MATTHEWS
'V.
FIDELITY TITLE
&;
TRUST CO.
687
regarded equally exists." Duncomb, v. Railroad 00., supra. Let a decree foreclosing the deed of trust for the amount due on the dept therein mentioned, and dismissing the cross bill of Sallie Leverett for want of equity·
v.
FIDELITY Trrr..E
&
TRUST' CO.
et ale
(Oircuit Court, W. D. Pen'liByl11ania. August 4, 1892.)
No. 27. 1.
; 14'1' tile OWDer of a mor:tgage, loaned, it to a bank for temporary use, to sustain its cred t when. in a financial strait. . The bank pledged the mortgage with a creditor All cpllatoralsE;lcurity. and lIuhsequent!i plodged with the samE' creditor commerc.ial paper10wned by it, as cOllateral security for the same debt, Afterwards the bank mBde a general assignment. fer the benefit of creditors.· The mortgagor then volnn.t.arilyp.aid, the amount 01 the mortgage to the pledgee. WlloapPliedtM mOIl.ey . towards the debt of tile bank. The pledgee collected the commercial paPer, aIld, after'full'satisfaction, there remained a balance therefrom'in the pledgee'li hands. HeliJ. that by right of subrogationM. was entitled to this balance asagabillt the assignee. 'Pl"O Tata dividend on the full amount 'of his claim. Held, that he was not thereby
J'()B BENBI!'IT 011' CREDITORS.
9.
M. had,proved as a general creditor against the assigned estate, and received a
estopped frpmasserting his right by subrogation to the whole of the fund in the hands of the pledgee, as that fund and his dividend together did UOli'eatisf;v his claim in futL '
In Equity. Bill by John Matthews against the Fidelity Title & Trust Company and others to enforce an alleged right of subrogation. Decree for complainant.' On October 31, 1889, and prior to that time, the complaina:nt, John Matthews,.was the owner of a mortgage for $50,000, made by the Moorhead-McCleane Company, and dat6d,February 1,1887, payable 10 years after date. On the date first above mentioned the Lawrence :Bank was financially embarrassed,and its condition was known both to Matthews and to its president, Young, and on that day Matthews assigned the mortgage to Young for the use of the bank, and received in return a certificate of deposit, btluring interest, for the 8um of $50,000. Subsequently the mortgage was assigned by Young to the president of the Union National Bank to: secure overdrafts made and to be made upon it by the Lawrence Bank. The overdrafts having at length somewhat exceeded the amount of the mortgage,. the Lawrence Bank, as additional security pledged with the Union Bank a large amount of commercial paper. Shortly afterwards, on November 25, 1889, the Lawrence Bank made a voluntary assignment for the benefit of creditors to the defendant the Fidelity Title &1'rust Company. On December 2d following, the Moorhead-MoCleane, Company paid the amount of the mortgage and accumulated interest to the Union Bank, which applied the same to the extinguishlOent oUhe overdra,fts·. , Subseqllently it collected large amounts
688
FEDERAL REPORTER,
.vol. 52.
of the commeroial paper held in pledge, and, after satisfying its whole claimagafnst the LawreneeBank, had left a surplus of $21,000. The complainant,Matthews, claims this fund by right of subrogation, on the theory that he had only assigned his mortgage for use the credit of-the bank, and was to recei ve it back when this purpose was accomplished. It appeared, however, that Matthews had filed his certificate of deposit with the assignee of the Lawrence Bank, and had received his pro ratacshltre of a dividend paiq. to the creditors thereof. Lyon, McKee & Sanderson, 'forcomplainaht. '·. . Wm. M. MaGiU Ewing, fqr Fidelity Trust Company-. Contended that subrogation "will not be decreed in favor of a mere volnnteer, who, without any duty, moral or otherwise, pays the debt of another. It will not arise in favor of a only in favor ·of a,par.ty, who, sort.. 0 fO 0. II1.·lJ..ni.s.ion.,.di8C.h:a..,:rg the pay.,m . · :1\ .. Rins.t a common. dP.bt.0.r; " . . C.i.tin g .. .. . .es. .. ... Sti'294; AjJpeal, S6Pjl. St. lW9.. E'pler, 52'.,fa·. ,St. 522; M;pdiJr'sAppeal, 56:pa.St. JValPa, St. 401; Bleakley'aAppeal.66 Pa; Sk187;: WancieU'$ Sheld.'::SIlbr.