text:
    Duff versus Wilson.
    1. If a co-tenant obtain an outstanding title or encumbrance against the common property, it will, at the election of his fellows, be for their benefit, although the purchase be made in the name of another.
    2. When acts of a person standing in a confidential relation admit two i constructions, the presumption is in favor of the rightful construction.
    3. Equity considers the purchase of one in a confidential relation as bon& ' fide and for the benefit of his associates; but he is entitled to be reimbursed before he can be compelled to convey, unless he acted fraudulently.
    4. Duff leased to Smathers his share in land, which they owned in common ; Wilson became surety for Smathers, who mortgaged to him ; Wilson bought an outstanding mortgage on the whole, under which he sold it and became the purchaser in the name of another, who took possession under an habere. In a suit by Duff against Wilson as surety of Smathers, Held, that Wilson could not set up the sheriff’s sale as an eviction.
    November 19th 1872.
    Before Thompson, C. J., Read, Ag.new, Shakswood and Williams, JJ.
    Error to the District Court of Allegheny county: No. 98, to October and November Term 1872.
    This was an action of assumpsit, brought April 9th 1868, by Samuel Duff against Samuel Wilson, who was surety for the performance by Philip Smathers, of the covenants of a lease to him from the plaintiff.
    The cause had been before tried and resulted in a verdict and judgment for the plaintiff; the judgment was reversed in the Supreme Court (Wilson v. Duff, 19 P. E. Smith 316.)
    The declaration set out the lease under seal, dated September 10th 1859, for five years, for the undivided half of certain adjoining tracts of land, containing in the whole 600 acres, Smathers himself being the owner of the other half, with privilege to cut timber, &c.; Smathers to deliver five pairs of flat-boats (one pair to be delivered after the first freshet after April 1st 1863, and another after the first freshet after April 1st 1864), for each of which plaintiff should pay him $100. The lease contained other stipulations as to taxes, &c.
    The contract of suretyship, also set out in the declaration, was as follows:—
    “ September 10th 1859. I hereby become bound to Samuel Duff for the faithful performance of the covenants and agreements contained in the foregoing agreement on the part of Philip Smathers, in case he shall fail to perform the same.
    “ Samuel Wilson.”
    The declaration then averred the failure by Smathers to deliver the boats of 1863 and 1864, and to perform his covenants in several particulars, and the consequent liability of the defendant as his surety.

      One of the tracts of land had been conveyed by Matilda Kifer to Smathers and Mary B. Lyon; to secure part of the purchase-money Smathers and Mrs. Lyon,'on the 20th of March 1857, gave to Mrs. Kifer a mortgage on the tract conveyed by her. Mrs. Lyon conveyed her interest to Smathers: he afterwards conveyed an undivided half to the plaintiff, after which the lease set out in the declaration was made.
    The whole 600 acres was known as the “ Platt saw-mill property it comprised the Kifer tract and two others, known as the “ Bingham tracts.” On the 29th of November 1862 the Kifer tract was sold by the sheriff under the Kifer mortgage, and the purchaser, -Joseph Henderson, obtained possession under an habere facias.
    The defendant asserting that this was an eviction of part of the demised premises, held that Smathers was discharged from the payment of any of the rent, and that therefore the defendant as surety was not liable.
    The plaintiff alleged that, in the “ spring of 1861, himself, the defendant and David Gilmore were tenants in common of the “Platt saw-mill property,” and that the defendant, whilst such tenant in common, procured an assignment of the Kifer mortgage to himself, caused it to be foreclosed, and the property sold; that Henderson, the purchaser, bought the Kifer tract for the defendant, who thus became the actual owner.
    The cause was tried, May 27th 1872, before Kirkpatrick, J.
    The plaintiff gave in evidence the lease and defendant’s contract as surety; also, that Smathers had failed to deliver the boats in 1863 and 1864.
    The defendant gave evidence tracing the title of the Kifer tract to Mrs. Lyon and Smathers, and their mortgage to Mrs. Kifer; scire facias sur mortgage, August 18th 1862, Kifer “ for use of Samuel Wilson, now for the use of Joseph Henderson, against Philip Smathers and Mary B. Lyon,” and sale by sheriff, November 29th 1862, to Joseph Henderson for $50, and possession delivered to Henderson, January 31st 1863, under an habere facias.
    He gave evidence also for the purpose of showing the performance by Smathers of his covenants.
    The plaintiff in rebuttal gave in evidence an article of agreement, dated August 25th 1859, between the defendant, of the first part, and Smathers, of the other part, by which Smathers agreed to sell to defendant the Platt saw-mill property for $1800, with this stipulation:—
    “ And it is now understood and agreed that the said Samuel is to let the said Philip Smathers redeem, repossess and hold in his own right, all the within-named property, on the 25th of August 1861, on him (the said Smathers) paying the within debts.”
    The plaintiff gave further evidence, that in May 1861 Gilmore, ■ who was then an owner of the land (Wilson claiming to own Smathers’s share), and the plaintiff agreed “ to protect the Kifer mortgage.”
    After consultation it was understood that Mrs. Kifer would take in payment land known as the Hetherington land. The plaintiff made a contract with Mrs. Kifer to get the land for her, and she to assign the mortgage jointly to plaintiff, defendant and Gilmore. The plaintiff made an arrangement with the agent of the owner of the land, that he would make a contract for it with the three; the agent having left for the army had placed his business with a Mr. Craig, who afterwards prepared an article and so informed plaintiff. After some time the defendant made the contract for the land in his own name, without the knowledge of plaintiff, and took an assignment of the mortgage.
    There was evidence that the defendant went to Mr. Craig, who sold him the land, defendant having informed Mr. Craig that it would be satisfactory. The land was afterwards sold by the defendant to Mrs. Kifer, for her mortgage.
    Gilmore testified in the same manner as to the agreement for the purchase of the land, and conveyance of it to Mrs. Kifer for her mortgage.
    The plaintiff gave other evidence of the same character.
    He then gave in evidence the deposition of Joseph Henderson, viz.:—
    “I am a brother-in-law of Mr. Wilson, the defendant. I merely know the property in Clarion county called the Platt sawmill property by reputation. Never saw it in my life that I remember of. I was at one time an owner of a mortgage on that property. I received a letter from Mr. Wilson, the defendant, stating that he had assigned to me the mortgage on this property. Don’t recollect the amount or the party by whom it was given. I knew nothing of it until after the assignment was made until I got notice by letter already spoken of. I did not pay anything to Mr. Wilson for this mortgage. I did take proceedings on this mortgage. I wrote to Mr. Lathy, of Clarion, to collect the mortgage and if it was not paid to bid it up to the amount of the mortgage for me. It was sold, and I got a sheriff’s deed for the property. I don’t recollect the amount of the bid, but it was a trifle, and I paid nothing but the costs when I got the deed. I can hardly say that the costs were paid with my money, for I paid a portion of the costs with Mr. Wilson’s money which I had at the time. There was an account between us. I took further proceedings, for I instructed Mr. Howe to go on to the property and repair it and take charge of the mill, and keep an account with the mill. I never settled or had any reckoning with Mr. Howe. I deeded my interest in the property to Samuel Wilson. There may have been consideration mentioned in this deed, but there was no money passed between us. When I took this mortgage I paid no money, and when I made the deed to Wilson I received no money. I did not claim any interest in this land or any ownership over it further than I have already stated in my deposition. I think afterwards Mr. Wilson told me the land was sold and the deed was made, and that I had better lift it. Mr. Wilson wrote to me to the effect that the property was good property and would be a good thing for myself and my boys. I acquiesced in the assignment and his views, and proceeded to take action under them, although I did not fully understand it. We had accounts existing between us running for a number of years, and no settlement had been made. The amount of costs paid by me when lifting the deed was about twenty-two dollars. I directed Mr. Howe to take possession of the mill and keep account of the lumber sawed, &c. I gave Mr. Lathy instructions to take all measures necessary to give me possession. There never has been any settlement of accounts between Mr. Howe and myself. Never received any rents or profits from him or never released him. Never received any rents from Mr. Wilson. When I conveyed to Mr. Wilson, I merely conveyed the property and not the rents or profits. There never has been any settlement between Mr. Wilson and myself in reference to these matters.”
    The defendant gave evidence in answer to the plaintiff’s case.
    The plaintiff requested the court to charge:—
    1. That if the jury believe that in the spring of 1861, the plaintiff and the defendant were jointly interested in the Platt saw-mill property, either as legal or equitable owners, or as lien creditors; that they and David Gilmore, another party interested in said property, agreed to purchase the Kifer mortgage for their mutual protection; that in pursuance of said agreement plaintiff and Gilmore, on behalf of all, made an agreement with Mrs. Kifer for the purchase of said mortgage, to be paid for with the Hetherington land; that plaintiff made a bargain with the agent for the land with which to purchase the mortgage; that defendant afterwards, without the knowledge or consent of plaintiff, closed the contract with the agent and with Mrs. Kifer, in his own name, and took an assignment of the mortgage in his own name, and then assigned the mortgage to Joseph Henderson, without consideration, and caused it to be foreclosed and the property sold in the name of Joseph Henderson — plaintiff not being made a party to the proceedings — for the purpose of acquiring the title to himself and defrauding plaintiff and Gilmore, the defendant cannot set up the title thus acquired under said mortgage in bar of the rent sued for, and plaintiff is entitled to recover.

