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76 N.C. 306

Jackson v. . Sloan

Supreme Court of North Carolina

Decided January 5, 1877

Supreme Court of North Carolina · decided 1877-01-05

<p>1. Where a debtor whose real estate is encumbered with a judgment lien sells a portion of it. a judgment creditor who has a lien upon the whole land is compelled to exhaust the unsold portion for the satisfaction of his judgment before resorting to that which has been sold.</p> <p>2. This however is nut to be done when it trenches upon the rights or operates to the prejudice of such judgment creditor.</p> <p>3. So where A obtained judgment against two partners and under execution issued thereon certain real estate (alleged to be the property of the partners', which allegation was not sufficiently denied in the answer) was sold by the Sheriff who held the proceeds of sale; Held, in an action by B (who had purchased from the partners certain other real estate <m which the lien of A’s judgment rested) to restrain A from selling under his execution the land purchased by plaintiff, that A should be restrained from selling until an account could be taken of the fund in the hands of the Sheriff and a distribution made of the same, so as to ascertain whether or not A’s judgment would be satisfied therefrom.</p> <p>(Roberts v. Oldham, (13 N 0. 297, cited and approved )</p>

Key passage — most relied on by later courts

“It is an analogous principle of equity that when a debtor, whose lands are encumbered by a judgment lien, sells one portion of it, the creditor who has a lien upon that which is sold and upon that which is unsold, shall be compelled to take his satisfaction out of the undisposed of land, so that thus the creditor and the purchaser both may be saved”

quoted by 1 later decision, including Francis v. . Herren

“But this is never done when it trenches on the right or operates to the prejudice of the party entitled to go upon both funds,”

quoted by 1 later decision, including Francis v. . Herren

Relies on Meech v. . Allen · Roberts v. . Oldham and Others · Robertson v. Alford

Good law ✅— No negative treatment on recordhow we know

Decided 1877-01-05

How this case has been cited

Cited by 4 later decisions — most recently January 1976

3 state decisions

1018771880189019001910192019301940195019601970decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

*308 Bynum, -T.

¶1 (After stating the facts as above.) Upon this» state of facts tbe plaintiff demands that the defendant Sloan, be enjoined from selling the “Stowesville Factory ” and b& compelled first to look to the fund arising from the sale of" the “Spring Shoal” tract for the satisfaction of his judgment. The question is whether the plaintiff is entitled to this relief. From the admissions expressed and implied in the-answer, -we think he is.

¶2 What are the obstacles preventing the Sheriff' from paying out the “ Spring Shoal” fund in discharge of the executions under which that property was sold, does not appear. As from the defendant’s not denying it, we are to assume that this sale was in part at his instance and under-his judgment, it was his duty to explain why he abandoned his claim to the satisfaction of his debt out of that fund ancfi now resorts to another. It may be that in due course of disbursement by the Sheriff it would have satisfied the defendant’s judgment and disencumbered the land purchased by the* plaintiff. The sale of the “Spring Shoal” having been made at the instance of the defendant and for the satisfaction of his debt, it is certainly not inequitable to restrict', him to that fund until it is exhausted, without reaching and! discharging his judgment. For otherwise the rights of the» subsequent purchaser of the “ Stowesville Factory,” would be-necessarily affected by the continuing lion of a judgment-which the. fund ought to have discharged.

¶3 Tbe ground upon which the defendant resists an injunction against his selling the “ StoAvesville Factory,” is the alleged fact that the “Spring Shoal” is the separate property of J. Stowe and primarily liable for his separate debts,, and the further fact that the fund arising from that sale is; insufficient to pay his debt according to the priority of lien. Roberts v. Oldham, 63 N. C. 297.

¶4 If these two facts clearly appeared to the Court, it would be a sufficient answer to the application of the plaintiff!. *309 But the complaint specifies tlie judgments which are a lien ■‘upon the “Spring Shoal,” whether considered as firm or ■separate property and shows therefrom in detail that the fund is sufficient to discharge all the liens prior to and in•cluding the Sloan debt. The answer to this by the defendant is general. It neither denies the particulars set out, nor •specifies a single judgment in addition to those named by the plaintiff, which constitutes a lien prior to his own upon ■-either the firm or separate property of J. and E. B. Stowe. And whether the “ Spring Shoal ” fund is sufficient to reach .¡and pay his judgment, can be best ascertained by the actual -disbursement of that fund according to the legal priorities -of the claimants.

¶5 It is reasonably clear from the whole case that this fund will discharge the Sloan judgment all or in part. This judgment against the firm is a lien both upon the partnership and separate property with this difference in equity, •that the partnership is the primary and the separate property the secondary fund for the payment of a firm debt. If therefore it had clearly appeared that the “Spring Shoal” ■was the separate property of J. Stowe and that the defendant with others had not in the first instance resorted to and sold fit for the payment of his debt, there is no principle upon which the Court can compel the defendant to seek satisfaction out of a secondary instead of the primary fund, to-wit; the “Stowesville Factory,” although the subsequent purchaser -should be discommoded by its sale. But the answer to the •complaint does not sufficiently negative the allegation that ■the “ Spring Shoal” was the property of the firm. Assuming then that both the “Stowesville Factory” and the “Spring Shoal” were .partnership property the rule of equity is, that -when one creditor can resort to two funds for. the satisfac-. ■tion of his debt, and another to one only of the funds, the ■former shall first resort to the fund upon which the latter ihas no claim, as that by this means of distribution both may *310 be paid. And it is an analagons principle of equity that where a debtor whose,lands are eneumbered’by a judgment’ lien sells .one portion of it, the creditor who has a lien upon ■that.which.is sold aud upon that which is unsold, shall be-compelled to take his satisfaction out of the undisposed of' land, so that thus the creditor and the purchaser both may be-sa ved. Rollins v. Thompson, 21 Miss. 521 ; Russell v. Howard. 2 McL. 489 ; Alston v. Munford, 1 Brock. 267 ; Herman on Ex. § 224. But this however is never done when it trenches-on the rights or operates to the prejudice of the party entitled to go upon both funds. Meech v. Allen, 17 N. Y. 300 ; United States v. Duncan, 4 McL. 607 ; McCulloch v. Dashiell, 1 Harris & Gill, 96.

¶6 No appreciable injury to the defendant can arise here, for his lien extends to both funds which are amply sufficient to-secure his debt. He can lose nothing then by awaiting the legal disposition of the “Spring Shoal” fund before resorting to the factory property. The delay, if it operates as such, is-an incident common to the complications of a large insolvent’ estate and - cannot ordinarily be avoided. "Whether the plaintiff is pursuing the speediest way to disencumber his purchase and get a good title instead of subrogating himself' to the rights of the defendant by the purchase and assignment of his judgment, it is unnecessary to inquire.' As the-plaintiff has with notice and voluntarily purchased and put’ himself in his present situation and the defendant is-in no default, the latter ought not to be subject to any costs, ■ or charges in or about this proceeding. Therefore before an, injunction -is allowed the plaintiff must give bond to indemnify and save harmless the defendant-Sloan against any and all costs of .this suit and any loss which may result from, granting-the-injunction. Subject to these conditions the-plaintrff is entitled to an injunction restraining the defendant S. J. Sloan from selling the “ Stowesville Factory” property. until an account is taken of the fund in the hands of *311 the Sheriff of Gaston County and the judgments which constitute a lien thereon, and the disbursement of the fund-according to the priorities of the judgments.

¶7 There is error. Judgment reversed and cause remanded to be proceeded with in accordance with this opinion.

¶8 Per Curiam. Judgment reversed.

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