text:
    Howell and others, executors, &c. vs. Ransom and Johnson.
    Where an attorney obtains from his client the assignment of a judgment, for a consideration so grossly inadequate that the clierft would not probably have made the assignment, if he had been fully informed of the facts which his attorney ought to have ascertained and communicated to him, the assignment will be set aside, as constructively fraudulent. And it is not necessary for the client, in such a case, to prove actual fraud on the part of the attorney.
    Even if the court is not bound, as a matter of course, to set aside a sale, by a client to his attorney, of the subject matter of the litigation, the burden of establishing the fairness of the sale, and that it was made upon a full and adequate consideration, is cast upon the attorney.
    An attorney cannot sustain a purchase from his client, without showing that he communicated to such client every thing necessary to enable him to form a correct judgment as to the real value of the subject of the purchase, and as to the propriety of selling for the price offered. And the neglect of the attorney to inform himself of the true state of the facts, will not enable him to sustain a purchase, from his client, for an inadequate consideration.

      This was an appeal by the defendant A. G. Ransom, from a decree of the late assistant vice chancellor of the first circuit. The complainants, who resided in Orange county, were the executors of I. W.-Tuthill deceased, and as such, held two leases against 0. Wheaton, of Broome county, upon one of which leases there was due to their testator about $700, and upon the other about $100. The complainants placed these demands in the hands of Ransom, who was an attorney living in Chenango county, and not far from the residence of Wheaton, for collection. Ransom brought a suit upon one of the leases, and in January term, 1832, he recovered a judgment thereon, against Wheaton, in the supreme court, for $701,77, besides costs. At the time of the recovery of this judgment, Wheaton resided on, arid was the owner of, a farm in Broome county, worth about $3000; the conveyance of which farm to him was duly and regularly recorded in the clerk’s office of that county, in May, 1829. He was also the owner of considerable stock and other personal property on such farm; but no execution was issued upon the judgment lentil after the assignment thereof, as hereafter mentioned. Wheaton was ieputed to be a slippery and trickish fellow, and for some years previous to May, 1829, had his property covered up, and had held the title to the farm in the name of another person. In January, 1833, the defendant Ransom, being in Orange county, purchased the judgment and the amount due upon the other lease, in the name of the defendant Johnson, his father-in-law, but in fact for his own benefit, for the sum of $75; and took an assignment thereof, in the name of Johnson. In May, 1833, an execution was issued upon the judgment, and was levied upon the personal property of Wheaton on his farm ; and Wheaton subsequently paid the whole amount of the judgment, and the costs of the suit, to the defendant Ransom. The bill in this cause was afterwards filed, by the complainants, at .the request of those who were interested in the estate of Tuthill, to set aside the sale and assignment to Johnson for the benefit of Ransom, and to compel the latter to pay to them the full amount collected upon the judgment, exclusive of the costs. An answer on oath from the defendants was waived. And the defendants having put in their answers without oath, a replication was filed thereto, and the cause was heard before the assistant vice chancellor, Upon pleadings and proofs. He directed the bill to be dismissed as to the defendant Johnson; who disclaimed any interest in the assignment, and who had received no part of the moneys collected of Wheaton. But he set aside the assignment, and decreed the defendant Ransom to pay to the complainants the amount collected upon the judgment, exclusive of the costs, and of the $75 paid upon the assignment; together with the costs of this suit.

      J. A. Collier, for the appellant.

      W. M. Patterson, for the respondents.
   The Chancellor.

From the view I have taken of the law

of this case, id is entirely immaterial whether the testimony of Heard is received or rejected. It is unnecessary, therefore, to consider the question, whether he had such an interest in the result of the suit as to render him an incompetent witness for the complainants. From the relation of attorney and client, which existed between the complainants and the defendant Ransom, it was mot necessary for them to prove actual fraud, on the part of the hitter, in obtaining an assignment of their judgment for about one-tenth of its actual value, including the interest which was due thereon at the time of such assignment. It is a case of constructive fraud, which relieves the blients from the burthen of proving that their attorney intentionally deceived them, or made any misrepresentation whatever in relatibn to the value of the judgment, or the probability of its collectiori. And, if the court is not bound to set aside the sale as a matter of course, upon the application of the client, in such a case, the whole burthen of establishing the fairness of the sale, and that it was made upon a. full or adequate consideration, is at least cast upon the attorney. The attorney, therefore, can never sustain a purchase of this kind, without showing that he communicated to his clients 'every thing which was necessary to enable them to form a correct judgment of the actual value of the subject of the purchase, and as to the propriety of selling at the price offered. And his neglect to ascertain the true state of the facts himself will not sustain his purchase. (Gibson v. Seyes, 6 Ves. 271.)

The fact that the assignment, in this case,,was made to the father-in-law of the attorney, instead of being directly to himself, is of itself a strong ground of suspicion. And 1 have not been able to find any proof, in the case, satisfactorily explaining that feature in the transaction. The answer of the defendants cannot be resorted to for that purpose; as it was not put in under oath, and would not therefore be evidence in their favor, even where it is responsive to the allegations in the bill. And the assignment itself is prima facie evidence of^the allegation of the complainants, that Ransom did not apply to purchase the judgment on his own account, but for a third perSom) Such an application would of course throw the complainants off their guard, as they could not suppose that their attorney, who had no interest adverse to theirs if the sale was to a third person, would advise them to sell the judgment below what he really believed it to be worth. Nor can I account for the neglect to issue an execution upon the judgment, for more than a year after it was entered,.consistently with the fairness of the purchase'. Ransom, as a lawyer, unquestionably knew that it could not subject the complainants to any additional expense to issue an execution, so as to enable the sheriff to collect the debt- out of the property of Wheaton, if he had any. It now appears that Wheaton, during all that time, was in the possession of a farm worth several thousand dollars, of which he was the real as well as the ostensible owner, and that the evidence of his title thereto, by the reconveyance from Comstock, for the consideration of $2000, with warranty, was upon the records of the county. It also appears, by the testimony of the county clerk, that the defendant Ransom was in the habit of searching the book of deeds and mortgages. Wheaton #as also in possession, and was the ostensible owner of the stock and other personal property. It was the duty of the attorney of these complainants, as they lived at a distance,, and had entrusted him with the collection of their demand because he resided near the debtor, to malee the, necessary inquiries as to the situation of Wheaton as to property. And if he did his duty in this respect, as it is to be presumed he did, he must have ascertained that he was not only the ostensible owner of the farm and the personal property thereon, but that it was understood in the neighborhood that Comstock had reconveyed the property to him. And if he had ascertained these facts, or any of them, he was bound to show that he communicated that information to his clients, before he applied to them to purchase the judgment for one-tenth of its real value. Had he done this, and at the same time informed them that there was upon the, records of Broome county a warranty deed, conveying the farm from Com-stock to Wheaton, subsequent to his discharge under the non-imprisonment act, and that there were no other incumbrances upon record which would be entitled to priority over their judgment, no one can suppose that they would have sold their judgment for the sum of $75 only. [And the result would probably have been different from what it was, if the attorney had informed his clients that he had never examined the records, to ascertain whether Wheaton was the owner of the farm in his possession, or whether it was incumbered by judgments or mortgages, which would be entitled to a preference, or even that he had neglected to inform himself whether Wheaton was the ostensible owner of the farm, or of the personal property thereomj

In any view which can be taken of this case, this purchase .of the judgment cannot be sustained, consistently with the principles which have been long settled, in the court of chancery, in relation to the dealings between attorneys and their clients, in reference-to the subject matter of the employment of such attorneys by their clients. Whether there has been actual fraud, in the particular case, is not the question upon which the claim of the client for relief usually turns ; although the forms of pleading, in such cases, usually charge the purchase of the attorney as a fraud upon the client. But where the consideration paid upon the purchase, by the attorney, is grossly inadequate, so that it is wholly improbable that the client would have made the sale if he had been fully informed of all the facts which the attorney ought to have ascertained and communicated to his client, the court is bound to declare the sale constructively fraudulent. The cases on this subject are mostly referred to by Mr. Justice Story, in his treatise upon equity jurisprudence; (2 Stor. Eq. 306, § 311, &c.;) and it is not necessary to refer to them at length here. It is sufficient to say that the decree of the assistant vice chancellor, in the present case, is fully sustained by the cases, on this subject, both in England and in our own courts.

There is no foundation for the objection that the decree made no provision for the extra counsel fees, commissions and charges of the defendant Ransom, beyond his taxable costs. He has made no claim in his answer for such allowances; nor ha’s he given any proof in support of such a claim. He does indeed show that a motion was made, by Wheaton, to set aside the judgment. But that motion was denied with costs; and the attorney who made the motion testifies, that the taxable costs of opposing was a fair compensation for the service. The presumption also is that those costs have been paid; as no claim for them has ever been made in this suit. Nor did the points made by the appellant, before the assistant vice chancellor,. ask for any deduction on account of commissions and counsel fees.

