author: Mr. Chief Justice ENG-lish

text:
    Newton exer. of Walters vs. Field.
    Where a party makes a fruitless attempt to interpose a defence at law, which is exclusively an equitablo one, and not cognizable by tho court of law, ho is not thereby debarred from tho right to resort to equity.
    Watkins obtained a judgment against Johnston, and Walters as his security; issued a writ of garnishment against Field, tho debtor of Johnson; before judgment on the garnishment, tho original judgment was paid by Walters, but not entered satisfied; execution was issued on the garnishment judgment, for the benefit of Walters; Field filed his bill for injunction, alleging that a judgment had been rendered against him, as the security of Johnston, which ho had paid, to a larger amount than his debt to Johnston: Held,
    1. That the garnishment judgment must bo considered as res adjudícala as between Watkins and Field as to any defence that could have been made at law; but not so in a proceeding between Walters and Field.
    2. That when Walters paid the original judgment, it was extinguished at law as between the parties to it.
    3. That if the garnishment judgment had been rendered at the time tho original judgment was paid, it would also have been extinguished, so far as Watkins was concerned, being but an incident to tho original judgment.

      i. That if Field had known that the original judgment had been paid, ho might have successfully interposed it as a defence to tho garnishment suit.
    5. That as Field had no legal or actual notice of tho payment of the original judgment, and was thereby deprived of interposing that defence to the garnishment suit, he had sufficient grounds to resort to a court of equity to enjoin the execution of tho judgment, so far as Watkins was concerned.
    6. That though the payment of the original judgment extinguished it, and extinguished the right of Watkins to enforce the garnishment judgment against Field, it did not extinguish tho debt which Field owed to Johnson: and so, had the "bill of Field been filed to be relieved from the garnishment judgment, exclusively upon the ground of such payment, without any equitable right of his own, equity would not have relieved him without his paying to Walters the debt which ho owed to Johnston; or had Walters, by a cross-bill, shown that his equity as security was superior to Field’s, tho court might well have decreed that Field pay him the amount of the garnishment judgment.
    V. That the garnishment judgment having been extinguished by tho payment of the original judgment, and -the plaintiff enjoined from proceeding on it, if Walters had any equitable right to collect the money, on the doctrine of subrogation, he could not do so by an execution on tho judgment, but would be compelled to apply to a court of equity.
    8. Regarding Walters and Eield as having equal claims to be protected in equity from loss, a court of chancery would not compel Eield to surrender up to Walters an indemnity which he held in his own hands.

      Appeal from the Oi/rcuit Oourt of Pulaski Ooimty vn Oha/ncery.

    Hon. *WM. H. Feild, Circuit Judge.
    WatKINS & CuRRAN, for tbe appellant.
    So far as tbe ground, of relief set up in tbe bill, is tbe same as tbat set up in tbe garnishment suit, we insist tbat tbe complainant is concluded by tbe decision made in tbat case, and that tbe question is res adjudi-cata. A court of chancery cannot review tbe supposed errors of a court of law, much less of tbe Supreme Court, either directly or indirectly. Watkins ad. vs. MeDonald et al., 3 Ark. Rep. 270.
    Tbe allegation tbat tbe j udgment at law was secretly extinguished, is wholly unfounded. Tbe judgment creditor, pending the garnishment, bad coerced payment of Walters, tbe security; but tbe effect of that payment was not to extinguish tbe original judgment and discharge tbe garnishee.
    Tbe rule in England does not appear to be very well settled. See Oopis vs. Middleton, 1 Turner da Russell 231, and 1 Leadvng cases m Equity 60, where this whole subject is fully discussed. Parsons vs. Eriddock, 2 Verm. 60S.
    But there seems to be but little doubt or conflict of authority in tbe United States, on this subject. See 1 Leadvng cases in Equity, p. 88, a/nd the authorities there collected.

    Now, in this case, tbe garnishment is a distinct proceeding from tbe judgment, ancillary to it, but nevertheless, a security, which tbe creditor had acquired, in addition to- bis judgment against Johnston and Walters; and the payment by Walters did not extinguish. the original judgment itself, but equity would keep it alive, for Ms protection; so, for instance, as to' give him thebenefit of any lien of that judgment on the estate of Johnston.
    There are many cases where the surety would have to apply to a court of chancery, in order to obtain the benefit or enforcement of assets or securities acquired by the creditor or a co - security. But, in this case, Walters has the legal advantage of the judgment as a subsisting security, susceptible of being enforced at law, and the payment by him is regarded as an equitable assignment of the debt, and of the judgment upon it, so as to authorize him to sue or issue execution in the creditor’s name for his use. See authorities collected, p. 92,1 Leading cases i/n Equity.

    A court of law, at this day, is fully competent to take cognizance of such equities, and will not. refuse to protect them.
    Teapkall, for the appellee.
    That the security, who pays the debt of the principal, is a favorite of equity, and entitled thereby to be subrogated to the securities held by the creditor, is a familiar principle. But there is a great diversity of authority as to the extent of it.
    The English, and a Large proportion of the American courts, confine the principle to those independent collateral securities which are not extinguished ipso facto by the payment: such as mortgages, pledges of personal property, &c. Oopis vs. Middleton, 1 Turner & Bussell 229 / Hodgson vs. .Shaw, 3 Mylne <& LLeene 183/ Jones vs. Davids, 4 Bussell 227/ Dennis’ exr. vs. Byden, 2 McLain 454/ 1 Story’s Equity 509, 510, 513, 514, 515, and notes; Bank of the United States vs. Stewart, 4 Dana 28 : and assert that the original debt and judgment, and all proceedings, judgments, and securities, incident thereto, are extinguished by the payment, and cannot, in law or equity, be made available to the security. Story’s Equity 512, 513, 514 / Gammon vs. Stone, 1 Vesey, 339/ Woffington vs. Shcuw, 2 Vesey 560/ LLodgson vs. Shaw, ub. sup.; 2 Greenleaf 343, 344, 345/ 10 ' J. B. 524.

      The security must resort to proceedings in equity to get tbe benefit of such, securities, to prevent the reconveyance of the mortgage, or the assignment and delivery of the securities. Rotten House vs. levering, 6 Watts dh Serg. 190/ BeczrdsT/y vs. Warner, 6 Wend. 610/ 4 J. O. R. 132.
   Mr. Chief Justice ENG-lish

delivered the opinion of the Court.

On the 15th February, 1847, William Field filed a bill on the chancery side of the Pulaski Circuit Court, against Robert A. Watkins and Ebenezer Walters, to injoin the execution of a judgment at law.

The bill alleges, that on the 12th day of March, 1841, Robert A. Watkins obtained a judgment, on the law side of said court, against John W. Johnston, and Ebenezer Walters, for $970 debt, $19 72 damages, and for costs.

On the 28th of April, 1843, Watkins sued out a garnishment upon said judgment against complainant, alleging that the judgment remained unsatisfied, and that he was indebted to Johnston, &c., returnable to the May Term of said court, 1843, which was ■ executed upon complainant, on the 2d day of May, 1843. On the 29th of the same month, Watkins exhibited his allegations and interrogatories, calling on complainant to'state what amount he was owing Johnston, when it was due, &c., to which complainant filed his answer; and, on the 9th of June, 1846, after various intermediate proceedings, judgment was rendered against complainant, as such garnishee, for $831, with costs, which amounted to $15 30. A certified copy of the proceedings and judgment is exhibited.

That, after the rendition of said judgment, complainant was informed, and alleges it to be true, that the original judgment in favor of Watkins, against Johnston and Walters, had been fully satisfied and discharged, by the payment thereof to Watkins, or his .attorney. That the payment was not made upon execution, but without process, and though the judgment had been long satisfied, there was no evidence of record of such payment, and no entry of satisfaction of record, as required by law, &c.

That the payment of said judgment had been kept secret among the parties, and a fraudulent combination formed between the defendants, to keep the judgment against complainant alive and in force, for the purpose of coercing the amount out of him, to be appropriated to the reimbursement of Walters, who was the security of Johnston to Watkins, and had the original judgment to pay.

That complainant was not apprized of the payment of said judgment, until shortly before filing the bill, and long after the judgment was obtained against him in the garnishment.

That complainant had applied to Watkins to desist fiom the prosecution of said judgment, and to enter satisfaction of both of said judgments according to the statute, &c., but he, combining with Walters, to defraud complainant, &c., had refused to do so, and was harrassing him with an execution, &e. A certified copy of the execution is exhibited.

Prayer for injunction, restraining all further proceedings upon the execution and judgment; and, that on the final hearing the injunction be made perpetual, &c., and for general relief.

