Gilbert v. McCorkle

• Decision Date: 28 March 1887
• Parties: Gilbert, Assignee, etc., and others v. McCorkle and others.
• Court: Indiana Supreme Court

110 Ind. 215

11 N.E. 296

Gilbert, Assignee, etc., and others

v.McCorkle and others.

Supreme Court of Indiana.

March 28, 1887.

Appeal from superior court, Vanderburgh county.

Alex. Gilchrist and G. H. De Bruler, for Gilbert, assignee, appellant. D. B. Kumber and G. F. Denby, for Schutz, and others, appellants. James M. Shackelford and S. B. Vance, for McCorkle and others, appellees.

MITCHELL, J.

Conrad Miller and Jacob Miller, partners doing business under the firm name of Miller Bros., in the city of Evansville, Indiana, being in a failing condition, executed a mortgage upon all of their property, real and personal, including their notes and accounts and choses in action, to secure certain of their creditors, to whom they were indebted. The debts which the mortgage was given to secure were specifically described in the mortgage, and amounted to about $125,000. Two persons were named as trustees, but the mortgage stipulated that it was given to secure the debts due the persons therein mentioned. This mortgage was executed on the twenty-ninth day of March, 1886, and was duly recorded on the day it was executed. The mortgagors were indebted in sums aggregating a large amount, in addition to the sums secured by the mortgage. Miller Bros. executed a deed of general assignment of all their property for the benefit of all their creditors on the thirtieth day of March, 1886. The appellant John Gilbert was named therein as assignee. The assignment conformed to the provisions of the act of March 5, 1859, regulating voluntary assignments for the benefit of creditors. After the assignment had been executed, the assignee, with the concurrence of the trustees named in the mortgage, took possession of the firm assets, all of which had been included in the previous mortgage, and was proceeding to administer the trust under the direction of the circuit court of Vanderburgh county. This action was commenced on the twelfth day of April, 1886, in the superior court of Vanderburgh county, to foreclose the mortgage. The assignee was made a party defendant. Other creditors, whose claims were not secured by the mortgage, became parties upon their own application. Upon issue made, trial was had, which resulted in a finding in favor of the mortgagees, fixing the amounts severally due them. There was a decree of foreclosure, and an order for the sale of the property mortgaged.

Several questions of minor importance have been made on both sides. For example, it is urged, in respect to some of the claims set out as exhibits to the complaint, that there is a variance between the names of the payees of those claims and some of the parties named as plaintiffs. And, on the other hand, the point is made that it does not appear in the answer of the assignee with sufficient certainty that the deed of assignment was recorded as the statute requires. None of the questions referred to affect the substantial merits of the controversy. Having examined each of these questions, it is sufficient to say they do not involve the court below in any error.

There are two questions which are relied on for reversal of the judgment. One involves the jurisdiction of the superior court of Vanderburgh county over the subject-matter. The other involves the validity of the mortgage as a security.

It is insisted that the court in which the foreclosure suit was commenced had no jurisdiction to entertain the proceedings, because the mortgaged property had been delivered into the possession of the assignees by or with the concurrence and assent of the mortgagees or their representative, and was being administered under the direction and control of the Vanderburgh circuit court. It is said the property was therefore in the custody and under the exclusive jurisdiction of the circuit court, and that an answer setting forth the foregoing facts was sufficient in law to show that the superior court had no jurisdiction over the subject-matter. It is said, next, that the answers make it appear that the trustees and mortgagees knew, at the time they took the mortgage, that the mortgagors were in failing circumstances, and that the mortgage covered all of their property, and that they contemplated making an assignment for the benefit of their creditors. Hence it is argued the mortgage was a mere device to give the mortgagees an unjust preference over and to hinder and delay the other creditors of the mortgagors. The result which is said to follow is that the mortgage and the assignment are to be construed together as a general assignment for the benefit of all the assignors' creditors, and that the mortgage, in so far as it gave a preference to the mortgagees, is void.

In respect to the question of jurisdiction. It has been settled by the decisions of this court that, where property which is subject to the lien of an execution is afterwards assigned, such property may nevertheless be seized, and taken out of the possession of the assignee, by virtue of such prior lien. Griffin v. Wallace, 66 Ind. 410;Marsh v. Vawter, 71 Ind. 22;Woolson v. Pipher, 100 Ind. 306. The assignment carries only the assignors interest in the property assigned, and does not affect the prior vested rights or remedies which a good-faith lienholder may have therein. The assignee takes the property assigned subject to the incumbrance of the mortgage, and subject to all the rights and remedies of the mortgages. Recker v. Kilgore, 62 Ind. 10. It was competent for the assignee to have made application to the court in which the assignment was pending or leave to pay off the incumbrance out of the general fund, or to have sold the property under the order of the court, subject to the liens. But neither the assignment, nor any proceeding which the assignee might have taken thereunder, could impair or postpone any remedy which the prior mortgagees might have availed themselves of against the assignor. Section 2674, Rev. St. 1881, provides, in substance, that, where property has been assigned before the holder of any lien or incumbrance thereon shall be entitled to receive any part of his debt out of the general fund, he shall proceed to enforce the payment of his debt by sale, or otherwise, of the property, on which such lien or incumbrance exists. This provision recognizes the right of a lienholder to proceed by the usual and appropriate methods to enforce his lien. That the mortgagees or trustees consented that the property might go into the possession of the assignee did not estop them from afterwards foreclosing the mortgage in any other court of competent jurisdiction, nor would that fact have estopped them from asserting a lien on the proceeds if the assignee had sold the property. Stix v. Sadler, 9 N. E. Rep. 905. The authority of a court in which an assignment is pending, concerning the sale and disposition of the property assigned, is distinctly marked out in the statute. In respect to property which is subject to prior liens when it comes under its jurisdiction, the court may order that it be sold subject to the liens, or it may order that the liens be paid off out of the general fund. The statute does not, however, confer exclusive jurisdiction upon the court having control of the assignment to enforce the ordinary common-law or other independent remedies of those who have antecedent rights in, or liens upon, the property which are in no way affected by the assignment. This conclusion is not in conflict with Grubbs v. Morris, 103 Ind. 166, 2 N. E. Rep. 579. In so far, therefore, as the answers sought to challenge the jurisdiction of the superior court, they presented no obstacle to the proceedings. This conclusion is reached without taking into account the propriety of the form in which the answers were pleaded, being pleas in bar, in connection with other matters.

It is urged, moreover, that the foreclosure of the mortgage to be followed by a sale of the property in pursuance thereof will involve an unnecessary expense, and deplete the available assets of the estate, and that excessive attorney's fees were...