      2. If the jury believe that plaintiff and defendant and Gilmore were tenants in common of the Platt saw-mill property in 1861, and in possession of the same, plaintiff being in possession by his tenant, the defendant could’not acquire title against his co-tenants by the purchase and foreclosure of the Kifer mortgage, a common encumbrance, and plaintiff is entitled to recover.
    3. That a mortgagee of an undivided interest in land in possession is a tenant in common, as regards the owners of the other undivided interests.
    4. That to suspend the rent there must be an actual eviction, and as plaintiff was not a party to either the suit in ejectment or the scire facias on the mortgage by which the eviction is alleged to have been effected — if the jury believe that defendant, and not Joseph Henderson, was the owner of the Kifer mortgage, and the real plaintiff in the proceedings on t'he mortgage, and was at the time these proceedings were prosecuted and the alleged eviction took place, the assignee of the lease sued on, and in possession of the demised premises as such assignee, neither the ejectment nor the scire facias on the mortgage constitutes such an eviction as will suspend the rent.
    5. That in any event plaintiff is entitled to recover the proportion of the stipulated rent which fairly arose and was derived from that portion of the land from which the tenant or his assignee was not evicted.
    The defendant also submitted a number of points.
    The court charged that the plaintiff was not entitled to recover, and that their verdict must be for the defendant; and that this peremptory instruction upon their part rendered a formal answer to the various points of the counsel unnecessary.
    The verdict was for the defendant.
    The plaintiff took a writ of error; assigning for error the instruction of the court and declining to answer the points.

      L. B. Buff and B. Woods, for plaintiff in error.
    — One of several persons having a joint interest cannot purchase an encumbrance or outstanding title and set it up against his fellows: Weaver v. Wible, 1 Casey 270; Keller v. Auble, 8 P. F. Smith 410; Lloyd v. Lynch, 4 Casey 419.

      8. A. Punianoe (with whom was W. 8. Purviance), for defendant in error.
    January 6th 1873,
   The opinion of the court was delivered, by

Sharswood, J.

— When this case Avas here before (19 P. F. Smith 316), the only question presented upon the record was upon the rejection of an offer by Wilson, the defendant below, to prove an eviction under the proceedings upon the Kifer mortgage. The learned judge below thought that as Smathers had sold to Duff, clear of all encumbrances, and was, therefore, bound to indemnify him against that mortgage, Wilson, his surety for the rent, could not set up the eviction as a defence. We came to a different conclusion, and reversed the judgment.

On the second trial the evidence before rejected was admitted; and it was shown by the plaintiff, in rebuttal, that by an article of agreement of August 25th 1865, Smathers had agreed to sell and convey to Wilson all his interest in the premises, giving Smathers, however, the right to redeem in two years. It was a mortgage, but Wilson took possession, and continued so until after the period fixed for redemption. Being thus in possession, it also appears that he procured an assignment of the Kifer mortgage to his brother-in-law Henderson, by whom the proceedings on the mortgage were instituted and- carried on; and he (Henderson), having become the purchaser at the sheriff’s sale, afterwards, by deed, conveyed the title thus acquired to Wilson. That Henderson was merely the trustee of Wilson appears by Henderson’s own testimony : “ I don’t recollect the amount of the bid, but it was a trifle, and I paid nothing but the costs when I got the deed. I can hardly say that the costs were paid with my money, for I paid a portion of the costs with Mr. Wilson’s money, which I had. at the time. There was an account between us.” And again : “ When I took the mortgage I paid no money, and when I made the deed to Wilson I received no money.”

Smathers being the owner of the whole tract had conveyed a moiety to Duff, who had leased to Smathers his moiety for five years. It is clear, then, that Wilson, by the article of August 25th 1859, became in equity tenant in common with Duff, in such a relation with him, that if he bought in an outstanding encumbrance on the common property, it must, at the election of his co-tenant, enure to his benefit. This is very well settled in this state. When several persons have a joint or common interest in an estate one cannot purchase an encumbrance or an outstanding title, and set it up against the rest, for the purpose of depriving them of their interest: Weaver v. Wible, 1 Casey 270; Lloyd v. Lynch, 4 Casey 419; Keller v. Auble, 8 P. F. Smith 410. The fact that the purchase was made in the name of a third person is of no consequence: Painter v. Henderson, 7 Barr 50. -Wherever the acts of a person standing in a confidential relation may admit of two constructions, one right and the other tortious, the presumption is in favor of the former. Equity will, therefore, consider the purchase as bond- fide, and intended for the benefit of all those with whom he is associated in interest. He is a trustee for them, and is entitled to be reimbursed all the purchase has cost him before he can be required to convey to them. To apply these principles to this case. If Wilson bought the mortgage, and had proceedings instituted upon it, under which, though he was in form turned out of possession, and Henderson put in, yet as Henderson was his agent or trustee, he is not entitled to set this up as an eviction as against Duff. The most he can claim is by way of set-off, Duff’s proportion of the expenses of obtaining the mortgage.

But this is on the hypothesis that he acted bond, fide. It is only when the party has acted honestly, or what is the same thing, in the absence of evidence of dishonesty must be presumed to have so acted, that he has any claim to reimbursement. In case of positive fraud, the rule is otherwise: McGinn v. Shaeffer, 7 Watts 412; Chronister v. Bushey, 7 W. & S. 152; Beeson v. Beeson, 9 Barr 279. We think that, upon the evidence in the case, there was a question of actual fraud to be submitted to the jury. If it was the fact that Wilson was a party to an agreement with Duff and Gilmore that the Kifer mortgage should be bought for their common benefit and protection — that Wilson, secretly and, especially, by false representations to the agent of the mortgagee, procured the assignment to Henderson for his own exclusive benefit — that he proceeded on the mortgage, without making Duff a party as terretenant, and without giving him any notice — these were facts which, unless explained or contradicted by other testimony, might well lead a jury reasonably to the conclusion that the whole transaction was a trick, op the part of Wilson, to get the title of Duff for a very inadequate price, and to escape also from his obligation both as assignee in possession of the lease to Smathers, and of his own contract, by which he became surety for Smathers for the rest.

Judgment reversed, and venire facias de novo awarded.


source: Caselaw Access Project

author: Read, O. J.

