text:
    Reed vs. Warner and others.
    Where R., who had failed in business, employed W. to compromise with his creditors, and authorized him to offer fifty cents on the dollar upon such compromise, and V/., while acting as such agent, purchase ed several notes of R. at that rate, upon his own account, and after-wards sold such notes to J. and H. for the whole nominal amount, after they became due; Held, that J. and H. could not be permitted to recover more than fifty per cent, upon the amount of such notes; Held also, that W. was a proper party to a bill in chancery filed by R. against J. and H. ■ to stay the proceedings at law on such notes upon the payment of what was equitably due thereon as between R. and W.
    An agent who is employed to purchase an estate, or to transact any particular business for another, cannot purchase the estate for himself, or act for his own benefit in relation to the subject matter of such agency, to the injury of the person by whom he is employed.
    Where an answer on oath is not waived by the complainant, in his bill, and there is no jurat to the copy of the answer served, if the complainant files a replication and goes to a hearing without objection, the irregularity is waived; and he cannot at the hearing deprive the defendant of the benefit of the answer, so far as it is responsive to the bill, by objecting to the want of a jurat to the copy of the answer as served.
    The complainant, who was a jeweller residing in the city of New-York, in the spring of 1839, gave to Davis, Babbitt & €o., of Providence, three negotiable promissory notes, amounting together to the sum of $700,34, payable at different times, the last of which notes became due on the 28th of March, 1830. Previous to the time when any of the notes became payable, the complainant stopped payment. He made propositions to his various creditors to compromise, and offered to pay them fifty per cent, on the amount of their debts; which terms Davis, Babbitt & Co. were willing to accept, if other creditors would consent to compromise in the same way. About the middle of April, 1830, these notes were transferred to the defendant Warner, upon a purchase of real estate, but without recourse to Davis, Babbitt & Co. as endorsers. It appeared by the proofs in the cause, that Dr. Richmond had some interest in the real estate conveyed by Warner, and thus became interested in the purchase of the notes; but it did not appear what was considered by either party as the fair cash value of the notes, upon the sale and purchase of the real estate. On the 33d of April, 1830, Warner gave to the complainant a written memorandum, reciting that he was the holder of the three notes, which he promised and agreed to give up to. Reed, upon his paying $350, and interest from that time, provided Reed paid the sanie within two months from that date. This amount was not paid by Reed at the time specified in the memorandum. Warner again went to Néw-York, in August, 1830, where an interview took place between him and Reed. At this interview Reed offered to pay him the $350, and interest, for the notes, about $107 thereof in the note of a third person, and the residue in cash; which sum Warner refused to receive unless Reed would also pay him $100 in addition, as a compensation for his services in negoiating for him with his Providence creditors and to remunerate him for his passages backward and forward, and for other expenses. The complainant offered him a watch, or $50, as a compensation for such services and expenses; which offer ivas declined, and the negotiation was thereupon broken off, Warner being then about to start for Providence in the steam boat. Warner afterwards sold the notes to the defendant Johnson, for $400 in cash and $226 in goods, without endorsing the notes; and he took from Johnson a written stipulation exonerating Davis, Babbitt & Co., whose names were on the- back of the notes as endorsers. One of the notes, for $250, was subsequently transferred by Johnson to the defendant Harris, to be collected and applied by him in part payment of an antecedent debt. Harris after-wards brought a suit in the supreme court upon the note transferred to him ; and Johnson brought two suits upon the other notes, one in the supreme court, and the other in the mayor’s court in the city of New-York. The complainant thereupon filed his bill in this cause, for an injunction to stay the proceedings in the suits at law, and to have the notes delivered up and cancelled upon the payment of $350 and interest thereon from the date of the agreement or memorandum, of April 23d, 1830. The complainant alleged in his bill, among other things which are not material to be stated here, that previous lo the transfer of the notes to Warner, by Davis, Babbitt & Co., he had employed Warner as his agent to effect a compromise with all his Providence creditors, and had agreed to pay him a reasonable compensation, for his services, and that Warner purchased the notes at the rate of fifty cents on the dollar of the amount due thereon. But the defendant Warner, in his answer, although he admitted that he was requested by the complainant to ascertain the views of the creditors in relation to their demands against him and to inform him upon what terms he thought they could be arranged, expressly denied that he was ever employed or applied to, at any time before the purchase of these notes, to negotiate with Davis, Babbitt & Co., or with any other of the Providence creditors, in relation to any claims against the complainant; or that he ever agreed with Reed to settle with the holders of these notes for a less sum than their nominal amount, if practicable, or in any other manner. The other defendants also denied this allegation in the bill, upon their information de= rived from Warner. The cause was heard upon pleadings and proofs as to all the defendants.

      James King, for the complainant.

      8. Butcher, for the defendants.
   The Chancellor.

Before proceeding to examine the merits of this cause, it is proper to notice one or two objections that were made upon the argument, which relate to matters of form. On the part of the defendant Warner it was insisted that there was no equity in the bill which could authorize the complainant to make him a party; and that he was a mere witness. This objection is untenable, if the allegation in the bill is true, that Warner, at the time of the purchase of the notes, was the agent of the complainant to obtain a compromise of his Providence debts at an amount not exceeding fifty cents on the dollar. If such was the fact, the transfer of the notes to Johnson, for the whole nominal amount thereof, was a fraud upon the rights of the complainant;, which would have authorized him to file a bill in this court to compel the defendant Warner to indemnify him against the payment of any more of the notes than was equitably due, as between him .and Warner, at the time of the transfer of the notes to Johnson. And as the notes were transferred to" Johnson and Harris after they became due, and therefore subject to all equities which existed against such notes in the hands of Warner, the complainant had a right to join them with Warner, as defendants in the suit, for the purpose of having the account of what was due ascertained, to prevent a recovery at law for any more than was justly due. (See Baily v. Inglee, 2 Paige’s Rep. 278. Again ; it appears, from the answer of the defendant Johnson, that Warner sold and transferred the notes to him as being justly due to the extent of the full nominal amount thereof. And that he gave to Johnson no information as to the existence of the agreement of the 23d of April, Í 830, or that any equitable claim existed to prevent the recovery of the full amount of the notes, with interest. This being the fact. the defendants Johnson and Harris would probably have had the right to insist that Warner should be made a party, to assist them in the defence of the suit, and that he might be primarily charged with the costs, if the complainant succeeded; and also that they might have a decree over against him, for so much of the nominal amount of the notes as was not equitably due from Reed at the time they were sold to Johnson.

The copy of the answer of Warner which was served on the complainant’s solicitor, has no jurat attached to it; and it is objected that, for this reason, it is to have no greater effect, as evidence, even where it is responsive to the bill, than if an answer on oath had been waived by the complainant, under the provision of the revised statutes on that subject. (2 R. S. 175, § 44.) This is probably a mere slip of the defendant’s solicitor," as I presume the original answer on file was duly sworn to, in the usual manner. The 40th rule makes it the duty of the complainant, if he wishes to waive an answer on oath, so as to obtain the benefit of this provision of the revised statutes, to insert .such waiver in his bill. And where he has a right to an answer on oath, and neglects to insert such a waiver in his bill, he ought not to bo permitted to take advantage of a technical objection of this kind, to deprive the defendant of the benefit of such parts of the answer as are responsive to the bill. If, from the copy served, the answer did not appear to have been properly verified, the complainant’s solicitor should have refused to receive it, or he should have returned it to the defendant’s solicitor, as soon as the mistake was discovered, and proceeded as if no answer had been put in. But by filing a replication and proceeding to a hearing upon pleadings and proofs, the irregularity of serving an answer to which no jurat was attached, was waived.

The answer of the defendant Warner is in direct collision with the testimony of W. H. Priest, one of the complainant’s witnesses, as to the fact of Warner’s having assumed to act as the agent of Reed, in compromising with his Providence creditors, previous to the purchase of these notes; and the letters of Warner, before and after the transfer of the notes of Davis, Babbitt & &o. to him, strongly corroborate the testimony of Priest, in this respect. There is some little doubt as to the tíme when the notes were actually sold to Warner, in exchange for the land. Warner, in his answer, says he thinks it was about the last of March. But Davis and Babbitt, both of whom were examined as witnesses, in one of the suits at law, and whose testimony was read in this cause, by agreement of the parties, swear that the bargain for the transfer of the notes was closed about the 13th of April. This difference in time, however, is not very material, as none of the letters to the complainant are dated between the 16th of March and the time of the arrangement between him and Warner, at New-York, when the latter agreed to accept $350, in full for the notes. Priest swears that sometime in the latter part of the winter of 1889,53Q, he thinks in the month of February, Warner was at New-York, and had an interview with Reed, at. the store of the latter; that Reed requested Warner to assist him in compromising with his Providence creditors, and told him he would compensate him for his services, and pay all the expenses which he, Warner, might be put to, in the business ; that Warner replied that he had no objection to do what be could for the complainant, but that it would be useless for him to stir in the business, unless Reed was prepared to pay fifty cents on the dollar, as he was confident the creditors would take no less ; that after some farther conversation, the complainant authorized Warner to settle with the creditors on those terms, if he could not do better, but requested him to settle on the best terms he could, and to get as long a time for the payment of the fifty cents on the dollar as possible; and that Warner then said he would do what he could for him, and would let him know the result as soon as possible.

