Edwards v. Sanders
| Decision Date | 14 October 1875 |
| Citation | 6 S.C. 316 |
| Parties | EDWARDS v. SANDERS. |
| Court | South Carolina Supreme Court |
BEFORE TOWNSEND, J., AT DARLINGTON, DECEMBER, 1873.
This was a bill in equity, filed in January, 1869, by B. W Edwards, administrator de bonis non of Julius A Dargan, deceased, (who died intestate in March, 1861,) against H. E. P. Sanders and others, creditors of the intestate. The object of the bill was to call in creditors to establish their demands, enjoin them from suing at law and to wind up the estate.
A Referee was appointed to call in creditors, take testimony and report upon the claims presented.
The Referee submitted his report, bearing date November 19, 1873 in which he set forth and classified the claims that had been presented and proved, those of the first class, entitled to priority of payment over specialty and simple contract debts being stated under the caption " Judgments and Mortgages." In this class were included, amongst others, three claims as follows: b13. A claim for $4,821.57, due upon a bond and mortgage of real estate given by the intestate to T. C. Evans, Commissioner in Equity; b14. A claim for $2,133.71, due upon a bond and mortgage of slaves given by the intestate to T. C. Evans, Commissioner in Equity; and, b15. A claim for $929.41, due upon a bond and mortgage of a slave, also given by the intestate to T. C. Evans, Commissioner in Equity. The bonds and mortgages all bore date February 1, 1858. The rest of the facts bearing upon the questions raised by the appeal are stated in the opinion of the Circuit Court.
L. C. McCall and T. A. Woods, creditors of the intestate, excepted to the report as follows:
1. Because the Referee has erred in classing as mortgage debts the claims of Thomas C. Evans, as Commissioner in Equity, amounting on the 1st day of June, 1873, the one to $2,133.71, and the other to $929.41, the same being bonds secured by mortgages of slaves, which had matured while the said slaves were property; and the property mortgaged having been exhausted, the debts secured thereby no longer exist as mortgage debts, but must stand as specialty debts merely.
3. Because the claim proved as a mortgaged debt by Thos. C. Evans as Commissioner in Equity, stated as No. b13 on the class designated " Judgments and Mortgages" on the schedule of claims attached to said report, is improperly classed as a mortgage debt, the same having been extinguished by operation of law by reason of the purchase of mortgaged land by the assignee and holder of the said mortgage under proceedings to foreclose the same.
The Circuit decree is as follows: TOWNSEND, J.
A bill is now before this Court for the settlement of the estate of Julius A. Dargan, deceased. An order, in the progress of the cause, has been heretofore granted, requiring creditors to come in and establish their claims against his estate. W. E. Charles, Clerk of the Court, has submitted his report, containing the names of such creditors as have, in obedience to the order, proved their claims, and a classification of the same in regard to their rank. Exceptions have been filed to the report, suggesting error as to the classification of four of the claims. The first, designated as No. b13 in his report under the class of mortgage and judgment, was a bond executed by the intestate, J. A. Dargan, to T. C. Evans, the then Commissioner in Equity, given for the purchase money of a tract of land sold by the Commissioner belonging to the estate of T. J. K. Dargan, and on the same day, to wit, first of February, 1858, executed a mortgage of the said land to the Commissioner to secure the payment of the purchase money. After the death of the obligor and mortgagor, this tract of land was sold as a part of his estate, and purchased by one J. J. McCown, who gave a mortgage to secure the payment of his purchase and made payments on same to the amount of $1,500. Afterwards the mortgage given by J. A. Dargan was, under proceedings in which the Commissioner in Equity and J. J. McCown were parties, foreclosed, and the land sold. B. W. Edwards was the purchaser at this sale and is now the owner of the land. He has also become the owner of the bond and mortgage against J. A. Dargan. This claim of B. W. Edwards has been classified by the Clerk as a mortgage debt, after allowing on it a credit of the amount of the bid of the purchaser. The second and third, designated as Nos. b14 and b15, in the same class, are bonds executed by J. A. Dargan to T. C. Evans, the then Commissioner in Equity, on the 1st day of February, 1858, for the purchase money of slaves purchased by him at a Commissioner's sale, and payable in one, two and three years from date, the payment of which bonds were secured by the execution of mortgages of the said slaves by J. A. Dargan on the same day.
