| N.C. | Jun 5, 1841
The bill states that Roles had been the guardian of the plaintiff, and in that character he had loaned $419.56 (money of his ward) to Elizabeth J. Powell, and took her note with surety payable to himself as guardian; that Roles has become insolvent and has left the State, and has failed to settle his accounts with the present guardian of the plaintiff or deliver over the note aforesaid, but has assigned the said note to Jones, the other defendant, who at the time had notice that it was held by Roles as guardian to the plaintiff, and that it upon its face was payable to him, Roles, in that character. The bill states that the said note was not assigned to (338) Jones for any debt due him by or on account of the plaintiff. *276
The prayer is that Jones be declared a trustee and be decreed to account for the said note. Jones, in his answer, admits that Roles was guardian as stated in the bill, and that he has left the State and is now insolvent. He admits that the said note as mentioned in the bill was payable to Roles as guardian of the plaintiff. He admits that Roles assigned the said note to him whilst he, Roles, was guardian of the plaintiff. Jones states that at the time of the assignment of the note Roles was largely indebted to him and had been so for several years; that the said note had been taken by him in part satisfaction of said debt, and that Roles has been credited for the same. Jones further states that the plaintiff has obtained a judgment against the sureties of Roles on the guardian bond, and that the said sureties are solvent and well able to pay the said judgment, and that the claim now in controversy was included in that judgment. He says that Roles, before he left this State, executed a deed of trust in favor of the sureties to his guardian bond, which deed of trust covered property sufficient to indemnify the sureties against all and every demand which could be brought against them. Jones states that the plaintiff never demanded the note of him before he filed the bill. There is a replication. Jones admits that at the time he took the assignment of the note he knew that Roles was a trustee for the plaintiff and that the said note composed a part of the trust fund. The legal title to the note certainly passed to him by the assignment; but there is no rule of this Court better established than that such an assignee shall be considered and stand as a trustee for the originalcestui que trust to the amount of the fund thus obtained. At law it has been laid down that an executor or administrator may make a valid sale of the effects in satisfaction of his own private debt, although the purchaser knew the goods sold were the goods of the testator or intestate. But in equity it seems to be now established that the executor or the administrator can make no valid sale or pledge of the assets as a security for or in payment of his own debt, on the principle that the transaction itself gives the purchaser or mortgagee notice of the misapplication, and necessarily involves his participation in the (339) breach of duty. Williams on Executors, 612, and the authorities there cited. It seems to us that the two cases of Lockhart v. Phillips, post, 342, and Bunting v. Ricks,
Second. Jones insists that as the plaintiff has a judgment against the sureties of his guardian for this demand, he ought not to have a decree against him for the same demand. This is no answer we think. The judgment has not been satisfied. It is like the ordinary case at law where the drawer and endorser are sued in separate actions at the same time, or where the co-trespassers are sued separately, the plaintiff may have two separate judgments for the same demand, but he can have but one satisfaction. He may elect to have satisfaction out of which he pleases. The note in this Court belongs to the plaintiff, and he is entitled if he chooses to relieve the sureties by taking that property from Jones. We said in Bunting v. Ricks that the sureties of an insolvent trustee will be entitled in equity to all the remedies and securities that were in the power of the cestui que trust, or creditors against one who co-operated in the breach of trust, and this even before they had paid to the cestui que trust or creditors the amount misapplied by their principal. The plaintiff will be doing only an act of justice to the securities to obtain satisfaction out of the note in question.
Third. It is said that the sureties to the guardian bond have a sufficiency of property held for their indemnity against the judgment, and that the plaintiff ought to be forced to follow his judgment against them for satisfaction rather than go against Jones. There is no cross-bill filed to enable the Court to ascertain the amount of the fund left, if any, for indemnity to the sureties. The plaintiff does not admit it, and it would not be reasonable to compel him to go before the master (340) for an inquiry under the present state of the pleadings. Jones, we think, must be compelled to surrender the note in question or account for its avails. If there is a fund intended for the indemnity of the sureties Jones perhaps may reach it by an original bill or in some other way. The plaintiff is entitled also to a decree for his costs.
PER CURIAM. Decree accordingly.
Cited: Fox v. Alexander, post, 342; Exum v. Bowden,