The first loiter of Warner to the complainant, after the interview testified to by Priest, is dated at Providence, on the 16th of March, 1830. 'In this letter Warner says, ecI have made some inquiry respecting your business, and think, from what I can discover, that you will find some difficulty in settling at fifty cents on the dollar, cash down. Patten says he will have seventy-five. Mr. Frost says the same. I will look about and ascertain what others will do, and will write you soon. ■ I should recommend you to settle with Mumford, if possible.” Again, upon the 88th of April, he writes to Reed, and says, among other things: “ I have this day seen Mi* Mumford, respecting your business. I saw Mr. Jenks yesterday. It will be necessary for Mr. Jenks to have his money by the 12th of May. Mr. Mumford says, in conversation I had with him, that he expects to get the whole of his demand against you, as you have nearly settled all your business. He does not know that I was authorized to offer any terms from you.” These two letters, and the subsequent claim which Warner made upon Reed for compensation for his services in endeavoring to make a settlement with the Providence creditors, in connection with the positive testimony of Priest, satisfy me that it is true, as alleged in the bill, that Warner had assumed to act as the agent of Reed in effecting a compromise with his Providence creditors, previous to the purchase of the notes of Davis, Babbitt & Co., notwithstanding thé denial in the answer. He therefore had no right, while that relationship continued, to purchase and hold those notes for a greater sum than he actually paid, not' exceeding fifty cents on the dollar and a reasonable compensation for his services. And although it was a breach of good faith, on the part of Reed, not to pay the $350 and interest within the time given him for that purpose by the memorandum of the 23d of April, that did not authorize Warner to hold the notes for their full amount, or to demand any thing more-than a reasonable compensation for his services as agent. It is a well settled principle of equity that an agent employed to purchase .an estate, or to transact any particular business for another, cannot purchase for himself, or act for. his own benefit in relation to the subject matter of the agency, to the injury of his principal. (See Lees v. Nuttall, Taml. Rep. 282; 2 Myln. & Keen, 819, S. C.; Parkist v. Alexander, 1 John. Ch. Rep. 394.) The amount offered by the complainant, in August, 1830, including the $50 for his services as agent, which probably was more than those services were actually worth, was as much as Warner had any equitable right to claim. And if that amount had been actually tendered in money, instead of being in part offered ih the note of a third person, I should hold the complainant discharged from the payment of interest after that date, or any of the costs of the suits at law upon the notes.

As the notes were transferred to Johnson, after they became due, and under circumstances sufficient to put him on inquiry, as to the equities existing between the maker and the holder of the notes, Johnson cannot be permitted to bold them for any thing more than the two sums offered by Reed, in August, 1830, with interest from the 13th of that month ; which, from the casting on exhibit No. 11, appears to be the day on which that offer was made. The complainant is not wholly without fault in this business, as he should have paid the amount of the two smallest notes, and tendered sufficient upon the other to make up the $406,45 and interest, from August 13th, 1830. In that case the costs of the suits upon the two smaller notes would have been saved. He must, therefore, pay the whole amount of those two notes, and the costs of the suits thereon ; and so much of the larger note as will, with the principal and interest of the two smallest, make up the $406,45 and interest. And upon the payment of that amount, the defendants must be perpetually enjoined from proceeding in the suit upon the larger note, and the same must be deposited with the register and cancelled.

The defendants Harris and Johnson appear to have acted in good faith, and I shall not charge them with the costs of the complainant in this suit; but he is entitled to recover his costs as against the defendant Warner. As the defendants have all appeared by one solicitor, and the cause was argued by the same counsel, on the hearing, it would be improper for me, at this time, to undertake to settle their rights between themselves, although it is probable that sufficient appears upon the pleadings and proofs to enable me to make such a decree as would be equitable in that respect. I shall therefore reserve the questions which arise between the defendants themselves, and give permission to any or either of them hereafter to apply for such further directions in this respect as may be just. z


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Nott vs. Hill and others.
    If is improper to detail the proceedings at length in an affidavit of regularity. The affidavit should merely state that the bill had been taken as confessed upon a personal service of the subpoena, or on a voluntary appearance of the defendant) or upon a proceeding against him as an absentee, as the case may be, and that all the proceedings to take the bill as confessed are regular; except in special cases, where the solicitor wishes to submit the question of regularity to the court.
    This was a bill to foreclose a mortgage, and the complainant’s solicitor had set out, in his affidavit of regularity, all the proceedings at length, to take the bill as confessed.
    1836. January 26.

      J. N. Cushman, for the complainant.
   The Chancellor.

It is improper, in an affidavit of regularity, to set out all the proceedings at length ; and no allowance for such an affidavit should be made on taxation, beyond two folios. The affidavit should simply state that the bill had been taken as confessed upon a personal service of the subpoena on all the defendants, or upon a personal service upon some and a voluntary appearance of others, or upon a proceeding against some of the defendants as absentees and a personal service of the subpoena upon others, as the case may be, and that the proceedings to take the bill as confessed have all been regular. Nothing further than this should be stated in the affidavit, unless in a special case, where the solicitor is in doubt as to the regularity of the proceeding, and wishes to submit the question to the decision of the court; in which case, the special circumstances upon which the doubt arises should be stat-

ed, and the general clause as to regularity should be varied so as to state that the proceedings were regular in all other respects, and that all the proceedings were regular, if the court should be of opinion that the special circumstances stated did not render them irregular in that respect,


author: The Chancellor decided,

text:
    Van Valkenburgh vs. Fuller & Petrie.
    1836. January 28.
    Where the decree of a rice chancellor for the payment of money la stayed by an appeal to the chancellor, the respondent upon the affirmance of the decree is entitled to interest thereon, as damages for the delay caused by such appeal.
    This was an appeal from a decree of a vice chancellor, directing the payment of a sum of money by the appellants to the respondents; and upon the hearing of the appeal before the chancellor, the decree of the vice chancellor was affirmed, with costs. The respondents’ counsel thereupon asked for damages for the injury he had sustained by reason of the appeal,

      N. S. Benton & D. Cady, for the appellants.

      A. Loomis & M. T. Reynolds, for the respondent.
   The Chancellor decided,

that upon an appeal from a de - cree or order of the vice chancellor directing the payment of money, if security had been given by the appellant so as to stay the proceedings of the respondent upon such decree or order pending the appeal, the respondent,upon the affirmance of the decision of the vice chancellor, was entitled to interest upon the decree or order of the court below during the time the proceedings were thus stayed, as damages for the delay and vexation caused by such appeal,


author: The Chancellor

text:
    In the matter of Wager.
    1836. February 1.
    Upon the execution of a commission in the nature of a writ de lunático itiquirendo, it is the duty of the sheriff to select and summon the jurors; and it is improper and irregular for the commissioners to dictate to him what persons are to be summoned.
    A commission having been issued in this case to enquire whether Wager was incapable of managing his property and affairs by reason of habitual drunkenness, the commissioners selected and made out a list of the jurors, whom they directed the sheriff to summon •, and, for this reason, a motion was made to set aside the injunction.

      G. R. Davis, for Wager.

      R. Hayner, for the petitioners.
   The Chancellor

decided that it was the duty of the sheriff, in such cases, to select and summon such jurors as he thought proper, and who were indifferent in relation to the matter; that the commissioners were only authorized to decide upon the validity of challenges to jurors so selected; and that it was irregular and improper for them to dictate to the sheriff what jurors should be summoned in the first instance. For this irregularity, the proceedings were ordered to be set aside ; and a new commission was directed to be issued.


