Opinion by
Mr. Justice Deant,
The Bienville Water Supply Company, with a capital stock of $500,000, is a corporation chartered by the state of Alabama to supply water to the city of Mobile; it was further authorized to issue bonds to the amount of $750,000. A small amount of the capital was actually subscribed and paid; the company obtained options on several pieces of real estate, had an office and [95]*95furniture ready for the transaction of business; the estimated cost of the construction of the plant was $750,000. Thus matters stood on 10th of April, 1886, when the company entered into a written contract with Samuel R. Bullock & Co., water-work contractors, by which Bullock & Co: covenanted at their expense to construct, equip and operate the waterworks, and deliver the same to the water company free from all liens at the expiration of six months after completion. In consideration, the water company covenanted to deliver to the contractors the $500,000 of capital stock as full paid, not subject to assessments, also the $750,000 first mortgage bonds; the stock and bonds to be delivered in monthly installments as the work progressed, based on estimates of the chief engineer as to value of work done and materials furnished the preceding month. On the completion and acceptance of the work, final delivery of all the bonds and stock to be made. Before the acceptance of the work, the company delivered the stock and bonds. The contractors proceeded with the work of construction; as they were to receive and had received nothing but paper (stock and bonds) for their work, of course, unless they were men of abundant capital, they had to procure money on this paper. During the first year, Wm. G. Hopper & Co., bankers, of New York, made advances to Bullock & Co. on their notes, taking the bonds as collateral, and by the 13th of June, 1887, had loaned them $375,000, equal to 50 per cent of the par value. Then, an agreement was entered into between Hopper & Co. and Bullock & Co., by which the bankers agreed to advance to the contractors, in two equal installments, 16 per cent additional on the par value of the bonds, the last installment of 8 per cent to be paid on completion of the work free from all incumbrances; as additional collateral to the bonds, Bullock & Co. were to deliver to Hopper & Co. the $500,000 capital stock. Hopper & Co. further took an option to purchase at any time up to eight months after the completion of the waterworks the whole $750,000 of bonds at 92-|- per cent of their face value. Under this agreement, Bullock & Co. continued the work until October 26,1887; during that time, Hopper & Co. had advanced to them 8 per cent of the sixteen, or about $60,000. It was then clear, the additional sum of 16 per cent, about $120,000, under this last agreement, made four months before, would not nearly [96]*96complete the works; so a tripartite agreement was entered into between R. D. Wood & Co., creditors of Bullock & Co., for pipe and other materials, Hopper & Co. and Bullock & Co., by which Hopper & Co. were released from any obligation to make further advances to Bullock & Co., and they agreed to furnish R. D. Wood & Co. $200,000 more, to be applied by Wood & Co. in completing three contracts of Bullock & Co., among them the Mobile contract, which it was estimated would consume abotit $60,200 of the amount, in addition to the debt already owing to Wood & Co. by Bullock & Co. Hopper & Co. agreed to carry the debt of Bullock & Co. for a period of eighteen months after the completion of the works on four months’ renewals at 6 per cent discount; on default of renewal or payment of discount, to have the right on 10 days’ notice to Wood & Co. and Bullock & Co. to sell collateral, and when the debt due Hopper & Co. from Bullock & Co. was paid in full, Wood & Co. to control further sale of the securities. Hopper & Co. furnished the additional $200,000 to Wood & Co., who applied the same as stipulated to the completion of three contracts of Bullock & Co., among them the Mobile contract. The works of the Mobile plant were completed and put in full operation; the stocks and bonds issued by the Bienville Water Company to Bullock & Co., and by them delivered to Hopper & Co., are in their and Wood & Co.’s possession. Bullock & Co. are insolvent, hut became so after the completion of the Mobile contract; at the date of their insolvency, they owed to these plaintiffs, for supplies bought by them for the Bienville Water Supply Company, a balance of over $41,000, they having been paid in cash $161,000.
The plaintiffs filed this bill against Hopper & Co. and R. D. Wood & Co., averring the material facts in substance as we have stated them, and praying: 1. That the stock and bonds of the Bienville Water Company be declared a trust for the construction of the works.
2. That the agreement between Bullock & Co. and Hopper & Co. be declared fraudulent, and decree made that it be canceled.
3. That plaintiff either be decreed subrogation under the tripartite agreement, or that it be declared fraudulent and void as to them.
[97]*974. For an account and sale of the stock and bonds.
To this bill, defendants demurred, averring, that on their complaint as set out, plaintiffs were entitled to no relief as against these defendants. The court below sustained the demurrer and dismissed the bill; plaintiffs appeal, assigning for error the decree of the court. In our statement of the facts, we have made it not only as favorable to plaintiffs as set out in the positive averments, but we have also drawn the inferences of fact therefrom, which in the argument are claimed as warranted.
What appears from the bill ?
