Wooldridge v. Bowmar ( 1886 )

Cooper, C. J.,

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.