Although the papers in this case are very voluminous, and many points have been mooted by counsel on either side, yet its merits lie, comparatively, within a narrow compass. The complainants, as the judgment creditors of the Mississippi and Alabama Railroad Company, have levied an execution upon a number of negro slaves in the hands of the defendant, Petrie, in which they allege the said company has an equitable interest, which they ask to have applied to the payment of their judgments. The facts of the case are substantially these:
On the 23d of Feb., 1S37, Petrie contracted with that company to construct a railroad from the town of Brandon to the town of Jackson, and agreed to furnish all the materials therefor, and also a number of cars, a locomotive engine and tender, and everything else necessary to the construction and finish of the road, and to put the same in complete operation, within two years from the date of the contract; the company agreeing to pay him $204,000, at such intervals as the prosecution of the work might require. One hundred thousand dollars Petrie was to lay out in negro slaves, to work on the road, and was to give a mortgage upon them, and all his other property, as security for the faithful performance of his contract. The com*315pany also bound themselves to pay as an extra charge, not exceeding two dollars per cubic yard, for any excavation that might have to be made through rock. It appears, that Petrie purchased with the advance made to him by the company the slaves levied on by the complainants, and continued to work on the road, until, in December, 1839, at which time it is alleged, that by a fraudulent combination with the company, he abandoned the road in an unfinished and worthless condition, after having received more than the amount of money agreed to be paid to him, for the completion of the whole work, and for furnishing cars, locomotive, and other appendages necessary to put the road in full and complete operation. The complainants insist, that as to them, Petrie is still to be regarded as the debtor of the company, at least, to the amount of money received by him, over and above the value of the work actually done, and that that sum should be decreed to the satisfaction of their judgment, by enforcing the equitable mortgage growing out of the contract upon the slaves and other property. Petrie denies that he is in any way indebted to the company, or that they have any claim upon the slaves, and insists upon a settlement had with them, by which he is released from all liability on his contract, and the mortgage ordered to be cancelled.
The argument of counsel, upon this statement of the case, suggests the following questions for examination :
1. Whether, at the time of the alleged settlement and discharge, Petrie was really the debtor of the company.
2. Whether that indebtedness was released by the company without payment, and without any just consideration ; and if so, whether such release must not be regarded as fraudulent and void in law, as against the complainants, who- were then the judgment creditors of the company.
3. Whether the nature of Petrie’s liability to the company is of that character, which may be pursued in equity ; and, whether the complainants show a case which authorizes them to sustain such bill for that purpose. These inquiries will be disposed of in the order in which they are stated.
1. Upon the first question, it may be confidently stated, as the result of the whole testimony upon the subject, without going into a *316critical analysis of the proofs, that Petrie had received, at the time when he abandoned the road, and obtained a discharge from- his contract, a sum of money greater than the amount agreed to be paid by the original contract, and, at least, equal to the additional sum claimed by his answer, on account of his contract with the Jackson and Brandon Bridge Company, which he insists was assumed under his contract for the construction of the railroad. In the face of these opposing facts, it is, however, insisted, that Petrie’s failure to complete the road was the result of the failure of the company to furnish him with the necessary amount of funds, and their neglect to procure the right of way for the location of the road. These excuses seem to have originated since the commencement of this suit. It is true, some of the defendant’s, witnesses state, generally, that the company failed to comply with their part of the contract; but at what time ; on what occasion ; in what particular; or to what extent, is left wholly unexplained and undefined by any part of the testimony. Other witnesses state, in vague and general terms, that the company failed to furnish the defendants with par funds. But at what time the demand was made ; whether before, or after the expiration of the time in which the contract was to be completed ; whether, at the time of such demand, an advance was necessary to the due progress of the work; or whether such demand was made before, or after the company had already advanced an amount greater than that called for by their contract, are questions which the testimony leaves entirely unanswered. And yet, direct evidence on these points was indispensable to establish the alleged default of the company. To discharge one party to a contract, on the