Mallory v. Dauber's Ex'r

| Ky. Ct. App. | Oct 6, 1885

JUDGB PRYOR

delivered the opinion of the court.

L. S. Hardin, for the purpose of securing several of. his creditors, executed to them a mortgage on his real ■estate in the county of Jefferson, the mortgage debts •amounting to near $15,000.

The appellee, a judgment creditor, had an execution issued on his judgment, and while in full force placed it in the hands of .the sheriff of Jefferson county.

The appellant, Mallory, after the execution came to the officer’s hands, by some arrangement with the mortgagees and the debtor, purchased the realty for six thousand dollars, the mortgagees releasing their liens for the balance of their mortgage debts. After the release was entered, the judgment creditor levied his execution on the realty, or, perhaps, had levied it before the release (but whether before or after is immaterial), and proceeded to sell the property to ■satisfy his debt. The judgment was rendered in the Common Pleas court, and the appellant, Mallory, •claiming to be the absolute owner, obtained an injunction from the Chancellor Staying proceedings on .the judgment sought to be enforced until the matters •alleged for his injunction could be heard and determined.

The lien in behalf of the execution creditor existed prior to the purchase by the appellant, and, therefore, remained in force until the land was sold, or some ■act done by the plaintiff in the execution or the sheriff that released it. No such state of case has been made to appear, but, on the contrary, while the execution -creditor was attempting to enforce his judgment, the appellant made his purchase, and when the actual levy was made had obtained his deed. He was a purchaser in contemplation of law, with notice of the lien by the appellee, and bought subject to it.

When the property was sold or the levy made, all the mortgage had been released except six thousand dollars, the amount of the purchase by the appellant. The release was made in the ordinary way by an entry on the margin of the deed book releasing the lien. The mortgage lien had then been reduced to six thousand dollars, and, therefore, the execution creditor could have sold subject to that lien. It is urged, however, by the appellant, that inasmuch as the lien for-fifteen thousand dollars existed when the execution lien was created, therefore the sale should have been made subject to the lien for the entire amount. If the debtor had satisfied the debt except six thousand dollars, or the creditor before the sale had released his lien except as to the six thousand dollars, we know of no rule of law or equity that would require the unsecured creditor to sell subject to a lien that did not exist.

The appellant maintains further that -the release-was for his benefit, and doubtless such was the case. He was not aware of the execution lien, or, if so, failed to provide against its effect. . The appellant, did not purchase the notes from the mortgagees. There was no assignment from them to the appellant, of the balance of the claim, nor is there any proof showing that he was to have the benefit of the claims in any way. It was an absolute unconditional release of the lien with the notes doubtless surrendered to the original debtor. The mortgagees have not testified in the case, and the only witness is the appellant, who says the release was for his benefit. This must have been the case so as to give him a perfect title, but it is not pretended or proved that he became the owner of the balance of the indebtedness, or that he is now the owner. The mortgagees agreed that they would release their lien if he would pay to them six thousand dollars, and this they did.

We see no escape from the judgment below giving; to the appellant a prior lien for the amount paid the mortgagees, and then permitting the execution creditor to assert his lien, or, in other words, selling the land first to satisfy the amount paid by appellant on the mortgage debt, and then to satisfy the debt of the execution creditor. The appellant having paid six thousand dollars of the mortgage debt by an agreement between the parties was entitled to be' substituted (to that extent) to the rights of the mortgagees. There being no assignment of the notes and no transfer of the mortgage for the benefit of the appellant, the judgment must stand on the original appeal.

The appellant did not release the levy of the execution by his injunction bond, as the condition of the bond was to the effect that if the injunction was dissolved he would have the property or its value forthcoming to satisfy the order of the court. A bond to satisfy the execution in the event the injunction. is. dissolved discharges the levy, and the remedy is on the bond and not by a sale of the property upon which the levy was made. (Civil Code, section 278.)

On the cross-appeal of the appellee it is argued that the Yice Chancellor-had no power to grant an. injrinction to stay proceedings upon a judgment rendered by the Common Pleas court. Section 285, Civil •Code, provides: “An injunction to stay proceedings on a judgment shall not Tbe granted, in an action ’brought by the party seeking the injunction, in any ether court than that in which the judgment was rendered.”

This is a comprehensive provision, and applies not only to the party against whom the judgment was rendered, but to all parties who seek to stay proceedings on the judgment, and if not in this case, the lien of the appellee existed before the appellant became •the owner, and while the appellee v§as endeavoring to enforce his lien and had placed his execution in ■the hands of the sheriff the appellant interposed as purchaser and claimed the absolute estate.

We have not been cited to any provision of the ■Code by which the Chancellor or the Yice Chancellor can, by a proceeding in his court, enforce the collection ■of a judgment rendered in the Common Pleas court, .and, therefore, the injunction should have been dissolved. The appellant, however, was properly in a court of equity in order that the liens asserted by himself and the execution creditor might be adjusted. The lien of each was claimed to be prior 'in date, or, in fact, each claimed to hold the property regardless of the lien the other asserted.

It is evident, however, that the appellant by his purchase became entitled to the lien of the mortgagees to the extent that he had paid the mortgage debt, :and the common law judge could not, in a controwersy between him and the execution creditor,' have substituted the appellant to the rights of the mort- • gagees, and the execution creditor claiming his right: to sell the entire property, a resort to the Chancellor was the remedy to be adopted by the appellant. If, therefore, the appellant had an equity as against the appellee, although the injunction was improperly granted, the court had the power to give mere nominal damages on its dissolution; but having failed to-dissolve the injunction, this court will not reverse on the cross-appeal for that error alone, in order that the court below may determine the damages the appellee is entitled to recover. The Code provides:

“If the collection, payment or use of money been joined, the damages may be any rate per cent, on the sum released by the dissolution which, in the discretion of the court, may be proper, not exceeding ten per cent.” This discretion is not arbitrary,, but in determining the equitable rights of the parties, and the necessity of resorting to a court of equity for relief, the fact that the Chancellor had no power to grant the injunction does not require him to lose sight of the equities between the parties, in order that he may award damages on the dissolution of the injunction.

The damages in this case should have been nominal only, and, therefore, the judgment is affirmed on' the original and cross-appeal.