The decree appealed from must be affirmed, with costs.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    McCormick vs. Chamberlin and Moore.
    Where an answer on oath is not waived, if a simple plea to the whole bill is allowed to stand for an answer, without giving to the complainant liberty to except to the same, and where the plea is not accompanied by an answer, so as to entitle the plaintiff to except without special leave, the order of the court necessarily implies that the plea is deemed sufficient as an answer, although not necessarily a full and perfect defence.
    Bat where the complainant, in such a case, is allowed to except to the answer for insufficiency, the order allowing the plea to stand for an answer, wiffi leave to except thereto, only implies that the plea contains matters which, if put in the form of an answer, would, have been available as a defence to the whole or a part of the matters which it professes to cover; and that the complainant is permitted to except to it, as an answer, because he is entitled to a further discovery in reference to the matters of the bill.
    The complainant, however, is not obliged to except to a plea which is allowed to stand for an answer; although the order, allowing the plea to stand for an answer, gives him liberty to call for a further answer, by exceptions for insufficiency; but he may file his replication, and proceed to take proofs as to all the material facts charged in the bill, in the same manner as if the defence, set up in the plea, had been put in as an answer originally.
    Liberty to except to an answer, for insufficiency, is never granted where an answer on oath is waived by the complainant’s bill.
    Allowing a plea to stand for an answer, without any provision in the order that the complainant have liberty to except’ for insufficiency, in a case where an answer on oath has been waived, is no evidence that the court considered the allegations of the plea as a full and perfect defence to the suit.
    This was an appeal, by the complainant, from a decree of the vice chancellor of the eighth circuit, dismissing the complainant’s bill. The bill contained various charges in relation to the dealings between the complainant, through his alleged agent, D. McCormick, and the defendants Chamberlin and Moore; but the principal claims were founded upon alleged dealings with the defendants as copartners in business, at Cuba, in the county of Allegany, previous to 1828, and upon an alleged copartnership between the complainant and the defendants, at Mill Grove, in the adjoining county, subsequent to that time. An answer upon oath from the defendants was waived by the complainant. And each of the defendants pleaded in bar of the whole bill, that there was no copartnership, either as between themselves, or as between them and the complainant, as stated in the bill. These pleas, upon argument before a former vice chancellor of the eighth circuit, were overruled as pleas, but were allowed to stand as answers. Replications were afterwards filed, and testimony was taken as to all the allegations in the bill. The cause was subsequently heard, upon pleadings and proofs, before the present Vice-chancellor, who decided that the only questions in issue in the case were as to the alleged copartnerships.; and that the bill must be dismissed‘if the partnerships were .disproved.

      T. T. Sherwood, for the appellant.

      A. S. Diven, for the respondents.
   The Chancellor.

I think the vice chancellor mistook the legal effect of allowing the pleas of the defendants to stand for answers in this case. Where an answer upon oath is not waived, if a simple plea to the whole bill is allowed to stand for an answer, without giving to the complainant liberty to except to the same, and where the plea is not accompanied by an answer, so as to entitle the complainant to except without special leave, the order of the court necessarily implies that the plea is deemed sufficient as an answer; though not necessarily á full and perfect defence. But where the complainant is allowed to except to the answer for insufficiency, in such a case, the order allowing the plea to stand for an answer, with leave to except thereto, only implies that the plea contains matters which, if put in the form of an answer, would have been*' available as a defence to the whole or a part of the matters which it professes to cover. But the complainant is permitted to except to it, as an answer, because he is entitled to a further discovery in reference to matters of the bill. The complainant, however, is not obliged to except to such an answer, although the order, allowing the plea to stand for an answer, gives him liberty to call for a further answer, by exceptions for insufficiency. But he may file his replication and proceed to take proofs, as to all the material facts charged in the bill, in the same manner as if the plea had been put in as an answer originally. Liberty to expept to an answer, for insufficiency, is never granted where ah answer on oath is waived by the complainant’s bill. Allowing a plea to such a bill to stand for an answer, without any provision in the order that the complainant be at liberty to except for insufficiency, is therefore no evidence that the court considered the allegations of the plea asa full and perfect defence to the suit. But as an answer to such a bill is sufficient, as a pleading, to put in issue every material allegation in the bill which is not answered and admitted by the defendants, under the provisions of the 40th rule of this court, the allowing of the plea, to a bill in which the answer upon oath is waived, to stand as an answer, must necessarily have the same effect as if the same defence had originally been put in, by the defendants, in the form of an answer. The complainant in the present case, therefore, had a right, under his replication, to prove every material allegation in his bill, and to claim the same benefit of such proof as if the answers of the defendants had put such allegations in issue, in the first instance, by a direct denial thereof, by an answer without oath.

The result, however, is the same to these parties, from the conclusions to which I have arrived- from the testimony in this case. There is not a particle of proof to support the allegation, in the bill, that Chamberlin and Moore were in partnership as to their business^at Cuba, or that the defendant Moore had any interest whatever in that business, other than as an ordinary clerk of Chamberlin. It is true D. McCormick swears that the defendant Chamberlin told him that any arrangements which he should make with Moore, in relation to their deal, was equally well as if made with himself. But that is no evidence that Moore was interested in the business; but only that he was entrusted by Chamberlin, in the absence of the latter, to transact his business for him, at his store in Cuba.

Again; I am.satisfied, from the evidence, that no copartnership ever existed between the complainant and the defendants, either at Mill Grove or elsewhere; and that if there was a co-partnership existing between .these two defendants and any other person, in the business which was commenced in the names of Moore & McCormick, at Mill Grove, in the fall of 1828, it was a copartnership between them and D. McCormick, upon his own account and for his own benefit.

The evidence is such as to satisfy me, beyond all reasonable doubt, that after the commencement of the new account upon the complainants’ books, in September, 1826, the property in the hands of D. McCormick, at Mill Grove, was held and used by him for his own benefit exclusively. The acts and declarations of the complainant, subsequent to that time, are wholly inconsistent with the supposition that he considered himself as the real party in interest, in the dealings between his brother and Cham-berlin subsequent to September, 1826, or as one of the copart-ners in the business which was carried on at Mill Grove, after Moore went there, in the fall of 1828. It is not necessary, therefore, that I should examine the question, whether the sworn deposition of D. McCormick could be used as evidence to contradict his testimony in this suit, as to the complainant’s being the copartner instead of himself, without first calling upon him and inquiring whether he had not sworn differently upon a former occasion. ,

The fact being satisfactorily established, that D. McCormick, and not the complainant, was the person who was interested in the business which was commenced at Mill Grove, in the fall of 1828, it is very evident that this suit was not properly instituted, in the name of H. McCormick, for an account of that business ; but that D. McCormick, the real party in interest, should have filed a bill in his Own name. Without taking up time to comment at length upon the testimony in this case, it is sufficient to say that there is nothing, established by the proofs, which would have authorized the vice chancellor to give any relief whatever to the complainant upon the bill, in this cause, which he has permitted to be filed in his name.

The decree of the vice chancellor must therefore be affirmed, + with costs.


text:
    Sandford, receiver, &c. vs. The Trust Fire Insurance Company.
    Where aparol agreement was made with the president of an insurance company, to insure the buildings of the assured, and the president made a brief memorandum of the terms of the agreement, upon the application book of the company, but no policy was made out pursuant to such agreement, because the assured gaye notice to the company that he wished to have the risk differently apportioned, and no premium' was paid or secured, nor was the premium charged to the assured; . and the assured was notified that he must come to the office and settle the business, or the company would not consider itself liable in case of loss, but the assured did not call, nor did he pay or secure the premium; Held, that the parol agreement to insure was not a consummated contract, and that the company was not liable for a loss which subsequently occurred.
    Whether a parol agreement to insure is valid, by the law of this state ? Quaere.

    This was an appeal, from a decree of the late assistant vice chancellor of the first circuit, dismissing the complainant’s bill. The bill was filed by the complainant, as the receiver appointed in a creditor’s suit against Cowles, Brother & Co., to recover compensation for a loss of the property of that firm by fire, on the 17th. of August, 1839; under an alleged agreement of The Trust Fire Insurance Company to insure the same, for one year from the first of July 1839. The facts, as they appeared from the pleadings and proofs, were as follows: Cowles, Brother & Co. consisting of H. B. Cowles, T. G. Cowles & B. H. Hodges, were the owners of the chemical works situate on Troy-street, in the city of New-York, called the Manhattan Chemical Works. In June 1839 Dammers, the surveyor of the respondents, applied to H. B. Cowles, with whom he was acquainted, to know if his firm did not wish to insure; and being informed that they did, he took a survey of the part of the chemic'ál works on the south side of Troy-street, upon the stock, fixtures, engines and buildings, of which they proposed to insure $5000. But as they were then unwilling to pay the premiuni which Dammers supposed that the company would ask, the matter remained open until the evening of the first of July thereafter. On that evening Dammers the surveyor, and Wheelwright the president of the insurance company, met H. B. Cowles, by accident, at the Sans Souci Hotel, where, the president was introduced to Cowles, as one of the firm who had proposed to insure upon the chemical works on the south.side of Troy-street. And after considerable conversation as to the amount of the premium &c., the president agreed verbally to insure $5000 on the premises, for one year, at one and a half per cent premium; to be divided as follows: $3000 upon the stock of the firm, $1000 upon the fixtures, including the steam engine, and $1000 upon the buildings, the time to commence on that day. The next day the president made a brief memorandum of the terms of the agreement, upon the application book of the corporation, except that in such memorandum the name of the firm of Cowles, Brother & Co. was not correctly stated, nor was there any description of-the character of the buildings to'be insured. No policy was made out, as H. B. Cowles, a few days after the first of July, saw Dammers, the surveyor, and told him that he wanted the risk differently apportioned; and no premium was paid, nor was any premium note given; nor was there any charge made upon the books of the corporation against Cowles, Brother & Co. for the premium-. Dammers, the surveyor, by the direction of the president, spoke to H. B. Cowles, several times, to call at the office of the corporation and determine as to the distribution of the risk, so as to have the insurance completed ; but he neglected to do so. And a few days before the fire, Dammers again called on him, and told him that he must come down and settle the business that afternoon, or the insurance company would not consider itself liable for any loss. But H. B. Cowles did not come down, nor give any information to the officers of the company as to how the risk should be apportioned; nor did Cowles, Brother & Co. ever pay, or oiler to pay, the premium for the insurance, before the fire occurred 5 although by the published proposals for insurance, by the corporation, one of the conditions was that no insurance, whether original or continued, was to be considered as binding until the premium was paid. Shortly after the fire, Cowles, Brother & Co. made a claim upon the corporation, but upon being told by the president the reason, why he did not consider the corporation bound for the loss, nothing further was said. And having rebuilt their works, in the following October they insured them with this company, and took out a policy and paid the premium charged for the risk; which was two and a half per cent. They subsequently failed, and a creditor’s bill having been filed, and a receiver appointed in that suit, in December, 1839, the complainant as such receiver, on the 19th of March, 1840, made a claim upon the corporation for the loss, and tfaeh furnished -the preliminary proof of loss.

