154 Ind. 230 | Ind. | 1900
The First National Bank of Blooming-ton brought foreclosure against Malone and Pickel, makers of the note and mortgage, the Stinesville Stone Company, as purchaser of the mortgaged premises, and Mueller, the appellant, as a junior mortgagee of the Stone Company.
Upon motion of the plaintiff, William M. Louden was appointed a receiver, and ordered to take charge of and preserve the mortgaged property. Mueller filed a cross-complaint to foreclose his mortgage, making defendants thereto his codefendants and the plaintiff. The defendants, to each the complaint and cross-complaint, made default, and on June 21, 1897, judgment and decree were given in favor of the plaintiff bank for $7,933, as a first, and in favor of the cross-complainant, Mueller, for $16,905, as a second, lien, and the property ordered sold by the sheriff, and the proceeds applied — First, to the payment of the costs; second, to the payment of the bank’s judgment; third, to the payment of Mueller’s judgment; fourth, the balance to be paid into court for further orders. On the day following the entry of the decree of foreclosure, upon his application, the court ordered the mortgaged property sold by the receiver, the order reciting, among other things, that the plaintiff bank and cross-complainant Mueller had some interest therein. On July 22, 1897, the receiver sold the property for $9,600, in accordance with the order of sale. On September 27, 1897, appellee, the Stinesville & Bloomington Stone Company, came into said foreclosure proceeding, and applied for permission to prosecute a suit “on an account” against the defendant, Stinesville Stone Company, and Louden, receiver thereof, which leave was granted, and the claim allowed against the receiver for $397.49. No special lien
The motion of the Stone Company recited the various proceedings of the foreclosure, and the rendition of the several judgments and decrees in favor of the plaintiff bank and cross-complainant, Mueller, and the order of liens and payment that should be observed by the sheriff. It also recited the order of sale granted to the receiver, and averred “that in said order of sale there was no order whatever for the distribution or application of the fund derived from said sale; nor did either the said Mueller or the said plaintiff bank appear to or in any way answer said petition; and there was no order of said court of any kind fixing or determining their rights in said real estate, or said property or
We are first confronted with a motion by appellees to dismiss the appeal under rule six, on the ground that the assignment of errors does not contain the name of the Stinesville Stone Company. This company was a defendant to the action, was a judgment debtor, was largely insolvént, and a receiver was appointed to take charge of all its property, which was afterwards sold under the order of the court;
The real question is: Did the court err in its order of distribution by directing the payment of the general claim of the Stinesville & Bloomington Stone Company in preference to the adjudicated specific lien of appellant? We think it did. The Stinesville & Bloomington Stone Company was not a party to the action -when the receiver was appointed, and when the foreclosure decree was entered in favor of the bank and appellant, Mueller, and hence, it was not concluded by the adjudication. But when it came into the case, and asserted its claim against the estate in the hands of the receiver, it was bound to take notice of all the steps that had been taken in the action to which it had become a party, and was bound to know that the court had adjudged liens in favor of the plaintiff bank and cross-complainant, Mueller, and against the property of the common debtor in the hands of the receiver. Appellees’ judgment was rendered by the same court and in the same action in which appellant’s was rendered, and had relation to the same source of payment. And the court, having sequestered the common insolvent debtor’s property for distribution among the creditors, must proceed in such a way as will preserve the priorities and equities, as they existed when the receiver was appointed, of all creditors, whether'regular parties to the cause, or only parties in interest coming before the court in seasonable time to establish their claims. So, in this case, when the mortgaged .property was sold, and the proceeds brought into court, it was still the mortgaged property in another form and impressed with all the priorities and equities that had been judicially declared against it, and sale and
The contention of appellee, that, because in its order of sale to the receiver the court did not specifically direct that the property should be sold to pay off the adjudged liens, or free from liens, it must be held as having been sold subject thereto, and the lienors driven to the property in the hands of the purchaser for their remedy, can not be accepted, so far as it applies to parties to the action. When a court of equity has taken possession of property for administration for the benefit of creditors, and .claimants thereto have come before the court with their pretensions and had their priorities and equities judicially determined, and a sale is ordered to carry out the equitable conclusions, by the sale thus made the liens of all parties to the action are extinguished in the property, and transferred to the fund arising therefrom. In the final distribution of this fund among the creditors, who have come into the case at any stage of the proceeding, in respect of priorities, the court will be governed by established principles, keeping in view that the superior rights and equities of creditors are to he preserved in the fund to the same extent .that they existed in the property sold. It does not appear, by appellee’s motion nor by the record, that it is entitled to priority in the distribution of the fund; and its motion was therefore improperly sustained.
Judgment reversed, and cause remanded, with instructions to overrule appellee’s, the Stinesville & Bloomington Stone Company’s motion for distribution, and for further proceedings in accordance with this opinion.