Fowler v. Wood

| S.C. | Oct 16, 1889

The opinion of the court was delivered by

Mr. Justice McGowan.

In 1873, one B. T. Wood filed his petition in bankruptcy. At the time there were several judgments against him, the oldest, that of A. L. Moore for $1,252, and the next in priority that of the plaintiffs, Fowler, Foster & Co. In these bankruptcy proceedings a certain tract of land was set off to the petitioner, Wood, as his homestead, and was held by him until 1879,'when he sold the land to M. F. Smith, who after-wards sold it to the respondent, his wife. On July 23, 1874, Wood was discharged in bankruptcy; ■ but it seems that both of the judgments above described were founded on causes of action which were in existence before the adoption of the constitution (1868); and fearing that the assignment of homestead would not stand as against these judgments, the said Wood, before his discharge, paid to A. L. Moore $125¹ for his judgment, and took an assignment of it from him in. the following words: “For value' received, I hereby assign to B. T. Wood the above judgment, without recourse on me. (Signed) A. L. Moore, (seal.)” And on March 19, 1887, the following paper was signed 'and delivered to Mrs. E. J. Smith : “For value, received, I hereby assign to Elmira J. Smith' the above judgment, without recourse on me. (Signed) B. T. Wood, (seal.)”

Tn 1886, T. E. Moore, the owner of the judgment of Fowler, Foster & Co., had it renewed by order of court.

In August, 1887, the land was sold by the sheriff under Fowler, Foster & Co.’s (plaintiffs’) judgment, and was bid off by respondent, Mrs. Smith, for $705. Respondent refused to pay her bid, claiming that her judgment (the A. L. Moore judment) was still alive, and as it was the older judgment, she was entitled to credit the purchase money thereon.. • This proceeding was then begun by rule on the sheriff, and Mrs. Smith was made a party. She was made a party defendant, and the referee, to whom all issues were referred, found that the judgment claimed by respondent had been paid, and that the plaintiffs were entitled to have the purchase money paid in by Mrs. Smith and applied to their judgment. On exceptions filed, Judge Kershaw overruled this report and dismissed the proceeding.

From this decree the appeal comes to this court upon the following exceptions: “I. In not holding that the judgment now claimed by the defendant, Mrs. Smith, has been paid by lapse of time. II. In holding that B. F. Wood, under advice, bought the oldest judgment against himself from Dr. A. L. Moore, with a view to protect the title to his homestead, and in not holding, if there was any evidence at all tending to show such purpose and such advice, that same was incompetent and should not have been considered. III. In holding that plaintiff’s judgment never had lien on the land sold by the sheriff, except in subordination to the judgment now claimed by Mrs. Smith, the defendant. IV. In holding that the original judgment debtor, B. T. Wood, had the right to purchase and keep open against himself, to the prejudice of his junior judgment creditors, the Moore judgment, and in holding further, that such conduct did not injure said junior judgment creditor. V. In not holding that the moment the money was paid to A. L. Moore for said judgment, and the same was assigned to Wood, it was paid by operation of law, and never afterwards constituted a lien on said land. VI. In not holding that from the time of such so-called assignment in 1874, up to March, 1887, the said judgment was not kept open by Wood, but was intended to be and was paid and satisfied, and the pretended assignment of it in 1887 could not revive its lien. VII. In not sustaining the report of the referee and overruling the defendant’s exceptions thereto.”

The assignment of the homestead, as against the judgment rendered on debts older than the Constitution of 1868, was absolutely void. Douglass v. Craig, 13 S. C., 371. The land was left still as the property of the judgment debtor, and before he was discharged in bankruptcy he paid $125 for the judgment, took an assignment of it to himself, and afterwards transferred it to Mrs. Smith, the respondent. Was not the judgment thereby paid and discharged as a lien upon the land ? We cannot think that the facts as stated make out a case for the application of the doctrine of technical merger, and depending upon the actual or implied intention of the parties. The owner of the land liable to the judgment was himself the primary debtor, and liable personally for the debt. A judgment is not a mere security, but something more. Its very purpose is to enforce payment from the defendant in execution, and when he pays the money, that is the end of the law; the transaction is payment eo instanti, and not merely purchase for future use against himself. The end in view has been accomplished, and the process is Ufunctus officio.”

“The owner of the fee subject to a charge, who is himself the principal and primary debtor, and is liable personally and primarily for the debt secured, cannot pay off the charge, and in any manner or by any form of transfer .keep it alive. Payment by such a person and under such circumstances necessarily amount to a discharge. The encumbrance cannot be prevented from merging by an assignment taken directly to the owner himself, or to a third person as trustee. This rule applies especially to a mortgagor who continues to be the primary and principal debtor. The rule also applies to a grantee of the mortgagor, who takes a conveyance of the land subject to the mortgage, and expressly assumes and promises to pay it as a part of the consideration. He is thereby made the principal debtor, and the land is the primary fund for payment. If he pays off the mortgage, it is extinguished.” 2 Pom. Eq. Jur., section 797 and authorities. “The assignment to one of his own debt is an absurdity.” Sherwood v. Collier, 29 Am. Dec., 264; Freem. Judg., 89.

But it is earnestly urged that Wood, at the time he paid for the judgment and took the assignment to himself, was not the primary debtor and personally liable for the judgment, for the reason that he had been discharged in bankruptcy,- and that had relieved him from the legal liability to pay the judgment, and therefore he was not the debtor, but had acquired the right to purchase and hold a judgment against his own property, precisely as any stranger might do. We do not so understand the facts of the case. It appears that Moore assigned his judgment to B. T. Wood, the defendant, on July 8, 1874, and that he was not discharged in bankruptcy until July 23rd, 1874, so that there is no foundation for the view suggested. But if the facts were as claimed, we could not accept the conclusion insisted on. The land was not administered in bankruptcy, and must have still remained the property of Wood, the debtor. If not, to whom did it belong? Certainly not to the assignee in bankruptcy. Wood paid for a judgment against himself, and if his discharge in bankruptcy relieved him from the legal liability to pay the judgment of the plaintiff, it was certainly not paid, and being a debt still, had a lien upon the land. We hardly think it can be said that he had ceased in any sense to be the debtor. Wilson v. Kelly, 16 S. C., 216.

We do not think the cases cited sustain the proposition that a judgment may be purchased by the defendant in execution and kept open for his future use in selling lands which belong to him, although he may as to the debt have been discharged in bankruptcy. The authorities referred to relate to mortgages; and while our court has held that a mortgage may be kept open by an express agreement in writing to that effect, there being an intervening encumbrance, we have not been able to find a case where a judgment paid for by the defendant in execution and merely assigned to him, was kept open for the benefit of the defendant in execution. See Agnew v. Railroad Company, 24 S. C., 18; and Navassa Guano Co. v. Richardson, 26 Id., 401.

The judgment of this court is, that the judgment of the Circuit Court be reversed, and the rule be made absolute against the sheriff; and that the case be remanded to the Circuit for such further proceedings as may be deemed necessary to carry into effect the conclusion herein announced.

1 This was one-tenth of the amount then due. — Reporter.