      E. H. Owen & A. S. Johnson, for the appellants.
    The complainant has all the rights of Cowles, Brother & Co. The contract set forth in the bill, of which performance is sought, is fully established, and is a valid and effectual contract of insurance. There is no statute which required this contract to be in writing, unless it was the act of incorporation of the defendants ; and that act did not require it. The sixth section of the act of incorporation, {Sess. Laws, 1836, p. 80,) was intended to enable the company to contract without as well as with their corporate seal. It was not the intention of the legislature to take away, or withhold from the company, the ordinary power ■which they, as well as other corporations, have to make valid contracts, either without writing, or by sealed instruments. It may be that a policy, executed in any other manner than that prescribed by this section, would not be valid ; but the contract of insurance and the policy are two separate and distinct things; the latter is merely the evidence of the contract, (23 Wend. 18,) and must be made in conformity to it; and if through fraud or mistake it is not, this court has power to correct it and make it conformable. (Phoenix Fire Insurance Co. v. Gurnee, 1 Paige, 278.) It does not follow that because the policy must be executed in a particular way to make it valid, the contract of insurance must be made in that way also; for if so, then all the contracts made in respect to their ordinary business, to be valid, must be in writing and signed as directed by the act.
    The power of corporations to contract by parol, and by writing, with or without their corporate seal, and their liability upon contracts express and implied, are now well settled; and the rule appears to be that they may be bound by the acts of their agents, as well as their own, although not under their corporate seal, and even when they are not reduced to writing, except in those cases where, by the provisions of the statute of frauds or otherwise, the contract must be in writing to render it valid if made by a private person. (2 Kent, 288, &e. with the cases cited. Moss v.- Oakley, 2 Hill, 265. The Attorney Gen. v. The Life and Fire Insurance Co. In Chancery,

      decided 15th March, 1842. The American Ins. Co. N. Y. v. Charles Oakley, decided in this court 5th April, 1842.)
    A parol contract of insurance is valid ; there is no law prohibiting it, and the power of contracting in this way will not be taken from a corporation by implication. It is the common .way in which insurance companies do their business. A contract of insurance is made, and that is followed up by a delivery of the policy of insurance, or in other words, the evidence of the contract; but if that evidence be unjustly withheld, and the contract of insurance can be otherwise established, the insured may come into this court and claim to,have the policy executed and delivered, or, in case of loss, payment of the loss. {Perkins v. Wash. Ins. Co. 4 Cowen, 645. Lightbody v. N. American Ins. Go. 23 Wendell 18. Thayer v. Middlesex Ins. Co. 10 Pick. Rep. 326. 2 Phillips on Ins. 396. 6 East, 583. 4 ¿Yates, 475.) Unless the defendants can show that the contract was so vague, uncertain, or ineonsummate, as to have rendered it impossible for them to make out a policy, they cannot object to their liability for the want of it. The promise to pay the premium was a sufficient consideration to support the contract. And the payment of the premium was not a condition precedent, to be performed by the insured, before the contract of insurance became binding. Payment of the premium is not essential to the validity of a contract of insurance; it only becomes so, when the company, at the time of contracting, or at the time of delivering the policy, make it a condition precedent; it then comes into operation like conditions precedent in all other contracts. (See Kohm v. Ins. Co., 1 Candy’s Marshall, 335; .1 Wash. C. C. R. 93.) It was almost the invariable custom of the company to deliver the policy before or at the time they received the premium.
    The payment of the premium, as a condition precedent, was waived by the president’s informing Cowles, at the time the contract was made, that they might consider themselves insured from that time. (Thompson v. Todd, 1 Peters C. C. R. 380.) The contract, once made, could only be rescinded, by the consent of both parties. (4 Paige, 17. 17 John. 357,) The application to have the apportionment of the amount insured altered, did not in any manner affect the validity of the. other part of the contract. (Disbrough v. Nutson, 3 John. Cas. 81. Giles v. Bendley, 2 Id. 253.) It had no other effect upon the contract than it would have had if the defendants had refused to alter the apportionment, when the application was made. The preliminary proofs were, under the circumstances, furnished in due time. (McLaughlin v. Wash. Co. Mut. Ins. Co. 23 Wend. 525. Cornell v. LcRoy, 9 Id. 163. Barker v. Phoenix Ins. Co. 8 John. R. 317. 7 Cowen, 645. 11 John. 260.) The furnishing preliminary proofs was waived by the company. The president,' when applied to for payment of the loss, repudiated the contract and refused to recognize it as a valid contract, and for that reason he refused to pay the loss. This ¿repudiation of the contract of insurance, rendered it unnecessary to furnish the proofs. (Francis v. Ocean Ins. Co. 6 Cowen, 408; S. C. 2 Wend. 64. McMasters v. Bruce, 25 Id. 379. Lawrence v. Columbia Ins-. Co. 10 Peters, 507. 17 Wend. 385, above cited. Vos v. Robinson 9 John. 193. 8 Id. 307. 7 Id. 315.
    If a vendee of real estate tell the vendor, before the day of performance, that he will not perform his contract, a tender of the deed is unnecessary. (Franchet v. Leach, 5 Cowen, 506.. Calhoun v. Vechio, 3 Wash. C. C. R. 165.)

      G. N. Titus, for the respondents.
    No contract of insurance, binding on the company, was ever made. A verbal contract of insurance is void. Invariable practice, ever since the contract of insurance was known, has established that it must be in writing, by an instrument denominated a policy. This invariable practice has resulted necessarily from the nature of the contract, which consists of a great variety of stipulations and conditions as to the situation and circumstances in which the subject insured is and is to be used. And these stipulations are of the substance of the contract. For a party to agree to insure the house of another against loss by fire, without making the usual stipulations and conditions, would be no more a contract than if one should agree to

      build a house for another without specifying the materials, size or plan. That the law is settled, that these contracts must be in writing, is strongly, if not conclusively, inferred from two facts. First, That such is obviously the understanding of the legislature, as is evinced by the provisions contained in all charters of insurance companies as to the manner of executing this contract, to wit, by a policy, “ signed by the president and countersigned by the secretary” and in other similar particulars which are inconsistent with the supposition that this contract could be made verbally. And this understanding o.f the legislature is also to be deduced from the great improbability of their omitting to make any special provision for this contract of numerous details, which, though it may always be executed within a year, is seldom expected to terminate until the end of a year; whilst they have required all contracts, however simple, which are to be continued for a year, to be in writing. Second, that no case has been found, by the complainants’ counsel, in which a verbal contract of insurance has ever been sanctioned bp a court.

    The provision in the charter that “ there shall be distinctly and legibly printed or written upon the face of every policy of insurance, or other contract or obligation made by said corporation, the amount of its capital actually paid in,” not only, by a necessary implication, inhibits the making of any contract which cannot by possibility be made in compliance with this provision, but it also contains an obvious expression of the understanding of the legislature, as is urged above, that there is no such thing known as a contract of insurance, except a written or printed policy of insurance. (See Sess. Laws of 1836 p. 244 § 6; Id. of 1839, p. 209, changing the name.) The insured are not only by law chargeable with notice of the provisions of the charter, (Salford v. Wychoff, 1 Hill 16,), but the complainant expressly claims the contract to have been made by the company under the authority conferred upon if by its charter. If this company might have made a verbal contract, their president was not authorized to make such a contract for them. Corporations, like natural persons, are bound only by the acts and contracts of their agents when done and made within the scope of their authority. (2 Kent’s Com. 292, 2d ed.) No authority on the part of the president, to make this contract, is shown, and no such authority could be inferred from the duties which presidents of insurance companies usually perform, or from any act of this company, or any provision of its charter. What passed between the president and Mr. Cowles was not a contract, or understood to be one by the parties. The company did not make out the policy, or make any entry of the contract in their books, or in any manner carry it into their business. And Cowles, Brother & Co. did not ask for the policy, or any other evidence of the contract, or pay the premium. But if what was said at the time, was intended for a contract of insurance in itself, it was void for want of consideration, no premium being paid. If it is said that it was an agreement in .which the mutual promises are respectively the consideration for each other, it was an executory mutual agreement, in which each party must show performance, on his part, before he can claim performance of the other. In this case, Cowles, Brother & Co. did not offer to perform until performance on the part of the company was rendered impossible, by the destruction of the subject of the insurance. If a binding contract was made on the 1st of July, it was conditional and temporary, to continue only long enough to make the contract in form, and to pay the premium and execute a policy, and it tetrminated with the lapse of the time proper for this purpose.
    The complainant cannot ask this court to decree a specific performance, by executing a policy, or to give relief as though a policy had been executed. This court will lend its aid to compel a party, who has made a contract, to furnish the requisite evidence of that contract, to enable the other party to enforce it in a court of law; or it will give the same relief here as the party would be entitled to at law if the contract had been in due form; but this court does not make contracts for parties. Unless a contract of insurance was actually made, the complainant has no more claim to relief here than he could have at law; and it is supposed to have been already shown that no contract was made.

