Toulmin v. Hamilton

GOLDTHWAITE, L — 1. It is certain, the writ of error attached to the transcript entirely misdescribesAhe parties to the suit, as it stood when the decree was made, but it is equally certain, that it comes within the provision of the statute, authorizing the amendment by this Court, of writs of error. [Clay’s Dig. 312, § 39.] The original bill, in connection with the supplemental bill, sufficiently discloses who kthe'[parties were, plaintiffs, as well as defendants, at the time of the decree, and the writ of error can be amended by them. 2. We have given an attentive consideration to the case made by the bill, but cannot arrive at the same conclusion as the Chancellor came to. It will be seen, that the sole consideration for the note of 31,000 dollars, and upwards, is alledged [367] to be the discharge of the previous indebtedness to Hamilton & Cole, by Austill, of something more than 11,000 dollars, and as a security against the payment of the bills drawn in his favor by Green, and indorsed to the several complainants. These bills, it is true, were then accepted by Hamilton & Cole, and they probably considered Austill as their debtor on this accomit; but it cannot be seriously pretended, they have the right to apply the proceeds of the trust property beyond the 11,000 dollars, to any thing besides the extinguishment of those bills. The deed of trust is a mere security for the payment of the promissory notes, and if these had been passed to innocent persons, in the usual course of trade, the equities arising out of the acceptance, and non-payment of the bills, very possibly might not be open to inquiry; but the bill directly charges, that the deed of trust, with the note which first fell due, was delivered by Green, who received it as the agent of Hamilton & Cole, to Martin, 'for their use and benefit, and that he, as their attorney at law, indorsed the note to Robert Hamilton, .who is the trustee named by the deed. The other is in the hands of Sayre, Converse & Co., who, as complainants, concede, by the allegation and prayer of the bill, that they have no exclusive claim upon it. The notes being thus in the hands of persons, who do not insist upon any right to their proceeds, as purchasers for a valuable consideration, without notice, the equities may be considered, as if they yet were in the possession of Hamilton & Cole, or, of Waddle, their assignee. The allegation is, that the notes were drawn by Green, for the accommodation of Austill, and the inference, from the original bill, we think, is, that he was also a party; however this may be, the fact is all edged in the supplemental bill, that they were drawn in his favor. The relation of the mariner of the ¿xecution of the deed of trust, shows, also, that the acceptance,by Hamilton & Cole, was also for his accommodation. Austill, is, therefore, to be considered, as between himself, Green and Hamilton & Cole, as the principal debtor, and the d rawer and acceptor, as his sureties. The deed of trust, then, is a security, given by the principal debtor, to one who stands to him as a surety, and the question is, whether the holder of the notes has a right, in equity, to enforce the security for his [368] benefit. Of this, we think there is no doubt. In Moses v. Murgatroyd, 1 John. Chan. 119, it was held, by Chancellor Kent, that an absolute assignment of goods, intended to indemnify the assignee, on account of his indorsement of notes, was held applicable in equity, to a holder of the notes; and in Phillips v. Thompson, 2 Ib. 418, the same doctrine was applied to a collateral security, taken by the indorser of a note from the maker. In both these cases, the suits were brought by the creditors holding the notes, which were intended to be secured. The same principle is recognized in Manse v. Harrison, 1 Eq. Ca. Ab. 93, and Wright v. Mosley, 11 Vesey, 12; see also 1 Story Eq. § 638. 3. There is a difficulty in this case, even after it is ascertained that the holders of these bills are entitled to any security, given by Austill to Hamilton & Cole, for their indemnity, as the deed of trust is conceded not to have been solely for that purpose, but was also- to secure the payment of the sum of 11,000 dollars, and upwards, already due from Austill, but upon which a further indulgence was given. Whether the trust is to be considered as applicable, first, to the benefit of the debt then owing, or is to be divided joro rata, we shall not at present decide, for the reason, that it has not been passed on by the Chancellor, and because the matter already ascertained, is sufficient to show there is equity in the bill, even if the holders of the bills, are to be postponed until the debt to Hamilton & Cole is first satisfied. 