Opinion
03-06-1900
STREETER v. SEIGMAN.
Wm. W. Benthall and N. Henry Stevens, for complainant. Louis H. Miller, for defendant.
Bill for an injunction by John J. Streeter against Isabella A. Seigman. Granted. Cross bill by defendant for an injunction against the complainant. Granted.
Wm. W. Benthall and N. Henry Stevens, for complainant.
Louis H. Miller, for defendant.
GREY, V. C. (orally). I think I can dispose of this matter at once. The first question is whether or not there should be a restraint issued to enjoin the executrix of Seigman, plaintiff in a judgment in the supreme court, from using the judgment and execution which she has recovered rightfully, to compel payment out of the property which Streeter holds, other than the real estate named in the mortgage given with the bond upon which judgment was entered. This claim to a restraint is based upon the clause in the bond on which judgment was entered, which is in these words: "It is agreed that no other real estate than the described in mortgage to be liable, or other personal property, without any fraud," etc. It is quite clear that the word "the" preceding the word described is intended to be "that." What the parties intended in the way of exclusion of property from which the debt should be made, in their reference to other personal property, is a matter regarding which the parties are in contention. It may be, however, that the rights of the parties can be finally adjusted without applying the equities to which the complainant in the original bill insists he is entitled by reason of this clause in the bond. He has, I think, a status in equity to assert that the clause in the bond was intended to limit the property out of which the obligee in the bond might make the debt. If he can show that was the intention and agreement of the parties, he has a right to come into this court and ask its intervention to restrain the complainant in the judgment from defeating the intent of the parties at the time the agreement was made, and to maintain the present status until a further hearing may ascertain the truth, provided no serious injury may thereby come to the defendant. As it stands, judgment was entered generally, and an execution has been issued, and the property of the defendant Streeter, which has been seized in execution, is the Vineland Independent plant,—the very property which the obligor in the bond claims was excluded from seizure by the clause quoted. On the other hand, the plaintiff in the judgment on the bond claims that the use of the phrase, "other personal property," shows that it was intended that the property named, viz. the plant, the payment for which the bond was given, was to be included. It should be noted, however, that at the time when the bond was made this plant was not the property of the obligor Streeter, but of Mr. Wilcox. It is a little difficult to give that construction to it, because it is difficult to see how Streeter could agree that the property of Wilcox should be liable for the payment of his (Streeter's) debt. However, it is not necessary that a final construction shall now be given to this somewhat obscure instrument. The equities of the parties are very seriously affected by another phase of the matter.
It is set up in the cross bill that the bond, and mortgage accompanying It, upon which bond judgment was entered, were given by Mr. Streeter to Mr. Seigman, to secure the payment of a debt which Wilcox owed to Seigman for the purchase of the Vineland Independent property. The facts proven by the affidavits and pleadings and the admissions of the parties all show that at the time when that transaction took place Mr. Seigman was in negotiation with Wilcox for the sale of that property, and that they came to an agreement that it should be bought, and that the purchase should be made in a certain way. Seigman was to receive the purchase money, $2,800, of which $750 was to be secured by the bond and mortgage of Streeter to Seigman for that sum upon certain of Streeter's real estate. It was that bond so given which is the one on which judgment has been entered. Now, at that time, Streeter owed nothing to Wilcox, and his giving of his own bond and mortgage to Seigman was to secure Wilcox's debt, and he therefore stood in the attitude of one who, by giving his own paper without consideration, was an accommodation surety. That was his real attitude. He did not owe the debt. If he had not voluntarily given his bond, Seigman would have claimed the money, not from Streeter, but from Wilcox, and when Seigman took Streeter's paper for Wilcox's obligation Streeter was, as between him and Wilcox, a mere surety. It was not a payment therefor, but only an agreement to pay to the extent of $750,—an arrangement by which Streeter stood to pay Wilcox's debt. Now, to show that this was unquestionably the true situation, Streeter received from Wilcox a chattel mortgage to secure him in case he did pay the very $750 for which he gave the bond and mortgage. So that it was quite obvious that for a debt which Wilcox owed to Seigman he was the original debtor, and Streeter, to the extent of $750, was the surety, and, to protect him in case Streeter was compelled to pay it, he received the security of the chattel mortgage which he took from Wilcox.
The rule is well established, not only in Klapworth v. Dressier, 13 N. J. Eq. 62, but in dozens of cases, and it is a principle of equity,that the creditor is entitled to the benefit of all the collateral securities which the surety may take to make himself whole, and the creditor may go into equity, and compel the surety to deliver over to him, in order to make the money due him, whatever securities he has received from his principal to protect him, and that right is inherent from the relations of the parties, and is irrespective of their agreement. Streeter, being surety to Seigman for the payment of Wilcox's debt to the amount of $750, obtained from Wilcox a chattel mortgage to protect himself. Seigman, the creditor, became entitled to the benefit of this security. Streeter, without Seigman's consent or knowledge, used that chattel mortgage as his personal asset, and with it purchased an interest in this Vineland Independent plant, and canceled the chattel mortgage. Streeter presently holds that plant, and insists that Seigman can have no Interest in the chattel mortgage. Seigman now seeks to enforce the bond against this plant. Whether the bond can be enforced against it, in view of the clause limiting the property which should be liable under it or not, it seems to me clear that, while the debt which Wilcox owed to Seigman remains unpaid, Seigman has a right to say to Streeter: "You are surety for the payment of this $750. You had certain collaterals which were given to secure you if you were compelled to pay Wilcox's debt to me, and you could not dispose of them without my consent, and if you did dispose of them without my consent, and the equities of the parties presently exist, and the circumstances are such that they can be seized as still outstanding, the court will so consider them, and so enforce my equity to have them applied in satisfaction of the debt due me from Wilcox." If that turns out to be the fact,—and on this preliminary hearing I am not deciding that,—undoubtedly the rights of Mr. Seigman can be protected through the reinstatement of the chattel mortgage. Whether that should be done I do not presently say, because that is a question which should be fully heard on the merits.
Mr. Benthall: This chattel mortgage was not canceled by Streeter, but afterwards by Wilcox.
The Vice Chancellor: I understand that, but for all purposes of a transaction, where a man who has control of an instrument delivers it over to somebody else to cancel It, he cancels it himself. On both these applications there is enough shown to make it clear that there should be a stay of the proceedings at law until final hearing. I will allow such restraint as will maintain the status quo until a full hearing can be had on the merits. In both cases, they can be brought on together. I will hear counsel upon the manner in which the parties should be restrained so as to be least detrimental to the property until final decree. I think each party is entitled to the Injunction for which he has applied.
Mr. Miller: I suppose they will have to give the usual bond?
The Vice Chancellor (after hearing argument): This is not an application to restrain the execution of a judgment at law. What is asked by the complainant is a direction of the mode of executing the judgment, so that the plaintiff may have what he agreed to take and no more. If the contention of the complainant is right, the judgment is not, and never has been, enforceable against the property excluded by the clause in the bond. To say that it shall not be enforced against that property is not to restrain It, in any proper sense. It may be enforced against any other property. I do not think a bond is required.
Counsel for complainant may prepare an order on the complainant's bill restraining the sheriff from selling the Vineland Independent plant. That will allow his levy to stand, and simply prohibit a further disposal. Counsel in the cross bill may draw an order restraining Mr. Streeter from in any way disposing of or Incumbering or charging the property named in the chattel mortgage; and both injunctions may be issued accordingly, until final hearing of the cause. I will not appoint a receiver. It is not necessary.