Babbett & Herman v. Morgan, Root & Co.
Babbett & Herman v. Morgan, Root & Co.
Opinion of the Court
The act of March 29, 1856 (S. & C. 1098), gives to the judgments of justices of the peace, where transcripts are filed in court in vacation, a lien from the day of filing, “as against the judgment debtor” (and of course as against mortgagees claiming under him), but “as against . . . judgments rendered at the next term of court,” it gives a, lien to such transcript judgments only from the first day of the term. Here are two laws governing the rights of the parties. The one is the law of priority in time, and the other is the law of equality, irrespective of time. The law of priority is the law of the case as between the mortgagee and either or both the other parties, but the law of equality is the law of the case as between the transcript and the court judgments. It seems to me that it is the confounding of these two laws, and the application of them respectively to the wrong parties, that leads to any doubt or confusion as to the respective lights of the parties. This' statute plainly gives the transcripts a lien, as between them and every other claim except the court judgment, from the date of filing; and the law of mortgages as plainly declares that mortgages shall have effect from the date of their being filed for record. It is equally clear that this law of priority as between the transcript and the mortgage, and as between the court judgment and the mortgage, is in no way affected by the provision that the transcripts and the court judglnent, as between themselves, shall have equal lieus. That provision has its whole operation between the two parties. Its effect begins and ends with them, and the rights of all others are left as they would have stood if no suóh provision had ever been made. The whole effect of the provision is to compel each of these two parties, the owners of the judgments, to share pro rata with the other whatever either may acquire by priority over third persons. The provision that the transcript and court judgments, as between themselves, shall take effect from the first day of the term is simply a provision that they shall stand equal—that their liens shall take effect from the same day. The particular day is immaterial, provided it be the same day, because it
How, then, stand the parties here? The transcripts, as between them and the mortgage, fastened upon and secured $257 of this fund, subject, however, to a pro rata division with the subsequent court judgment. The mortgage came in next, and fastened upon what was left of the fond, leaving out the $257. The amount thus secured by the mortgage could not be changed by the court judgment, or any other subsequent lien. It became a fixed fact. If anything still remained, it was taken by the subsequent court judgment, but subject to a like pro rata division with the transcript judgments. In other words, the liens attached according to their priority in time, but whatever wms thus secured by either the transcripts or the court judgment, must be shared in common by both. This seems to be the principle adopted by the court below in marshaling the liens of the parties, and a majority of us are satisfied that it is the right principle. It carries into effect all the provisions of the statute, according to both their letter and their spirit. While, on the other hand, the principle contended for on behalf of the plaintiffs in error disregards the provisions of the statute, both by making the transcripts and the court judgments unequal in right, and also by giving the mortgage more than what was left of the fund at the date of the mortgage. It gives both the transcripts and the moi'tgage more than their due, and instead of 'making the owner of the court judgment equal with those of the transcripts, it gives him nothing.
That we may see more clearly wdiich of the two theories-■contended for is the true one, let us clear the case of fractions and uncertain amounts. This we should do, because the right principle in this case must be the right principle in every similar case, irrespective of the amount of the fund to be distributed, or the relative amounts of the several
I am aware that this holding is apparently in conflict with the rule laid down in Choteau v. Thompson, 2 Ohio St. 115. There, as is claimed to be the ease here, two of three several parties were held to be equal in right, while a third was held to be superior to one of them and inferior to the other. But the cases are unlike in their essential facts. The subject of the lien in that case was a building, to the erection of which two of the parties had themselves contributed—it was to a certain extent a thing of their own creation. It was only by construction that the lien which preceded and the lien which succeeded the mortgage were held to be equal in right. There were equitable reasons for giving the prior one of these liens the preference over the other. There was the absence of direct statutory provisions fixing the rights and relations of the parties, and the "court seem to have marshaled the liens upon an equitable rather than upon a legal basis. Without undertaking to say that the rule there adopted was not the right one for the case,'we are unwilling to extend it to cases like the present, -where the analogy is not perfect. Properly'speaking, it is not true, in either case, that two of three parties were equal, and the third was superior to one and inferior to the other. It can not be true in any case. The thing is morally and legally as well as mathematically impossible—just as impossible as an inclined level, a crooked straight line or a square circle. What we mean, when we say that a third person is superior to one and inferior to the other of two equals, is that he is superior to one of them in onerespect, and inferior to the other in a different respect. In the present ease, as to the $257, the judgment creditors are equal, and they are all superior to the mortgagee. As to so much of the remaining fund as is necessary to satisfy the mortgage, the mortgagee is superior to all the judgment creditors; and as to any remaining balance of the fund the judgment creditors are all equal, and all, of course, superior to the mortgagee. Nor do we think the cases of Brazee v. Bank, 14 Ohio, 318; Halliday
Dissenting Opinion
dissenting. The fund to be distributed is insufficient to satisfy the liens. The liens are held by three classes or grades of creditors, which have been tersely designated 'as transcript, mortgage, and judgment creditors. These liens accrued, in point of time, in the order named, and I affirm that the rights of these creditors must be preferred in accordance with the exact order of time in which their liens attached. The first in time is first in right; the' second in time, second in right; and the last in time, last in right.