license: Public Domain

text:
    Buchanan’s Appeal.
    A testator devised land to his son William, “ he paying the legacies hereafter enjoined on him to pay,” one was to a daughter,Nancy. He devised other land to his son John, he to pay legacies. He then directed, “ should either of my two sons die without issue, that such son’s portion shall pass to the survivor.” William died intestate without issue. Held, 1. That on William’s death his devise passed to John. 2. That Nancy’s legacy was not a charge on William’s land. 3. That the legacy not having been paid in William’s life was not a charge in the hands of John.
    November — 1872.
    Before Thompson, O. J., Read, Agnew, Shaeswood and Williams, JJ.
    Appeal from the Court of Common Pleas of Washington county: Of October and November Term 1872, No. 150.
    By virtue of an Act of Assembly for that purpose, passed April 12th 1869, viewers appointed by the court reported in favor of enlarging a burial-ground by laying off from the lands of William Buchanan, one and one-half acres of land for which they awarded him $200; this sum was paid into court, May 15th 1871. William Buchanan died July 27th 1871, intestate, without issue.
    On the 21st of August, John Buchanan petitioned to be allowed to take the money out of court, averring that the land was originally the property of John Buchanan, deceased, the father of the petitioner and William Buchanan ; and that William derived his estate in the land by the will of his said father, which was proved May 2d 1837; that under the same will upon the death of William without issue, the land passed to the petitioner in fee, and he was therefore entitled to the money in court.
    Nancy Buchanan, a sister of William, in answer to the petition, averred that under the will of John Buchanan, deceased, William took a fee; that she was entitled to a legacy of $300, which was charged on the land of William Buchanan, deceased; that the money in court represented the land and was subject to the payment of her legacy; and that she was entitled to a share of the $200 as an heir of William.
    The opinion of Judge Acheson approved by the Supreme Court, contains all that is necessary for the understanding of the case.
    The opinion is as follows:—
    “ The respondent, Nancy Buchanan, resists the application of her brother John to take the money out of court on two grounds :
    “ 1st. She claims that the legacy of $300 bequeathed to her by the will of her father, John Buchanan, was a charge upon" the land devised by said will to her brother William, and that the fund in court, having been derived from a portion of said land, should be applied to the payment of her legacy.
    “ 2d. That William Buchanan took an estate in fee simple in the Pennsylvania land, under his father’s will, and having died intestate and without issue, she, as one of his heirs at law, is entitled to a share of the money in court.
    “ The will of John Buchanan, hearing date June 10th 1836, contains the following provisions:—
    “ ‘ Item — I give and bequeath to my son William Buchanan, all my lands on the Pennsylvania side of the line dividing said state and Virginia, which I now live on, he paying the legacies hereafter enjoined on him to pay — to my daughter Nancy four hundred dollars, in the manner following, viz: two years after my decease he shall pay fifty dollars, and fifty dollars annually till all is paid.’
    “ ‘Item — I give and bequeath to my son John Buchanan'all my lands adjoining on the west side of the state line, he agreeing to pay two hundred dollars to my daughter Jane in manner following, viz.: two years after my decease he shall pay fifty dollars annually until all is paid.’

      “ ‘ To prevent mistakes, I hereby order that one hundred dollars of the above-mentioned four hundred dollars ordered to be paid by my son William to my daughter Nancy shall be paid to my daughter Jane in the same way as above ordered.’
    “ On the 25th of January 1837, the testator added the following codicil to his will:—
    “ ‘ It is my will and desire that, should either of my two sons William or John die without issue, that such son’s portion of the land above, mentioned shall pass to the survivor; and in that event the survivor shall pay the following sums, viz.: to my son Walter one hundred dollars, and to each of my daughters, Nancy and Jane, one hundred dollars; the said sums to be paid one-half in one year and the remaining half in one year thereafter.’
    “ The testator died in 1837, and his sons William and John took possession of their respective portions of the land, as devised to them by his will. On the 27th of July 1871, William died intestate and without issue, leaving unpaid the legacy of $300 bequeathed to his sister Nancy.
    “ That this legacy was a personal charge upon William, for which his estate is liable, there can be no doubt;. but if he did not leave personal assets sufficient to pay the legacy, the question is, was it made a charge upon the land, so that if William’s estate therein has become extinct, the land is still subject to its payment in the hands of John, the surviving devisee ?
    . “ In Wright’s Appeal, taken up from this county, and reported in 2 Jones 257, the devise was to testator’s son Thomas. If he chose to accept, he -was to pay $1700 to legatees. In deciding the legaey not to be a charge upon the land, the Supreme Court reiterated the rule laid down in Montgomery v. McElroy, 3 W. & S. 371, that ‘ to make a' legacy a charge upon land devised, it is necessary it should be declared so by express words, or that it may be inferred from the whole will that such was the intention of the testator.’
    “ Tower’s Appropriation, 9 W. & S. 103, was a devise of all the testator’s real and personal estate, the devisee ‘ paying the several legacies hereinafter mentioned.’ The design to charge the land was held to arise from the blending of the real and personal estate, the legal inference being that the devisee was to have nothing till the legacies were paid.
    “The latest casein the hooks is that of Hamilton v. Porter and Wife, 13 P. F. Smith 332, where the language used was : He ‘ is to take the within-mentioned ‘land’ at my death, and pay $700,’ &c. There is no appreciable difference between the expression here employed and that we are considering. In both cases the devisee was to pay a specified sum, for which, upon his acceptance, he was personally liable. There is no expressed intention to create a lien upon the land for the benefit of the legatee, nor can it be inferred from the tenor of the whole will.
    “ The devise to William Buchanan of the Pennsylvania lands vested in him an estate in fee simple under the ninth section of the Act of 1838. What, then, is the effect of the qualifying words of the codicil upon the absolute estate thus given to him by the will ? It is claimed on behalf of his brother Walter and sister Nancy that the design of the codicil was to provide merely for the contingency of the death of William or John without issue in the testator’s lifetime, and that William, having survived his father, took an indefeasible estate in fee simple. The presumption is that the testator did not expect to outlive the sons between whom he divided the inheritance, and therefore this construction could be resorted to only on the ground of necessity, and to carry into effect the manifest intention of the will. The provision in the codicil that, upon the death of William or John without issue, his portion of the land should pass to the survivor, and in that event the survivor should pay legacies to Walter, Nancy and Jane in one and two years thereafter, indicates an intent adverse to such construction, and shows conclusively that the contingency must be referred to a period subsequent to the testator’s death; otherwise the time fixed for the payment of the legacies might arrive in the testator’s lifetime, and before the devise to the sons, or the survivor of them, could take effect. Moreover, the $300 legacy bequeathed by the will to Nancy, which William was to pay, would fail for want of any provision for its payment, in the event of his dying without issue in his father’s lifetime. We are of opinion that William Buchanan did not take an absolute and indefeasible estate in fee simple in the Pennsylvania land at the death of his father.
    “ It matters not what we call the estates given by the will to William and John — Avhether estates tail, with vested cross-remainders in fee in favor of the survivor, or fee simple estates, upon condition that the son first dying should leave issue, and failing to do so, his estate should pass to the survivor as an executory devise. The codicil providing that the survivor should pay the legacies within a prescribed time to persons in esse, the testator could not have contemplated an indefinite failure of issue, but a failure of issue at the death of William or John, whichever of them should first die. The estate given to William, therefore, might be regarded as a conditional fee, with executory devise over to John; but whatever his estate might be, it became extinct upon his death without issue, and by the limitation of the will the land passed to John as the survivor: 5 Casey 490; 12 Harris 249; 13 P. F. Smith 485.
    “ It follows that the respondents, Walter and Nancy Buchanan, have no interest in the land as heirs at law of their brother William Buchanan, and that the money in court belongs to John Buchan an, the petitioner, and it is accordingly ordered to be paid over to him by the prothonotary.”
    The respondent appealed to the Supreme Court, and assigned the decree of the Court of Common Pleas for error.

      S. A. McOlung and Braden Miller, for appellants, cited:
    As to the legacy being a charge on the land: Wright’s Appeal, 2 Jones 256; Hoover v. Hoover, 5 Barr 351; McFait’s Appeal, 8 Id. 290; Downer v. Downer, 9 Watts 60; Drake v. Brown, 18 P. F. Smith 223; Holliday v. Summerville, 3 Penna. R. 533. As to William’s devise being a fee : Eichelberger v. Barnitz, 9 Watts 447; Fahrney v. Holsinger, 15 P. F. Smith 388; Caldwell v. Skilton, 1 Harris 152 ; Lifford v. Sparrow, 13 East 359; Jenour v. Jenour, 10 Vesey 562; Gillard v. Leonard, 1 Swanston 161; Clayton v. Lowe, 5 Barn. & Aid. 636; Biddle’s Estate, 4 Casey 59; Fulton v. Fulton, 2 Grant 28; Schoonmaker v. Stockton, 1 Wright 461; Shutt v. Rambo, 7 P. F. Smith 149.

      Qrummine Patterson, for appellee,
    as to the charge on land cited Wright’s Appeal, 2 Jones 256; Brandt’s Appeal, 8 Watts 198 ; Montgomery v. McElroy, 3 W. & S. 370 ; Mellon’s Appeal, 10 Wright 165; Dewitt v. Eldred, 4 W. & S. 414; Miltenberger v. Schlegel, 7 Barr 241; Hackadorn’s Appeal, 1 Jones 86; Hamilton v. Porter, 13 P. F. Smith 332. As to the estate in William: 2 Jarman on Wills 665, 671; 2 Powell o.n Devises 763; Jessup v. Smuck, 4 Harris 327.
    January 6th 1873,
   The opinion of the court was delivered, by

Read, O. J.

