Opinion
Decided June 25, 1928.
Priorities — Mortgage has priority over judgment lien for personal injuries — Mortgage, securing pre-existing debt, executed by insolvent tortfeasors after petition filed — Injured party not existing, but subsequent, creditor.
1. Where at time mortgage was executed and recorded personal injury action against mortgagor had been brought, but judgment had not been rendered therein, plaintiff in such tort action held not "existing creditor," as regards priority of mortgage lien over judgment lien.
2. Insolvent husband and wife, knowing that personal injury action had been brought against them, had right as against such claim to secure pre-existing debt by mortgage, and execution of such mortgage did not constitute actual fraud.
ERROR: Court of Appeals for Lucas county.
Messrs. Tracy, Chapman Welles, for plaintiff in error.
Miss Esther Antin, for defendants in error.
This case involves a question of priority between a mortgage held by Andrew Kuntsbeck and a judgment lien secured by C.H. Wheeler, based on a claim for personal injuries. The trial court held that the mortgage had priority, and error is prosecuted to reverse that judgment.
The promissory note and mortgage held by Kuntsbeck are for $2,500, and were executed on October 22, 1923, and filed for record on October 23, 1923. They were not based on any consideration passing simultaneously with or subsequently to their execution, but were based upon a valid consideration existing at and prior to the time of their execution.
On August 11, 1923, Wheeler suffered personal injuries arising by reason of the negligence of Ignaz Lorenz and Frieda Lorenz. For these injuries he brought an action against them on September 28, 1923, and recovered judgment on November 18, 1924, for $4,750. At the time Ignaz and Frieda Lorenz executed the note and mortgage to Kuntsbeck they were insolvent and had knowledge that Wheeler had brought an action against them to recover damages for personal injuries.
The cause of action existing in Wheeler was one for tort, and he was not an existing creditor at the time of the execution of the note and mortgage to Kuntsbeck. Judgment was not secured by him until long after the execution of the note and mortgage and the placing of the mortgage on record, and, as to Kuntsbeck, Wheeler must be treated as a subsequent creditor. Pfisterer v. Toledo, Bowling Green Southern Traction Co., 89 Ohio St. 172, 106 N.E. 18; Schubeler v. Lilly, 23 Ohio App. 481, 155 N.E. 699.
Lorenz and wife had the right, under the law, against such a claim, to secure a pre-existing debt by mortgage, and the execution of such mortgage does not constitute actual fraud.
The court of common pleas was right in holding that the mortgage had priority over the judgment, notwithstanding the intent of Lorenz and wife to create a preference by the execution thereof, and the judgment will be affirmed.
Judgment affirmed.
WILLIAMS and LLOYD, JJ., concur.