      The contract originally made, whether it be considered a contract of insurance in itself, or an agreement giving the complainant a claim to a specific performance, was abrogated when Cowles, Brother & Co. gave notice that the amounts were not divided as they- wished, and proposed to call and make a hew division. The insured have abandoned and lost their claim to indemnity, by not complying with the ninth condition of insurance, by furnishing the preliminary proofs as soon as possible after the loss. That the furnishing the preliminary proofs as soon as possible after the loss is a condition precedent, without the performance of which the insured cannot recover, is abundantly established by numerous cases in our courts of recent date. (Inman v. The Western Fire Ins. Co., 12 Wend. 482, and cases cited by the court. The Mina Fire Ins. Co. v. Tyler, 16 Id. 385, opinion of the chancellor, p. 401. M ’Laugh-lin v. The Washington Co. Mutual Ins. Co., 23 Id. 525.) In none of the cases cited were the insurance companies held to have waived the preliminary proofs entirely, but simply to have been estopped from objecting to formal defects in the proofs. In every case the'proofs had been furnished in due season, and the company, after having examined them, or had an opportunity to do so, communicated with the insured upon the subject of the claim, without objecting to the defect, or, as in one of the cases, when the objection was made, refused to return the proofs so that they might be corrected.
    All the cases concur in establishing that the acts on one side which will excuse the performance of this condition, by the other, are such as lead him to suppose that such performance will not be required.
   The Chancellor.

From the view I have taken of this case, it is not necessary for me to decide the question whether a parol agreement of insurance, not evidenced by writing in any way, is valid and binding; or whether there is any thing in the charter of this particular corporation to prohibit it from contracting to insure, by a mere parol agreement, not evidenced by writing and subscribed by some of the agents of the corporation. In England, the stamp act necessarily requires all contracts for insurance to be in writing. The French code also requires the contract of insurance to be in writing. (Com. Code of Fr. Book 2, art. 332.) And the Spanish law is the same, in substance. (Span. Code of Com. art. 812, 841.) Millar says the importance of the contract of insurance, and the singularity of those obligations which it is intended to create, have, in all commercial states, rendered a deed in writing essential to its validity. (Millar on Ins. 30.) But he refers to no authority ; and I have not been able to find any thing in the common law of England, rendering it absolutely necessary that contracts for insurance should be in writing; although the custom has been, so far as I can ascertain, to have sonde written evidence of the agreement to insure. A policy of insurance necessarily imports a written contract, as the name of the instrument, derived from the Italian, necessarily implies. I am not prepared to say; however, that in this state there may not be a valid parol agreement, founded upon a good consideration, to execute a written policy Of insurance, which a court of equity may enforce ; although there is no written evidence whatever of the agreement, or of any of its stipulations or conditions.

The agreement in the case under consideration; however, was clearly not a consummated contract of insurance; and neither of the parties could have so understood it, at the timé it was entered into. But it was an agreement, on the part of Wheelwright, that the corporation, of which he was the president, would give to Cowles, Brother & Co. a policy, in the usual form and lipón the usual conditions of insurance by such corporations, insuring $5000 upon the premises, for one year from the first of July, 1839, upon being paid the premium of one and a half per cent for the risk; such risk to be apportioned as then stated, unless the assured, previous to the consummation of the insurance, should desire to have such apportionment of thé risk changed. And both parties unquestionably understood that if a loss should occur before the insurance could be consummated in the usual form, the corporation would be answerable therefor. But as there was no agreement to give credit for the premium, and no implied agreement for a credit beyond the time which was necessary to prepare the policy, the neglect of Cowles, Brother,& Co. to pay. the premium after they were called upon to complete and consummate the insurance, would of itself have been such an abandonment of the agreement, of the first of July, 1889, as to deprive them of all right to claim pay for the subsequent loss; either at law or in equity. In this case also, the notice given by H. B. Cowles, a few days after the first of July, that the apportionment of the risk as then specified was not right, and that he wished it changed, was of itself an abandonment, or at least, a suspension of the contract, until the apportionment should be adjusted according to his wishes. And he having been expressly notified that if he did not come to the office and complete the 'arrangement by a particular time, the insurance company would no longer consider itself hol'den to insure, ór to be responsible for any loss that might thereafter occur, his neglect to attend, as requested, put an end to the «previous agreement to insure; so that neither party was thereafter bound, either at law or in equity, to proceed further in the consummation of the bargain. The notice, given by the corporation, was an election on their part to abandon their claim to the premium unless the contract should be completed, if they ever had any legal claim upon Cowles, Brother & Co. therefor. And the neglect of the latter to pay the premium, or to enable the insurance company to execute and tender the policy, because the distribution óf the risk was not ascertained, put an end to all pretence of claim on the part of those who were to have been insured, for any subsequent loss they might sustain. And after what occurred at the last interview between Dammers and H. B. Cowles^ previous to the fire, in connection with the other evidence in this case, I am perfectly satisfied that Cowles, Brother & Co. Would not have considered themselves under any legal or even honorary obligation to pay the premium had no subsequent loss taken place.

In deciding this case, I lay entirely out of view what H. B. Cowles testified to, on his examination before, the master in the creditor’s suit. The insurance company not being a party to that proceeding, had no right to cross-examine; and his exami-

nation is not legal evidence against the respondents in this case, for any purpose. Besides, he was directly interested against the insurance company in relation to the matter of that examination. For whatever might be recovered by the receiver would, at the termination of the creditor’s suit, either be applied to pay the debt of the firm, or if the complainant in that suit did not succeed in obtaining a decree against Cowles, Brother & Co., the funds in the hands of the receiver would of course be paid over to them. The proceedings upon the creditor’s bill, therefore, are not legal evidence, in this suit, for any other purpose than to show that the present complainant had been duly appointed a receiver of the property and effects of the firm of Cowles, Brother & Co., and the time of such appointment; and that they had assigned such property and effects to the receiver, to abide* •the further order of the court in that suit. And upon the evidence which was properly before the assistant vice chancellor, I have no doubt that he arrived at the correct conclusion, that the appellants were not liable, either at law or in equity, for the loss occasioned by the fire of August, 1839. ,

The decree appealed from is therefore affirmed, with costs.


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    Howard vs. Sheldon and others.
    Where a judgment was recovered against three debtors who were jointly hable for the debt, and the judgment creditor, instead of taking out an execution on the judgment, brought a new suit thereon, but only served the process upon one of the debtors, and having obtained judgment in that suit, took out his execution, against the joint property of all the defendants ancf against the separate property of the one who was served with process in the last suit; Ifeld, that the creditor had not exhausted his remedy at law, so as to entitle him to file a creditor’s bill' against the defendant who was served with process in the last suit.
    The recovery of a second judgment, in a suit upon a former judgment, will not prevent the judgment creditor from issuing an execution upon the previous judgment to obtain satisfaction of his debt.
    Where a person purchases goods and places them in the hands of an insolvent, as his. agent, to be sold, and allows him to use a portion of the property for the support of his family, fraud cannot be inferred from such circumstances alone.

      This case came before the chancellor upon the appeal of the complainant, and upon a cross-appeal by J. Sheldon and L. Benedict, two of the.defendants, from a decree of the vice chancellor of the eighth circuit. The complainant recovered a judgment, in the supreme court, in May, 1834, against the defendant J. Sheldon, and against L. Shearer, and M. Bull,, for a joint debt; upon which judgment no execution was issued against the property of either of the defendants mentioned therein. In January, 1837, he commenced a suit, in the same court, upon that judgment, against all the judgment debtors, by filing a declaration in the usual form, but the service was only on Sheldon, one of the defendants, who resided in the county of Monroe. The other defendants, who resided in Washington county, had no notice of such second suit, and did not appear therein. And in May term, 1837, judgment was entered in favor of the complainant, against all the defendants, in the usual form in such cases: the judgment record stating that the declaration was not served on Bull and Shearer. An execution was afterwards issued to the county of Monroe,- endorsed as directed by the statute in such cases, and was subsequently returned unsatisfied. No execution was issued upon this judgment to the county of Washington, where Bull and Shearer resided; but the complainant alleged in his bill that the defendants had no joint property. The complainant filed his bill in this cause, as a creditor’s bill, as against J. Sheldon; but Bull and Shearer were not made parties to the suit. U. B. Sheldon and L. Benedict were made parties, for the purpose of reaching property which the complainant alleged was held by them in trust, or for the use and benefit of J. Sheldon. The defendants did not raise the objection, in their answers, that Bull and Shearer should have been made parties; but they insisted in their answers that the complainant had not exhausted his remedy at law against the judgment debtors. The cause was heard upon pleadings and proofs, before the vice chancellor, and he decided and decreed that the property in controversy, except the household furniture, and horses and carriages, was the property of the defendant Benedict, and was not held in trust for J. Sheldon; and that the complainant’s bill be dismissed as to the defendants Benedict and U. B. Sheldon, with costs. He further decreed, that the furniture, and carriages and horses, were the property of J. Sheldon, and subject to the complainant’s claim in this suit; and directed a reference to a master to appoint a receiver of that property, and to inquire-and report as to the title to certain bank stock and fourteen acres of land, not mentioned in the pleadings, but which was referred to in the testimony; reserving further directions until the coming in of the master’s report.
    The complainant appealed from the first part of the decree, which declared the right of the defendant Benedict to the property, except the furniture, horses and carriages, and directed the bill to be dismissed with costs as to Benedict and U. B. Sheldon. And the defendants Benedict and X Sheldon appealed from all of the decree except so much thereof as directed the bill to be dismissed as to two of the defendants with costs.
    S. Matthews, for the complainant.

