SANFORD vs. OGDEN, FERGUSON & CO.

SANFORD vs. OGDEN, FERGUSON & CO. [bill in equity for execution of trust heed, removal of cloud on title, and INJUNCTION OF ACTION AT LA1V.] 1. Conflicting liens of judgment and mortgage. — A stay of execution on a judgment, by order of the plaintiff, is constructively fraudulent as against a bom fide creditor, who, during the suspension, acquires a mortgage or deed of trust on the debtor’s lands, to secure an antecedent debt; and the lien of the judgment, in such case, will be postponed to the mortgage or deed of trust., (Overruling Doe d. Leverich v. Bates. 0 Ala. 480.) Appeal from the Chancery Court at Mobile. Heard before the Hon. Wade Keyes. ON the 25th March, 1841, Ogden, Ferguson & Co. obtained a judgment, in the county court of Mobile, against Thaddeus Sanford, for $5,846 69, besides costs. 'This judgment belonged in fact to J. & C.‘ Townsend, of New York, who had endorsed for collection to Ogden, Ferguson & Co. the note on which it was founded;’on which note Thaddeus Sanford was an accommodation endorser for JolmW. Townsend; another judgment being recovered about the same time, and on the same note, against said J. W. Townsend. On this-judgment against Sanford the following executions were issued : 1st, fi. fa. issued April 17, 1841, returned on 6th May, 1841, “by order of plaintiffs’ attorney,” as having been issued by mistake; 2d, alias fi. fa. issued May 18,1842, returned, on 10th June, 1842, “stayed by order of plaintiffs;” 3d, pluries fi. fa. issued on the 27th June, 1842, and returned, on same day, “all proceedings stayed by order of plaintiffs’ attorney;” 4th, alias pluries fi. fa. issued 19th June, 1843, and levied on 9th September following on certain lands, which were sold, on the first Monday in November following, to "Walter F. Townsend,.for $1,676 61, after deducting costs and commissions; 5th, another alias pluries, issued on 3d April, 1844, and returned, on 31st May following, by order of plaintiffs’ attorney; 6th, another alias pluries, issued on 1st June, 1844, and returned, on 7th February, 1845, “no property found ;” 7th, another alias pluries, issued on 2d October, 1846, and levied on certain other lands, which were sold, on the first Monday in November following, to Walter- F. Townsend, for $158 75, exclusive of costs and commissions ; 8th, another alias pluries, issued on the 1st April, 1853, and levied on certain other lands, but not in time to sell; and, 9th, another alias pluries, issued on the 27th May, 1853, and enjoined by the bill filed in this case. In addition to the credits to which the judgment was entitled, arising from the sales of laud as above stated, the following payments were credited on it, as voluntary payments: $565, paid on 7th January, 1842; $630, paid on 3d June, 1842; and $500, paid on 31st May, 1841. On the 10thFebruary, 1843, Thaddeus Sanford executed a deed, by which he conveyed all the lands on which the executions above-named were levied, with others, to Charles B. Sanford as trustee, to secure James Sanford against liability as accommodation endorser for him oil certain notes* and also to secure other creditors.- This deed was duly recorded, and was accepted by the beneficiaries. On the 4th June, 1853, James and Charles B. Sanford, in behalf of themselves and the other beneficiaries under this deed, filed their bill in equity against all the parties claiming an interest in the lands under judgments at law against Thaddeus Sanford; alleging, that they had paid the notes secured by the deed; that said Sanford was insolvent, and had no other property than the lauds conveyed by the deed; that Walter F. Townsend, the purchaser of the lands at sheriff’s sale, had conveyed a portion of his interest therein to due William A. Dawson ; that both Townsend and Dawson had instituted actions at law for the recovery ot the lands; that these actions, and the claims set up by Townsend and Dawson, constituted a cloud on the title of the lands, which would prevent them from bringing their full value at the trustee’s sale; and that the complainants’ title, under their deed of trust, was superior to any claim founded on the judgment at law, in consequence of the stay of execution by order of the plaintiffs in the judgment- The prayer of the bill was for an execution of the deed of trust under the directions of tbo court, an injunction of the actions at law and of the execution then in the sheriff’s hands, an account, &e. Dawson was the only defendant who filed an answer to the bill; but, by written agreement of counsel, bis answer was allowed to stand as an answer for the other defendants. lie alleged, that W. IP. Townsend and himself owned the entire interest in the judgment recovered by Ogden, Ferguson & Co against Thad. Sanford; insisted, that their lien under the judgment was superior to that of the complainants, and was not at all affected or impaired by their failure to coerce its immediate satisfaction ;.and be appended to his answer, as exhibits, copies of the letters from J. & 0. Townsend, under which the several executions were stayed. These letters were written from New York city, and were addressed to Ogden, Ferguson & Co.; their respective dates and contents being as follows: ' (May 6, 1841.) “A letter having been received from. ..John ~W. Townsend, of Mobile, asking indulgence in the .'