The answer of Watkins admits that he obtained judgment against Johnston and Walters at the time, and for the sums stated in the bill. That a garnishment was sued out upon the judgment against complainant, as a debtor to Johnston, served, returned, and judgment rendered thereon, as alleged in the bill. That execution had been issued, upon the judgment against complainant, and returned unsatisfied. That Walters was the security of Johnston upon the debt, on which the original judgment was recovered, the debt being for the purchase money of a tract of land sold by Watkins to Johnston. Avers that at the time the original judgment was obtained, Johnston was insolvent, or in failing circumstances, and had since become utterly insolvent. That before, and at the time of the maturity of the debt Walters being uneasy as such security, urged resimndent to bring suit upon it, and after the judgment was obtained, he gave Walters control of the execution, to enable him, if possible, to protect himself by causing the money to be made out of Johnston’s property, but no part of it was made.

That "Walters represented to respondent, that complainant was indebted to Johnston, and urged him to sue out a garnishment against complainant upon the original judgment, for the benefit of Walters; and upon his agreeing to pay all costs that might be incurred by respondent, in the prosecution of such garnishment, it was sued out, on the 28th April, 1843. That afterwards, on the 2d November, 1843, the garnishment being contested by complainant, and respondent becoming apprehensive of incurring costs, his attorney took from Walters a written agreement to pay all such costs as might be incurred, &c. A copy of which is exhibited.

That, at the earnest solicitations of Walters, respondent delayed coercing payment of the original judgment out of him, until such time as he had secured, or endeavored to secure himself, in respect of such judgment, by means of execution and garnishment aforesaid, out of the property and effects of Johnston; respondent relying upon the promises of Walters to pay said judgment without execution, whenever the necessities of respondent required him to have the money. That accordingly Walters afterwards paid upon said judgment to respondent’s attorney $500 on the 23d May, 1844, $500 on the 24th July, 1844, and $182 11, on 21st November, 1844, when respondent gave to Walters a receipt in full, of the debt, damages, and interest, due upon the judgment.

Respondent denies any fraud or concealment on his part, in respect of the matters aforesaid; and avers that when he received payment of the judgment of Walters, as the security of Johnston, he supposed that the operation of it was an assignment and transfer to Walters of the judgment, and of all beneficial interest, which respondent had therein, as against Johnston, and of all liens and securities which respondent had obtained thereon, as against Johnston, by means of execution, and the garnishment aforesaid, and he submits that such was the result, and by operation of law, a substitution of Walters in the place of respondent, in respect of said judgment, and all securities which respondent had obtained thereon, as between Walters and Johnston, the principal debtor, and which Walters had the right to enforce either at law or in equity. Eespondent denies that complainant ever requested him to enter satisfaction of the garnishment judgment, or to desist from further prosecution thereof, and that he ever called upon him to know if Walters had paid the original judgment, which fact respondent had no motive to conceal.

Eespondent states that as between complainant and Walters, he stood indifferent in interest, and would desire to see them both saved harmless, &c.; but submits that the operation of the garnishment in question, was a legal transfer to respondent of the indebtedness of complainant to Johnston, at the time of the service of the writ of garnishment which could not be impaired by the subsequent payment of the original judgment by Walters, as the security of Johnston; and the writ of garnishment having been sued out at the instance, and for the benefit of Walters, respondent was bound in equity, to hold, and enforce, for the benefit of Walters, all securities obtained by respondent, from or against Johnston, under the original judgment; and that if he had canceled any such securities, or desisted from the prosecution of said suit of garnishment, he would be liable therefor to Walters; and, therefore, he submits himself to such decree as the court may render in the premises.

Walters, inhis answer, makes the same admissions, and states the same facts, substantially, as are contained in the answer of Watkins ; and, in addition thereto, sets out more fully the proceedings in the garnishment suit in the court below, and in this court on error, as reported in Field vs. Watkins, 5 Ark. 672, and Watkins vs. Field, 1 Eng. 391, which will be noticed in the progress of this opinion.

He submits that the service of the writ of garnishment upon complainant, operated as an assignment to Watkins, of the then indebtedness of complainant to Johnston, which was not divested by the subsequent payment of the original judgment by respondent to Watkins, wbo was bound to bold, and enforce tbe garnishment, for the use and benefit of respondent, as the security of Johnston, and that the payment by respondent of the original judgment, was a subrogation in equity of respondent to all the rights of Watkins, in respect of the original judgment, as against Johnston, the principal debtor therein, and of any security previously obtained by Watkins, by means of the service of the writ of garnishment upon complainant.

Denies all fraud and concealment in the payment of the original judgment, and that complainant ever called upon him for information in regard to it. Avers that such payment was known to sundry persons, and that complainant might, if material to his defence to the garnishment, have ascertained the fact by the exercise of ordinary diligence, long anterior to the final judgment therein, &c. That Watkins caused an execution to be issued upon the original judgment, returnable to the November term, 1844, which was levied upon the property of respondent, and he desiring to avoid costs, and the injury of his credit, by the advertisement of his property, made an agreement with Watkins, to the effect, that he would pay the amount due upon the execution before the return day, and that on his failure to do so, the sheriff should sell respondent’s property, without advertisement, which agreement was endorsed upon the execution, signed by respondent and the attorney of Watkins, and returned into the clerk’s office by the sheriff, and that complainant was bound to have known, on inspection of the execution and return, that the judgment was paid, or that it was at least sufficient to have put him upon inquiry, &c. A copy of the execution and return is exhibited. Admits that no entry of satisfaction of the judgement was made of record, &c.

Insists that the bill should be dismissed for want of equity, and Watkins permitted to enforce the garnishment judgment for his benefit.

Afterwards, the death of Walters was suggested, and Thomas W. Newton, his executor, substituted as a party defendant.

On.the 31st July, 1849, complainant filed an amended bill, stating, in addition to the allegations contained in the original bill, that be was tbe security of Johnston, on a note to the Neal Estate Bank, for $2,300 70, dated 14th October, 1840, and due February 16th, 1841. That Johnston, in a short time thereafter, became hopelessly insolvent, and that complainant, as his security, had to pay; and on the 30th October, 1844, did pay to the said Bank $7f>0 on a judgment rendered on said debt, in favor of the Bank, against Johnston and complainant, in the Pulaski Circuit Court, on the 3d December, 1842, which judgment, at the time of such payment, was in full force, and constituted a lien upon the real estate of complainant. A certified copy whereof is exhibited.

That the 21 st section, 93d chapter, Revised Statutes, provides, that when a judgment is satisfied, otherwise than by execution, the plaintiff shall, within sixty days thereafter, acknowledge satisfaction before the clerk of the court in which such judgment was rendered; and the 23d section provides, that on failure to enter such satisfaction, the plaintiff shall pay and forfeit to the defendant in such judgment, any sum not less than five, nor more than one hundred and fifty dollars.

Complainant charges that on payment of said judgment to "Watkins by Walters, the same was satisfied in law, and the failure to enter satisfaction, was a violation of the law, and of the plaintiff’s duty to Johnston, and a palpable fraud upon complainant, and was done by á combination between Walters and Watkins, to injure and sacrifice complainant in the premises.

That if complainant had been aware of the above facts, before judgment was rendered against him in the writ of garnishment, he would have set them up in defence, and shown to the court that his equity in the premises was prior to that of Walters; but these facts were unknown to complainant at the time, and he was not aware of them until long after the judgment was rendered against him off said writ, in favor of Watkins. Prayer, as in the original bill.

Watkins, and Newton, as executor of Walters, filed a joint answer to tbe amended bill. They profess to have no knowledge of the alleged payment by complainant to the Bank, as Johnston’s security, or as to the judgment, upon which it is alleged to have been made, being in force and constituting a lien upon complainant’s real estate, and require proof, &c. They aver that if such payment was made, it was made in the notes of the Bank, or other depreciated currency, worth, at the time of the payment, not more than 30 cents on the dollar. They insist that there is no equity in the amended bill, and claim the benefit of a demurrer upon the hearing.

Deny all fraud and concealment in reference to the payment, by Walters, of the original judgment, &c.

The deposition of George C. Watkins was read upon the hearing. He proves that Walters was Johnston’s security on the note, upon which the original judgment was obtained; the insolvency of Johnston; the issuance and prosecution of the' garnishment against complainant, to indemnify Walters: the payment of the original judgment by Walters, as stated in the answer of Watkins, &c. Witness was the attorney of Watkins, andknew of no fraud or concealment in regard to the payment of the original judgment by Walters.

