Pallen v. Agricultural Bank

The complainant states that he is the owner of a town lot in Vicksburg, the title to which is derived through a judgment debtor, *424who at the time of the sale thereof is alleged to have held other real estate more than sufficient to satisfy the judgment; but that the same was afterwards sold out to different successive purchasers, which, however, the complainant insists is primarily liable to the lien of that judgment, and must be resorted to before the lot in his hands can be subjected. To that end he obtained in vacation an injunction against the judgment creditors, who now demur generally to the bill.

I have heretofore decided the principal question raised by the demurrer; but as the correctness of that opinion has been questioned by the counsel for the defendant, in an argument of much ability and research, I have been induced to re-examine the authorities, and to carefully review the grounds upon which I placed it. I may state at once, that I placed the opinion heretofore expressed upon the broad principles which govern courts of equity in marshalling securities between parties having different equities upon the same things. I am unable to perceive any solid distinction between the current of cases on that subject, and the one now before me. The general principle is, that where one party has a lien on, or interest in two estates, and another has a lien on, or interest in one of those estates only, the latter is entitled to throw the former upon that estate which he cannot reach, if that be necessary to adjust the rights of both parties; and can be done without prejudice to him who holds the double security.

In administering these equities, the court does not assume to divest or postpone a prior incumbrance, but simply to so apply it and limit it, that equal justice may be done to all concerned in the fund to which it attaches. I can see no reason in favor of limiting the doctrine to mere incumbrances. It can have no necessary dependence upon the character of the interest or title of the claimants; it rests upon the, intrinsic justice and morality of the maxim that a party shall so exercise his own rights as' not to do unnecessary injury to those of others. Why should not the rule be extended to a purchaser? The claims of a bona fide purchaser are certainly entitled to as much consideration, in equity, as those of a mere incumbrancer. Why should a judgment creditor be permitted to pursue property into the hands of a subsequent purchaser, when sufficient remained in the hands of his debtor to sat*425isfy his claim? The extent of his equity against his debtor is, to have his judgment paid; if this can be done without trenching upon the rights of others equally meritorious, a court of equity should so order it. There can be no reason for enforcing the judgment against the property in the hands of the purchasers, and then turning him round, for indemnity, upon the very property of the debtor which should have been applied to its payment. The spirit of equity does not tolerate this roimd of embarrassing litigation, and especially where more complete justice can be done between the parties by a more direct and simple process. But the right of a purchaser in such case does not depend upon general principles alone; there are several cases where the question has been directly adjudged.

In the case of Clowes v. Dickinson, 5 John. Ch. Rep. the complainant had purchased of one Yanderheyden two lots in the city of Troy. At the time of the sale there was a prior unsatisfied judgment against the vendor, under which the lots were sold to the defendant in that case. The bill prayed either for a re-conveyance of the lots, or for compensation for their value. Chancellor Kent most distinctly recognized the right of a purchaser from a judgment debtor to compel the creditor to resort to other property of the debtor, provided sufficient remained for the satisfaction of his judgment. It was said, however, in argument in this case, that the question as to such right was not before the court, and that when it came up in the subsequent case of Avery v. Patton, 7 John. Ch. Rep. 211, the right of a subsequent purchaser to stay the hand of the creditor, upon such ground, was utterly denied. I think a reference to that case will show that this is an entire misapprehension of the question there raised, and of the grounds upon which the decision was placed. The case was this: the complainants derived title to a tract of land under a judgment debtor; the bill alleged that at the time of the sale by him he was the owner of other lands which were subsequently passed into the hands of other purchasers. The bill was filed against a judgment creditor, and prayed for an assignment of the judgment upon payment, that they might make the owners of the other lands bound by the judgment pay a just proportion of it. There was no allegation that those other lands were sufficient to satisfy *426the claim; and it was said in argument, that it would require all the'lands, that the debtor owned, for the purpose. The chancellor, in looking to the scope and purpose of the bill, said, “all that the plaintiffs seem to claim, is a right of contribution against the owners of the other lands.” This he held could not be decreed, because the other persons interested in the lands, said to be bound-by the judgment, were not before the court. And he refused to direct an assignment of the judgment, because he could not determine in that case the extent to which the other' owners should contribute, and that a partial and oppressive use might be made of the judgment in the hands of the plaintiffs in that case. It will thus appeal, that no principle was settled in that case, applicable to the one before me.

I find that the case of Clowes v. Dickinson, before referred to, was taken up by appeal; and although the decision of the chancellor was reversed upon other grounds, yet the principles upon which he placed the rights of the complainant are most distinctly admitted. Justice Woodworth, as to the question of relief to which the complainant was entitled, says : “ There can be no doubt that had he applied, either to the supreme court or the court of chancery, they would have directed the execution of Kimberly to be levied on the property of Vanderheyden, not including the two lots. When that property was exhausted, and found not sufficient to satisfy the execution, then, and not till then, should the lots conveyed to the appellant have been sold, to make up the deficiency.” “ This he says,” is a clear principle of equity, established by all the authorities; and approves itself to the plainest principles of natural justice.” 9 Cow. Rep. 405. So in the case of Averall v. Wade, Lloyd & Goold. Rep. 252; cited in 1 Story’s Eq. 589, note. Where a judgment debtor was seized of several estates, and conveyed one of them for valuable consideration and subsequently confessed other judgments, Lord Chancellor Sugden held that the prior judgment should be thrown upon the estates remaining in the hands of the debtor, and that the subsequent judgment creditors had no right to contribution against the purchaser. In the case of Guion v. Knapp, 6 Paige, Ch. Rep. 35, the same general principles are admitted. It was held in that case, that where a mortgagor sells a part of the mortgaged premises, the remainder *427of such premises in his hands are primarily liable in equity for the satisfaction of the mortgage debt, and that if a mortgagee with knowledge of such sale releases the other mortgage property, he will not be permitted to pursue that whiehdiad passed into the hands of a purchaser. It was also held in that case, that property sold by the mortgagor at different times, and to different persons, was liable in the inverse order of alienation, commencing with the last, and proceeding to the first sale. In the case of Thompson v. Murray, 2 Hill’s Ch. Rep. 213, it was said that even a creditor of a party who had given away a portion of his estate, would in equity be compelled to exhaust the property of the donor before he would be allowed to go against the property so passed into the hands of the donee. The doctrine of these cases rests upon the most obvious principle of distributive justice; that of doing equal equity to all parties concerned. Here the complainant alleges that at the time of the sale of the lot in question, there remained in the hands of the judgment debtor other real estate of value greatly above the amount of the judgment, which gave a lien upon the whole of them; but which was subsequently passed into the hands of successive purchasers. The property is particularly designated and pointed out to the judgment creditor. That the complainant would have a right to go against all the purchasers behind him, commencing with the last, is I think placed beyond doubt, both upon principle and authority. If then the judgment creditor is compelled, for the satisfaction of his judgment, to go against a purchaser from his debtor, I can see no reason why he should not be compelled to proceed against the one upon whom equity would ultimately throw the burden in adjusting the equities of the successive purchasers. Under these views, I am of opinion the demurrer must be overruled, with leave to the defendant to answer.