Gemmill v. Richardson

The Chancellor :— .This seems to be a case of first impression. No direct authorities are found upon the question raised. It must be decided in accordance v/ith the general principles which have controlled this Court in administering that peculiar class of interests- termed equities, as distinguished from legal estates or rights. For, although the contrary was earnestly argued, there can be no doubt that the widow’s interest in the surplus proceeds of sale was but an equity. The questions involved are (ist,) whether this Court has the power to recall the surplus proceeds of sale which have been paid to the judgment creditor, Flinn, so as to enforce the widow’s equity against the fund; or, (2nd) — 609 — supposing the fund to have passed beyond the reach of the Court, can the defendants, Flinn and Richardson, or either of them, be held to respond personally to the widow, it having been by their action that the fund was discharged of her equity. First, then as to the fund : It has been applied by the sheriff to the judgment of the defendant Flinn. Can the Court recall it ? I am far from considering that a fund which is subject to an equity is placed beyond the reach of this Court merely because it has passed out of the hands in which the equity originally attached to it. That is a power too important to be surrendered without necessity. But it is a power subject to this limitation, viz: That the Court can in such case recall the fund only when in so doing it can restore the status quo, as it stood before the fund was disposed of, so as not to affect or prejudice rights or equities which have intervened to innocent third persons ; to illustrate, if, in the case of this fund, there had been no other liens beside the mortgage, and the money had been paid over by the sheriff to Mr. Gemmill’s executors or administrators or to his heirs at law, the Court might recall it from their hands for the purpose of enforcing the widow’s equity ; because they would have lost no advantage by receiving it, and by restoring it they would be placed in no worse condition than they held before it was paid to them ; besides the additional consideration that they represent the husband against whose estate the dower is claimed. No equity would be violated by obliging them to render back the fund. But .very different is the condition of the fund after it has been applied, as in this case, to judgment against the debtor. By such application the judgment has been satisfied and discharged—irrevocably so—for a judgment once discharged is gone forever. This Court therefore cannot, when recalling the fund, reinstate — 610 — the creditor to his rights and remedies under the judgment ;—it cannot restore the status quo. That the application of the fund to Flinn’s judgment operated as a satisfaction and discharge of it will be made obvious by considering that this is a question to be adjudged in the Superior Court, the Court in which the judgment was rendered, and under the process of which the money was raised and applied. The question could arise only in the event of an attempt to enforce the judgment by execution and of an application to the Court to stay proceedings upon the ground of satisfaction. That Court, being a Court of law and taking no cognizance of equities, would treat the money raised under its process as a purely legal fund applicable only to liens at law, and would necessarily hold any judgment paid in its due order out of the proceeds of sale to be discharged. Now, what would be a discharge of the judgment in the Court where it was rendered must be so treated here. For that Court having the exclusive power to enforce the judgment by its process, its decision must be absolutely conclusive. This Court has no possible control of such a question. It may restrain a judgment creditor from making an inequitable use of the process of the other Court, but it has no jurisdiction to give a creditor the use of such process. It must then be obvious that, as against the fund itself, from the necessity of the case, the widow’s equity can be protected only by arresting it in the hands of the sheriff before its application to the legal liens, and thus bringing it within the jurisdiction of this Court. After it has been applied to judgments in the due course of law, all questions touching the fund and what rights appertain to it and the validity and legal operation of the payment made to the creditor belong to another Court in which equities are unknown and where the fund is held subject only to legal claims. — 611 — In the next place :—As the fund is beyond reach, can Mr. Flinn the judgment creditor who received it be charged personally with the equity which attached to it prior to its being applied to his judgment ? I think not. The effect would be to leave a creditor who has been in no default, stripped both of his judgment and of the money received in satisfaction of it; such a decree would be in gross conflict with one of the principles of this Court, viz : that it will not enforce an equity by violating equity or working injustice. The creditor by receiving the money has been in no default. He has only accepted what by law was required to be applied to his judgment. In the condition in which the fund stood, no equity having been asserted against it, it was applicable only to legal claims, and to this judgment in its order. The creditor was not only entitled to it, but was obliged to receive it. ; for it was the law through its officer that applied the money, and the creditor could refuse to receive it only by relinquishing his judgment. Further than this, in the present case Mr. Flinn not only exercised a legal right, but upon the evidence, I am satisfied that he has acted.in good faith, without any collusion or effort to prevent or forestall the assertion of the widow’s claim; in fact, that he was ignorant of it. Further, it must be added that it has been solely in consequence of Mrs. Gemmill’s own neglect to take her remedy seasonably that the fund took its legal course of application. There is clearly no ground for charging Mr. Flinn, ex delicto, as for fraud or breach of duty in the receipt of this fund. Therefore, he cannot equitably be decreed to refund the money applied to his judgment, unless he can be re-instated in the judgment. But this, we have already seen, is impossible. The principle just referred to, that a