— Two questions are raised upon this appeal from the decision of the court below, awarding the damages arising from the taking of the land for the enlargement of a burial-ground to her brother, John Buchanan.

These questions arise upon the will and codicil of John Buchanan, their father, admitted to probate on the 2d May 1837.

The appellant claims: 1. That the legacy of $300 bequeathed to her by the will of her father, John Buchanan, was a charge upon the land devised by said will to her brother William, and that the fund in court, having been derived from a portion of said land, should be applied to the payment of her legacy.

2. That William Buchanan took an estate in fee simple in the land in Pennsylvania, under his father’s will, and having died intestate, and without issue, she as one of the heirs at law is entitled to a share of the money in court.

The learned judge in the court below, in a carefully drawn opinion, negatived both these claims, and held that the money in court belonged to John Buchanan, and ordered it to be paid to him. We, agreeing with the court below, for the reasons assigned by them, The said order or decree is affirmed.

       Vide McEadden v. Johnson, antea 335. — Rep.


author: Williams, J.

text:
    Bayard’s Appeal. In the matter of the Waynesburg Turnpike Road Company.
    1. The Act of April 7th 1870 (Executions against Corporations) supersedes the remedy by sequestration under the Act of June 16th 1836.
    2. The proceeds of the sheriff’s sale of the property, franchises, &c., of a corporation under the Act of 1870 are to be distributed amongst all the creditors as in case of insolvency.
    3. The levy under such execution does not ereate a lien on the property seized;
    November —1872.
    Before Thompson, C. J., Read, Agnew, Sharswood and Williams, JJ.
    Appeal from the Court of Common Pleas of Greene county: No. 140, to October and November Term 1872.
    In the distribution of the proceeds of the sheriff’s sale of the ■ franchises, &c., of the Waynesburg Turnpike Road Company.
    To April Term 1871, No. 3, of the Court of Common Pleas of Greene county, John S. Bayard issued a fi. fa., under which the sheriff levied on all the property, franchises, &c., of the Waynesburg Turnpike Road Company; other fi. fas. were afterwards issued and the property, franchises, &c., sold under all the executions for 17250.
    This fund was brought into court and its distribution referred to Geerge L. Wyly, Esq., as auditor, who made a report distributing the fund to execution-creditors according to the priority of their executions. Exceptions were filed to this report, which was set aside and sent back to the auditor, who was directed to report distribution amongst all the creditors of the company as in case of insolvency. The auditor so reported and his report was confirmed by the court.
    Bayard and other execution-creditors appealed to the Supreme Court, and assigned for error, the decree confirming the report of the auditor.

      jBlack Phelan, for appellants.

      R. W. Downey §• Son, for appellee.
    January 6th 1873,
   The opinion of the court was delivered, by

Williams, J.

— The Act of 7th April 1870, Pamph. L. 58, under which the property and franchises of the corporation in this case were sold, superseded the remedy by sequestration, under the Act of 16th June 1836, of which it is a supplement, and to this extent supplied its provisions: Philadelphia & Baltimore Central Railroad Company’s Appeal, 20 P. F. Smith 355. Instead of sequestration based on the return of an unsatisfied execution, as provided by the Act of 1836, it authorizes the levy and sale by execution, of the property, franchises and rights of 'the delinquent corporation. The two remedies are incompatible, and cannot possibly co-exist. But how are the proceeds of sale to he distributed ? To the judgment-creditors according to the priority of their executions, or pro rata to all the creditors, in conformity with the rules established in the case of the insolvency of individuals ? The supplemental act makes no provision on the subject. The answer to the question must therefore depend upon the construction to he given to its provisions, taken in connection with those of the former act. To what extent, then, does it repeal or set aside the provisions of that act ? It is contended by the appellants that it repeals all the provisions relating to sequestration, including the rule of distribution provided for'therein ; and. as a necessary consequence, that the proceeds of sale must be distributed to the execution-creditors in the order of their priority. But it does not follow that in superseding the remedy, the legislature intended to do away with the rule of distribution established by the original act; nor is this the necessary and only reasonable construction to be given to the language of the supplement. It declares that in lieu of the provisions or proceedings by sequestration, under said act, the plaintiff in any judgment against any corporation not excepted therein, may have execution by a writ of fieri facias for the levy and sale of the property, franchises and rights of such corporation. In other words, it* substitutes, in lieu of the remedy by sequestration, that of sale by execution. This is the whole substance and extent of the provision in this respect. Why then should we give to the language any other or wider meaning ? It does not repeal, in express terms, the provision in regard to distribution. Nor does it repeal it by implication, unless the provision is an integrant and necessary part of the proceedings by sequestration. But the remedy by sequestration is one thing — the rule of distribution another; and there is no necessary and inseparable connection between them. Why then should it be inferred that in superseding the remedy the legislature intended to set aside or change the rule? No such intention is apparent in the provision, and there is nothing in the language that compels such a construction. But it is said that a lien is a necessary and inseparable incident of seizure in execution, by the principles of common law; and, therefore, whether the legislature intended it or not, the execution-creditors are entitled to be paid out of the proceeds of sale according to their priority of lien. If this be so, then none but the execution or lien creditors would be entitled to any portion of the proceeds; and the corporation, if wholly insolvent, would receive the residue. But where authority is given by statute to seize and sell upon execution the property and franchises of a corporation not liable to such seizure and sale by the principles of the common law, it does not follow that a lien is a necessary and inseparable incident of such seizure in execution. Whether it is, or not, depends upon the object and language of the act. If its purpose be to convert the property and franchises of the corporation into money for the payment of its debts, and to make distribution thereof among all the creditors according to the equitable rule in insolvency, then no lien attaches by such seizure. But if the object be to put corporate, on the same footing as individual property, in respect to its liability to seizure and sale by execution, and subject the proceeds tp the same rule of distribution, then a lien would doubtless be a necessary and inseparable incident of the execution. If a domestic attachment binds the property seized under it, the attaching creditor acquires thereby no advantage or preference over the non-attaching creditors in the distribution of the proceeds. The sole purpose of the proceeding is to convert the absconding debtor’s property into money for the payment of his debts by an equal distribution among the creditors. So, as it seems to us, the legislature in authorizing the seizure and sale of the property and franchises of a corporation against which judgment has been obtained and execution returned unsatisfied, intended to provide a speedy mode for winding up its affairs for the benefit of all its creditors, instead of subjecting them to the vexation and delay incident to the proceedings by sequestration against a corporation hopelessly insolvent. This view is confirmed by the provisions of the second section of the act. It cannot be that the legislature intended that any execution issued under the act should be a lien on the property, franchises and rights of the defendant corporation in any and every county of the Commonwealth for the sole use and benefit of the plaintiff, and that he should be first paid out of the proceeds of sale. In giving to the execution a grasp on all the property of the corporation within the Commonwealth, and authorizing the levy and sale thereof, with the same effect as if it was located, used, levied upon and sold in the county wherein said writ of execution was issued, it is manifest that the legislature must have intended the sale to be for the common benefit of all the creditors, otherwise gross injustice would be done to such of them as resided out of the county in which the execution was issued, but within a county where a portion of the property was situated, and who had trusted the corporation on the faith of it.

For these reasons we are of the opinion that the court below was right in the construction given to the act, and distributing the proceeds of sale pro rata among the creditors.

