Stodder v. Toulmin , 10 Ala. 824 ( 1846 )

GOLDTHWAITE, J.

When this cause was here at a previous term, the bill was sustained, against the motion to dismiss for want of equity, on the ground, that if the trust fund was more than sufficient to pay the sum actually due to Hamilton & Cole, by the account, then the bill holders were entitled to the remainder of the trust fund, as that was created for the purpose of securing the payment to H. & C. of the sums they should pay on those bills, as well as the amount previously due them; but we .declined to decide whether the trust fund was applicable; in the first instance, to the payment of the debt actually due to H. & C., or whether it was to be divided, pro rata, to their account and to the holders of the bills. These are questions now to be decided.

By referring to the report of the case, as it was when here before, [see 7 Ala. Rep. 362,] it will be seen, we considered the equity of the bill holders as arising out of the fact, that the trust was created as a security to H. & C. for the sum which all the parties to the deed conceded was then due to them. In point of fact, as well as of law, a portion of this sum was not then a debt to H. & C., and never became so from their omission to pay these bills. So far as this sum was concerned, the trust was a security given to the accept- or of the bills, to pay them, and was available to the holders when these were dishonored. The trust however, was not created solely for the payment of these bills, apd therefore the bill holders cannot claim its appropriation to themselves, to the exclusion of the other object, unless some distinct equity arises out of the insolvency of H.& C. and of Austill. That this furnishes no distinct ground of equity is evident from the circumstance, that if it was alone, the bill holders would be mere creditors at large, and without any title to satisfaction out of specific assets, either of H. <fc C. or of Austill. As bill holders, they have the right to claim that the trust fund shall be applied to the payment of the debt it was in- • intended to secure, but they are interested in this debt, only in the proportion which the bills bear to the whole sum. In regard to the other, the general creditors of H. & C. have rights precisely equal to themselves, and the holders of the notes given by Austill to H. & C., if entitled to retain those against them, are invested with all their rights to the extent of the sum due by the account.

In our opinion, the case is one for equal distribution of the trust fund between the bill holders and the trustee under the deed, and consequently the general assignee of H. & C., in the relative proportions the.bills and the account bear to the sum intended to be secured.

As the decision is not in conformity with this view, it must b.e reversed and remanded, for further proceedings.