In re the Final Accounting of Morgan

Merwin, J.:

Under the statute (chap. 166 of 1877, § 13), the surety is recog- • nized as a party in interest. This is for some purpose, presumably for the purpose of enabling him to protect his rights and also that he may be bound by the decree. He has the right to apply for an accounting. (Sec. 11.) This carries with it the idea that he has the right to have the estate distributed to whom it belongs. Schoellkopf & Matthews were creditors and were preferred. By accepting payment under the assignment they became parties to it. Under the statute they were interested in the fund, and, as such, entitled to notice of the accounting. They were in fact notified. The statute permitted further citations. (Sec. 20, sub. 7.) The Herkimer County Bank was .also entitled to notice and was notified. So that we have a proceeding pending in the County Court in which there were as parties, legally among others, the assignee, the surety, the creditors Matthews & Schoellkopf, and the creditor The Herkimer County Bank. These are all the parties interested in this controversy.

Under the statute (§ 25), this proceeding was in a court of general jurisdiction. It had by the terms of the statute full jurisdiction to do all and every act relating to. the assigned estate, the assignees, .assignors and creditors, and jurisdiction is presumed to exist unless the contrary be shown. It could exercise the powers of a court of ■equity in reference to the trust and any matters involved therein.

. This broad language seems to place the County Court in a position •to do all that any court could do with the parties and subject-matter legally before it. This power is not dependent on whether ■an action is brought. The statute recognizes the proceeding by petition and citation. In 2 Barbour’s Chancery'Practice, 578, the rule is laid down, that petition may be presented in a matter over which the court has jurisdiction under some act of the legislature or other special authority. That rule applies here. The statute authorizes a trial by jury.

An implied trust exists where there is a claim which may be directly enforced at law against one party, but to the due discharge of which another party is ultimately liable, and in such a case a court of equity treats it as a trust by the party ultimately liable which may be directly enforced in favor of the party ultimately entitled to the benefit of it. (2 Story’s Eq. § 1250.)

A creditor of an estate, when the executor has by mistake paid legatees or distributees before a discharge of all the debts, has a. clear right in equity to follow the assets of the testator into their hands as a trust fund for the payment of his debt. (Id., § 1251.) Being ultimately responsiblé to pay back to the executor, if he should be compelled to pay, they, may be made immediately liable to the creditor in equity. (Same section.) The creditor is not compelled to resort to his legal remedy against the executor. (Marshall, c. J., in Riddle v. Mandeville, 5 Cranch., 330.) If as between the executor and the party over paid, the executor has no right to recover back, then in such case it has been'held that the party seeking to follow the fund must first exhaust the executor. (Orr v. Kaines, 2 Ves. Sen., 194.) In Peckham v. Van Wagenen (83 N. Y., 40, 45), the right of the prior creditor, his debt being-established, and the fund set apart for him by the preference in the assignment, to follow the fund into the hands of a party not entitled to receive it is recognized. The power to give entire relief in one-suit was recognized in Wheeler v. Perry (18 N. H., 307-314), and Hood v. Clapham (19 Beav., 90), the proper parties being before the court. The theory of the present statute is in the same direction. It confers power to do any and every act in relation to the assigned estate. Part of the assigned estate was in the hands of Schoellkopf & Matthews and received by them as such. It was received by the cheek of the assignee as such. No question is raised about the identity.

Under the assignment, the Herkimer County Bank, had an equitable lien on the assets in the hands of the assignee. This lien the-surety had the right to have enforced for his benefit. In a proper case a surety has the right, after the debt is due, to compel the ■creditor to coi’ect. (Decolyar on Principal and Surety, 324; Hayes v. Ward, 4 Johns. Ch., 132; 5 Wait [A. & D.], 195, and cases cited.)

The County Court being deemed to be a court of general jurisdiction, had power to render a personal judgment. No question is made about the propriety of the order or decree, if there was jurisdiction in the County Court.

The foregoing considerations lead to the conclusion that, inasmuch as all the parties to this controversy were legally before the County Court in relation to a subject matter properly before it, it had under the broad language of the statute jurisdiction to make the decree appealed from, and that therefore the decree should be affirmed, with costs.

Follett, J., concurs; Hardin, P. J., not sitting.

Decree of Herkimer County Court affirmed, with costs against the appellants.