Gearhart v. Jordan

The opinion of this court was delivered by Bell, J. This case is identical in principle with Neff v. Miller, 8 Barr, 347. That determination, and the authorities upon which it is based, settle that subrogation is admissible wherever a joint creditor of two funds, belonging to different debtors, appropriates one of them in payment of his debts, in disappointment of another creditor of that fund; provided the untouched fund is that from which, in fairness and honesty, payment of the joint debt ought first to have been drawn. In the ordinary case of a creditor with right of recourse to two funds belonging to the same debtor, and another creditor, who can look to but one of these funds as the source of satisfaction, a chancellor will, of course, interfere for the protection of the several creditors, for here there is no risk of doing injustice to third persons. But the administration of this equity is, by no means, confined to these instances, as would seem to have been at one time thought, and perhaps intimated in Kyner v. Kyner, 6 W. 225, and Harrisburg Bank v. German, 3 Barr, 303. Yet, when the funds or subjects of lien belong to different persons, the inquiry is whether the debt, which is a lien on both of them, or any part of it, ought, in justice, to be paid by one of them in relief of the other. If so, chancery will aid the interest of a creditor of the latter fund, against an appropriation of it in lieu of the fund primarily liable. Thus, if a judgment be recovered against A. and B., the latter being merely the surety of the former, for satisfaction of which B.’s land is sold, and his separate lien-creditors thus deprived of the means of payment, they are entitled to be subrogated to the place of the joint judgment-creditor, so as to be let in on the land of the principal debtor, even against subsequent encumbrances. So, also, if the judgment-debtors be partners, and on a settlement of accounts between them, it turns out one ought to pay the full amount of the judgment in discharge of the other’s estate: Dorr v. Shaw, 4 Johns. Ch. Rep. 17; Ex parte Kendell, 17 Ves. 520. Eor the same reason, the rule embraces purchasers, in common, of an estate bound by a joint lien. As between themselves, the purpart of each is liable to contribute only its proportion toward the discharge of the common burden, and beyond this, is to be regarded simply as the surety of the remaining purparts. In this [332] respect they are to be treated as the several estates of joint debtors, one being surety of the other; and, if the purpart of the one is called on to pay more than its due proportion, the tenant, or his lien-creditors, upon the principle settled in Fleming v. Beaver, 2 R. 128, Croft v. Moore, 9 W. 451, and Neff v. Miller, is entitled to stand in the place of the satisfied creditor, to the extent of the excess which ought to have been paid out of the other shares. The doctrine was so applied in Champlain v. Williams, 9 Barr, 341, where a purchaser of part of a tract of land, encumbered by a mortgage, was subrogated to the rights of the mortgagee, whom he had been compelled to pay, as against his co-tenants; and under the reasoning of Morris v. Oakford, 9 Barr, 498, the rule would be the same, even against the subsequent lien-creditors of the defaulting tenant. But where the original debt springs from a partnership transaction, it was ruled in Sterling v. Brightbill, 5 W. 229, there can be no substitution before a settlement of the partnership accounts; clearly evincing, that the partner whose estate has been taken in satisfaction, in defeat of his own creditors, was not indebted to his fellow, and that no countervailing equities existed in the latter. And it was strongly intimated that the duty of showing this devolved on the party claiming to be substituted, in the clearest manner. Though the cogent remarks of the learned judges who there delivered the opinion, were called for by the peculiarities of that case, to which all interested in the question had not been made parties, and are perhaps, applicable in all eases of recent partnership, we do not perceive their relevancy to this controversy. It is true, the defendant in the feigned issue, ordered by the Common Pleas, by way of answer to the plaintiff’s petition, averred that the property encumbered by Baldy’s judgment was purchased with partnership funds; Gearhart and Brown being then partners in trade, and that on the settlement of their partnership concerns, Brown was found to be indebted to Gearhart in an amount exceeding one-half the judgment recovered by Baldy, which indebtedness has never been discharged. This was denied by the plaintiff, and an issue was thus framed, the parties having agreed to try the right to subrogation on the bill and answer. Yet, on the trial of this issue, no evidence was offered of the existence of the alleged partnership, except what may be extracted from the agreement of February, 1845, between Gearhart and Brown, given in evidence by the plaintiff for an entirely different purpose. By that instrument, Brown covenants to pay off certain claims against Brown and Gear-hart, in part consideration of the conveyance to be made. Now, [333] this may indicate that a partnership once existed, but this is nowhere asserted to have been the fact. Nor is it anywhere positively intimated that the claims to be paid were the debts of a recent or subsisting partnership. Certainly, having asserted it as his answer to the pretension set up by Jordan & Brothers, it lay upon Gearhart to make out, at least with some degree of certainty, a partnership; but though Brown himself was called as a witness, he proved nothing either as to the alleged partnership or his indebtedness, on that account, to Gearhart. But had the existence of a late firm been established, surely under the circumstances surrounding this case, some evidence of the avowed indebtedness of Brown to Gearhart, or at least of an unsettled account between them, should have been given. Gearhart, the party apparently solely interested in the question at issue, was properly in court; differing the case, in this particular, from Sterling v. Brightbill, and had himself affirmed the only facts upon which issue was joined. By the article of agreement, already noticed, it was confessed his moiety of the property bound, was subject to the payment of one-half the amount of Baldy’s judgment; and the agreement was properly admitted to show this, if for nothing else; and yet Gearhart tendered not a particle of proof tending to show the smallest share was due to him from Brown, or even the existence of an open account between them. Under such a condition of facts, to ask the court to presume the truth of the answer was to tax its credulity beyond the stretch of sober reason. Had the defendant succeeded in raising a question on this head, by even inconclusive proof, or furnished a ground, though narrow, upon which to build such an hypothesis, he might, with some show of propriety, have called on the court to pause before acceding to the prayer of the petition; but, in the absence of everything like evidence, I repeat, the principle developed by the case already twice alluded to, is inapplicable here. Something was due from him who set up a partnership, to defeat the plaintiff’s otherwise undoubted equity. In no respect was this duty discharged, and the transaction itself furnished nothing to fill the hiatus. There is nothing in the suggestion, that the agreement shows the claims against Gearhart and Brown were to be paid with part of the purchase-money of the property, and, therefore, not Gear-hart’s funds, to raise a balancing equity in the latter. The answer is twofold: first, no partnership was shown; and, second, if this were otherwise, the consent of Brown to pay these claims, in part consideration of his purchase, shows — if it shows anything ger [334] man to the purpose — that Grearhart was, as between the contracting parties, alone liable to pay them. No presumption of indebtedness on account of partnership transactions can, therefore, be fairly drawn from this. It follows that, as the case stood, the court below was right in assuming to itself, as matter of law, the decision of the controversy. There was, in truth, no disputed fact upon which the jury could be called to pass. Considered in connexion with this fact, the first error assigned sinks into insignificance. There was undoubtedly a mistake committed in permitting the challenge of a juror after he was sworn, for a cause existing when he was called to the book. The authorities cited for the plaintiff above, abundantly establish this. The proper course, on a persistence in the objection, would have been, to direct a juror to be withdrawn, and then to call a fresh jury into the box. But, as it turned out, there was nothing for a jury to decide; and, consequently, the error committed inflicted no injury on the defendant below. We have often said, we will not reverse a judgment for such a mistake. Judgment aflirmed.