Schmitt v. Henneberry

Opinion of the Court.

This was a bill in chancery, filed by the appellant, alleging, in substance, that on the 29th of July, 1891, the National State Bank, of Bloomington, obtained two judgments in the County Court of McLean County for $550 each against one Louis Schmitt, and his wife, the appellant; that on July 31, 1891, six other judgments in favor of six other plaintiffs were also obtained against the said Louis and Bertha Schmitt, and that on the same day Henneberry and the Harlan Brothers obtained, respectively, judgments against Louis Schmitt alone, one of said judgments being for $308.23 and the other for $153; that the total sum of all these-ten judgments was $3,837.08, besides the costs; that executions were issued on each of said judgments on the days the same were severally obtained, to the sheriff of said county; that in all of said judgments against her and the said Louis he was the principal debtor and she the surety, the debt in each instance being that of said Louis Schmitt; that under said judgments and executions in favor of the bank the sheriff levied upon real estate belonging to appellant and upon personalty belonging to said Louis, and that afterward, on the 29th of August, 1891, and succeeding days, he sold the said real estate and personal property, the former for $2,715, and the latter for $2,716.95, the total proceeds being $5,431.95, which was $1,594.87 in excess of the judgments mentioned; but that in the meantime, to wit, August 1st, 1891, the Blatz Brewing Company also obtained a judgment against said Louis Schmitt and the appellant, in which also the said Louis was the principal debtor, and appellant the surety, for the sum of $2,062.12.

The bill prayed that the sheriff be directed to apply the proceeds of the sale of the property of Louis Schmitt to the payment of the executions against him in the order in which received by the sheriff, whether such executions were against said Louis alone, or against him and the appellant, until all the proceeds of the property of said Louis were exhausted, before taking any of the proceeds of appellant’s property; or, if the court held that could not be done, that it would decree the appellant to be subrogated to the rights of the judgment creditors against the said Louis to the extent that her property was applied to paying such judgment and that the same should, in her favor, be held to have priority of right as against the proceeds of the property of said Louis, in accordance with the order in which the executions came into the hands of the sheriff, etc. A demurrer to the bill was sustained and the bill was dismissed, and the question for our consideration is as to the propriety of such ruling.

The situation was such that Henneberry and Harlan, who had judgments against Louis alone, were prior in point of time and lien to the brewing company, whose judgment was against both the Schmitts. There was money enough from the sale of all the property to pay all the judgments obtained on the 29 th and 31st of'July and leave a surplus of $1,594.87, which lacked about as much of paying the brewing company’s judgment as the two judgments of Henneberry and Harlan amounted to. If the prayer of the bill were granted, the personal property would all be exhausted in paying judgments to which the appellant desired to be subrogated, thus excluding Henneberry and Harlan from the only fund to which they had access, and leaving so much more for the benefit of the brewing company.

The relief thus sought was properly denied. The object was to displace the legal rights of Henneberry and Harlan and to .deprive them of the equitable right of insisting that those creditors who had. judgments against Louis and Bertha should first exhaust the funds which were beyond their reach before resorting to the only fund which they could reach.

While it is true that a surety may be subrogated to the rights of the creditor, in reference to any collateral security which the creditor may hold, and that he may be subrogated to the creditor in the judgment for the purpose of keeping it alive and enforcing it for his own benefit against his co-defendants, yet this doctrine, being one of mere equity and benevolence, will not be enforced at the expense of a legal right. Junker v. Rush, 136 Ill. 179.

The surety does not become subrogated ipso faoto by payment, and will be entitled to the relief only upon equitable terms and under equitable conditions.

When the legal or equitable rights of others would be unfavorably affected or wholly disregarded, subrogation would be denied. Powell v. Allen, 11 Brad. 134.

Here the complainant seeks to be subrogated to the rights of the creditor and yet to be exempt from one of the conditions to which the creditor was subject—that is, to be required by a creditor of the principal debtor above to seek satisfaction from the fund which the latter creditor could not reach, and by this proceeding to secure precedence over such creditor, who had a valid lien at law by virtue of his judgment. The relief so desired is wholly inequitable. The demurrer was properly sustained and the decree dismissing the bill will be affirmed.