
    
      Dr. Henry Ravenel vs. Samuel A. Lyles et al.
    
    1. By a resolution of the Directors of the Limestone Springs Company, A, on the 18th January, 1839, was appointed superintendent of the same, and also authorised to borrow for the company a sum not exceeding $10,000 ; to execute their bond for the money, and to make their real estate liable for it by mortgage.
    2. A. applied to the Bank of the State for the purpose of effecting the loan, but the Bank having already made a loan to the Company, secured by a mortgage of their real estate, was unwilling to make a further one on the security of the property; a portion, however, of the sum desired was obtained on the personal indorsement of B, in February, 1839, on the condition that a part of the sum loaned should be paid in the July or August following, and the balance out of the income of the season of 1839, at the springs. B. was to be secured, if necessary, by the mortgage which A. was authorized to give. During the summer of this year, C., not then a director of the company, agreed to make advances to the company on their bond, and to pay for them their note in the bank. In October, 1839, it was resolved, on a meeting of the company, that the government of it should thereafter be vested in a President and two directors. C. was chosen President, with B. and M. as Directors. In Dec. 1839, C. informed B. that he declined to pay the note in bank, upon which intimation B. took from A. the mortgage pledging the personal estate of the company, and bearing date the 7th January, 1840.
    3. C. paid the note, but did not inform A. and B. of the fact until after the mortgage was executed. Subsequent to this transaction, no further meeting appears to have been held either of the President and Directors, or of the stockholders of the company. In September, 1840, B. assigned the mortgage to A., the company being likely to prove insolvent, and provided that he was not to be made accountable for the same.
    4. The sales of the personal property included in this mortgage, in the hands of the commissioner, amounted to $3,187 41.
    5. The Court were of opinion that whatever might have been the strength of complainant’s claim, it would seem from the terms of the instrument, that the funds in the custody of the Court could not be made chargeable until it had been shown that the other sources mentioned in the mortgage had been exhausted and proved inadequate.
    6. The Company never having sanctioned or approved the act of A., in pledging the personal estate, the Court were further of opinion, that if A’s. agreement with B., in February, 1839, amounted to an equitable mortgage, and could be established to the extent of the authority which he might then have exercised under the resolution, it could not avail the complainant, as the proceeds of the real estate were insufficient to satisfy the elder liens.
    7. In December, 1839, A., as the superintendent of the company, reciting C’s. agreement in the summer of that year, executed to him the bond of the company, in a penal sum, conditioned to pay the amount due on the note, with interest from the date of the bond, when thereunto requested; The note becoming the proper debt of C., and being accordingly paid by him, he had no equity to set it up, or any incident of it, the company having extinguished it by a higher security which he had agreed to take.
    8. Had C. literally advanced the money to the company, when the bond was executed, and they had taken up the note in bank, he could not have availed himself of the mortgage executed to the endorser of the note.
    
