text:
    In the matter of the Receiver of the City Bank of Buffalo.
    Where a bill had been filed by the bank commissioners, before the office was abolished, against an incorporated bank which had become insolvent, for the appointment of a receiver to close up its concerns, and a final decree had been made appointing such receiver, and declaring that the bank had forfeited its corporate rights and privileges, and perpetually enjoining the bank and its officers from using them; and an order had been made in such suit requiring the creditors of the bank to present their claims to the receiver for adjustment ; Held that, after the office of bank commissioner had been abolished, the court had power to revive the suit, upon a proper bill filed for that purpose by any person interested in such revival; or upon an application of the attorney general, if the interest of the people of the state required such revival.

      Held further, that as there was nothing further to litigate with the defendants in the suit, no revival of the suit was necessary to enable the court to adjust and settle the claims of the creditors of the bank against the fund in the hands of the receiver, who was under the jurisdiction and control of the court in the discharge of his duties.

      Held also, that as the office of bank commissioner had been abolished, and the corporation had been dissolved, the further proceedings should be entitled “ In the matter of the receiver of the banknaming it. And that an order might be entered, without reviving the suit, for the master to proceed and adjust the claims of the creditors, which the receiver had declined to allow, when they were presented to him for that purpose.
    1843. October 17.
    Where a final order has been made for the appointment of a receiver of the property and effects of a corporation, and to close up its concerns and distriBute such property and effects among its creditors and stockholders, under the provisions of the revised statutes relative to proceedings against corporations in equity, such order is in the nature of the usual decree in a creditor’s suit against executors or administrators; and any creditor who has a claim upon the fund, but who is not a nominal party to the suit, may make himself a party thereto, in fact, by coming in and presenting his claim under the decree, and submitting himself to the jurisdiction of the court, for the settlement and adjustment of his claim upon the fund to be distributed, as directed by the decree or order of the court, under which such claim is presented.
    A creditor who comes in and makes his claim under such a decree is quasi a party to the suit, and is entitled to the benefit of the decree, as such party; and he may be restrained from proceeding at law for the recovery of such claim."
    After a final decree has been made for the administration of a fund, in the hands of executors, &c. for the benefit of all creditors who have a claim upon such fund, the court may restrain the creditors from proceeding at law; and may compel them to come in and establish then' claims under such decree or lose their claims upon the fund.
    Nor will such creditors be permitted to file a new original bill, against the executor or trustee of the fund. But if any of the creditors are so situated that they cannot come in under the decree in the original suit, or if they are entitled to more extensive relief than they can obtain under such decree, they will be permitted to file a new bill in the nature of a supplemental bill.
    Creditors entitled to come in under a general decree for their benefit are, for every substantial purpose, parties to the suit; and if the nominal complainant neglects to proceed with due diligence, they may apply and obtain leave to prosecute the suit. And if the suit becomes abated by the death of the sole complainant, or if it abates by the death of a defendant, and the complainant or his representative neglects to revive, within such time as may be fixed by the court for that purpose, it is a matter of course to permit any creditor who has established his debt before the master, under such decree, to file a bill, in the nature of a bill of revivor and supplement, to revive and continue the proceedings.
    Any other creditor who is entitled to come in under such decree, and who has an existing claim upon the fund, has also a right to file such a bill to revive and continue the proceedings, and to have the benefit thereof; stating in such bill the existence of his debt. But if the existence of his debt is denied, by the defendant’s answer, he must establish it by proof, before he will be entitled to a decree to revive and continue such proceedings.
    This was an application by the receiver of the property and effects of the City Bank of Buffalo, for the instruction and direction of the court, in relation to the settlement and adjustment of certain claims against the bank, which claims had been presented to and disallowed by him.

