Clift v. Williams

JUDGE WHITE

delivered the opinion of the court.

These two appeals are upon the same transcript, and are heard together. The administrator of J. W. Williams brought an action to settle the estate of his decedent, and both appellants, being creditors of J. W. Williams, were made parties defendant.

Appellant B. F. Clift, trustee of Stanton Clift, in his answer and cross petition, alleges that in March, 1878, the decedent J. W. Williams, executed a note to W. S. Botts for the sum of $2,500, due twelve *563 months after date. To secure this note, Williams and his wife, appellee Lucy Williams, executed a mortgage on a tract of land in Fleming county, and on which Williams then lived. This note to Botts was sold and assigned to John Clarke, and, by the will of John Clarke, devised to appellant Stanton* Clift. Payments were made on this note, from time-to time, from March, 1879, the last being October 19, 1895. The note, properly proven, and the mortgage, were filed with the cross petition, and judgment was sought enforcing the mortgage lien. To this answer and .cross' petition of Clift certain creditors of decedent filed answer, and pleaded the statute of limitation of 15 years to the mortgage therein set out. They alleged that before they gave credit to decedent, J. W. Williams, they caused the records of the county clerk’s office of Fleming county to be examined for a period of 15 years next before the investigation, and that, finding within said date no mortgage lien of record they extended credit to decedent, J. W. Williams, upon the belief, from their investigation, that there was no lien, and these creditors deny that appellant Clift has a lien on the land.

W. Y. Williams, a son of decedent, and the administrator, filed answer to the answer and cross petition of appellant Clift Williams alleges that in January, 1888, he purchased, by deed of general warranty from decedent, J. W. Williams and his.wife, appellee Lucy Williams, a portion of ‘the land described in the mortgage to Botts, this portion containing 87.1 acres, at the price of $4,350, of which sum $2,500 was paid cash, and that the deferred payments had long since been paid to decedent in his lifetime; and in 1890 purchased of Maginnis, who had purchased of Sousely, who had purchased of Williams, who had purchased of decedent, about five acres of this land, and had paid *564 for same in full. Williams pleaded the statute of 15 years as a bar to Clift’s lien; also that Clift, well knowing of his purchase of this portion, indulged decedent for many ye-ars without enforcing his lien, and without collecting the full amount of the interest, and pleaded this laches in bar of appellants’ lien. ■*

Appellee Lucy Williams, the widow of decedent, J. W. Williams, also filed answer to the cross petition of appellant Clift; and alleges that, by the mortgage to Botts, she only waived and relinquished her potential right of dower in the land, and that more than fifteen years had elapsed since its execution, and that she was and is ignorant of any payments on the note, and that, as to her rights of dower, the mortgage lien is barred by limitation.

To all of these answers to the cross petition of Clift demurrers were filed and overruled by the court, and, appellant Clift declining to plead further, the court adjudged he had no lien on the land by reason of limitation,- but allowed his note as a general claim against the decedent, J. W. Williams. From that part of the judgment that adjudged that appellant had no lien this appeal is prosecuted by him.

This court in the case of Prewitt v. Wortham, 79 Ky., 287, said: “The rule in this State in reference to mortgages, whether on personal or real estate, is that they are mere securities for the debt. No title passes to the mort-' gagee, and no right is acquired by the mortgagee, except as an incident to the debt. When the debt to secure which the mortgage was given is barred by statute, the incident goes with the principal, and the mortgage ceases to be .enforceable.'

In the case of McCracken Co. v. Mercantile *565 Trust Co., 84 Ky., 344, [1 S. W., 585], it is said: “There is no statute of limitation as to liens. If the claim becomes barred, the lien dies with it. Tate v. Hawkins, 81 Ky., 577, [50 Am. Rep., 181]. If the claim could be made an incident of the lien, then The statute of repose’ would be defeated, as the claim no longer legally existed, the lien had nothing to support its existence.”

This doctrine was recognized and followed in the case of Bank v. Thomas (decided Feb. 3, 1887), 8 Ky. L. R., 690, [3 S. W., 12], where a mortgage was executed to secure a bill of exchange. It was held that the mortgage lien existed with the debt, and when the debt is barred the mortgage lien is barred.

It seems to be well settled in this State that a lien exists coincident with the debt it is intended to secure. As long as an action may be maintained on the debt the lien is in force, and when the debt is. barred the lien is barred. This is held to apply to all character of liens, notes, accounts, bills of exchange, and statutory liens.

We are of opinion that the demurrers to the several answers to the cross petition of Clift should have been sustained. However, the purchaser, Williams, having shown his purchase under a deed of general warranty, is entitled to have the remainder of the land, about 136 acres, sold before the land he has purchased, and, if this 136 acres brings the mortgage debt, his land would not be sold.