The right of each class depends solely upon statutory law. The right of the judgment creditor is founded on section 421 of the code, which provides : “ The lands and tenements of the debtor, within the county where the judgment is entered, shall be bound for the satisfaction thereof, from the first day of the term at which judgment is rendered.” The right of the mortgage creditor is based on the act of March 18, 1838, which provides : “That all mortgage deeds do and shall take effect and have preference from the time the same are delivered to the recorder of the proper county, to be by him entered on record.” - The case shows that the mortgage was delivered for reéord previous to the first day of the term at which the judgment was rendered; hence it is perfectly clear that, as between the
The right of the transcript creditors rests upon section 490 of the code, which provides: “ Such judgment, if the transcript shall be filed in term time, shall have a lien on the real estate of the judgment debtor from the day of filing; if filed in vacation, as against the debtor, it shall have a lien from the day of filing, but, as against other transcripts filed in vacation and judgments rendered at the next term of the court of common pleas, it shall have a lien only from the first day of the next term of said court.” The case shows that these transcripts were filed in vacation next preceding the term at which the judgment was rendered, and before the time when the mortgage was delivered for record. Hence, it is conceded that the lien of the transcript creditors is superior to the lien of the mortgage creditor; and it has been shown that the lien of the mortgage creditor is superior to that of the judgment creditor.
The whole difficulty in the case is in determining the relative rights, under section 490, between the transcript creditors and the judgment creditor. It is assumed that their rights are equal. This I deny. I concede, that as between themselves, their liens are concurrent; but as between themselves, the lien of neither commenced to run until the lien of the mortgage had vested ; and yet, as between the transcript creditors and the mortgagee, the liens of the former vested before the mortgage was delivered for record.
The solution of the difficulty, however, is plain and easy. It is found in the answer to this question : "What right did the transcript creditor secure by the filing of a transcript of his judgment ? The statute answers: Such judgment as against the debtor shall be a lien on the real estate of the debtor from the day of filing. "When the transcript lien was thus secured, the real estate of the debtor was not incumbered by either the mortgage or subsequent judgment, so that the entire estate of the debtor was bound for the
The proposition, that the transcript creditor, by filing his transcript, secured a lien only on , so much of the debtor’s estate as was equal in value to the amount of his judgment, is a fallacy; and it is equally fallacious to hold that such transcript lien was secured for the benefit of subsequent judgment creditors. The lien of the transcript attached to the whole estate, aud for the sole benefit of the transcript creditor. The only limitation upon his right is found in the lien itself, which is declared to be concurrent
The only right given to such subsequent judgment creditor, by section 490 of the code, is to insist that the residue of the fuud, after satisfying the prior mortgage, shall not be reduced by the payment to the transcript creditors of a greater portion of the fund than they would have been entitled to receive if the mortgage had not intervened.
Again; in my judgment, the construction given to section 490, by the court below, would necessarily lead to this absiird result, namely: it would give to the subsequent judgment creditor a pro rata share of the fund secured by the transcript lien in a case where the intervening right was acquired by an absolute purchase of the estate as well as by the mortgage deed.
It has been suggested that my construction of these statutes is unsound for the reason, that it enlarges the right secured by the mortgage, in case a judgment be taken after the lien of the mortgage is vested, or in other words, when the mortgage lien attached it was subject to the payment in full of the transcript judgment, whereas, by reason of a subsequent judgment, which is admitted to be inferior
The trouble with this suggestion is that, as a legal proposition, the premise is false. I admit that when the mortgage lien attached it was inferior to the transcript liens, and that it must ever remain so; but the extent of the right secured by the transcript creditors was not then ascertained or ascertainable. The extent of that right depended on the fact whether or not a subsequent judgment would be rendered. The lien of the transcript creditors was subject to this future contingency, whereas, the mortgage lien was subject only to the rights of the transcript creditors, which rights could be determined only by future events. So that the lien of the mortgage is no more'enlarged by the subsequent judgment than it would have been by a partial payment of the transcript judgments, and in a legal sense such payment -would not have affected the legal status of the mortgage creditor. His lien remains the second lien upon the premises as it was from tbe date of the record of the mortgage. Nothing more, nothing less.
The decree below involves the proposition that the transcript creditors, in their effort to secure themselves, become trustees for the benefit of the subsequent judgment creditors. A lien, which was intended by the statute for their own benefit, is converted, by judicial legislation, into a trust for themselves and others, simply because a mortgage lien, inferior to their own, is created and declared, by statute, superior to subsequent judgment liens. To illustrate this proposition, we will suppose, in approximation to the facts of this case, that the amount of the transcript judgments was $250—the mortgage $1,000, the subsequent judgment $750, the value of the estate $1,000. If the mortgage had not intervened, the judgments would have been paid in full. But the mortgage having intervened, the $250, secured by the transcript liens, are distributed pro rata between them and the subsequent judgment creditor—giving one-fourth or $>62.50 to the transcript creditors, and the balance secured by their liens, to wit, $187.50 to the subsequent judgment
While I regret the necessity for dissenting in this case, I may in justification say that, in my opinion, the exact question, in principle, has been heretofore decided by this court, in the very carefully considered case of Choteau v. Thompson, 2 Ohio St. 114. That case, as I understand the majority of the court, is not intended to be overruled. An effort is made, however, to distinguish between it and the present case, but in my judgment, the distinction is without a. difference in principle. In that case, as in this, a mortgage lien intervened between two other liens of different dates, but which were declared to be concurrent as between themselves. The cases are sought to be distinguished on the ground that the supposed equality, between the first and last liens in that case, was determined by the court upon a certain construction of the statute under which they arose, -while in the present case, the equality is declared by the statute in express terms. In each case, I insist, the question was controlled, by force of the statute. In Choteau’s case the lien which preceded and the lien which succeeded the mortgage were created under the mechanic’s lien law, and in determining that these liens were concurrent, the court considered many facts and circumstances not germain to the case before us; but after the question of equality was ascertained in that case, it stood, upon all fours, with the present; aud hence, in determining the question in this, by the authority of that case, it is of no importance what facts and circumstances -were considered by the court in settling the concurrence of the first and third liens.
For all the purposes of this case, Choteau’s case may be stated thus: A lieu was secured under the mechanic’s
My judgment is in eutire accord with this decision.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.