Williams v. Cox

78 Ala. 325 | Ala. | 1884

SOMERVILLE, J.

The mere fact that a creditor holds a mortgage, or other like security for his debt, do.es not interfere in any manner with his right to sue at law, so as to reduce his claim to judgment. — Micou v. Ashurt, 55 Ala. 607; Duval v. McLoskey, 1 Ala. 708.

The debt due plaintiff by the defendants in this cause being undisputed, he was clearly entitled to a recovery, unless the written transfer made by plaintiff’s intestate to Knox operated in some way to bar such right. This debt or claim was secured by a deed of trust executed by the defendants to a trustee, for the benefit of their creditors. The plaintiff, it will be thus observed, was not the holder of the legal title to the assigned property, such title being vested in the trustee, but only of an equitable lien on it, or the right to have the secured debt satisfied out of it. The transfer made to Knox purports to convey to him the “right, title and interest” of the plaintiff in the assigned property, in consideration of the sum of six hundred and forty-six 29-100 dollars, the whole of which was entered as a credit upon his claim pursuant to agreement. The remainder, or balance of the claim, he especially reserves to himself, by excepting it from the operation of the transfer. This instrument, therefore, did not transfer any part of the debt, at least in a court of law, and it is with this phase of the case alone we are dealing. It has been held, it is true, that a mortgagee, when invested by proper conveyance with the legal title of property, whether real or personal, may convey or assign such title to another, without assigning the debt itself. — • Welsh v. Phillips, 54 Ala. 309 ; Russell v. Walker, 73 Ala. 315. So, the assignment or transfer of the debt, which is secured, operates in equity, though not in law, as an assignment of the mortgage. — Prout v. Hoge, 57 Ala. 28; Duval v. McLoskey, 1 Ala. 708; 1 Brick. Big. 126, § 18. But it is manifest that the mere transfer of an equitable lien, which is nothing more than the right to have a debt satisfied out of specified property of the debtor or another, can amount to nothing in a court of law, when the debt, which is the principal thing, is not assigned. — Herman on Chat. Mort. § 179. In such a case, a court of law, regarding, as it does, only legal and not equitable titles, would consider the transaction as passing no interest which it could recognize, in a suit the object of which is only to reduce the debt to judgment. It would seem to operate, at law, only as a release of the security, which would enure to the benefit of the other creditors, or, when they were fully satisfied, to the ultimate benefit of the mortgagors.

Under the facts disclosed in the record, the plaintiff, in our opinion, was entitled to recover, and the rulings of the court so holding are free from error. •

Affirmed.

STONE, C. J.

The majority of the court concur in the opinion of brother Somerville, that in the absence of a final settlement of the trust created by the Williams assignment, the defense attempted in this case can not be made in a court of law. Cox, as we understand the record, was one of the beneficiaries under the assignment, and entitled, as such, to the dividend, or pro-rata, which his claim would receive in distribution. He sold and transferred that interest, being his share of the security, to Knox, for an agreed pi;ice — something over six hundred and forty-six dollars. This transfer authorized the assignee to pay, and Knox to receive the proportion, or dividend of the assigned property, which would fall to the Cox claim, whether it was much or little. Cox, by selling and transferring his interest, ratified the assignment, and barred himself from assailing its validity. To the extent of the value of his, Cox’s interest in the assigned property, he has deprived Williams of it, by empowering Knox to receive and enjoy it. If Knox realized a profit on the purchase, it was his profit, and did uot benefit Williams. On this hypothesis, it would seem unjust that Williams should be required to reimburse to Cox what lie may Lave lost iu the sale to Knox. — Pattison v. Hull, 9 Cow. 747; Field v. Mayor, 6 N. Y. 179.

What we have said is based on the postulate, that Knox purchased for himself, and demanded and received the purchased share of the assigned effects, amounting to more than the sum paid by him, and interest upon it. If the effects of Williams, whether through the assignment, or otherwise, have only been used to the extent of repaying to Knox the sum expended by him iu the purchase from Oox, with interest, if any had accrued, then Williams has no cause of complaint at being required to pay his note to Oox, less the sum paid by Knox.