text:
    Halsey vs. Van Amringe and wife.
    1836. April 5,
    The papers which are to be furnished for the chancellor upon the hearing of an appeal from the sentence or decree of a surrogate are a copy of the surrogate’s return, including the transcript of the appeal as entered in the court below, and copies of the petition of appeal and answer to the same filed in the appellate court, together with the points of the respective parties upon the appeal.
    If the surrogate’s return does not contain all the proceedings before him which either of the parties deem requisite for a correct understanding of the questions arising upon the appeal, the proper course for such party is to apply to the chancellor, before the hearing of the cause, for an order for a further return.
    The surrogate upon the settlement of the accounts of executors or administrators before him is bound to allow them their legal commissions for receiving and paying out monies of the estate; and the amount of the estate of the decedent in their hands, which they are to account for and pay over to the creditors or distributees, is the balance which remains after deduct» ing such commissions.
    The surrogate is not authorized to decree the payment of costs out of the estate of the decedent in the hands of his personal representatives, to the exclusion of their commissions for receiving and paying out monies, if the amount in their hands is not sufficient to pay both. But if it is a proper case to charge them wilh the costs of the adverse party upon the pro» ceedings before the surrogate, there should be a decree against them directly and personally for the payment of such costs.
    Upon the settlement of the accounts of executors or administrators before a surrogate, he is not authorized to make an arbitrary allowance for services and counsel fees to be paid by one party to the other, or to be paid out of the estate, without reference to the taxable costs allowed for similar services in other courts. But in the taxation of the costs of the proctors and advocates, upon the settlement of such accounts before the surrogate, the taxable charges must not exceed those which are allowed by law to solicitors and counsellors in the court of chancery, in similar cases.
    This was an appeal from a sentence or decree of the surrogate of the city and county of New-York, upon the final settlement of the account of the appellant, as the administrator of the estate of George Youle, deceased. By the petition of appeal and answer thereto, and the return of the surrogate, it appeared that auditors were appointed to examine and report upon the accounts of the administrator, and that certain exceptions were taken by the appellant to their report; that, on the 17th of June, 1833, the surrogate made a decretal order confirming the report of the auditors, and disposing of the question as to their fees and expenses; that such order also contained various directions for the continuance of the account down to the final decree, by an accountant, under the superintendance of the surrogate, and at the expense of the estate; and that, among other things, it was adjudged and decreed that in the statement of the account, the administrator should be allowed his legal commissions upon monies received and paid out by him on account of the estate. In pursuance of the directions contained in that order, the account was continued down to the time of the final decree ; from which it appeared that there was a balance in the hands of the administrator of $1120,30, excluding from the account any allowance to him for commissions, and that such commissions amounted to $861,14. The costs and counsel fees of the proctor and advocates of the administrator were then taxed and allowed by the surrogate, to the amount of $868,45, and of the proctor and advocates of the next of kin, to the amount of $797,92 ; and the fees of the surrogate were $42,90. The surrogate thereupon made a final decree, bearing date on the 26th of October, 1833, reciting the balance thus found due, and the amount of commissions due to the administrator, and of the costs and counsel fees, &c.; and by such decree he ordered, adjudged, and decreed that the surrogate’s fees should be first paid out of the sum of $1120,30 in the hands of the administrator, and that the balance of that sum should be rateably divided among the parties according to the amount of their costs and counsel fees as thus taxed and allowed, and should be paid by the administrator accordingly ; and that the payment of the administrator’s commissions should be postponed to the payment of such costs and counsel fees.
    The administrator appealed to the chancellor, from so much of the final decree of the surrogate as declared that there was a balance of $1120,30 in the hands of the defendant, for which he was personally liable ; and from so much thereof, as adjudged, that, after the payment of the surrogate’s fees, the remainder of the $1120,30 should be rateably divided according to the amount of costs as taxed, and that the allowance of commissions to the administrator should be postponed to the payment of the costs and counsel fees.
    Previous to the argument of the cause before the chancellor, a question arose as to what papers were necessary and proper to be furnished for the use of the court, upon the hearing of the appeal. The chancellor, thereupon, decided that a copy of the surrogate’s return, including a transcript of the appeal as entered in the court below, and copies of the petition of appeal and the answer thereto which were filed in the appellate court, together with the points of the respective parties upon the appeal, were all the papers which it was necessary to furnish for the use of the court, upon the hearing ; and that if the surrogate’s return did not contain all the proceedings before him, which either party might deem to be requisite and necessary for a correct understanding of the questions arising upon the appeal, the proper course for such party was to apply to the chancellor, before the hearing, for an order for a further return of such proceedings. The cause was then heard upon the merits of the appeal, upon the papers which were furnished by the appellant’s solicitor, under that decision of the court,

      C. Graham, for the appellant.
    The surrogate’s decree, or decretal order, of the 17th June, 1833, upon and for the final settlement of the administrator’s accounts, not having been excepted to or appealed from by either party within three months from the time of the recording thereof, it became final and conclusive between all the parties thereto. (2 R. S. 95, § 67.) And the appellant, the administrator, ?n virtue of that decree, as well as of the provisions of the statute, (2 R. S. 93, § 58,) was entitled to the commissions allowed by law to executors and administrators, for their services over and above their expenses ; and became, by the same decree, entitled to the remaining half of the auditor’s fees and room hire, not charged to the administrator, personally, by that decree, and to all his expenses, including costs, counsel fees, clerk hire, and other charges attending the proceedings before the surrogate, and the auditors ; which, by that decree, were adjudged to be a legal and proper charge against the estate of Youle, in the hands of the administrator, and which the surrogate, by the decree, directed to be allowed to him on the settlement of his accounts. The surrogate’s decree, of 26th October, 1833, is, therefore, in derogation of and in violation of his previous decree of the 17th June, 1833, so far as respected the appellant, as it deprives him of rights which he had acquired under such previous decree. And the decree of the 26th October, 1833, was, so far as it deprived or divested the appellant of his commissions as allowed by law for his services as administrator, or postponed the payment thereof until the payment of the costs, counsel fees and charges of the next of kin, out of a fund admitted to be insufficient to pay both, and also so far as the decree put the costs, counsel fees and charges of the next of kin upon an equality with the actual and necessary expenses of the appellant, was not only in violation of the previous decree of the 17th June, 1833, but was contrary to the enactments of the revised statutes.
    The respondents not having excepted to or appealed from either of the surrogate’s decrees, they are to be confined, upon this argument, to the appeal made by the administrator. The decree of 26th October, 1833,-should, therefore, as to matters appealed from, be reversed with costs, and the suirogate should be directed to execute the decree of the 17th June.

      P. A. Cowdrey, for the respondents.
    The surrogate has power in all cases of contest before him, to award costs to the party in the judgment of the court entitled thereto, to be paid either by the other party personally, or out of the estate which shall be the subject of such controversy, (2 R. S. 223, § 10.) By the surrogate’s decree, dated June 17, 1833, he ordered that the costs and the commissions be both paid out of the assets in the hands of the administrators, it being then uncertain what the fund would amount to, but supposed sufficient for the payment of the whole costs and commissions. By the decree, upon the equity reserved, dated October 26, 1833, the payment of the commissions was postponed, to the payment of the costs, it being then ascertained that there was not sufficient assets to , pay both.
    The administrator has his remedy over against the real estate of the decedent, and against the funds still in his own hands. The decision of the surrogate on the question of costs was therefore a just and discreet exercise of his discretion ; the administrator having been guilty of gross misconduct in the administration of the intestate’s estate.
   The Chancellor.

The surrogate unquestionably erred, in this case, in deciding that the balance of the estate in the hands of the administrator was $1120,30, for which he was personally liable. The decretal order of the 17th of June, expressly declared and directed, that, in the statement of the accounts, the administrator was to be allowed his legal commissions; and in the absence of every thing in this case to show the contrary, I must presume that the direction in that decretal order was correct, whether such order was or was not final and conclusive, between the parties. Independent of that order, however, the administrator was absolutely entitled to the allowance of his commissions, under the provisions of the revised statutes; and the surrogate had no discretionary power to withhold them, or to state a balance against the administrator excluding his legal commissions. It is not necessary now to inquire whether the court of chancery, upon a bill filed against an executor or administrator, has the right to disallow commissions where there has been a fraudulent mismanagement of the estate. The surrogate takes no power by implication ; and the direction of the statute is positive that upon the settlement of the account of executors and administrators in a proceeding before him, the surrogate shall allow them certain specified commissions, for their services, over and above their expenses ; except in those cases where a specific compensation for such services is allowed by the will of the decedent. (2 R. S. 93.) The appellant, therefore, had the same right to be credited his legal commissions for receiving and paying out the monies of the estate, as he had to be credited for monies paid by him for debts and funeral expenses. And the balance of the $1120,30, after deducting therefrom the allowance for commissions, was the amount of the estate remaining in the hands of the administrator, for which he is personally liable. The sentence or decree of the surrogate must, therefore, be modified accordingly.

The surrogate had a discretionary power to award costs to the next of kin, to be paid out of the estate, or to be paid by the administrator personally if his conduct had been such, in the opinion of the surrogate, as to make it proper that the costs should be personally charged upon him. But he could not award costs to be paid out of the estate of the intestate, if there was not sufficient remaining in the hands of the administrator to pay such costs, after crediting him with his legal commissions and disbursements in the discharge of his trust. If this was a case in which it was proper that the costs of the next of kin should be charged upon the estate or upon the administrator personally, to the exclusion of the claim of the administrator for costs, the decree should not have directed the costs of the administrator to be paid out of the fund, but should have directed the costs of the next of kin to be paid out of the estate in the hands of the administrator, after crediting his commissions, and should have directed the balance of such costs to be paid by the administrator personally. I have not, however, any thing before me on this appeal which can enable me to determine whether the administrator should be charged with, or allowed costs, upon the proceedings before the surrogate and the auditors. From the examination of the decree appealed from, however, I am satisfied that the costs which have been taxed and allowed in this case, so far at least as counsel fees are included therein, are not such costs as the surrogate had any right to award to one party against the other, or to direct to be paid out of the estate of the decedent, under the provision of the revised statutes on this subject. (2 R. S. 223, § 10.)

In the ecclesiastical courts of England, costs are allowed in testamentary causes, to one party or the other, in the discretion of the court, as in the court of chancery ; and a regular tariff of fees for the proctors and advocates, and other officers of the court, is settled or sanctioned by the court from time to time. (See 2 Burns’ Eccl. Law, 8 ed. 267.) In this state, however, previous to the revised statutes, it had been settled by a decision of the court of probates, that no costs were recoverable in such cases. In the case of Davis v. Gardner, before the judge of probates, on the 27th of March, 1813, it appears that an administrator was directed to pay into court the balance of the estate of the decedent in his hands, with costs. But the question of costs does not appear to have been discussed in that case ", and the direction to pay costs appears to be contrary to the settled practice of that court, appearing upon its records. In the case of Connell’s estate, 26th October, 1818, the question was examined and settled upon due consideration. The appeal in that case was dismissed with costs, but upon a rehearing the decree was amended by striking out that part which related to the costs ; the reason of which alteration is thus stated in the record: “ Inasmuch as from investigation this court is satisfied that costs cannot be allowed here.” In the recent revision, the legislature have changed the rule of law in this respect, and have restored that which existed in the ecclesiastical courts of England at the time of the first settlement of this state. Although no fee bill was expressly adopted, by statute, for the advocates and proctors in the surrogates’ courts, it was not the intention of the legislature to leave it to the several surrogates to make an arbitrary allowance for services and counsel fees, in each particular case, to be paid by one party to another, or out of the estate which is the subject of controversy, and without reference to the taxable costs allowed for similar services in other courts. In the taxation of the costs and counsel fees of the proctors and advocates upon the settlement of the account of an executor or administrator before the surrogate, the taxable charges therefor cannot exceed those which are allowed by law to solicitors and counsellors in this court, in similar cases, The fees of the surrogate are fixed by the statute ; and the auditors’ fees are so limited by law that they cannot exceed $2 per day to each auditor, and are to be paid out of the estate of the decedent. (2 R. 8. 94.) The allowances to the proctors and advocates upon the hearing before the auditors, should be the same that are established by law, and the practice of this court, upon reference to a master to take an account in a similar case.

