
    Dexter and others against Stewart and others.
    Property held in trust, does not pass to the assignees of the agent or trustee, in case of bankruptcy or insolvency.
    Where D. agreed with S. to sell and convey to him a quantity of land, and for which S. covenanted to pay 25,000 dollars in a certain time; and Z). gave S. a power of attorney to sell and convey the land, in the name of Z)., fee., S. covenanting to giveZh security for the due performance of his contract, and to indemnify Z)., fee.; and S. sold parcels of the land, and took moneys and securities, &c. from the purchasers; and, being insolvent, assigned the securities with other property: Held, that S. was a trustee, and that Z). had an equitable lien on the proceeds of the sales, and on the securities, &c. for his payment and indemnity, which could not be defeated by the assignment of S.
    THE bill, filed September 10th, 1819, by the representatives of Samuel Dexter, deceased, stated, that S. D. being seised of certain lots of land in the military tract, which were described, on the 4th of' September, 1813, entered into a contract, by deed, with the defendant, Gilbert Stewart, for the sale and conveyance of the lots, being thirty-nine, at the time, and upon the terms mentioned in the contract, which was set forth in the bill. The defendant, G. S., on his part, covenanted to pay S. D., on or before the 14th of September, 1823, the sum of 25,000 dollars; and that on the 14th of September, 1815, he would pay S. D. one year’s interest on that sum, at six per cent, and the like interest annually thereafter, until the principal was paid. That if the interest became in arrear for three months, he would, on request, pay the principal and interest, and would give collateral security for the performance of the contract, when demanded, on sufficient real estate in Albany ; or, on failure to do so, would pay the principal and interest. The deed recited a power of attorney, from S. D. to G. S., authorizing him 
      to sell any of the lots, to compromise any disputes concerning them, and to represent S. D. in regard to the samej and G S. covenanted, that he and his substitutes would use the power only for the purpose of carrying into effect that agreement $ and that he would indemnify S. D. from all costs and damages which might happen in respect to the premises. That G. S< was to have the title of S. D. to the lots, with all the advantages and disadvantages thereof, on performing his covenants ; and neither party were to have recourse against the other, for any profit or loss which might arise on the title, &c. The bill stated, that the power of attorney was given to G. S. as trustee of S. D., to enable him to make sales of the land, in the name of S- D., and for his benefit, according to the terms of the contract j that G. S. proceeded to make divers sales and contracts, &c. That S. D. died the 5th of May, 1816, intestate, and the plaintiffs, who are his administrators and heirs, on the application of G- S., executed a confirmation of the power of attorney of the intestate, without any knowledge of what had been done by G. S., &c. The bill further stated, that G. S. had received above 10,000 dollars, &c. That on the 25th of August, 1819, the plaintiffs demanded of G. S. security, according to the terms of the contract, which he neglected to give ; and on the 2d oi September, 1819, the plaintiffs revoked their power of attorney to G. S. That it is pretended by the defendants, that G. S., being insolvent, on the21st of August, 1819, assigned certain estate to the defendants, D. P. Ciarle and J. S., jun.; and in that assignment he referred to the contract with S. D., and the powers of attorney, stating that he had sold divers lots, and made contracts for the sale of others, &c.; and that the lots mentioned in a schedule annexed remained unsold; that he had paid up the interest, according to the contract; and had acquired a beneficial interest, in the unsold lots, subject to the terms of the contract 5 and he conveyed and assigned to TJ 
      
      P. C. and J. S., the lots unsold, to hold in trust, and substituted and empowered them to sell the same, and appro- , priate the proceeds to pay the plaintiff, and the surplus, if any^ ag ¿[Irected, &c. The bill charged, that the assignment was made after the notice and demand of the 25th of August, 1819, and in fraud of the plaintiffs; that the contracts and securities for any part of the lots, were lent property ; and that D. P. C. and J. S', had notice thereof at the time of the assignment to them. That the defendants threaten to collect the moneys due on the contracts and securities, Stc. That G. S. has only paid interest on the contract with S. D. to the 14th of September, 1818. That he has abused his trust, and received above 10,000 dollars, for which he ought to account, &tc. Prayer, that the assignment from G. S. to the defendants, D. P. C. and J. S., be declared void, so far as relates to the said lands of S. D.; and that the securities, Szc. be assigned over to the plaintiffs, and for general relief; and that an injunction issue, 8$c.
    The defendants answered, admitting the material facts stated in the bill, but denying any fraud, &.c.
    The cause was heard on the bill and answer.
    ■ S. A. Talcot, (A. G.) Hoffman, and J. H. N. Yates P for the plaintiffs.
    
      A. Han Hechten, for the defendants.
   The Chancellor.

The just construction of the agreement, with its accompanying power of attorney, would seem to require that the proceeds of sales, under the power, should be strictly and specifically applied to the discharge of the debt due to Dexter, and to the payment of the costs and charges necessarily created in the due execution of the power. It was part of the express covenant of Stewart, that the power was to be used only for the purpose of carrying into effect the agreement. Under this construction, Stewart became a trustee, and took contracts . . and securities, and received the proceeds of sales m that character. The securities were not his property, to be by him disposed of for his own benefit, until Dexter was paid, as well as indemnified against responsibilities incurred by the use of the power. Unless we are to consider that Dexter had an equitable lien on the securities and contracts taken by Stewart, it would be impossible to render the power effectual, in carrying the agreement into effect, consistently with safety to the rights of the grantor, and consistently with the evident intention of the parties.

These contracts and securities did not pass to the assignees of Stewart, except subject to the same equities, and the same rights and claims of the plaintiff, that existed against them while in the hands of Stewart. It was not in the power of Stewart to assign them absolutely, without a breach of duty and of good faith; and the assignees of a bankrupt, in such cases, stand exactly in the situation-of their principal, and with no greater rights. It would, under the circumstances, to use the words of Lord Hardwicke, “ be the hardest thing in the world to say, these securities should go to the creditors at large.” Though a chose in action be taken in the name of the agent, it does not pass, by his act of bankruptcy, to his assignees, provided it be taken and held in trust. (Godfrey v. Furzo, 3 P. Wms 185. Ex parte Dumas, 1 Atk. 231. Ex parte Sayers, 5 Vesey, 169.) In this case, demand for security, in pursuance of a provision in the agreement, was made prior to the assignment, and the assignees are presumed to have known of it, as they knew of the agreement and the power, at the time of the assignment. The whole principal and interest became due by a refusal to give the security demanded, and the plaintiffs are now entitled to demand the entire debt, as well as indemnity against the costs and charges accrued under the agency. or to have the lands still unsold, and the contracts and securities taken for lands sold, assigned over to them, to ^ use(j for those purposes, and for the payment of the costs of this suit; and the surplus (if any) remaining after these purposes are answered, to be returned. I shall, accordingly, grant relief to this extent, and shall direct a reference to take an account of the amount due, and of the proper costs and expenses incurred under the agency, and justly chargeable upon the fund, and that the assignees, by a short day after the report shall have been made and confirmed, pay and indemnify, or convey the unsold lands, and assign over the Contracts and securities to the plaintiffs, in trust, to be used by them for their payment and indemnity, under the direction of a Master.

Decree accordingly.  