delivered the opinion of the court.
On thе 4th of April, 1877, the Commercial Bank,, a corporation doing business at Knoxville, made a general assignment of all its assets of every description to a trustee for the equal benefit of all its creditors. The complainant, James Comfort, was afterwards appointed trustee in place of the person named in the-deed, and, on September 11, 1877, filed this bill against R. R. Bearden, M. G. Bearden, W. M. Bearden and Jos. T. McTeer, as partners- under the name and style of Breedens & McTeer, to recover from them an alleged indebtedness to the bank by overdraft аt the date of the assignment. Pending the litigation, Samuel McKinney was permitted by the chancellor, over the objection of the complainant, to come in and file an answer and cross-bill as a defendant. On final hearing, both the bill ■ and cross-bill were dismissed, and complainant Comfоrt appealed from so much of the decree-as dismissed his bill, and denied him relief.
The bill states that on the 4th of April, 1877, when-the Commercial Bank suspended, its books showed a balance of $2,722.67 in favor of Beardens & McTeer. And the charge is that this balance was produced by an еntry on the books of the bank, on April 2, 1877, to the credit of the firm of $10,000, without any consideration then passing, and to which the firm was not-
MeTeer, in his answer, admits that the firm of Beardens & MeTeer, from its formatiоn in 1875, continued to make its deposits and transact its business with the Commercial Bank, the balances being in favor of the firm generally until October or November, 1876, and then turning in favor of the bank. He says that
Further answering, McTeer says he was induced to enter into the business of Beardens & McTeer by the agreement of R. R. Bearden to put into the' business a certain amount of capital, and, his further assurance that he could and would, from time to’time.-as-needed, advance such additional sums as might be necessary for its successful prosecution; that about January, 1876, needing money in the business, and, R. R. Bearden not being able at the time to furnish it, he applied to Samuel McKinney for a loan .of money. ' In his deposition, taken by the complainant, he exp^iins that
In his answer McTeer further says: “He did not then, and does not now regard the debt to McKinney as a debt 'due from the firm, but when he learned that Bearden procured the means of settling that amount
The only other witness examined by the original complainant is the cashier of the Commercial Bank. He says that on the 4th of February, 1876, the Knox county bonds were used as collateral security for four notes, amounting to $10,000, executed by Beardens & MeTeer, and re-discounted by the National Park Bank of New York, for the benеfit of the Commercial Bank. The bank again used the bonds, June 27, 1876, with the National Park Bank, as collateral for two notes of H. L. McClung for $5,000 each. In January, 1877, the bonds were delivered by Bearden to a New York house, as collateral to his notes, on which $10,000 were received by the Park Bank, and carried to the credit of the Commercial Bank. On April 2, 1877, the witness, by the direction of the president of of the bank, made an entry on the bank books as follows: “ Borrowed by R. R. Bearden on Knox county bonds $10,000.” And on the same day, under like direction, he entered the credit in the acсount of
The gravamen of the bill is that the credit of $10,000 of 2d of April, 1877, was. without consideration, and procured by Bearden for his individual benefit. The answer is that the credit was based upon the bonds placed in the bank by McKinney, with instructions to sell them and pass the proceeds to the credit of the firm, and that Bearden procured the means of settling that amount for the firm from McKinney. The proof is that McTeer had first applied to McKinney for а loan for the firm, was told that he could have the Knox county bonds at a given price, notified Bearden, who had contracted to furnish the capital to run the firm business, and was told by him that he had obtained the bonds and left them for sale in New York. The proof further is that the Commercial Bank had the benefit of these bonds, and allowed Beardens & McTeer to overcheck their account; that no entry
The theory of the bill is that the assets of the bank as they еxisted when the insolvency of the bank became known to its officers, became at once a trust fund for the creditors of the bank. But the law is
Shortly after the filing of the bill in this case, Samuel McKinney presented his petition asking tо be made a defendant, and to be permitted to file a cross-bill. The reason of his application was stated to be that he had an interest in upholding the credit of the 2d of April, 1877. But it is obvious that the complainant could have no object in making him a defendant, for he neithеr sought, nor could by possibility have any relief against him. And whatever interest McKinney had in upholding the credit grew out of the peculiar agreement he made with McTeer on the 20th of April, 1877, and not out of his previous deal
When а third person claims under, or in privity with one of the parties litigant, the proper mode of bringing his interest before the court is by a supplemental bill, or by an original bill in the nature of a supplemental bill: Sto. Eq. PL, sec. 156. It cannot ordinarily be done by petition: Foster v. Deacon, 6 Madd., 59; Carow v. Mowatt,
A cross-bill is a mode of defense or an auxiliary suit, and constitutes one cause with the original bill Cross v. DeValle,
The chancellor’s decree will be affirmed, the complainant being charged with the costs of this court. The costs of the court below will be paid as ordered: by the chancellor.