Farnham v. Campbell

10 Paige Ch. 598 | New York Court of Chancery | 1844

The Chancellor.

The reason why no opinion was expressed by this court, upon the question now under consideration, in the case of the Albany City Bank v. Schermerhorn, (9 Paige’s Rep. 379,) was not because I had any doubts on the subject, but because the question did not arise upon the proceedings then before me. The object of the legislature, in giving to the owner of real estate sold on execution the right to redeem the same within a limited time, was not to give to an insolvent debtor the rents and profits of his property during fifteen months, to the prejudice of the just rights of his creditors ; but it was to secure a sale of the property for something like its real value. It is well known that previous to the passage of the redemption law, real estate in the country, when sold upon execution, was generally bid in by the creditor for a mere nominal price; leaving the judgment still standing against the unfortunate debtor and his future earnings for nearly its whole amount, although the actual value of the property was frequently more than the whole amount of the plaintiff’s debt and costs. But under that law, which allowed the right of redemption to the defendant, and to his other creditors who had obtained liens upon his property, the owner of the oldest judgment was compelled to bid something like the cash value of the property, to entitle him to the benefit of the lien of his judgment thereon as against other creditors. No injustice, therefore, is done to the creditor by making it necessary for him to bid to the amount of the cash value of the property, subject to the right of redemption and of the possession of the premises for the fifteen mon ths, to obtain the benefit of the prior lien of his judgment; where the property, subject to such right, is worth enough to pay his whole debt and costs. But where the present value of all the debtor’s property with the right to the immediate possession thereof, is insufficient to satisfy his honest debts, it would be manifestly unjust to give the debtor the whole rents and profits of his property for fifteen months, leaving a part of the debts due to his creditors unpaid. And it not unfrequently happens that the debtor who thus attempts to retain the use of a portion of his property, when the whole is not sufficient to satisfy the just claims of his creditors, does it at the expense of the honest mechanic or laborer ; the recovery of whose debt may be necessary to save himself from bankruptcy and his family from want. Courts of justice, therefore, have no right to presume that the legislature intended to protect any part of the debtor’s property from the just claims of his creditors. I admit the power of the legislature over the remedies of the creditor is very broad. But until they say so, in terms which cannot be misunderstood, it is our duty to suppose they could not have intended to interfere with the just rights of either debtor or creditor in prescribing the remedies of the latter. And upon what principles of justice or equity can the debtor claim to retain the whole rents and profits of a large real estate, for the period of fifteen months, when such rents and profits are necessary to pay the debts which he honestly owes to his creditors 1

Independent of the provisions of the revised statutes, the court for the correction of errors, in the case of Hadden v. Spader, (20 John. Rep. 554,) held that a judgment creditor, whose execution had been returned unsatisfied, might come into chancery to reach an interest of the debtor in property which could not be sold under the execution at law. And in the case of Edmeston & Ridde v. Lyde & Walton, (1 Paige’s Rep. 637,) which was decided the year before the revised statutes went into operation, this court held that the judgment creditor could file such a bill here to reach an interest of the debtor in real estate. Although the provision of the revised statutes speaks of decreeing satisfaction out of personal property, money or things in action, whether the same were originally liable to be taken in execution or not, it is every day’s practice to decree satisfaction of such judgments out of beneficial interest of the judgment debtor in real property, which interest cannot be reached by execution at law. And such is the nature of the interest sought to be reached in the present case.

The exception, in the order of the vice chancellor, is therefore erroneous, and such order must be reversed, with costs. And the defendant must be directed to assign and deliver over the excepted property to the receiver, including the rents and profits thereof which have accrued or become due subsequent to the filing of the complainant’s bill, as well as those which were due before ; and the tenants must be directed to attorn to the receiver and pay the rents to him. And the proceedings are remitted to the vice chancellor.