The decree of the surrogate must therefore be reversed, but without costs to either party, on the appeal. And the proceedings are to be remitted to the surrogate with directions to tax the costs of the proctors and advocates of the respective parties upon the principles before stated, and to enter a final decree declaring that the amount of the estate of the decedent in the hands of the administrator, and for which he is personally liable, to be $269,16, with the interest thereon from the 26th October, 1833, and directing the surrogate’s fees, as liquidated by the former decree, together with his fees for entering the final decree upon the remittitur, to be paid out of the estate in the hands of the administrator, and that the residue of the fund be applied raieably for the payment of the costs of the respective parties, as the same shall be taxed and allowed by the surrogate.

       See act of May, 1837, § 70, as to fees in surrogates’ courts.


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    Payne vs. Matthews and others, executors, &c.
    Where, upon the death of one of the members of an insolvent firm, the surviving copartner, who was solvent, was obliged to pay the debts of the firm out of his own property, and the separate estate of the decedent was insufficient for the payment of all his debts; Held, that the balance due from the estate of the decedent to the surviving copartner, on account of the partnership transactions, must be paid rateably with the other debts of the decedent of the samo class, according to the provisions of the revised statutes.
    If the persons comprising a copartnership firm are insolvent, the joint creditors of the firm are entitled to payment out of the partnership property and effects in preference to the separate creditors of the individual copartners; and in case of the death or bankruptcy of one of the members of the firm, 30 that his separate estate cannot be reached at law for the satisfaction of partnership debts, his separate creditors have a corresponding right to priority in payment out of such sepaiate estate.

      1836. April 5.
    The balance due to a surviving copartner on account of the copartnership transactions, is an unliquidated demand of the fourth class of debts due from the estate of the decedent, according to the order prescribed by the revised statutes for the payment of debts by executors and administrators.
    The surrogate, upon the settlement of the accounts of executors and administrators and the distribution of an insolvent estate among the creditors, is competent to adjust equitable as well as legal demands against such estate,
    This case came before the court upon an application to dissolve an injunction. The bill was filed by S. Payne, a surviving copartner of Samuel Payne & Co. against the personal representatives of J. Bissel, junior, a deceased partner, to settle the partnership concerns and to restrain the. defendants in the meantime from distributing the proceeds of the separate property of the decedent among his separate creditors, to the exclusion of the balance claimed to be due to the complainant on account of the partnership transactions, and for debts of the firm which he had been compelled to pay since the death of Bissel. The bill also alleged that a part of the copartnership funds had been applied during the existence of the copartnership to pay the private debts and responsibilities of Bissel. But it appeared from the answer of the defendants that the amount so applied had been charged to him on the books of the firm,

      J. Rhoades, for the complainant.

      S. Stevens, for the defendants.
   The Chancellor.

The rule appears to be well settled that in a case of insolvency, the joint creditors of a copartnership are entitled to payment out of the property and effects of the firm, in preference to the separate creditors of the individual copartners ; and that such separate creditors have a corresponding right to a priority in payment out of the individual estate of the copartners, in case of the death or bankruptcy of the latter so that such estate cannot be reached by the partnership creditors by an execution at law. (Wilder v. Keeler, 3 Paige’s Rep. 167. M’Cullock v. Dashiell, 1 Har. & Gill's Rep. 96.) And where the surviving partner is in fact insolvent at the death of his copartner, equity will not allow the creditors of the copartnership, after exhausting all the joint effects of the firm for their sole benefit, to use the name of the surviving copartner, or to obtain a nominal payment of the residue of their joint debts from him, for the purpose of reaching a portion of the property of the deceased partner which, in such a case, belongs to his separate creditors upon this equitable rale.

I am not aware, however, that this principle of marshalling the effects, as between the joint and separate creditors where both copartners are insolvent, has ever been carried so far, except perhaps under the English bankrupt laws, as to exclude a solvent partner, who has a just claim against his copartner after all the debts of the firm have been paid, or who is obliged to pay the joint creditors out of his own private funds, from coming in for a share of the estate of the deceased partner. This appears to be a case of that kind. The partnership was dissolved previous to the death of Bissel, at which time he owed the firm a large amount; and the complainant, since that time, has been obliged to pay very large sums to the partnership creditors out of his own private funds. The principle adopted by the revised statutes is that equality among creditors is equity, in relation to the distribution of the estate of an insolvent decedent, except in those cases where the creditor had proceeded to judgment against the decedent before his death. (2 R. S. 87, § 27; 112, § 73; 453, § 37, &c.) The fourth class of debts in their order of payment as directed by the statute, includes all recognizances, bonds, sealed instruments, notes, bills, and unliquidated demands and accounts. And the statute is express that no preference shall be given, in the payment of one debt over another debt of this class. The balance due from the decedent to his surviving partner on account of the partnership transactions, after the payment of the partnership debts and the appropriation of all the copartnership effects to equalize the balances between them, was an unliquidated demand of this class against the decedent at the time of his death; and when it shall have been liquidated by the complainant and the personal representatives of Bissel, or by the surrogate, who is competent upon the settlement and distribution of the estate to liquidate an equitable as well as a legal demand, or by a decree of this court upon a reference to a master, the balance that shall be found due to the complainant must be paid to him out of the estate of the decedent, rateably with the other creditors.

The motion to dissolve the injunction must therefore be denied. But as this was a new question on which it was proper for the personal representatives of Bissel to take the opinion of this court, the costs of both parties should be paid out of the estate of the decedent in their hands, if the claim of the complainant is now liquidated between the parties, without any further expense ; and a decree to that effect may be entered, upon filing the written consent of the parties, stating the balance which is thus ascertained to be due to the complainant.