      A bill was filed by the bank commissioners, against the corPorati°n> charging it with insolvency and with a viola-t*on *ts c^arter 5 and praying for an injunction to restrain such corporation and its officers from exercising any of its franchises and privileges, and for the appointment of a receiver of its property and effects to distribute the same among its creditors &c. And upon due notice of the application, to the proper officers of the bank, a final order for an injunction and for the appointment of a receiver was made accordingly. Subsequently an order was made, according to the directions of the statute, to restrain the creditors from proceeding at law against the bank ; and requiring them to exhibit their claims and demands to the receiver, and to become parties to the suit, within a certain time, specified in that order. In pursuance of such order various claims were presented to the receiver, some of which-were allowed by him, and others were rejected. The cause was afterwards brought to a hearing, upon the bill taken as confessed against the corporation. And in July, 1841, the chancellor made a final decree thereon, adjudging and declaring that the bank had forfeited its corporate rights and privileges, and perpetually enjoining it from exercising them ; that the corporation be continued in existence so far only as might be necessary to enable the receiver to collect foreign debts and to recover the foreign property in the name of the corporation, but for no other purpose whatever ; and when those objects should have been accomplished, that the corporation should be deemed to be actually dissolved. The final decree also directed the payment of the costs of the complainants’ solicitor, out of the funds of the bank in the hands of the receiver.
    The parties who had presented claims against the bank, which the receiver had disallowed, not having agreed to the appointment of referees to settle such claims, nor applied to the chancellor for the appointment of such referees, as authorized by the article of the revised statutes relative to the powers, duties and obligations of trustees of insolvent debtors, the receiver applied to the chancellor and obtained an order, referring it to a master to settle and adjust all claims which had been presented within the time allowed by the former order, and which had been disallowed by the receiver 5 except such as the claimants and the receiver should within thirty days mutually agree to refer to referees, to settle and adjust, according to the statute. ÍTone of the claims having been submitted to referees within the time prescribed, the master proceeded in the reference as to the claims, and had made his report in relation to one of those claims at the time when the act of the 18th of April, 1843, abolishing the office of bank commissioner, went into operation. That act having made no provision for the revival or continuance of suits in chancery, commenced by and in the names of the bank commissioners, the master doubted whether he had a right subsequently to proceed in the execution of the order of reference to him. And the object of this application was to obtain the decision and direction of the court in the premises._

      E. Fitch Smith, for the petitioner.
   The Chancellor.

The sixth section of the act abolishing the office of bank commissioner, (Laws of 1843, p. 301,) authorizes the comptroller, in certain cases, to appoint an officer as a substitute for those whose office is abolished. But his powers and duties do not appear to apply to a case like the present, where a bank has already been proceeded against j even if he would be authorized to institute a proceeding, in this court, for an injunction against the bank which he was appointed to examine. The power of such special commissioner to apply, in his own name, for an injunction, or for the appointment of a receiver against the particular bank to which his appointment relates, is at least doubtful. For the legislature, in the adoption of the sixth section of the act, appear only to have had in contemplation an examination into the condition of the bank. And if they had intended to give him the power which the former bank commissioners, or a majority of them, jointly possessed, in instituting proceedings against the bank in this court, they probably would have employed different language to express that intention.

But although the statute has made no provision for the revival or continuance of a suit of this kind, commenced by the bank commissioners, if such revival is absolutely necessary for the purposes of justice, this court has unquestionably the power, upon a proper bill filed, by a party interested in such revival, or by the attorney general where the interest of the people requires it, to allow the proceedings already instituted to be continued. In cases of this kind, after the making of a final order for the appointment of a receiver, such receiver becomes absolutely entitled to all the property and effects of the corporation, for the purpose of distributing the same among the creditors and stockholders. (2 R. S. 464, § 42; 469, § 67.) Such final order, therefore, is in the nature of a decree in an ordinary creditor’s suit, against executors, or others, who are trustees of a fund upon which several distinct creditors have claims for the payment of their debts rateably, or according to a specified order of priorities. In cases of that kind, creditors who are not nominal parties-to the suit may make themselves such parties in fact by coming in and presenting their claims to the master, under the decree; and by submitting themselves to the jurisdiction of the court, for the settlement and adjustment of their respective claims upon the fund, as directed by the decree or order under which such claims are presented. A creditor who comes in and makes his claim under such decree is quasi a party to the suit, and is entitled to the benefit of the decree' as such party. And he may be restrained from proceeding at law for the recovery of his debt, after he has made his election to proceed in this court for the recovery of his debt under the decree. (Farnham v. Burroughs, 1 Dick. Rep. 63.) It is now settled that, after such a decree, a creditor who is entitled to come in under it, although he has not so come in, and is not in fact a party, may be restrained from proceeding at law; and may be compelled to come in under the decree or lose his claim upon the fund. (Douglas v. Clay, 1 Dick. Rep. 893. Mocher v. Reed, 1 Ball & Beatty, 318. Goate v. Fryer, 2 Cox’s C. C. 201.) Neither will he be permitted to file a new original bill, in this court, against the executor, or the tiustee of the fund. But if he could not come in under the decree in such suit, or if he is entitled to more extensive relief than he could obtain under that decree, he may be permitted to file a new bill in the nature of a supplemental suit. (Brooks v. Gibbons, 4 Paige’s Rep. 374.)

