Smith v. McLeod

• Decision Date: 31 December 1844
• Parties: BENJAMIN B. SMITH v. JOHN McLEOD.
• Court: North Carolina Supreme Court

3 Ired.Eq. 390

38 N.C. 390

BENJAMIN B. SMITH

v.JOHN McLEOD.

Supreme Court of North Carolina.

December Term, 1844.

Whenever a collateral security on the property of the principal is given to or obtained by a creditor, by whatever means, it amounts to a specific appropriation of those effects to the debt, and therefore the surety is entitled to the benefit of it, as well as the creditor; and the creditor is under a duty to the surety, which will be enforced in equity, not wilfully to impair the security or omit to enforce satisfaction of it.

The act, directing that injunctions shall issue but within four months after the rendition of a judgment at law, is only directory to the Judges; and forms no ground for dissolving an injunction, after the defendant has appeared and put in his answer to the bill.

The cases of Cooper v. Wilcox, 2 Dev. & Bat. Eq. 90, Nelson v. Williams, Ibid. 118, and Pugh v. Maer, 4 Hawks, 362, cited and approved.

Appeal from an interlocutory order of the court of Equity of Wake County, at the Fall Term 1844, his Honor Judge Caldwell presiding, which order directed the injunction, which had been obtained in this case, to be continued to the hearing. The facts disclosed by the bill and answer were as follows.

On the 26th of October, 1839, William W. White, gave a bond for the sum of $1,641 16, in which Johnson Busbee and the plaintiff joined, as his sureties; and which came by assignment to the Trustees of the Rix Hospital Fund. They brought an action on the bond in Wake County Court, and obtained judgment against all the obligors in November, 1842; from that, the defendants appealed, and at the next term of the Superior Court, which was on the 1st Monday of April, 1843, judgment was rendered against White, Busbee and Smith, and the sureties for the appeal. At the same term of the Superior Court, a judgment was rendered in favor of one Johns, for about $600, against the same persons; and also one, in favor of one Atkins, for about $700, against White, Busbee and Smith. The three judgments made, together, upwards of $3,000. Writs of fieri facias were taken out on all the judgments, and delivered to the Sheriff, in April 1843, and served on certain property of White on the 4th day of May, following; and that was all the property he had.

At May term 1843, of Wake County Court, which was on the third Monday, the defendant, John McLeod, obtained two judgments against the said White and Busbee for $3,269 72, in the whole, besides costs; and at the same time judgments were rendered in favor of other persons, against White and Busbee, for about $1,530 28.

A few days before the County Court, but after the issuing of the executions from the Superior Court, Johnson Busbee conveyed to Trustees, all his visible estate, (except certain of his slaves,) upon trust, to sell and pay certain debts of his own, which exceed in amount the value of the effects assigned.-- Writs of fieri facias were taken out in May, on the judgments in the County Court, and delivered to the Sheriff; and, as the latter executions could not reach the property conveyed by Busbee, in his deed of trust, and those from the Superior Court could, because their teste was prior to the execution of the deed, McLeod requested the Sheriff to serve the executions from the Superior Court on the property conveyed by Busbee, and leave the property of White and the negroes of Busbee, which he omitted to convey, for the satisfaction of the County Court executions. But the Sheriff declined doing so, and levied the executions from the Superior Court on the said negroes of Busbee, as being of prior teste, and entitled to the preference, and, subject thereto, he levied the County Court executions on the same property of White, and the same slaves of Busbee; and he made known, that he would apply the proceeds of sale to the executions according to their legal priorities; and White and Smith united in a request to him, that he would do so. With the view of saving his own debts, McLeod then purchased the judgment of the Trustees of the Rix Hospital, and took an assignment of it, and gave the Sheriff notice thereof, and, inasmuch as none of the executions designated any of the parties as sureties, he again required the Sheriff not to proceed further on the Rix Hospital's execution, against the property of White and the negroes of Busbee, so levied on, but to sell the same under the other executions.--But the Sheriff, at the instance of White and Smith, still persisted in his previous determination, and, in consequence thereof, McLeod withdrew the Rix Hospital execution, from his hands. The Sheriff then sold White's property for $2,372 50, and Busbee's negroes, that were left out of his deed, for $2,967 15; in all, $5,339 65. He did not, however, pay over those moneys to the plaintiffs in the executions, but returned the special matter and submitted it to the Courts to decide, to which of the creditors, and in what proportions, it should be paid. After the sale, McLeod again delivered to the Sheriff the Rix Hospital execution, and required him to serve it on the property of Smith, and on that of Busbee, conveyed by the deed of trust; which he did, and returned the levies to the Superior Court, at October term, 1843. At that term, it was also decided, on the Sheriff's return, that the executions from the Superior Court in favor of Johns and Atkins, should be first satisfied out of the proceeds of White's property, and the residue of the whole sum of $5,339 65, applied to the the judgments in the County Court, pro rata. McLeod then sued out a venditioni exponas on the levy on the property of Busbee and Smith returned on the Rix Hospital's execution and delivered it to the Sheriff on the 20th day of October, 1843.

