Marine & Fire Insurance Bank of Georgia v. Jauncey

Harris, J. At the time of the execution of the assignment,. Joseph Wood had no interest in the cotton which could be conveyed by the assignment. The cotton had not arrived. The draft had not been accepted. When he accepted the draft he acquired a lien upon the cotton for his indemnity, but this could give Jauncey no right to claim the cotton. He then stood in the situation of a surety for John Wood, the principal debtor. The proceeds of the cotton, if received by him, would have constituted, in his hands, a trust fund applicable to the payment of, the draft. It is not denied, that as between him and John Wood, the party providing the fund for a specific object, such application could have been enforced. It cannot be pretended that Jauncey acquired any greater interest, or better right to the cotton, than Joseph Wood would have had if no assignment had been made, or than he would have acquired if the draft had been accepted before the assignment. It is well settled that an assignee claiming under a general assignment made by a failing debtor, for the benefit of creditors, is only entitled to the same rights and equities as the debtor himself would have possessed. ]J seems to follow then that the proceeds of this cotton in the hands of Joseph Wood’s assignee oecame a trust fund applicable to the payment of the draft drawn against such proceeds. Again; it is well settled that where a principal debtor provides, in the hands of his surety, or one standing in the situation of a surety, a fund to pay his debts, the creditor is entitled to have such fund applied in payment of that debt. (Curtis v. Tyler, 9 Paige, 434. Pratt v. Adams, 7 Id. 626.) And this too, even where the creditor had no knowledge of the exist [489] ence of the fund when he became such creditor. In this case, then, the plaintiffs having, by the discount of the draft, become the creditors of John Wood, the principal debtor, they are entitled, as the holders of the draft, to the benefit of any fund provided by John Wood for its payment; whether in discounting the draft they relied upon the credit of the fund or not. Jauncey having taken the place of Joseph Wood, so far as the fund is concerned, is bdund to apply it to the purpose for which it was provided. Nor can I think the other grounds of demurrer well taken. It does not appear that Walsh had been charged as endorser of the draft; and if he had not been, he had no possible interest in the subject Inatter of the suit. But even if he were liable as endorser, I cannot see that he would have been a necessary or even a proper party to the suit. As endorser he might have an equitable claim to have the property provided by the drawer of the draft applied to its payment. IPhe has any interest at all, it is identical with that of the plaintiffs. If he had been made a party, no decree could properly have been made against him. It is undoubtedly true, that when a foreign corporation appears in court, it must establish its right to bring the suit and to make the contract it seeks to enforce. But I understand that it is sufficient to show this upon the hearing of the cause, and that it is not necessary to set forth in the pleadings, the authority upon which it relies to sustain its right to' sue or enforce the contract. (Bank of Michigan v. Williams, 5 Wend. 478.) The demurrer must be overruled with costs. The defendants may have thirty days to pay the costs, and put in their answer. In case they do not elect to answer within that time, the bill is to be taken as confessed by them.