Decree affirmed at the costs of the appellants.


author: Agnew, J.

text:
    Fowler and Vankirk, his assignee, versus Scully, for use of First National Bank of Pittsburg.
    1. Fowlei- gave to a national bank,&c., not then being indebted to it, a mortgage to secure the bank for notes, &c., thereafter to be discounted for him. Held, that under the National Currency Act, June 3d 1864, the mortgage was void.
    2. Corporations both for their powers and the mode of exercising them depend upon the statute creating them.
    3. Under the Currency Act no other than personal security can be taken by a bank for a loan.
    4. Lending money by a national bank on mortgage or real estate security is ultra vires and forbidden.
    5. The 52d section of the National Currency Act refers to mortgages taken for pre-existing debts.
    6. Fowler gave a mortgage to a national bank to secure future advances and afterwards assigned for the benefit of creditors. Held, that the assignee might resist the mortgage on the ground of its invalidity.
    7. The mortgage being void, no action on it could be sustained.
    8. Courts, even with the consent of the defendant, will not enforce a contract in violation of a statute although not expressly made void.
    9. If a plaintiff cannot open his case without showing that he has broken the law, courts will not assist him to recover, whatever his justice may be.
    November — 1872.
    Before Thompson, C. J., Read, Agnew, Shaeswood and Williams, JJ.
    Error to the District Court of Allegheny county: No. 171, to October and November Term 1871.
    On the 81st of May 1871, John D. Scully, in trust for The First National Bank of the city of Pittsburg, issued a scire facias sur mortgage against Silas S. Fowler with notice to William Vankirk, terre-tenant.
    The mortgage, dated October 21st 1869, was between Silas S. Fowler and John Scully, in trust for The First National Bank of the city of Pittsburg. It recited: “Whereas, the said bank hath agreed to discount for said Fowler an amount in the aggregate not exceeding $100,000, such negotiable business paper as he shall offer for that purpose, consisting chiefly of bills of exchange, or drafts drawn by him on his customers on account of work, &c., done, and orders filled by him for them from time to time in the course of his business; and Whereas, said Fowler wishes to avoid the necessity of procuring the additional endorsement to said paper by a third party.” * * *
    “ And in consideration of the premises, and for the better securing the said drafts, bills, &c., and other negotiable paper unto ” the bank, Fowler conveyed the premises named in the mortgage to Scully. The defeasance was the payment by Fowler to the bank of “ the aforesaid debt or sum of all bills of exchange, drafts and other negotiable paper discounted by said bank for said Fowler, as aforesaid, on the days and times mentioned and appointed for the payment thereof, according to the tenor and effect of said bills, drafts, &c., and in satisfaction and discharge thereof;” and then, “as well this present indenture, and the estate hereby granted, as the said recited bills, drafts, &c., shall become void, &c.,” with a further proviso that a scire facias might issue upon default of payment for 30 days after maturity,” of any bill, draft or other negotiable paper discounted by the bank for said Fowler.”
    The plaintiff’s affidavit of claim was upon a large amount of paper discounted for Fowler contained in a schedule attached to the affidavit. The first was discounted April 23d 1870, and the last October 22d in the same year; the whole amount, principal, interest and costs to April 30th 1871 -was $77,452.87.
    The affidavit further set out “ that all said bills of exchange were discounted by said bank for said Silas S. Fowler, in pursuance of and under the said recited mortgage, and that they were severally duly presented for payment according to the tenor thereof, and payment by the respective drawees and acceptors wras duly demanded and payment was refused; of all which due notice was given the drawer, the said Silas S. Fowler. Said bills of exchange remain wholly unpaid, and they are all overdue more than thirty days.”
    The affidavit of defence was as follows, viz.:—
    “ William Vankirk, terre-tenant, and owner in fee of the real estate described in the mortgage sued on in the above case, under and by virtue of a certain deed of assignment duly executed by the said Silas S. Fowler, bearing date the 7th day of November, 1870, &c., says, that he is advised and believes he has a just and full defence to said action, consisting in this, to wit, that said mortgage was given at the time of its date, by the said Silas S. Fowler to the said First National Bank, as security, not for any previous indebtedness of the said Silas S. Fowler, but for future advances and for liabilities thereafter to be contracted, and was given for no other purpose, as by said mortgage will more fully appear. That said bank was created under, and derives all its powers and privileges from, the Act of Congress relative to banking companies, approved the 3d day of June 1864. And deponent is advised and believes that by the 28th section of said act the said bank was prohibited from taking said mortgage, and that according to the provisions thereof the same was and is utterly null and void.” The court (Hampton, P. J.) on the 11th of September 1871, entered judgment for the plaintiff for $79,118.70, for want of a sufficient affidavit of defence.
    The defendant took a writ of error, and assigned for error, entering judgment for want of a sufficient affidavit of defence.
    The following are sections of the National Currency Act of June 3d 1864: 2 Bright. U. S. Dig. 53, 57, 58, 63, 64, pi. 8, 28, 29, 52, 53, 54.

      “ Sect. 8. Every association formed pursuant to the provisions of this act, shall, from the date of the execution of its organization certificate, be a body corporate, but shall transact no business except such as maybe incidental to its organization and necessarily preliminary, until authorized by the comptroller of the currency to commence the business of banking. Such association shall have power to adopt a corporate seal, and shall have succession by the name designated in its organization certificate, for the period of twenty years, * * * by such name it may make contracts, sue and be sued, &c., * * * and exercise under this act all such incidental powers as shall be necessary to carry on the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin and bullion; by loaning money on personal security; by obtaining, issuing and circulating notes according to the provisions of this act; and its board of directors shall also have power to define and regulate by by-laws, not inconsistent with the provisions of this act, &c. * * * and its usual business shall be transacted at an office or banking-house located in the place specified in its organization certificate.
    “ Sect. 28. It shall be lawful for any such association to purchase, hold and convey real estate as follows:—
    “ First. Such as shall be necessary for its immediate accommodation in the transaction of its business.
    “ Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted.
    “ Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings.
    “Fourth. Such as it shall purchase at sales under judgments, decrees or mortgages held by such association, or shall purchase to secure debts due to said association.
    ' “ Such association shall not purchase or hold real estate in any other case or for any other purpose than as specified in this section; nor shall it hold the possession of any real estate under mortgage, or hold the title and possession of any real estate purchased to secure any debts due to it for a longer period than five years.
    “ Sect. 29. The total liabilities to any association, of any person, &c., for money borrowed, &c., shall at no time exceed one-tenth part of the amount of the capital stock of such association actually paid in: Provided, That the discount of bond; fide bills of 'exchange drawn against actually existing values, and the discount of commercial or business paper actually owned by the person, &c., negotiating the same, shall not be considered as money borrowed.
    “ Sect. 52, All transfers of the notes, &c., owing to any association, or of deposits to its credit; all assignments of mortgages, &c., to prevent the application of its assets in the manner prescribed by this act, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and Void.
    “ Sect. 53. If the directors of any association shall knowingly violate, &c., any of the provisions of this act, all the rights, privileges and franchises of the association derived from this act shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a proper circuit, district or territorial court of the United States, in a suit brought for- that purpose by the comptroller of the currency, in his own name, before the association shall be declared dissolved.
    “ Sect. 54. * * And the association shall not be subject to any other visitorial powers than such as are authorized by this act, except such as are vested in the several courts of law and chancery.”

      G-. Skiras, Jr., and Hopkins Lazear, for plaintiff in error.
    —The mortgage under the provisions of the Act of Congress is absolutely void, and therefore a suit could not be maintained on it: E. Anglian Railway v. E. Counties Railway, 7 Eng. L. & E. 505; McGregor v. Railway, 16 Id. 180; Norwich v. Norfolk Railway, 30 Id. 120; Seneca Bank v. Lamb, 26 Barb. 695; Leavith v. Palmer, 3 Comstock 19; Tallmage v. Pill, 3 Selden 328; Swift v. Beers, 3 Denio 79; Tyler v. Gates, 3 Barb. 226; Green v. Seymour, 3 Sandford 286; Chilicothe Bank v. Swayne, 8 Ohio 280; Miami Exporting Co. v. Clark, 13 Id. 1; New York Ins. Co. v. Ely, 5 Conn. 560: Wheeler v. Russell, 17 Mass. R. 258 ; White v. Franklin Bank, 22 Pickering 183; Merrith v. Lambert, 1 Hoffman Ch. R. 166; Pearsoll v. Chapin, 8 Wright 9; Columbia Bank v. Haldeman, 7 W. & S. 233; Mitchell v. Smith, 1 Binney 110; Biddis v. James, 6 Id. 321; Weeks v. Lippincott, 6 Wright 474; Burkholder v. Beetem, 15 P. F. Smith 496 ; U. States Bank v. Owens, 2 Peters 537; Augusta Bank v. Earle, 13 Id. 519; Perrine v. Ches. & D. C. Co., 9 Howard 172; Cappell v. Hall, 7 Wallace 542.

      M. W. Aoheson, for defendant in error. —
    A mortgagee has no estate, property or interest in the land until he takes possession of the property: Myers v. White, 1 Rawle 353 ; Craft v. Webster, 4 Rawle 255; Wilson v. Shoenberger, 7 Casey 295; Moore v. Cornell, 18 P. F. Smith 320.
    There is no express prohibition to be found in the Act of Congress from taking a lien by mortgage : Act of June 3d 1864, supra.

