Pindell v. Grooms

Judge Simpson

delivered the opinion of the court.

The first question that arises in this case is, did the mortgage, which was executed by Grooms to Pindell on the 3rd day of August, 1854, transfer to the mortgagee any title to the horse, which was then in the possession of Jones, and the right to which was a matter of controversy in an action then pending between Grooms and Jones?

As the possession of the horse had been taken from the mortgagor, and delivered to Jones by process of law in the action then pending between them, and was subject to restitution by the final judgment of the court, in the event that the plaintiff did not succeed in maintaining his action, it is very questionable whether, under these circumstances, the property should be regarded as being in such a condition as to preclude the mortgagor from passing the legal title to it, to a purchaser. But be this as it may, we entertain no doubt that a mere chose or right of action may be assigned or mortgaged for the indemnity of a surety, or to secure creditors. The legal title to the property will not pass, which was all that was decided in the cases of Stockdale vs. Fugate, 2 Mar. 136, and Young vs. Furgurson, 1 Litt. 298. But an equitable title to it will vest in the mortgagee or assignee, who, in a case like the present, will be equitably entitled to the benefit of. any judgment that may be rendered in favor of the mortgagor in the action pending between him and the claimant of the property.

2. All claims growing out of and adhering to property, right of action for damages ex contractu, and interests in actions pending,may all be assigned or mortgaged for the benefit of creditors. (Comegys »s. Vassee, 1 Peters, 193; Leitck vs. Hollister, 4 Comstock, ■ 211; North vs. Turner, 9 Sarg R. 248; Bur-rill on Assignments, p. 67.)— Not so with causes of action growing out of personal wrong to the debtor.

All claims growing out of and adhering to property, rights of action for damages ex contractu, interests in actions pending and undetermined, may all be assigned or mortgaged for the benefit of creditors. (Comegys vs. Vassee, 1 Peters, 193; Leitch vs. Hollister, 4 Comstock, 211; North vs. Turner, 9 Serg. & R. 248; Burrill on Assignments, page 67.)

The object of the law in authorizing such assignments is manifestly to benefit creditors, by making all the property and rights of property belonging to the debtor available to their payment. But causes of action arising out of a personal wrong to the debtor, not being for the recovery of damages for property illegally taken out of his possession, or unlawfully withheld from him, are not embraced by the reason or spirit of this rule of law, and may not therefore be legally assignable.

In this case, then, the right to the benefit of any judgment that might be rendered in the action between the mortgagor and Jones vested in Pindell, the mortgagee, he being equitably entitled under the mortgage to the horse which was the subject of controversy in the action. Jones as Grooms’ vendor had no lien upon the horse at the time the mortgage was executed, nor had he then an equitable right to set-off his debt on Grooms against the claim of the latter against him, not only because his debt \yas not then due, but also because the claim of Grooms was upon the horse in contest, or for his value, and was not the proper subject of a set-off. Consequently, the mortgagee has the elder and best equitable right to the judgment against Jones, and for which Logan, his surety, is responsible. The court below therefore erred in dismissing the plaintiffs petition as to the defendants Jones and Logan. If, however, the mortgagee can be indemnified out of the other property embraced by the mortgage, no judgment should be rendered against Jones and Logan, inasmuch as they have an equity against the mortgagor, inferior and subordinate to that of the mortgagee, but still such a one as should be respected in a court of equity. The other mortgaged property must therefore, if accessible, be first applied to the payment of the plaintiff’s demand, and he will not be entitled to any judgment against Logan, unless it prove to be insufficient for the payment of his demand.

Wherefore, the judgment is reversed, and cause remanded for further proceedings in conformity with this opinion.