| Ill. | Jan 15, 1867
delivered the opinion of the Court:
The appellant in this case was the security on four certain notes executed on behalf of the firm of A. C. Dickson & Co., lumber merchants, of St. Louis, to Charles R. Hurst. This firm was composed of A. C. and John H. Dickson and George M. McConnel, who signed the notes by their individual names. To secure appellant, A. C. Dickson, then the owner of valuable real estate in Jacksonville, his wife, in February, 1860, while the notes were maturing, executed to complainant a mortgage upon this Jacksonville property. The mortgage recites all of these notes, the dates and sums for which given, and the day each note became due, and contains this condition after their recital. That the said A. C. Dickson is bound to pay one-half of all and each of said several notes, and the said George M. McConnel is bound to pay the other half thereof. How, if the said Dickson shall well and truly pay his said one-half of said notes when due, then this deed shall from thenceforward be null and void, it being hereby fully understood that the said mortgage is to secure said George M. McConnel against the payment of one-half of said notes only, as aforesaid.”
The controversy arises in the first instance on the construction to be placed on this clause of the mortgage, appellant contending that Dickson was to pay one-half of each note, go nomine, and that the fact that he has paid one-half of the whole sum due upon all the notes is no performance of the condition.
It is very evident to our minds, from the terms of this condition, especially the last clause of it, that it was the intention of these parties that whenever one-half the debt specified by these notes was paid by Dickson, the mortgage was to be null and void. All that Dickson designed to secure appellant in was one-half of this Hurst debt,—it was to secure that that the mortgage was executed, and, although he agreed to pay one-half of each note, he never agreed to pay more than one-half of the debt of which those notes were the evidence. Having paid one-half of this debt due by those notes, before the bill was filed, complainant was not entitled to any decree, there being nothing due on the mortgage.
It appears by the pleadings, that in November, I860, the firm of A. 0. Dickson & Go. made an assignment of all the property of the firm to the partner, John H. Dickson, and dissolved. John H. accepted the trust, and took possession of a large amount of property included in the assignment, stated in the bill to be of the value of $15,000, and entered into a written contract to sell the same on certain terms of credit, at auction, and to collect and use the proceeds to pay all the debts of the firm, these Hurst notes included, the third note, payable to Hurst for $3,870, being then not fully paid. It is alleged that the assignee sold this property and applied the proceeds to his own use, and in May, 1861, A. C. Dickson and wife conveyed by deed to the same John H. Dickson all the real estate described in the mortgage to complainant, and A. C. Dickson then became insolvent, and had no property subject to execution, and left the State, and that John H. was also insolvent, and was endeavoring to sell all this property and to defraud the complainant out of the money he had paid as security, and that George M. McOonnel is insolvent.
The complainant sought by his bill (he having paid the balance of the third note, being about nine hundred dollars, to Hurst, as security for the firm,) to be substituted in the place of Hurst, and to be entitled to all his remedies as against the assets in the hands of Dickson, the assignee.
A plain answer and refutation of this claim of complainant exists in the fact that there is no place for such subrogation, for when Hurst was paid by complainant, Hurst ceased to have any interest in the assets. The doctrine, as cited from 7 Cranch, 69" date_filed="1812-03-12" court="SCOTUS" case_name="Russell v. Clark's Executors">7 Cranch, 69, Russell v. Clark's executors, has not the slightest application to this case. In that it is said, and correctly, that the person for whose benefit a trust is created, who is to be the ultimate receiver of the money, may sustain a suit in equity to have it paid direetly to him. But that is not this case. Here the complainant stands as a creditor of this firm, he having paid Hurst a debt they were bound to pay, and in this respect he stands in no different or better position than thousands of persons who have paid debts for which they were security. On paying the debt complainant became the creditor of the firm, and entitled to no greater rights than any other simple contract creditor of the same firm. The case is yet to be found, adjudged by any respectable court, recognizing the right ,of such a creditor to come into a court of chancery, in the first instance, seeking to subject the assets of the firm to the payment of his debt. Chancery has no jurisdiction in any such case.
The remedy of the complainant is complete and ample at law. When he shall have obtained judgment against the firm for this money so laid out and expended for their use, he can levy his execution on this property, alleged to have been fraudulently assigned and appropriated by the assignee to his own use. This fraud, if proved, would not protect the assignment. If the assignee has conveyed it to innocent parties, or fraudulently, and no fruits follow an execution, then complainant can come in with his bill of complaint, known as a creditor’s bill, and pursue the property. To this effect, are sections 36 and 37 of our Chancery Code; and such is the course of proceeding in all the States of this Hnion and in England. The rule is inflexible in such cases, that a creditor must exhaust his remedy at law before he can come into a court of chancery to reach equitable assets, or set aside a fraudulent conveyance. Cases are abundant on this point. We cite a few of them. Slone v. Manning, 2 Scam. 531; Miller v. Davidson, 3 Gilm. 518; Manchester v. McKee, Exr., 4 id. 511; Bigelow v. Andress, 31 Ill. 330.
Complainant had the right to file a bill against John H. Dickson, as assignee of the partnership, to compel performance of the trust, but he does not show there are any partnership assets. He is simply a creditor of the firm to the extent of the debt paid by him to Hurst, but before he can maintain a bill in chancery to reach equitable assets, or to set aside a fraudulent conveyance, he must exhaust his remedy at law. The scope of the second amended and supplemental bills being for relief solely on the last ground, the court did not err in dismissing the bill.
These views render it unnecessary to consider the question of the validity of A. C. Dickson’s deed for the use of his wife, or the deed to Dummer, or any question made to which these give rise, as the complainant is not in a position to attack any of them.
For the reasons given the decree of the Circuit Court must be affirmed.
Decree affirmed.