Under such a decree for the benefit of creditors generally, therefore, all the creditors who may wish to come in under the same and avail themselves of its provisions, are for every substantial purpose considered as parties. And if the nominal complainant neglects to proceed with due diligence under the decree, a creditor who is entitled to come in and prove his debt before the master, will have leave to prosecute the suit. (Powell v. Walworth, 2 Mad. Rep. 183. Cook v. Bolton, 5 Russ. Rep. 282.) And where the sole complainant in such a suit dies, or the suit becomes abated by the death of a defendant therein, if the complainant, or his representative, does not revive within such reasonable time as may be fixed by the court for that purpose, it is a matter of course to permit any creditor, who has established his debt before the master, to file a supplemental bill in the nature of a bill of revivor, to revive and continue the proceedings. (Dixon v. Wyatt, 4 Mad. Rep. 392. Houlditch v. The Marquis of Donegall, 1 Sim. & Stu. Rep. 491. Mitf. Pl. 79, 4th Lond. ed. 3 Dan. Ch. Prac. 173.) Although the cases referred to by Lord Redesdale were those in which the creditor had already come in and established his claim before the master, I apprehend that any creditor who had an existing claim against the fund, and who has a right to come in and prove the same under the decree, has an equal right to file a supplemental bill to revive, and to have the benefit of the former proceedings. The only difference between his case, and that of a creditor who has established his claim, appears to be, that the former would be bound not only to state the existence of his debt, in the supplemental bill, but also to prove it, if it was denied by the defendant’s answer, before he would be entitled to a decree to revive and continue the proceedings. (White on Sup. & Rev. 156.)

If a revival of the suit in this case was necessary, therefore, I should, under the circumstances, permit any of the creditors of the bank who had presented and proved their claims to the satisfaction of the master, under the order for that purpose made by the court, to file a supplemental bill to revive and continue the proceedings. And similar permission would be given to any creditor who had presented his claim to the receiver within the time limited by the order for that purpose, upon the presentment of a petition, on oath, showing that his claim which had been rejected by the receiver was a valid claim against the bank at the time of its failure.

A revival of the proceedings does not, however, appear to be necessary where there is no further litigation to be had with the defendant in the original suit, and where the only questions to be settled are between the different creditors claiming payment out of a fund which is in possession of an officer of the court, and is under its control. (3 Dan. Ch. Pr. 224.) In the case under consideration the nominal complainants are no longer in existence, and their right to continue these proceedings has not; devolved upon any other persons or officers representing the same rights. Indeed the whole object of the suit has already been attained, by placing the funds of the bank in the hands of the receiver, to be distributed among the creditors and stockholders of the corporation, under the direction of the court. And the charter of the bank has in fact been annihilated by the decree; so that the citizens of the state are in no danger of being injured hereafter by any proceedings of its officers. All that is necessary, therefore, is to direct an order to be entered that the master proceed upon the reference, to ascertain and determine the validity of the claims which have been presented to the receiver and disallowed.

