Wheat v. Dingle

| S.C. | Apr 10, 1890

The opinion of the court was delivered by

Mr. Justice McGowan.

This was a controversy without action. (The agreed statement of facts should appear in the report of the case.) It seems that one G. J. Luhn, being largely indebted by mortgage and otherwise, died intestate, and G. W. Dingle administered upon his estate and took proceedings to sell the real estate in aid of assets. Upon nearly every parcel of the intestate’s real estate there was a mortgage securing a .debt. The different mortgage creditors were made parties to these proceedings, and the respective pieces of realty were sold, the proceeds applied to the liens in each case, and the balance left unpaid, for which balance the parties were, by decree, entitled to enter up judgment against the administrator, to be paid out of the assets of the estate which may be applicable thereto. All the appellants, creditors of the intestate, save Mrs. Wheat, were mortgage creditors, in the condition above stated; and Mrs. Wheat had as security a policy of insurance upon the life of the intestate, assigned to her in his life time ; and that being realized upon, and after his death lefc a balance still due her upon simple contract. She had no part in the proceedings to sell the lands. All the appellants claim that they are entitled, there being a deficiency of personal assets, to a proportion thereof, based upon the amounts of their respective debts as they existed at the death of the intestate, and before the securities (mortgages) had been applied thereto, always providing that in no event more than the debt be paid. The administrator contests this view, and claims that they are only entitled to prove for the deficiency which may remain after exhausting their respective securities.

The facts were submitted to Judge Pressley, who held and “adjudged that the plaintiffs, creditors, are entitled to prove only the balance of their respective debts in prorating with the general creditors out of the remaining assets.” The plaintiffs appeal upon the ground that his honor erred in holding that the plaintiffs were entitled to prove only the balance of their respective debts in prorating with the general creditors out of their remaining assets, but, on the contrary, should have adjudged that, in accordance with the rule of law in this State, they, and each of them, were entitled to prove for the full amount of their respective debts as they existed at the death of the intestate, provided only that in no event should the entire amount obtained by any creditors out of the estate exceed the debt as it stood at the time of such death,” &c.

In the ground of appeal, as in the argument, reference was made to “a rule of law as established in this State,” which, if adhered to, must be considered as conclusive of this case; and in that connection were cited the cases of Morton & Courteny v. Caldwell, 3 Strob. Eq , 166, and of Wilson v. McConnell's Adm'rs, 9 Rich. Eq., 500. We have examined these cases carefully, and we fail to find their supposed analogy to this case. In both those cases the debts were divided into two distinct parts as against the partnership and an individual member of the partnership. and it was held that, “in ascertaining the yro rata due a copartnership creditor from the separate estate of a deceased copartner, who died insolvent, the debt should be regarded as. standing in the precise condition in which it stood at the death of the copartner, without regard to any subsequent payments derived from the copartnership assets, though, to avoid double satisfaction, such creditor is not entitled to receive more than the balance due after deducting such payments,” &c. This was manifestly on the ground that the payments by the parnership assets were by a person other than the individual debtor.

As was stated by Chancellor Johnston in Morton & Courteny v. Caldwell, supra: ‘Tt would appear from all these views that the proper mode for determining the proportions of assets liable to the respective creditors of a deceased debtor, is to assign them according to the debts as they exist at his death. If, upon any of the demands thus taken into consideration, any payments had been subsequently made by a third party, that does not release the proportion of the deceased’s assets originally liable to the creditor if there still remains due on the demand a balance requiring that proportion to satisfy it.” This seems to us. considering the facts, as*strictly correct; but suppose that the payments referred to, instead of having been made by a third party, had been made out of the estate proper of the debtor himself. Would it be for a moment contended that such payments did not release that much of the deceased’s assets originally liable to the creditor? It seems to us that such result would not only be in violation of all principle, but entirely unjust.

As we understand it, the cases above cited did not involve the precise point now under consideration, which, as far as we are able to see, is now for the fbst time raised in this State. Here there is no pretence of allegation that any one is liable for those debts, or any part of them, except the estate of the intestate himself. All are creditors of his estate alone. Some hive mortgages upon particular parcels of land, whde others have none, but there is no doubt that the whole of the debtor's estate, real and personal, mortgaged and not mortgaged, is liable for his debts; and it does seem to us that, when any part of his debts is paid by the sale of lands belonging to the estate, that cannot, in any proper sense, be called a payment by a third party, as the payment by the partnership in Morton & Courteny v. Caldwell, supra.

Besides, it is settled in this State that a mortgage has priority over specialty and simple contract debts only to the extent of the property mortgaged. Piester v. Piester, 22 S. C., 146. After the property mortgaged has been sold and applied to the debt, leaving a balance of the debt unpaid, as to that balance the creditor is no longer a mortgage creditor, but stands only where his evidence of indebtedness places him; and he gets judgment for the balance alone on his claims, whatever it may be, from which has already been eliminated what was a mortgage debt. In this controversy without action the case states that “the administrator filed his complaint against the heirs of Gr. J. Luhn for a sale of his real estate in aid of personal assets in an action to which all the mortgagees were parties. In this action they set up their mortgages. The. real estate was sold by order of the court, and the proceeds applied to said liens according to their priorities,” &c. So that the respective mortgagees, in effect, assented to that application ; and it is, therefore, now too late to present their whole bonds, withholding their mortgages, as suggested by Lord Cottenham in the English case cited of Mason v. Bogg, 2 Myl. & Cr., 447.

The judgment of this court is, that-the judgment of the Circuit Court be affirmed.