
    DENNIS TYSOR and another against THOMAS L. LUTTERLOH and another.
    
    Where a note, prepared for the purpose of being discounted at a bank, was left by the party, for whose accommodation it was made, with A, to be offered at bank, upon an understanding that A should draw the proceeds, and apply a part thereof to the discharge of a smaller note, then duo to the bank, and the balance to certain debts which the principal owed him, and on the refusal of the bank to discount the note, it was further agreed between the same parties, that A should keep the note as security for the debts due him, it was Held that a judgment obtained in a court of law, on . such note, could not be impugned for any matter that could have been pleaded to the action at law, and that it was in the first place applicable to the indemnity of the party, paying the debt in bank, and that the remainder was applicable to the claims of A against the principal.
    Appeal from an interlocutory order of the Court of Equity o.f Chatham, continuing an injunction.
    The plaintiff, Dennis Tysor, being indebted to the Bank of Fayetteville, in the sum of $101, with Harris Tysor and G. "W. Palmer, the intestate of the defendant Goldson, his sureties, and not being prepared to pay it off, made a new note for $250, payable to the defendant, W. G. Broadfoot, cashier of the bank of Fayetteville, with the same sureties, and left it with the defendant, Lutterloh, to be presented to the bank for discount. Lutterloh presented the note, but not being accepted by the bank, he retained it, and afterwards brought suit on it, in the name of Broadfoot, and recovered judgment in the Superior Court of law of Cumberland county.
    jibe bill is filed to enjoin the collection of this judgment, alleging that, having learned that the bank would not renew a note of the size of one the plaintiffs owed, and it being inconvenient to pay the money, the one in question was prepared, partly to take up the former note, and the remainder of its proceeds was to remain in the hands of the defendant, Lutterloh, subject to the draft of the plaintiff, Dennis Tysor, and that the said defendant had no right or authority to detain the said note, or put it in suit, or use it in any way, and prayed for an injunction, which was ordered.
    
      The defendant, Lutterloh, in his answer, gives a very different account of this transaction. He states that Dennis Tysor owed him three several notes of $50, $56,63 and $170, and much doubting his ability to pay the whole, he received from him the note in question, in order to secure a part; that concerning that, it was understood and agreed that he should advance to him, Tysor, $50 more and surrender to him his note of $50, so that there should be due him one simple contract debt of $100, and two notes, that on getting the $250 note discounted, he was to apply, out of the proceeds, the necessary amount to take up the $101 note and interest, and the remainder, first to the simple contract debt of $100, and the balance to the two notes of $56,63 and $170 ; that he offered the note in question for discount, but it was not accepted by the bank, and he immediately informed Dennis Tysor of the fact, urging him to make some other arrangements as to these debts; that he insisted on defendants retaining the note as security for what he owed him, which, being the best he could dp to save himself, he agreed to; that having obtained a judgment, at law, upon this note, in the name of the payee, Broad-foot, he insists that he is entitled to use it for his indemnity. He denies that he promised to surrender this note, or that he ever said that it ivas worthless, and should never come against the parties.
    On the coming in of the answers, his Honor, on a motion to dissolve the injunction, refused to do so, but ordered it to be continued until the hearing; from which the defendants appealed.
    No counsel appeared for the plaintiffs in this Court.
    Uaughton, for the defendants.
   Pearson, O. J.

We do not concur with his Honor, in the view taken by him of the question presented, upon the motion to dissolve the injunction.

Assuming that the facts bring this case within the principle of Southerland v. Whitaker, 5 Jones’ Rep. 5, that defense was available at law, and is cut off by the judgment, which is conclusive as to the existence of the debt, and we are confined to the enquiry, have the plaintiffs an equity ; that is, is there any matter or thing connected with the transaction, which makes it against conscience for the defendants to avail themselves of the advantage which the judgment gives them at law ?

The answers are fully responsive, and deny without evasion, the entire equity, in respect to the plaintiff, Dennis Tysor ; so he has no ground to stand on.

With respect to the other plaintiffs, who are his sureties, without expressing a decided opinion at this time, we are inclined to think that an equity is confessed, in regard to a part of the judgment, to wit, an amount corresponding with the bank debt and interest; for it is admitted that the $250 note was made, for the purpose of discharging that debt, upon which they were sureties, and Dennis Tysor was only at liberty to dispose of the excess. That arrangement did not go into effect, and it is not alleged that they concurred in the subsequent arrangement, by which (as Lutterloh avers) he was to retain the note, as collateral security, for the sums due to him by Dennis Tysor ; so that, as against them, Lutterloh (it would seem) is only entitled to use the judgment for the purpose of collecting such excess. It does not distinctly appear by whom the debt, in bank, was paid, if the sureties paid it, their equity, in respect to the amount, is clear. But if Dennis Tysor paid it, as we suppose to be the fact, his means of discharging the $250 note, was made less by that amount, and the effect of the arrangement, by which Lutterloh was allowed to retain it, was to make them liable, at one time, for loth of the notes, which was known by Lutterloh, not to have been the intention of the parties, and for that reason, it was against conscience for him to accept the note, as obligatory on them, for the full amount.

The order continuing the injunction until the hearing, must be reversed. The injunction will be dissolved as to Dennis Tysor, and it will also be dissolved as to Hands Tysor, and Gliolson, except as to a sum equal to the bank debt and interest. The money will be paid into office, to the end that Lutterloh may produce the notes, which he holds, so that a credit may be endorsed of the balance, after deducting the $101 and interest, advanced by him, together with costs. If only a part of the judgment is made out of Dennis Tysor, the defendant will be allowed to apply that to the part of the debt, for which Dennis Tysor and Gholson are not liable, their equity extends no further than an exemption from liability, in respect to that part. The defendants are entitled to costs.

Per Curiam, Decree accordingly.  