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    Swift vs. Eckford, executrix, &c. and others.
    1836. April 5.
    Where S. assumed the payment of E.’s debt to an incorporated company and conveyed lands by absolute deed, to one of the officers of the company, but the conveyance was only intended as a mortgage to secure the payment of the debt to the company, and the land was afterwards conveyed by the grantee to another officer of the company, who knew the object for which the first conveyance was made; Held, that the claim of S. against the personal reprerentatives of E., to be re-paid the debt thus assumed, was separate and distinct from his claim against the holder of the legal title to the land, and the company, to redeem the mortgage; and that the joinder of both claims in one suit rendered the complainant’s bill multifareous. It would have been otherwise if E. had agreed to pay the debt to the company, or to indemnify S. against liability on the mortgage.
    If a joint claim against two or more defendants is improperly joined in the same bill with a separate claim against one of the defendants only, in which the other defendants have no interest, and which is wholly unconnected with the claim against them, all or either of the defendants may demur to the whole bill for multifariousness.
    An amendment to a sworn bill by striking out allegations in the bill which the complainant has verified by his oath, will not be allowed by the court of chancery, except under very special circumstances.
    The bill in this cause was filed against the personal representatives of Henry Eckford, deceased, and against James E. Dekay, one of the representatives, in his individual capacity, and against the receivers of the Life and Fire Insurance Company of the city of New-York. The complainant alleged, in his bill, that in May, 1826, he conveyed to H. Eckfoi’d, by an absolute deed, about six acres of land in the city of New-York, but which deed was only intended as a mortgage, to secure the payment of a debt due to the Life and Fire Insurance Company; that Eckford was the president of the company, and a large stockholder therein, and was permitted to manage the affairs and use the funds of the company without consultation or question; and the complainant was the vice president of the company from ' October, 1824, to July, 1826 ; that on the first of February, 1826, the complainant had drawn out of the funds of the company, on his own account, with the assent of Eckford, $10,926,10, from which was to be deducted for his salary, for dividends on his stock, and for money paid for the lease of an office, $6937,50 ; leaving the balance due from him to the company; that he had also drawn out of the funds of the company $20,032,25, on account of Eckford and by his direction, but which was charged to the complainant on the books of the company; that the monies thus drawn out of the company and charged to the complainant, were expended for the sole benefit and account of Eckford, as follows : $11,500 to pay the amount of a loan he had made to purchase the National Advocate, in his own name, but for the account of Eckford ; and $6321, to defray the expenses of carrying on the Advocate, and the Patriot which had been united with the Advocate and carried on in the name of Thomas Snowden, at the request of Eckford, making the above mentioned sum of $20,032,25 ; that in February, 1826, Vermilyea, a director of the company, called upon the complainant with an account made up against him to the first of that month, in favor of the company, showing a balance against him of $30,058,85; and stated that he was requested by Eckford to say to the complainant that the directors of the company were about to be convened, and that his account was too large to be laid before them, and must be reduced; that after several conversations with Vermilyea, and with Eathbone, another of the directors', who also called upon him at Eckford’s request, Vermilyea recommended that the complainant should give his notes, secured by property, and which should be passed to his credit by the company; that in pursuance of this suggestion he gave his three notes, amounting to $17,500, secured by his stock in the company and by his Williamsburgh Ferry stock, and agreed to give a deed for the six acres of land, to secure the balance of the account; which deed was afterwards given in the name of Eckford, but without any conversation with him on the subject, except to ask Eckford, as the president of the company, in whose name the deed should be given; that the Life and Fire Insurance Company and the Williamsburgh Ferry Company both failed, and the stocks of the complainant so hypothecated to the Life and Fire company, thereby became of no value, leaving nothing but the land conveyed to Eckford for the payment of the debt, but which land had not been appropriated for that purpose at the time of filing the complainant’s bill; that, after his account with the company had been thus arranged, the complainant applied to Eckford to have his disbursements on account of the National Advocate re-paid, and the paper transferred to some other person ; that Eckford acceded to this, and the complainant made out his account, amounting to $17,825, exclusive of interest, and omitting a charge of $1000, which was left out by mistake ; that Eckford referred the account to Snowden, who said $5052,31 of the disbursements were on account of the Patriot, which Eckford therefore objected to paying, but proposed to pay the balance of the $17,825, and to leave the disbursements on account of the Patriot for future discussion ; which proposition was acceded to by the complainant, and the Advocate was transferred to Eathbone, who accepted Eckford’s drafts in favor of the complainant for $12,772,69, the balance of the account exclusive of the disbursements on account of the Patriot; that these drafts were afterwards paid to the Life and Fire Insarance Company by Eathbone, and the amount thereof had recently been carried to the credit of the complainant upon the books of the' company; that Eckford afterwards paid the complainant $3000, in part payment of the balance of his disbursements on account of the paper, and the settlement of the residue was deferred and remained unsettled at the death of Eckford, in 1832; that the complainant had recently discovered that the land conveyed to Eckford, as a security for the debt due to the company, Was immediately conveyed without consideration to the defendant DeKay, the son-in-law of Eckford, who was a director of the company and well knew the nature and object of the conveyance to Eckford, and who now claimed to be the owner of the land, and refused to convey the same to the complainant ; that soon after the failure of the Life and Fire Insurance Company, its officers were enjoined from interfering in its affairs, and at the same time the defendants Hoffman and Lawrence were appointed receivers of the property and effects of the company ; that the complainant had applied to the receivers, and offered to pay the balance due from him to the company upon their causing the land to be reconveyed to him, and had also requested DeKay to re-convey the lands and to account to him for the rents and profits thereof; and that he had also requested the personal representatives of Eckford to account with him,and pay the balance due from their testator. The complainant, therefore, prayed that an account might be taken of all the dealings and transactions between him and Eckford; and an account between him and the Life and Fire Insurance Company, and if any part thereof should be found to be the proper debt of Eckford, that his personal representatives might be decreed to pay the same to the complainant; that upon payment of what might be found to be due from the complainant to the company, DeKay might be decreed to reconvey the land to him, and to account to him for the rents and profits thereof; or that the representatives of Eckford might be decreed to pay the complainant the full value of the land, together with the rents and profits of the same from the time of the conveyance to Eckford; or that the complainant might have such further or other relief as he was entitled to upon the case made by his bill. -

      The personal representatives of Eckford, and the defendant DeKay in his individual capacity, severally demurred to the bill for want of equity, for multifariousness, and because the Life and Fire Insurance Company was not made a party.

      S. A. Foot & W. Hall, for the complainant.

      F. B. Cutting & D. Lord. jr., for DeKay and the personal representatives of Eckford.
   The Chancellor.

The objection that the corporation of the Life and Fire Insurance Company should have been made a party to this bill, appears to be well taken. The receivers of the property and effects of the company, appointed upon the granting of the injunction immediately after the •failure of the company as described in the bill in this"case, are not the legal representatives of the rights of the corporation upon a bill to redeem the lands mortgaged for the use of the company. The receivers are proper parties, but the corporation itself should also have been a party. It is a fact, although it is not so stated in this bill and therefore it cannot avail the complainant on this demurrer, that the same persons who were appointed receivers, at the suit of a creditor, shortly after the failure of the company, have since been appointed receivers, on the petition of the Attorney General, under the provisions of the revised statutes relative to proceedings against insolvent corporations ; according to which provisions, the title to the property of the corporation is actually vested in the receivers, so that they may prosecute for it in their own names. I am also under the impression that a decree has been made upon that petition, dissolving the corporation. It would, therefore, be a matter of course, if this were the only objection, to permit the complainant to amend his bill in this respect upon the payment of the costs of the demurrers, by making the corporation a party or stating the proper facts to show that the company was no longer in existence, and that the defend-", ants Hoffman and Lawrence fully represent the rights of all persons who are interested in the concerns of the late corporation.

There is, however, another and more fatal objection in this case, which cannot be remedied by amendment, as this is a sworn bill. The objection on account of multifariousness appears to be well taken. It is evident, from the whole tenor of this bill, that the complainant assumed the debt to the company, and expected that Eckford would settle with, him and pay whatever had been expended for his benefit by the complainant as his agent. The claim, therefore, which is set up in the bill for an account and payment by the representatives of Eckford of whatever may be found due upon the private dealings between Eckford and him, has nothing to do with the redemption of the land which is mortgaged for his debt to the company. This claim, therefore; in which neither the receivers, nor the defendant DeKay as the holder of the legal estate in the premises mortgaged, had any interest, ought not-to have been joined in the same suit with the claim for the redemption of the mortgaged premises and an account against DeKay for the rents and profits of those premises. If the mortgage had been given by the complainant to the company to secure a debt admitted to be due from Eckford to the company, and whichhe had promised topay and discharge so asto relieve the complainant’s land from the lien of such debt, there would have been some reason for joining the representatives in the same suit, so that they might be bound by the account to be taken of what was due on the mortgage, and might be decreed to pay the balance found due, and thus to relieve the complainant’s land. But from the complainant’s own showing, he has always since the liquidation of his debt with the company, in 1826, considered himself as the person who was liable for the payment of the debt to the company, and that he had a personal claim against Eckford, for the monies advanced for him, in the purchase and carrying on of the National Advocate ; he has accordingly called upon Eckford, from time to time, to pay that balance to himself. His proper remedy, therefore, for the recovery of what is due to him on that account, is by a separate bill against the personal representatives of Eckford, or by a suit at law against them for monies paid laid out and expended for the use of their testator. The misjoinder, of this claim against the representatives of Eckford alone, with the claim to redeem the land, in which the other parties are interested, renders the bill multifarious, even if the executors were proper parties to the bill for the redemption of the land which had been once in the hands of their testator as the agent or officer of the company. If a joint claim, against two or more defendants is improperly joined in the same bill with a separate claim against one of those defendants only,in which the other defendants have no interest and which is wholly unconnected with the claim against them, all or either of the defendants may demur to the whole bill for multifariousness. (Ward v. The Duke of Northumberland and the Earl of Beverly, 2 Anst. Rep. 469. Gibbs v. Claggett, 2 Gill and Johnson, 29, Boyd & Suydam v. Hoyt & Parsel, 5 Paige’s Rep. 65.)

Neither can I see any good reason, in this case, for making the personal representatives of Eckford parties to the bill for the redemption of this mortgage, as to which they do not appear to have any interest. It is not alleged in the bill that Eckford has violated any trust, for which he is liable to the complainant, by conveying the mortgaged premises to DeKay •, or that he conveyed the land to a bona fide holder without notice, who would, in that case, have the right to hold it as an absolute estate. On the contrary, it is alleged in the bill that, the land was conveyed to Eckford as the president of the company ; and that it was the practice of the corporation to take securities, by way of mortgage, by absolute conveyances to some of its officers. The complainant also alleges that Eckford immediately conveyed the land to DeKay, who was also a director of the company, and knew that the deed was taken merely as a security for the debt thus due to the company. If this allegation in the bill is correct, neither Eckford nor DeKay were accountable for the rents and profits of the land to the complainant; but they were the agents of the company, and DeKay must account to the receivers for the rents and profits received for their use, to be applied in payment of the principal or interest of the complainant’s debt secured by the mortgage. And as no rents or profits were or could have been received by Ecltford who conveyed immediately, according to the allegations in the bill, his personal representatives could not be proper or necessary parties to the bill to redeem.

It is not a matter of course to permit a bill to be amended after the allowance of a demurrer for multifariousness; as the multifarious matter is generally such that it cannot be separated from the residue of the bill. And in this case, as the bill is sworn to, it is contrary to the practice of the court to permit it to be altered by striking out; as such an amendment to a sworn bill is not allowable except under very special circumstances. The demurrers must therefore be allowed ; and the bill must be dismissed with costs, as to the parties who have demurred, but without prejudice to the future rights of the complainant in a new suit or suits against the proper parties.


text:
    Fitzburgh vs. Everingham.
    1836. April 5
    The answer or affidavit of the defendant in a creditor’s bill, that he has not property to the amount of $ 100, is not a full defence to the suit; nor is it a sufficient reason for refusing to appoint a receiver.
    Upon the usual order on a creditor’s bill to appoint a receiver, and for the defendant to deliver over to such receiver his property and effects on oath, the defendant is only bound to answer such interrogatories as relate to the subject of the proceeding before the master.
    This case came before the chancellor upon an appeal, by the defendant, from an order of the vice chancellor of the first circuit, for the appointment of a receiver upon a creditor’s bill. Upon the hearing of the motion before the vice chancellor, the defendant made an affidavit that he had not $100 in property over and above prior just claims thereon. The order for the appointment of the receiver was in the usual form, requiring the defendant to assign and deliver over his property on oath before the master.