ground of the failure of the other to perform his part, such failure must be clearly established, by full, direct, and satisfactory evidence. Opposed to these general statements is the testimony of W. H. Shelton, president of the company, who says, on cross-interrogatory, that he does not believe that the company was in arrear to Petrie on account'of his contract, at the time when he ceased to work on the road. The deposition of Win. G. Bullock, who was book-keeper and teller of the company, proves, that upwards of four hundred thousand dollars had been advanced on account of the road, up to the 18th of November, 1839 ; more *317than a month previous to the time at which the work is alleged to have been abandoned for the want of funds to carry it on. Shelton says, that including the money advanced to obtain the iron rails, there had been advanced the sum of $312,000 ; and Petrie himself admits, by the exhibit to his own answer, that he had received the sum of $298,000, a sum greater than the amount which would have been due him according to' his own claims, and it will appear that a large portion of this amount was advanced during the first year of the contract. Now, what did the company receive in return for this large sum of money ? It is admitted, that no turnouts, platforms, water-stations, warehouse, nor engine-house had been built. No cars nor locomotive had been furnished, and no bridge built over Pearl river ; and yet, all these were to be done and furnished for a less sum of money than was actually received. Thus it will appear, that not more than half the work was done ; and that nothing was furnished necessary'11 to put the road in complete operation, according to his contract, at the time when he abandoned it. From this view of the case, I think it evident, that there was no failure on the part of the company to supply the necessary funds ; and that it is equally evident, that Petrie was, at the time of the alleged settlement, largely in debt to them, for advances made to him on account of the contract. There is equally as little ground for holding, that he was prevented from completing the road, for the right of way, along the tract over which the road was to pass. There is no proof, to show that there was any interruption or delay on this score, during the two years, within which the contract was to be completed ; on the contrary, he appears to have had the undisturbed control over the entire way ; for he states in his own answer, that the grading was done the entire length of the road, and nothing further seems to have been attempted by him towards its completion. I then conclude, upon this feature of the case, that Petrie was not hindered from performing the work, either by the want of means, or the want of the right of way ; and that having received large advances, and abandoned the road without finishing it, he must have been the debtor of the company, when they ordered him to be released and discharged from his contract. If any embarrassment existed as to means, it may *318perhaps be accounted for by the fact, that Petrie vested some forty or fifty thousand dollars in slaves, over and above the amount authorized by his contract, instead of applying it to the construction of the road.
2. The next question in the order of investigation, involves the nature and character of the alleged settlement, by which it is insisted, that Petrie was discharged from all liability to the company. Without stopping to inquire whether this settlement was consummated by the company, with such forms and solemnities as would give it validity as a corporate act, I proceed at once to inquire into its substance and effect upon the rights of the complainants, supposigg it to be duly and .technically executed. It is to be regretted, that the testimony in the case sheds, so little light upon this branch of the subject. There is nothing to. show that there ever was a mutual accounting between the parties. There are no items of charge and discharge'; no balance-sheet struck, nor anything else, going to show what constituted the basis of the settlement. The resolutions upon the subject simply declare, that Petrie is discharged, and direct the mortgage to be cancelled ; but whether any consideration passed ; whether there was any settlement of accounts, or whether the resolutions were purely voluntary, are matters which are nowhere fully explained. There is, to be sure, a singular paper filed with the answer (as exhibit N.), bearing no date, and having no one’s name, or other mark of authenticity, but which professes to be <can approximate estimate” of damages sustained by Petrie, by reason of the assumed failure of the company to comply with its part of the contract. , In this paper, the most extravagant and speculative dala, having no foundation in the facts and principles of the case, are assumed, as grounds for the calculation of damages ; and then, the round sum of eighty-five thousand six hundred dollars is set down as the result; which sum, it is assumed, might, upon certain contingencies, have been either made on the one hand, or saved on the other. And the answer informs us, that, by this process, Petrie brought the company in debt, and that they agreed to allow his claim for damages, so far as to balance the money accounts between the parties.
