Hopkins v. McLure

delivered the opinion of the court.

On the 9th of July, 1876, George W. Melton died, intestate and insolvent, in South Carolina, leaving surviving him his widow, Margaret A. Melton, and three infant children. John J. McLure was appointed administrator of his estate, and commenced an action in the Circuit Court of Chester County, South Carolina, in July, 1877, to marshal the assets of the estate, to have the real property of the deceased sold in aid of assets, and to have the creditors of the estate establish their deifiands. . The creditors were called in, and numerous claims were established, among them, a .note under seal to R.. G. Ratchford & Co., bearing date February 22, 1859 ; a note under seal to Dr. A. P. Wylie, bearing'date May 3, 1872; a note under seal to Samuel D Melton, bearing date February 1, 1871; a bond secured by a mortgage on real estate to one Duvall, sheriff, datfed June 4, 1875, which had been transferred to one Kerr, as clerk" of the court of Fairfield County, South Carolina; and

It appeared that the mortgage to Hopkins, Dwight & Co. had been foreclosed by a judicial sale of the land covered by it; that the proceeds of the sale were insufficient to pay the debt; that the debt and the mortgage were set up as a preferred claim against the general assets in the- hands of the administrator; that the land covered by the mortgage held by Kerr as, clerk was sold under an order of the court before Kerr became a party to the suit by proving his debt and mortgage; that, after that sale, Kerr, not having obtained -its proceeds, instituted proceedings to foreclose the mortgage, obtained judgment, and sold the land, but the proceeds of sale were insufficient to pay the mortgage debt; and that Kerr set up the debt as a preferred one against the general assets of the estate.

The Circuit Court said, in its opinion, that the referee held that both of these debts were preferred claims, on the authority of the case of Edwards v. Sanders, 6 So. Car. 316 ; and it discussed the question whether the mortgage debt of Hopkins, Dwight & Go. was a'preferred claim after its specific lien had been exhausted, because it was a mortgage.

Section 26 of the act of South Carolina, which became a law

This provision was construed by the Constitutional Court of South Carolina, in 1822,- in the case of Tunno v. Happoldt, 2 McCord, 188 . In that case, the deceased left an outstanding “ obligation or sealed instrument of mortgage and covenant ” and some outstanding simple contract debts. The question arose whether that instrument was to be ranked, in the legal order of payment under the statute, among bond debts or among simple contract debts. The court said that the claim was by simple contract, that is, by a note; that the question was whether the mortgage deed could change the character of the note, or give it a preference over other simple contract debts under the statute; that the simple contract debt was not changed by the mortgage; "and tkát the deed gave a particular lien .upon certain property, but its object and intent had terminated, and otherwise left the note as it stood before, still a simple contract. ■

In Kinard v. Young, 2 Rich. Eq. 247 , in the Court of Appeals in Equity and Court of Errors of South Carolina, in 1846, it was held that, in the administration of the assets of an insolvent testator or. intestate, mortgages, as mortgages, were not entitled to priority over rent, specialties, and simple con

The provision of the act of 1789 was incorporated in 1872 in the Revised Statutes of South Carolina, as section 3 of chapter 90, p. 457, as follows: “ The assets which come to the hands of an executor or .administrator, after proper allowancé to the executor or administrator, in a due course of administration, shall be applied to the payment of his debts in the following order, that is to say: 1. Funeral and other expenses of the last sickness, charges of probate or letters of administration; 2. Debts due to the public; 3. Judgments, mortgages, and executions — the oldest first; 4. Rent; 5. Bonds and debts by specialty; 6. Debts by simple contract.”

In 1875, the case of Edwards v. Sanders, 6 So. Car. 316 , was decided by the Supreme Court of the State. It was held that, under section 26 of the act of 1789, prescribing the order in which debts of a decedent are to be paid, mortgages, whether of chattels or real estate, rank in the third class, and are entitled to payment out of the general estate in preference to specialty and simple contract debts; that a purchase of the mortgaged premises, by the mortgagee or his assignee, under a decree for foreclosure, does not extinguish the mortgage debt for any unsatisfied balance that may remain; and that, where .the purchase is made after the death of the mortgagor, the unsatisfied balance retains its rank as a mortgage debt, with right to priority of payment out of the general estate, over specialty and simple contract debts.