On the 29th of March, 1844, the plaintiff filed this bill against McLeod, in which he prays for relief and an injunction. It states, that the plaintiff applied to Busbee to join in the suit, and that he had refused, and has become insolvent, and makes the same allegations as to White. Upon the bill and the usual affidavit of the truth of its allegations, an injunction was granted in vacation.

The answer sets forth the facts much as they appear in the foregoing statement. It admits, that White is insolvent and has no property; and it states, that Busbee's assignment did not include any debts that might be due to him, but it admits that he has no visible property except that assigned, and that he is reputed to be insolvent. The defendant denies, that, when he purchased the judgment from the trustees of the Rix Hospital, he knew that Smith and Busbee were sureties, though he now admits such to be the fact. The answer further insists, upon the delay in filing the bill, for more than four months after the decision of the court as to the application of the money raised by the sheriff.

The defendant moved upon his answer for a dissolution of the injunction, but his Honor refused the motion, and ordered the injunction to stand until the hearing, but allowed the defendant an appeal.

Iredell for the plaintiff , relied on the cases of Cooper v. Wilcox, 2 Dev. & Bat. Eq. 90, and Nelson v. Williams, 2 Dev. & Bat. Eq. 118.

Badger for the defendant . To arrange the executions in such manner, and to apply the property liable to all and each of them, so as to produce satisfaction of all, was the duty of the sheriff without any instructions to that effect from McLeod. The whole amount of the executions in his hands, was more than $8,000. The three Superior Court executions were for about $3,329, and the lien of these overreached Busbee's deed of trust, while the County Court executions for more than $4,000, were tested subsequently to that deed, and, therefore, could not authorise a seizure of the property conveyed by it. By applying Busbee's property in the hands of the trustee, wholly to the satisfaction of the Superior Court executions, and the other property of Busbee with that of White, to the County Court executions, the satisfaction of all would be produced. If it is the duty of the sheriff to endeavor to procure satisfaction of all executions in his hands, then he was bound to make such application. If all the executions had come into his hands at the same time, no doubt can be made, that he was bound so to levy them, as to produce entire payment of them all, and, as necessary to this end, to seize under the elder executions, that property of Busbee, which was not liable to the junior. What difference is produced by the fact of the levy upon White's property, before the junior executions came into his hands? Nothing is gained by the delivery to the sheriff; executions, by our law, having priority amongst themselves, as well as a lien upon the debtor's property, from their teste, and not from their delivery. Nor is any specific right of satisfaction out of property seized under an execution, gained by such seizure as against other executions, for, by the decisions of this court, the proceeds of a sale are to be applied to all executions in the sheriff's hands at the time of the sale, according to their priorities, without regard to the time of delivery, or to the process under which the seizure is made. Up to the sale, all the property of all the parties, liable under the executions, was a fund subject to the satisfaction of all the debts, so far as any legal application of the same by the sheriff could produce that result. When, therefore, upon the delivery of the junior executions, the sheriff found, that, to apply the property seized under the senior executions to these latter, would leave the former unsatisfied, it became his duty to seize the property of Busbee conveyed by the deed, and apply it wholly to the satisfaction of the senior executions; and seize and sell the property of White under the junior ones, because it was then apparent, that, by this course only, could all be paid, and he was bound to pay all, if he could.

But if...