Upham v. Paddock

Tbe plaintiffs sue as assignees in bankruptcy of George F. Paddock, an adjudged bankrupt, to recover tbe share of tbe bankrupt in tbe rents of certain real estate owned by bim and tbe defendants, Oscar Paddock and Edwin L. Paddock, as tenants in common. Tbe rents accrued from 8tb December, 1874, to 29tb October, 1875, and were collected by tbe defendant, tbe First National Bank of Water-town, as tbe agent of tbe owners of tbe real estate, and are now beld by tbe bank. Tbe bankrupt’s share of tbe rents beld by tbe bank amounts to tbe sum of $2,937.30. Tbe bank makes no claim to tbe money in its own right, but alleges in its answer that tbe defendants, Blood and Sawyer, bave demanded tbe same of tbe bank, and tbat tbe bank is ready and willing to pay tbe same as tbe court shall order. Upon this state of facts it is obvious tbat tbe plaintiffs, as assignees, bave tbe legal title to tbe money, and tbe right to recover tbe same from the bank as a part of tbe assets of tbe bankrupt, unless some of tbe other defendants bave a superior right to it.

The only defendants who set up an adverse claim to tbe money are Blood and Sawyer. Their claim is based upon tbe following state of facts: On 8th December, 1874, Blood, Sawyer and George F. Paddock (tbe bankrupt), as sureties, with Jeremy W. Rogers as principal, who was tbe collector of tbe town of Watertown, executed tbe bond of said Rogers, as collector-, to tbe supervisor of tbe town, and tbe same was duly filed and became a lien upon tbe real estate of tbe obligors. Rogers failed to pay over tbe sum of $11,348.68 of tbe taxes collected by bim, but deposited it with George F. Paddock & Co., bankers, a firm consisting of tbe said George F. Paddock and Merritt Andrews, which firm converted tbe money and after-wards became bankrupt. Tbe supervisor sued tbe bond and recovered a judgment against all tbe obligors, which directed tbat tbe real estate of Paddock should be first sold to satisfy tbe judgment before resorting to tbe property of tbe other sureties. On 29th October, 1875, tbe real estate of Paddock was sold, being tbe property from which tbe rents in controversy arose and tbe avails were insufficient to pay tbe judgment by tbe sum of $3,909.16, for which tbe other securities are liable. Tbe ground upon which the claim of Blood and Sawyer was upheld at Special Term, and on which we are asked to affirm the judgment, is that as between them and Pad*573dock, the latter was primarily liable for the tax moneys converted by his firm, and they can avail themselves, in equity, of the lien of the bond on his real estate for their security; and that he being insolvent, and his real estate being inadequate security, they can reach the rents, by means of a receiver, the same as a mortgagee in like circumstances. By the decree the bank, defendant, was appointed a receiver for that purpose.

We are not prepared to affirm all of these conclusions. Grant that the real estate of the. bankrupt is primarily liable, as between him and the other sureties (Blood and Sawyer), the latter are not in the position of mortgagees. The only lien they have upon the land of the bankrupt is that created by the collector’s bond in favor of the supervisor, to whose rights they are perhaps entitled to be subrogated on paying the debt. We do not understand from the findings that they have actually paid. They are liable to pay. But waiving that point, the nature of the lien is to be considered. It is not a lien by mortgage, it is created by statute, and is more nearly analogous to a lien by judgment. The county clerk with whom the bond is filed is required to make an entry of it, in a book to be provided for the purpose in the same manner in which judgments are entered of record. (1 B. S., 346, § 20.)

The statute provides no special mode of enforcing the lien. The onlymode, therefore, is by a suit on the bond to recover the amount due from the collector, and judgment being obtained, the real estate which is subject to the lien may be sold by the sheriff upon execution. That being the case, the owner of the land has the same right to redeem as other judgment-debtors whose lands are sold on execution, and in the meantime, and until title is perfected in the purchaser, by the sheriff’s deed, the owner of the equity of redemption is entitled to the possession of the property, and to receive the rents and profits as his own. The equitable considerations which induce courts of equity, in their discretion, to permit a mortgagee to collect the rents and profits, through a receiver, pendente Ute, where the land is inadequate security and the mortgagor is insolvent, have no application to the lien of a judgment-creditor, nor, as it seems to us, to a lien created by the filing of a collector’s bond.

But if the reverse of this proposition were true, the defense must fail for another reason. Even a mortgagee has no specific *574lien on the rents and profits, in the absence of a special clause to that effect in the mortgage, until a court of equity has determined that it is necessary for his security, and has appointed a receiver to intercept the rents and profits and divert them from the mortgagor. That had not been done in this case when .the assignees commenced the present action. No receiver was appointed until the judgment was rendered which is now under review. Assuming, for the present purpose, that the respondents, Blood and Sawyer, are to be regarded, in equity, as mortgagees, the lien which they acquired by the appointment of a receiver, undoubtedly attached to the rents and profits then past due and owing from the tenants, if there were any such, but the respondents could not call on the assignees to refund rents and profits which the tenants had paid over to them or their agent before the receiver was appointed. (Howell v. Ripley, 10 Paige, 43; Astor v. Turner, 11 id., 436.) Prior to the commencement of this action the rents in controversy had been paid by the tenants to the bank, and were received and held by the latter as the agent of the owners of the real estate, of which the bankrupt was one. The title of the bankrupt to the real estate, and to such of the rents collected as had accrued at the time of the commencement of the bankruptcy proceedings, and to such as were thereafter to accrue, passed to his assignees. As between the bankrapt or his assignees on the one hand, and his co-tenants on the other, there was no dispute as to the amount of his share of the rents. The receipt by the bank of the share of the rents belonging to the estate of the bankrupt was, in law, the receipt of them by the assignees.

The bank held the money for its principals, by whom it was authorized to receive it, and not, as seems to be supposed by the respondents’ counsel, as a trustee for the benefit of outsiders who might ultimately lay claim to the fund, but who had no valid claim to it, in law or equity, when the bank refused to pay it to the plaintiffs, and when the plaintiffs commenced suit to recover it. Not only, therefore, had the plaintiffs the legal title to the rents in question, but they had collected them from the tenants before the respondents procured the appointment of a receiver. This suit was necessary, simply because their agent, the bank, refused to pay over the money which it had collected for them. The bank was the only necessary defendant. Indeed, there is nothing in the com*575plaint showing that at the time of the commencement of the action the plaintiffs had any controversy with the defendants, Richardson, Blood and Sawyer, and it alleged no ground whatever for making them parties. And the co-tenants of the bankrupt, Edwin and Oscar Paddock, who were made defendants, did not answer the complaint. It would seem, too, from the stipulation which is made a part of the case, that Richardson, Blood and Sawyer were not made defendants originally, but were permitted by the plaintiffs to come in after the suit was commenced, and set up their claims by answer. That is of no consequence, however, except as showing that the only object of the suit, originally, was to compel the bank to pay the plaintiffs the money which it had received from them as their agents.

These views lead to the conclusion that the judgment should be reversed; and, as the facts are undisputed, judgment should be ordered for the plaintiffs for the relief specifically demanded in the complaint, with costs and disbursements of the action and appeal, against the respondents, Blood, Sawyer, and the bank.

Ordered accordingly.