court of equity will not enforce an equity contrary to equity, springs from — 612 — the very nature of equitable interests and is' of general application. These are interests which this Court, upon considerations of good conscience,sets up against thé rights which at law attach to the subject-matter. They must, therefore, be asserted consistently with good conscience and not otherwise. Hence it is that what aré termed equities may be lost by loches on the part of the claimant affecting prejudicially the party against whose legal rights they are set up, or they may be defeated by superior equities attaching to the subject-matter. In this respect they differ from estates, liens or charges at law, affecting land or a personal fund ; for these can be divested or discharged only by legal modes, such as the conveyance of an estate, or the release or satisfaction of a lien or charge. It cannot be necessary to argue that the claim of this widow is a bare equity kn-own only in this Court, and with which the fund is not affected until brought into this Court and subjected to its decree. (Her claim is in no sense an estate, lien or charge, such as needs to be divested by a release. It remains now to consider the case as against the sheriff, Richardson. He is sought to be charged on the ground, taken in the argument, that having notice, or at least knowledge of the widow’s rights, he applied the money to the judgment instead of bringing it into this court by a bill of interpleader, which was assumed to be his duty in the premises ; and so it is argued that he may be affected ex delicto with the widow’s equity. I waive the question of notice in this connection, as being wholly immaterial to the sheriff's duty or responsibility touching this fund. For, whether with or without notice, it is not a sheriffs-duty in applying the proceeds of an execution at law to take cognizance of equities affecting the fund. The proceeds, while in his hands, are a purely legal fund, being raised under the process of a court of law, and it is applied by the sheriff as an officer of that court, acting upon the same principles which would govern the court — 613 — itself in administering the funds. That the sheriff stands in this relation to the court from which the process issued and is bound to apply the money, as the court itself would do, is evident from the fact that he may under proper circumstances and on the application of the party interested, be ruled to bring the money into that court for distribution. Further, the statute which authorizes the sheriff, in the case of conflicting claims upon the proceeds of an execution at law, to take the money into the Superior Court,, conclusively demonstrates that his responsibility is only to legal claimants such as the court which issued the process recognizes, because, clearly the statute must have contemplated giving him this relief against all claims to which he could be subject ; and equitable claims cannot be brought under the cognizance of the Superior Court. But beyond all this, is thé more practical, and, perhaps, more important consideration that only by confining the responsibility of the sheriff in applying money raised under execution to legal liens of record,- can the office be administered with safety either to himself or to the public. In this view of the sheriff’s duties and responsibilities touching the fund while in his hands, he could not be allowed by a bill of interpleader to bring the money into a court of equity. For the object of such a bill is the protection of the party filing it against conflicting claimants upon the fund or property in his hands—such claimants as he is bound to recognize, who can hold him responsible and who may harrass him with conflicting suits for the same subject-matter. 2 Sto. Eq. Jur. Sec. 806. But a sheriff, being amenable only to legal and not to equitable claimants had no need in this case for his own protection to file a bill of interpleader ; and certainly he would not have been permitted to file such a bill and to bring the fund into this court for the protection of the widow’s interest. That would violate a settled principle of the law of interpleader which forbids one holding a fund professedly as a disinterested party from using — 614 — the process of the court to protect the interest of one claimant at the expense of another;—whence comes the rule that a complainant in a bill of interpleader shall make affidavit that the bill is not filed in collusion with either of the claimants. Under the circumstances, it does not appear that the Sheriff in applying the surplus proceeds of sale to the judgments in their order committed any breach of official duty. Neither is there the slightest evidence of fraud, collusion or undue haste, evincing an effort to defeat the widow’s equity. The money was applied in the due and proper course of such business, not less than a month after the rights of the judgment creditors had become fixed at law by the confirmation of the sale and adjournment of the Superior Court. There is therefore nothing to affect the sheriff with the equity displaced by his application of the fund to the judgments. The result of the whole case is that the widow has lost her equity by omitting seasonably to assert it. I treat' the case not as one of estoppel or of waiver. That it was technically neither of these was well shown in the argument. But it is a clear case of a loss of remedy through the failure to prosecute it while the subject-matter was within the control of the Court; and nothing remains but for the complainant to bear the consequence of her neglect. This is indeed, a hardship, but it is one inseparable from,the condition of such a fund. The proceeds of the land being subject to the liens at law, as they stand upon the confirmation of the sale, unless meanwhile the equity shall be enforced against it, there is reason that the widow should take her remedy promptly, if at all, so that the interests of others in the fund be not prejudiced. Nor was she without opportunity to protect her rights. For she had notice from the date of the service of the scire facias, and ample time to file a bill in equity — 615 — after the confirmation of the sale—not less than a month: Her ignorance of the law and want of legal counsel, suggested in the argument, are not, in the absence of fraud, grounds for equitable relief. The bill must be dismissed.