The court decreed that the judgment in favor of Watkins against Johnston and Walters, having been fully paid before final judgment against Field on the writ of garnishment, no execution could issue thereon against Field; and that the garnishment judgment of Watkins against Field, be perpetually enjoined, &c. From this decree, the executor of Walters appealed. Watkins took no appeal.

1. It is insisted, on the part of appellant, that Field cannot set up his liability as security for Johnston to the Bank, or a payment thereon, as grounds of relief in equity, because he pleaded both the liability and payment as a defence to the garnishment in a court of law, and that the matter is res acbjudieata.

2. That on the payment by Walters, as the security of Johnston, of the original judgment, be was subrogated to tbe right of Watkins to enforce the garnishment against Field for his indemnity ; that the payment of the judgment did not destroy the right to proceed upon the garnishment at law, for the benefit of the security who paid it.

3. On the other hand, it is insisted for Field, that the payment of the original judgment extinguished it, and the garnishment being but an incident to the judgment, springing out of and resting upon it, all right to proceed upon and enforce it, ceased upon the payment of the judgment.

4. That even if Walters was subrogated to the right of Watkins to enfore the garnishment, this was in equity, and could not be done by the issuance of an execution upon the garnishment judgment, which at law was extinguished, but that Walters would have to resort to a bill in equity to conrpel Field to pay the debt for his benefit.

5. That Field being also the security of Johnston, for a larger amount than he owed him, and Johnston being insolvent, a court of equity would not compel Field to surrender to Walters an indemnity which he held in his own hands, and claimed to hold to save him harmless for so much.

1. Watkins haying submitted to the decree of the court below, and taken no appeal therefrom, the decree, as to him, is "conclusive and final. He is perpetually enjoined from attempting to execute the garnishment judgment against Field. The contest in this court, is between the executor of Walters and Field.

The transcript of the proceedings in the garnishment suit, shows that at the return term, May, 1843, Field set up as a defence in his answer to the allegations, &c., filed by Watkins, that in December, 1842, before the issuance of the writ, the Beal Estate Bank obtained a judgment against him, as the security of Johnston, for $2,370, besides interest and costs, which remained in full force, &c.

That Johnston and his co-securities were insolvent, and he would have the debt to pay, &c. The answer was held to be insufficient, and judgment rendered against Mm, and be brought error. This court, by Laoy, Judge, said:

“Field has no right to set off his demands against Johnston, in this form of action. The authorities on this point are clear. The demands are not between the same parties, nor are they mutual subsisting rights. How far the defendant (Field) may be able to avail himself of this defence in a court of equity, by proving the insolvency of Johnston and his co-securities, is a question not before us, and of course, upon which we express no opinion.”

The judgment was, however, reversed for excess, and the cause remanded.

If this defence was exclusively an equitable one, and not at all cognizable by the court of law, surely Field did not debar himself from the right to resort to equity, by a fruitless attempt to interpose the defence "at law. The court expressly said that the defence, if good at all, was available in equity only.

On the remanding of the cause, Field, by permission of the court, amended his answer, showing that since the service of the garnishment upon him, he had paid, on the judgment obtained against him by the Heal Estate Bant, as the security of Johnston, $750; and therefore, claimed not to be indebted to Johnston, and asked to be discharged. The court thereupon (April Term, 1845,) gave judgment that he be discharged, and "Watkins brought error.

This court, by Oldham, Judge, said: “The service of the writ of garnishment was a transfer, by operation of law, of the amount due by the garnishee (Field) to the original defendant, (Johnston), to the judgment creditor, (Watkins), for the satisfaction of his judgment, and the right of the creditor to a satisfaction of his judgment out of the debt thus transferred, cannot be defeated by a subsequent payment of the garnishee, whether made voluntarily or by legal coercion. Watkins vs. Field, 1 Eng. Rep. 391.

The judgment was reversed, the cause remanded, and final judgment rendered against Field, on the 9th June, 1846, which is the judgment injoined by the decree of the court below in this cause.

This court, in the last case, seems to have decided upon the merits of the defence, and makes no intimation that it was properly cognizable or available in equity. If the court meant to decide that the defence was such as could be made at law, but was not a good defence, then this point would be res adjtidicata, as between Field and Watkins, who were the parties to that suit, and contesting that question; though it would seem that if there was anything in the intimation of the court, in the first decision, that the judgment liability of Field, as the security of Johnston, would be available as a defence in equity, such defence would be strengthened by the fact that Field had made a payment upon the judgment equal to his indebtedness to Johnston, a.s stated in his amended answer to the garnishment.

But, be this as it may, let it be assumed that this point is res adjudieata, as between Watkins and Field, and if the original judgment had not been paid to Watkins, and Field had filed the bill to enj oin the garnishment j udgment, exclusively on the ground that he had been compelled to pay, after the service of the writ of garnishment upon him, on the judgment against him as the security of Johnston to the Real Estate Bank, an amount equal to what he was owing Johnston, then the court of equity might have held that this defence had been decided against him in the court of law, and was res aclgudieata.

But the original judgment has been paid to Watkins: the judgment against Field upon the garnishment, was but an incident to the original judgment, and must be regarded as having been paid also, so far as Watkins is concerned. He has been perpetually injoined from collecting it. Walters, who was not a party to the garnishment suit, claims to be subrogated in equity to the right which Watkins had to enforce the payment of the garnishment judgment against Field: but even if he had filed a bill to compel Field to pay to him the debt which was the foundation of the judgment in the garnishment suit, it could hardly be said that the right of Field to withhold from him the debt, on account of his having previously paid the amount to the Real Estate Bank, as the security of Johnston, was res ad/juclieata, as between him and "Walters. Surely the court of chancery would regard the equitable rights of Field as well as of Walters, in such a contest between them.

The 2d and 3d points, made for the parties in the argument of the cause, present for consideration the question, as to the extent of the right of a security, who pays the debt of his principal, to be subrogated to the benefit of securities acquired by the creditor irom the principal debtor.

In Copis vs. Middleton, 1 Turner & Russell 224, it was held, that where a security pays a bond for his principal, he is a simple contract creditor only of the principal — that the bond was extinguished on the payment of it. Lord EldoN said: “It is a general rule, that in equity, a surety is entitled to the benefits of all the securities which the creditor has against the principal, but then the nature of those securities must be considered: when there is a bond merely, if an action was brought upon the bond, it would appear, upon oyer of the bond, that the debt was extinguished : the general rule, therefore, must be qualified by considering it to apply to such securities as continue to exist, and do not get bach upon payment to the person of the principal debtor: in the case for instance, where in addition to the bond, there is a mortgage, with a covenant on the part of the principal debtor to pay the money, the surety paying the money, would be entitled to say, I have lost the benefit of the bond, but the creditor has a mortgage, and I have a right to the benefit of the mortgaged estate, which has not got back to the creditor.”

In Jones vs. Davis, 4 Russell Rep. 272; 4 Eng. Ch. Rep. 278, the surety, who paid a bond for his principal, and took an assignment of it, filed a bill against the heir and executor of the principal to enforce the payment of the bond, and it was decided, that the surety was but a simple contract creditor of the testator — that the payment of the bond extinguished it, and the assignment of it to the surety, gave to him no right of action upon it. The bill was dismissed for want of equity, on tbe authority of Copis vs. Middleton, and other cases.

To the same effect are Gammon vs. Stone, 1 Vesey Sen. 339, Woffington vs. Sparks, 2 ib. 570. In the case last cited, Sir Thomas ClaRK said, the assignment would be of no use, “because the bond was given only for the payment of one sum of money, and when once satisfied to the obligee, is functus offioio. But it is said, though this is so in the case of a bond, a judgment would have been different: consider how this is. Suppose execution had been offered to be taken out upon that judgment: that if judgment was entered up after tbe money was paid, no doubt but that the King’s Bench would have set it aside. I mean a judgment entered up in consequence of a motion for liberty to enter up a judgment on a stale bond by the obligee after such time as he had received the money. But, take it the other way, that the money was not paid when the judgment was entered up, if execution were offered to be taken out upon the money’s being-paid afterward, it is allowed, relief might behad. I believe there might be an injunction (as it has been said) upon a bill here.”

See, also, Hodgson vs. Shaw, 3 Myl. & Keene 189, sustaining Copis vs. Middleton, and Armitage vs. Baldwin, 5 Beav., where a creditor sued his principal debtor and recovered a j udgment against him, and the bail in the action. The surety thereupon paid and satisfied to the creditor, the amount of the judgments, with interest and costs, and topk an assignment thereof. Lord LáNgdale, hi. R., held, that the judgment was discharged, and that the surety could not recover on the judgment against the bail; though it seems that a different doctrine had been formerly held by the English Courts of Equity, as in Parsons vs. Briddock, 2 Vern. 608. See 1 White & Tudor's Leading cases in Eq., by Hare & Wallace, 84.

