Hood, Comr. of Banks v. . MacClesfield Co.

183 S.E. 403, 209 N.C. 277, 1936 N.C. LEXIS 451

• Court: Supreme Court of North Carolina
• Decided: January 22, 1936
• Status: Published

Opinion

Stacy, C. J.,

after stating the case: The judgment of the Superior Court is grounded on the assumption that the equity of marshaling existed between the holders of judgments Nos. 1 and 2 at the time judgment No. 3 was docketed in the Superior Courts of Edgecombe and Pitt counties, and that the subsequent docketing of judgment No. 3 did not affect this prior subsisting equity. Butler v. Stainback, 87 N. C., 216; 38 C. J., 1371; 18 R. C. L., 456.

This conclusion overlooks two considerations: (1) That the equity of marshaling does not fasten itself upon the situation when the successive securities are taken, but is to be determined at the time the marshaling is invoked, and (2) that the holder of judgment No. 3 purchased the same from the plaintiff for a valuable consideration. Harrington v. Furr, 172 N. C., 610, 90 S. E., 775.

Having received full value for judgment No. 3, the plaintiff is in no position to ask a court of equity to help him render it valueless in the hands of the transferee. Stokes v. Stokes, 206 N. C., 108, 173 S. E., 18. “Hurt nobody” is a cardinal tenet of the equity of marshaling. Jones v. Zollicoffer, 9 N. C., 623.

The most the plaintiff would be entitled to under the doctrine of marshaling, had he never owned the third judgment, would be to have the first judgment paid ratably out of the two properties. The English rule more nearly applicable to the facts here presented is stated in 18 English Ruling Cases, page 211, as follows :

“Thus the court will not marshal in favor of a second mortgagee as against a subsequent mortgagee, so that if a first mortgage is made of two estates, then a mortgage of one only of the estates, and lastly a third mortgage of both estates, marshaling will not be enforced in favor of the second mortgagee as against the third mortgagee, but the first mortgage will be ordered to be paid ratably out of the two estates. So that the second mortgagee may apply the estate subject to his mortgage in or towards satisfaction thereof, leaving what remains of both estates to satisfy the third mortgage.”

Plaintiff was originally the holder of all three judgments. He transferred two of them to claimant Bridgers for valuable considerations. He now seeks, through the doctrine of marshaling, to have the judgment retained by him paid to the exclusion of the one which he sold to Bridgers for $3,822.70. Equity will not aid him in this undertaking. Newby v. Norton, 90 Kan., 317, 133 Pac., 890, 47 L. R. A. (N. S.), 302.

Error.

Devin, J., took no part in the consideration or decision of this case.