Purdy v. Doyle

The Chancellor :—The first question presented in this case is whether the fund in court is either legal or equitable assets. If it is such property as the judgment creditors could obtain a specific or general lien on at law, they are entitled to the fruits of their superior vigilance so far as they have succeeded in getting such lien. But if the property was in such a situation that it could not be reached by a judgment at law, and the fund is raised by a decree of this court, and *the creditors are obliged to come here to avail themselves of it, they will be paid upon the footing of equality only. (Codwise v. Gelston, 10 John. Rep. 507.) It clearly appears by the affidavits before me in this case that, as to one-half of the property out of which the fund in court was raised, the legal title never was in the ancestor, and of course it did not at law descend to the heirs. [561] The first section of the act for the relief of creditors against heirs and devisees gives an action against the heirs of a debtor who dies seized of lands, &c. At law a contract to purchase and payment of the purchase-money does not give the purchaser a legal seizin of the land. In this court it is otherwise; and on the equity of that statute this court would give to the creditors satisfaction out of the equitable interest in the land descended to the heirs. But when the creditors come here for the purpose of reaching the equitable rights of the heirs, they must submit to the equitable rule of this court. In Morrice v. The Bank of England, (Cases Temp. Talb. 218,) that rule is stated thus: “ The rule of this court with regard to equitable assets is to put all the creditors-on an equal footing; so where the assets are partly legal and partly equitable; and though equity cannot take away the legal preference on legal assets, yet if one creditor has been partly paid out of such legal assets, when satisfaction comes to be made out of the equitable assets, the court will defer him until there is an equality in satisfaction to all the other creditors, out of the equitable assets, proportionable to so much as the legal creditor has been satisfied out of the legal assets.[1] The complainant filed his bill in this court, in behalf of himself and of all other creditors, to reach this equitable property in the hands of the heirs. This was equal to the commencement of a suit at law to prevent the alienation of the assets. (Searle v. Lane, 2 Vern. 88.) But if the legal title was in the heirs, the subsequent suits at law, in which judgments were obtained before any decree here, would give the judgment creditors a preference over any other creditors whose debts were of equal degree ; and the heirs would not be obliged to defend those suits.[2] (Mactier v. Lawrence, 7 John. Ch. Rep. 206; Martin v. Martin, 1 Ves. sen. 211.) As to the remaining half of the land sold *under the mortgage, it is stated in some of the affidavits that the deed was signed and acknowledged in the lifetime of the testator; but it does not distinctly appear whether it was actually delivered to him, so as to pass the fee, or was retained in the hands of the grantor until it should be executed by Heeney, the owner of the other half. If the intestate was actually seized of this half at the time of his death, the judgments recovered against the infant heirs would give the plaintiffs therein respectively a legal preference as to the three-fifths of the surplus arising from that half over any other creditors of equal degree. But those judgments cannot affect the other two-fifths which belonged to the heirs who were not taken in the suit. As to them the judgments were no lien on their share of the land. This was so decided by the Supreme Court, in Jackson v. Hoag, (6 John. Rep. 59,) where a sale under such a judgment was held not to affect the rights of the heirs who had not been served with process. There is another difficulty in this case which has not been explained by the administrators who are the owners of two of the judgments. It is stated in the petition that on a sale of other real estate which belonged to these infants there was a surplus of $2,200, "which has been paid to the administrators. If such is the fact, they ought to account for that sum and have it applied to the payment of their judgments, before they are entitled to come upon the fund in court. If the judgments of Barry and McDonough were prior to those of the administrators, an order might be made for the payment of so much of the fond as they have a specific lien upon towards their debts. But Barry’s judgment is subsequent to both of those belonging to the administrators; and McDonough, by prosecuting a subsequent suit to judgment in the Supreme Court, has lost his first lien, and must now be postponed even to Barry, whose judgment is now the eldest. Under these circumstances the fund in court must be invested by the assistant register, and remain until all the [562] entangled equities between the parties are finally disposed of under a general reference in this suit; and the question of costs on this application is reserved until further order. Footnotes [[1]] Wilder v. Keeler, 3 Paige, 176; Slade v. Van Vechten, 11 id. 21. [[2]] 2 R. S. (4th ed.) 606, sec. 4.