Moore v. Parker Drug Co.

SHABPE, J. No defense ivas made to the bill in this case, the same having been taken as confessed, and the only question presented for review is whether in the distribution of the assets of the defendant Parker Drug Oo., the appellant as a creditor is entitled to be preferred over other creditors participating in that distribution. Appellant’s claim to such preference is based on two theories, viz., that he had a lien by virtue of the contract whereby the debt was created, and also that he obtained a lien or superior right by the mere filing of the bill. According to the bill’s averments the contract depended on as creating a lien was for the sale to the Drug Company of a stock of merchandise and of certain furniture and fixtures for which that company paid in part, and for the remainder of the purchase price, gave appellant the two notes which evidence the debt. Each note recites “this note is secured by a first lien on the drugs, furniture, and fixtures recently bought of” appellant. That transaction was had and possession of the property was given the Drug Company about a year before this suit was commenced. In addition to these facts the bill alleges “said defendant Parker Drug Co. carried on business in the usual course for a while, but is now in failing circumstances. Substantially all the furniture and fix [290] tures and much of the stock remain hi the store. But. he [appellant] shows that said defendant company and its president and secretary, R. B. Dawes, are removing and wasting said stock, and little will be left to satisfy orator’s claim and lien unless immediate steps are taken to conserve the properly by appointing a receiver and enjoining further waste and removal by defendants.” Added by amendment to the bill is the following paragraph : ‘‘That the actions of the defendants above described are in fraud of all creditors of said Parker Drug Company, and tend to hinder and delay said creditors, as well as orator, and orator, therefore, files this bill on his own behalf and also on behalf of all creditors of said defendant Parker Drug Company who may come in and contribute to the expenses of this suit.” The prayer is for injunction and “that a receiver be appointed to take charge of said property, manage and sell the same under the orders of this court for enforcement of said lieu, and for the protection of orator and all others properly entitled thereto,” and for general relief. From its contents, the substance of which is set forth above, it. is clear tin* bill is not framed for the special purpose of enforcing the lien stipulated for in appellant’s notes. That lien extended to uo property except that sold by him and is not alleged to haAe extended to any other, though the bill seeks to subject the entire property owned by the Drug Company at the commencement of the suit without averring, by any description which would serve for identification, what, parts of R was composed of the drugs, furniture and fixtures referred to in the notes, and without praying or showing any necessity for a discovery of that part. Furthermore, if the enforcement of that lien had been the main purpose of the bill, there would have been no propriety in bringing it in behalf of creditors generally, for that course is appropriate only to bring in persons who are. in a like situation with the party filing the bill.—Story’s Eq. Pl., § 101. The suit seems to have, been treated by the parties and the trial court as one to preserve and to apply to its debts, the general property of the failing corporation and in no other aspect does it here appear. The [291] effectuation of such purpose may not liave been inconsistent with a right in complainant to a preferred claim on the undisposed of property sold by him and subject to the lien stipulated for in his notes, but to have entitled himself to relief to that extent the necessity ivas devolved on him to procure such orders and proceedings as would have ascertained and kept separate the encumbered property and its proceeds so as to render practicable the rendition of a decree for his preference in the particular fund arising from that property. This was not done. A right of priority as to an undefined part does not give such right in the whole fund.—George v. St. Louis Cable Co.. 44 Fed. Rep. 117. There are cases involving the subjection to debt of property fraudulently conveyed, and the like subjection of equitable assets, and probably other cases, wherein the party whose suit is prior in time is by reason of his superior diligence accorded a prior right for the satisfaction of his debt out of the property proceeded against, but where as here the suit is in the nature of a creditor’s suit for the administration of assets owned by and remaining with an insolvent corporation and is brought in behalf of creditors generally who may choose to be availed of the suit, the doctrine last referred to is without application as against creditors who come into the case in response to invitation extended by the bill whether they be formally made parties or not.—Younger v. Massey, 19 S. E. Rep. (S. C.), 125; Jones v. Lansing, 7 Paige, 583; Johnson v. Walters, 111 U. S. 640; Hammond v. Hudson Riv. I. & M. Co., 20 Barb. 378; Fink v. Patterson, 21 Fed. Rep. 602; Finney v. Bennett, 27 Grat. 365; George v. St. Louis Cable Co., supra. Decree affirmed.