The fourth, designated as No. b16 in the same class, are bonds executed by S. H. Wilds to T. C. Evans, the then Commissioner in Equity, for certain slaves purchased by him at a Commissioner's sale, with one James Bell and J. A. Dargan, the intestate, as his sureties, which bonds were dated on the 14th day of January, 1857, and payable in one, two, three and four years; and further to secure the said bond, the said S. H. Wilds executed mortgages of the said slaves. E. B. Brunson, the former Referee appointed to take proof of claims, made no report to the Court. Before him the claims above enumerated and described were established as specialty debts and not as mortgages. W. E. Charles, in his report, alludes to this action before the former Referee and allows the same claims to be established before him as mortgage debts. The exceptions allege that there was error in this classification, and that the claims should have been allowed and classified as specialty debts and not as mortgage debts.
The exceptions will be considered seriatim . The first exception is: " Because the Referee has erred in classing as mortgage debts the claims of Thomas C. Evans, (numbered 4 and 5 in the schedule,) amounting to $2,133.71 and $929.41, the same being bonds secured by mortgages of slaves, which had matured while the said slaves were property; and the property mortgaged having been exhausted, the debts secured thereby no longer exist as mortgage debts but must stand as specialty debts merely."
The 26th clause of the statute of 1789, (5 Stat. 111,) furnishes a rule or guide for the appropriation to the payment of debts of the assets of an intestate or testator. Certain claims are therein specified, and when the nature of the obligation or debt is ascertained it must be arbitrarily placed within its appropriate class. In the administration of the assets of an intestate or testator's estate, this Court is governed by the requirements of the statute, for in administering legal assets the Court distributes them according to the strict rule of law. In the administration of assets that are purely equitable, it is governed by a rule peculiar to itself, founded upon the principle that equality is equity.- Tennant vs. Stoney , 1 Rich. Eq., 235. This Court, in the distribution of funds, recognizes liens, and enforces, in the same manner that a law Court would, if it had jurisdiction, all antecedent liens on property.-Story Eq., 519; Tennant vs. Stoney , 1 Rich. Eq., 235.
In the administration of the assets of an insolvent testator or intestate, mortgages, as mortgages, are not entitled to priority over rents, specialties and simple contract debts, except so far as they are liens on any particular part of the estate. After the lien is exhausted, the grade of the demand must be determined by the nature of the instrument which the mortgage was given to secure.- Kinard vs. Young , 2 Rich. Eq., 247.
To determine the question as to whether these debts of Evans are mortgage debts or mere specialty debts, the inquiry is pertinent whether the liens of the mortgages given to secure the debts have been exhausted. It is contended that they have not by seizure of the mortgaged property and its appropriation or sale by the mortgagee, but because the slaves so mortgaged have been emancipated and the liens are thus extinguished. What is the legal effect of a mortgage of personal property as to the title?
- Calhoun vs. Calhoun , 2 S. C., 307.
The Act of 1712 vests the mortgagee with the complete title and ownership, if he takes possession after breach of condition and retains possession for ten years. In Black vs. Hair , 2 Hill Ch., 624, it is held: " That a creditor holding a mortgage security is a trustee, to sell not only for the benefit of the mortgagor but for his own use."
The interest in or title to the slaves in this case was a qualified one, and the mortgagee was not the owner. His mortgage was a mere pledge or security for his debts, taken with a view to recover his money and not to obtain the possession of the property itself. The mortgage debt was due on the 1st day of February, 1861. On that day there was a breach of the condition of the mortgage. The mortgagee was authorized, at that time, to seize the slaves and convert them into money, to be applied to the satisfaction of his debt, or to seize them...
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