      Before Dunkin, Ch. at Spartanburgh, June Term, 1843. The- facts of the case will be fully understood from the circuit decree.
    Dunkin, Ch. This hill was filed on 24th October, 1840. The principal, perhaps entire, object, is to marshall the assets of the Limestone Springs Company.
    At June sittings, 1841, a decretal order was made for the sale of the real and personal estate. That the commissioner should call on the creditors to establish their several demands, that he should take an account of the estate, and the debts, and report on the same; “ the equities of the parties and the distribution of the funds being reserved for the future adjudication of this court.”
    Some intermediate orders have been passed, directing the appropriation of the greater part of the fund to certain preferred creditors, whose demands have been established, and whose right of priority was not disputed. The principal question presented by the commissioner’s report, arose out of the claim of the complainant, under a mortgage executed to Judge Q’Neall.
    In order to decide on the validity of this claim, it is necessary to refer to the history of the transaction. The testimony is in writing, .and consists of certain instruments exhibited with the bill, extracts from the journals of the company, and the statement of Judge O’Neall.
    It appears that prior to the 18th January, 1839, J. W. Clark had been the superintendent of the Limestone Spring,? company. On that day a regular meeting of the directors was held, at which it was resolved, among other things, that William Murray should be appointed superintendent of the company, and that Mr. John W. Clark should hand to Mr. Murray the seal of the corporation. It was also resolved, that Mr. Murray should be authorized to borrow for the company a sum not exceeding $10,000, and that he be authorized to execute a bond for the same, as the bond of the company, and to make the real estate of the company liable for the same mortgage — that if possible, the money should be borrowed from the bank of the State, and added to a loan already made from that institution, and which was secured by a mortgage of the real estate of the company.
    Judge O’Neall states that these resolutions were placed in the hands of Mr. Murray, who came to Charleston in January or February, 1839, for the purpose of effecting the loan. The bank were not willing to make a further loan on the security of the property; but the cashier thought that a part of the loan could be obtained by a personal endorsement. Judge O’Neall, very reluctantly, as he says, agreed to endorse Murray’s note for $3,600, “ on the following conditions,” “ that $1000 should be paid in July or August, and the balance out of the income of the season of 1839, at the Springs.” “ I was to be secured,” says he “ if necessary, by the mortgage which Mr. Murray was authorized to give.”
    The loan of $3,600, was accordingly obtained from the bank, on the note of Mr. Murray, endorsed by Judge O’ Neall. In July or August, $1000 was paid, and the note renewed for $2,600.
    Judge O’Neall further testified, that while he was at the Springs, in the summer of 1839, Dr. Ravenel not being-then a director, a meeting of the directors of the company was held. By tlae arrangement with Murray, the current income of the season was to be applied to the extinguishment of the note in bank. Dr. Ravenel says, he agreed to “ make advances to the company on their bond,” and in order to allow the income to be applied to the debts of the establishment, Dr. Ravenel agreed that he would pay for the company the note in bank. If he desired it “ he was to have the privilege of renewing it to the expiration” of the credit allowed to the company. “ Judge O’Neall thenceforth considered himself discharged from all personal responsibility.”
    On the 12th October of that year, (1839,) a meeting of the company was held at the Limestone Springs. It was then resolved, “ that the government of the company shall hereafter be vested in a President and two Directors, to be elected at each annual meeting and at that meeting Dr. Ravenel (the complainant,) was elected President, and Judge O’Neall and Col. Maybin, directors.
    In December, 1839, the complainant informed Judge O’ Neall, by letter, that he declined to pay the note in bank, and “ advised him to be prepared to meet it.” “ In reply,” says the Judge, “ I expostulated warmly with him on the subject, pointing him to the fact, that but for his undertaking, the note would have been paid out of the income of ’39.” In consequence, however, of the doctor’s intimation, the Judge “ required Mr. Murray to meet him at his own house, and give him the mortgage.” The complainant did, in fact, take up the note, but, as he says in his bill, “ he did not inform Judge O’Neall and Mr. Murray of the fact, until after the mortgage was executed.”
    The mortgage bears date 7th January, 1840. After reciting that Judge O’Neall was the indorser of Murray’s note, then in bank, negociated for the benefit of the Limestone Springs company, it was stipulated that, if he should be compelled to pay the same, or any part thereof, he was .authorised, in satisfaction of the amounts so paid, to receive from Col. Gregg any moneys he might collect on demands in his hands, belonging to the company, and if they were not collected by Col. Gregg, then that Judge O’Neall should receive from any one who had collected the debts and interest, in certain cases therein enumerated, in favor of the Limestone Springs company; and if these should be insufficient, “ then as security for the re-payment of the sums which may be so advanced to him, he, Murray, assigned and set over to him three slaves, by name, (fee. the stock of mules, wagon, hogs, cattle and oxen, and the whole household and kitchen furniture, belonging to the Lime» stone Springs company.”
    