      M. T. Reynolds & F. M. Haight, for the defendants.
   The Chancellor.

I think the vice chancellor arrived at the correct conclusion in. relation to the title to the property which by the decree is declared to belong to the defendant Benedict; and that the bill was properly dismissed upon the merits, so far as related to that property. The evidence shows that the goods furnished for the store in Rochester, were intended to be and remain the property of Benedict, and that Sheldon transacted the business merely, as his agent. I admit that if this property had originally belonged to X Sheldon, and had been nominally sold to Benedict by him, and he had thus retained the possession and control thereof, there would have been prima facie evidence of fraud, and that the transaction was intended as a mere cover to keep the property beyond the reach of creditors. No such prima facie evidence of fraud, however, arises where the goods are purchased by a third person, with his own funds, and placed in the hands pjf a person who is insolvent, as the agent of such purchaser. For the presumption in such a case is the other way; and the party alleging fraud in the transaction is bound to sustain the charge, by affirmative proof on his part. In relation to the furniture, and horses and carriages, if the vice chancellor was right in supposing that they were the property of J. Sheldon, he should not have dismissed the bill generally and absolutely, as to Benedict, who claimed that part of the property also. For that was inconsistent with the part of the decree which directed the furniture and horses and carriages to be transferred to a receiver, to be applied in satisfaction of the complainant’s judgment. For the reasons stated by the vice chancellor in his opinion, I think the furniture and horses and carriages must be considered as property taken by J. Sheldon, for the use of his family, and paid for out of the store, as a part compensation for his services; and that they therefore belonged to him, and not to the defendant Benedict, at the time of filing the bill in this cause.

The objection that Bull and Shearer, who appear to be jointly and equally liable for the payment of the complainant’s debt, were not made parties, and that there is no averment in the bill that they are destitute of property, would have been a valid one, if taken at the proper time. But it should have been made either by a demurrer to the bill, or in the answer of these defendants; so that the complainant could have had an opportunity to obviate the objection by an amendment. It was too late, therefore, to turn the complainant around to a new suit upon that technical objection, taken for the first time at the hearing. The answer of the defendants does, however, distinctly raise the objection that the complainant had not exhausted his remedy at law, by execution against the property of Bull and Shearer, in the county where they resided; and that he, therefore, had no right to institute this suit. The answer also alleges, upon the information and belief of the defendants, that Shearer and Bull, or one of them, had property liable to execution, in the county of Washington, where they resided, sufficient to satisfy the original judgment recovered against them jointly with the defendant J. Sheldon, and that it was well known to the complain ant; and that no attempt was made to serve the declaration in the action brought against them and J. Sheldon, upon that judgment, on Shearer and Bull, although their residence in the state was known to the complainant. The question is therefore fairly presented by the answer, whether the complainant had exhausted his remedy at law against the judgment debtors, so as to authorize him to file a creditor’s bill, in this court, to obtain satisfaction of his judgment out of the property of J. Sheldon, which the complainant had not been able to reach by execution at law.

The excuse for not issuing an execution against Shearer and Bull, to the county in which they resided, is that the bill alleges that they had no property jointly with J. Sheldon, and that they were not served with the declaration by which the second suit was commenced. But the supreme court has frequently decided that the recovery of a second judgment is no bar to the issuing of an execution upon the first, to obtain satisfaction of the debt. (Andrews v. Smith, 9 Wend. Rep. 53. Jackson v. Shaffer, 11 John. 513. Bates v. Lyons, 7 Paige, 85.) The neglect of the complainant to serve the declaration upon Shearer and Bull, in the second suit, so as to enable him to exhaust his remedy against their individual property, by the issuing of an execution in that suit, to the county where they resided, was, therefore, no excuse for not proceeding against their individual property, by an execution upon the original judgment for the same debt. It is true, that the last judgment included a bill of costs which could not have been collected on an execution upon the first judgment. But it no where appears that the amount of such costs exceeded one hundred dollars, so as to have given this court jurisdiction of the case, upon a creditor’s bill, if the amount of the original judgment had been collected by executions against all the defendants in that judgment, issued to the proper county. No excuse is stated in the bill for the commencement of the action upon the first judgment, and serving the declaration upon one of the defendants only, instead of issuing an execution or executions to the proper counties; but it probably was to try the experiment of filing a creditor’s bill to obtain satisfaction out of the individ•ual property of one of the judgment debtors only. If the other judgment debtors were mere sureties for J. Sheldon, or if there was any other reason why it would have been inequitable to proceed to obtain satisfaction of the complainant’s debt out of the property of Bull and Shearer, instead of coming into this court to reach the individual property of J. Sheldon only, it should have been stated in the bill. And if the facts were contested by the defendants in this suit, the complainant should have established the same by proof. The objection was, therefore, well taken by the defendants, in their answer, that the complainant had not exhausted his remedy at law, for the recovery of his debt, either within the letter or the spirit of the law on the subject of creditors’ bills. For this reason, the decree is erroneous, even as to the defendant J. Sheldon, and as to the property which the vice chancellor decreed to belong to him, and to be properly applicable to the satisfaction of the complainant’s judgment.

The part of the decree appealed from by the complainant must, therefore, be modified, so as to declare that the general dismissal of the bill as to the defendant Benedict, shall be without prejudice to the rights of the complainant in any future litigation in reference to the furniture, horses and carriages mentioned in the pleadings in this case. And upon the cross-appeal the bill, as to all the other matters in controversy in this suit, must be dismissed without prejudice to either of the parties in any future litigation. The appellants Benedict and Sheldon are also to recover their costs upon the cross-appeal; but neither party is to have costs as against the'other upon the complainant’s appeal.


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    Wyckoff vs. Remsen and others.
    The acknowledgment of a mortgage is presumptive evidence of the execution and delivery of the mortgage, at or before the date of such acknowledgment. But such presumptive evidence may be rebutted by proof that the mortgage actually remained in the possession and under the control of the mortgagor subsequent to that time.
    A mortgage which is executed and delivered to the mortgagee, previous to a general assignment, by the mortgagor, of all his property for the benefit of his creditors, is entitled to a preference, although the assignment is first recorded.
    Whether a subsequent recording of the mortgage, in such a case, is constructive notice to a bona fide purchaser of the premises, from the assignees, who had no actual notice of the mortgage at the time he obtained his deed from them? Quare.

    This was an appeal from a decree of the late assistant vice chancellor of the first circuit, dismissing the complainant’s bill.

      J. A. Lott, for the appellant.

      S. F. Clarkson, for the respondents.
   The Chancellor.

The mortgage in this case, if in fact executed and delivered before the general assignment of the mortgagor, for the benefit of his creditors, would be entitled to a preference as between the complainant and the assignees; although the assignment to them was recorded before the recording of the mortgage. But if the mortgage was not in fact executed and delivered to the mortgagee, or to some one for his use, previous to such assignment, the assignees are entitled to a preference; although the mortgage was dated and acknowledged before the execution of the deed of assignment. The acknowledgment of the execution of the mortgage, before the date of the assignment of the mortgaged premises, for the benefit of creditors, was presumptive evidence of the actual delivery of such mortgage to the mortgagee, or to some one for his benefit, before the assignment; so as to make the mortgage a valid incumbrance upon the premises in the hands of the assignees. But such presumption might be rebutted by evidence that Remsen retained possession of the mortgage until after the execution and delivery of the assignment. And I think there was sufficient in this case to rebut the presumption that the mortgage was delivered by Remsen, to the mortgagee, before the assignment.

Neither party has thought proper to examine the mortgagor or the mortgagee, or the commissioner before whom the mortgage was acknowledged, and who was also the subscribing witness to the mortgage, to ascertain the fact as to the time of the actual delivery of the mortgage; or to explain why the mortgage was given in the name of Seymour, if the only object of it was to secure a debt due to Wyckoff. It appears by the testimony, however, that the mortgage was in the hands of Remsen, the mortgagor, long after the date of the deed to the assignees; and that it was sent by him to Wyckoff after an assignment thereof had been procured from Seymour. These circumstances, with the form of the assignment, and the hesitation of Wyckoff to insist upon the validity of the mortgage at the interview at Clarkson’s office, lead me to conclude that the mortgage was made out in the name of Seymour and was retained by the mortgagor himself until the time when he put it on record ; the 17th of December, 1836. If so, it was not a valid mortgage at the time of the assignment of the mortgaged premises for the benefit of the general creditors; and that assignment having been first recorded, was entitled to a preference.

From this view of the subject it is not necessary to examine the question whether the subsequent recording of the mortgage was constructive notice to the respondent, who claimed through the deed of assignment which .had been recorded previously, Nor is it necessary to inquire whether the admission, in the answer, of notice of the existence of the mortgage before the respondent obtained his deed, is not to be taken, as a pleading, in connection with the other fact stated in the answer, that the appellant abandoned all claim under the mortgage, and that the respondent completed his purchase in consequence of such abandonment.