      T. Fessenden, for the appellant.

      H. Holden, for the respondent.
   The Chancellor.

The bill in this case is sworn to by the complainant and shows a matter in controversy between the parties exceeding one hundred dollars, which is sufficient to give the court jurisdiction to appoint a receiver of such property as the defendant has, although he swears it does not amount to that sum. And if the complainant should not succeed in recovering the whole amount of his claim, he may have a decree for a part; although he may have to pay costs to the defendant, if he fails to show that the whole amount of property to which he is entitled exceeds $100. (Smetz v. Williams, 4 Paige’s Rep. 364.) The affiidavit of the defendant that he has not $100 in property is therefore no defence to the suit, or to this application ; as a receiver may be necessary to collect and preserve the property pending the litigation, although it should not amount to half that sum. In cases of this kind, as the defendant is enjoined from interfering with the property himself, he can have no honest motive in resisting the appointment of a receiver. For if he has property, it is for his interest that it should be preserved during the litigation; and if he has none, there will be nothing for the receiver to do, and the complainant must pay the costs of the appointment.

The defendant is under a mistake in supposing that the master, upon the order to appoint a receiver, is to try the whole matter in litigation between the parties. He may indeed make inquiries of the defendant under oath, as to the property in his possession, or under his control, for the purpose of-seeing whether it is all delivered over to the receiver ; and he may also examine witnesses for the purpose of ascertaining whether there is any property in the hands of other persons, to which the receiver is entitled under the order, to enable the receiver to take the necessary steps to recover such property from the persons in whose possession it is; but the defendant cannot be required by the master to deliver up property which, upon his oath, he declares is not in his possession or under his control.

I have understood that some abuses have occurred under these orders for a defendant to deliver over his property on oath. But if the master permits the interrogatories to extend beyond the legitimate purpose of obtaining a delivery of the property which the defendant has a right to control, the proper course is to bring the question before the court by an appeal from the master’s decision. If the investigation is properly conducted by the master, no honest defendant can be injured thereby; and public policy requires that such a course should be pursued, that fraudulent debtors cannot succeed in covering their property from their creditors by a mere general affidavit that they have nothing.

The objection to the order of the vice chancellor, that it requires the defendant to deliver over the property which is by law exempt from execution, and also the earnings of the defendant subsequent to the filing of the bill, would be valid if such a construction could be given to the order. It is sufficient to say the order is in the usual form, which was adopted long since, and I am not awqre that any master has ever given such a construction to the order. If the defendant has really any apprehensions that such a construction will be given to. this order, he may have it modified in this respect so as to preclude the possibility of such a construction being given to it. But in all other respects the order appealed from must be affirmed, with costs ; and the proceedings are to be remitted to the vice chancellor, so that the order for the appointment of the receiver may be carried into full effect.


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    Cuyler and others vs. Ensworth.
    1836. April 5.
    Where four persons became joint sureties in the official bond of a county treasurer, who afterwards misapplied the funds of the county and died insolvent, and a judgment was thereupon recovered against the four sureties in the bond, jointly, and three of them afterwards paid the whole amount of the debt and costs, and an execution was issued upon the judgment for their benefit, on which the sheriff was directed to levy one fourth of the amount of the judgment of the property of their co-surety, which execution was subsequently returned unsatisfied; Ileld that the three sureties who had paid the whole debt and costs, could file a creditor’s bill in their own names against their co-surety to obtain satisfaction of his rateable proportion of the judgment, out of his equitable interest and choses in action which could not be reached by the execution at law.
    Joint sureties are bound as between themselves to contribute equally to discharge the debt for which they are jointly holden, and if one of them pays the whole, he is, in equity, subrogated to all the rights and remedies of the original creditor for the payment of his debt, not only as against the principal debtor, but also as against the co-sureties, to the extent they are equitably bound to contribute,
    This was an appeal from a decision of a vice chancellor, refusing to appoint a receiver of the property and effects of the defendant in' a creditor’s suit. The complainants and the defendant were the joint sureties of S. M. Smith, in a bond to the supervisors of Monroe county, for the faithful discharge of the duties of his office as county treasurer. Smith died insolvent, and a judgment was afterwards recovered against all the sureties jointly, for about S5000. Tile defendant neglected to pay any part of the judgment, atid the complainants paid the whole to the plaintiffs therein ; by which, as the complainants insisted, they became and were subrogated to all the rights of the original creditors against the defendant, their co-surety, as to the equal one fourth of the debt and costs thus paid by them. An execution was taken out upon the judgment, for the benefit of the complainants, upon which execution the sheriff was directed to levy one fourth of the amount of the judgment, of the property of the defendant Ensworth. The sheriff having returned the execution unsatisfied, this bill was filed to reach his equitable assets and chosesin action.

      J. Van Buren, for the complainant.
    J. Edwards, for the defendant.
   The Chancellor.

The equitable principles of the civil law as to suretyship, have long since been established as the law of this court upon that subject. One of the fundamental principles of that law is that co-sureties, or joint cautioners, are bound to contribute equally as between themselves, to the discharge of the common burden ; and another is that if one surety pays the whole debt for which they were jointly bound, he is entitled to a cession of the rights and remedies of the creditor, not only as against the principal debtor, but also as against his co-sureties. Or more properly, according to the modern doctrine on this subject, the surety by the mere payment of the debt, and without any actual assignment from the creditor is in equity, subrogated to all the rights and remedies of the creditor, for the recovery of his debt against the principal debtor or his property, or against the co-sureties or their property, to the extent of what they are equitably bound to contribute. (Nap. Code, Art. 1251, 1252. Bell’s Dick. art. Beneficium cedendarum actionum, Civ. Code of Louis, art. 2157, 2158. 2 Robin. Prac. 136. Cheesebrough v. Millard, 1 John. Ch. Rep. 409. Eppes v. Randolph, 2 Call’s Rep. 125, 189. McMahon v. Fawcett, 2 Rand. Rep. 514.)

It is objected, however, in this case, that the complainants cannot file a creditor’s bill here, against their co-surety, although they are in equity subrogated to the rights of the creditor against him as to one fourth of the debt, because no execution could be taken out on the judgment against him after the creditors had received the whole of their debt from the complainants. It is a sufficient answer to this objection that it does not appear from the bill that the execution was issued and returned unsatisfied after the whole debt had been paid by the complainants. And if necessary to sustain the proceeding against that technical objection, this' court would presume the execution was issued and returned before that portion of the judgment was paid. The bill only alleges that the complainants have paid the full amount without stating at what time such payment was made. This court, however, only looks to the substantial rights of parties, without reference to mere matters of form. It even revives a judgment at law which has been actually discharged, on the record, for the purpose of giving effect to the equitable rights of a surety to subrogation ; as was done in the case of Burrows v. McWhann (1 Des. Rep. 409.) In this case, theaefore, as the complainants were entitled to the benefit of the judgment, in equity, to compel the defendant to refund to them his contributory portion of the debt, if the execution had been taken out for their benefit and levied upon his property, to that extent, after the co-sureties had paid the whole amount of the judgment, this court, if necessary, would have restrained the defendant, by injunction, from contesting the validity of the execution at law. In the state of Louisiana, where the right of subrogation is recognized by the civil code, the surety has a right to take out an execution in his own name on a judgment against the principal debtor where he has himself been compelled to pay the debt. But in a recent case it has been decided that he may, if he pleases, take out an execution in the name of the creditor, to whom he has paid the judgment against the estate of the principal debtor; and that the return of the sheriff on that execution is sufficient evidence, in a suit by the surety against a third person, that due diligence has been used by him to collect the judgment of the principal debtor. (Sprigg v. Braman 6 Louis. Rep. 59.

In equity, these complainants must be considered as the assignees of one fourth of this judgment; and which remains still due, as against this defendant, after the issuing and return of an execution unsatisfied. And as the suit in this court must be brought in the name of the persons who are beneficially interested in the subject matter of the litigation as the legal or equitable assignees of the judgment, and not in the name of the nominal plaintiff, this creditors’ bill is properly filed in their names. • They are therefore entitled to all the rights, in this court, of complainants in an ordinary creditor’s bill, after the return of an execution at law unsatisfied. If the defendant has any equitable defence to this suit, he should have shown it in opposition to the motion for a receiver. But as no such defence was attempted to be set up, or even suggested before the vice chancellor, it is a matter of course to appoint a receiver to take charge of his property, if he has any, so that it may not be lost or squandered pending the litigation in this suit.

The decision appealed from must be reversed ; and the usual order entered referring it to a master in Monroe county, to appoint a receiver. And the complainant’s costs on this appeal are to be paid out of the fund which may some into the hands of such receiver.

