Kellogg v. Miller

• Decision Date: 18 June 1892
• Citation: Kellogg v. Miller, 22 Or. 406, 30 P. 229 (Or. 1892)
• Parties: KELLOGG et al. v. MILLER.
• Court: Oregon Supreme Court

30 P. 229

22 Or. 406

KELLOGG et al. v. MILLER.

Supreme Court of Oregon

June 18, 1892

Appeal from circuit court, Jackson county; L.R. WEBSTER, Judge.

Charles P. Kellogg & Co., with others, presented their claim against Kurth & Miller, insolvents, to D.H. Miller, assignee, and from the order of distribution the assignee appeals. Affirmed.

Willard Crawford, A.S. Hammond, and Sanderson Reed, for appellant.

Francis Fitch, (C.J. McDougall, of counsel,) for respondents.

BEAN J.

On July 29, 1890, C.J. Kurth and John W. Miller, partners, doing business under the firm name of Kurth & Miller, being insolvent, made a general assignment of all their property to appellant, D.H. Miller, for the benefit of their creditors. At the time of the assignment Kurth & Miller were indebted to respondents, Charles P. Kellogg & Co., in the sum of $1,448.90 on a promissory note for goods, wares, and merchandise, which indebtedness was secured by a mortgage upon certain real property of the probable value of $800. Within the 60 days allowed by law Kellogg & Co. presented to the assignee their claim, duly verified, for $1,448.90, being the full amount thereof; and on September 13, 1891, the assignee having converted into money all the property of the estate of Kurth & Miller, except the mortgaged premises, the circuit court of Jackson county, in a proper proceeding, ordered and adjudged that the assignee pay to all the creditors of the estate, including Kellogg & Co., pro rata, according to the amount of their respective claims from which order this appeal is taken. The only point raised and to be decided on this appeal, is whether a creditor of an estate in the hands of an assignee, under the general assignment law, whose claim is secured or partially secured by a mortgage on real property, is entitled to a dividend on the face of such claim, without regard to the value of the mortgaged property, or whether such creditor is compelled to rely upon his mortgage first, and is entitled to a dividend only upon the balance of his claim, if any, after his security is exhausted. There are some conflicting decisions upon this question in the courts of this country and in England. The law governing the administration of estates in bankruptcy, which is that creditors so secured shall have dividends only on the residue of their claims after converting and applying the security, or after deducting its appraised value, has been applied sometimes in the settlement of an insolvent estate after the death of the debtor, or under his assignment. But there seems to be no warrant for any such application of the bankruptcy doctrine. The rule in bankruptcy proceeds, it is generally said, upon the express provisions of the statute requiring the creditor to give up his security in order to be entitled to prove his whole debt or, if he retain it, only to prove the balance of the debt after deducting the value of the security held, and hence is not controlling upon a court administering in equity upon the estate of insolvent debtors. By the great preponderance of authority the creditor has a right, in the absence of statute, to prove and have dividends upon his entire debt irrespective of the collateral security. Jones, Pledges, § 587; 1 Story, Eq.Jur. § 564b; People v. Remington, 121 N.Y. 328, 24 N.E. 793; Allen v. Danielson, 15 R.I. 481, overruling Knowles, Petitioner, 13 R.I 90; In re Bates, 118 Ill. 524, 9 N.E. 257, and 19 Ill.App. 470; West v. Bank, 19 Vt. 403; Walker v. Baxter, 26 Vt. 710; Bank v. Patterson, 78 Ky. 291; Brown v. Bank, 79 N.C. 244; Moses v. Ranlet, 2 N.H. 488; Morris v. Olwine, 22 Pa.St. 441; Keim's Appeal, 27 Pa.St. 42; Graeff's Appeal, 79 Pa.St. 146; Mason v. Bogg, 2 Mylne & C. 443; Kellock's Case, L.R. 3 Ch.App. 769. These cases proceed upon the theory that, by the contract between the debtor and creditor, the creditor secures a personal right against the debtor, and also a right to proceed against the security in case the debt is not paid. The debt or personal right is the principal thing, the security being regarded as something collateral, which does not reduce the debt, but only secures the creditor pro tanto in case the debt is not paid in full by the debtor or his estate. In the absence of the intervention of positive or statutory law, this...