Barnum v. Raborg

2 Md. Ch. 516 | New York Court of Chancery | 1850

The Chancellor:

I have read carefully the evidence taken by the parties under the order of the 18th of September last, passed upon the petition of Zenos Barnum, objecting to the sureties in the appeal bond filed by the defendants in this case, and am of opinion, that the objections are not sustained.

The solicitor for the complainants and purchaser, suggests, that the sureties in an appeal bond, if excepted to, should justify, in analogy to the practice at law in the case of bail.

But the late Chancellor in Ringgold’s Case, 1 Bland, 27, says, “there does not appear to be any settled mode of proceeding, by which to cause the sureties to justify to ascertain their sufficiency, and I am persuaded such has never been the practice of this court in cases similar to the present.”

The proof shows very clearly in this case, that one of the sureties is worth'more than the penalty of the bond, and though the other surety may be" destitute of commercial credit, it is impossible, looking to his property, to consider him merely a nominal party.

The great and only question in such cases as the present, is to ascertain, whether the party who is successful in the inferior court, has, in the sureties in the bond, a secure indemnity for the injury he may sustain by the appeal, and whether this appears by looking to the value of the estate of each surety, or, by an aggregation of the worth of all, does not seem to me to be material. If the sureties in the bond taken collectively are sufficient, the bond is sufficient, and must be approved.

It is therefore ordered, that this petition be dismissed with costs, to be taxed by the Register, and that the appeal bond be approved.

Thé order ratifying and confirming the sale, was affirmed by the Court of Appeals, on the 21st of June, 1850, for the reasons assigned by the Chancellor, and the cause remanded to this court. On the 26th of June, the complainants filed their petition, praying that the cause might be reinstated and referred to the Auditor, with directions to state an account making proper allowances to the complainants and purchaser out of the surplus proceeds of sale, for the injury which they have sustained by the said appeal, and that a writ of habere facias possessionem, may be issued to put said purchaser in possession of said premises. An order was the same day passed referring the case, according to the prayer of this petition, and granting a writ of injunction directed to the defendants to deliver possession to the purchaser.

The Auditor stated an account in compliance with this order by which he applied the net proceeds of sale, first, to the payment in full of the complainants’ claim for the purchase money due to them, with interest to the day of sale, amounting to $4,920. The interest was then calculated upon this whole claim as of that day, to the date of the affirmance by the Court of Appeals, of the order ratifying the sale, 21st of June, 1850. This interest amounted' to $630 58. This claim was stated with reference to a credit of $600, to be allowed as of the 27th of June, 1850, by an agreement of the parties filed in the cause, with a proper rebate to the date of the decree affirming said order. The residue was then applied to the payment in full of the complainants’ costs in the Court of Appeals on the second appeal, and the balance of $1,207 45 assigned to the purchaser in part remuneration for the damage sustained by him in consequence of the non-delivery of possession, the sale having been made for cash, and terms having been duly complied with. The measure of such damages were assumed to be the interest on the purchase ($6,600,) increased by the amount of the incumbrance ($8,000,) subject to which the purchase was made, from the day of sale to the date of his obtaining possession, (27th of June, 1850,) according to the instructions of the solicitor for the purchaser. A large balance was left still due on this claim after the application of the said $1,207 45, the whole claim amounting as then estimated to the sum of $1,871 23.

This account, and report of the Auditor accompanying it, was filed on the 20th of July, 1850, and on the 5th of December, 1850, the defendants excepted to the allowance of these items of $630 58 to the complainants for additional interest, and $1,207 45, to the purchaser for loss resulting from the non-delivery of possession. To the first, because, as between the complainants and the defendants, their rights growing out of their relations, were determined by the sale of the property, and by its conversion into money, which was applicable to the discharge of the debt due by the defendants. The delay consequent upon the proceedings in regard to the ratification of the sale, it is submitted, whatever of loss it may have occasioned the complainants, is not to be recompensed by any resort to the proceeds of the property sold, but that the complainants’ remedy, if any, is by a different proceeding, and personal, against the defendants. But if this be not so,, and the Court of Chancery be competent to appropriate the fund in the hands of the trustee, it is insisted, that the Auditor should have calculated the interest on $4,000 from the 8th of July, 1844, to the 27th of June, 1850, and then deducted the credit of $600 as of the 6th of July, 1850, instead of calculating the interest to the 8th of May, 1848, and then compounding on that sum up to the 27th of June, 1850.

To the allowance of the item of $1,207 45, the defendants object.

First, Because there is no case before the Chancellor in which the respective claims of the purchaser and the défendants as against each other can be adjusted, or an account between them stated. Zenos Barnum was but the purchaser of the estate, the defendants the debtors upon the claim under which the property was sold, the controversy between them in the Court of Chancery affected only the validity of the sale reported by the trustee, and the damage resulting from the delay consequent upon the appeal from the order of ratification is covered by the appeal bond, to which the purchaser may resort for indemnity. But the defendants respectfully insist that it is not competent for the Chancellor in any condition of this, case, to determine how far the purchaser has been damnified by the course of the defendants, and to assess and liquidate his damages. That can only be done by a resort to the bond of the defendants, and in a different form.

