Hurd v. Eaton

Waliceb, J. It appears from the evidence in this case, that the plaintiff in error, after Dunlap had sold the property to Blaney, directed his executions against Dunlap to be returned unsatisfied. Plaintiff in error stated to the deputy sheriff, that he did not want the execution enforced against Dunlap, but against Sanford, and that there was an understanding with Dunlap, the nature of which was not stated. This witness states, that when the execution was in his hands, Dunlap was running a planing mill, and that plaintiff in error said, that he did not wish to break up Dunlap & Oolburn, but wanted the money made of Sanford. Benson testifies, that he saw plaintiff in error, in reference to his judgment liens on the property in controversy, and was prepared and would have redeemed the property, if Hurd had not agreed to release it. That plaintiff in error said he did not regard his judgments as liens on this property. This witness states, that Dunlap had previously informed him, that the object of the judgments was to collect the amount from Sanford, the amount which Sanford had agreed to pay for Hurd, and that in a conversation, Hurd acquiesced in Dunlap’s statement. It also appears, that after Hurd obtained his judgments, he by agreement postponed his lien on a portion of Dunlap’s property, to notes held by Davenport and Otis, to about the sum of eleven hundred dollars, when they purchased it at a trustee’s sale. The judgments are shown to have been a prior lien to the trust deed, given to secure the notes; yet Hurd permitted the notes, by agreement, to be paid by a sale of the property freed of the lien. When Blaney purchased this property subject to the lien of Hurd’s judgments, and Dunlap had other property out of which they could have been satisfied, could Hurd stay a levy and sale of such property, and hold that purchased by Blaney liable for their satisfaction ? Or could he, after Blaney had purchased, voluntarily release his lien on other property in favor of Davenport and Otis, and still retain his lien on the property purchased by Blaney ? Blaney purchased with constructive notice that the property was liable to sale for the satisfaction of these judgments. In making the purchase he ran the risk of having to redeem, satisfy the judgments, or procure a release of the liens. But was it fair and equitable for plaintiff in error to voluntarily release his lien upon other real estate, and permit a sale of the planing mill and other property of the defendants in execution, and thus impose the whole burthen upon Blaney ? We think not. When Blaney left an abundance of property to satisfy the judgments, he committed no fraud upon plaintiff in error. And having had no actual notice of the lien, he had strong claims upon the chancellor for relief, unless he acted recklessly or with a great degree of carelessness in making the purchase. And his grantee would succeed to all of his rights. Whilst a court of equity has no right, under such circumstances, to release the property altogether from the lien of the judgment, it has a right to compel a judgment creditor to first resort to and exhaust all other property held by the debtor subject to the lien, before resorting to the property thus purchased. After Blaney purchased, and before the other property of Dunlap had been discharged from the lien, if he had been threatened by an execution, there cannot be a doubt that by bill filed for that purpose, he might have compelled the sale of the other property before resorting to his. And it is upon the principle of marshaling assets, as applied to the administration of estates, the satisfaction of mortgages and other liens. The principle is, that when there exists two or more funds, and there are several claims against them, and at law one of the parties may resort to either fund for satisfaction, but the other party can resort to only one; courts of equity exercise the authority of marshaling the funds, and by this means compel the party having the right to look to both funds, to resort to that upon which the other has no claim, and thus enable the party who has but one remedy, to receive satisfaction. This rule is never applied except where it can be done without injustice to the creditors, or other parties interested, or the common debtor. In this case no wrong can result to Dunlap, because he sold without reference to this lien. He has received the value of the premises. It produces no injury or injustice to Hurd, as he had the means of satisfaction, after Blaney became the purchaser, but permitted it to be lost, by having his executions returned not satisfied. He postponed his prior lien to the satisfaction of Davenport’s notes, for a larger amount than the judgments. He had the means of collecting his judgments, but not only neglected but refused to do so, when it would have produced no injury to Dunlap’s grantees. By the return of his executions, and releasing, by agreement, other property to enable Davenport to collect his debts, it may be safely inferred that Hurd intended to release this property from liability to discharge his judgments. This presumption is strengthened by his agreement with Benson to release it, and by that agreement prevented a redemption. Again, his declaration to the deputy sheriff, that he did not want the executions satisfied out of Dunlap’s property, supports this view. When all of the evidence is considered, there seems to be no doubt that Hurd is estopped from proceeding against this property, to obtain satisfaction. This view of the case renders it unnecessary to discuss the question of Dunlap and Colburn as witnesses, or the validity of the judgment. The decree of the court below is affirmed. Decree affirmed.