§'l: Shinn.v. Budd, 14l,'l;. J. 254; (1adsde7i v. Br9o/n, 1 " Before ACHESON, Circuit Judge, and BUFFING'l'ON, District J uelga.; '1'aking the proofs as whole; the tranSlH18.89:, Matthews, andthel;awrenee :au1;lk, cannot faIrly be regarded as a purchase by the bank·fron: the plaintiff of the Moorhead-McCleane Company mortgage. NeitheJ' ofiliepartiesnriderstood Of intendedthe1tl'allSfer of the mortgage to bo a As well the'officersof'thebank as the plaintiff himself believed that the financial embarrassment of the bank would be overcome, and we,lthink it was in the contemplation of them alltliatthe mortgage, would, be returned ito the plaintiff, after its temporary usetG sustain the credit ofthe bank. Certainly it was the plaintiff's by what the officers of the bank told him--that the mortgage ;would be retransferred· to him shortly. It is, indeed, true that a certificate of deposit for the sum of $50,000, the principal (without the accrued interest) of the mortgage, was issued by the bank and delivered to the' plaintiff; but it is quite olear from the evidence that this certificate was intended as a mere security to the plaintiff. As already intimated. the subsfumtial nature of the transactionivas a loan of the mortgage to aid temporarily the bartk in its financial strait. .. Turning now _ the, dealings between the Lawrence Bank and the to UnioJl: National Bank, we find from the evidence that the latter was the clearing-house agent of the former bank, and that, for the purposEl of securing any existing: or· future' overdrafts by. the Lawrenc:e Bank· of its clearing-houseacdount with. the Unio1;l Bank, the Lawrence -aank, by its president, on November 4; 1889, assigned the mortgage to the president of the Union Bank, in trust! for that institution. ,While this assignment, upon its face, was unoouditional, it is indisputable under the ,proofs
a
MATTHEWSV. FIDELITY TITLE &: TRUST CO.
689
that the transfer by the Lawrence Bank to the Union Bank was not a sale or absolute assignment of the mortgage, but a mere pledge, for the purpose just stated. At tbe time of this transfer the Lawrence Bank had overdrawn its clearing-house account to the amount of $14,915.39, and on November 8, 1889, its overdrafts in all amounted to $57,108.38. date the Lawrence Bank assigned and delivered On the to $25,769.49, to the Union commercial paper owned by it, Bank, as security for all its liabilities incurred or to be incurred to the Union Bank. Such was the condition of affairs when the Lawrence Bank, on November 25, 1889, made its deed of voluntary assignment for the benefit of its creditors. Then, on December 2,1889, before the maturity' of,themortgage, the Moorhead-McCleane Company, the mort· gagor, voluntarily paid the principal thereof, with accrued interest, amrounting'to$52,350, to tbe Union Bank,and this money was credited by the Union Bank to the Lawrence Bank. Afterwards the Union Bank c011ectedthe commercial paper pledged with it by the Lawrence Bank, and,affur applying so much of the proceeds as fully discharged all the remaining-indebtedness of the Lawrence Bank, there was left its hands a balance from these securities, amounting to about $21,000. This balanceis clailned by the plaintiff, Matthews, by right of subrogation, a;nd to eMorceSuch right is the purpose ·of this hill. Now,'ltis well settled that subrogation is not founded on contract, nor dQes it depend on strict suretyship, but it results from the natural justice of placing the bllrdenwhere it ought to rest. It is a mode which equity adopts to compel the ultimate discharge of a debt by him: who, in good conscience, ought. to pay it, and l'elieve him whom none but the creditor could ask to pay. 2 White & T. Lead. Cas. 282; McCormick v. Irwin, 35 Pa. St. 111. The facts above narrated, we think, clearly bring this case within the operation of the rule, for, as between the Lawrence Bank and the plaintiff, the former was bound to pay the indebtedness to the Union Bank, and, as the plaintiff's mortgage, pledged by the Lawrence Bank for its debt, has been applied to the discharge thereof, the'plaintiff has, as against the Lawrence Bank, an equitable right to the surplus in tpe