A settlement made upon such vague hypothesis, and upon such *319loose and speculative principles, relinquishing assets of an insolvent debtor, must be regarded as purely voluntary ; and can have no claim to validity, when opposed to a judgment creditor. It seems to have been of a kindred character to another settlement, spoken of by some of the witnesses ; in which Petrie was given a formal discharge from all his liabilities, when about to proceed to New Orleans, in order to prevent him from being garnisheed there, by the creditors of the company. But I consider it perfectly immaterial to this controversy, whether fraud, in fact, was intended by this settlement or not. It is a matter of public history, and is also attested by the evidence in the case, * that this company was then on the eve of hopeless insolvency, and that the directors were dealing with its assets in the most reckless manner. A voluntary transfer, or 'relinquishment of any portion of its assets, under such circuiflstances, is, within the contemplation and policy of the law, fraudulent and void as against creditors. The directors were the trustees of the corporate funds, and were bound to administer them in good faith, for the benefit, alike of the stockholders and creditors of the institution ; and any one receiving sych funds, from their hands, by voluntary transfer, or upon a mere assumed and colorable consideration, would, upon general principles, be bound to account to those for whose use such funds were held. I think, then, that it is sufficiently established, that Petrie was in debt to the company for advances made to him, at the time of the alleged settlement, and that that debt was released without any valuable consideration being received therefor. The claim to damages, by which this debt was balanced, is wholly unsustained by any fact in the case. Even Petrie’s answer shows that it is utterly groundless. It will be recollected, that the assumed basis for this claim is the injury sustained by reason of the failure of the company to furnish the requisite funds ; and yet the answer shows that Petrie was so far indebted for advances made, as to make it necessary that he should get up a claim for $85-600, in imaginary damages, in order to balance accounts.
3. The next question is, whether the nature of Petrie’s liability to the company is of that character, which may be pursued in equity by a .creditor of the company ; and whether the complain*320ants show a case which authorizes them to sustain a bill,for that purpose. In regard to the first branch of the inquiry, it seems now to be the rule in England, that in order to render a conveyance void, made by a debtor, it is necessary that the conveyance should embrace property liable to be seized by an execution at law, and applied to the payment of the debts of the grantor. As a consequence of this doctrine, it has been held, that a voluntary transfer of stock, choses in action, or other property not liable to be taken in execution, is good, notwithstanding the provisions of the statute of 13 Elizabeth.
It is said the provisions of that statute- do not enlarge the remedies of creditors, nor subject to their demands any property of the debtor, which was not at law, or in equity, previously liable. Roberts on Frau. Con. 421, 422; Atherly on Mar. Sett. 220, 221; Dundas v. Dutens, 1 Ves. jr. 196; M'Carthy v. Gold, 1 Ball & Beatty, 390 ; 2 ib. 223 ; 1 Story’s Eq. 361.
Such a distinction seems to me to be utterly inconsistent with the rights whiclj result from the relation of debtor and creditor, and has no foundation in sound morals or just reasoning. It makes the right of the creditor depend upon the form and character which the fraud or caprice of the debtor may give to his property. It is difficult to perceive any solid reason why the intangible property and effects of a debtor should not be subjected to the payment of his debts equally with his chattels, which may be the subject of seizure and sale, under an execution at law. The abstract right of the creditor is as‘perfect in the one case as in the other. The spirit of an enlightened jurisprudence requires that the property, rights, and interests of the debtor, whatever may be their form, if they have an ascertained value, should be subject to the payment of his debts. Any other rule leads to fraud upon the creditor, and encourages dishonesty in the debtor ; who would only have to convert his property into the bond or promissory note of a third person, or into stock of some kind, and then settle the same on his family, in order to obtain a perfect immunity from his creditors.
A rule so fraught with mischief, and so subversive of the plainest dictates of reason, has no other support than that derived from the rule, which exempts mere choses in action from execution. *321From that rule it is concluded, that as the creditor has no lien he has no right to follow the choses in action of his debtor, in the hands of a voluntary assignee. The reasoning by which this rule is supported is too purely artificial and technical to find any sanction in a court of equity ; it is fully answered by the language of Lord Hardwicke in the case of Edgell v. Haywood (3 Atk. R. 357), where he says ; “ The court does not proceed in such case, on the ground of a lien, but only considers it a part of the property of the debtor, which the creditor cannot come at, without the aid of this court.” The modern English doctrine upon this subject was fully examined, and its unsoundness as fully exposed, by Chancellor Kent, in the case of Bayard v. Hoffman, 4 John. Ch. Rep. 451. The same question was also ably examined, in the case of Hadden v. Spader, 20 John. R. 554.
