
    NOVEMBER TERM, 1846.
    John Knight vs. Henry D. Yarborough et al.
    A bill of interpleader admits the indebtedness of the complainant therein ; and when one of the parties defendant withdraws all claim to the fund, a decree in favor of the other is a matter of course.
    Where a person, on being authorized so to do, collected a debt of another, in notes of a bank then current at par, with instructions to pay the proceeds (after satisfying a debt due to himself,) over to a third person; and that third person directed a special appropriation of the money to another party, who was willing to take the notes at par, which appropriation the holder of the notes refused to make; held, that his refusal to permit the appropriation made the subsequent holding of the notes at his own risk ; and that he would be liable to the person entitled to the money for the full amount thereof in specie, though the notes received by him had greatly depreciated.
    On appeal from* the superior court of chancery ; Hon. Robert H. Buckner, chancellor;
    John Knight states in his bill, that before the 18th July, 1840, he received $>406^ in post notes of the Union Bank, for the use of Thomas Organ, and with his knowledge and consent; that on that day he was garnisheed by Mark Izod, a creditor of Organ, to which he answered on the 9th June, and expressed his willingness to bring the post notes into the circuit court, and did actually deposit them with the clerk; that on the 19th May, 1840, he had been served with a notice by Henry D. Yarbo-rough, that he claimed the money, a copy of which notice, is exhibited with the bill; that Yarborough subsequently sued him to recover this money ; that he has always been ready and willing to pay the post notes to whoever was entitled, and desirous only to be protected from the conflicting claims of Organ’s creditors, who are prayed to be made defendants, and required to interplead and settle their rights.
    The answer of Izod states that, as sheriff of Adams county, he collected a judgment of Knight v. Organ from Yarborough, as security oil forthcoming bond for $420 ¿1, which was paid over to Knight at the spring term, 1839; that when Yarbo-rough paid the money, he informed respondent that Knight had a judgment against one Plosea, on a note which was held as collateral for said debt, and that Organ had agreed that Yarbo-rough should receive the money when collected of Hosea ; that afterwards an execution came to his hands in the case of Knight v. Hosea, on which he collected $542 in Union post notes, and paid the same to Knighton the 11th Feb. 1840. Before he did so, however, Yarborough requested him to apply it to other executions in his hands against Organ, on which Yarborough was bound as security. He applied to Knight for his consent, and stated what Yarborough had said about his right to the money; but Knight refused his consent to such application of the money, and threatened him with motion ; that from information he had received, he believed the money belonged either to Yarborough or Organ, and that he took out process of garnishment against Knight, as stated in the bill; and that he was always satisfied the money justly belonged to Yarborough.
    The answer of Yarborough states that Organ owed Knight $323i8040, and that Knight held the note of Hosea for $467, as collateral security, and obtained a judgment on the first note, which was honored by Yarborough and paid; that it was agreed by Organ that he, Yarborough, should have the benefit of the collateral note held by Knight; that shortly after the payment of the judgment against Organ, he called on Knight and showed him the sheriff’s receipt, and requested Knight to deliver to him the note of Hosea, held as collateral, which he refused to do, but recovered judgment against Hosea and collected the money on the 18th, Feb. 1840; that the $806.$, admitted by Knight to have been received for the use of Organ, is part of the sum of $542,11, collected of Hosea; that on the 19th March, 1840, he served Knight with the notice which is made an exhibit with the bill; admits the institution of suit against Knight, and denies that he authorized the receipt of Union post notes.
    A bill filed by Yarborough against Knight was treated as a cross bill in the case ; it recites the bill of interpleader, states the recovery of judgment by Knight against Organ, and the delivery by Organ of Hosea’s note as collateral security, and the recovery of judgment on that note also; states the collection of the money by Knight on both judgments; that Organ promised him he would be safe in going on the bond in the case of Knight against him, because Knight held the collateral note, and that Organ authorized him to get the receipt given by Knight, from his attorney, Covington Rawlings, which was afterwards delivered by said Rawlings to him, and is made an exhibit.
    This receipt authorizes Knight to retain out of the note of Hosea Ais claims against Organ; not only the note paid by Yarborough, but his account of $ 135. He states that he was induced, by the promises of Organ, to go on the forthcoming bond, and that he informed Knight of the agreement between Organ and himself before the payment of the forthcoming bond. That before the payment of the money, Knight promised him an order for the money in tl^e case of Hosea so soon as it should be paid; but after the payment he refused so to do without retaining about $150, which he asserted was still due to him from Organ on account. That previous to the payment of the money on the forthcoming bond, Organ had removed from this state; — he had no knowledge that Organ ever authorized the receipt of Union post notes; he himself never authorized Knight to receive them.
    The answer of Knight to the cross bill, among other things admits the receipt of Hosea’s note, as collateral security, the proceeds of which are to be applied not to the note of Organ alone, but generally to the payment of his claims against Organ, or to be returned to him; he denies that he ever promised Yarborough to pay him the amount of the judgment, or any part of it, nor did he ever promise in any way to give him the benefit of an order for it; states that Yarborough never exhibited to him any evidence of authority from Organ, to receive said money, or any part of it, and that he never knew that he had his receipt (if such was'the fact) before the exhibition of it in the bill; that he never stated or intimated to him before the filing of said bill, that he had said receipt, and that he never believed or had any sufficient evidence to believe that Y. was properly authorized by Organ to receive the money; states that in addition to the note, Organ owed him a balance of account of about $135, which he was fully authorized by the terms of his- receipt • to retain out of the judgment against Hosea, and repeats that' he has always been ready and anxious to pay the balance to Organ or . any other person, lawfully authorized by him, so that he could be safe from the conflicting claims of creditors. That Organ expressly authorized the receipt of the post notes, and although the notes on hand may not be the identical notes, he always kept that amount of them specially for Organ, until he deposited them with the clerk. That the sum of what passed between complainant and himself, is this ; complainant frequently told him that Organ was largely indebted to him, and that he should lose by him, and manifested anxiety to get respondent’s consent to pay him any balance that might remain in his hands, after paying himself; and was very willing to receive Union post notes, to which respondent replied expressing his willingness to pay to Organ or his authorized agent, and advised complainant to garnishee him at once, which he said' he could not do, because he was not a judgment creditor. But complainant, never claimed any legal right to demand the money, or produced any evidence of such right; he denies that he was called upon by Izod for permission to pay the money to complainant. And states (hat he offered to pay the money to complainant if Izod would withdraw his garnishment, &c. and Izod’s refusal.
    The testimony of the defendant Izod was taken; who, in addition to the facts stated in his answer and admitted in the pleadings, proved that Yarborough paid the debt to him, for which Knight had the judgment against Organ and Yarborough, which he paid over to Knight, as well as the $542.16, which he had received on the judgment in favor of Knight against Hosea, which last judgment he collected and paid over to Knight in Union money, then current. That when Knight' came to get the money collected on the Hosea judgment, he told Knight that he intended to apply it to the satisfaction of an execution in his hands against Yarborough, and upon which Knight threatened to move against him as sheriff, if he did not pay the money, upon which he paid it to him; that at that time and before he paid Knight the money he told Knight of the nature of Yarborough’s claim on the money, and his assignment from Organ, and his having paid the judgment of Knight-against Organ and Yarborough.
    On cross-examination, he stated that on the same day he paid the money on the Hosea debt to Knight he took out his process of garnishment against Kuight, as a debtor of Organ, Organ being a debtor of the witness. That though a party to the suit, he had no interest in it, and had abandoned his claim on garnishment.
    On this state of pleading and proof, the chancellor dismissed Knight’s bill of interpleader, and on the bill of Yarborough against Knight, decreed the latter to pay the former the full sum of $542.16, with interest; from which decree Knight appealed.
    