So it was held in England, that where several judgments had been obtained by the creditor against the principal and surety, and the latter had paid the debt on the judgment against him, and then sought an assignment to be made of the judgment against the principal, the judgment was effectually extinguished by such payment, and the surety would not be permitted to avail himself of it against the principal. Dowliggin vs. Bourne, 2 Younge and Call Exch. Ca. 462, cited in 1 Story’s Eg., see. 499.

Story, (1 Equity, sec. 499,) after commenting upon the English doctrine, as held in the above and other cases, that the payment of a bond or judgment, extinguishes it, and that the surety, who makes the payment, is entitled to no assignment, &c. says : “The error of the contrary doctrine, if indeed, upon the principles of enlarged equity, any there be, seems to have arisen from confounding the right of the surety, on payment of the debt, to be substituted for the creditor, and to have an assignment of any independent collateral securities, with the supposed right to have the original debt assigned. Such independent collateral securities may well be required to be assigned by the creditor in favor of the surety: because, in many cases, the principal would not be entitled to have a re-transfer thereof from the surety, without paying him the sums advanced by him to the creditor, as a matter of equity between the parties. But the assignment of the debt itself, which had been already paid, would be a merenullity in egmty, as well as at lorn, since it could not have, in the hands of the surety, any subsisting obligation.”

Tet, he continues in the same section, “There are many cases in which a surety paying a debt, will be entitled to stand in the place of the creditor, or to obtain the full benefit of all the proceedings of the creditor against the principal. Thus, for example, if the creditor, in case of the bankruptcy of the principal, has proved his debt before the commissioners, and then the surety pays the debt, the latter will be entitled to the dividends declared on his estate, and the creditor will be held to be his trustee for this purpose. So the surety may compel the creditor to go in and prove his debt before the commissioners, &c., [so when a surety for the purchase money of land, pays the debt, he is subroga-ted to the vendor’s lien on the land for the unpaid purchase money]. In cases of this sort, courts of equity seem to be regulated by the same principles which govern their interference, in favor of sureties, to compel creditors to proceed in the first instance against the principal for the recovery of their debts.” (These quotations are made from the 6th Edition of the work).

It seems that some of the American courts have gone much further than the English courts in favor of subrogating the surety, paying the debt for the principal, to the rights and securities of the creditor.

Hare & Wallace, the American editors of White and Tudor’s Leading cases in Eguity, vol. 1, p. 87, sum up, as the result of a number of decisions in this country, thus: “As soon as the surety has paid the debt, an equity arises in his favor, to have all the securities original and collateral, which the creditor held against the person or property of the principal debtor, transferred to him, and to avail himself of them as fully, as the creditor could have dono; for the purpose of obtaining indemnity from the principal, he is considered as at once subrogated to all the rights, remedies and securities of the creditor, as substituted in the place of the creditor, and entitled to enforce all liens, priorities and means of payment, as against the principal, and to have the benefit even of securities that were given without his knowledge.” In support of this summary, they cited, Lidderdale vs. Robinson, 2 Brockenborough 160, 167; same case, 12 Wheat. 594, 596; McMahon vs. Fawcett, 2 Randolph 514, 530; Hampton vs. Levy, 1 Mccord’s Chancery 107, 117; Perkins et al. vs. Kershaw et al., 1 Hill’s Ch., 344, 351; Railroad Co. et al. vs. Clayhorn et al., 1 Speer’s Equity 547, 561; Loud vs. Sergeant, 1 Edwards Ch. 164, 168; Lathrop & Dale’s Appeal, 1 Barr 512, 517; Atwood vs. Vincent, 17 Conn. 576, 583; Hardcastle vs. Commercial Bank of Delaware, 1 Harrington 374, 377, and note; Burk et al. vs. Chrisman, et al., 3 B. Monroe 50; Cullom vs. Emanuel et al., 1 Ala. 23, 28; Brown vs. Lang et al., 4 ib. 50; Commercial Bank of Lake Erie vs. Western Bank, et al., 11 Ohio 444, 449; Miller vs. Woodward & Thornton admr., 8 Missouri 169, 175; Hoyes vs. Ward, 4 Johnson’s Ch. R. 123, 130.

These were cases where the surety paying the debt for the principal, sought in equity to be subrogated to the securities, liens, &c., of the creditor, and so far as we have been able to obtain access to the books containing the cases, they sustain, to a greater or less degree, the above summary presenting the question in various phases, according to the particular facts of each case.

The same editors say, {on page 88, vol. 1,) “Payment by one who stands in the relation of a security, although it may extinguish the remedy or discharge the security, as respects the creditor, has not that effect as between the principal debtor and the surety. As between them, it is in the nature of a purchase by the surety from the creditor; it operates an assignment in equity of the debt, and of all legal proceedings upon it, and gives a right in equity, to call for an assignment of all securities, and in favor of the surety, the debt and all its obligations and incidents are considered as still subsisting.”

In some of these cases, it has been held, that where a judgment constitutes a lien upon the property of the principal debtor, and the surety pays the debt, though as between the principal debtor and creditor, the judgment is extinguished at law; yet, as between the surety and the principal debtor, in equity, it is regarded as still in force, and the surety may, in a court of equity, reimburse himself out of tlxe property on which the judgment constituted a lien, in preference to junior incumbrances.

The question being measurably a new one in this court, the above authorities have been cited to show, to some extent, the state of the decisions on this interesting subject in England, as well as in our own country. It is sufficient for us, however, to decide the case before us in the aspect in which it is presented, without sanctioning or disapproving the abstract general rules above quoted.

In view of all the authorities, which we have been able to examine, we are of the opinion that when "Walters paid to Watkins the original judgment, it was extinguished at law, as between Watkins, in whose favor tlie judgment was obtained, and Johnston and Walters the defendants therein.

That if the judgment upon the garnishment against Field had been finally rendered at the time of the payment of the original judgment, it would also have been extinguished at law, so far as Watkins was concerned, being but an incident to the original judgment, and Watkins being entitled to but one satisfaction.

That Walters having paid the original judgment before final judgment was rendered upon the garnishment, had Field known that fact, and interposed it as a defence by an amended answer, the court of law could have rendered no judgment againt him in favor of Watkins for the debt which he owed to Johnston.

That on payment of the original judgment, Watkins having failed to enter satisfaction thereof, in the manner prescribed by the statute, and Field being thereby deprived of the legal mode of deriving a knowledge of such satisfaction, and having no actual notice of the payment in any other manner, and judgment having been rendered against him upon the garnishment after such payment, he had sufficient grounds to resort to a court of equity, to enjoin the execution of the judgment, so far as Watkins was concerned.

But though the payment of the original judgment by Walters extinguished it, and extinguished the right of Watkins to proceed upon and enforce the garnishment against Field, at law, yet such payment did not extinguish the debt which Field owed to Johnston, which was a different debt from the one that Walters paid to Watkins.

This being the case, we are inclined to the opinion that had Field filed his bill to be relieved against the judgment, exclusively upon the ground of the payment of the original judgment by Walters, having made Walters a party, the court of equity would hardly have granted him such relief, without his paying to Walters the debt which he owed to Johnston, in the absence of any showing on his part of an equitable right to withhold such payment, on the grounds, that he who seeks equity, must do equity.

Or, in the case made by Field, in his original and amended bill, had "Walters filed a cross-bill and shown that he had a better right in equity to the fund in the hands of Field, than Field had to retain it, in consequence of his own secnrityship for Johnston, the court might well have decreed, upon the cross-bill, that Field pay the money to Walters. But in this case, the court below granted to Field the relief which he prayed against "Watkins — a perpetual injunction against his executing the judgment' — and Watkins took no appeal from the decree. Walters having in no cross-bill, no decree was, or could have been rendered in his favor.

4. There was no decree against the executor of Walters in the court below but for costs. Suppose we were to reverse the decree, as the counsel for appellant thinks should be done, of what avail would that be to the executor of Walters? The execution of the judgment against Field by Watkins, in whose favor it stands upon the record of the law court, is perpetually injoined. At law, as a judgment in favor of Watkins, it is extinguished by the payment of the original judgment, to which it was but an incident. If execution is taken out upon it, it must be done in the name of Watkins, whose hands are tied up by the injunction. Can the executor of Walters, holding an equitable right to collect the money of Field on the doctrine of subrogation, without any decree of a court of chancery to enable him to enforce such right, put into motion an execution in the name of Watkins, who is enjoined from moving in the matter, upon a judgment enjoined, and extinguished at law, for the purpose of coercing satisfaction out of the property of Field ? We think not. It seems to us that the doctrine of subrogation belongs to the courts of equity, and that such rights of sureties must be enforced by the decrees of these courts, upon proper cases made for their interposition, by parties claiming such rights.

