EVAN WILLIAMS against WILLIAM HOWARD AND ANOTHER.
Where goods were placed by a debtor in the hands of his surety, for the purpose of indemnifying him against certain debts, which he immediately paid off, it was Held that the fact of the surety’s making the application of the-fund to the payment of these debts, instead, of handing it to the other, for him to. do it, as was stipulated in the contract, gave the- principal debtor no right to convey his claim, on the said surety, in respect of these goods, for the. security of other debts, or make the. surety again account for the value of them, without allowing him credit- far the application of the fund mad'e by him.
Cause removed from the Court of Equity of Lenoir county.
The bill sets out that the defendant, Howard, was indebted to divers persons,, (naming them) in several sums, amounting-to about $3000 ; that the plaintiff.was surety on these debts, and the said Howard being in failing circumstances, plaintiff' applied to him for indemnity against loss on account of such-suretyship ; that the said Howard agreed to deliver him goods-to- the amount of said debts, which plaintiff was to sell and apply the proceeds to- the payment of these debts, and the-overplus, if any, he was to pay to the defendant, Howard ; that these debts were to be accounted for at the original cost andi five per cent, added ; that accordingly, a list of the goods was taken as the same were delivered to the plaintiff, and the prices set down therein, on the statement of the defendant, Howard, and the list left with him as the contract by which the plaintiff was to he charged, and by which he should account with Howard ; that he paid off the debts very soon af*39ter taking these goods into his possession, and has been very willing to account with defendant, Howard, at a fair price for the goods ; that according to this list, the goods amounted in value, with the five per cent, added, to $3236,55 ; that this list and the prices were made up.on the faith and confidence, that the prices and qualities of the goods were known to said Howard, who had the original invoices, and were fairly and honestly stated by him; but that in this, he has been deceived and defrauded by Howard ; that the goods are set down at higher prices than the original cost, and that the quality of them is such, as by no means, to justify the prices put upon them in the inventory, under which he was to account; that as soon as he discovered the fraud practiced upon him, he went to Howard, making known his complaint, and desiring him to produce the original invoices, and offering to settle with him according to such invoices, but that he refused to produce them. The plaintiff, in his bill, further states, that shortly after taking these goods into his possession, the defendant, Howard, made a deed of trust, conveying the claim he had on the plaintiff to the defendant, Jackson, as trustee, to satisfy and pay off certain other debts due to sundry persons, excluding those above mentioned, wherein the plaintiff was surety, and that Jackson brought suit, at law, against him, in the name of the said Howard, for the full value of these goods. The prayer is for an injunction to stay this proceeding at law, and for an account and settlement according to the real value of the goods, with five per cent, added.
The answer of Howard, admits that the goods were placed in the plaintiff’s hands, as security for the debts enumerated in plaintiff’s bill, but he says they were to be paid for on being delivered to the plaintiff, and that he (H.) was to make the application of the proceeds to the said debts; that on getting possession of the goods, the plaintiff refused to let him have the money, and insisted on being allowed to pay the debts in question ; he says, he then conveyed the claim, on the plaintiff, to the other defendant, Jackson, for the payment of debts other than those provided for in the original dealing. *40He denies that the goods are over-charged in the list made by the plaintiff. He says, they were bought by him at different times, and were contained in sundry invoices, some of which were lost or mislaid, and that it would have been difficult and tedious to refer back to these invoices for the prices, so that they were stated from an inspection of the private marks put on the goods from these invoices, and from which thé original cost as fully appeared as if they had been consulted.
The injunction was ordered below to stand over till the heai'ing, and afterwards the cause was set down for hearing on the bill, answer and former orders, and sent to this Court to be heard.
lieRae, for the plaintiff.
Stevenson, for the defendants.
Peaesos, C. J.
The allegation offfraud, on the part of the defendant, Howard, in stating the prices and quality of the goods, received by the plaintiff, is denied, and, as the plaintiff is so unfortunate as to be unable to offer any evidence, this part of the bill fails for the want of proof.
The plaintiff further alleges, that being bound as the surety of Howard for several large debts, amounting to about $3000, and becoming apprehensive of loss on account of Howard’s embarrassed condition, it was agreed that he should take of Howard’s goods to that amount and apply the price to the payment of the debts for which he was bound as surety, and account to Howard for the excess, should there be any, and that he has accordingly paid off the debts and offered to pay the excess to Howard, but that Howard, in the mean time, under pretense that the plaintiff was indebted to him for the price of the goods, has assigned the claim to the other defendant, Jackson, in trust, to collect and pay it over to the other creditors of Howard, and that Jackson has commenced an action, at law, in the name of Howard. The prayer is for an account, in order to ascertain the excess of the price of the *41goods over the debts, which the plaintiff has paid, and for an injunction as to the balance of the price.
Howard admits that, being in failing circumstances, at the request of the plaintiff, he proposed to secure the payment of the debts, for which the plaintiff was bound as his surety, and with that view, “ he sold to the plaintiff a bill of goods, to the amount of about $3220, to b & paid for on clelwery ; the proceeds of the said sale, to be applied by Howard in the liquidation of said debts, so far as was necessary,” but he avers that the plaintiff, after he got possession of the goods, refused to pay the price to him, and insisted upon being allowed to make the application himself to the liquidation of the debts, and .thereupon he (Howard) assigned the debt to Jackson, in trust, for other creditors.
The parties agree as to the essential fact, that the object of dealing was to save the plaintiff from loss by securing the payment of the debts for which he was bound as surety ; but they differ in respect tonvhether the plaintiff, or Howard, was to make the application of the money, and the plaintiff being so imprudent as to neglect to provide evidence of the transaction, must be content to abide by Howard’s version of it. So the question is, does that establish an equity in favor of the plaintiff? "We think it does. ' Howard admits a trust. He was to receive the money, in-trust, to apply it to the liquidation of the debts for which the plaintiff was bound. Did the refusal of the plaintiff to pay the money over to him, discharge him from the trust, so that he could, in conscience, collect the money from the plaintiff and apply it to the payment of other debts, or assign it to a trustee for that purpose? "We can see no principle upon which he was relieved from a performance of the trust and acquired a right to apply the fund to a purpose different from that for which it was created, and to which it was devoted. On the contrary, as the plaintiff made known to Howard his intention to apply the money to the payment of the debts, whereby the main obj ect of the dealing would be accomplished, and the trust undertaken by Howard be performed, so far as he did so, he did the very *42tiling that Howard was bound to do, and in taking an account of the fund, is clearly entitled to a credit for the amount so. paid. Indeed, if Howard intended honestly to apply the money according to the trust, it could make no sort of difference whether it was done by himself or by the plaintiff, and his making so immaterial a matter a pretext for an attempt to misapply the fund and a color for a breach of trust, raises an inference much to his prejudice, and tends to show that the trust has been executed more truly than it probably would have been, had his anxiety to get hold of the money been gratified.
There will be a reference to state the account upon the basis of the list of prices, &c., made when the goods were received.
Pjsb CuRiAM, Decree accordingly.