State Savings Bank v. Harbin

The opinion of the court was delivered by Mr. Justice McIver. The facts of this case are so fully and clearly stated by the Circuit judge, that it seems unnecessary to repeat them here. It is conceded that the question raised by this appeal is novel in this State, and that the authorities elsewhere are conflicting. It is necessary, therefore, to consider the general principles applicable, and from them to deduce the proper conclusion. There is no dispute as to the general rule, that where there are two creditors of a common debtor, one of whom has a claim or lien upon two funds, and the other upon only one of these funds, that the latter has an equity to require the former first to exhaust the fund upon which he has no claim or lien. The only qualification of this rule, laid down in the elementary writers, is that it will not apply where the creditor having the lien upon the two-funds will be injured or delayed by its application. 1 8tory Eg. Jur., § 633 et seg.. This rule is for the benefit of the creditor only, and cannot be invoked in behalf of the debtor unless some peculiar equity springs up from other circumstances, as, for example, where the debtor occupies the position of a surety. I am unable to perceive any reason why this well settled and universally acknowledged rule should not be applied to the present case. There is no suggestion that its application would [432] tend to injure or delay the creditors having liens on the two funds. All the parties are before the court, and the only objection proceeds from the common debtor, who does not occupy the position of a surety, and I do not see any equity on his part to interpose an objection to the application of the rule. His right of homestead is not an estate, but is a mere right to have a certain portion of his property “exempt from attachment, levy or sale, on any mesne or final process -issued from any court.” If he has voluntarily stripped himself of this protection which the law has thrown around him, by twice mortgaging the land, out of which he would otherwise have been entitled to claim a homestead, he cannot complain at a result brought about by his own act, and he certainly has no such equity as would protect him from the operation of the rule above stated. The only creditor who would be likely to suffer under a different conclusion, is one who seems to have extended credit to the appellant before there were any liens upon any of his property, and it would seem to be manifestly inequitable that this creditor should suffer from an indulgence extended to the appellant, perhaps, in reliance upon a well settled and universally acknowledged rule. All the authorities seem to concede the proposition that, as between the debtor and his mortgagee, the former has no equity to require the latter first to exhaust the other property embraced in the mortgage before he can go upon that out of which homestead is claimed, and, as Mr. Thompson, in his work on homesteads, section 657, well remarks: “ If this is a sound rule where the only parties affected by it are the mortgagor and mortgagee, it becomes more imperative where to deny it would prejudice the rights of third parties, such as judgment creditors of the mortgagor.” It would, indeed, be a strange perversion to deny the equity claimed by the debtor in a case where its application would injure no one, and yet allow it in cases where innocent third persons would be the sufferers. The analogy drawn from the case of a devise of lands.to charitable uses, does not seem to me to be complete. Creditors stand upon much higher ground than devisees or legatees, and the reason given by Lord Hardwicke, in Mogg v. Hodges, 2 Ves. [433] 53, for not applying the rule in a case of a devise to charitable uses i?, “ that a court of equity is not warranted in setting up ■a rule of equity contrary to the common rules of the court, merely to support a bequest which is contrary to law.” In the case now under consideration, it is not proposed to set up the rule of equity as to a creditor having a lien upon two funds for the purpose of securing the payment of an illegal debt, or “ to support a bequest which is contrary to law,” but simply to provide for the payment of a just debt, subject to no legal exception whatsoever, not out of property exempt by law, but out of property liable for its payment, by throwing another debt upon the homestead property, which the debtor has voluntarily subjected to its payment by giving a mortgage on it. The judgment of this court is that the judgment of the Circuit Court be affirmed, Mr. Chief Justice Simpson concurred.