5. But .on the other hand, it may be supposed that the appeal of "Walter’s executor brought up the entire decree of the court below, and that the whole case-is open for review. Walters and Field were both the securities of Johnston, an insolvent principal. At the time Walters paid the judgment of Watkins, the Neal Estate Bank had obtained a judgment against Field, as the surety of Johnston, for an amount largely over what Field owed him. After Watkins ceased to have any claim upon Field for the amount which he had garnisheed in his hands, Johnston could not himself have coerced Field to pay to him the debt without indemnifying Field against loss as his security. Abbey vs. Van Campen, 1 Freemam's Ch. R. 273. Could Walters do more % Regarding Walters and Field as having equal claims to be protected in equity from loss, surely the court would not compel Field to surrender up to Walters an indemnity, which he held in his own hands. The Bank obtained her judgment against Field before Watkins took out the garnishment, and his claim to indemnity in equity, was hardly cut-off by the proceedings at law in the garnishment suit, where he was not permitted to interpose an equitable defence.

Tlpon any view of the case, we think the decree of the court below, should be affirmed.

Absent Mr. Justice WalKEr.


source: Caselaw Access Project

author: Mr. Chief Justice ENGlish

license: Public Domain

text:
    Sandefur ex. vs. Mattingley.
    where but two witnesses are examined as to a fact, and they disagree in their statements, the finding of the court sitting as a jury, one way or the other, is conclusive, there being no motion for a new trial.
    Where one receives a note from another, to be used in some purpose of his own if it will answer the purpose, and if not to return it, and he loses it, the inconvenience resulting to the owner of the note from its loss, is a sufficient consideration to support a promise, made by the party who thus obtains and loses it, to pay the amount of it to the owner.
    Where one receives of another a note for collection, and is afterwards called upon by the owner of the note to know if he has collected it, and replies that he has not, but has lost it, and would pay the amount of it himself; if he should not find it — the owner of the note, after the lapse of a reasonable time, may bring an action against the party making such promise, without further demand, and if further demand were necessary, the party making the promise having died, a demand upon his executor, in legal form, is sufficient.
    Where a party is thus sued for the amount of the note so lost by him, he could not require strict proof of its identity, having by his own negligence, placed it out of the power of the plaintiff to identify it, by losing it.
    The claim being based upon the promise of the party to return the note if it did not answer his purpose, the loss of it by him, his failure to return it, and his promise to pay the amount of it, the plaintiff was not required to prove that the note could have been collected by proper diligence, as in eases where a note is placed in the hands of an agent for collection, and the suit is simply for the failure to collect.

      Appeal from, the GvrovAt Cowrt of Hempstead, Gounty.

    Hon. SheltoN WatsoN, Circuit Judge.
    CueraN & Gallagher, for tbe appellant.
    Tbe note was deposited by tbe appellee with deceased for collection, and there is no proof that be ever collected tbe money, or failed to do so, through gross negligence or mismanagement. No proof was introduced showing that any demand had ever been made of deceased for the same, either note or money. See Ashley c& Bmgo vs. Taylor <& Southmaycl, 3 Ark. 1$; McLain et al. vs. Cum-mins, 3 Ark. d02; Taylor vs. Speers, 1 Eng. 38 ; Warner vs. Bridges, il>. 385.
    There was no proof that the note was of any value, or that it was a subsisting debt, and that maker was solvent. T’ermmgton's ew. vs. Yell, 6 Eng. 215.
    There is no proof tending to the identification of the note; no witness knows who was the maker of it, nor in reality the amount of it.
    Puce & CuMMiNS, for appellee.
   Mr. Chief Justice ENGlish

delivered the opinion of the Court.

At the January Term, 1854, of the Probate Court of Hemp-stead county, James Mattingley filed for allowance and classification, against the estate of James IT. Dunn, a claim as follows:

“James IT. DuNN,
To James Mattingley, Dr.,
May, 1842.
To note on Thomas C. Porter, for sixty-five dollars, had and received by you, and due when received. $65 00.”

To which was attached the affidavit of Mattingley, made before a justice of the peace, 10th of January, 1854, that nothing had been paid or delivered towards the satisfaction of the demand, and that the sum of $65, with interest, was justly due.

TJpon which was an indorsement of John B. Sandefur, as executor of Dunn, dated 10th January, 1854, showing that the claim had been presented to him for allowance and rejected.

The allowance of the claim was contested in the Probate Court by the executor, and the judge decided against the claimant, on the following testimony:

Shaw testified, that he was present when Mattingley handed a note to the deceased, Dunn, who took the note, and said it would answer his purpose, or words to that effect. Mattingley said to Dunn he thought the note was good, and Dunn said if it did not answer his purpose, he would return it. Witness did not remember the amount of the note — he read it — something was said about interest on the note, but no calculation was made.

Witness could not recollect all that was said between the parties, nor the amount of the note, nor to whom it was made.

Heecd testified, that he heard Mattingley ask Dunn if he had collected the note. Dunn said he had not collected it, and had looked for the note, a few days after Mattingley handed it to him, but could not find it. Said he wanted to write below. Dunn looked for the note on the day witness saw him, and said he could not find it — Dunn then said, if he could not find the note, Mattingly should not be the loser, he would pay the note himself. Witness did not know the amount of the note — as well as he recollected, both Dunn and Mattingley said the note was for sixty-five dollars. Witness did not know by whom it was given, nor whether it was due. Mattingley said to Dunn, it was hard that he should lose the note — Dunn then said he hoped that neither of them would lose the note, but if either of them lost it, he, Dunn, wogld lose it himself. Witness understood from both parties, the note was placed in Dunn’s hands for collection.

Mattingley took a bill of exceptions, setting out the evidence, &c., and appealed to the Circuit Court of Hempstead county, where the judgment of the Probate court was reversed, a trial de novo awarded, and the cause submitted to the court sitting as a jury, upon the above testimony and finding, and judgment in favor of Mattingley for the amount of the claim, with interest, &c.

The executor of Dunn took a bill of exceptions, setting out the evidence, and stating that “this being all the evidence intro* duced by the parties on tbe trial anew in tliis court, said appellant thereupon moved, and prayed the court, to decide and declare that the law, arising upon the testimony aforesaid, was for the appellee, and that said apjoellant was not entitled to recover in this suit, but the court refused so to declare, and decided that the law arising ujjon said facts, well entitled appellant to recover, to which opinion and decision of the court, said appellee excepted,” t%c.

The executor of Dunn appealed to this court:

1. It is insisted for the appellant, that the note was placed in the hands of Dunn for collection, and that there was no proof that he had collected the money, or failed to do so by gross negligence or mismanagement.

From the testimony of one of the witnesses, it maybe inferred, that Dunn received the note of Mattingley to be used in some purpose of his own, and if it did not answer that purpose, to return it. The other witness understood, from the parties, that Dunn received it for collection. What the truth of the matter was, we cannot tell; but, this was a fact to be passed upon by the court below, sitting as a jury. And there being no motion for a new trial, the finding of the court, as to matters of fact, is not to be reviewed. If the court below believed the statement of the first witness, that Dunn received the note to use it, for his own benefit, and to return it, if it did not answer his purpose, the inconvenience to Mattingley, resulting from the loss of it, was a sufficient consideration for the promise made by Dunn to pay the amount of it to Mattingley, as proven by the second witness.

2. It is furthermore insisted for appellant, that Dunn received the note in the character of a bailee, and that his estate could not be made liable, without proof of a demand, &c.

The second witness testifies, that sometime after Dunn had received the note, Mattingley called upon him to know if he had collected it. Dunn said he had not, but had lost it, and if lie could not find it, he would pay the amount of it to Matting-ley.

It seems to us, that if Dunn had continued in life, that no further demand would have been necessary on the part of Matting-ley, but that if, after waiting a reasonable time, Dunn had not returned the note to him, he might well have sued him upon his promise, for the amount of it. But if a further demand was necessary, what other demand could Mattingley have made than he did? He probated his claim for the note, in due form, and presented it to the executor of Dunn, after his death, for allowance, and it was rej ected. lie could make no d em an d pia¿h c} .¿Lcpd, and he made his demand upon the executor, in Jae out by law. \ ^ ^ 1

3. The third point made for appellant, is tlm|J^-not identify the note. $ t Mattingley sufficiently identifies the note iimhj$t Jifcfel-lüSh®' name of the maker, and the amount of it also stated that it was due when Dunn received it. Th^account is made out for the amount of the note as of May, 1852.

