46 A. 960 | Md. | 1900
The bill in this case was filed to procure a sale of certain lands, of which Lewis Turner died seized, and a distribution of the proceeds among his six daughters and the issue of a deceased daughter in equal shares under the terms of his last will. Before the sale was made Catherine L. Horner, one of the daughters, made two mortgages on her interest in the land and also executed jointly with her husband the promissory notes hereinafter mentioned.
Before the proceeds of sale had been distributed the two mortgagees of Mrs. Horner's interest and also the parties to the present appeals, who are the four banks holding her notes, intervened in the partition case by appropriate petitions asking to be allowed her share of the fund. The mortgagees were paid off without objection, leaving as the residue of her share of the fund $3,139.52, to which the four banks made conflicting claims. The sole issue presented by these appeals is the question of the respective rights of the four banks to priority in the distribution of the $3,139.52.
The decree for the sale of the land was passed in the partition case on October 9th, 1888, but the sale was not made until December 16th, 1896. The petition of the Western National Bank was filed on December 23rd, 1895, and it asked to have the entire fund awarded to it without noticing the existence of other creditors. The petitions of the National Union and Marine Banks were filed on November 3rd, 1897, and that of the National Bank of Baltimore on March 3rd, 1900. These three banks in their petitions asked for a distribution of the fund among all of Mrs. Horner's *619 creditors according to their legal priority. Each petition set up the alleged lien relied on by the party filing it.
The Western National Bank claimed that the notes held by it amounted by reason of their terms to an equitable mortgage, which gave to it a specific lien upon the fund. The other banks claimed the fund under attachments issued on the notes held by them, and levied as per schedule upon Mrs. Horner's interest in the land after the decree for its sale but before the sale had been made. The attachments were also laid in the hands of the trustee appointed to make the sale. The Circuit Court admitted all four banks as parties to the suit, but held that neither the alleged equitable mortgage nor the attachments created liens upon the fund and directed it to be divided among them pro rata; whereupon they all appealed.
None of the banks had direct dealings with Mrs. Horner, but each of them acquired, by discount, negotiable promissory notes which were either signed or endorsed by her jointly with her husband. The notes were all drawn to the order of J.D. Horner Co., that being the title under which her husband conducted the straw goods business, or to the order of the Horner Miller Straw Goods Manufacturing Co., of which he was president. Each bank in discounting this paper relied in part upon Mrs. Horner's ownership of an interest in the land already mentioned.
All of the notes held by the Western National Bank, amounting in the aggregate to $18,700, were signed by Mrs. Horner and her husband as makers; she signing last and adding after her signature the words "for the payment of which I bind my separateestate." These words do not appear upon the notes held by the other banks which bear simply the joint signatures of Mrs. Horner and her husband as either makers or endorsers. The Western National Bank claims in its petition that the presence of the words just mentioned upon the notes held by it constituted all of them equitable mortgages upon Mrs. Horner's interest in the fund and entitled it to receive the entire fund, but in the *620 argument of the case it only claimed for its notes precedence over all prior general creditors of Mrs. Horner with the right to share pari passu with subsequent ones. As one of the notes held by this bank for $2,000, drawn to the order of the Horner, Miller Straw Goods Manufacturing Co. and dated September 6th, 1895, post-dates all of the other claims, the precise contention of the bank is that it is entitled to have this note paid in full out of the $3,139.52 and to share pro rata with the other banks in the distribution of the balance of that sum.
We will first consider this contention of the Western National Bank and will subsequently discuss the effect of the attachments issued by the other banks.
It is conceded by all parties that if the notes held by this bank constitute equitable mortgages on Mrs. Horner's interest in the land sold, the result claimed for them follows under the authority of Pannell v. Farmers' Bank, 7 H. J. 206; Dyson
v. Simmons,
Whatever may be the precise operation of these notes held by the Western Bank, they do not seem to us to amount to equitable mortgages. An equitable mortgage results from different forms of transactions in which there is present an intent of the parties to make a mortgage, to which intent, for some reason, legal expression is not given in the form of *621
an effective mortgage; but in all such cases the intent tocreate a mortgage is the essential feature of the transaction. Thus, an equitable mortgage has been held to result from a defectively executed legal mortgage (Dyson v. Simmons, supra,Saunders v. McDonald,
In ascertaining the true effect of the declaration by Mrs. Horner upon the face of these notes of an intent to bind her separate estate for their payment, it would serve no good purpose to review at length the history of the law in Maryland touching the ability of a married woman to bind her estate by contract. This has already been fully done in former decisions of this Court. It is sufficient to say, that prior to the Code of 1860, she could charge her separate estate in equity by contract if the intent to do so affirmatively appeared either upon the face of the obligation or by evidence aliunde. After the passage of the Code, which created what is commonly described as the wife's statutory separate estate, she could legally devise it and with the concurrence of her husband could alien or encumber it by deed or mortgage, and it was also held to be "liable in equity for all of the debts, incumbrances or other engagements which she together with her husband may by express terms or clear implication charge thereon." Since the Act of 1872 her separate estate can be made liable in an action against her at law upon any contract executed jointly by her with her husband. Hall v.Eccleston,
This Court has never passed upon the effect of such a contract by a married woman, as the one now before us, upon the rights of other creditors holding her contracts enforceable at law against her separate estate. In the case of Hall Hume v. Eccleston, a somewhat similar contract, in which a wife jointly with her husband bound herself and her separate estate to pay a sum of money, was treated "so far as the wife is concerned" as constituting "as between the parties" an equitable lien to be enforced in equity as being somewhat in the nature of an equitable mortgage, but the issue in that case was simply one between the original parties to a non-negotiable contract, and the rights of third parties were neither considered nor determined.
