United States v. Butler

25 F. Cas. 210, 2 Blatchf. 201, 1851 U.S. App. LEXIS 478

• Court: U.S. Circuit Court for the District of Southern New York
• Decided: May 17, 1851
• Status: Published

Opinion

NELSON, Circuit Justice.

The answer of Thomas C. Butler to the original bill admits that the mortgage was given to Sturgis for the benefit of the plaintiffs, that is, for the purpose of raising money to pay the judgments recovered on the custom-house bonds, and was, therefore, properly no real incum-brance on the premises, as respected the judgment against Butler. So far as his interest was concerned, therefore, they might have been sold at once under the judgment, and the proceeds applied in payment. The sale, however, was embarrassed by the interest in the mortgage set up by Sturgis, the mortgagee, and by Sturgis & Burrows, the assignees under him. But as, on the filing of the bill to remove this incumbrance, a receiver had been appointed, for the purpose of securing the rents and profits pending the litigation; that they might be applied towards the satisfaction of the judgment, if necessary, they are, in equity, to be deemed subject to the lien and claim by virtue of the judgment, the same as the premises themselves.

The rents and profits thus accruing would have been applied to the judgment, together with the proceeds of the sale, if the proceedings in equity had gone to a final decree in favor of the plaintiffs. Certainly, there would have been no ground for any other disposition, as it respected Butler or those coming in under him, as he had admitted that the premises were subject to the lien of the judgment, from the time it was docketed, free from the mortgage. The litigation with him, as it respected the mortgage, and the right of applying the premises to the satisfaction of the judgment, ended on the coming in of his answer. It continued only in respect to the claim of Sturgis and his assignees. If they had succeeded in establishing the mortgage, and if the premises had, on being sold, turned out to be insufficient to satisfy that security, perhaps they would, it being the first lien, have been entitled, in equity, to have the rents and profits accruing and in the hands of the receiver applied to its payment. That was a question, however, between the plaintiffs and those parties.

Has, then, the settlement made with Min-turn and the assignees of the. mortgage in any way affected the right of the plaintiffs to this fund? I do not see how this can be. The parlies, instead of carrying on the litigation to a final determination, preferred to settle it; and the plaintiffs, by paying the sum of $6,000, got rid of the mortgage ineum-brance, and the premises were thus left subject only to the lien of their judgment. In legal effect, the result is the same, as it respects the lien of the judgment, as if a decree had been made, on the coming in. of the master’s report, that, on payment of such sum, the prior incumbrance should be discharged. On the payment of that sum. the premises and the rents and profits that had accrued and were in the hands of the receiver, would have been applicable to the judgment of the plaintiffs against Butler. The mortgage having been got rid of by the settlement, every thing was accomplished that would have been by a decree to the effect above stated. The land and the rents and profits that had accrued became subject to the judgment; and this is what, as is apparent, was intended by the -parties, in their arrangement.

Neither does the entry of satisfaction of the judgment after the sale in any way affect the right of the plaintiffs to the rents and profits. They were- in court, awaiting the result of the litigation, to be applied to the judgment; and, in equity, were immediately applicable, when the right under the mortgage was dis posed of. Besides, the whole scope of the settlement clearly shows, that it was intended by all parties concerned, that the premises covered by the mortgage, and the rents and profits that had accrued and of right belonged to the judgment creditors, should be applied to the plaintiffs’ demand. Butler had nothing to say in the matter, as he had admitted, this right in his answer.

I am satisfied, therefore, that there is sufficient equity in the bill to entitle the plaintiffs to this fund, and that the demurrer should be overruled.