.matter of a judgment obtained for us, through your house there, against the property of the said John W. Townsend 'and Thaddeus ¡Sanford; you will be kind enough to instruct your house at Mobile to grant them an indulgence, under the following circumstances: If, in the opinion of their lawyers, our security under the judgment will be in no wise impaired by letting it lie, and the parties will pay all costs, expenses, fees and commissions, and five huudred dollars in cash, in New York funds, by the 1st June ensuing, towards the liquidation of the debt; and, as an earnest of their intention, will give security to pay five hundred dollars in the same funds, six months thereafter, viz., on 1st December, 1841, then let such judgment lie until May, 1842, unless necessary for our security to be realized sooner.” (Dec. 22, 1841.) “ Not having heard from your house in Mobile, in relation to a payment of five hundred dollars due from John Townsend and Thaddeus Sanford, of that place, on the 1st inst., you will be kind enough to instruct that house that, if said amount of $500 was not paid, according to agreement, on the 1st inst., and has not been paid since that time, then they will, without further delay, proceed to execution on judgment'[against] said John "W. Townsend and Thaddeus Sanford.” (April 4,1842.) “You will be kind enough to instruct your house at Mobile, that if, on the 1st May ensuing, John Townsend and Thaddeus Sanford do not pay the remaining sum, with interest, then due, (say $5,250,) then they will immediately proceed to execution on judgment, to the full amount of balance due, with interest. Of course, the amount to be paid will be in specie, or its equivalent, which, when paid, you will be kind enough to have remitted in some safe manner.” (April 18,1842.) “You will be kind enough to instruct your house in Mobile, that, since our letter of the 4th inst., we have received one from John ~W. Townsend, of that place, again asking for further indulgence by staying execution of judgment, without naming any definite time when the debt should be voluntarily paid, or explaining-how far his property would be sacrificed by collecting the same by virtue of an execution. He says, that, already, more than the whole amount of the judgment has been sacrificed, in raising the $1000 paid last year. Can this, be? These are times, undoubtedly,- difficult to raise money; and we cannot, at this distance, well judge how far leniency should'be exercised, and must, therefore, leave it to your discretion, to be guided only in this way: If you find, on inquiry, that the sacrifice in immediate execution will be of a very ruinous or disastrous character, causing a greater loss than would probably be sustained by a similar proceeding nine months hence, then let the judgment lie for the present; provided, the security for the eventual payment is ample, and will be in no way lessened by the deláy. But, if you find, on inquiry, such apprehension of loss to be exaggerated, and that, in your opinion, nothing will be gained by delay, then proceed with the execution according to our letter of the 4-th inst. Perhaps, should yomthink it best to delay execution, you may be able to get (say) $1,000 on account. But, whatever steps you' take, be kind enough to write immediately the course adopted. We are desirous not to postpone the collection of this debt, unless its collection is to be attended with serious sacrifices to John W. Townsend ; for we believe the year’s profits of the office of postmaster at Mobile are sufficient to satisfy the judgment, without any sacrifice of property.” (April 29, 1842.) “We have received a letter from John W. Townsend, of Mobile, under date of 19th inst., which, for the first time, satisfies us that to pay the whole amount of our claim at present would cause him ruinous sacrifices. He proposes, in the same communication, to pay us five hundred dollars, (which must be in silver, or equal to it,) every six months, until the Avhole claim is liquidated, and as much sooner as he can. We have, therefore, to trespass again on your kindness, in requesting through you that your house in Mobile will postpone execution on judgment, and accept the terms here proposed, of .five hundred dollars every six mouths; always retaining, of course, security for the eventual payment of the full judgment. Should John Townsend represent it as too difficult to raise the first installment of five hundred dollars at this time, your house will then postpone its collection for the present.” By agreement of counsel, at the hearing, it was admitted, that