Bank of Muskingum v. Carpenter's Adm'rs ( 1835 )

Lane, L,

pronounced the opinion of the court:

Before the plaintiff can set up a higher claim than a simple contract creditor he must establish the validity of his mortgage. It is asserted to be made void by a material alteration since the grantor’s death, in adding the name of an attesting witness. If we look to the testimony of the defendant only we should *find it difficult to evade this conclusion.

Evidence is adduced tending to show that the name of the sub■scribing witness was not written by him. Witnesses the most unexceptionable, with means the most ample of learning the facts, including the spectator, the lawyer, and the judge, almost prove that the deed was exhibited at the trial, with this defect. The parties most interested in supporting the deed seem to have acted upon the opinion that the instrument was not valid. It is a striking example of the uncertainty of memory, to find this body of testimony completely disproved. The affidavit of one of the defendants to the truth of the plea to the scire facias, drawn up by another defendant, shows that at that time the deed had two witnesses, for the ground of resistance to it is, that the name of the second witness had been added to it, since the record. There is no sufficient proof of forgery, especially against the witness’ own oath. The grantor -intended when he made it, to make a good mortgage; a fraud is not to be presumed, Since, then, it is shown to have existed at the time of the trial, with the names of two witnesses, it is more probable, either that it always had two, one of which was omitted by the recorder, or if one was added subsequently to the-registration, that it was added while the grantor was living, and with his consent. If either of these suppositions is true, the deed, although it conveys no legal estate, from the defective registration, is a good equitable mortgage, binding the mortgagor, his administrators and. his heirs ; affecting their rights from the time of its execution, as much as if it passed an estate at law.

There are judgments rendered in Fairfield county, both before and after the date of the mortgage, which are liens upon the land of the decedent. The three in favor of the Bank of Chillicothe, having been rendered earlier than the mortgage, are admitted to-be preferred. In regard to the others, the question is presented, whether an equitable mortgage, or a judgment at law, has the-preferable lien.

Whenever rights are acquired, depending on, or in reference to specific property, they are regarded.as possessing a superior equity to a general lien upon all the estate of a debtor, as the lien by judg ment. Tho latter do not constitute a property per se, or a right in-the land itself; it only confers the right to acquire such a property by levy. A mortgage is sometimes called a lien for the debt, but it. is something more; it is a transfer of the land itself; the mortgagee is purchaser. *2 Craneh, 355 ; 3 lb. 73; he takes the-interest of the debtor subsisting at that time, and no posterior rights can be preferred to his. Such is the plaintiff’s position; ha. has a specific interest in the lands, and is entitled to a preference over creditors by subsequent judgments. 2 Peere Williams, 279; 3 Vez. 581; 3 Dess. 568; 3 Ohio, 539; 5 Ib. 181; 1 Pow. Mort. 279; 2 Ib. 519; 2 Pow. Cont. 60; 4 Kent’s Com. 154; 1 Ohio, 258; 10 Mod. 468; 1 Pet. U. S. 388 ; 4 Johns. 216.

When a trust to sell and raise money is created by the parties,, by a deed, through which the purchaser traces his title, and in which the object of the trust is defined, it seems a rule in equity,, that the purchaser should look to the application of the moneys but where the law creates a trust, or confers authority to execute a trust, it imposes upon the purchaser no obligation to apply tha money, further than to pay it to the trustee. This rule furnishes a principle in the present ease; we find the administrators, the trustees created by law, for the purpose, and invested with authoriy to sell the assets, as a trust fund, and to distribute the avails according to the respective rights of creditors, and giving bonds to secure to all interested the faithful execution of these duties. It is a well settled principle of policy and law, to apply such rules to-these sales as tend to confirm and render certain the titles they pass. 3 Ohio, 561. As it is made their duty to sell the land for-the purpose of paying the debts, purchasers may safely buy, in-the forms of law, and on payment hold it exempt from the lien,, leaving the holder of the lien to look to the trustee and his security, for the faithful application of the money. Those defendants, therefore, who have purchased from the administrators, hold the-land free from these incumbrances; the suit maybe dismissed as, to Buch as have paid the purchase money; those who have not, areretained as parties, to secure the appropriation of the money due.

It is urged that the administrators were justified in distributing the assets of the estate among the other creditors, without regard to this claim of the plaintiffs, because no demand for the payment of it was made. But the administrators had notice of its existence, by the scire facias; notice, it is true, of a defective legal conveyance, but indisputable notice of the existence of the debt, and if we hold them to a knowledge of the law, notice of a good incumbrance in equity. They were not justified, with this knowledge, in distributing the estate ^without providing for these claims. If their extent or validity were doubtful, it would have been an obvious dictate of prudence to institute proceedings in chancery against all parties, by which all rights and interests would have been defined and settled; for the settlement of an estate in a court of probate is an ex parte proceeding, prima facie evidence only of correctness, and binding no rights, except where made in conformity to law.

A part of the assets received from the administrators have been derived from the sale of the Leathers’ land. Leathers, with Emanuel Carpenter his security, was indebted to the Bank of Chillicothe; by an arrangement between them, the debt was assumed by Carpenter, and is embraced in the judgments which the Bank of Chillicothe obtained against him. To indemnify Carpenter, Leathers confessed a judgment binding his lands, the avails of which were applied, before the institution of this suit, upon a judgment of the Chillicothe Bank, rendered subsequently to the plaintiff’s mortgage. The plaintiff asks to appropriate this sum upon the elder judgments of the Bank of Chillicothe, which subsisted at the time of his mortgage. The justice of this claim is not acknowledged; although a creditor with one fund can compel the creditor with two to exhaust the one he can not reach, before recurring to the other, it is too late to interfere with the application of money already made in good faith, by the creditor or the debtor.

We are, therefore, led by these principles to the conclusion that ’ the mortgage deed is evidence of a debt against the decedent, which the service of the scire facias made known to the administrators ; that it bound the land, from its date, as to all subsequently accruing rights (there being no purchasers for a valuable consideration, without notice), and is to be postponed to the three elder judgments of the Bank of Chillieothe only: that the purchasers of the lands from the administrators, under the order of court, hold them discharged from liens, but the moneys produced are to be distributed after the priorities of lien attaching to the lands. The mortgage being intended by the parties to secure all the plaintiff’s debts, the avails of the land mortgaged, after extinguishing the lien of these judgments, are to be distributed equally upon all, as well those in judgment as otherwise. That the plaintiff’s debts in judgment, reduced by the above payment, are a lien, like other ^judgments, upon the other real estate, if any be found; and the unpaid' balance of all the plaintiff’s debts is a general debt against the estate. The case is remanded to the county, that an account may be taken upon these principles.