         See also Dowbiggin v. Bourne, Youngs Exc. Rep. 111 and Wood v. Creaghe 2 Hogan's Rep. 50.


text:
    Guion and others vs. Knapp and others.
    The principle of charging different parcels of the mortgaged premises which have been sold at different times, subsequent to the mortgage, in the inverse order of their alienation, is not always confined to the original alienations of the mortgagor who is personally liable for the debt. It is equally applicable to several conveyances of separate parcels of the mortgaged premises, made at different times, by his grantee who conveys with warranty.
    Where a mortgagee, with notice of several successive alienations of parts of the mortgaged premises, releases that part which is primarily liable in equity for the payment of the mortgage debt, he cannot be permitted to charge other portions of the premises with the payment of the mortgage, without deducting from the amount due the value of the part thus re leased.
    Therightof a prior grantee of part of the mortgaged premises to have the different parcels charged in the inverse order of their alienation is an equi- . table and not a strictly legal right; and is governed by the same equitable principles upon which a court of chancery protects the rights of sureties. A release by the mortgagee of the land which is primarily chargeable, as being the last conveyed, does not therefore discharge his lien upon the part which was previously conveyed, unless he had notice of the previous conveyance at the time of the execution of such release.
    1836. April 5.
    This was an appeal from a decree of the vice chancellor yle c}rcu}t. The bill was filed to foreclose a mortgage given by Peter Knapp and wife, in November, 3810, upon about 300 acres of land in lot No. 42, in the township of Tully, to secure the payment of $1000 and interest. The mortgage was registered the 4th of March, 1812; previous to which time, the mortgagors had conveyed about 64 acres, oif the south end of the mortgaged premises, to John Knapp, which were subsequently released to him by the mortgagees. * In December, 1811, the mortgagors also conveyed to Elijah Knapp about 76 acres of the mortgaged premises, with warranty; but the grantee knew of the existence of the mortgage at the time of his conveyance. On thé 9th of April, 1812, the mortgagors conveyed about 25 acres of the mortgaged premises to P. Knapp, jun. who afterwards conveyed the same to W. J. Skellie. In March, 1814, the mortgagors conveyed to L. Palmer 103 acres of land, which included about 32 acres of the mortgaged premises. Of this 32 acres, Palmer conveyed 9r3/„ acres to E. Millard, previous to the 6th of January, 1826; under whom the defendant J. W. Raymond afterwards derived title to the same. And of the residue, Palmer, on the 6th of January, 1826, conveyed 16 Wo acres to the defendant J. Guthrie, and 5WV acres to the defendant A. Snow. The conveyance from Palmer to Snow also included another small piece of the mortgaged premises; but which was embraced in the release of the 64 acres, from the mortgagees to John Knapp. On the 24th of April, 1814, the mortgagors also conveyed to the defendant E. Humphrey 50' acres of land, which included about 6 acres of the mortgaged premises. The mortgagors also conveyed 100 acres of land to Silas Crandall, in October, 1816, which included 15T\% acres of the mortgaged premises, and Crandall gave back to Peter Knapp a mortgage to secure $537 of the purchase money. This mortgage was assigned to Isaac and James D. Knapp, in February, 1822; and it was subsequently foreclosed, and the premises were purchased in by F. G. Jewett, in September, 1822, who conveyed the same to Isaac and James D. Knapp. They conveyed to the defendant M. Hillman the north half of the 100 acres, including 7T|T acres of the premises embraced in the original mortgage to the Guions. And D. Kellogg afterwards obtained title to the other half of the 100 acres, by a sheriff’s sale, upon a judgment against Isaac and James D. Knapp; which half included S-A-C- acres of the mortgaged premises; and the defendant Burdick afterwards contracted with Kellogg for the purchase of the same. In April, 1819, Peter Knapp and wife, the mortgagors, conveyed about 12 acres of the mortgaged premises to J. B. Eggleston ; under whom the defendant W. J. Skellie afterwards obtained title to the same. On the 6th of March, 1820, the mortgagors also conveyed about sixty acres of the mortgaged premises to John Knapp, who conveyed the same to Isaac Knapp in August of the same year. Isaac Knapp conveyed the north two-thirds of the sixty acres to N. Hammond, in August, 1822, and the south one-third thereof to the defendant J. Patterson, in January, 1823, with warranty ; and in August, 1823, the mortgagees released Hammond’s 40 acres from the lien of the mortgage. At the time of that release, the lands included therein were worth about $10 per acre. In April, 1820, the mortgagors conveyed the residue of the mortgaged premises, 70T2505- acres, to Isaac and Silas Knapp; who afterwards conveyed the same to the defendant M. Hillman. And in June, 1825, the mortgagees released this portion of the premises from the lien of the mortgage; at which time the land was worth about $12 per acre.
    None of the conveyances from Peter Knapp and wife were recorded at the time of the execution of this release, or at the time of the execution of the release to Hammond, in August, 1823, except the deeds to Palmer and to Humphrey, which had been- duly recorded before that time. The Guions had actual notice of the conveyance to Crandall ; as his mortgage for the purchase money was assigned to them, by Peter Knapp, as an additional security for their mortgage debt, at the time of the execution of their release to John Knapp, in March, 1817 ; but it did not appear that they had any notice of the execution of conveyances of any other portions of the mortgaged premises, by the mortgagors, at the time of the execution of their several releases, except the' lands thus released from the lien of the mortgages. Patterson, Skellie, Raymond, Burdick, Hillman, Guthrie and Snow, appeared and answered, and the cause was heard on pleadings and proofs as to them ; but Peter Knapp and Elijah Knapp, and the wives of the several parties, who were also made defendants, suffered the bill to be taken as confessed against them.
    The vice chancellor decided and decreed that an account should be taken of the amount due on the mortgage, applying towards the payment thereof the value of the land released by the mortgagees, in June, 1825 ; and if nothing was found to be due on the mortgage after deducting the value of such land at the time of the release, that then the complainant’s bill be dismissed, as to all the defendants who had answered, with costs. But if a balance should be found due on the bond and mortgage, after deducting the value of the land thus released in 1825, and two-thirds of the value of the land released to Hammond, in August, 1823, that then Patterson’s 20 acres be sold, and the proceeds, or so much thereof as was necessary, be appropriated to pay such balance. If any thing still remained due, that then the remaining third of the value of the land released to Hammond be applied as a satisfaction of what remained due, as far as it would go. And if that was not sufficient to pay the balance, that then the land of the other defendants should be sold, in the inverse order of their alienation by Peter Knapp and wife, the mortgagors. From this decree the complainant appealed.

      J. V. L. Pruyn, for the appellants.

      M. T. Reynolds, for the respondents.
   The Chancellor.

Assuming, for the present, that the vice chancellor was right in the principle upon which his decree in this case is based, the decree appealed from is erroneous in some of its provisions. The principle of charging different parcels of the mortgaged premises, which have been sold at different times subsequent to the mortgage, in the inverse order of their alienation, is not always confined to the original alienations by the mortgagor who is personally liable for the payment of the debt. The principle is equally applicable to several conveyances at different times, by a grantee of the whole or a part of the mortgaged premises, where he conveys with warranty. Thus, if the mortgage is a lien upon 200 acres of land, and the mortgagor conveys one hundred acres thereof to A., the one hundred acres which remains in the hands of the mortgagor is to be first charged with the payment of the debt, and, if that is not sufficient, the other 100 acres is next to be resorted to. But if A. has subsequently conveyed one half of his 100 acres to B. with warranty, the 50 acres remaining in the hands of A. is, in equity, first chargeable with the payment of the balance of the debt which cannot be raised by a sale of the 100 acres that still belong to the mortgagor or his subsequent grantee, before resort can be had to the 50 acres which A. has conveyed with warranty. And if A. conveys his remaining 50 acres to C., either with or without warranty, that portion of the premises is still liable for the balance of the mortgage debt, and must first be sold, before a resort can be had to the 50 acres previously conveyed with warranty to B. In the language of chancellor Kent, C. sits in the seat of his grantor, and must take the land with all its equitable burdens. (5 John. Ch. Rep. 241.)

By the decree which is appealed from in this case, the vice chancellor directs the lands of Patterson to be sold only in case the whole mortgage debt is not satisfied after applying two-thirds of the value of the lands released to Hammond by the mortgagees. But by referring to the exhibits, it will be found that Isaac Knapp was the owner of the whole 60 acres conveyed in March 1820, to John Knapp, at the time of his conveyance of the north tWo-thirds thereof to Hammond with warranty, in August, 1822, about five months before he conveyed the south third of the 60 acres to the defendant Patterson. This south 20 acres, therefore, was primarily .liable, in the hands of Isaac Knapp, for the payment of the mortgage debt, before a resort could equitably be had to the 40 acres which he had first conveyed to Hammond. And when Patterson afterwards purchased that 20 acres, in January, 1823, he took the land charged with all the equitable burdens which existed against it in the hands of his grantor. These two grantees of Isaac Knapp, therefore, stood in the same relation to each other, in reference to the lien of this mortgage, as if they had derived their titles to their respective portions of this 60 acres directly from the original mortgagors of the premises by conveyances of different dates. And as the proceeds of Patterson’s 20 acres was the primary fund for the satisfaction of the lien of the mortgage on the whole 60 acres, the release to Hammond could not in any way impair the lien of the mortgagees upon that 20 acres. But as Isaac Knapp had also conveyed to Patterson with warranty, and was bound to see that his land was discharged from the lien of the mortgage, the $300 received of him. by the mortgagees,, as the consideration of the release to Hammond, must be applied upon the mortgage, if it has not already been done, before any resort can be had to the lands of Patterson.