The order appealed from must be affirmed, with costs.


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    Tone vs. Brace.
    The provision of the revised statutes that no covenant shall lie implied in any conveyance of real estate, does not extend to implied covenants of warranty as to the quiet enjoyment of the demised premises, in a lease of a term of years, creating a mere chattel interest in land. Such a lease is not, in the ordinary acceptation of the term, a conveyance of the land.
    This case came before the chancellor upon appeal, and the facts are stated in the report of the case before the vice chancellor, in Clark’s Chancery Reports, upon a previous application.

      C. M. Lee, for the appellant.
    The lease in question contains no express covenant, the words used are “ demise and lease;” and all implied covenants in a conveyance of real estate are abolished, and, therefore, the complainant has no remedy either in this court, or in a court of law. At common law, the words “ demise and lease” imply a covenant. And a lessee upon eviction before the termination of the demise, could maintain.an action for damages. (8 Coioen, 36. Barney v. Keith, 4 Wend. 502.) This rule of the common law'is altered by the revised statutes. (1 R. 8. 730, § 140.) The section is in these words, “ No covenant shall be implied in any conveyance of real estate, whether such conveyance contains special covenants or not.” This section includes leases for years as well as deeds in fee. A lease for years is a conveyance of real estate. In 1 R.8. 750, (§ 10, ck. 1,) it is declared that the terms “real estate” and “ lands,” as used in that chapter, should be construed as coextensive in meaning with “lands, tenements and heredita-ments.” This legislative interpretation includes estates less than freehold. (Tone v. Brace, 8 Paige, 597.) A lease for years is a conveyance. The legislature say “ a conveyance made by a tenant for life or years, &c. showing conclusively that a lease for years is a conveyance. (1 R. S. 739, § 45.) In 1 R. 8. 751. § 36, it is declared that “the term real estate, as used in that chapter, should be construed as co-extensive in meaning with lands, tenements and hereditaments, and as embracing all chattels real, except leases, for a term not exceeding three years.”
    The complainant had a perfect remedy at law, and therefore, cannot come to ask the aid of this court. If there is any covenant, either express or implied, in this lease, on the part of Brace, it is included in the same instrument with the covenant on the part of the lessee to pay rent. It was fully competent for Tone to have defended himself at law in the action for rent. He did so and failed, and the law will presume it was because he failed in his proof. He could have recouped his damages of Brace, whether liquidated or not. (Ives v. Van Ness, 22 Wend. 155.)

      J. W. Gilbert, for respondent.
    The respondent is entitled to compensation for his damages, in consequence of the eviction under the implied covenant for quiet enjoyment. At common law, the words “ demise and lease” imported a covenant for quiet enjoyment. (Grannis v. Clark, 8 Cowen, 40. Barney v. Keith, 4 Wend. 504. Tone v. Brace, 8 Paige, 597.) The revised statutes have not changed the rule of the common law. A lease is in no sense a conveyance of real estate, within the meaning of the statute. The term conveyance, as used in this chapter, is not defined. It is evidently employed in its common law sense, and imports a transmutation of title. A lease can operate as a conveyance only in conjunction with a release of the reversion, Alone it creates only a chattel interest, by demise, and not conveyance, which interest is passed, not by conveyance, but by assignment. (Jac. Law Diet. tit. Conveyance. 4 Kents Com. 96.) Prior to the statute of frauds, (29 Car. 2,) such interest might have been created by parol. A lease cannot be denominated a “ conveyance.” It is truly defined, by Chancellor Kent, to be “ a contract for the possession and profit of lands.” (4 Kents Com. 85.) But if a lease be a conveyance, it is not a conveyance of real estate. It conveys only personal property, a mere chattel interest. In the event of the death, of the lessee, his interest goes to the executor or administrator,, and not to the heir. (4 Kents Com. 93.) Such an interest is not within the statute authorizing a redemption of real estate. (People v. Westervelt, 17 Wend. 374.) The legislature did not intend to embrace'terms for years, in the definition of real estate and lands in 2 R. 8. 2d ed. 741, § 10, because in defining the same term in the-recording act, they have expressly included chattels real. (1 R. S. 2d ed. 751, § 36.) Inclusio unius est exclusio alterius. (1 Clarke, 507.). Taking the legal import of the terms “tenements” and “hereditaments,” it is manifest that a term for years is not embraced in either. (4 Kent’s Com. 95. Preston on Estates, 8, 10, 11,205. 2 Black. Com. 16, 17. 1 Co. Lit. 176.) The title of 1 R. 8. 717, § 5, entitled “ of the creation and division of estates,” denominates terms for years, chattels real, as contradistinguished from estates of inheritance, which are denominated “ freeholds.” When the freehold is preceded by a term for years only, the freehold is a present interest. (Gore v. Gore, 2 P. Wms. 27.) And a husband has an absolute power to assign the chattel's real of his wife. (3 Co. Lit. by Thomas, 243.) A devise of all the testator’s lands, tenements and hereditaments, will not pass a term for years. (Thompson v. Lawley, 2 Bos. & Pull. 303, and cases cited.) These authorities show that terms for years have not been treated as real estates.
    The "stipulation in the lease, that the lessee may take off a crop after the expiration of the term, in connection with the rest of the instrument, amounts to an express covenant that the lessee shall enjoy the premises during the whole term. The respondent has not an adequate remedy at law. A cross action would have been fruitless in consequence of the insolvency of the appellant. The right of recoupment is confined to cases of dependant covenants, or covenants upon condition. The term imports defalk or discount, not a cross claim. {Jack. Law Diet, tit. Recoupe.) The rule has always existed that cross damages arising out of a breach on the part of the plaintiff to the same contract,' on which the defendant is sued, may be set off. This was allowed at law, before any statute of set-off, to avoid circuity of action; but it has never been extended so as to allow a set-off of damages arising out of independent covenants or
      separate instruments, which are alike. (8 Wend. 109; 22 Id. 155.) In this case the covenants are independent, and this creates a broad distinction, and one which has been uniformly-recognized. (Opinion of Marcy J. in Real v. McAllister, 4 Wend. 490, and cases cited.) The supreme court, in Ives v. Van Epps, (22 Wend. 157,) say “ the defendant ought always to have an election whether he will go by way of recoupment, or by cross action.” Having this election, the respondent was right in availing himself of it, and the insolvency of the appellant is a sufficient reason for bringing the cross action in this court. Thiscourt will entertain jurisdiction, because the remedy at law is doubtful. The.case of Sickles v. Fort, (15 Wend. 539,) is in point, and establishes the principle that a tenant cannot, in an action for rent, have an allowance for the • damages which he has sustained by breach of the landlord’s agreement. But if the respondent has an adequate remedy at law, the objection is not taken in the answer, and cannot, therefore, be raised on the hearing. (Le Roy v, Grandin, 2 Paige, 509.)
   The Chancellor.

This is an appeal by the defendant from a decree of the vipe chancellor of the eighth circuit. For the reasons stated by the vipe chancellor, in the report of this case, upon an -application to renew the injunction, (1 Clark’s Ch. Rep. 503,) I think the 140th section of the article of the revised statutes relative to alienation by deed, (1 R. S. 738,) does not extend to the implied covenants of warranty as to quiet enjoyment of the demised premises in a lease of a mere term of years, creating only chattel interest in lands. Such a lease is not, in common parlance, called a conveyance of lands, tenements, or hereditaments; thoqgh an instrument by which the lessee might afterwards transfer his interest in the leasehold prernises to another might very properly be denominated a conveyance of his chattel interest as lessee. I am therefore of opinion that the supreme court erred in the case of Kinney v. Watts (14 Wend. 38,) in the construction of the statute itself, as well as in the application of it to a lease of lands lying in another state.

Although the decision in the case of Ives v. Van Epps, (22 Wend. Rep. 155,) may be considered as settling the principle that relief might have been obtained at law, by a re-coupment in damages, if the complainant had been aware of such decision, that case had not been reported when the suit was commenced at law, for' the rent. That decision also carried the principle of recoupment farther than it had been previously understood to be allowable. The remedy at law was therefore doubtful, and furnished a proper ground for the interference of this court, at the time this bill was filed. For the defendant was out of the state and was insolvent. The fact of insolvency was denied by the answer of the defendant; and it had not been established by the proofs at the time this case was before this court, upon the application to dissolve the injunction. But the insolvency is now satisfactorily established, notwithstanding the belief of some of the witnesses for the defendant, that he had property enough to pay all his debts if his creditors would wait until he should be able to sell his property at what these witnesses suppose it was really worth.

The decree appealed from must therefore be affirmed, with costs.


