Farmers' & Drovers' Bank v. Sherley
| Decision Date | 27 September 1876 |
| Citation | 75 Ky. 304 |
| Parties | Farmers & Drovers' Bank v. Sherley, & c. |
| Court | Kentucky Court of Appeals |
APPEAL FROM LOUISVILLE CHANCERY COURT.
A. T POPE, W. P. JOHNSON, For Appellant,
5 Dana 241,Patterson v. Pope.
4 Johnson, 123, Hayes v. Ward.
12 B Mon. 44, Rice v. Downing.
23 Mo 232, Hays v. Steamboat Columbus.
MIX & BOOTH, For Appellees,
CITED
Story's Equity, section 327.
2 Smith's Leading cases, 226.
On the 19th of March, 1870, S. S. Hite was made receiver of the Louisville Chancery Court, and on that day entered upon the discharge of his duties, having first executed a bond in the penalty of $100,000, conditioned for the faithful performance of the trust, and that he would account for and pay over to the parties entitled all moneys in his hands as ordered by the court. His sureties in this bond were James Bridgeford, Alfred Herr, Jacob Hite, sr., Richard Herr, and James Hite.
Subsequent to the execution of this bond the legislature, deeming that the penalty imposed was not sufficient to secure the rights of litigants, required the execution of a bond by the receiver in the penal sum of $200,000. This bond was executed on the 10th day of March, 1871, containing the same stipulations as the first bond, with James Bridgeford, Z. M. Sherley, Alfred Herr, Richard Herr, James Hite, and Jacob Hite as sureties.
The receiver, S. S. Hite, on the 2d day of May, 1870, borrowed of the appellant, the Farmers & Drovers' Bank, the sum of $5,000, for which he executed his note as of that date, payable in four months, and to secure the payment of the money executed to the bank a mortgage on a tract of land in the county of Jefferson containing one hundred and twenty-six acres.
Hite, the receiver, having been required to settle his accounts as such from the time he qualified until the settlement was made, was found to be behind in his accounts on the 15th of April, 1874, in the sum of $4,909.41; and failing to make payment, the record shows that one of his sureties in the second bond (Sherley), in behalf of himself and co-sureties, appeared in court and made good the deficit.
The bank, on the 9th of June, 1874, filed a petition in the Louisville Chancery Court to foreclose its mortgage, and during the pendency of that action, the appellees, the sureties in the second bond, all of them being sureties in the first bond, except Sherley, upon petition were made parties to the litigation by the bank, and asserted a lien upon the land prior in date to the mortgage.
By section 819 of the Civil Code, regulating proceedings in the Louisville Chancery Court, it is provided,
These sureties, having paid the debt, insist that, as the creditor to whom they were liable had a lien by reason of this section upon the estate of the receiver, they should be substituted to his rights, and their lien adjudged to be superior to the lien created by the mortgage. The court below gave them this preference, and from that judgment the bank has appealed.
It is argued by counsel for appellant that no lien can be successfully asserted in the present case by the sureties, as no judgment had been rendered fixing their liability, or any judicial determination in favor of any of the creditors of the fund in the hands of the receiver showing that the latter had received moneys as an officer of the court for which he had failed to account.
The receiver in discharging his duties is necessarily under the control of the chancellor, and the latter may at any time require him to settle his accounts, and to pay over the moneys in his hands to the parties entitled. If upon a settlement of his accounts, or in any other manner, it appears that he holds a fund as receiver, upon his failure to pay, a...
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