Morgan v. Sherwood

Mr. Justice Lawrence delivered the opinion of the Court: On the sixteenth of May, 1864, Sherwood, the appellee, filed a claim in the county court of Will county, against Morgan, the appellant, administrator of Small, founded upon a bond executed by Small to Sherwood. The county court did not allow the claim, but Sherwood appealed to the circuit court, and it was there allowed. The administrator has brought the record to this court. The allowance of the claim is resisted, on the ground that the bond was secured by mortgage upon certain real estate in the State of Hew York, which mortgage Sherwood filed a bill to foreclose, on the twenty-first of February, 1862, in the State of Hew York, making Small a party, and after his death bring-' ing in his administrator and heirs, and that a decree of foreclosure and sale was rendered, under which, on the fourteenth of March, 1863, the mortgaged premises were sold to one Beasley, the equitable owner of the mortgage, for an amount sufficient to satisfy the debt. The appellee meets this defense by showing that the court in Hew York, which pronounced the decree, made another order on the nineteenth of June, 1865, setting aside the sale, on the ground that Small had no title to the mortgaged premises, and directing Beasley to be released from the purchase. The purchase had been in no manner consummated, no money having been paid, except the master’s fees, nor had a deed been executed, nor had the sale been approved by the court. Under this state of facts, it is insisted by counsel for appellant, that as the sale under the decree had been made before this claim was filed in the county court, and was not set aside until some months thereafter, there was nothing due from the estate when this proceeding was commenced; and admitting the debt was revived when the sale in Mew York was set aside, it was then too late to file a claim, more than two years having elapsed since the letters of administration were issued. This position of counsel we do not consider tenable. The decree and sale were not a satisfaction, or, in other words, an extinguishment, of the debt. If such had been the case, the action of the court in setting aside the sale would not have revived the debt. Yet no one would claim, if a court of chancery sets aside a sale under a decree, while it retains its jurisdiction over the case, that no further steps could be taken to. enforce the debt which it had been the object of the sale to satisfy, because the sale, if completed and approved, would have satisfied the debt. In this proceeding, it is wholly immaterial upon what grounds the court in Mew York based its order annulling the sale. It is sufficient that it had jurisdiction to make it, which can not be questioned, as, independently of the general practice of courts of chancery in such cases, this decree shows upon its face that the sale was to be reported to the court, and that it had not dismissed the parties from its jurisdiction. When the. sale was set aside, the debt stood precisely as if no sale had been made. Only after such a sale is so far consummated as to be no longer liable to be set aside on motion, can it be regarded as an absolute satisfaction of the debt. Until then, in order to preserve the mutual rights of the parties, and prevent a failure of justice, we must regard it as merely a conditional satisfaction. If the sale is consummated, the satisfaction becomes absolute, and relates back to the day of sale. Until consummated, there is no absolute satisfaction. It is a proceeding in fieri, which may or may not extinguish the debt. It follows, from what we have said, that if the mortgagee is suing on his- note or bond at law, and foreclosing under the mortgage at the same time, although a sale under the decree for an amount equal to the debt might be a very good reason for suspending further proceedings in the cominoji law action until the sale had either been consummated by the report of the master and an order of the court, or by the master’s deed, or had been set aside, yet such a sale would not be, of itself, a sufficient reason for dismissing such action, and in case the sale is set aside, there would be no reason why the plaintiff should not have judgment on his bond. It also follows, that, pending such merely conditional satisfaction, the creditor, if he has not already sued upon his bond, should be permitted to commence a suit upon it, subject to be defeated if the satisfaction under the sale becomes absolute, but with the right to recover, in case the sale should be set aside. Judgment affirmed.