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    G. H. & J. H. Northrup vs. Metcalf and others.
    Where H. took a conveyance of the legal title to a farm, as the mere trustee for N., and as a security for a part of the purchase money advanced for N. upon the purchase of the lot, the whole of which advance was repaid by N.; Held that a judgment recovered against H. was primarily chargeable upon a mill lot which belonged to him, subsequent to the repayment of his advance to N.; although H. had afterwards sold the mill lot to another person, who had paid him for the same.
    And an assignee of the judgment having agreed to discharge the premises, whiph were primarily liable for the payment of the judgment debt, with a full knowledges of the equitable right of the parties; Held further, that he could not be permitted e to enforce the judgment against the farm of N.
    Where a judgment at law is a lien upon two parcels of land of the judgment debtor, both of which parcels are subsequently conveyed to bona fide purchasers, who have no actual notice of tie existence of the lien, of the. judgment,, the one who first purchases and pays for his land has th'e prior equity to havé the same released from the. lien of the judgment; although by mistake the conveyance to him is not executed, so as to transfer the legal title froth the judgment debtor, until' after the conveyance of the olhér parcel of land to'the second purchaser.
    Where the equities of parties ate equal, and neither has. a strict', legal' right as against the lien, of a judgment, the one whose equitable right first accrues is entitled to a preference in having hts property discharged item such hen.
    This was an appeal’ frotó á decree of the Vice chancellor of the fifth circuit. The facts of the case, as established by the' pleadings and proofs," were- substantially ÜS' follows': In May, 1816, Christopher Northrup the elder, the: father of the complainants, contracted with the executor of W. Cooper deceased, for the purchase of lot No. four of the subdivisions of great lot No 13 in the Wharton patent, in Otsego County, for the consideration of $860 .and" interest; and, upon the cotópletion of the payment of the purchase money, the executor' was to give" a Conveyance in" fee simple of the premises. C. Northrup went’ immediately into possession of the lot, under this contract; and he made payments thereon, for principal and interest, to the amount of about $760, previous to the sale thereof under the decree of the court of chancery hereafter mentioned. The premises were afterwards advertised to be sold, upon a decree of the court" of chancery against the heiis of W. Cooper ; and C. Northrup employed’W. Hall, his nephew, to attend the"'sale and bid in the premises for him. But for some reason which is not explained, Hall suffered the lot to be sold to another person, who subsequently transferred his bid to Geo. Clark. As the sale under the decree had been made subject tb the right of C. Northrup under the contract, Clark, however, consented to sell and convey his interest in the lot, to C. Northrup, upon the payment of the balance due on suchi contract, with a trifling addition ; ■ amounting in all to about $400. W. Hall thereupon under-tdokto obtain the conveyance from Clark, and was furnished by C. Northrup with about $100 in money and agreed himself to raise the residue of’the fund, for that purpose. As C. Northrup did ñdt wish t'o'take the conveyance to himself immediately, but to:have the land conveyed’to himself, "dr His .heirs,’at a future day, as he should afterwards direct, it wás agreed that W. Hall should take the conveyance from Clark, in his own name, arid should hold it as security for the moneys which should be advanced to Clark, by him, for C. Northrup; and that upon payment of such moneys he should convey the premises to the latter, or to his sons; as Ci Northrup should thereafter direct. Hall thereupon, in February, 1824, raised the residue of the purchase money which was to be paid to Clark, and took a conveyance of the premises to himself, pursuant to his agreement with C. Northrup; Which conveyance was duly recorded. In July, 1825. J. C. Morris recovered a judgment for about $400, besides costs, in the cbürt of common pleas of Otsego county, against W. Hall and R. B. Carpenter, for a debt in which Carpenter was a mferé Siirety for Hall. C. Northrup and his sons being ignoráritof the existence of this judgment, afterwards paid to Hall the whole arriOhnt due him for advances on account of the purchase from Clark j which payment was completed previous to May, 1828. But as C. Ñdfthrup had not yet determined to whom he would have the lárid conveyed, Hall.bontinued to retain the legal title to the same uritil after his purchase of the mill lot, and the re-conveyance thereof to R. Clark, as hereafter mentioned. On the 4th of October¡ Í828; Hall purchased of Luke Metcalf a mill and mill site, in the bounty of Otsego, and took a conveyance thereof to himself. Á few days afterwards Hall conveyed the same to R. Clark in ptirsuance Of a previous agreement between them. Clark being ignorant of the existence of the Morris judgment, which had beedriie a lien upon the mill lot, through the conveyance from Metcálf to Hall, paid the whole of the purchase money for-the mill and mill site to Hall-j at the time he received the deed of the latter for the premises. In July, 1829, Hall, by the directions of C. Northrup, executed what was supposed and intended to be a conveyance of the farm, then in the possession of the latter, to his two sons, J. H. Northrup and C. Northrup the younger; and they gave a.bond to their father to support him and their mother for life. But by mistake the deed was given for lot No. three instead of lot Nek four. Before the discovery of the mistake the father and mother of the grantees died, and C. Northrop the younger had sold out his interest in th'é premises to his brother, G. H. Northrop. In February, 1831, the mistake was corrected by Hall’s giving a new deed to J. H. Northrop and G. H. Northrop, the present complainants, for lot No. four, which was the lot intended to be conveyed to them in 1829; and a re-conveyance, by a quit claim deed, was then executed to Hall for lot number three, which was described in the deed of 1829; which last mentioned deed had been recorded previous to the execution of the corrected coriveyanóe. Subsequent to the execution and recording of the deed from Hall to the complainants, the Arkright Cotton Manufactory ’was incorporated, and became the owner of the mill and mill site, which was subject to the lien of the judgment to Morris. Ón the fourth of December, 1832, B. C. Williams, Who wris one of the stockholders in that corporation, took an assignment of the judgment from Morris, to be collected at his own risk and costs, but upon the condition that it should be collected out of the property of Hall, without resorting to that of Carpenter, the surety, unless sufficient property of Hall could not be found to satisfy the judgment, and the property of Hall, bound by the lien of the judgment, being first sold, And on the 28th of the same mónth, Williams sold the judgment to L. Metcalf, who was aware of the circumstances under which Hall had obtained' the legal title to lot number four, and that the money adváncéd by him for C. Noithrrip the elder had been repaid in frill. But Metcalf took the assignment of the judgment subject tó the condition that the judgment was to be made and collected Out of the property of Hall, except the mill and mill site, deeded by Hall to R. Clark, and then owned by the Ark-right Cotton Manufactory* and without resorting to the property of Carpenter, the surety. Metcalf afterwards caused lot number four to be advertised and Sold, upon an execution issued on that judgment, And became the purchaser thereof at the sheriff’s sale, in February,. 1835; although he had been notified by the complainants of their rights in the premises, and that the judgment was not in equity a lien thereon. At the expiration of the fifteen months allowed by law for redemption, he took a conveyance from the sheriff, and subsequently commenced an action of ejectment, against, one of the complainants who was in possession of the premises. After issue joined in that suit, L. Metcalf died, having by will devised a life estate in his real property to his wife, A. Metcalf, one of the defendants in this suit, and leaving the other two defendants, his sisters, his only heirs at law. They subsequently caused themselves to be substituted as plaintiffs in the ejectment suit, as such devisee and heirs at law of L. Metcalf. And the complainants thereupon filed their bill, in this cause, to restrain the defendants from proceeding in the ejectment suit, and to compel them to release to the complainants the legal title to the premises, which was acquired undei the sheriff’s deed¡ The cause was heard upon pleadings and proofs, and upon a stipulation that certain proceedings in- another suit, before the vice chancellor of the sixth circuit, in which L. Metcalf was the complainant, and Hall and G. H. Ntorthrup were defendants, should be received as evidence. The vide chancellor decided that the mill and- mill site were primarily liable to satisfy the judgment and that it was therefore inequitable to sell the lot of the complainants, to satisfy the amount due; the mill lot and mill site being more than sufficient for that purpose. He made a decree accordingly, from which decree the defendants appealed.

      H. Van Derlyn, for the appellants.
    The judgment ot Morris against Hall was a legal and equitable lien on the Northrup farm to the extent of the purchase money Unpaid at the time of the docketing of the judgment; and the lien of the judgment was not impaired or affected by the subsequent payments made by the Nor.thrups to Hall.
    Equity does not consider the vendee of real estate as the owner, until the purchase money is actually paid. (1 Story’s Eq. 78. Bogert v. Perry, 17' John. 355. Finch v. Winchel-sect, 1 P. Wths. 277, 279, 282. 1 Paige, 128. White v. Carpenter, 2 Id. 218.) A judgment is, in equity, a lien only on the legal and equitable interest of the judgment debtor in his real estate. The judgment can attach only on his actual interest in the land. (Kiersted v. Avery, 4 Paige’s Rep. 9.) The judgment being merely a general lien on the land of the debtor,, it is subject to every equity which existed against the land, in the hands of the judgment debtor, at the time of the docketing of the judgment. (Arnold v. Patrick, 6 Paige, 315.) Against the rights of Hall in the farm, at the time of the docketing of the judgment, the Northrups had no prior equity; but their equitable right was subject to the prior right of Hall, to the extent of the unpaid purchase money. The lien of the judgment on the Northrup farm was not discharged by the assignment of Williams, to Metcalf, which exempted the mill lot from the lien of the judgment. And neither Morris nor his assignees were bound to sell the mill lot, under the judgment, before resorting to the Northrup farm.