    The object of the restraining clause of the statute is to prevent an inordinate proportion of real estate being held by banking companies, and to prohibit them from withdrawing their capital from their legitimate business and engaging in land speculations : Silver Lake Bank v. North, 4 Johns. Ch. R. 373; Baird v. The Bank of Washington, 11 S. & R. 411, 417. A bank may receive and hold bonds and mortgages as securities for its debts: Trenton Banking Co. v. Woodruff, 1 Green (N. J.) Ch. R. 117; Bates v. The Bank, 2 Alabama R. 465; Blunt v. Walker, 11 Wis. 334.
    Every corporation has, at common law, a right to take and hold property real and personal: Ang. & A. on Corp., sec. 145; 2 Kent Com. 335. The mortgage here was for a debt “ previously contracted ” within the meaning of the second clause of the 28th section of the Act of Congress: Silver Lake Bank v. North, supra.

    There is a distinction between a mortgage to cover future advances at the discretion of the mortgagee and one to cover advances which he is bound by contract to make: Ter Hoven v. Kerns, 2 Barr 96; Moroney’s Appeal, 12 Harris 372; Parmentier v. Gillespie, 9 Barr 86. The previous agreement by the bank to discount Fowler’s paper was equivalent to discounts then actually made.
    Equity will regard the mortgage as redelivered anew on each occasion when the bank discounted a bill for Fowler: Rex v. Ins. Co., 2 Phila. R. 357; Purser v. Anderson, 4 Edwards’s Chancery Rep. 17; Valk v. Crandall, 1 Sandf. Ch. (N. Y.) 179; Uhler v. Applegate, 2 Casey 140. In the absence of any complaint by the government, and in the absence of any defence by Fowler himself, it lies not in the mouth of Vankirk — a mere volunteer — to assert that the bank has no equities : Knowles v. Lord, 4 Wharton 500. In re Roberts, 2 Barr 371; Twelves v. Williams, 3 Wharton 485; Foulke v. Harding, 1 Harris 242; Mellon’s Appeal, 8 Casey 121; Breading v. Boggs, 8 Harris 33. The utmost that can be said is, that the bank in taking this mortgage acted in excess of its powers to acquire property. The goveimment alone can complain : Silver Lake Bank v. North, supra; P. & C. R. R. Co. v. Allegheny County, 13 P. F. Smith 126; Leazure v. Hillegas, 7 S. & R. 313; Goundie v. Northampton Water Co., 7 Barr 233; Baird v. The Bank of Washington, 11 S. & R. 411; Steamboat Co. v. McCutcheon, 1 Harris 13; Farnham v. D. & H. Canal Co., 11 P. F. Smith 265 ; Chester Glass Co. v. Dewey, 16 Mass. 94.
    A contract forbidden by the charter of a company is not necessarily void, except in a direct proceeding by the state: Grand Gulf Bank v. Archer, 8 Smedes & M. 151; Steam Nav. Co. v. Weed, 17 Barbour 378; Insurance Bank of Columbus v. U. S. Bank, 7 Pa. Law Jour. 129, 145; Lagow v. Badollet, 1 Blackf. 416; Bank of South Carolina v. Hammond, 1 Rich. 281; Southern Life Ins. & Trust Co. v. Lanier, 5 Fla. 110; Wooster Bank v. Stevens, 1 Ohio St. R. 233; Richmond Bank v. Robinson, 42 Maine 589; Parrish v. Wheeler, 22 N. Y. 494.
    January 6th 1873,
   The opinion of the court was delivered, by

Agnew, J.

— The First National Bank of Pittsburg asked the District Court to enforce by scire facias the payment of a mortgage for future advances. The defendant, the owner of the mortgaged land, asserts that the mortgage is forbidden by the Act of Congress, which confers upon the bank its charter and all its powers. The simple question is, Is the mortgage valid or void; and if void will the law enforce it ? In deciding this question, we must be guided by the Federal laws and Federal precedents, for the subject is one of. Federal origin and Federal control. The plaintiff is a corporation created and governed by the Act' of Congress, approved the 8d of June 1864, commonly called the National Bank Act. What is the Federal rule to be applied to such a corporation? In the Bank of U. S. v. Dandridge, 12 Wheaton 64, Justice Story lays down this rule : “ Whatever may be the implied powers of aggregate corporations by the common law, and the modes by which these powers are to be carried into operation, corporations created by statute must depend, both for their powers and the mode of exercising them, upon the construction of the statute itself.” For this he cites the following language of Chief Justice Marshall, in Head v. Prov. Ins. Co., 2 Cranch 127: “Without ascribing to this body, which in its corporate capacity is the mere creature of the act to which it owes its existence, all the qualities and disabilities annexed by the common law to ancient institutions of this sort, it may correctly be said to be precisely what the incorporating act has made it; to derive all its powers from that act and to be capable of exerting its faculties only in the manner the act authorizes.” These propositions are repeated by himself in Dartmouth College v. Woodward, 4 Wheaton 636, and by C. J. Taney, in Bank of Augusta v. Earle, 13 Peters 587, and Penrise v. Chesapeake & Delaware Canal Co., 9 Howard 184. In our own state, the same doctrine is recognised in the case of a National Bank. Justice Strong said: “ The bank is a creature of the act, dependent on it for all its powers, and controlled by all the restrictions which the act imposes Venango National Bank v. Taylor, 6 P. F. Smith 14.

This being the settled rule of interpretation, the question is: Does the Act of Congress authorize or permit a National Bank to take a mortgage of lands, to secure the payment of future loans and discounts?”

The banking powers of these associations are to be found in the 8th section, and are “ to carry on the business of banking by discounting and negotiating promissory notes, drafts, bills of exchange and other evidences of debt; by buying and selling exchange, coin and bullion; by loaning money on personal security; by obtaining, issuing and circulating notes according to the provisions of the act.” In view of the rule of interpretation of such charters given to us by the Federal courts, and the maxim expressio unius est exclusio alterius, the argument might close with the terms of the power to loan money on personal security: for agreeably to this rule and maxim, no other security than personal can be taken for money lent. This is the law of the bank’s capacity, and of its control. It accords also with the nature o£ banking as a business, which is precisely described in the language of the law itself; the discounting and negotiating of promissory notes, drafts, bills and other evidences of debts (meaning, of course, debts ejusdem generis, such as checks, certificates of deposits, &c.), the buying and selling of bills of exchange, bullion, and lending of money on personal security. The reasons are manifest. The business of a bank is commercial, not that of dealing in real estate, brokerage, &c. It, therefore, does not buy and sell real estate, ground-rents, mortgages, stocks, produce, &c.

It deals in commercial paper, on the security afforded by the personal responsibility of drawers, endorsers and payers, and this because banks are created for the purposes of trade, which require ready access to loans of money, and discounts on business paper made in the course of trade. Experience also has shown, that whenever banks abandon the legitimate practice of loaning or discounting on the well known standing of the parties to commercial paper ; to lend money on the hypothecation of stocks, real estate, &c., alone in lieu of personal security, they enter an uncertain and unknown region of credit. The directors can well know or ascertain the standing of drawers and endorsers as men of capital or means in the community, but the moment they leave this plain field to enter the region of corporation stocks, real estate and liens, they take a leap in the dark, and must resort to outside agents, such as lawyers, brokers, &c. The internal affairs and condition of a corporation are known to few, while the security of a mortgage rests on both title and liens, requiring professional skill to explore them. The evident intent of Congress is, that National Banks should be institutions of commerce, not dealers in real estate, stocks or produce. What power there may be to accept an hypothecation of stocks in addition, and to strengthen a loan, we do not say. We are discussing the power conferred to maJce or create loans.

Another' obvious purpose of confining their loans of money to personal security, is to prevent these associations from splitting on the rock which has ruined so many banks, to wit, that of lending too much of their capital to one person or firm. The 29th section provides: “ That the total liabilities to any association, of any person, or of any company corporation, or firm for money borrowed, including in the liabilities of a company or firm, the liabilities of the several members thereof, shall at no time exceed one-tenth part of the amount of the capital stock of such association actually paid in.” Thus Congress has prohibited an undue aggregation of its capital in single hands even though each note or bill may be well secured by the names upon it. Then what must we say of large aggregations of capital in the hands of one man, without personal security on the faith of an estimated value of real estate and the risk of title, and conflicting liens ? In the present case we see an aggregate of loans to Fowler, tbe mortgagor, of $76,303.59; the very mortgage reciting, that it was taken to dis pense with personal security, and to extend to the sum of $100,000 How much the paid in capital of this bank is, we do not know. That such a transaction is contrary to the first principles of correct banking and to the charter, is obvious.

