Paterson & Mack vs. Bangs & Alcott, 9 Paige Ch. 627

The Chancellor. Independent of the objection for the want of proper parties, which was waived on the argument, the vice chancellor was right in refusing to grant an injunction in this case. This is not a bill of discovery, as the answer on oath is waived. The question therefore does not arise whether this court will in any case, after a judgment at law, entertain a bill to set up a defence in equity which the party, by the aid of a bill of discovery, might have availed himself of as a defence in the suit at law.

The general rule unquestionably is, as stated by the vice chancellor, that the complainant must come here in the first instance, if he has a legal defence and merely wishes the aid of this court to enable him to establish such defence, either by a bill of discovery or otherwise. And in this case the complainants had no defence in this court, to the joint suit against them and Paterson and Avery upon the joint agreement, which they could not have availed themselves of in the suit at law with the aid of the discovery obtained by the answer of-these defendants to a proper bill filed for that purpose.

The defence, if any, in the suit at law was a defence to the principals as well as to the sureties in the agreement, as it went to the whole cause of action against any of the defendants in the suit upon the covenants contained therein. In cases of that kind all the defendants in the suit at law, which is sought to be enjoined, are necessary parties to the injunction bill in this court. (Bailey v. Inglee, 2 Paige’s Rep. 278. Morse v. Hovey & Thayer, ante, p. 197.) In the case of Miller v.

McCan, (7 Paige’s Rep. 452,) the complainant sought to establish a defence arising subsequent to the giving of the note which he signed as a surety; and which defence would not prevent the recovery of a judgment against his co-defendant in the suit at law. Again 5 the person who is alleged to be the only witness, to establish the defence to the suit upon the agreement is bound to indemnify the complainants against the recovery in the suit at law, and is therefore an incompetent witness in their favor. And there is no allegation in the bill that they have released him or intend to release him from his liability.

In the case of Beggs & Chester v. Butler Adams, (ante, p. 226,) this was considered as a material and necessary averment in a bill of this kind. Nor is the bill properly verified to entitle the appellants to an injunction ; for the complainants only state the material facts in the bill upon information and belief. This would indeed be sufficient upon an order to show cause, if the facts were charged as being within the personal knowledge of the defendants, so that they might have denied the truth of the allegations upon oath if the same were not as alleged in the bill.

But in a case of this kind, where the complainants ask for a preliminary injunction upon facts which are not alleged to be known to the defendants, the complainants should have obtained the affidavit of the person from whom their information was obtained, and who could swear to the truth of what he communicated to the complainants as facts.

I am also inclined to the opinion that the mere fact that monies remitted to the defendants, and by them applied to the extinguishment of the prior indebtedness, were in truth the proceeds of some of the drafts accepted by them under this agreement, would not of itself be sufficient to make it their duty to apply such monies to the extinguishment of the debts arising under the agreement.

And that to constitute a valid defence to the action at law, a knowledge of the fact that the monies remitted and applied in payment of the previous indebtedness were the proceeds of subsequent acceptances should have been brought home to the defendants, at the time; so as to render them parties to the fraud which it is alleged Paterson and Avery committed upon the complainants, as their sureties, by thus applying the proceeds of the acceptances instead of remitting the same in flour to meet such acceptances according to the agreement.

Without intending, however, to express any definitive opinion upon this point, I am satisfied that it would be an abuse of the process of injunction to delay these defendants thereby in the collection of their debt, against the sureties in the former injunction bond, without requiring the complainants to bring the money into court. The order appealed from must therefore be affirmed with costs, to be paid by the appellants T. J. Paterson and E. D. Smith.