McCandless v. Klauber
| Decision Date | 02 October 1930 |
| Docket Number | 12987. |
| Citation | 155 S.E. 141,158 S.C. 32 |
| Parties | McCANDLESS v. KLAUBER et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Dorchester County; M. M Mann, Judge.
Action by R. B. McCandless, receiver of the First National Bank of St. George, against M. J. Klauber, M. L. Jordan, R. L Klauber, and others. Exceptions were filed to the master's report, and, from the decree of the circuit court, defendants named, except defendant first named appeal .
Modified and affirmed, and remanded.
Nathans & Sinkler, of Charleston, for appellants.
M. S. Connor and W. Herman Pearcy, both of St. George, and Thomas H. Moffatt, of Columbia, for respondents.
This is an action commenced in June, 1928, by the plaintiff, as receiver of the First National Bank of St. George, for the foreclosure of a certain mortgage executed by the L. A. Klauber Company on January 14, 1920, to W. A. Klauber, to secure the payment of a note given by the corporation to W. A. Klauber, for his interest in the mortgaged property and in the corporation, later assigned to the First National Bank of St. George under the circumstances hereinafter detailed, and for the adjustment of certain equities between the defendants and the plaintiff.
It appears that W. A. Klauber, Alice K. Jordan, and R. L. Klauber were the owners of certain real estate, consisting of "a store building and other property," in the town of St. George. They conveyed it to the L. A. Klauber Company, a corporation, the stockholders of which were W. A. Klauber, R. L. Klauber, and Alice K. Jordan, in January, 1920. It seems that W. A. Klauber desired to retire from the corporation as a stockholder, and accepted from the corporation a note for $8,000, secured by a mortgage upon the real estate, dated January 14, 1920, in satisfaction of his interest in the real estate and in the corporation. This mortgage was not recorded until February 24, 1923.
In the meantime, on the 26th day of October, 1922, E. F. A. Wieters & Sons obtained a judgment in the court of common pleas against the corporation and against Alice K. Jordan and R. L. Klauber for $3,255.82 upon a note of the corporation indorsed by Alice K. Jordan and R. L. Klauber.
On the -- day of November, 1924, W. A. Klauber, the mortgagee assigned the $8,000 note and mortgage to his wife, Mrs. M. J. Klauber.
On the 18th day of November, 1924, Mrs. M. J. Klauber assigned the $8,000 note and mortgage to the First National Bank of St. George, to secure a note for $4,095.75.
On December 18, 1924, Mrs. M. J. Klauber assigned her equity in the $8,000 note and mortgage, to American Bank & Trust Company, to secure a note of $5,000.
On December 19, 1924, Mrs. M. J. Klauber assigned her equity in the $8,000 note and mortgage, to American Bank & Trust Company, to secure a second note of $5,000.
On August 25, 1926, M. L. Jordan, husband of Alice K. Jordan, purchased the Wieters judgment, upon which there was at that time unpaid, $2,095, with interest from October 26, 1922, erroneously stated in the Circuit Decree as October 26, 1926, and had it assigned to himself by Wieters. In the purchase of the judgment he used $1,520 of the funds of Mrs. L. A. Klauber, a person of unsound mind, represented in this proceeding by a guardian ad litem.
Alice K. Jordan was not made a party to the present foreclosure proceeding.
The case was referred to T. J. Appleby, Esq., master of Dorchester county, to take the testimony and report his conclusions of law and fact. His report was filed in May, 1929. He recommended that the plaintiff have judgment in the sum of $4,095.78, which shall be a first lien upon the property, and that the defendant Receiver for the American Bank & Trust Company have judgment in the sum of $10,000, etc., which shall be a second lien upon the property, and that the defendant M. L. Jordan be required to exhaust the unincumbered property of L. A. Klauber Company, first the personal property and then the realty, and then the unincumbered property of R. L. Klauber and Alice K. Jordan, who are joint judgment debtors with L. A. Klauber Company under the Wieters judgment, and that, if the same cannot be fully satisfied from these sources, then the same be satisfied from any residue arising from the sale of the property, the subject of this action.
To this report the defendants R. L. Klauber and M. L. Jordan filed exceptions. The case was heard by his honor, Judge Mann, who filed a decree, dated December 31, 1929, in which he held that Mrs. L. A. Klauber had a first lien upon the premises for $1,691.26, which represented the funds belonging to her which M. L. Jordan had used in the purchase of the Wieters judgment, admittedly the first lien upon the property; that the plaintiff, receiver of the First National Bank of St. George, had a second lien for $5,759.46, subject to the lien for taxes and the costs and disbursements of this action; that the defendant Peurifoy, as receiver of the American Bank & Trust Company, had a third lien for $6,234.61; and that the defendant M. L. Jordan had a fourth lien for $894.91; that for these respective amounts the parties have judgment.
He held that M. L. Jordan, having had notice of the unrecorded $8,000 mortgage, was not entitled to claim the priority which Wieters may have claimed for their judgment, or that which was allowed by him to Mrs. Klauber.
His honor further held that, as it appears that, after the rendition of the Wieters judgment, the Klauber corporation transferred its stock of goods to certain trustees, who are the present owners of the property, the owners of the Wieters judgment should, in exoneration in the assignees of the $8,000 mortgage, make an effort to collect the judgment out of the personal property in the hands of the trustees, and should to that end force an accounting by the trustees. He doubted his authority to so direct in this proceeding and made no order in reference thereto.
He further held that, as a matter of equity, the Wieters judgment should not be enforced in full against the mortgaged property, but that it should be prorated between that property and the property that R. L. Klauber and Alice K. Jordan owned at the time of the rendition of the Wieters judgment. He accordingly referred the case back to the master to report as to the property owned by these persons at such time, and the value thereof; "it being the intention of the court, if possible, to prorate the amount due Mrs. Klauber among the property, the subject of this action, and the property owned by R. L. Klauber and Alice K. Jordan at the date of the Wieters judgment."
From this decree the defendants M. L. Jordan and R. L. Klauber have appealed.
M. L. Jordan contends that, as assignee of the Wieters judgment, he is entitled to a first lien to the extent of the amount due thereon, less the amount of the claim of Mrs. L. A. Klauber. As to this claim of Mrs. Klauber there does not appear to be any controversy; it amounts to $1,520, with interest at 7 per cent. from the date of the purchase of the judgment by M. L. Jordan, August 26, 1926.
The position of his honor, Judge Mann, is that, as M. L. Jordan had notice of the prior unrecorded mortgage from the corporation to W. A. Klauber, later assigned to the banks as stated, he is not entitled to claim as a subsequent purchaser for value without notice, but that Mrs. Klauber was entitled to occupy that position.
There is no appeal from the conclusion sustaining the claim of Mrs. Klauber to the first lien upon the property; the storm center is his conclusion as to the claim of M. L. Jordan.
It is conceded that the Wieters judgment is a valid one, and, if it were now his property there would be no question but that he would have the first lien upon the mortgaged property. There is likewise no question as to the validity of the assignment of the judgment by Wieters to Jordan, except that Mrs. Klauber's funds contributed to the purchase money and to that extent she has the first lien. It is suggested that it was an afterthought of Jordan to set up Mrs. Klauber's interest, and something is said about the...
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