      R. Campbell, for the respondent.
    Morris’s judgment never was a lien, in equity, on the premises in question. Equity l ooks ,on' things agreed to be done as actually done. Therefore where a contact is made for the sale of real estate, equity considers the vendor as a trustee for the purchaser of the estate sold, and the vendee as a trustee of the purchase money for the vendor. (Sugden on Vendors, 120, ch. 4, old ed.) A judgment against the vendor after the contract to sell, especially after the payment of .the purchase money though before the conveyance, will not bind the land. (Finch v. Winchelsea, 1 P. Wms. 272. In the matter of Hov>e, 1 Paige, 125/ White v. Carpenter, 2 Id. 21T. Kiersted v. Avery, 4 Id. 9. Arnold v. Patrick, -6 Id. 315.) The equity of the Northrups arose at the time of the contract of sale. Where lands, which subject to the lien of a judgment, are sold by the judgment debtor, they are to be sold under the judgment in the inverse order of alienation. The first purchaser from the judgmentdebtor has the prior.equity, although the consideration is not actually paid until after other portions of the lands have been purchased and paid for. (Gomer-* neur v. Lynch, 2 Paige, 300.) The possession of the Nor-thrups was constructive notice of their equitable rights to Metcalf. The judgment, in the hands of Metcalf, was not even a lien to the extent of the unpaid purchase money. If the owner of a judgment delays selling until the purchase money of land contracted' to be sold by the judgment debtor is paid, he is without remedy. He must issue his execution, and stay the payment, and make the land responsible for the balance due by the vendee. The lien of the Morris judgment was. discharged by the assignment of the judgment by Williams to Metcalf. That assignment released the mill lot, which was primarily liable, from the lien of the judgment, Metcalf, at the time he took the assignment, had constructive if not actual notice of the equity of the Northrups. (11 Wend. 447. 6 Id. 226. 2 J. J. Marshall, 180. 1 John. Ch. 83,, 8 Paige, 285. 2 Id. 300.)
   The Chancellor.

The evidence in this case shows that Hall took the legal title to the Northrup lot as a mere trustee, and as a security, in the nature of a mortgage, for the amount of that portion of the purchase money which he advanced to G. Clark for C. Northrup the elder. It comes, therefore, directly within the decision of Chancellor Kent in the case of Boyd v. McLean, (1 John. Ch. Rep. 582.) There it was held that such a transaction created a resulting trust in favor of the person for whom 'the purchase was made; which trust might be established by parol evidence. It is not necessary to decide whether a judgment against the trustee is, in equity, a lien upon the premises, even to the extent of the moneys advanced for the benefit of the cestui que trust; so as to make it the duty of the cestui que trust to search the records, and ascertain whether any such judgments exists, before he pays over to the trustee the moneys borrowed of him. For the judgment in this case was unquestionably an equitable as well as a legal lien upon the mill lot, which was conveyed to Hall on the 4th of October, 1828; the value of which lot was more than sufficient to satisfy the judgment. And the evidence in the case establishes the fact, beyond all doubt, that the whole amount of the advances of Hall, for the benefit of C. Northrup the elder, had been re-paid some months previous to the conveyance of the mill lot to Hall. It is true Hall had contracted to sell the mill lot to B. Clark, some four or five weeks before he purchased it of Metcalf. But no part of the purchase money was paid to him, by R. Clark the purchaser, until the execution of his deed of the 8th of October, 1828, when the judgment of Morris had become an equitable as well as a legal lien upon the mill lot in the hands-of Hall.

Although the docketing of the judgment was constructive: notice to subsequent purchasers from Hall, it is probable that neither R. Clark nor the Northrups were aware of its existence at the time they made their several payments to him. And in this respect, if the judgment was ever a lien, in equity, upon lot No. four, which was held in trust, the equities of the parties were equal. But the equity of C. Northrup, to a conveyance of his lot discharged of any claim on account of the judgment, was prior in point of time to the .equity of R. Clark under his purchase. And the principle that as between equal equities he who is first in time is strongest in right, would of course, throw the charge of the judgment upon the land last purchased and paid for, upon which it was a lien. The result will be the same if we apply the doctrine of constructive notice to this case. For if the equitable owners of both parcels had constructive notice of the existence of the judgment, at the time they made their several payments to Hall, the possession of lot No. four by C. Northrup, at the time R. Clark purchased, was constructive notice of his right, in equity, to that lot discharged of the lien of the judgment: That is, it was sufficient .to .put ,a subsequent, purchaser from Hall upon inquiry, whether the lot, for which he was about to pay his money, was not, in fact, primarily liablefor the payment of the amount .of the judgment; upon the equitable principle of charging the several parcels, sold by the judgment debtor, in the inverse order of alienation. And if such an inquiry had been made of the Northrups, at the time R. Clark paid his purchase money, he would have ascertained that the judgment of Morris was chargeable exclusively upon the mill lot, and upon the other property, belonging to the judgment debtors at that time ; and that in equity lot No. four was not subject to the lien of such judgment.

Morris, the original owner of the judgment, therefore, had no right to enforce the lien of that judgment, against the mere legal title of Hall in lot No. four, which title Hall held as a mere naked trustee for C. Northfup, subsequent to the 4th of October, 1828 ; and to exempt the mill lot and the property of Carpenter the surety, which was primarily liable. And the subsequent assignments certainly gave no greater rights in this respect, to L. Met-calf, than Morris himself had. The sale of lot No. four, under the execution, and the purchase thereof by Metcalf with full notice of all the facts upon which the equitable rights of these, complainants to have that lot exonerated from the technical lien of the judgment was based, was therefore inequitable and unconscientious.

The decree appealed from is not erroneous, and it must be affirmed, with costs.


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    Winsor vs. Orcutt, Wood and Baxter. The Same vs. Orcutt, Wood and Westover.
    A suit in chancery, to set aside a release given by the nominal plaintiff in an actioir at law, of the right of action upon a bond which was the foundation of such action, is a suit concerning property, within the meaning of the provision of the revised statutes requiring the court of chancery to dismiss suits in that court, concerning property, where the amount in controversy does not exceed one hundred dollars.
    In an action upon an attachment bond, the plaintiff is bound to show that he has sustained some damages by reason of the attachment. He is not entitled to recover, in such action, upon the mere fact that the plaintiff in the suit before the justice did not succeed in that suit.
    These cases came, before the chancellor upon appeals from decrees of the vice chancellor of the fifth circuit, dismissing the complainant’s bills against the defendants respectively, with costs, upon the ground that the amount in controversy in each suit, exclusive of costs, did not exceed $ 100.

      A. J. Parker, for the appellant.

      H. Van Derlyn, for the respondents.
   The Chancellor.

The vice chancellor was unquestionably right in supposing that these were suits concerning property, within the provision of the revised statutes in relation to the jurisdiction of this court. The object of each suit was to set aside a release, given by one of the nominal plaintiffs, in an action at law upon a bond. The rights of action, if any existed, upon the bonds in question in the suits at law, were choses in action, and were property. And the suits in this court, to set aside the releases of such choses in action, were suits concerning property; as contradistinguished from suits for divorces, or other mere personal rights.

The bills do not show what amount the complainant claimed' to be due for damages upon the attachment bonds, or that he had in fact sustained any damage by reason of the attachments, or that costs were awarded upon the quashing of the proceedings before the justice, or that any property belonging to the complainant had been attached, so as to give him any right of action whatever upon the bonds. The bills merely state that suits, by attachment, were commenced, and bonds were given, and that ihe constable levied on certain property as the individual property of Winsor; not that the property levied on was in fact his property, or was in his possession. And the complainant then states the commencement of the suits, in the supreme court, by declaration, for the purpose of collecting the amount of damage. which Winsor had sustained by reason of the commencement of the attachment suits, and the proceedings thereon; but without stating what such damages were, or how they had arisen, or whether the declarations in the supreme court showed any right of action whatever. The complainant, therefore, appears to have proceeded upon the supposition that the defendant in an attachment suit is entitled, of course, to recover some damages, upon the bond, if the plaintiff fails to recover judgment against him. The condition of the bond, however, is not, that the plaintiff shall succeed in obtaining judgment'; so as to entitle the defendant to nominal damages, at least, in case the plaintiff fails in the suit, although he pays the costs, if any, which are awarded against him; but the condition of the attachment bond is only to pay the damages Which the defendant may sustain by reason of the attachment. To show a right of action upon the bond, therefore, the complainant must aver that he has sustained damage by reason of the attachment, and must state the manner in which such damage has arisén. Ór if costs were incurred, or were awarded to him, he must aver that such costs have not been paid; so as to constitute a breach of the condition óf the bond.

The bills in both cases are fatally defective íri these respects; as they do not show any right of action on either ‘Of the bonds, or that the conditions of the bonds had not been fully .complied with when the actions in the supreme court Were 'commenced upon such bonds. The complainant, therefore, was not entitled to deorees in his favor, upon these bills, even if the defendants failed to support the affirmative allegation, in their answer in these suits respectively, that the amount in controversy, was less than $100.

I am inclined 'to think, however, that the proofs showed that •the.amount in controversy could not exceed $100 in each suit, if any recovery whatever could be had upon the bonds, ch the facts proved. It appears, by the proofs, that the property attached did not belong to the complainant, and that it was hot taken out of his possession. Mere formal levies upon the property were made, by the constable; and the real Owners of "such property were present and claimed it, and gave bond's therefor to the constable, who suffered it to remain undisturbed. Win-sor appeared, upon the return of the attachments, and pleaded, in abatement, that the property attached was not his'; and succeeded in getting the attachments dismissed upon that ground. And the plaintiff in the attachment suits thereupon paid the -whole of the complainants’ costs in both suits. Even if nominal damages, therefore, could have been recovered upon the bonds, which were in the penalties of $200, so as to entitle the plairitíff to costs in the actions at law, according to the fee bill of 1840, the costs of both parties in the action, upon a mere joining of the issue, could not, at the extent, have exceeded sixty or seventy dollars. And the amount of damages to which the complainant was entitled upon the bond, and the costs of both parties in the action on the bond, was all that constituted the amount in controversy. In any view of the cases, therefore, the vice chancellor was bound to dismiss the bills; and I think he was right in dismissing them with costs.

The decrees appealed from must, therefore, be affirmed, with costs.