While the case of Edwards v. Sanders stood as the rule of construction, the referee in the present case held that the mortgages in question were preferred claims. Before the case came on to be heard upon exceptions to the report of the referee, the case of Piester v. Piester, 22 So. Car. 139 , was decided, in January, 1885, by the Supreme Court of the State, which held that, under the act of 1789, a mortgage, as such, had no precedence in the administration of the estate of a deceased person, except

After a consideration of these cases, the Circuit Court reached the conclusion, in the present case, that the mortgages in question came under the operation of the decision in Piester v. Piester, and were not preferred claims as mortgages. The decree of that court was that, the lien of the mortgages having been exhausted, they were no longer preferred claimsand that the debts they were given to secure could only be proved

The point w^s taken • by the appellants in the Supreme Court of South Carolina that the case of Piester v. Piester could not be applied to their cases, for the reason that so to apply it would impair the obligation of contracts or divest Arested rights, bec'ause, at the time of the making of the contract of Hopkins, Dwight & Co., the law, as then declared by the case of Edwards v. Sanders, required that the balances due on the two debts should be ranked as mortgages, and as such be entitled to priority over specialty debts; and that the decision in Piester v. Piester could not divest rights which became vested at the time the intestate died, under the law as it was then declared to be.

But the Supreme Court said that the construction placed on the provisions of the act of 1789 by the decision in Piester v. Piester, Avas the same as that laid down in Tunno v. Happoldt and Kinard v. Young; that the law stood unquestioned down to the time of the decision in Edwards v. Sanders; that that decision did not seem to have been followed in a single instance; that, from Avhat was said in Piester v. Piester it would seem never to have been satisfactory to the profession; that at the first opportunity it was overruled; and that, in the meantime, the legislature, by the act of 1878, had shown its dissatisfaction with the construction adopted in the case of Edwards v. Sanders. On the question whether the decision in Piester v. Piester effected such a change in the law ás would forbid its application to the case under consideration, because it would. impair the obligation of a contract or divest rights vested under* the law as declared in Edwards v. Sanders, the Supreme Court said, that, as the proper construction of the statute had been settled for a long series of years by decisions of both of the courts of final resort in the State, in accordance with the view declared in Piester v. Piester, it would be going very far

' The members of the firm of Hopkins, Dwight & Co., as successors of the former members of that firm, and the trustee of that firm and of Mrs. Melton and her infant children, have brought a writ of error to review the decree of. the Supreme Court affirming that of the Circuit. Court; and the .defendants in error now move to dismiss .the writ of error, on the ground of a want of jurisdiction in this court.

It is contended on the part of the plaintiffs' in error that the decision of the court below was based upon the application of the act of 1878 as a valid act, affecting the contract of the plaintiffs in error and impairing its obligation. But the validity of that statute was not drawn in question, and the Supreme Court did not pass upon it. The decree of that court does not rest upon that statute, but upon .independent grounds. The decision rests upon a ground broad enough to cover' the entire case, without considering the statute. It rests upon the ground that the law of South Carolina, under the act of 1789, was such as it had always been held to be, in Tunno v. Happoldt, Kinard v. Young and Piester v. Piester, and that the law as so declared had always been the law, and was not varied or changed by anything decided in Edwards v. Sanders. That being so, we must hold that • no Federal question is presented by the record.-

This view is in. accordance with the decisions of this court in Kreiger v. Shelby Railroad Co., 125 U. S. 39 , Desaussure v. Gaillard, 127 U. S. 216 , and Hale v. Akers, 132 U. S. 554 , the ruling in which cases is, that where the Supreme Court of a State decides a Federal question, .in rendering a judgment, and also decides against the plaintiff in error on an independent ground, not involving a Federal question, and broad enough

-The writ of error is

Dismissed.