4. Another reason assumed by the Chancellor for dismissing the bill, is, that it contains no allegation that the legal remedies on the bills have been exhausted. This is certainly an essential averment, when a creditor seeks to have satisfaction out of the equitable estate of his debtor. [Mitford, 128 ; 2 Story Equity, § 1216, b.] Here, however, the holder of these bills do not claim the interposition of the Court, to have a satisfaction out of the equitable estate of those debtors merely as such; but they desire a fund specifically appropriated by the debtor, for the purpose of paying those bills, may be applied to that object. It is a trust which results from the nature of the appropriation, and is an original ground of equity jurisdiction. In Neale v. Marlborough, 3 Mylne & Craig, 407, Lord Cottenham endeavors to ascertain the principle upon [369] which it is held essential, in Courts of equity, that a general creditor, when, seeking to subject an equitable freehold interest of his debtor, in lands, shall be held to alledge and prove the suing out of an elegit, and then says, “ it is not correct to say the creditor obtains a lien, (or the equitable estate), by virtue of his judgment. It he had an equitable lien, he would have the right to come here to have the estate sold.” We have been referred to no decision, where it is maintained, that a creditor, having a trust created for his benefit, either expressly, or by implication, can be refused the aid of a Court of equity to enforce it, on the ground that he has omitted to proceed at law, against the legal estate of his debtor, nor in any way affected by the trust. As we unnderstand the rule, it is only a creditor at large, who is required to show that his lien at law, has attached by suing out execution. 5. Independent of these objections, 'it is urged, there is no privity between the complainants and the defendants. This objection seems to us to be founded in a misapprehension of the ground, upon which the aid of the Court is invoked. The holders of the bills do not pretend they have any right to interfere in the administration of the trust, but they state the facts, from which they claim the trust shall be applied for their benefit, instead of those who are indicated by the deed. It is the trust for the common benefit of the holders of the bills, which establishes the privity between them, and those who are seeking to misapply the trust fund, and, in our judgment, the existence of the trust once established, the privity becomes apparent, as a matter of course. 6. It is very certain, that Mr. Ogden has no interest in the subject of this suit, if the statement in the bill, in that respect, is accordant with fact, as it is said, the bill in his possession is owned by the New Orleans Canal and Banking Company; but this defect does not warrant a dismissal of the bill, without giving the opportunity to amend it. The rule is, that whenever the want of proper parties appears on the face of the bill, it is good cause of demurrer, and if the parties omitted are necessary to the decree to be made under the bill, the exception may also be insisted on in the answer, or at the hearing ; but in such cases, the Court will always give leave to make new parties, cither by amendment or by supplemental bilb [370] And even if the bill is dismissed for this defect, the dismissal will be without prejudice. [Story Eq. Plead. § 541; Batre v. Auze, 5 Ala. Rep. 173.] 7. The other objections, as the confusion of parties, as they are made by the supplemental bill, do not seem to be sustained by the record, or, rather the confusion is in appearance only, and is caused by the circumstance, that several of the parties, plaintiffs as well as defendants, have become bankrupt, since the institution of this suit, and they are all represented by the official assignee. It is said that Harris, as assignee of one of, or more of the complainants, cannot sue himself, as the as-signee of one or more of the defendants. This may be entirely true, and yet the necessity may exist, that all the bankrupt estates shall be before the Court by their assignees. Here the assignees are made parties, defendants, and the Court, in its decree, will ascertain, and if'necessary, separate the rights, which may pertain to each. We think the assignees were properly made parties defendants, and as to the other defects of the supplemental bill, they are either immaterial, or should have been reached by demurrer. If Prince is improperly made a party, it furnishes no reason to sustain the decree dismissing the bill. Such an objection is personal only, and can only be raised on demurrer. [Erwin v. Ferguson, 5 Ala. Rep. 158; Story’s Eq. Plead. § 544.] Our conclusion is, that the bill contains equity, and therefore, the decree dismissing it for the want of equity, is reversed and the cause remanded.