If no rights of third parties were here involved we should not hesitate, upon the authority of Hall Hume's case, to direct the application of Mrs. Horner's share of the proceeds of sale to the payment of the debt of the Western National Bank, but as between that bank, holding a class of her obligations enforceable both at law and in equity against her separate estate, and the other banks holding a class of similar obligations enforceable only at law we can see no sound reason why the former should be preferred to the latter.
The conclusion at which we have thus arrived as to the true effect of the declaration by Mrs. Horner, on some of the notes, of her intent to bind her separate estate, was reached by the Court of Appeals of New York, in the case of Maxon v. Scott,
We will now consider the effect of the attachments. Each of the three banks, other than the Western National, sued *623 out attachments for its claims against Mrs. Horner, who is a non-resident, and caused them to be levied as per schedule upon her interest in the land and also to be laid in the hands of the trustee who made the sale. The attachments, as we have already said, were issued and served after the decree for the sale of the land but long prior to the sale.
The National Marine and Union Banks each issued an attachment on October 12th, 1895, which was on the same day levied as per schedule on Mrs. Horner's interest in the land, and two days thereafter judgment of condemnation nisi was entered in each case against the property attached. On October 15th, 1895, the National Bank of Baltimore, issued an attachment which was similarly levied and condemnation nisi was entered therein on November 11th, 1895. Subsequent attachments were issued and levied by the same banks, but in the view which we take of the case it is unnecessary to notice them as the two attachments first issued are more than sufficient in amount to cover the fund in dispute.
The attachments thus levied on Mrs. Horner's interest in the land became inchoate liens thereon in the order and as of the date of their respective levy. The judgments of condemnationnisi entered therein ripened by operation of law into final judgments at the expiration of the respective terms of Court at which they were entered, although the plaintiffs could not have had execution thereon within a year and a day except by giving bond. Such judgments constituted specific liens on the property condemned, which related back to the time when the attachments were laid. Cockey v. Milne,
Prior to the Act of 1880, ch. 28, a judgment of condemnationnisi in personam against a garnishee would have become *624
final in the same manner. Friedenrich v. Moore,
The contents of the section also make it apparent that its scope and purpose were to protect garnishees from the hardship of the law as it formerly stood, under which they had often been made personally liable through mere neglect or oversight for the debts of defendants, to whom they owed nothing, and of whose assets they had none in their possession or under their control. It might be wise to so amend the existing law as to modify the terms upon which a judgment of condemnation of property attached as per schedule now becomes absolute, but that was evidently not the purpose of the Act of 1880.
The judgments of condemnation entered in the attachments now under consideration, having thus become absolute by operation of law, constituted specific liens in favor of the attaching banks upon Mrs. Horner's interest in the land as of dates long prior to the filing by those banks of the petitions in the partition case by which they set up their liens. The attachments of the National Marine and Union Banks were issued and levied on the same day, October 12th, 1895, but the record shows that the former was first issued and levied, and it therefore became the first lien and is entitled to precedence in payment. Ginsberg v. Pohl,
The counsel for the Western National Bank contended that as the partition case had, so far as Mrs. Horner's share of the fund is concerned, assumed the form of a creditor's suit, by the filing of the petitions by her creditors, the attaching banks could not be permitted thereafter to perfect the lien of their attachments, but this position is not tenable. The judgments of condemnation became absolute at the end of the September term of Court, 1895, while the record contains no indication that the suit took on the form of a creditor's bill until nearly two years thereafter, when the proceeds of sale were about to be distributed. It is true that the Western National Bank filed its first petition in the partition suit on December 23rd, 1895, but an inspection of that petition shows that it did not mention or invoke the jurisdiction of the Court in behalf of the other creditors of Mrs. Horner, or ask for a distribution of her share of the fund among them, but simply asked to have her entire share awarded to it as the holder of a lien thereon. Nor did the order of Court on that petition contain any reference to the other creditors or any recognition of their rights.
The case of Rhodes v. Amsinck,
As the auditor's account which was ratified by the decree appealed from did not divide the fund in the manner here indicated as the proper one, the decree will be reversed in each of the cross-appeals and the case remanded for further proceedings in accordance with this opinion, the costs of both appeals to be paid out of the fund for distribution.
Decree reversed and cause remanded.
(Decided June 16th, 1900.)