In that case-it was held, that the mere choses in action of a debtor might be followed into the hands of a voluntary assignee, and subjected in equity to the payment of a judgment creditor’s claim. The same doctrine has been recognized by the Supreme Court of Kentucky. In the case of West v. Saunders (1 A. K. Marsh. Rep. 108), it was held, that an assignment of a debt, made with an intent to delay or defeat creditors, may be reached tíy them, whether they have a lien or not. But if precedents were wanting, I would now establish one in analogy to the proceeding authorized at law by our statutes, in favor of a judgment creditor, whose debtor has no visible property upon which an execution can act. In such case, he may garnishsee the debtor of his debtor, and have the means of the former applied in satisfaction of the debt of the latter ; and, surely, the remedies of a court of equity should be equally as broad and comprehensive as those of a court of law'. But in this particular case, the defendant’s counsel suggest these additional objections to any relief. 1. That if there is any liability to the company, on the part of Petrie, it consists in unliquidated damages, that can only be ascertained by an action of covenant on the contract; and that it is not therefore such an interest as can be pursued by the creditors of the company, either at law or in equity. 2. But that, at any rate, the liability of Petrie to the company amounts to mere equitable assets, and cannot be reached *322by the complainants, until they have exhausted their remedies at law by a return of nulla Iona, to an execution on their judgment, and that there is no evidence to that effect. 1. As to the first objection, I am fully satisfied, upon a fair construction of the agreement between the parties, that the mortgage to be given by Petrie was not only intended as a guaranty for the performance of the work, but was equally designed, at least, indirectly, to cover the amount of money that might be advanced upon the contract, in case the work was not done. What was the object of the mortgage ? It is admitted that it was designed as indemnity to the company, against any loss or damages they might sustain by reason of Petrie’s failure to comply with his part of the contract.
I pause here to inquire, in what items would the damages, thus provided against, chiefly consist ? By the terms of the contract the company was to advance large sums of money, at short intervals, and in such sums as the prosecution of the work, and the purchase of the necessary appendages, might require. It is too clear for argument, that these sums of money would constitute the leading criterion, in fixing the quantum of damages that might result from Petrie’s failure to complete the road, and are therefore, in legal contemplation, clearly embraced within the mortgage. To this extent the damages would be regarded as liquidated ; and, in this point of view, I must consider the mortgage as an undertaking, by Petrie, to refund the money agreed to be advanced, if-he failed to perform the work, rather than as an indemnity against any speculative injury which might be sustained by the company, by reason of his failure to complete the road within the time prescribed by the contract. 2. Whether thé1 second objection is well taken or not, must depend upon the facts of the case. I have repeatedly decided, in accordance with the current of authority upon that subject, that to entitle a judgment creditor to come into this Court, for the purpose of having his judgment satisfied out of the equitable assets of his debtor, he must show that he pursued his remedies at law to every available extent, without being able to realize his debt. Such a showing is of the substance of his right to relief in this Court, and is not waived by a general answer. M'Elvain v. Willis, 9 Wend. 548; 4 John. Ch. 671, 681, 687.