      R. M. Gaines, for appellant,
    contended,
    1. That this was a proper case for a bill of interpleader, and cited 6 Johns. Ch. R. 445; 3 S. & M. 294, and authorities cited ; 15 Vesey, 246.
    2. That the decree against Knight should have been to pay Yarborough the Union Bank notes, less the §135, due to himself.
    
      J. T. McMurran, on the same side.
    
      G. Winchester, for appellee,
    contended,
    1. That the decree of the chancellor was right, on the merits. 1 Story’s Eq. 83 — 85; Story’s Eq. PL 240, §297.
    2. That the chancellor could not decree otherwise than a payment in lawful money. 1 Story’s Eq. 83, §65; §64— § 74; lb. 590, § 635; lb. 592, § 637; Story’s Eq. PI. 240, § 297.
   Mr. Justice Clayton

delivered the opinion of the court.

The bill of interpleader necessarily admits the indebtedness of the complainant. The defendant Izod has dismissed his garnishment, and withdrawn his claim. Of course the complainant is bound to pay the other defendant, Yarborough. The only question is, as to the kind of funds for which he is responsible — whether he can pay in Union post-notes, or is bound for par funds. Knight alleges, that he was authorized to receive the Union post-notes, by Organ; but when the authority was given is not stated. At the time of the payment Organ had left the country, and had transferred the receipt of Knight for the claim, to Yarborough. It does not appear when he received notice of this transfer. Knight was authorized to collect the debt, for which the receipt was given, to pay his own claims, and pay the balance to Organ. Before the money was paid to him by Izod, he was informed that Yarborough claimed it. He refused to permit the sheriff Izod to retain it, and apply it to executions which he held against Organ and Yarborough, which Yarborough had directed to be done. He received five hundred and forty-two dollars, when, by his own showing, Organ only owed him one hundred and thirty-five i7o°0 dollars. We think his refusal to permit the application of the money to the payment of the executions against Organ and Yarborough made the subsequent holding of the notes at his own risk. At that time there were no proceedings against him to restrain such payment, and the sheriff was willing to receive the notes at par. The evidence is, that they were then current at par.

The decree below was rendered against him for the whole amount received by him. This was erroneous. He was entitled to credit for the balance of account, which he shows Organ owed him.

The decree will be reversed, and the cause remanded for further proceedings, in accordance with this decision.  