Datesman's Appeal , 1875 Pa. LEXIS 43 ( 1875 )

Mr. Justice Woodward

delivered the opinion of the court,

The essential inquiry here is, whether the sum of $698, with interest and costs, was properly appropriated to the judgment of Terret & Martin against Datesman & Heckel by the court below. A fund had been realized from the sales of the joint property of William P. Datesman and John Heckel, and the separate property of W. P. Datesman. This had been distributed to joint and separate creditors in a manner that has not been made the subject of any complaint. There remained the sum of $1043.71, which was made, up entirely of proceeds of the sales of the separate property of W. P. Datesman. This was claimed by the appellant, John Datesman, as assignee of the judgment of John Heckel against W. P. Datesman, for $1726.71. This had been entered on the 26th of June 1871, and been assigned as collateral security on the 1st of August 1872. It was claimed also by Terret & Martin on a judgment against Datesman & Heckel— W. P. Datesman and John Heckel — for $698, which had been entered on the 21st of October 1871. The auditor gave the entire balance to John Datesman on the Heckel judgment. The court reversed the report, and appropriated as much of the fund as was necessary to satisfy their judgment to Terret & Martin.

It appeared by the record that W. P. Datesman and Heckel became insolvent as early as the 9th of July 1872. It was not until after that time that Heckel assigned his judgment to John Datesman. When the latter took it he became subject to every equity and disability which would have affected Heckel. He was the assignee of a chose in action ten months after the insolvency of Heckel had been ascertained. He was not a purchaser for a valuable consideration, for he had received it as collateral security. The case was precisely one for the application of the rule laid down by Judge Sergeant in Himes v. Barnitz, 8 Watts 39. The rights of the appellant, then, being only those which his assignor could have asserted, what would have been Heckel’s own position in relation to this fund? He was a debtor of Terret & Martin in a judgment next of record to his own. The law could not tolerate the wrong that would have been involved in permitting an insolvent debtor to retain money raised by a judicial sale, to the direct exclusion of his judgment-creditor. He and W. P. Datesman had been partners. The money had been raised by his partner’s property, and he and his partner were joint defendants in the judgment of the appellees. To permit him to retain this money on his lien would violate long-settled principles of equity, which are the foundation of the entire practice of substitution and subrogation. It was decided in Worrall’s Appeal, 5 Wright 524, that though a claimant to the proceeds of a sheriff’s sale of the personal property of his debtor has the prior execution, he cannot, by virtue thereof, if insolvent, receive the fund to the prejudice of a subsequent execution-creditor, for whose claim he was bound as the surety of the debtor, but the proceeds will be appropriated to the latter claimant. Erb’s Appeal, 2 Penna. R. 296, and Himes v. Barnitz, supra, were relied on as authority for Worrall’s Appeal, and the judge who delivered the opinion of the court, said: “ The fund for distribution in those cases arose from sales of real estate; in this case the fund is raised from personalty, but this circumstance cannot affect the application of the equitable principle w'hich forbids a joint debtor, who is insolvent, to divert a fund from a creditor to whom he owes it, into his own irresponsible pocket.” The current of authority in this direction has been unbroken since Erb’s Appeal, except in the case of The Harrisburg Bank v. German, 3 Barr 303, and that is shown by the opinion of Judge Williams in Huston’s Appeal, 19 P. F. Smith 485, to have been overruled.

But it is urged on behalf of the appellant, that the decree should be reversed, because the judgment of Terret & Martin, though next to that of Heckel in the order of time, is not next in the order of lien. The ground is taken that it was so defectively indexed, that, as between them and John Datesman and Mary M. Datesman, the plaintiffs in the two following judgments, the latter would be preferred in the distribution. The firm name of Dates-man & Heckel was only entered in the index of the Terret & Martin judgment, and the argument is, that when the fund reached that, it was subject to a defect that was fatal; that, as to it, the latter judgments would take; that the controversy was thus reduced to one in which the holder of the Heckel judgment and the plaintiffs in the later judgments were the only parties; and that, as between them, no question of lien and no question of substitution could arise, the Heckel judgment was entitled to the fund.

It would be difficult to find any recognised legal rule to justify the appellant in thus reaching forward to assert a disability in favor of the plaintiffs in the later judgments, in order to create a fresh contest between the latter and himself. But the fallacy of the view presented on his behalf is shown by the consideration that the money was intercepted by the lien of the Heckel judgment when that was reached, and that, as a subject for legal distribution, it never reached the judgment of Terret & Martin at all. At that point all disputes in relation to the order of distribution and the applications of liens, were arrested and closed. So far as principles of law were concerned, the appropriation was made to the Heckel judgment. The only issue left av*, whether the appellant should take the fund by virtue of the legal lien which had. grasped it, or it should go, on principles of equity, to the judgment-creditors of an insolvent debtor. The defect in the index was not one which could be made the foundation of a contest between these parties; and as to the later judgments of John and Mary M. Datesman, the fund was gone. They could set up no legal claim, and certainly their intervention cannot be invoked in a controversy in which Terret & Martin are pursuing their demand against Heckel, on the equitable grounds on which the right of subrogation and substitution rests, irrespective of any right of contract or any Hav of lien.

Decree affirmed at the costs of the appellant-