The witness, who was present when the note was delivered to Dunn, could not recollect the amount of the note, to whom payable, or when due. The second witness stated the amount of the note. Whose fault was it that Mattingley was unable to identify the note more particularly upon the trial? The fault of Dunn, most assuredly, in whose hands the note had been placed, and who had lost it.

It was, by his act, that Mattingley was deprived of the means of identifying the note, and he, nor his executor, could take advantage of this. The amount of the note was proven, and this was the matter in controversy.

4. Had the note been placed in the hands of Dunn simply for collection, and the action been brought against him, or his executor, for failing to collect it, it might have been necessary for Mat-tingley to have proven that the money could have been collected by the use of such diligence as was incumbent upon Dunn, from the nature of bis undertaking But tbe claim in tbis case is based upon tbe promise of Dunn to return tbe note, if it did not answer bis purpose, tbe loss of it by bim, tbe consequent failure to return it, and bis promise to pay tbe amount of it.

Upon tbe facts proven, we tbink tbe law warranted tbe court below in rendering judgment for tbe appellee, and tbe judgment is affirmed.

Absent, Mr Justice "Walker.


author: Mr. Chief Justice Ekglish

text:
    Wheat at al. vs. Moss et al. use, &c.
    It is a general rule (but with exceptions, Watson el dl. vs. Palmer et al., 6 Ark. Rep. 501,) that, where a general replication is put in to an answer in chancery, all the allegations, which are responsive to the bill, shall be taken as true, unless disproved by two witnesses, or by one witness with pregnant circumstances: and, also, that every allegation, not directly responsive to the bill, but stating matter in avoidance, or in bar of the plaintiff’s claim, must, under such circumstances, be fully proved, or it will have no effect.
    The charges in a bill by a judgment creditor of one of the defendants, to subject certain real estate to the payment of his judgment, were, thaCsuch defendant had purchased the real estate with his own money, but had caused the title to be made to his co-defendant to delay and defraud his creditors: The answer stated that he did not purchase with his own' money, but with money in his hands as administrator, and that the deed was executed to the co-defendant, to hold in secret trust for the benefit of the heirs: Held, That so much of the answer was responsive to the bill.

      But the answer proceeding further to state that, at the time of the purchase, the co-defendant advanced a portion of the money, which she borrowed, and executed a mortgage on the property to secure the payment, and afterwards borrowed money to pay off such mortgage, and executed a second mortgage to secure the payment thereof: Held, that this was a distinct transaction, not responsive to the bill, but new matter in avoidance.
    An administrator is not authorized to invest in real estate or otherwise, the balance in his hands, as such; but should distribute it to the representatives of the intestate, if known; and, if unknown, put it out at interest, under the direction of the Probate Court, until called upon to pay it over.
    Where an administrator purchases property with money in his hands, due to the estate of his intestate, and causes the title to be made to another- — there being a judgment and execution against him at the time, and no property of his own out of which to satisfy the judgment — the court may well presume, as between the judgment creditor and the parties to the purchase, that the administrator had converted the assets to his own use; that the purchase was made for his individual benefit, and that the transaction was intendod to delay his creditors.
    A prior incumbrancer may properly be made a party to a bill to subject real estate to sale; but he is not a necessary party.

      Appeal from Hempstead CirevAt Oourt m Chancery.

    Hon. SixeltoN Watson, Circuit Judge.
    S. H. & B. F. Hempstead, for appellants.
    1. Where a general replication is put in to an answer, and the parties proceed to a hearing, the statements in the answer responsive to the bill, are to be taken as true, unless disproved by two witnesses, or one witness and strong corroborating circumstances. 1 Gill c& J. 270/ 3 Gill & J. 425/ 2 Blackf. 324/ 1 Paige 239/ 3 Wend. 532/ 4 Encj. 550.
    The bill charges fraud, and sought discovery, and the answer was conclusive. 1 Bill 253/ 1 Dap 156/ 1 Wend. 583/ 3 Paige 557.
    In this case, the answer denies the fraud alleged; and there was no proof in support of the bill. Fraud may be proved by circumstances, but it is not to be presumed. 4 Eng. 485.
    2. Nance, a mortgagee, ought to have been made a party; and advantage may be taken of that at the hearing or on error. 3 Arle. 364/ Cooper's Eq. PI., 33, 185/ Mitf. Eq. Pleading 180/ 6 Vesey Jr. 573.
    CuRRAN & Gallag-hbe, contra.
    The defendants below admit that the lots were paid for with money furnished by the judgment debtor, Samuel C. "Wheat, but set up in avoidance that it was in fact held by him as administrator of McCormick’s estate. Where a party admits a fact, and insists on a distinct fact, by way of avoidance, he must prove it. Hart vs. Ten Eyck 2 John. Oh. M. 65, and the oases there oited; Roberts vs. Totten, 13 Ark. Rep. 609.
    Another strong circumstance showing that the property was held in trust for Samuel C. Wheat, is that the answer states, that when Salome B. Wheat borrowed the money from Nance to pay Gibson, she at the same time assumed, and included in the mortgage to Nance, a debt due from Samuel C. Wheat to Nance.
    If it had been proven that the money belonged to Samuel C. Wheat, as administrator, the heirs, by proving that their money had been used in the purchase, might, as against the adeninistrator, enforce their lien on the property; but could they do so as against creditors and third persons ? If they could, they are not bound to do so — they could proceed against the administrator on his bond.
    True, the defendants deny fraud; but they, at the same time, admit such facts as show that the property is liable for the debts of Samuel C. Wheat.
    Nance might have been made a party, but was not a necessary party. It is not necessary to make prior incumbrancers parties— the only effect of omitting them, is that they are bound by the decree. Rose vs. Page, 2 Sim. Rep. 471/ Pelctberevs. Harwood, 2 Swcmst. Rep. 144/ Wilson vs. Trustees of Real Estate Bank, 6 Ehig. Rep. 44.
   Mr. Chief Justice Ekglish

delivered the opinion of the Court.

In October, 1851, William Moss, and Matthew Moss, (for the use of tlie latter,) filed a bill on tbe chancery side of the Hemp-stead Circuit Court, against Samuel C. Wheat, and Salome B. Wheat, alleging, in substance, as follows :

That, in June, 1845, complainants obtained a judgment on the law side of said court, against Samuel C. Wheat, for $332 74 debt, §13 68 damages, and for costs, &c.; the debt bearing ten per cent, interest. On the 11th August, 1845, an execution -was issued upon the judgment, and a tract of land levied upon and sold for one dollar, and the writ returned unsatisfied as to the residue of the debt, &c. On the 1st April, 1846, another fi. fa. was issued, levied upon lands, which were sold for $10, and returned unsatisfied as to the residue, &c. On the 9th June, 1847, another execution issued, levied upon two lots in the town of Washington, sold for $15, and returned unsatisfied as to residue, &c. Another fi. fa. issued the 20th September, 1851, which was returned, no property found. A transcript of the judgment, several executions and returns, is exhibited.

That about the 1st of March, 1849, Samuel C. Wheat purchased of one James Gibson, lots one and two, in block thirty-one, situate in the town of Washington, of the value of $1200, being, at the time, indebted to complainants as aforesaid. That he paid for said lots out of his own individual money; but intending to hinder, delay, cheat, and defraud complainants, combining and confederating with Salome 13. Wheat, caused Gibson and wife to convey the lots, by deed bearing date 1st March, 1849, to the said Salome B. Wheat, who since held the title thereto.

That the conveyance of the lots to Salome B. Wheat, was merely voluntary on the part of Samuel C. Wheat, and without any valuable consideration whatever, passing from her to him; and that she held the title to the lots, in trust, and as a trustee for complainants, as creditors of said Samuel C. Wheat.

Pray&r, for decree subjecting the lots to the satisfaction of the amount remaining due upon the judgment at law.

