Knouf's Appeal

Mr. Justice Paxson delivered the opinion of the court, The appellants object to the order of subrogation made by the court below for the following reasons: 1. There are not two funds belonging to the common debtor. 2. It throws partnership-creditors upon the individual estates of the partners, to the exclusion of individual creditors having liens thereon, and 3. The mechanics’ lien-creditors having specific liens only, with no right to proceed against any other property, are not entitled to subrogation. To decide these questions properly, requires an examination of the facts. John Knouf, Peter Heilman and Henry Knouf, became the owners in fee as tenants in common, of a lot of land in the borough of Milton, on which they erected a planing-mill, and commenced business under the firm name of Knouf & Co. Prior to the commencement of the building, the following judgments were entered as liens against the property: Hull & Davis v. John Knouf and Peter Heilman, two judgments of $450 each; Alexander Jordan v. Same, for $1080; White, Lentz & White v. Same, for $2375, and Patrick Coyle v. Same, for $880. At the time these several judgments were entered, the said John Knouf was the owner of two other lots of ground, one of them situate in the borough of Milton, the other situate in Torbert township, Northumberland county. The judgments above mentioned, were not only liens upon the mill property, but were also liens upon the individual property of John Knouf, and the judgment of Alexander Jordan, was a lien by transcript, upon the farm of Peter Heilman, in Lycoming county. Ellen Jane Knouf, one of the appellants, held a judgment of $4300 against the same defendants, which in Northumberland county was subsequent in point of lien, to the mechanics’ claims hereinafter mentioned, and was one of the first liens upon the farm of Peter Heilman, in Lycoming county. We now come to the mechanics’ liens, in whose favor the order of subrogation was made. They were filed for work and materials furnished to the firm of Knouf & Co., for and about the construction of the planing-mill aforesaid, and amounted in the aggregate to the sum of $4696.80. They were all subsequent as to lien to the five judgments first above stated. The firm having failed in 1877, executed a deed of assignment of the firm property, for the benefit of its creditors. John Knouf and Peter Heilman also executed separate assignments of their [82] respective individual estates. The assignee of the firm sold the mill property discharged of all liens, under the Act of 19th January 1876, filed his account of the proceeds, and an auditor was appointed to distribute the balance in his hands, amounting to $4631.14. The auditor awarded the whole of the fund to the judgments which were prior liens to the mechanics’ claims, whereupon the latter creditors obtained the order of subrogation, which is the subject of this contention. It needs but the above statement of facts, to show that the difficulties in the way of the mechanics’ lien-creditors, are very serious, leaving out of view any question of the right of subrogation growing out of the peculiar nature of their liens. The claims filed were against the firm, and were for partnership debts. The firm does not, and so far as this record shows, did not own any real estate. The mill lot was owned by the three partners, not as a firm, but as tenants in common. The judgments which were paid out of the fund, and to which the appellees were subrogated, were not against the firm, but against John Knouf and Peter Heilman, two of the members of the firm as individuals, and the fund out of which the appellees claim to be paid, was raised from, or belongs to, the individual estates of the said John Knouf and Peter Heilman. It will thus be seen, that there are not two funds in the hands of a common debtor. There are, in point of fact, three funds, one belonging to Knouf & Co., one to John Knouf, and the third to Peter Heilman. The rule as to subrogation exists only where both funds are in the hands of a common debtor of both creditors. Lloyd v. Galbraith, 8 Casey 103; Fessler v. Hickernell, 1 Norris 150. There is the further objection that the order throws the payment of the partnership debts upon the individual estates of John Knouf and Peter Heilman. It is impossible for us in this proceeding, to determine the equities between the partners, and Fessler v. Hickernell, is an authority in point, that such equities cannot be considered upon a motion for subrogation. To entitle a party to subrogation, his equity must be strong, and the case clear. In such applications great care should be taken by the court, that the subrogation will work no injustice to the rights of others: Erb’s Appeal, 2 Barr 296. And it will never be allowed, where .the equity of tjje party seeking it is no stronger than the equity of the party affected by it. I am unable to see what equity the appellees have, that entitles them to be paid their mechanics’ claims against the firm of Knouf & Co., out of the individual property of Peter Heilman, in the adjoining county of Lycoming, as against the appellant, who is a judgment-creditor of said Heilman in said county. It is a mistake, to suppose that mechanics’ claims have superior equities over other liens. If, as a class, they have any right to subrogation at all, about which I express no opinion, it is not because they possess superior merit. [83] While it is to be regretted that the appellees will lose their money, if the fact be so, it was nevertheless a risk which they voluntarily assumed, when they furnished labor and materials for the erection of a building upon a lot already encumbered by judgments to the extent of $5235. The order of subrogation of September 28th 1878, is reversed and set aside, at the costs of the appellees.