bear in mind that French knew that payment of some sort had been made to Lynch of a demand belonging to him, as administrator, and at once recognized the payment as though made to himself, and accordingly entered satisfaction of record of the old mortgage, I think the payment to Lynch was, in law, payment to French, and if so, as between French and the makers of the original notes and mortgage the payment should be held valid. That French regarded the payment to Lynch as payment to him, is clearly shown by the fact that after Lynch qualified as guardian, French confessed a judgment in favor of Lynch, as guardian, for the amount of that payment, as so much money received by him as administrator. Very likely, French allowed the amount of this payment to remain in the hands of Lynch, his attorney, for the reason that he expected that Lynch would qualify as guardian, in which case he would have a right to appropriate the amount as guardian. Hence, even if Fogarty be entitled to subrogation against Lynch, French and Lochenmeyer, I think the decree ought to declare Lynch primarily liable, and French as secondarily liable, and Lochenmeyer as liable only if the amount be not paid by Lynch or French. It, however, must be noted that Lynch, by receipting the judgment against French, and by reporting the amount in his hands, after Lynch had qualified as guardian and after Fogarty had become his surety, gives prima facie evidence that at that time he had not squandered or appropriated to his personal use the new notes or money received by him for them. This cast the burden upon Fogarty to show that this was not true. The mere fact that these notes were indorsed without date, (although in some eases this raises a presumption that the indorsement was at the date of the notes,) is not sufficient to repel this conclusion; and especially this presumption should not be indulged against the fact that payments on two of' these notes are indorsed in Lynch’s handwriting, at dates after Fogarty had signed his bond. There is no direct proof that these notes did not remain in Lynch’s hands until after he qualified as guardian, and in such case they became assets in his hands, as guardian, and hence Fogarty became primarily liable for any subsequent conversion to his own use by Lynch. Another view equally cogent, in my mind, is as follows: "When Lynch accepted these notes, he, as between himself and the makers of the original notes, undertook that the money to arise from the new notes should be applied, through the proper channels, to the use of the ward, who was the equitable owner of the original demand, and as to that duty,in equity, the makers of the original notes were merely his sureties. Now, when French, who legally owned that demand, falsely confessed that the amount had been paid to him, as administrator, he impaired the right of the makers of the original notes which they had to demand of Lynch that he should pay the amount to French. This impaired their right as sureties, and hence discharged them from liability to French, to whom, at that time, they were alone liable. Another view still more cogent: When a man who is debtor to an estate is made administrator of such estate, and gives bend as such, it is well settled that his debt to the estate, by operation of law, becomes at once assets in his hands as administrator, for the faithful application of which his surety becomes liable on his bond, and this though the administrator be insolvent. I see no difference in principle between the case of an administrator and a guardian. When, therefore, Lynch became guardian, if he had before that appropriated to his own use the proceeds of the new notes, he was, in equity, indebted to the estate of his ward for the amount of the demand. Certainly he became so liable when he receipted the judgment he had recovered against French. This sum thus being assets in his hands as guardian, Fogarty became primary guarantor that Lynch would faithfully apply these assets, and hence he has no higher equity than the makers of these original notes. The rule as to subrogation relates solely to the rights of the creditor against those whose obligations to pay are higher than the obligation of the surety seeking subrogation. If their obligations are equal, then the right of contribution, and not of subrogation, prevails. If the general rule, as stated, be adopted without this qualification, it would follow that had the makers of these original notes paid this demand to the present guardian,—being, in equity, mere securities for Lynch, —they might have had subrogation to collect this sum from Fogarty. Can it be possible that two parties can occupy such relation to a given demand that the one who pays first can compel the other to make him whole ? Of course the decree ought to be reversed for the omission to require Lynch to pay, and requiring others to pay only on his default. It is erroneous in that it charges Lochenmeyer and others, primarily, as between them and Fogarty. It is erroneous because he was fully discharged by the giving of the new notes to Lynch, which were accepted by French as payment and satisfaction. In any view which I can take of this case, I think the decree ought to be reversed. -