The intention of Congress is manifested by other features of the act. The 35th section declares: “That no association shall make any loan or discounts on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon any debt previously contracted in good faith, and stocks so purchased or acquired, shall within six months from the time of its purchase, be sold or disposed of at public or private sale, in default of which a receiver may be appointed to close up the business of the association according to the provisions of this act.” What is this, but to repeat to the bank — you must lend money only on personal security. Then comes the 37th section, prohibiting the bank from hypothecating its circulating notes to procure money to pay on its capital, or to be used in its banking operations or from using its notes so as in any form to increase its capital. These two sections, the 35th and 37th, when viewed together, teach another lesson, that these banks shall not live upon themselves, so that when compelled to wind up, creditors and stockholders shall not then discover that their apparent assets are composed of their own decayed viscera, instead of outside personal security. In this way only can the public be made safe against mismanagement.

Here the argument might rest, that the lending of money on mortgage or real estate security is ultra vires and forbidden. But Congress has left nothing to implication, and in the 28th section has said in what cases these hanks may hold real estate, and has forbidden all others. The 28th section reads thus: “ That it shall be lawful for any such association to purchase, hold and convey real estate as followsThen follow four numbered cases.

First.' Such as shall be necessary for its immediate accommodation in the transaction of its business.
Second. Such as shall be mortgaged to it in good faith by way of security for debt previously contracted.
Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judgments, decrees, mortgages held by such association, or shall purchase to secure debts due to such associations.”

Now comes the prohibition against any other mode, and the appointed time such as shall have been legally acquired, shall be held.

“ Such association shall not purchase or hold real estate in any other ease or for any other purpose than as specified in this section, nor shall it hold possession of any real estate under mortgage, or hold the title and possession of any real estate purchased to secure any debts due to it, for a longer period than five years.”

Thus the section speaks to the bank in plain language — you shall not purchase or hold real estate (besides your banking-house) except in good faith to secure debts already contracted, and you shall not hold in mortmain, for a longer period than five years, that which you can legally take. This section is interpreted also by the 35th section, which forbids the bank from taking its own stock in security, except to prevent the loss of a debt previously contracted in good faith ; and when stock shall be so taken it shall not be held longer than six months. The language of prohibition in the 28th section is quite clear. The bank “ shall not purchase or hold real estate in any other case or for any other purpose than as specified in this section.” The second specified case in this section is, “ such as shall be mortgaged to it in good faith by way of security for debts previously contracted.” The law therefore says plainly — you shall not hold a mortgage for future loans, for that is another case.

If anything were wanting to make plain that which is clear, it is the amendment of the 2d clause in the 28th section, and the debate on it in the Senate. See Cong. Globe, April 26th 1864. The amendment of the committee proposed to strike out, “for loans made by such association in the usual course of its banking business or for money due thereto,” and to insert “ for debts previously contracted,” so as to make the clause read, “ such as shall be mortgaged to it in good faith by way of security for debts previously contracted.” At the call of Senator McDougall, Senator Sherman explained the amendment of the committee to allow the banks to take a mortgage for a pre-existing debt; but not to loan money on real estate security ; “ Not to loan money on mortgage ?” said Mr. McDougall. Mr. Sherman again replied, “ They have no right to loan money upon mortgage ; they must take personal security, but after a debt is contracted they may, in order to secure the debt, take a mortgage upon real estate.” The amendment was adopted, and the section now stands so.

It is argued, however, that a mortgage is not real estate, and therefore it cannot be said that the bank holds real estate when it holds a mortgage. The criticism is unsound, in forgetting that the law is its own interpreter. A mortgage is one of the four enumerated cases of which the law says the bank may hold real estate as follows. Then follows the second case. It is also one of the cases referred to when the law says, the bank shall not hold in any other case than as specified in this section. The criticism overlooks the fact also that the act as a Federal law is intended to embrace the various conditions of the law of mortgage as realty or personalty, in the several states. Even in Pennsylvania, where no court of chancery existed, though viewed only as a security for money, mortgages have been regarded as conveyances of real estate in form and subject to real estate remedies, as by ejectment, and by writ of waste.

The argument founded on the 52d section is unsound. The mortgages therein referred to are of course those which may be (awfully taken for pre-existing debts, which when found among the assets of the bank shall not be so assigned as to create preferences among creditors. The express prohibition of the 28th section cannot be repealed by this reference to mortgages in the 52d section, when so ready a meaning can be found for the latter.

It is a clear and incontrovertible position, therefore, that a National Bank cannot lend money on the security of a mortgage, and that its power to take and hold a mortgage is confined to the second case in the 28th section, for debts previously contracted. .

It is argued that the mortgage before us is not a mortgage for future advances of money, because of the recital that the bank “ hath agreed to discount for said Fowler an amount in the aggregate not exceeding $100,000, such negotiable paper as he shall offer for that purpose.” It is said this is a covenant or obligation on part of the bank to loan that sum, and, therefore, the money to be lent is not a future loan. But this confounds distinctions and ignores facts. Treat the recital as a covenant to lend, still the loans and discounts to be made are future. The bank did not owe Fowler $100,000, and if it did, it had a security without a mortgage. The mortgage before us is not to secure a debt from the bank to Fowler, but a debt from Fowler to the bank, not exceeding $100,000, which is to consist of negotiable business paper discounted for him without the necessity of procuring the additional endorsement for said paper by a third party. If the bank is bound to make the discounts, the breach of the covenant would be followed by such damages only as Fowler could show. So much is drawn from the instrument itself. Then the fact is, as it appears in the schedule of discounts, that though the mortgage bears date the 21st October 1869, acknowledged and recorded on the same day, the first discount claimed under it was on the 11th April 1870, after which come twenty-two others, down to September 26th 1870. These are Fowler’s debts to the bank, and they are all future to the mortgage. It would be an unmitigated fraud upon the Act of Congress if a bank could first covenant to lend the money, and then found upon its own covenant a mortgage to cover a line of future loans and discounts.

The distinction between a mortgage to cover future advances at the discretion of the mortgagee, and one to cover advances he is bound to make, recognised in TerHoven v. Kerns, 2 Barr 99, and other cases, has no bearing on the present question. That distinction was taken to regulate the rights and equities of lien-creditors among themselves, but does not change the nature of the advance itself. The advance in either case is future, but the effect upon the lien is different, just as the creditor was bound or not bound to make the advance.

It is further argued that to prevent injustice, equity will regard the mortgage as delivered anew, on each discount or advance. This will do inter partes, to prevent wrong; but such a fiction cannot confer a power upon a corporation, withheld from it by its charter. The error is in forgetting that this is a question of statute power and public policy, not of mere equity between the parties. Any want of corporate power might be supplied by this means, and the mere interests of parties be made to override the law.

Whether Yankirk, the voluntary assignee of Fowler, can set up the defence here, depends not on his character as a volunteer, but on the question whether the law will aid the plaintiff’s recovery. If it will not, it is clear that Yankirk, as the owner of the estate by assignment, and under bond to administer his trust according to law, may and ought to defend for the interest of the creditors. This brings us to the second question stated in the outset of this opinion. The mortgage being void, will the law enforce it ? All the authorities, English, Federal and state, say no. Mr. Powell, in his work on Contracts, p. 166, says, that all contracts repugnant to the welfare of the state, or against some maxim or rule in law, or in contradiction to some positive statute, are void. Then follow numerous instances. Mr. Comyn, in his work on Contracts, pp. 59 to 67, enumerates many statutes upon which contracts have been declared by the courts to be void as mala prohibita, and it is not essential that the statute itself should declare the contract to be void.

The doctrine that a contract, in violation of the provisions of a statute, though not expressly made void by it, is null and will not be enforced by the courts, is very distinctly stated and sustained by authorities in the case of the Bank of the U. S. v. Owens, 2 Peters 538. Johnson, J., said: “ No court of justice can in its nature be made the handmaid of iniquity. Courts are instituted to carry into effect the laws of the country; how can they become auxiliary to the consummation of violations of law ? There can be no civil right where there can be no legal remedy, and there can be no legal remedy for that which is itself illegal.” The sam.e principles are recognised in Coppell v. Hall, 7 Wallace 558. Justice Swayne, commenting on the instruction of the court below, that the illegality had been waived by the act of the defendant, says, “ In such cases there can be no waiver. The defence is allowed not for the sake of the defendant, but of the law itself.” Again, “ Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons. Where the contamination reaches, it destroys. The principle to be extracted from all the cases is, that the law will not lend its support to a claim founded on its own violation.” See also Bank v. Lanier, 11 Wallace 369. ■ And in Bank of Augusta v. Earle, 13 Peters 587, C. J. Taney says: “ It may be safely assumed that a corporation can make no contracts and do no acts within or without the state which creates it, except such as are authorized by its charter.”

