152 N.W. 116 | S.D. | 1915
This action was instituted to foreclose a chattel mortgage upon a stock of general merchandise given 'by defendant Louden to plaintiff. Defendant appeared and answered. W. A. Hazle, representing general creditors, as trustee in bankruptcy of defendant, Louden, by intervention, also became a party to the action. Findings and judgment were made and entered in favor of plaintiff adjudging said mortgage to be
(1) The claim of $1,760, and interest, the balance then unpaid on plaintiff’s mortgage.
(2) The claim of $1,062, and interest, the balance then unpaid on the second mortgage to Hoy & Mc’Closky.
(3) The claim of $750, personal exemption to Louden as a debtor under the statute.
(4) The claims of general creditors to the amount of about $1,800.
(5) The surplus, if any, belong to Louden after the payment of all debts.
It will be noted that ,if plaintiff had timely filed his mortgage, then those creditors whom we term “subsequent creditors” —that is, those whose claims accrued between March 1 and July 26, 1913 — would have been included in the class of general creditors. The claims of these ' subsequent creditors represent about $1,200 of the $1,800 referred to in the foregoing “No. 4.” It will also be noted that there was about $2,800 incumbrances, secured by mortgages, ahead of Louden’s claim for exemptions, and about $3,550 ahead of the claim of general creditors. Now, under the view heretofore expressed, what was the effect of plaintiff’s withholding his mortgage from record? Simply this: To substitute such subsequent creditors to the extent of their claims, not exceeding the amount of the first mortgage, in place of plaintiff, and to relegate plaintiff Jo the extent of a like amount back into the class of general creditors ir the place occupied by such subsequent creditors. This is the only equitable and just adjustment of priorities that will preserve the rights, of all the other interested parties. Neither the rights of the second mortgagees, the right of Louden to exemption, nor the rights of general creditors should have been or
It therefore necessarily follows:
• (i) That the subsequent creditors, whose claims accrued during the time plaintiff’s mortgage was withheld from record, have the first right or priority to the extent of their claims.
(2) That plaintiff has the second right or priority for the balance remaining of said mortgage debt after the payment of said subsequent creditors.
(3) That Hoy & McClosky have the third right or priority immediately after the amount necessary to extinguish plaintiff’s mortgage.
(4) That Louden has the fourth priority to the extent of his exemption; but in this connection, however, if it should occur that the proceeds remaining after the extinction of the first mortgage are insufficient to satisfy the Hoy & McClosky mortgage, then such second mortgage would be entitled to apply the mortgagor’s said exemption to the satisfaction of such balance, or such portion of such exemption as may be necessary to satisfy the second mortgage in full.
(5) The .general ceixlitors, including plaintiff, to the amount of his mortgage taken by subsequent creditors, have the next and fifth, priority.
The .judgment appealed from should be modified to conform to the views herein expressed, and, as modified, is affirmed, and costs should not be assessed by or against either party.