Brown v. Thompson

• Decision Date: 28 April 1925
• Docket Number: (C. C. No. 345.)
• Citation: 128 S.E. 309
• Court: West Virginia Supreme Court
• Parties: BROWN. v. THOMPSON et al.

128 S.E. 309

BROWN.

v.THOMPSON et al.

(C. C. No. 345.)

Supreme Court of Appeals of West Virginia.

April 28, 1925.

Rehearing Denied, with Modification, June 10, 1925.

(Syllabus by the Court.)

Certified Questions from Circuit Court, Ohio County.

Suit by Beeson H. Brown against Josiah V. Thompson and others. On death of plaintiff, suit was revived in the name of John W. Brown, administrator. After decree for plaintiff, an amended and supplemental petition was filed by James Edgar Hustead and others, seeking subrogation. Demurrers to such petition by Piedmont Coal Company and others, and by D. M. Hertzog and another, surviving trustees of the bankrupt estate of Josiah V. Thompson, were overruled, and the court certified questions. Affirmed.

Jay T. McCamic and McCamic & Clarke, all of Wheeling, for petitioners Hustead and others.

Nesbitt, Goodwin & Nesbitt, of Wheeling, Reed, Smith, Shaw & McClay, of Pittsburgh, Pa., and Poffenbarger, Blue & Dayton, of Charleston, for Piedmont Coal Co., Ayrshire Corporation, and Union Trust Co. of Pittsburgh.

W. H. Conaway, of Fairmont, and Weil, Christy & Weil, of Pittsburgh, Pa., for surviving trustees.

HATCHER, J. Certain questions arising upon the sufficiency of an amended and supplemental petition, filed in the above cause by Albert Miller Hustead, James Edgar Hustead, and Walter Bugh Hustead, have been certified here by the circuit court of Ohio county for decision.

This is one of the many actions growing out of the bankruptcy of J. V. Thompson, of Pniontown, Pa. The case of petitioners, as pleaded, is as follows: On July 2, 1914, a note was executed in favor of Beeson H. Brown for $107,435.87, by J. V. Thompson, principal, with J. M. Hustead and I. W. Semons, sureties. The note was not paid at maturity. On April 2, 1915, Mr. Brown instituted a suit in equity thereon against the principal and the sureties in the circuit Court of Ohio county. A nonresident return as to the three defendants was made, an affidavit for attachment was filed, certain real estate of J. V. Thompson in Ohio county was levied on by the sheriff, an order of publication as to the nonresident defendants was made, and a decree in rem, based on the debt represented by the note, was obtained in favor of the plaintiff on August 5, 1916, against the attached lands of Mr. Thompson in the sum of $117,749.64. Prior thereto, to wit, on April 20, 1915, a lis pendens was filed and recorded in the office of the county clerk of Ohio county. Beeson H. Brown having died during this litigation, the suit was revived on November 26, 1915, in the name of his personal representatives.

On September 10, 1917, Thompson was adjudged a bankrupt, and further prosecution of suits against him in the state courts was enjoined by the bankrupt court. Thereupon the representative of Brown proceeded against J. M. Hustead, as surety of the Thompson debt, in a state court in Pennsylvania. Judgment was there obtained, and, by virtue of a sheriff's sale of Hustead's lands, the sum of $52,036.34 was derived and paid June 21, 1919, to Brown's representative on the Thompson debt. J. M. Hustead died pending the litigation, but prior thereto bad granted to his sons, the petitioners in this case, the lands included in the sheriff's sale. Brown's representative then accepted an offer from the bankrupt court to release his remaining claim against the Thompson lands upon the payment to him of 90 per cent. of the balance due. The amount paid Brown by the trustees in bankruptcy was $81,955.89. The statement of the federal court on this matter, as set forth in the petition (288 F. 388) is as follows:

"There was due on the Brown judgment as of March 1, 1920, the amount of the original decree, with interest, amounting to $144,234.57. The amended order of March 31, 1920, fixed the balance due Brown at $91,062.04. This was determined by taking from the full amount due the prior Hustead payment of $52,036.43. Ninety per cent. of this balance, together with the costs, was paid by the trustees to Brown's administrator."