hands of the. creditor arising from the other securities owned and pledged by the Lawrence Bank for the same debt. the Fidelity Title & Trust Company, the trustee under the deed Nor of voluntary assignment for the benefit of creditors, successfully contest the plaintiff's claim, for that company is clothed merely with the rights of the Lawrence Bank. Morris' Appeal, 88 Pa. St. 368. The cases cited by the defendant's counsel to show that one who, without compulsion, duty pays the debt of another, is not en.titled to sul:>rogation, ha.ve no application here, for the plaintiff was not a volunteer in sense of those authorities. He was no more a volunteer thanis any surety who, of bis own free will, binds himself for the acts or debt of another. But it is .contencled that, if the plaintiff ever had a right to subhe lost it by claiming and receivipg out of the general assets of the Lawrence Bank in the hands of the :trustee a dividend amountv.52F.no.8-44
in
()9.Q <ingto $8,71&7A5. llpon his ,certific!l.te:Qf.deposit.:' Butw&,canTIot: iadopt plaintiff, oUnJa.Jll.Uary, 9, 1891,: s;ppeated ,as a daimant befol:'e the: auditor appointecl, tOidisttibute aUlQng the.creditors of the I.awrenge,Bank the balance in:the.hl1nds ofthetrust.e.eunder the deed pi its first and partial account, and t\S the foundation of his clli.im !plleSanted the certificate of deposit fo1' 850,000, heretofore referred to; ,Bl,1¢l1t sametil,lle he submitted to the auditQr evidence similar to that lli:l:wbefQl'6 uB,\explanatoryof thewllole, transaction. .t\.ll the facts were disclosed, and l111owanceto him by the auditor: of the divi{}end Rwarded:was an adjudicationof hi$ right theretonpon all theevidence. H&rein we perceive nogrou,l;}d of estoppetagainst Matthews. It. is clear to.us that he ,was at liberty to proveas·a against the as,Signed estate iQ. the hands, of the· trusteewithol1tprejudicing his rights in the specific 'fun.d. in the hands of the Union Bank. He h.ad a valid elaim agai!lst;the,Lawrence BlUlk for $50,000 and upwards, which originaredprior,tB the voluntftry '1lssignment, His proof before· the auditor was by no.:.means' 800 abandonment ofhisrighHosubrogation. The¢ase didlnot: involve an electic:m, ..for the two claims were not inconsistent. If itappear.ed:tbat the plaintiff'. had .received a larger ·dividend than he could sd lllold.outdecteel1$ to,do,equity; but we do not see that he was He had,we think, ,a 'rigM,to a pro raf:4, dhtideJad upou' the fuU'.faee of his claim,. npon that a creditormay'souse his colll\Wl'als as to .secure his the whole debt. ;lStory, E,q.. JUl'. {12th Ed;)§.564b,' Kittera'8 Estate, 17 Pa.St.41&.; 'Let a decree;be drawn.in favQr of the,plaintiff' in accordtb.eviews expreSsed in:this opinion. Bm'FINGTP.N,
District JwIge" · I, jil
·
do.
AGRICULTUREO,lfNoRTH CAROLINA. 24, 1892.)
. (OirCuit· Cowrt, liJ.· D. North CaroUM. 1.
,JYSPljlHTION LAwll. .:' ." In the absence of any prohibition, a the right, under. t.he gener!!l pt)weril reserved trom tbe gratlt10f other powers,tb 'lihefederal government, Ij,Bd ill: the vell'ula.tion .. lt/l)l1terbal commerCEl. and ;119 protect its citizens fraud, tosa',tli.at certainart\clesshlllinot be sold Withinitslimits witbout inspecsuch. inspection upon'those offeri'ilg such artition, and a.'lBO cles for sale. . . ' , U :: , ,, ; " 2. OF FEDERAL COURTS. A state tonnage' tax upoh'fertillzers td'defray inspe6tidn6Xpeoses wiilnot be de.clared uneolls1litutional. simply upon the grouod of alleged excess, when. such' excess does lIQt, /pllnifest .a 1':I1J1lQse to evade oonstitutiop'IIHnhibitions; ",nd a federal court will not go Into the examination of the question; except. for the purpose of dl.'cidingWb.eth.er the f,ax ,i.s only. colorably or ostensibly.'8<I1 iJlspectio,n charge. or a charge of a kindred nature. S. BAME-J!JXOjlSSlVE TAX.
Tlie 2ri oelits per ton i1nposeq upon fertilizers by 'Pub, Laws N. C. 18111, c. 9. (amen4l/lgCode. § tp defraytbe expenses in itself:so unreasQnable or exceSSIve as to show a purpolleto. eva.dethe, 10hlbltlOn of the federalOODstitutiQD" against the rtaxatidu pUmports 'by the state&. . .
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