Wooldridge v. Bowmar
Wooldridge v. Bowmar
Opinion of the Court
delivered the opinion of the court.
On the facts disclosed by the record it is clear that the notes executed by Crutcher imposed no personal obligation on him as between himself and Klein and volunteers under him.
As between Crutcher and Klein, Klein would have been the real debtor to any person to whom the notes had passed for value, and it would have devolved on him to indemnify Crutcher against personal loss. So far, then, as the notes in the possession of Bow-mar are concerned, they must be disregarded or considered as the notes of Klein, secured by a mortgage on his own laud.
There are two reasons either of which is sufficient to maintain the prior right of Wooldridge to the whole of the proceeds of the sale. First, Bowmar, receiver, stands in no better right than would Klein or his assignee, and neither Klein nor his assignee, claiming under an assignment of all his estate, could have any interest in the notes as property. They might be valuable as evidence of the extent of Klein’s right to the land held by Crutcher, but this is the sole purpose for which they could be used, and when all the facts are shown it appears that the land itself is subject to a mortgage for the notes held by Wooldridge, as against both Klein and Crutcher, and consequently against Klein’s assignee and the receiver of his estate.
The second reason is that Crutcher is entitled to protection at the hands of Klein as against his liability to Wooldridge on the notes held by him, and since he is not liable on the notes held by the assignee, the court ought in the distribution of the fund in hand to protect him by discharging the notes which are binding upon him.
The decree is reversed and a decree ordered to he made here directing 'payment of the whole fund to Wooldridge.
Reference
- Full Case Name
- S. L. Wooldridge v. J. H. D. Bowmar, Receiver
- Status
- Published
- Syllabus
- 1. MORTGAGE. Accommodation notes payable pro reda. Rights of indorsee, maker, and payee respectively. Proceeds of sale under mortgage. C. executed eight accommodation promissory notes for $2,500 each in favor of K., payable at different times, and secured by a mortgage on certain property deeded to C. by K. for the purpose of being thus incumbered. K. indorsed tbe notes and transferred them to W. The first two notes were taken up by IC. at maturity, but not cancelled. K. afterward assigned all of his assets for the benefit of his creditors. But the assignment was vacated, and B. was appointed receiver of his estate, and as such came into possession of the two'uncancelled notes taken up by K. W., on the non-payment of the remaining notes held by him, obtained a decree for the foreclosure of his mortgage, and the property therein embraced was sold under such decree. B. appeared and asked that he be allowed a pro rata share of the proceeds of the sale in proportion as the two notes were a part of the series secured by the mortgage. Held, that W. was entitled to the whole proceeds of the sale. 2. Same. Accommodation notes Indorsee holding some. Payee holding others. Proceeds of sale. As between O. and K. in the case above stated the notes imposed no obligation on the former, and B., as receiver of K.’s estate, stands in no better attitude than K. would. The notes taken up by K. must be disregarded or treated as the notes of K. secured by a mortgage on his own land. The mortgage as to the notes held by W, is good against both K.. and C., and C. is entitled as against K. to have the proceeds of the mortgaged property applied to the payment of the notes held by W., as he is not liable on those held by B.