Kerns v. Chambers, 38 N.C. 576, 3 Ired. Eq. 576 (1845)

June 1845 · Supreme Court of North Carolina

38 N.C. 576, 3 Ired. Eq. 576

DAVID KERNS vs. WILLIAM CHAMBERS & AL.

Where, to a bill praying for an injunction, the defendant admits the equity!seeks to get rid of it by setting up an equity of his own, the injunction m'nstbe Continued to the hearing1.

Our Act of Assembly, Rev. Stat. eh. 32, sec. 12, limiting the time, withiri1 which injunctions shall be granted to stay executions on judgments at law,does not apply to cases where the cause for the injunction originated in the conduct of the defendant after the rendition of the judgment.

A surety receives from his principal bonds oh other persons, sufficient to dist' charge a debt for which he and- a co-surety are responsible, and, for his personal' convenience, delays the collection of these bonds, the parties not being insolvent. He then obtains an equitable assignment of the judgment against Lis principal, his co-surety and himself. Equity will not permit him to enforce the collection oí one-half of this judgment against his co-surety, until he shews that he could not by' reasonable diligerice, have collected llie'bonds so received by hiih.

The case of Lindsay v. Etheridge,- f Dev. & Bat. Eq. 3G, cited and approved.-

This was an appeal from an interlocutory order of the Court of Equity, at the Fall Term1, 1844, his Honor Judge’ . Manly presiding, directing an injunction,- which had been1 granted1 by a Judge in the vacation, to be dissolved in part.

The'following is the substance of the bill and answers :

The plaintiff by his bill, charges that he, together with the’ defendant, Chambers, Charles Yerble, and Chistian Brinde,executed a'bbnd to the defendant Goss, aá sureties for one' Samuel Kerns, all of whom resided in the county of Rowan, except Goss, who resided in Davidson ; and suit was brought against all the obligors, ill the county' of Davi'dson, and judgment obtained against all except Kerns, who had been discharged as a bankrupt; that previous to the trial of the suit,Kerns the principal in the bond, delivered t'o the defendant Chambers, funds sufficient to pay off and discharge the whole debt due the defendant Góss; that these funds consisted of tañóte on R.- W. Long for $260, and one on Thomas Mull for $740, and the balance in cash, the whole amounting to $1,-086 50. After the rendition of the judgment, it was, as he is informed and believed, paid off and discharged by the defendant Chambers, and is now kept alive by a combination between him and the defendant Goss, to compel him, the plaintiff, to pay the whole of it, as an execution has been issued on it and been levied on a tract of land belonging to the plaintiff. The bill charges, that the defendant Chambers received from R. W. Long the money due on his bond, and that he either had or might and ought to have received the money due from Mull, and that the judgment of Goss has been satisfied by the funds of Kerns, the principal in the bond. It further alleges the entire insolvency of Kerns, of Yerhle, and of Brinkle, and prays for an injunction, which was granted.

The defendant Goss, admits such of the allegations of the bill as directly concern him, except as to any combination to oppress or injure the plaintiff in taking the judgment; admits, that after obtaining the said judgment, he accepted the bond of the defendant, Chambers, and by the directions of said Chambers, he assigned it to one James Ellis, and that he has no interest in it. The answer of Chambers admits the statement of the parties to the bond and the insolvency of all the parties to it, except himself and the complainant; that a suit was brought upon it to Davidson County Court, and a judgment obtained; that the amount due upon the bond was larger than that stated by the plaintiff. This defendant admits, that he gave his bond to the defendant Goss, for the amount of the judgment, and took an assignment of it to James Ellis ; that an execution has issued and been levied on the land of the plaintiff, but that it was not his intention to raise upon it more than one-haif the judgment, after deducting ml credits he was entitled to. The defendant Chambers admits, further, that Kerns, the principal in the bond, put into his hands the two notes or bonds mentioned, the money to be applied, when collected, to the d sc'iarge of Goss’ bond ; that the amounts are correctly set forth in the bill, and that he has received from R. W. Long the amount due upon his note or bond, and always intended to give the plaintiff the benefit of it, to the amount of his interest in it: ho says, that as to the bond of Mull, he never ^as c°Hected it; that Mull lives in Mississippi, where it is difficult to collect money, and that he owes him on his own ac-ten thousand dollars; and he has been afraid to press the collection of the bond transfered to him by Kerns, fearing, if he did so, to lose all that Mull owed him. He further states, that Kerns had transferred to a trustee all his property to secure the payment of his debts, among which was this one to Goss, and that the notes or bonds of Long and Mull were given originally for purchases made at the sale of the trust property, were not under the control of Kerns, and that therefore, Kerns had no right to appropriate them to the payment of the Goss debt, but the money upon either, when received, was to be appropriated to the whole of the debts secured by the trust.