1. The plaintiffs dealt with and are creditors of Bullock & Co., who were contractors with the Bienville Water Supply Company.
2. It is not averred they had any contract with the water company, or that their materials were even furnished on the credit of the water company.
It is argued, the capital of the water company is a trust fund for the creditors of the company; concede this, that does not fix it as a trust fund for the creditors of contractors who construct the plant. If plaintiffs had contracted directly with the water company to supply the pipe to the amount of $200,000, the amount of their bill, and take in payment stocks and bonds, would that have rendered them accountable as trus-. tees to their creditor, the furnace company, out of whose metal they made their pipes ? As long as these securities were in the possession of the water company, they were a trust fund for the payment of its debts; by the contract, the company became indebted in the whole amount of the securities to Bullock & Co., and under the contract delivered them to their creditor. Bullock & Co.’s title, then, was as absolute, so far as concerned third parties, as if, instead of stocks and bonds, they had received cash. True, if there was a premature delivery, and Bullock & Co. had attempted to defraud the company, the securities would have been impressed with a trust in favor of the party defrauded, but not in favor of third parties. But even if the stock and bonds were delivered sooner than the contract called for, no fraud was intended or attempted; the contract of Bullock & Co. was fulfilled according to the intention of the parties, and the works completed by money loaned to [98]*98Bullock & Co.
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Opinion by
Mr. Justice Deant,
The Bienville Water Supply Company, with a capital stock of $500,000, is a corporation chartered by the state of Alabama to supply water to the city of Mobile; it was further authorized to issue bonds to the amount of $750,000. A small amount of the capital was actually subscribed and paid; the company obtained options on several pieces of real estate, had an office and [95]*95furniture ready for the transaction of business; the estimated cost of the construction of the plant was $750,000. Thus matters stood on 10th of April, 1886, when the company entered into a written contract with Samuel R. Bullock & Co., water-work contractors, by which Bullock & Co: covenanted at their expense to construct, equip and operate the waterworks, and deliver the same to the water company free from all liens at the expiration of six months after completion. In consideration, the water company covenanted to deliver to the contractors the $500,000 of capital stock as full paid, not subject to assessments, also the $750,000 first mortgage bonds; the stock and bonds to be delivered in monthly installments as the work progressed, based on estimates of the chief engineer as to value of work done and materials furnished the preceding month. On the completion and acceptance of the work, final delivery of all the bonds and stock to be made. Before the acceptance of the work, the company delivered the stock and bonds. The contractors proceeded with the work of construction; as they were to receive and had received nothing but paper (stock and bonds) for their work, of course, unless they were men of abundant capital, they had to procure money on this paper. During the first year, Wm. G. Hopper & Co., bankers, of New York, made advances to Bullock & Co. on their notes, taking the bonds as collateral, and by the 13th of June, 1887, had loaned them $375,000, equal to 50 per cent of the par value. Then, an agreement was entered into between Hopper & Co. and Bullock & Co., by which the bankers agreed to advance to the contractors, in two equal installments, 16 per cent additional on the par value of the bonds, the last installment of 8 per cent to be paid on completion of the work free from all incumbrances; as additional collateral to the bonds, Bullock & Co. were to deliver to Hopper & Co. the $500,000 capital stock. Hopper & Co. further took an option to purchase at any time up to eight months after the completion of the waterworks the whole $750,000 of bonds at 92-|- per cent of their face value. Under this agreement, Bullock & Co. continued the work until October 26,1887; during that time, Hopper & Co. had advanced to them 8 per cent of the sixteen, or about $60,000. It was then clear, the additional sum of 16 per cent, about $120,000, under this last agreement, made four months before, would not nearly [96]*96complete the works; so a tripartite agreement was entered into between R. D. Wood & Co., creditors of Bullock & Co., for pipe and other materials, Hopper & Co. and Bullock & Co., by which Hopper & Co. were released from any obligation to make further advances to Bullock & Co., and they agreed to furnish R. D. Wood & Co. $200,000 more, to be applied by Wood & Co. in completing three contracts of Bullock & Co., among them the Mobile contract, which it was estimated would consume abotit $60,200 of the amount, in addition to the debt already owing to Wood & Co. by Bullock & Co. Hopper & Co. agreed to carry the debt of Bullock & Co. for a period of eighteen months after the completion of the works on four months’ renewals at 6 per cent discount; on default of renewal or payment of discount, to have the right on 10 days’ notice to Wood & Co. and Bullock & Co. to sell collateral, and when the debt due Hopper & Co. from Bullock & Co. was paid in full, Wood & Co. to control further sale of the securities. Hopper & Co. furnished the additional $200,000 to Wood & Co., who applied the same as stipulated to the completion of three contracts of Bullock & Co., among them the Mobile contract. The works of the Mobile plant were completed and put in full operation; the stocks and bonds issued by the Bienville Water Company to Bullock & Co., and by them delivered to Hopper & Co., are in their and Wood & Co.’s possession. Bullock & Co. are insolvent, hut became so after the completion of the Mobile contract; at the date of their insolvency, they owed to these plaintiffs, for supplies bought by them for the Bienville Water Supply Company, a balance of over $41,000, they having been paid in cash $161,000.