*323The foundation of his right to relief here, is, that he has none at law. The usual evidence in support of that proposition, is an execution returned no property found. It remains to be seen, whether the complainants have brought their case within the rule laid down. It appears that they have two distinct judgments at law against the Mississippi and Alabama Railroad Company. Upon one of these an execution was levied upon some town lots, which were sold for a small sum, and the sheriff returns that there was no other property of the defendant out of which to make the remainder of the money due on the execution. The first execution on the other judgment was returned no property found. Subsequently, executions were issued on both judgments, and levied, in part, upon the slaves mentioned in the bill; upon which Petrie, in his bill, enjoined any sale thereof, setting up title to the property irj himself. At this stage of things the commissioners filed their bill, alleging that the defendants in the judgments have an equitable interest in the property levied on by these executions, and praying that that interest may be ascertained, and subjected to the payment of their judgments. The evidence furnished, by the return of nulla bona to both executions, sufficiently establishes the complainants’ right to equitable relief in the premises, unless the presumption thus raised is disproved by the subsequent levy on the slaves and other property. The defendants’ counsel say, that the case shows that there was a levy on property under the execution at law, still subsisting and undisposed of, at the time of the filing of the bill. This is very true ; but the bill also shows, that the interest of the defendant in execution, in the subject of that levy, is of a character that cannot be subjected to sale under a judgment at law ; and hence results both the right and the necessity of coming into this Court to make that levy available. The bill, therefore, as well as the facts of the case, are in support of the conclusion resulting from the return of nulla bona; because, they show that the defendants in execution have nothing which can be reached by process at law. The position taken by counsel would leave the complainants entirely remediless. If they attempt to move at law, they are met with the objection, that there is nothing in the subject of the levy upon which an execution can act: if they come into equity, the pendency of a levy at law is pleaded as an *324estoppel to any relief here. The case of Perry v. Nixon (1 Hill’s Ch. Rep. 336) is a decision upon this very point. It was there held, that a judgment creditor, who had levied an execution upon the equitable property of his debtor, was entitled to the aid of a court of equity in subjecting such property to the payment of his debt. In the case of McDermott v. Strong (4 John. Ch. Rep. 691), Chancellor Kent, referring to the equitable interest of a debtor, says the creditor must first take out execution 'and cause it to be levied or returned, so as to show thereby that his remedies at law fail. I am satisfied from these authorities, and upon principle, that the defendants show sufficient in this particular to entitle them to the relief asked. I do not find it necessary to determine, in ,this case, whether the complainants could sustain a bill without having first pursued a course at law, upon the ground of a trust in the corporation for their use. Such a bill was sustained under very similar circumstances by Mr. Justice Story, in the case of Wood v. Dummer, 3 Mason, 308. I think the complainants have gone a sufficient length at law to entitle them to invoke the aid of this Court.
I had some doubt, upon first looking at this case, whether the contract was not to be regarded as mutual and dependent in its parts, and as entire and indivisible in its nature ; and whether, as a consequence thereof, Petrie would not be bound to refund the whole amount of money received, without retaining anything for, the amount of the work actually done, he having abandoned his contract without sufficient cause. But, upon a more careful consideration of the features of the case, I think he is entitled to retain an amount equal to the actual value of the work done, to be determined with reference to the amount to be paid for the whole work. In the_first place, his abandonment of the work seems to have taken place with the assent of the company, which of itself would bind them to pay him as on a quantum meruit. In the next place, the company was bound to pay him in instalments, as the progress of the work required, and not when the work was completed. This I think must be construed as an agreement to pay so much at different periods as the work then done might be worth. This was the construction placed by the Supreme Court of New York, in the case of Cunningham v. Morrel (10 John. Rep. 205), upon a contract very similarly *325worded. In that case, the plaintiff had contracted to build a piece of turnpjke-road, for which the defendant was to pay $6000 in instalments, as the work progressed. The Court held, that the plaintiff would be entitled to recover a ratable part of the money upon showing a ratable performance of the work; but that, if he went for the whole consideration, he must show a performance of the whole work. Upon the whole, I think that I am bound to declare the settlement and release made to Petrie as'fraudulent and void, as against the complainants, as the judgment creditors of the company; and shall refer the case to a commissioner, to take testimony and to state an account, showing what - amount is due from Petrie to the company, after allowing him a ratable sum for the work actually done on the road, to be ascertained with reference to the whole sum agreed to be paid for the whole work. I give no opinion now upon the point, whether Petrie will be allowed to pay such balance, when ascertained, in the depreciated paper of the company or not. That and all other questions are reserved until the coming in of the report. Let a decree be drawn accordingly.