Doane v. Fuller , 192 Ill. 617 ( 1901 )

Mr. Justice Boggs

delivered the opinion of the court:

The demurrer operated as an admission that all material and relevant allegations of the bill are true.

As between the appellee, Fuller, and the transfer company, there was ample consideration to support the note given by the transfer company to Fuller, on which the judgment by confession was entered. Save as to the rights of appellant, as holder of the shares of stock hypothecated to him, appellee was entirely free to contract with the transfer company for the payment by the company of the moneys appellee had advanced to Rolfe, for the reason the fact such moneys were appropriated by" Rolfe to the payment of the indebtedness of the company supplied the requisite consideration for the promise to re-pay the same. We think that under the allegations of the bill appellant, as between himself and appellee, because of the agreement between them, as set forth in the bill, had the-right to insist the interest created in his favor in the assets of the transfer company by the hypothecation of the stock of the company was superior, in equity, to the rights of appellee to procure re-payment out of the assets of the company of the moneys advanced by him to Rolfe, but in all other respects either party was free to deal with the transfer company as with other x corporations or persons, and no such equity existed in favor of the indebtedness of the transfer company to the appellant, arising out of other transactions than that in which the alleged agreement between appellant, Rolfe and the appellee was made. As between the transfer company and appellee, Fuller, the $5000 advanced by appellee to Rolfe may fairly have been regarded as the indebtedness of the transfer company, but as against the rights and interests of the appellant the indebtedness to appellee, so far as appellee is concerned, was that of Rolfe individually, and not of the company. Appellee knew, when he parted with his money,, that it was to be used by Rolfe in paying" the debts of the transfer company, in order the stock of the company should be rendered more valuable by the discharge of such indebtedness of the company, and, being more valuable, would be accepted by appellant as collateral security for the indebtedness of Rolfe to the appellant. Appellee knew the appellant required, as a condition upon which he would accept the stock of the company as collateral security for the indebtedness of Rolfe to him, that the debts of the company should be discharged by Rolfe without depleting the assets of the company. The value of the stock depended on the assets of the company, and the appellee knew, according to the allegations of the bill, before he parted with his money, that it was the contract between the appellant and Rolfe that the money furnished by appellee to Rolfe was to Rolfe in his individual capacity and as a personal loan to him, and that (as is clearly alleged in the bill) appellee expressly agreed that such should be the character of the loan, and that he made that agreement for the purpose of inducing appellant to accept the stock as collateral security.

The allegations of the bill being conceded to be true, upon equitable principles appellee should not be allowed to maintain an action at law to recover from the appellant a portion of his judgment against the transfer company if the appellant would suffer loss by reason of an inability to collect the amount of his indebtedness due from Rolfe. But the fatal defect in the bill is, that it does not affirmatively appear that the appellant has sustained or will sustain the loss of any part of such indebtedness due him from Rolfe. The bill avers that since Rolfe contracted the said debt to the appellant said Rolfe has paid to the appellant three of the notes, amounting to §7795.89, and there is no averment that Rolfe is insolvent, unable or unwilling to pay the remainder of said notes, or even that he has-been asked to pay such of them as are due. The only ground justifying the equitable interference prayed for in the bill is, that legal remedies are unavailable and that it is necessary equitable aid should be extended to protect the complainant from loss. In the absence of an allegation to the contrary it is to be assumed that Rolfe is solvent, and that being true, there is no reason the appellant should invoke or be granted the extraordinary remedies in equity to prevent the appellee from recovering the amount due him from the transfer company. Appellant voluntarily became surety on the appeal bonds, and the mere fact that Fuller agreed, when contracting the original debt represented by the appeal bond, that such debt should, as between himself and appellant, be regarded as the debt of Rolfe to Fuller, should not avail to entitle the appellant to equitable aid to relieve him from liability to answer his obligation as such surety, unless such equitable relief is essential to protect the appellant from loss by reason of the indebtedness of Rolfe to him. If Rolfe is solvent no loss will come to appellant by reason of the debt intended to be secured by the stock of the transfer company. This element of the case is not referred to in appellant’s brief in chief. In the brief of appellee much stress is laid on the omission of an allegation in the bill as to the financial condition of Rolfe, as being, within itself, sufficient to justify the action of the court in sustaining the demurrer. The appellant has filed a reply brief, but again entirely ignores the question. If the appellant had presented his bill before the assets of the transfer company had been appropriated to the payment of the judgment in favor of appellee a different question would have been presented. The situation then would have been, that appellant held unmatured notes against Rolfe, to secure which, so far as the appellee was concerned, he held the assets of the transfer company through the medium of the stock lodged in his hands as collateral security, and he might have invoked the aid of chancery to preserve intact his securities, though his debtor be then solvent, for the reason the financial condition of his debtor might change before the indebtedness would mature. But he did not invoke the aid of the court until the entire assets of the transfer company had been removed beyond the power of the court to restore them to him. If his debtor was then solvent no ground of equitable jurisdiction existed.

The judgment of the Appellate Court is affirmed.

Judgment affirmed.