Hubbard v. Security Trust Company

• Decision Date: 29 May 1906
• Docket Number: 5,718
• Citation: 78 N.E. 79,38 Ind.App. 156
• Parties: HUBBARD v. SECURITY TRUST COMPANY, RECEIVER
• Court: Indiana Appellate Court

78 N.E. 79

38 Ind.App. 156

HUBBARD v. SECURITY TRUST COMPANY, RECEIVER

No. 5,718

Court of Appeals of Indiana

May 29, 1906

From Marion Circuit Court (13,385); Henry Clay Allen, Judge.

Suit by Walter J. Hubbard against The Security Trust Company as receiver of the Topp Hygienic Milk Company. From a decree denying all the relief prayed, plaintiff appeals.

Reversed.

C. B Clarke, W. C. Clarke and M. M. Batchelder, for appellant.

Frank C. Groninger, for appellee.

OPINION

ROBY, J.

The question for decision grows out of the following facts: The Varney Electric Company in 1904 obtained a judgment in a justice of the peace court of Marion county against the Topp Hygienic Milk Company for $ 117.29. An execution was issued thereon in due form, and placed in the hands of a constable who levied upon a team of horses, harness and wagon belonging to said milk company, which thereupon gave a delivery bond therefor, the same being executed by appellant as its surety and by virtue of which said company retained possession of said property. It failed to pay the value of or deliver said property as required by the terms of said bond, and the electric company, by reason of said default, recovered judgment upon said bond against appellant for the sum of $ 144.37, and caused an execution against him to issue thereon, by reason of which he was compelled to and did pay the amount of said judgment and costs. In the meantime, a receiver for the milk company had been appointed, who took possession of the horses, harness and wagon above specified and sold the same for $ 180. Nothing has been paid by the milk company or receiver upon said judgment, nor to appellant, who intervened in the matter of said receivership and petitions the court for an order requiring the receiver to pay him the amount paid by him as aforesaid. The court found upon these facts that appellant's claim was no lien upon the assets in the hands of the receiver, and allowed it as a general claim. Appellant's position is that he is entitled to have said amount allowed as a preferred claim.

The receiver occupies no different position with regard to the property released by said delivery bond or its proceeds than would the milk company had no receiver for it been appointed. The effect of a receivership is to suspend the ordinary remedies for the enforcement of liability and render necessary a resort to the court having jurisdiction therein. McAnally v. Glidden (1902), 30 Ind.App. 22, 65 N.E. 291.

The doctrine of subrogation is independent of any merely contractual relations between the parties to be affected thereby, and applies to every instance where one person is required to pay a debt for which another is primarily answerable and should, in good conscience, pay. Johnson v. Barrett (1889), 117 Ind. 551, 552, 19 N.E. 199; Peirce v. Higgins (1885), 101 Ind. 178; Warford v. Hankins (1898), 150 Ind. 489, 50 N.E. 468.

Appellant was not liable for the payment of the Varney judgment. He was not primarily liable for the payment of the judgment rendered upon the bond against him, the duty of the milk company being to return the property or make payment as it had agreed to do, and thereby hold its surety harmless.

The case is one which demands the application of the equitable doctrine of subrogation, and appellant is entitled, as against the receivership, to the same remedies that the original creditor might have. It is urged by appellee that the question of appellant's suretyship has not been adjudicated. The answer to this objection is that the right which it is sought to enforce is an equitable one and equally available whether the question of suretyship has or has not been adjudicated in the statutory manner. Thomas v. Stewart (1889), 117 Ind. 50, 53, 18 N.E. 505.

It remains, therefore, only to inquire what right the judgment creditor held. An execution operates as a lien on the personal property of the judgment debtor, liable to be seized on it from...