The plaintiffs filed this bill against Hopper & Co. and R. D. Wood & Co., averring the material facts in substance as we have stated them, and praying: 1. That the stock and bonds of the Bienville Water Company be declared a trust for the construction of the works.
2. That the agreement between Bullock & Co. and Hopper & Co. be declared fraudulent, and decree made that it be canceled.
3. That plaintiff either be decreed subrogation under the tripartite agreement, or that it be declared fraudulent and void as to them.
[97]*974. For an account and sale of the stock and bonds.
To this bill, defendants demurred, averring, that on their complaint as set out, plaintiffs were entitled to no relief as against these defendants. The court below sustained the demurrer and dismissed the bill; plaintiffs appeal, assigning for error the decree of the court. In our statement of the facts, we have made it not only as favorable to plaintiffs as set out in the positive averments, but we have also drawn the inferences of fact therefrom, which in the argument are claimed as warranted.
What appears from the bill ?
1. The plaintiffs dealt with and are creditors of Bullock & Co., who were contractors with the Bienville Water Supply Company.
2. It is not averred they had any contract with the water company, or that their materials were even furnished on the credit of the water company.
It is argued, the capital of the water company is a trust fund for the creditors of the company; concede this, that does not fix it as a trust fund for the creditors of contractors who construct the plant. If plaintiffs had contracted directly with the water company to supply the pipe to the amount of $200,000, the amount of their bill, and take in payment stocks and bonds, would that have rendered them accountable as trus-. tees to their creditor, the furnace company, out of whose metal they made their pipes ? As long as these securities were in the possession of the water company, they were a trust fund for the payment of its debts; by the contract, the company became indebted in the whole amount of the securities to Bullock & Co., and under the contract delivered them to their creditor. Bullock & Co.’s title, then, was as absolute, so far as concerned third parties, as if, instead of stocks and bonds, they had received cash. True, if there was a premature delivery, and Bullock & Co. had attempted to defraud the company, the securities would have been impressed with a trust in favor of the party defrauded, but not in favor of third parties. But even if the stock and bonds were delivered sooner than the contract called for, no fraud was intended or attempted; the contract of Bullock & Co. was fulfilled according to the intention of the parties, and the works completed by money loaned to [98]*98Bullock & Co. on these securities; and out of this money, plaintiffs were paid more than $161,000 of their whole bill. It is not averred, actual fraud on Bullock & Co.’s creditors was intended by the parties to the several agreements; nor on the facts stated, is there a semblance of constructive fraud. The water company owed no duty to these plaintiffs, because it owed them no debt; Bullock & Co. owed them a debt; they also owed debts to Hopper & Co. and Wood & Co.; they paid these last creditors, for a very good reason; they furnished the money to complete the works, out of which plaintiffs and others were paid in large part their claims. Bullock & Co. did not pay plaintiffs’ whole debt, because they reached the bottom of the purse filled by Hopper & Co. and Wood & Co. before they reached plaintiffs’ balance. If defendants had not advanced the large sums they did, the securities would have been worthless ; plaintiffs would have been no better off, while defendants would have been much worse off. We fail to discover in plaintiffs’ bill any ground for the interposition of equity.
Every authority of the many cited by the learned counsel for appellant sustains beyond question the proposition, that the capital of a corporation is a trust fund for the payment of its debts, but not one of them intimates that, after such capital has been appropriated in payment of one debt, it is a trust fund in the hand of that creditor for the payment of Iris creditors.
Nor have these plaintiffs any equity which would entitle them to subrogation as parties to the tripartite agreement: Townsend v. Long, 77 Pa. 148; Zell’s Appeal, 111 Pa. 532, and the other cases cited on this question, hold, in substance, that where a fund has been set apart for creditors, they have a clear right in equity to enforce their claims upon it, although not parties to the contract.' But here the bill does not aver these securities were set apart for the benefit of Bullock & Co.’s creditors ; in fact, the averment is, that they were delivered to Bullock & Co. in payment of the water company’s debt, and transferred by Bullock & Co. in payment of their debt to defendants ; there was, from the beginning, a distinct, express appropriation to the payment, not of creditors generally, but to the payment of specific debts and particular creditors. If the law [99]*99forbade tbe preferment of creditors, then, only, could this fund be treated as a trust fund for general creditors of Bullock & Co., yet not parties to tbe agreement.
The decree of the court below is affirmed, and the appeal is dismissed.