      It does not appear that subsequent to this transaction any meeting was ever again held, either of the President and- Directors, (constituting the government,) or of the stockholders of the Limestone Springs company. Judge O’Neall says that he “ at that time, and for months after-wards, supposed the doctor intended to be the owner of the Springs, and that in the price he would give, his own debt and those of all the other creditors would be paid.” During the summer of that year, he found, however, that the complainant had abandoned the idea of purchasing, and he, the witness, foreseeing, from circumstances, the bankruptcy of the company which was approaching, and “thinking the doctor ought to have the benefit of the mortgage, (if it could avail him any thing,) on his return home wrote the assignment on the mortgage, and enclosed it, by letter, to him.” This assignment bears date 24th September, 1840, and stipulates that the assignor is, in no shape, nor in any way, to be made accountable for the same.
    The commissioner’s report states, that the sales of the personal property included in this mortgage, amounted to $3187 41.
    The contest is between the execution and general creditors of the Limestone Springs company, and a creditor claiming a specific lien.
    Whatever may be the strength of the complainant’s claim, it would seem from the terms of the instrument, that the fund in the custody of the court cannot be made chargeable, until it has been shewn that the other sources mentioned in the mortgage have been exhausted, and have proved inadequate. But this is not the principal difficulty.
    It is insisted that the mortgage of 7th January, 1840, was executed by Murray without any authority on the part of the corporation. It was not suggested, or rather it is not perceived by the court, that he had any other authority, than that derived from the resolutions of 18th January 1839. Judge O’Neall says these resolutions were placed in his hands when he received authority to make the loan, and that when he, the witness, afterwards agreed to become his indorser, he “ was to be secured, if necessary, by the mortgage which Murray was authorized to give.” The resolution authorizes Murray to execute for the loan, a bond, as the bond of the company, and to make the real estate of the company liable for the same by mortgage. He had no authority, then, to pledge the personal estate of the company. He made no agreement to give such pledge, when, twelvemonths afterwards, he executed the instrument of 7th January, 1840 — he probably had not the resolutions before him, and the provisions of them may not have been distinctly recollected by either of the parties.
    Whether Murray was at that time authorized to execute any instrument in the name of the company, (Dr. Ravenel being then the President,) the court is unable satisfactorily to determine, without a more accurate acquaintance with the bye-laws. But if. the agreement of Murray with Judge O’Neall, in January or February, 1839, amounted to an equitable mortgage, it might, perhaps, be now established to the extent of the authority which he might then have exercised under the resolutions. But this would not avail the complainant, as the proceeds of the real estate are entirely insufficient to satisfy the elder liens.
    It was suggested that the corporation subsequently approved or sanctioned this act of Murray in pledging the personal estate. But how can this be inferred ¶ The mortgage of 7th January, 1840, is neither witnessed nor recorded. • It was, probably, never out of the possession of the mortgagee. For all his purposes the object of the mortgage had ceased to exist before the mortgage was executed. Neither the corporation, nor the government of the corporation, so far as the court can understand, ever had any knowledge of the existence of the instrument, until the institution of these proceedings.
    But it is proper to consider this case in another point of view. Suppose that, in February, 1839, when Judge O’ Neall indorsed the note of the Limestone Springs company, they had then executed to him the mortgage w7hich Murray gave him in January, 1840.
    In the summer of 1839, Dr. Ravenel agreed, at a meeting of the board of directors (he not being then a director,) that he would make advances for the company on their bond. In furtherance of that agreement, as the court understands the testimony, he was to pay for the company the note in hank.
    On the 5th December, 1839, Murray, as the superintendent of the company, reciting the agreement of Dr. Ra-venel, to pay the note in bank of $2,610, due by the Limestone Springs company, executes to him the bond of the company, in the penal sum of $5,220, conditioned to pay the $2,610, with interest from the date, of the bond, whenever thereunto requested. The note, which had thenceforth become the proper debt of Dr. Raveuel, and for which he had received the bond of the company, is accordingly paid by him. What equity then has he to set up the note, or any incident of it, when the company had extinguished the note by a higher security, which he had agreed to take % If he had literally advanced the money to the company, when the bond was executed, and they had taken up the note in bank, it is difficult to perceive on what principle he could avail himself of the mortgage, executed to the in-dorser of the note. It is not important to enquire what would have been the effect if his agreement had been with Judge O’Neall, and not with the company, for the testimony repels any such supposition. Nor is it important to discuss the effect of Judge O’Neall’s assignment to the complainant. It is plain that the-Judge had acquired no right to avail himself of the mortgage, and it is scarcely less clear, from the terms of the assignment, as well as from the testimony, that he did not contemplate to confer any new right, but only to facilitate the establishment of an equity already existing. In Hunt vs. Bousmanier, Peters, the court expressed their reluctance to interfere, and help the party to a new security, merely because that which he had agreed to receive, had, in consequence of un-forseen events, proved insufficient. “ But,” says Mr. Justice Washington, “ if the court would not interfere in such a case generally, much less would it do so in favor of one creditor against the general creditors of an insolvent estate, whose equity is at least equal to that of the party seeking to obtain a preference.”
    The court is of opinion that the complainant can derive no right under the mortgage of the 7th January, 1840.
    
      The report of the commissioner is not before the court, nor has any project of a decretal order been presented.
    It would seem to be proper, however, that the commissioner should collect any assets which may be outstanding, and belonging to the Limestone Springs company, all the creditors of which have been made parties.
    Some suggestion was made as to the payment of costs. Although the complainant has failed in the principal object of his bill, Ido not think it is a case in which he should be charged with the costs. But it was said he had made not only prior incumbrancers parties defendant, but each of the execution creditors, and many of the general creditors of the Limestone Springs company parties defendant; and it was also stated that separate answers had been filed, for nearly every defendant. Certainly this is irregular. It was said that more than twenty answers had been filed. But none of the answers were submitted to the court. If the complainant had made parties, who were clearly unnecessary, he should pay the costs thereby incurred. On the other hand, where there are several defendants, who have a common defence, although each is entitled to answer separately, he does so subject to an ultimate question as to costs, if the proceeding is oppressive, Story Eq. PL 650, S. 848. See L’d. Eldon’s opinion in the case Soioden vs. Moore, 1 Rep. 441.
    The decision of the question of costs must, therefore, be reserved until the state of the pleadings has been brought to the notice of the court.
    It is ordered and decreed, that from the funds in his hands, the commissioner pay the amount due to the defendants, who were execution creditors of the Limestone Springs company, at the time of filing the bill, according to their respective legal prioraties: that he proceed to collect the remaining assets and choses in action of the Limestone Springs company ; and that the parties be at liberty to apply for such further orders as may from time to time be necessary.
    The complainant appealed from the foregoing decree, and moved the Court of appeals to reverse the same,
    
      Because the proceeds of the property embraced in the mortgage should have been ordered and decreed to be paid to the complainant.
    
      Dawkins, for the Appellant. Henry, contra.
   Per Curiam.

This Court concur with the decree of the Circuit Court, and the appeal is dismissed.  