Second. There is no evidence from which the Chancellor can determine the amount of damage the purchaser has sustained, if it be conceded that it is competent for this court to assess it, and enforce its payment in this suit. The assumption that the possession of the property was equivalent in value to the interest of the purchase money, is altogether arbitrary. It may have been worth more, or much less, and it is impossible, therefore, to say, that the measure of damages in this case is the precise interest. It cannot escape the observation of the Chancellor, that if this audit be confirmed, the defendants are made to pay not only the interest due by them up to the day of the final settlement of this controversy, but interest for a large portion of the same period upon the whole purchase money of which that debt is a part.

The defendants, therefore, maintain that these items are not allowable, and that the same, or a portion of them are not even cognizable in this court.

Upon these exceptions, the following opinion was delivered on the 7th of December, 1850.]

The Chancellor. :

This case is submitted by consent, upon exceptions to the report of the Auditor of the 18th of July last. The exceptions briefly, but very clearly, state the objections to the report, and some suggestions have been made by the solicitor of the parties interested in maintaining it.

The first exception relates to the allowance, by the Auditor, of interest upon the claim of the complainants from the day of sale, to the date of the affirmance by the Court of Appeals, of the order of this court ratifying it. This is objected to, first, upon the ground, that the complainants’ remedy, if any, for the loss occasioned by the delay consequent upon the appeal, is, by a different proceeding, and personal against the defendants. And, secondly, that if the complainants may resort to the proceeds of sale, to indemnify them from this loss, it was not proper in the Auditor to calculate interest upon the claim to the day of sale, and interest upon the whole claim, as of that day, to the date of the affirmance, by the Court of Appeals. In other words, that the complainants’ claim as it stood on the day of sale, should not have been treated as principal, but the interest should only have been charged, upon the original principal debt.

With regard to this last objection, I consider it met and answered, by the case of Ellicott vs. Ellicott, 6 Gill £f Johns., 35, where it is said, that if the debtor’s property be sold on credit, to pay his debts, his creditors using due diligence in getting their money from the trustee, on the day of its receipt by him, would be getting not only simple interest on their debts from their maturity, but interest compounded from the day of sale | and it seems to me very clear upon principle, that if the cred= itor is precluded of this right by the act of the debtor, as for instance, by appealing, as in this case, and filing an appeal bond, that the rights of the former should not be prejudiced. The debtor cannot be heard to say, that the claim of his creditor, shall be in any way impaired, not by his own omission or negligence, but by the act of his debtor, over which, he, the creditor, could exercise no control.

• The objection that the claim of the creditor for this additional interest, is personal against the debtor, and cannot be enforced against the proceeds of sale, cannot, I think, be supported. The appeal bond might no doubt be resorted to, for any injury or loss, occasioned by the appeal; but there can be as little doubt, I presume, that if a recovery was had upon the bond, and the sureties were made to pay the money, they would be entitled to come here, and ask for indemnity out of this fund; and if this be so, I cannot perceive the propriety of' turning the creditor over to the sureties in the first instance, creating unnecessary circuity certainly, and perhaps, exposing them to loss. Upon the same principle, that the costs of the appeal are allowed out of the fund, (and this allowance is not objected to,.) the additional interest should be allowed, these costs are equally a personal claim as the interest, and equally covered by the appeal bond.

The remaining exceptions relate to the allowance to the purchaser, if the sum of $1,207 45 for loss sustained by him, in consequence of not obtaining possession of the property, the sale having been made for cash, and the terms having been complied with. That the purchaser is entitled to indemnity for this loss, is not, I presume, denied; but for this also, it is said, the remedy is upon the appeal bond, and not upon the proceeds of sale. The purchaser bought subject to an incumbrance of $8,000, and the amount of the sale being $6,600, the property cost him $14,600, the interest on this sum, from the day of sale, until the order of ratification was affirmed by the Court of Appeals, amounts to $1,871 28 ; but the residue of the proceeds of sale, only amounting to $1,207 45, that sum only was assigned to the purchaser, by the Auditor, being but little more than interest at the rate of four per cent, per annum, on the purchase money. That the loss occasioned by the acts of the defendants in withholding the possession of the property from the purchaser, entitled him to have recourse to the appeal bond, is very certain; but this does not prove, that the proceeds of sale being in court, may not be applied to his indemnity. If the sale, instead of being for cash, had been on credit, and the defendant had refused to give the purchaser possession, until coerced by the authority of the court, it is supposéd to be very clear that the purchaser could not be made to pay interest for the time he was deprived of the possession, for the benefit of the defendant.

S. H. Tagart, Thos. S. Alexander for Complainants. John Nelson, Wm. Schley for Defendants,

No opinion is meant to be expressed, with regard to the obligations of the purchaser, under such circumstances, to pay interest, so far as creditors are concerned, but if the principal proceeds of sale should be sufficient for their payment, the defendant refusing to surrender the possession of the property, would never be allowed to claim interest as against the purchaser. But in this case, the sale was for cash, the money was paid, and the possession of the property retained by the defendant. The purchaser, therefore, lost the interest upon the purchase money, and he was also compelled, or will be compelled to pay the principal and interest of the elder incumbrance, and the question is, shall he not be indemnified for this loss out of the residue of proceeds of sale, which would otherwise be paid to the defendants ? The justice of making him this indemnity, is too plain to be disputed, and, I think, the technical objection should not be permitted to prevail. According to what is understood to be the received doctrine in this state, jive per cent, per annum, is considered an equivalent for the use of real estate, that being supposed to be about the average annual value of this description of property. But the allowance here is less than jive per cent., and, therefore, it seems to me, I can be doing no injustice to the defendant by confirming this report of the Auditor, and shall pass an order accordingly.