Coming now to our own state, a long line of decisions testifies that our courts will not lend their aid to enforce illegal contracts. In Mitchell v. Smith, 1 Binney 110, a case of the sale and purchase of a Connecticut title to Pennsylvania lands, Shippen, C. J., says : “ The contract is illegal, being founded on the breach of the law, and of consequence is a void contract and cannot be enforced in a court of law.” In Siedenbender v. Charles, Administrator, 4 S. & R., it was held there could be no recovery upon a ticket in an illegal lottery. Tilghman, C. J., said: “ I consider it perfectly settled that an action cannot be sustained, founded on a transaction prohibited by statute, although it is not expressly declared that the contract is void;” p. 160. Yeates, J., said: “ The principle of public .policy is, that no court will lend its aid to a man who grounds his action upon an immoral or illegal act. Justice as between these individuals would require either payment of the money or reconveyance of the property, but principles of public convenience demand that the justice of the case shall yield to higher considerations, the operation of the precedent on public morals and the public interest. It is for these reasons courts of justice will not assist an illegal transaction in any respect.” In Biddis v. James, 6 Binney 329, a case of. lottery ticket also, O. J. Tilghman states the same doctrine in fewer words. There is, therefore, no room for equitable presumptions, or estoppels, in cases of illegal contracts. Without protracting the statement too much, I may refer to the following cases of illegal contracts, which the courts have refused to aid by a recovery: Maybin v. Coulon, 4 Dallas 298; Duncanson v. McLure, Id. 308; Badgely v. Beale, 3 Watts 263; Kepner v. Keefer, 6 Id. 231; Wagonseller v. Snyder, 7 Id. 343; Clippinger v. Hepbaugh, 5 W. & S. 315; Filson v. Himes, 5 Barr 452; Columbia Bank & Bridge Co. v. Haldeman, 7 W. & S. 233; App v. Coryell, 3 Penna. R. 494; Edgell v. McLaughlin, 6 Wharton 176; Brua’s Appeal, 5 P. F. Smith 295. Two of these cases may be noticed particularly on the ground that the contracts were collateral to the illegal act, and that the court refused its aid. Badgely v. Beale was for wages as a marker at an illicit billiard-table ; and Columbia Bank, &c., v. Haldeman, was on a bond of indemnity to a stakeholder for paying over money won on a wager on an election. Here the bank, as plaintiff, asks to recover on an illegal mortgage; and it follows, from the doctrine stated, that the court will not assist the illegal act; and that the argument in regard to the state, being the only party to avail herself of the illegal forfeiture, has no place here. The defendant has the right to avail himself of the defence, and prevent a recovery. The doctrine of Leazure v. Hillegas, 7 S. & R. 313, and cases following in its track, is founded on the law of Pennsylvania as to corporations, that though they may take real estate, except for superstitious uses, yet they cannot hold it in consequence of the statutes of mortmain, but as the title has passed into the corporation, it must rest there, till the state enforces the forfeiture. This is very clearly shown by C. J. Tilghman in that case. But in the case now before us, as we have seen, the Act of Congress forbids the taking of a mortgage, except as a security for debts previously contracted. The disability attaches therefore to the acquisition, and not to the retaining of the mortgage. The transaction is without authority and illegal from the start, and the law will not enforce it. The defendant may, therefore, defend against it, not because of his own merit, but because the law will not suffer itself to be prostituted. This being the rule, it only remains to state the test adopted. “ The test (says Judge Duncan, in Swan v. Scott, 11 S. & R. 164) whether a demand connected with an illegal transaction is capable of being enforced at law, is whether the plaintiff requires the aid of the illegal transaction to establish his case. If the plaintiff cannot open his case without showing that he has broken the law, the court will not assist him, whatever his claim in justice may be upon the defendant.” This test has been .repeated in the following cases: Thomas v. Brady, 10 Barr 170; Scott v. Duffy, 2 Harris 20; Evans v. Dravo, 12 Id. 65. The mortgage of Fowler to the plaintiff is, on its face, a security for future advances, and the schedule of the debts claimed under it shows also their subsequent character. The plaintiff could not open its case, therefore, without disclosing that it sought the enforcement of an illegal security — one forbidden by the law. The action must, therefore, fail. Judgment reversed.

Sharswood and Williams, JJ., dissented.

March 12th 1873. The Supreme Court awarded a procedendo.


author: Thompson, C. J.

text:
    Weaver versus Wible et al.

    1. In a soire facias sur judgment in ejectment, the defendant cannot show facts which would have been an answer to the original action.
    2. Possession partly before and partly after the judgment cannot be shown in a scire facias to support the Statute of Limitations.
    3. A plaintiff died after recovering a judgment in ejectment. His heirs could have execution on the judgment.
    October 26th 1869.
    Before Thompson, O. J., Read, Agnew, Sharswood and Williams, JJ.
    Error to the Court of Common Pleas of Westmoreland county: No. 143, to January Term 1868.
    This was a scire facias quare exeeutio non, sur judgment in ejectment; it was issued November 11th 1865, by James Louther and Susan his wife, for her use, Francis C. Wible and James R. Wible, heirs at law of William Wible, deceased, against Susan Weaver.
    The defendant pleaded that since the recovery of the judgment, the land had become vested in the defendant; — the Statute of Limitations, and that the plaintiff in the ejectment had died since the judgment, and it being a real action the right of execution died with him.
    The case was tried May 22d 1868, before Sterrett, P. J., of the 5th district.
    The plaintiffs gave in evidence the record of an action of ejectment to August Term 1850, judgment for the plaintiff; record removed to the Supreme Court, the judgment there affirmed January — 1856.
    They then gave evidence of the death of William Wible about 1858 or 1860, and that the plaintiffs were his heirs at law.
    The plaintiff here rested.
    The defendant then offered to prove that soon after 1846, she made a parol contract with Abraham Horback for the land in dispute; that she paid the purchase-money and received a deed in fee simple from Horback in 1848 in consummation of the contract; and that from the time the contract was made she has been in possession, claiming the land as her own, and has made valuable improvements. The offer was rejected and a bill of exceptions sealed. The defendant offered no other evidence.
    The court charged the jury amongst other things:—
    * * * “ There is nothing in the pleadings or evidence to prevent a recovery, if you find the fact of heirship as claimed by the plaintiffs.”
    The verdict was for the plaintiffs, and judgment having been entered thereon the defendant took a writ of error.

      She assigned for error rejecting her offer of evidence and the instruction of the court.
    Laird, Poster and Stewart, for plaintiffs in error.
    There was no paper-book for the defendants in error.
    January 3d 1870,
   The opinion of the court was delivered, by

Thompson, C. J.

— This was a sei. fa. sur judgment in ejectment, quare executionem non. Of course the only question involved, was whether that judgment, standing unreversed and unexecuted, might still be executed by appropriate process. The attempt below was to answer the demand of the writ by faets, which would show that no such judgment ought to exist on original grounds. In other words, a retrial of the original controversy was proposed. But this cannot be. A release of the judgment, or a conveyance of title by the plaintiff to the defendant, which would operate necessarily as a release of the judgment, would undoubtedly be pleadable to a scire facias. They are defences occurring after judgment, and are good reasons why execution should not he awarded; but how the Statute of Limitations, arising partly before and partly after the judgment, could or ought to be regarded in the light of a release of the judgment, or conveyance of title, I do not see. The plan to try that is to turn out and sue upon it; the former recovery is no bar to that. If a trial of title on original grounds were allowable in the scire facias, it might follow that if the result in the scire facias should be the same as that in the original action, a single action in an ordinary ejectment would be conclusive, on account of two verdicts on the question of title the same way. We do not mean to go out of the case before us in any particular, or to say whether the recovery in ejectment,'without a habere facias possessionem, or actual entry, tolled the statute or not. That we must-leave until we are required to pass upon it; it would he improper to do so now, as from what we have said, it is apparent it is not in this case. The court below committed no error either in its charge or the rejection of the evidence complained of.

Judgment affirmed.