The seventy acres conveyed to Isaac and Silas Knapp, in April, 1820, and released from the lien of the mortgage in June, 1825, was the last parcel of the mortgaged premises which was conveyed by the mortgagors. And it was worth, at the time it was so released, more than sufficient to satisfy the balance then due on the mortgage, at the lowest estimate of its value as fixed by any of the witnesses ; even if the complainant’s bill contains a correct statement of all the payments which had been made upon the mortgage previous to that time. If the complainants, therefore, are chargeable with notice of the equitable rights of the respective grantees, under the previous conveyances of the several other parcels of the mortgaged premises by Peter Knapp and wife, the bill should be dismissed as to all the defendants who have appeared and answered, with costs. And a reference to compute the amount would in that case be wholly unnecessary, and a useless expense to the parties. On the other hand, if the complainants are not chargeable with either actual or constructive notice of the previous conveyances from the mortgagors, at the time when the release of the 70 acres was executed, the amount actually received by the complainants on the execution of the release should alone be taken into the account in ascertaining what is due upon the mortgage; and if any thing remains still due, the lands of the several defendants, which have not been released, should be charged in the inverse order of their alienation.

The answer of the defendant Burdick contains a distinct allegation, that at the time of the execution of the releases of the 400 acres to Hammond, and of the 70 acres to Hillman, the complainants knew of the conveyance to Crandall, in 1816 ; and this allegation is sustained by the proof. At the time of the conveyance to Crandall he gave back to Peter Knapp a bond and mortgage upon the same premises, for $467. And from the recitals in the release to John Knapp, executed by the Guions in March, 1817, it appears that such bond and mortgage was actually assigned to them by Peter Knapp, as an additional security for the payment of their debt. This is the same mortgage which was afterwards assigned to Isaac and James D. Knapp, and foreclosed by them ; and through which the defendants Burdick and Hill-man have derived their title to the two small pieces of the mortgaged premises, now claimed by them respectively. How this bond and mortgage came to be relinquished by the Guions does not appear; but the recital is conclusive to show that they must have known that Peter Knapp had conveyed away this part of the mortgaged premises, previous to 1817. It was also notice to them of the rights of Humphrey and of Palmer, and of the grantees of the latter, as the 100 acres of Crandall is bounded on their lands. This certainly was sufficient to make it their duty to inquire and ascertain what were the equitable rights of those prior grantees of Peter Knapp, before they undertook to discharge the lands which had been conveyed by him long subsequent to that time, from the lien of their mortgage. And as the deeds to Humphrey and to Palmer were -both on record, there could have been no difficulty in ascertaining their rights by an inquiry at the clerk’s office. I presume there was no intention, on the part of these mortgagees, to defraud the previous purchasers of their rights; but as these complainants have by their negligence released lands, which were primarily liable for the payment of their mortgage, of nearly double the value of what was due thereon at the time such releases were given, they have no equitable claim to come here for relief against those who in equity were entitled to be exonerated from the lien of the mortgage. The complainants’ bill should therefore be dismissed as against the defendants Burdick, Hillman, Humphrey, Raymond, Guthrie and Snow, with costs.

The case is different in respect to the lands claimed by the defendants, Patterson, Skillie and Elijah Knapp. Neither of those defendants, or the grantees under whom they claim, had taken the precaution to have the deeds under which they claimed title recorded; so that it could not be ascertained by a search in the proper office, that Peter Knapp had conveyed the lands claimed by them, previous to the conveyance of the 70 acres to Isaac and Silas Knapp, in April, 1820. And there is no evidence whatever in this case, that the complainants had any notice, either actual or constructive, of their equitable rights, as prior purchasers, at the time the releases to Hammond and to Hillman were applied for and given.

The right Jo have the lands, which have been sold by the mortgagor, charged in the inverse order of their alienation^ is not strictly a legal but an equitable right, and is governed by those equitable principles upon which this court protects the rights of sureties, or those who are standing in the situation of sureties. And the conscience of the party who holds the incumbrance is not affected, unless he is informed of the existence of the facts upon which this equitable right depends; or he has a sufficient notice of the probable existence of the right to make it his duty to inquire, for the purpose of ascertaining whether such equitable right does in fact exist. If, therefore, the prior purchasers are so negligent as to leave the holder of the incumbrance to deal with the mortgagor, or with a subsequent grantee of a portion of the premises, under the erroneous supposition that the lands conveyed to the prior purchasers still belong to the mortgagor, the mortgagee will not lose his lien by executing a release to one who happens to be a subsequent grantee. The principle that a creditor having a lien on two funds may discharge the lien as to one without impairing his legal claim on the other, if he has no reason to suppose it will interfere with the equitable rights of any one, was distinctly recognized and asserted by Chancellor Kent, in the case of Cheesebrough v. Millard, (1 John. Ch. Rep. 409.) To deprive a creditor of his legal claim against the property of a person standing in the situation of a surety on the ground that such creditor has done an act which is inconsistent with the equitable rights of a surety, not only the fact of suretyship must exist, but it must be known to the creditor at the time of the act complained of. (Neimcewitz v. Gahn, 3 Paige's R. 614. 11 Wend. 123, S. C.) I do not think there is any thing in this case which will authorize a decree discharging the lands of Patterson, Skillie and E. Knapp from the lien of the mortgage, if any thing is due thereon after crediting the amounts actually received as the consideration for the releases.

The decree of the vice chancellor must therefore be reversed, but without costs to either party on this appeal. And a decree must be entered declaring the lands of Burdick, Hillman, Humphrey, Raymond, Guthrie and Snow, discharged from the lien of the mortgage, and dismissing the bill, as to them, with costs. A reference must also be directed to a master residing in the county of Onondaga, to ascertain and report how much, if any thing, is due upon the bond and mortgage; and, upon the coming in and confirmation of the report, if it shall appear that there was nothing due on the bond and mortgage at the time of filing the bill, or that the amount then due was not sufficient to sustain the jurisdiction of the court, the bill is to be dismissed with costs as to Patterson and Skellie. But if it shall appear that a sum sufficient to sustain the jurisdiction of the court was due, then the lands of Patterson, Skellie and Elijah Knapp, or so much thereof as may be necessary to pay the amount reported due and interest together with the complainants’ costs, exclusive of their costs on this appeal, must be sold in the inverse order of alienation. The usual directions in other respects are to be inserted in the decree.


text:
    Price vs. Betts.
    1836. April 5.
    Where a non-resident complainant gives notice of a special application to the court, and before the time for making such application arrives the adverse party obtains an order that all proceedings on the part of the complainant be stayed until security for costs is filed, the application cannot be made until such security is given. And if the complainant wishes to be excused from paying the costs of opposing the application, he should appear at the day appointed and ask to have the application stand over until he has time to file security for costs; or he may give the security and then make the application at the time specified in his original notice.
    An order to stay proceedings on the part of the complainant until security for costs is filed, only operates upon him; but does not prevent the defendant from taking any steps to terminate the suit in the mean time, or to resist an application of which previons notice has been given by his adversary.
    The complainant in this cause being a non-resident, the defendant’s counsel, upon due notice of the application, obtained an order that all proceedings on the part of the complainant be stayed until security for costs was given. On the same day upon which the order was made, but before notice thereof had been given, the complainant’s solicitor gave notice of an application, at a future day, for the appointment of a receiver. On the day appointed in the notice for the hearing of this application, the defendant’s counsel appeared to oppose the motion, and informed the counsel for the adverse party that he should resist the application on the ground that security for costs had not been filed. The motion for the appointment of a receiver was not made, and the counsel for the defendant took an ex parte order for his costs of attending to resist the application. The complainant thereupon applied to the vice chancellor, to set aside the ex parte order for costs for irregularity. The application was denied ; and from the decision of the vice chancellor, refusing to grant such application, the complainant appealed.

      John Van Buren, for the appellant.

      N. B. Blunt, for the respondents.
   The Chancellor.

The practice adopted by the counsel for the defendant, in this case, was perfectly regular; and the vice chancellor was right in refusing to set aside the ex parte order for the costs of attending to oppose the application for the appoinment of a receiver. At the time when the notice of that application was given, the complainant’s solicitor knew that an order to file security for costs was about to be made ; and if he did not intend to file such security before the time appointed for making his application, he should not have noticed it until after such security was given. The order to stay the proceedings, only operated upon the complainant, but did not prevent the defendant from taking any steps to resist an application or to get the cause out of court. The practice of the court of chancery, in this respect, is the same as that of the supreme court. (See Champlin v. Petrie, 4 Wend. 209.) The notice of the application for the appointment of a receiver having been given, in this case, before the order to file security for costs was obtained, the complainant had a right to proceed and make his motion at the time appointed, provided he filed security, and gave notice thereof to the adverse party, before the motion was made. The adverse party was, therefore, bound to attend, prepared to resist the application. And if the attempt to negotiate, in this casej had delayed the complainant’s solicitor, so that he could not file security .for costs in time to make the application at the time appointed, he should have applied to the solicitor of the adverse party to let the motion stand over to a future day to enable him to file such security; or he should have attended at the time appointed, and asked the court for an order to that effect. Such an order would have been almost a matter of course, upon any reasonable excuse shown, or even suggested by counsel.

The affidavit of the defendant’s solicitor is sufficient to satisfy me that there was no intention to mislead his adversary as to the course which he intended to pursue, in reía--, tion to the application. The complainant’s counsel was apprized that the counsel for the other party was attending to resist the motion, and declined the proposition to go before the court and have the question disposed of at once. He therefore had no right to presume that the counsel for the defendant would not ask for the costs of attending to oppose his application.

The order appealed from must be affirmed, with costs.