The defendants filed a joint and several answer. They admit the recovery of the judgment, and the issuance of executions thereon as charged in the bill. They also admit that Samuel C. Wheat purchased the lots of Gibson, as in the bill alleged, but deny that said lots wore purchased with the means of the said Samuel 0., and for the purposes as in the bill charged. But, on the contrary, they aver the facts to be, that said Samuel 0., at the time the purchase was made, was, and still is acting as the administrator of one Terence McCormick, late of said county of Hempstead. That there had come to his hands, as such administrator, the sum of $500 belonging to said estate. That the price agreed upon with Gibson, for the lots, was $700, and Salome B. being doubtful of the propriety of said Samuel C., appropriating said sum of $500, belonging to the estate of McCormick, she and he consulted in regard to it, when it was finally agreed and understood between them, that if the purchase was made, the conveyance should be taken to her, as trustee, to hold in secret trust for the use and benefit of the heirs and distributees of McCormick. That on this understanding, Samuel C. closed the trade with Gibson for the lots, paying him the $500 belonging to the estate of McCormick, and Gibson and wife conveyed them to said Salome B., as alleged in the bill. Whereupon, she executed to Gibson her writing obligatory for $200, balance of the purchase money, payable at twelve months, and made him a mortgage back upon the lots to secure its payment, which was duly acknowledged and recorded.

Salome B. further answers, that on the maturity of the mortgage debt, she was unable to procure the money to pay it, and Gibson pressing her for payment, and being about to proceed for foreclosure and sale of the lots, she caused application to be made to Ezekial Nance for money to discharge the mortgage. That lie agreed to let her have the means, provided she would assume the payment of a small sum due him, from said Samuel C. Wheat, and then secure the payment of the whole, by a mortgage upon the lots. That finding that she could do no better, rather than have the lots sold to pay Gibson’s debt, she accepted the terms proposed by Nance, who furnished her with the money to pay Gibson, and lie entered satisfaction upon the record of his mortgage. That said Samuel 0. Wheat was indebted to Nance in about the sum of $150 00, which, added to the sum advanced by him, to discharge Gibson’s mortgage, made $375 00, for which said Salome B. Wheat, on the 1st day of May, 1850, executed to Nance, her obligation, payable on the 1st day of January, 1851, with interest, at ten per cent.; and, at the same time, gave him a mortgage upon the lots in question to secure the debt, upon which nothing had been paid, and the mortgage continued in full force.

Respondents further absolutely deny that said Samuel O. paid for said lots out of his own individual means, and had the same conveyed to said Salome B., to hinder and delay his creditors, but they aver the truth to be, that the lots were paid for, in part, as before stated, and that the sum received from Nance remained unpaid. They further deny that said Salome B. held, or ever held said lots, in secret trust, for the use and benefit of said Samuel O., or subject to his control or disposal; or that she ever held them in trust, as a trustee, for the use and benefit of the complainants, as creditors of said Samuel C. But Salome B. avers, that if she held in trust for any one, it was for the heirs and distributees of the estate of McCormick, and no other person, or persons: first paying, however, the debt due to Nance, and secured by the said mortgage to him. The answer is verified by the affidavits of both defendants.

At the May term, 1852, the cause was submitted for hearing, and the court being of the opinion that Nance had an interest in the subject matter of the suit, ordered the complainants to amend their bill, so as to make him a party, and serve him with process, returnable to the next term. The defendants objected to Nance being made a party, after the cause had been submitted. At the May term, 1853, it appearing to the court that complainants had failed to amend the bill so as to make Nance a party, in accordance with the order previously made, it was, on motion, and by consent, decreed that the order be vacated, &c., and that the cause proceed to final bearing, between tbe original parties to tbe bill.

The cause was accordingly submitted upon bill, answer, and replication, and a transcript of the Probate Oonrt record of the settlement of the estate of McCormick by Samuel C. Wheat, as administrator, offered as evidence by complainants; and copies of the mortgages executed to G-ibson and Nance, by Salome B. Wheat, offered as evidence by the defendants.

The transcript from the Probate Court record, shows that Samuel C. Wheat made application for letters upon the estate of McCormick, on the 10th of February, 1849, stating in an affidavit made by him at the time, that some three years prior thereto, the deceased had a brother living in the State of Maryland, whose name he did not know, nor whether he was yet alive, nor where he resided.

The transcript also contains an account filed by Samuel C. Wheat, as administrator, in the Probate Court, perhaps about the 10th of October, 1851, (judging from the time to which interest on some of the items is counted) for settlement; in which he charges himself with assets amounting to $813 44, deducts $81 34 for his commissions, and exhibits in his hands a balance of $732 10, of which he states $599 10 is in cash, and the residue in an uncollected note. lie also states, that but one claim for $18 50, had been established against the estate, “and the estate not being indebted, as appears from the foregoing statement, the amount now on hand is ready, and subject to the order of this honorable court.”

The mortgages to Gibson and Nance upon the lots, bear date, and appear to have been made to secure the sums, as stated in tiie answer of the defendants. TJpon the pleadings and evidence, the court below was of the opinion, and found that there remained due and unpaid, upon the complainants’ judgment at law against Samuel C. Wheat, $605 84; that he purchased the lots in question on the first day of March, 1849, and paid for them out of his own individual money, and procured them to be conveyed to defendant, Salome B. Wheat, thereby intending to hinder, delay, and defraud bis creditors; and that they were conveyed to her without any good or valuable consideration, either in law or equity, and that the same was merely voluntary on the part of said Samuel 0., and that the lots and premises ought to be subject to the debt of the complainants. It was, therefore, decreed by the court, that the defendants pay to the complainants, the amount of their said judgment, with costs, and that in default thereof, the complainants should have execution upon the decree, and levy upon the lots, &c., for satisfaction, &c. The defendants appealed from the decree to this court.

1. It is insisted by the appellants, that the matters set up in the answer, are responsive to the allegations of the bill, and should have been disproven by two witnesses, or one with strong corroborating circumstances ; the answer being under oath.

The appellees submit, that appellants admitted in the answer, that the money with which the lots were purchased of Gibson, was furnished by Samuel 0. Wheat, and that the additional statement that he used in the purchase, a fund held by him as administrator of McCormick’s estate, was matter in avoidance, and to be proven by appellants.

The office of the answer, like a plea in a suit at law, is to deny and put in issue, the allegations of the bill, or to confess and avoid them.

It is a general rule, that where a general replication is put in, and the parties proceed to a hearing, all the allegations of the answer which are responsive to the bill, shall be taken as true, unless they are disproven by two witnesses, or by one witness, with pregnant circumstances. It is also a general rule, that every allegation of the answer, which is not directly responsive to the bill, but sets forth matter in avoidance, or in bar of the plaintiff’s claim, is denied by the general replication, and must be fully proved, or it will have no effect. Hagthorp use et al. vs. Hooks ad, 1 Gill & Johnson’s Rep. 280. The first of the above general rules, is subject, of course, to such exceptions as are referred to by this court in Watson et al. vs. Palmer et al., 5 Ark Rep. 501.

The following quotation from the opinion of the court in Green vs. Vardiman, 2 Blackf. Rep. 328, is applicable to the question before us: “It is a general rule, that an answer is to be taken, as true, unless disproved by two witnesses, or by one witness and' corroborating circumstances; and when the term answer is taken in its strictest sense, we believe there are no exceptions to this rule: but an answer in this sense, is not what a defendant may say in his own behalf, but what he says directly responsive to the charges in the bill. Matters, however, that are set up in avoidance, that are not responsive to the bill, when in issue, must be proved by the defendant, for if the answer admits a fact, but insists on a distinct fact in avoidance, the defendant must prove this fact. Hart vs. Ten Eyck, 2 John. Ch. Rep. 62. On this part of the subject, there are many nice distinctions and cases that it is difficult to reconcile. An executor, in his answer to a bill by the creditors for an account of the personal estate, stated that he had received £1100 ; that in making up his accounts, he gave his bond for £1000, and that the testator gave him the other £100 for his trouble and pains in his business. It was held, that this answer did not discharge the defendant of the £100; the gift by the testator being a fact distinct from what he was required to ansvoer, and so in avoidance of the demand against-him. Gilb. Ev. 57; S. C., cited also in Bull. N. P. 237, and in 1 Stark Ev. 292. But it was held, that if it had been one fact, as that the testator gave him £100, it ought to have been allowed, lb. So in Ridgeway vs. Darwin, 7 Ves. 404, an executor charged by his answer, is not permitted to discharge himself by affidavits of payment made to the testator in his lifetime. So, a party charging himself in a schedule to his answer, cannot discharge himself in another schedule showing disbursements. Boardman vs. Jackson, 2 Ball & Beat. 385. And a party charged by his answer, cannot discharge himself by it, unless the whole is stated as one transaction; as that, on ,a particular day, he received a sum and paid it oyer; not tbat on a particular day be received a sum, and on a subsequent day be paid it over. Thompson vs. Lamb, 7 Ves. 587. Also, to a bill by the assignee of a note, stating tbat lie gave a valuable consideration for the note, and requiring an answer to the whole bill, the answer stating tbat the note was signed for a usurious consideration, requires proof. Green vs. Hart, 1 John. Rep. 580. There are many similar cases which seem to render it doubtful what matters in an answer require proof, and what are supported by the answer itself: and those cases that turn on the unity of thfe transaction, which creates a charge and discharge, are peculiarly perplexing. But we cannot conceive that any of those cases are intended as exceptions to the general rule: that the answer, so far as it is strictly such, being directly responsive to the bill, is to be taken as true. For, when the bill requires a disclosure of such matters as may discharge the defendant, he is compelled to answer and disclose those matters; and if the disclosure amounts to a discharge, he is entitled to the full benefit of it. But although the bill might not require a disclosure of the matters set up in avoidance, yet if the charge and discharge arise from one mdivisible transaction, and the answer sets forth that transaction, the defendant shall have the full benefit of the discharge. But we conceive the principal difficulty in all these cases turns on the question, what facts in the answer are responsive to the bill, and what are set up in avoidance. Such was the point on which the case of Green vs. Hart, and some others, evidently turned.”