In this same action the appellant Glover & Durrett filed an answer and- cross petition alleging that the decedent, J. W. Williams, had executed to them a note as follows: “|300.00. Elizaville, Ky., Feb. 26, 1896. One day after date I promise to- pay to the order of Glover & Durrett, three hundred dollars, negotiable and payable at the Citizens’ National Bank in Louisville, Ky., for *566 money which they have advanced me on my present crop of tobacco, which I hereby mortgage to them, and bind myself to ship all of said tobacco to them at the Louisville tobacco warehouse, Louisville, Ky. I agree to pay interest on this note at the rate of eight per cent, per annum from date until paid, and bind myself, in the event that I. do not ship them said tobacco, also to pay them full warehouse fees, both selling and buying, same as they would have. received had they sold it. My crop consists of about 10,000 pounds. John W. Williams.”

It is not alleged that this note and mortgage, so called, was ever acknowledged or proven, or ever lodged for record- Appellants Glover & Durrett, however, allege that, by reason of this’ note and mortgage, they have a lien on this tobacco, which was on hand when Williams died, and passed into the hands of his administrator, and sought its enforcement. The court sustained a demurrer to this paragraph of appellants’, Glover and Durrett’s, cross petition, asserting a lien, and they amended, pleading that all the debts of the decedent, John W. Williams, except funeral expenses and medical bills in his last illness, were created by Williams prior to the execution of their mortgage, and that there was sufficient ■ unincumbered property to pay these subsequent debts; that by reason of these facts, and that the mortgage was given for a debt created simultaneous with its execution, no creditor is prejudiced in the collection of his debts, and no creditor gave credit to Williams upon the faith of this property.

To the answer and cross petition, as amended a demurrer was sustained, and the cross petition dismissed; from which judgment this appeal is prosecuted by Glover & Durrett. There is no question but that the *567 writing given by Williams to appellants Glover & Durrett, as between them, is a mortgage, though never acknowledged or lodged for record. On demurrer the allegation of the amended answer and cross petition is taken as true, that all the creditors of the decedent, except as indicated, were antecedent creditors to appellants’ mortgage.

In the case of Baldwin v. Crow, 86 Ky., 680, [7 S. W., 147], the court said: “If the inquiry whether, by that section, creditors generally were intended to be affected by notice of such conveyances and tranfer of property to debtors, in the same way and to the same extent as purchasers, was an original one, there would, looking alone to the language used, be some' difficulty in reaching a satisfactory conclusion. But there is no reason whatever that a creditor, whose debt has been created prior to the conveyance, as was that of appellee, Crow, and who has not been defrauded or injured thereby, sh.ould occupy a better attitude than a purchaser with notice.” Then, after a careful review of the adjudged cases, the court continues: “The clear and necessary implication from the language of section 10, [c, 24, Gen. Stat.], is that deeds of trust and mortgages of real and personal estate, though unrecorded, are not void,' but valid, against purchasers at sale under execution, as well as private sale, when' notice has been given. And, that being the case, it would seem to be the intention • that creditors should be likewise,, though indirectly, affected by notice; for their attempt to collect debts by execution would be generally abortive, if notice to those about to purchase could prevent a sale. But, be that as it may, by the uniform ruling of this court for many years, cred *568 itors and purchasers have in that respect been placed on the same footing.”

Again this question came before this court, and was decided September 24, 1895, (Three Forks Lumber Co. v. Smith, 17 Ky. L. R., 566, [32 S. W., 167]), and the doctrine of 86 Ky., 680, supra, followed. In November, 1897, this question was again before us (Wicks Bros. v. McConnell, 20 Ky. L. R., 84, [43 S. W., 205]), and, after a careful review of the adjudged cases, the court said: “Time and again it has been held by this and other courts, on grounds of public policy, that secret liens were not to be favored. . . . This doctrine we believe to be a salutarj’ one. On the one hand, the unrecorded lien is upheld as against creditors who can not be presumed to have given credit upon the faith of the property held in lien; on the other hand, creditors who may be presumed on such faith to have given credit are protected, as against the secret lien, in the rights which they secure by their diligence in the levy of their execution or attachment. As indicated by Judge Lewis in the Baldwin case, before referred to, if the inquiry were an original one, we might reach a different conclusion as to the meaning of the statute in regard to creditors generally, but as to antecedent creditors the question has undoubtedly been considered as well settled.”

Following these cases, supra, we are of opinion that the demurrer to the answer and cross petition as amended, should have been overruled. Wherefore for the reasons indicated, the judgments on the appeal of Glover & Durrett as to the mortgage lien on the tobacco and on the appeal of Clift are both reversed, and cause remanded for further proceedings consistent herewith.