Hudkins v. Ward.
| Decision Date | 23 September 1887 |
| Court | West Virginia Supreme Court |
| Parties | Hudkins v. Ward. |
*(Woods, Judge, Absent.) 1. Marshalling Assets Creditor and Debtor.
A creditor, who has two funds open to him, while another creditor has but one, should not take the latter without placing the fund, which is exclusively within his reach, at the disposal of the creditor, whom he has deprived of the means of payment. (p 207.)
2. Marshalling Assets Creditor and Debtor.
The creditor can not be delayed in the collection of his chum and may take the fund most easily attainable but on condition, that the creditor, who has been prevented from resorting to that fund for payment of his claim, takes his place with reference to the other fund. (p. 209.)
3. Marshalling Assets Creditor and Debtor.
W. owed H. $1,055.00 and executed a deed of trust to secure it. At about the same time W. owed C and X. $1,600.00 and also held a chose in action for that sum against H., which he assigned to C. and X. to secure them. In W.'s name they sued H. for the amount and recovered judgment and sued out execution. H. thereupon filed a bill of injunction alleging the insolvency of W. and ten-dered to C. and X. the difference between the $1,000.00 and the $1,055.00 and prayed that the plaintiff in the execution, after this set-off was made, might he perpetually enjoined. The defendants C. and X. answered the bill, resisted the set-off and showed, that W. had executed a deed of trust to secure H. the $1,055.00, and that: W. was insolvent, and prayed, if the set-off was allowed, to be subrogated to the rights of H. in the deed of trust. The court perpetuated the injunction but did not decree the subrogation asked. On appeal, Held:
The set-off was properly allowed because H. could not be delayed in the collection of Ms debt. (p. 210,)
J. Hop. Woods for appellants.
T. A. Bradford for appellee.
Johnson, President:
In 1881 R. E. Hudkins and D. C. Hudkins obtained from the judge of the Circuit Court of Barbour county an injunction restraining the collection of a judgment. By the bill it appears, that Simon Ward, who sued for the use of Grim and Woodford, recovered on the 28th day of October, 1881, in the Circuit Court of said county against the said Hudkins & Bro. a judgment for $1,575.31 and costs; that long before that time said Ward was indebted to said Hudkins and Brother in the sum of $1,055.00, for which he had executed his note dated the 14th day of January, 1881; that this note was executed to R. E. Hudkins alone, but in fact the debt was clue to the plaintiffs jointly. The plaintiffs say, that they did not attempt to set-off said note in the action at law, because it was not then due. The bill further charges, that Ward is insolvent and has left the State of West Virginia. The bill tenders the residue of the money due on the said judgment after applying the $1,055.00 as a set-off against it and prays, that said set-off may be made, and for an injunction against said judgment and for general relief.
J. N. B. Grim and A. M. Woodford filed their joint answer to the bill averring the recovery of the judgment in the name of Ward for their use and admitting the insolvency of the defendant, and that he had left the State, but denying that the $1,055.00 was due to the plaintiffs jointly." They also aver, that on the 3rd of March, 1881, the said Ward executed a deed to Luther O. Elliot, trustee, conveying 750 acres of valuable land worth $18,000.00 or $20,000.00 to secure to R. E. Hudkins the payment of the $1,055.00, which he desires set off against their judgment; that said deed was immediately recorded and is an ample security for the said plaintiffs' demand against said Ward. The answer also avers, that after the execution of the deed of trust Ward assigned his claim to said Crim and Woodford, upon which the judgment against Hudkins and Brother was recovered; that after the execution of said trust the said Ward executed other deeds of trust and confessed large judgments to secure other debts and thereby further encumbered his said real estate to the amount of not less than $15,000.00 and left the State, so that unless the respondents can collect their said judgment against the plaintiffs or be subrogated to their rights in the said trust-deed, they will be compelled to lose the $1,055.00 and interest. They therefore claim, that the plaintiffs have no right to have the said $1,055.00 and interest set off' against their judgment; that plaintiffs are amply secured as to that amount by the trust-deed; that they have no right to abandon that security at the expense of the respondents; that they are entitled at least to be subrogated to the rights of the plaintiffs in the deed of trust, which they deem an ample security. They pray, that the injunction be dissolved, or if the plaintiffs are entitled to the set-off, that they may be subrogated to the rights of the plaintiffs in said deed of trust. The deed of trust is exhibited with the answer.
The deposition of R. E. Hudkins was taken, in which he proves, that, although the $1,055.00 note was executed to him alone, yet the debt was due to his brother and himself jointly. There was a general replication to the answer of the defendants; and no depositions were taken for the defendants.
On the 23rd day of July, 1885, the case was heard, and the court permitted the set-off to be made, and, as the residue had been paid to the defendants, Woodford and Crim, perpetually enjoined the judgment and decreed costs against the defendants but did not subrogate the said defendants to the rights of the plaintiffs in the deed of trust. From this decree Grim and Woodford appealed.
The aim of a court of equity as regards the payment of debts is equality that the assets shall be so distributed as to satisfy all the creditors; and a creditor will not be allowed arbitrarily to defeat this rule by throwing the whole burden on a particular fund. This results from the dictates of natural justice, that, where there is enough for all, it shall be so distributed as to give to each his due. A creditor, who has two funds open to him, while another creditor has but one, obviously should not take the latter fund without placing the fund, which is exclusively within his reach, at the disposal of the creditor, whom he has deprived of the means of payment. And if he neglects or refuses to fulfil this duty, it may be enforced by a decree of subrogation. 2 Lead. Gas. in Eq. 1, 255 n. The principle, on which a court of equity proceeds in marshalling assets, is, that a creditor having a choice of two funds ought to exercise his right of election in such a manner as not to injure other creditors, who can resort to only one of these funds. But if contrary to equity he should so exercise his legal rights as to exhaust the fund to which alone other creditors can resort, then these other creditors will be placed by a court of equity in his situation, so far as he has applied their funds to the satisfaction of his claim. Marshall, C. J., in Alston v. Munford, 1 Breck. 286.
In Cralle v. Meene, 8 Graft. 496, the testator had given a bond to indemnify an endorser, and the holder of the note was allowed to stand in the place of the endorser and be paid as a creditor by specialty out of thereat assets, although the endorser had not been compelled to pay the note.
See also Steamboat Co. v. New Jersey Co., 1. Hopk. Ch'y 460, Haidey v. Maneius, 7 Johns. 174, Ooertson v. Booth, 19 Johns. 485, Ramsey's Appeal, 2 Watts 228.
In Brinkerhof v. Marvin, 5 Johns. Oh'y 321, the bill stated that in July, 1819, J. and Z. Taylor of Saratoga being largely indebted to the plaintiff for goods sold to them, executed a bond to the plaintiff for the amount due with warrant of attorney to confess judgment thereon; that judgment was entered up in the Supreme Court on the bond the 27th of November, 1819; that on the 3d of January, 1820, the defendants, W. J. and A. Marvin, entered up a judgment against J. Taylor by confession on filing special bail without...
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