The answers both insist, that the bill be dismissed for want of parties. The representative of Ellis, the assignee of the judgment, who is dead, it is alleged, ought to be made a party, and they further insist that the injunction should be dissolved, as having improvidently issued, more than four months having qlapsed after the rendition of the judgment, before the filing of the bill. Upon the coming in of the answers, the injunction was dissolved as to one half of the judgment, and the plaintiff appealed.

Boyden for the plaintiff.

Alexander and Osborne for the defendants.

Nash, J.

No more of the pleadings is stated than is necessary to bring into view the principles upon which this court founds its decree. The plaintiff’s equity is, that he and Chambers, the defendant, being the joint sureties with others to Goss, the other defendant, for Kerns, the latter put into the hands of Chambers funds sufficient to discharge the debt, and that therefore, as between them, the debt is discharged. To meet this allegation, the defendant, Chambers, replies; he admits that he had received from Kerns two bonds, one on R. W. Long, which was paid, and the other upon Thomas Mull, of Mississippi, the latter not collected, and the reason he assigns is, that Mull is indebted to him to a much larger amount and he has been deterred from attempting to coerce the collection of either claim for fear of losing both. It is not denied that Mull is solvent and able to pay all he owes to hers. We do not consider this as any answer to the plaintiff’s claim. It is manifest, that the reason why the Mull debt has been delayed in the collection is, to accommodate and secure the interest of the defendant, Chambers. If he chooses to indulge Mull, for any cause, he has no right to ask that the plaintiff shall be compelled to join him in the indulgence. In other words, with funds in his hands to pay the debt, he has no right to s^-ll the property of the plaintiff to pay any portion of it. We consider him, as to the purposes of this debt, as having appropriated the Mull bond to his own use. The bond having been placed in his hands by the principal in the debt for the joint benefit of the sureties, the plaintiff, one of them, and the only responsible one excopt the defendant, Chambers, had a right to be consulted in its disposition, and the defendant ought at least to have brought the bonds and money into court and submitted them to its disposition. Another defence upon these bonds is offered by Chambers in his answer. He alleges, that Kerns, being greatly indebted, to secure his creditors, made an assignment of all his property to a trustee, and among the debts so secured was the Goss debt. He further alleges, that the bonds of Long and of Mull were given for the purchase of part of the trust property, so conveyed, and that it was not in his power nor in that of Kerns, to direct it entirely to the satisfaction of the Goss debt, but that the other creditors, whose debts are secured by the deed of trust, are entitled to their reasonable portion of it. It is not necessary any opinion should at this time be expressed upon the question raised ; it is sufficient for us to say, that, in this stage of the case, the defendant can take no benefit by the objection. It has been repeatedly decided by this court, that when, to a bill praying for an injunction, the defendant ad. mits the equity, but seeks to get rid of it by setting up an equity of his own, the injunction must be continued to the hearing. Lindsay v. Etheridge, 1 Dev. & Bat. Eq. 36.

That is the case here. If the objection can avail the deiendant, it must be upon the hearing of the cause.

We do not agree with the defendants that it was necessary t0 maj{e ¡¡le representative of Ellis a party. It is evident from the answer of Chambers, that the whole interest in the judgment, in equity is in him. Ellis paid nothing for it. It is not assignable at law, and at law it is still the property of Goss. The defendants are mistaken in supposing, that this case comes within the operation of our act, limiting the time within which injunctions can be granted. The plaintiff’s right to ask for an injunction arose after the rendition of the judgment, when he discovered that the defendant Chambers had made a wrong application of the funds placed in his hands by Kerns, for the payment of the Goss debt. This was made manifest to him by the levy of the execution on his land. As long as the judgment was Goss’, there was no equity against it. Until then he could not know whether those funds would be so appropriated or not. We do not think the statute operates upon this case at all.

We are of opinion there was error in the interlocutory decree heretofore pronounced in this case, and the same must be reversed, with costs in this court, so far as it dissolved the injunction for one-half of the sum recovered, and the injunction must be continued to the hearing.

Per Curiam, Decree accordingly.