Penn Mutual Life Insurance v. Walton & Whann Co.

Headnote

Mortgage. Affidavit of Defence.—In a scire facias on a mortgage begun by leave óf the Federal Court, against a corporation for which it had appointed re

ceivers, an affidavit setting up as a defence the legal inability of the corporation to pay an instalment because its assets had been taken out of its possession and control by virtue of the receivership, is insufficient.

This was scire facias on a mortgage given by the Walton & Whann Co. to the plaintiff, payable in instalments, one of which was due and unpaid, and with a defaulting clause.

The plaintiff filed an affidavit of demand with an abstract of the mortgage, and a duly verified copy of a decree or order of the Circuit Court of the United States for the District of Delaware, setting forth that the plaintiff, upon its petition, was authorized and permitted to institute suit, in the Superior Court of the State of Delaware, upon this mortgage, and make the said Walton & Whann Company and James P. Winchester and Francis FT. Buck, the receivers, parties defendant; and to proceed therein to judgment, execution and sale of the mortgaged premises.

An affidavit of defence was filed, setting forth that “ until after the appointment and qualification of the receivers of the said Walton & Whann Company, only one payment became due upon the said mortgage, to wit, semi-annual interest upon the principal sum of forty thousand dollars secured thereby,” which “ was duly paid.” It was further alleged that upon the petition of a creditor, James P. Winchester and Francis N. Buck were appointed receivers and qualified as such, and entered into exclusive possession of all the proper effects, real and personal, of the Walton & Whann Co., on the eighth day of June 1894, and before any further payment on said mortgage was due, which made it legally and actually impossible for the said Walton & Whann Co. to make any payment, and the said receivers were wholly without power or authority to make the payment; that the defendant company possessed ample means to meet the payments falling due and would have fully and duly paid the same if the Circuit Court had not, by its action as above stated, prevented the company f$om so doing.

The affidavit further set forth that while the Circuit Court had permitted and authorized the plaintiff to institute and prosecute this

suit, there had never been any judicial ascertainment or determination of the amount of money, if any, due and payable upon said mortgage, or of the existence of any right of action thereon. The defendant admitted that the payment of five thousand dollars and interest was due, but insisted that the residue of thirty-five thousand dollars was not due and payable by reason of the non-payment of the instalment of five thousand dollars, under the circumstances and for the reasons stated in the affidavit of defence.