these letters truly stated the facts relative to the indulgence granted on the judgment; also, that the complainants’ deed of trust was made in good faith, and was duly recorded; that the debts secured by it were genuine, and were paid by James Sanford before the filing of the bill; that the sales under the judgment took place as above stated; and that W. F. Townsend became the purchaser at the sheriff’s sale, and afterwards conveyed a portion of the property, for valuable consideration, to said W. A. Dawson. On final hearing, on pleadings and proof, the chancellor held, that the defendants, Townsend and Dawson, under their purchases at the sheriff's sale, were entitled to priority over the complainants; and he rendered a decree accordingly, which the complainants now assign as error. R. H. SariTH, and Thos. H. Herndon, for appellants. P. HAMILTON, contra. [MAJORITY — A. J. "WALKER, C. J.] A. J. "WALKER, C. J. The returns upon the executions issued upon the defendants’ judgment, the letter" of the owners of the judgment, of 29th April, 1842, the payments of $565 on 7th Jan., ’42, and $630 on 3d June, ’42, and the agreement of counsel, upon which the case was tried, all considered together, lead us to the conclusion, that there was a stay of execution, resulting from the active interference of the parties having a right to control the judgment, from the 27th June, 1841, to 19th June, 1843. On the 30th February, 1843, during the suspension of proceedings under the judgment, the complainants’ deed of trust was made. The mere failure on the part of a judgment creditor to prosecute his remedies for the collection of his judgment will not affect his lien. — Turner v. Lawrence, 11 Ala. 427; DeVendell v. Hamilton, 27 Ala. 171; Dargan v. Waring, 11 Ala. 988; Sellers & Cook v. Hays, 17 Ala. 749, But, in the case of Patton v. Hayter, Johnson & Co., 15 Ala. 18, it was decided, that the lien of a judgment creditor,' who directed his execution to be held up, would be postponed to a junior creditor, whose execution was levied 'while the senior creditor’s execution was held up under such order. — See, also, McMahan v. Green, 12 Ala. 71-74; Br. B’k at Montgomery v. Broughton & Duprey, 15 Ala. 132; Leach v. Williams, 8 Ala. 764; Wood v. Gary, 5 Ala. 152; Br. B’k v. Robinson, 5 Ala. 628; Albertson, Douglass & Co. v. Goldsby, 28 Ala. 711. The same principle has been applied in favor of a mortgagee, who came in during a suspension of proceedings under the judgment, and whose mortgage was executed upon a valuable consideration passing at the time. — Albertson, Douglass & Co. v. Goldsby, supra. It is supposed that the same principle cannot apply to this case. But why not ? The ground upon which the cases proceed is, that the interference to prevent the collect,ion of the judgment by the plaintiff is constructively fraudulent, and destroys the lien, quoad other creditors, whose executions are levied during the operation of such interference. If the interference is constructively fraudulent, why shall it open a door for judgment creditors alone to come in ? Why should that differ from all other frauds, in vitiating only as to judgment creditors ? Why may not a creditor, not having a judgment, come in and acquire alien by contract, as a creditor having a judgment may acquire a lien by virtue of bis judgment, or by levy of process ? We can see no grounds for a discrimination against any creditor who comes in during the constructively fraudulent suspension of proceedings under the judgment, and acquires a lien by mortgage or deed of trust; and if he is a creditor, it cannot injuriously affect him that the mortgage is given to secure antecedent debts. It is his character of creditor which clothes him with the right to claim advantage of the fraud. ' We cannot reconcile the judgment rendered in Doe, ex dem. Leverich v. Bates, 6 Ala. 480, with our conclusion; nor can we reconcile it with the later case of Patton v. Hayter, Johnson k Co., supra, -which had relation'to alien on land. The decision seems to have been made without noticing or adverting to the principle settled i n Patton y. Hayter, Johnson & Co., and cannot be permitted to weigh as an authority adverse to a principle which was manifestly not thought of when it was made. The only question? which is considered in the case of Leverich v. Bates, is as to the effect of an agreement, without consideration, to stay execution. 'With all that is said we entirely concur, and nothing in this opinion is at war with it. The decision in that case was not designed to touch the question now in hand. So far as it may have affected the question by inference from the judgment rendered, it is at war with the later ease in 15 Ala.; and to that we prefer to adhere, rather than to the adjudication upon the point inferred from the judgment rendered in Leverich v. Bates. The decree of the court below is reversed, and the cause remanded, to be proceeded with in pursuance of the foregoing opinion.