Furlong v. Edwards

Mason, J., delivered the following opinion, being, in part, the opinion of the court. The bill in this cause, which was filed on the 26th day of June 1852, charges the recovery, by the appellee Edwards, of certain judgments against Furlong one of the appellants, before a justice of the peace, the issuing of writs of fieri facias on said judgments, and the levying on certain goods and chattels alleged to be in the possession of Furlong, which had been conveyed by said Furlong to John Miller another of the appellants. The bill then charges the execution of the deed by said Furlong, conveying all his property, (which is the same levied upon by said writs) to said Miller, to secure a sum of money due him, and to secure the payment of certain other debts owing by the said Furlong to various persons, for the payment of which said Miller had become security. To said deed there was a condition annexed, that if Furlong paid to Miller and the other creditors the amounts severally due them, at or before certain stated periods, then the deed was to be void.

The bill further alleges that the property conveyed by said deed or mortgage, was more than sufficient to pay the mortgage debts, but not more than sufficient to pay them, together with the claim of the complainant. The bill then proceeds to charge, that the complainant was in danger of losing his claim by a misapplication of the said property, that Furlong was in possession of the same, and ¹¹¹ rapidly disposing of it at public auction, that complainant was ignorant of the application which Furlong was making of the proceeds of sales, but that he believed they were improperly applied to his own use, that Furlong was insolvent, and that said property could not be sold under the aforesaid executions, and therefore the remedy of the complainant was in a court of chancery. Upon this bill, and before answer, the court appointed a receiver and granted an injunction in accordance with the prayer of the bill. Subsequently the appellants, Miller and Furlong,, answered the complainant’s hill.

They admit the execution of the deed, the issuing and levying of the writs of fieri facias, and that the deed embraced all Furlong’s property, and that it was more than sufficient to pay the mortgaged or preferred debts, and the claim of the complainant.. The defendants, however, explicitly deny that Furlong is in possession of the property, or that he is selling or disposing of the same as his own property, or for his own purposes, but that he was acting as the authorised agent of Miller, and as such was selling the property, collecting the moneys on the notes and other assets conveyed by said deed, and was applying the proceeds arising from said sales and collections, in discharge of the objects contemplated by the said deed or mortgage ; and they further deny that any part of the money has been improperly applied. Upon application for that purpose, after the defendants had filed their answers and without proof on either side, the court below refused to dissolve the injunction previously granted, or to discharge the receiver. This refusal forms the basis of the present appeal, and we are called upon to decide whether the proceedings of the circuit court, either in passing the first order appointing a receiver and granting an injunction, or afterwards, in refusing to revoke the same, were regular and proper.

We will not now pause to consider whether the averments of this bill were sufficient to warrant, in the first instance, the ¹¹² appointment of a receiver, and the granting of an injunction. We will barely remark upon this point, that this power is a most delicate one', and should be exercised by the court with extreme caution, and only under special and peculiar circumstances requiring summary relief.- Conceding that the averments of the bill were sufficient to warrant the interposition of the court and the passing of the first order, it is clear to our minds that the defendants have explicitly denied every material fact stated in the bill, and completely sworn away every equity upon which the complainant could rest his case. The only allegations in the bill that could have authorised the interference of a court of chancery in the mode prayed for, were those which averred that the defendant Furlong ivas in possession of the property, was selling and, converting the same to his own use, that he was insolvent, and that the complainant was thereby in danger of losing his debt. These charges are unequivocally and explicitly denied, and thus the complainant has every pretended ground taken from him, upon which to rest an application for an injunction and receiver.

Upon other grounds we do not think the present case is one which calls for the interposition of .a court of chancery, to protect by injunction and the appointment of a receiver, the interests of the complainant. The appellant Miller is the legal owner. The court always reluctantly interferes against the legal title, and only in cases of fraud clearly proved, and of imminent danger. Lloyd vs. Passingham, 16 Ves., 59.

Williamson vs. Wilson, 1 Bland, 422. Speights vs. Peters, 9 Gill, 472. So far from fraud or improper conduct, constituting the ground of this proceeding against the legal owner, the judge who passed the order, expressly excludes any such idea, and even passes a high encomium upon what he terms the elevated and enviable character of Mr. Miller, thereby taking from the court all ground or claim to deal with his property in the harsh mode which was adopted. This court does not wish to be understood as calling in question the authority of the case of Harris vs. Alcock, 10 ¹¹³ Gill and Johns., 226.

We can see nothing in that case to warrant the present proceeding. The only purpose for which that case could be invoked, would be to authorise the court to enforce the equitable lien of the complainant, acquired against the mortgaged property by virtue of his levy. The position assumed by the learned judge who delivered the opinion below, as. respects the time when the creditor acquires his lien, is in our judgment erroneous. The following is his language upon this point :• “The right to file his bill takes place, so soon as the officer having charge of the execution makes his return.

Nothing in the nature of a lien or preference is acquired until the bill is filed. From that period he has priority over all other creditors at large.” The case of McDermutt vs. Strong, 4 Johns. Ch. Rep., 687, is cited to support this proposition.

We will not discuss the effect of that decision, or whether it sustains the view taken by the court below. The case of Harris vs. Alcock, in our own court expressly decides, that the issuing and levying of a fieri facias, secures for the creditor a priority or lien-upon the debtor’s equitable interest in personal property covered by a mortgage, which lien dates from the time the execution was placed in the officer’s hands. Thus the foundation for the interposition of a court of equity to enforce the lien, has been laid, which may or may not be resorted to, as the circumstances of the case may afterwards require. If the mortgagee proceeds to dispose of, and settle the estate as his duty requires him, by first paying off the incumbrance, and then the creditor’s execution, there would be no need of incurring the expense and delay of a chancery proceeding, but if on the contrary he does not, a court of chancery upon a proper application, would require him to do so.

In the present case the answer of the defendant shows that he, as mortgagee, is pursuing strictly the course which the law marks out. He alleges in his answer that he is selling the property, collecting the moneys on the notes, and applying the proceeds to the payment of the mortgage debt. Why then ask a court of equity to require a party to do that which he does not de~ ¹¹⁴ ny he is bound to do, and which in fact he is doing aS reguIarly and as expeditiously as he is able? This court will never encourage unnecessary litigation, nor will it treat an individual as in default of any legal duty, unless upon a case clearly made out showing such default.

Whether this be a proceeding under the authority of the case of Harris vs. Alcock, or not, is not a question directly presented by the present appeal, and if it were, it would be' comparatively an unimportant one, when contrasted with the real question involved in this controversy, which- is the propriety of granting the injunction and the appointment of a receiver. The point of the decision of the court below- directly xmder review and from which this appeal was taken, was-the refusal to dismiss the receiver and dissolve the injunction. The judge who delivers this opinion takes another view of this case, which in his judgment embraces and disposes of every question which arises out of it, as well as all other cases similarly situated. The sole object of the appointment of a receiver, is to take care of the subject or property about which the parties are contending, and to prevent it from being wasted or lost. 1 Bland, 213 .

If the court- can see that the party asking for relief, can have redress and protection in any-other way, the extraordinary power of the court will not be exercised in the appointment of a receiver. In the present case I think that not only the complainant, but all other