The learned judge, delivering the opinion of the court, concludes upon this review of authorities, by stating the following as a general rule : “¥e are, therefore, of opinion, that where the answer is confined to such facts as are necessarily required by the bill, and those that are inseparably connected with them, forming a part of the same transaction, the answer is to be taken as true, when it discharges, as well as when it charges the de-dendant.”

In the case of Whiting & Slark, vs. Beebe et al., 7 Eng. R. 588, this court, by Mr. Justice Walker, said: “ Where an answer admits the receipt of money at one time, and sets up that at another time, and in another adjustment, it was re-paid, the repayment is the affirmance of a new fact, and must be proved.” See, also, on the same subject, Roberts vs. Totten, 13 Ark. R. 609.

Testing the case at bar by the general rules above stated, and which appear to be well sustained by the authorities, there is but little difficulty in arriving at a correct result. The substance of the bill is, that Samuel C. Wheat being a judgment debtor of appellees, purchased the lots of Gibson, with his own money, and caused them to be conveyed to Salome B. Wheat, to hold in secret trust for his benefit, in fraud of the rights of his creditors.

The answer admits that Samuel C. was indebted to appellees; that he purchased the lots of Gibson, and caused them to be conveyed to Salome B., as charged in the bill, but denies that they were purchased with the individual means of Samuel C., and, on the contrary, states, that the price of the lots was $700; that Samuel G. used $500 in the purchase of them, which he had in his hands, as administrator of McCormick; that Salome B. executed her obligation to Gibson for the balance of the purchase money; the conveyance urns taken to her, and she gave a mortgage back to secure to Gibson the payment of the obligation; that it was agreed between her and Samuel C., that she was to hold the lots in secret trust, for the benefit of McCormick’s heirs, and that there was no design in the transaction to hinder, delay, or defraud the creditors of Samuel C. Wheat.

Beyond question, this portion of the answer is directly responsive to the bill. It would be surely unfair to take as true the naked admission, that the lots were purchased by Samuel C. of Gibson, and conveyed to Salome B., and treat as matter in avoidance the further statement made directly in connection with the admission, and in reference to the same transaction, the denial that they were paid for out of his individual means, and the averment of the truth to be, that the cash payment was made with money held by him in trust, &e., and that there was a deferred payment, secured by mortgage, &e.

The subsequent transaction with Nance, the borrowing money of him upon a new mortgage to discharge Gibson’s incumbrance, was a separate and distinct transaction from the original purchase enquired of by the bill, occurring at a different time; and so much of the answer as relates to this transaction with Nance, was not responsive to the allegations of the bill, but new matter in avoidance.

But though an answer may be responsive to the bill, yet it may, in detailing the circumstances of the transaction charged and denied to be fraudulent, overcome and destroy the force and effect of its own denial. Barraque and wife vs. Siter, Price & Co., 4 Eng. R. 551; Cunningham vs. T. & G. Freeborn, 3 Paige Ch. R. 557.

The answer of the appellants, in detailing the circumstances of the transaction in question, presented several features which could hardly have failed to strike the attention of the chancellor; and which, perhaps, materially influenced his decision. The bill charges, the exhibits prove, and the answer admits, that at the time the lots were purchased of Gibson, and for some time before, the appellees had a judgment against Samuel C. Wheat, which they had been making almost fruitless efforts to satisfy by execution. The answer states that $500 used in the purchase of the lots, was not the money of Samuel C. Wheat, but that it was a trust fund which he held as an administrator. Taking this to be true, and how does he stand upon the record, and with what claim to the favor and protection of the chancellor, does he make the admission ? He took an oath, faithfully and according to law, to administer and pay over the assets of the estate of McCormick, which might come into his hands or possession. Big., ch. 4, see. 12. The first duty of an administrator is to collect the assets, and pay the debts of his intestate, and then to distribute the residue- (deducting expenses) to the heirs of the deceased. The debts are paid, and the estate distributed under the direetion of the Probate Court. The estate of McCormick not being indebted, according to the account current filed in the Probate Court by Samuel C Wheat, as his administrator, it was then his duty, under the order of the court, to distribute the money shown to be in his hands, to the legal representives of the intestate; and if they were non-residents, unknown, incompetent to receive and give acquittance for it, or did not appear and claim it, &c., it was the duty of the administrator, to put the money at interest, under the sanction of the court, and so employ it for the benefit of the persons entitled to it, until such time as he was legally called upon to pay it over. He had no right to use the money for his own private purposes, and the law gave him no authority to vest it in town lots, or other speculations, for the benefit of the distributees, or for his own use or profit. Digest, eh. 4, see. 141. Any such appropriation was a conversion of it to his own purposes, and rendered him and his securities liable to the dis-tributees for the money, with interest. They would not be bound to receive from him, or resort to, the property bought with the money, though they might do so.

But it is stated in the answer, that Salome B. being doubtful of the propriety of the appropriation by Samuel C. of the $500 held’by him as administrator, it was agreed and understood between them, that the lots should be conveyed to her as trustee, to be held by her in secret trust, for the benefit of the heirs of Me-Gormieh. It may be asked, in all fairness, if the parties really, and in good faith, intended to vest the money in the purchase of the lots for the use and benefit of the heirs of McCormick, and not for the private advantage of Samuel C. Wheat, why this pui'-pose should be kept secret ? Why was Salome B. to hold the lots in secret trust ? Why not make an open transaction of it, and recite in the deed from Gibson to her, that the money Was furnished by the administrator, and.that the property was conveyed to her in trust for the benefit of the persons, whose money was used in the purchase ?

Again, it may be remarked, that the answer shows that, by tbe mortgage to Nance, the lots were incumbered with a private debt of $150, due from Samuel C. Wheat to Nance. Moreover, the lots were purchased oi Gibson in March, 1849. Some time after this, Samuel 0. Wheat, it appears, filed his account for settlement with the Probate Court, as administrator of McCormick, in which he stated that the balance in his hands was “ready cmd subject to the order of the cowrt.” No statement was made to the court that the fund had been vested in town lots, which were conveyed to Salome B. Wheat, for the benefit of the heirs.

Talcing into consideration all the statements made in the answer, in connection with the fact that Samuel C. Wheat -was a judgment debtor of appellees at the time, and that they were seeking satisfaction by executions, and the conclusion follows with a certainty, admitting of no reasonable doubt, that he converted a trust fund to his private purposes, and that the real object, on his part at least, of covering up the property in the name of Salome B. Wheat, was to shield it from execution by liis creditors.

Whatever may be the rights of the heirs of McCormick to resort to property, so purchased with money coming to them by their trustee, instead of proceeding upon his bond, they are not before us now — they are not parties to this contest, and we cannot know that they ever will claim to resort to the property. As between appellants and appellees, we think the court below, under all the facts of the case, was warranted in treating the lots as the private property of Samuel C., and subject to the satisfaction of appellees’ judgment.

2. Nance was not a necessary party to the bill, though it would have been proper to have made him a defendant, he appearing to be a prior incumbrancer. But not being a party, the decree will not affect any rights he may have, under his mortgage, upon the lots. The objection, however, that he was not made a party, does not come with a good grace from the appellants, as it appears that they objected to his being made a party, after sub mission, and finally, consented for the canse to be heard between the original parties.

Upon the whole record, we cannot conclude that any injustice has been done by the decree of the court below, and it is affirmed.