At the same time, Brown's administrator assigned to Piedmont Coal Company, one of the demurrants of the said petition, and the purchaser of the lands of Thompson from the bankrupt court, all the right, title, interest, property, claim, and demand whatsoever of the Brown estate to the Thompson debt, and to the lien on the Thompson land by virtue of the attachment suit in the Ohio county circuit court. There was specifically excepted and reserved by Brown from this assignment, as therein stated, "my said claim for which said attachment was levied to the extent that the same shall not be paid to me out of the estate of said bankrupt." As the only payment received by the representative of Brown on this debt, not made by the bankrupt court, was the Hustead payment, it would seem that the involved language of the, exception in the assignment had reference to the Hustead payment. Prior thereto, the Piedmont Coal Company had proposed to the trustees in bankruptcy to purchase the Thompson property "free and clear of all taxes, attachments, and other liens." This proposition had been accepted by the trustees in bankruptcy, subject to the court's approval. After Brown accepted the amount above stated, and assigned to the coal company his interest remaining in the Thompson debt, the trustees' sale to the coal company was confirmed by a so-called "consent decree" of the bankrupt court; to which decree, however, neither Hustead nor Brown consented, according to the opinion of the federal District Court on this matter.

The Husteads never submitted their claim against Thompson to the bankrupt court, and, on June 4, 1921, filed a petition in this case in the circuit court of Ohio county setting out the proceedings theretofore had herein, their payment of the said sum on the Thompson judgment, and their claim of pro tanto subrogation to the rights of Brown against the attached land, etc. The Piedmont Coal Company and its privy, Ayrshire Coal Company, filed a petition in the federal District Court on October 13, 1921, seeking to enjoin the petitioners from proceeding in the Ohio county circuit court on the said petition. This matter was heard and a decision adverse to the coal company rendered in the case of In re Thompson, Petition of Piedmont Coal Co. et al., In re Hustead, 288 F. 385. On appeal, the judgment of the District Court was affirmed by the Circuit Court of Appeals on November 2, 1923. 294 F. 247.

Thereupon, the Piedmont Coal Company et al. applied to the Supreme Court of the United States for a writ of certiorari to, etc., which was denied on February 18, 1924, and an order entered declining to review the said decision of the Circuit Court of Appeals. 264 U. S. 582, 44 S. Ct. 331, 68 L. Ed. 860.

Following which, the petitioners herein filed in the Ohio county circuit court their amended and supplemental "petition setting forth more fully the matters pertinent to their claims, wherein was copied at length the petition of the Piedmont Coal Company et al., before the federal District Court, as well as the answer of these petitioners thereto. There is also copied in the amended petition the decision of the federal District Court, and allegations are made detailing the litigation in and the decision of the Circuit Court of Appeals, and of the refusal of the Supreme Court of the United States to grant the certiorari thereto. These decisions are pleaded as res judicata in the instant case. The amended petition specifically adopts the answer of petitioners to the petition filed against them in the District Court. Among other things in the answer is an allegation that the trustees in bankruptcy, as well as the Piedmont Coal Company et al., had notice of the Hustead payment of $52,036.34 to Brown on the Thompson judgment, and that they availed themselves of said payment in making settlement through the bankrupt court with the creditor.

The parties to the amended petition are Josiah V. Thompson. D. M. Hertzog, R. M. Hite, surviving trustees in bankruptcy of the bankrupt estate of Thompson, the representative as well as the trustees in bankruptcy of the estate of I. W. Semons, John W. Brown, administrator of the estate of Beeson H. Brown, deceased, Piedmont Coal Company, Ayrshire Corporation, Union Trust Company, and Ohio County Fuel Company— the last four defendants being corporations. The last three named corporations hold certain claims under the Piedmont Coal Company to the attached lands. The demurrants are the four corporations and the trustees in bankruptcy.

In the brief of demurrants, comprising 141 pages, the remedy as well as the right of petitioners is attacked. Thirteen points are advanced against the remedy, and seven points against the right. Many cases are cited in support thereof. Time forbids any attempt on our part to discuss separately these points and authorities. We perceive no useful purpose to be served thereby. We consider it sufficient to briefly advert to such equitable principles as we believe control the case presented by the amended petition. In the application of these principles may be found, however, an answer to every question fairly arising on the demurrer.

The Remedy.

In the opinion of this court, in Dent v. Wait's Adm'r, 9 W. Va. 41, it was said:

"There is no doctrine better settled in this state than that, where a security pays a judgment for another, he is entitled to be substituted to all the rights and remedies of the creditor against the principal debtor, subsisting at the time, he became so bound for the debt. Robinson v. Sherman, 2 Gratt. 178; Preston v. Preston, 4 Gratt. 88; Hill v. Manser, 11 Gratt. 522; and numerous other cases might be referred to."

So far as we are advised, there has been no intimation in any opinion of this court since the rendition of the above opinion that the doctrine of subrogation therein stated would be in any way restricted or departed from; on the contrary, that doctrine has been...