Block, Oppenheimer & Co. v. Latham

Stayton, Associate Justice. It mattters not that Mills inay have bought some or all of the goods seized under the distress warrant sued out by Latham, after a part of the rent became due; for his lien attached upon whatever property Mills or his vendees had upon the rented property, the latter not being purchasers in the ordinary course of business, nor the property removed from the rented premises, and so for the payment of all rent due without reference to the time it accrued. The court, therefore, did not err in rejecting the testimony of the ■witness Kiam. There is nothing in the record to show that Latham had abandoned his landlord’s lien. The acceptance of the collateral promise of Sweeney & Coombs to pay the rent due by Mills would not, of itself, operate as a release of the lien held by Latham. The evidence shows very clearly that Latham received the promise of Sweeney & Coombs as an additional security for the rent due to him. The other assignments involve the question whether the appellants had the right to delay Latham in the recovery of the money due to him for rent out of the proceeds of the goods seized, which were practically in the hands of the court, and to force him first to resort to Sweeney & Coombs on their promise to pay the rent. The petition of Latham was filed on December 7, 1883, and, so far as the record shows, no effort was made by the appellants to obtain this character of relief until the day before the trial; and if, upon this ground alone, the court had declined to entertain the prayer for such relief, if under the facts it could have been given, there would have been no error. The trial occurred on May 14, 1884. As between Mills and Sweeney & Coombs, the title to the property seized passed to the latter, and Latham had a superior lien upon it whether that sale was valid against other creditors or not. The appellants have attachment liens, valid only in the event the sale from Mills to Sweeney & Coombs wTas fraudulent. [418] The instrument executed to Latham was not upon valuable consideration running from him to its makers, and hence he is not, in reference thereto, to be treated as he would be entitled to be were there a consideration other than the conveyance from Mills to Sweeney & Coombs to support the promise made by the latter. Latham, then, by virtue of his superior lien, has a claim on the fund in court for the payment of his debt, and he has also the claim on Sweeney & Coombs, based on their promise made to him, which the appellants aver was but a part of a transaction through which Mills transferred his property in fraud of their rights as his creditors. Under such a state of facts, can a court of equity marshal the securities held by Latham? The rule in reference to this matter is thus well stated by the supreme judicial court of blew Hampshire: “ Where one creditor has a lien upon two funds, and another creditor has a lien upon one only of these funds subject to the lien of the former, a court of equity will often compel the former to exhaust the fund upon which he only has a lien, before allowing him to satisfy any part of his claim out of the other fund. . . . But these principles can apply only where the creditor’s right to resort to both funds is clear, and not seriously disputed, and wiiere the remedies available for reaching and applying the funds are reasonably prompt and efficient.” Kidder v. Page, 48 N. H., 382. This rule is reasonable and is well sustained by authority. Cannon v. Kreipe, 14 Kan., 326; Calloway v. The Bank, 54 Ga., 573; Denham v. Williams, 39 Ga., 312; Briggs v. Planters’ Bank, 1 Freem. Ch. (Miss.), 584; Jervis v. Smith, 7 Abb. Pr., 221; Wolf v. Smith, 36 Iowa, 457; Pomeroy’s Eq., 1414; Story’s Eq., 642, 645. Under the facts before us, if Latham were compelled to resort first to his claim against Sweeney & Coombs, he would necessarily be delayed in the collection of his debt; for it is obvious that, if at all, he could enforce his claim against them only through an action which would probably be resisted, whereas, in the present action, there is a fund in court out of which he may be at once paid. This delay, if be could be compelled to undergo it, has been increased by the failure of the appellants, who were originally made parties to the suit, promptly to ask the relief which they now seek. If the sale made by Mills to Sureeney & Coombs was, as alleged by appellants, made with intent to defraud creditors, that matter would, doubtless, be urged by Sweeney & Coombs, if suit was brought against them on their promise made to Latham, and especially so [419] if in the other proceedings the sale be set aside by creditors for fraud; and although pleaded by a party to the fraud it would be a good defense to the action, for under the facts Latham could no ■more enforce the promise made to him directly than could he had the promise been made to Mills, and by him assigned to Latham. He would not be entitled to such protection as would be a bona fide holder of negotiable paper executed under circumstances similar to those charged by appellants to have existed. Nellis v. Clark, 20 Wend., 24; S. C., 4 Hill, 424; Briggs v. Merrill, 58 Barb., 389; Dyer v. Homer, 39 Mass. (22 Pick.), 253; Bailey v. Foster, 26 Mass. (9 Pick.), 140; Merrick v. Butler, 2 Lansing, 105; Ager v. Duncan, 50 Cal., 327; Goudy v. Gebhart, 1 Ohio St., 263; Powell v. Inman, 7 Jones, 28; Bump on Fraudulent Conveyances, 454. The answer of the appellants showing that Sweeney & Coombs have a defense which they could urge against their promise to Latham should he seek to enforce it, a court of equity would not compel him to resort to a fund, the recovery of which may be defeated. ' ' The facts alleged by appellants which make the promise to Latham illegal may not exist; but in this case, in which the appellants are seeking to have securities marshaled, the facts on which they base their claim as to them must be taken to be true. There is no error in the judgment, and it is affirmed. Affirmed. [Opinion delivered February 27, 1885.]