As there are in fact no bank commissioners, and the corporation itself is dissolved, so far as relates to any proceedings in this state, it appears to be improper to entitle the papers hereafter as in the original suit; except in the order for the master to proceed, which should be so entitled. But that order will direct that all subsequent proceedings shall be entitled 66 In the matter of the receiver of the City Bank of Buffalo.” And the right of the creditors against whose claims the master has reported, to except to his report, must be exercised within the usual time, allowed by the rules and practice of the court, after service of a copy of the order upon them, or upon their solicitor.


source: Caselaw Access Project

author: The Chancellor

license: Public Domain

text:
    Atlantic Insurance Company vs. Lemar.
    1843. October 24.
    Where a demurrer is overruled, and there is nothing in the proceedings before the court to show that a longer time than twenty days is necessary to an. swer the bill, if the defendant asks for further time, the proper course for the court is to make the usual order, that the defendant put in his answer and pay the costs of the demurrer in twenty days; with liberty to the defendant to apply for further time, upon notice of the application to the complainant.
    This was an appeal from so much of the order of the assistant vice chancellor, overruling the demurrer to the complainant’s bill, as gav.e to the defendant six months to put in his answer.

      D. Lord, for the appellant.

      J. Rhoades, for the respondent.
   The Chancellor

said there was nothing in the case to show that the defendant had any defence to the suit, or that such a great delay was necessary to enable him to answer the bill; that where there was nothing in the proceedings before the court to show that a longer time than the twenty days, prescribed in the 49th rule, was necessary to answer the bill, if the defendant’s counsel asked for further time to put in his answer, the proper course for the court was to make the usual order in such cases, that the defendant answer the bill and pay the costs of the hearing upon the demurrer within twenty days j with liberty to the defendant to apply for further time, upon due notice of the application to the solicitor for the complainant.

Order of the assistant vice chancellor modified accordingly.


author: The Chancellor.

text:
    McWhorter & Baldwin vs. McMahan.
    1843. November 21.
    Where a deed is delivered, in performance of a contract for the sale of land, if the purchaser has any objection to the deed itself, or to the description of the premises therein, or if he objects to accepting the deed upon the ground that the premises are incumbered, it is his duty to make the objection known at the time ; so as to give the vendor an opportunity to obviate it.
    A contract for the sale of lands is void, unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party by whom the sale is to be made, or by his agent lawfully authorized. And where the contract has not been signed either by the vendor or by his agent, it is not binding upon the vendee, although he has subscribed the same.
    To constitute a valid signing of an executory contract, for the sale of lands, by an agent of the vendor, it is only necessary that such agent be lawfully authorized.to execute the contract; an authority in writing for that purpose is not required by the statute of frauds.
    Aliter as to conveyances and leases, by which an interest in lands inprmsenti is intended to be conveyed. In such cases the authority of the agent of the vendor who subscribes the eonveyance or lease must be in writing.
    This was an appeal by the defendant from a decree of the vice chancellor of the eighth circuit. The bill was filed for the specific performance of a contract for the sale of a store and lot in the village of Westfield, in the county of Chautauque, belonging to the complainants. The agreement was made on the 2d of February, 1839, between the complainants, who were copartners in trade under the name or firm of McWhorter & Baldwin, and the defendant McMahan, who were all present in the store, mentioned in the written contract, when such contract was made. Only one of the complainants, however, signed the written agreement, by subscribing the partnership name thereto, in the presence and with the concurrence of his copartner. The contract was as follows : “ In consideration of two thousand seven hundred and fifty dollars, to be paid to us as hereinafter mentioned, we hereby agree to sell to James McMahan the brick store which we now occupy, together with the lot in rear, or lane, subject to such restrictions as are mentioned in a certain writing passed between Joshua R. Babcock, John McWhorter, Norman Kibbee, Aaron Rumsey, and others, in reference to keeping open a lane as therein mentioned; the said store being fifty-six feet front and rear, and extending to the centre of the walls on each of the sides respectively ; and to be paid for as follows, viz : One-third of the whole amount on the first day of May next, and the other two-thirds in three equal annual payments, with annual interest, and payable on the 1st day of May, 1840, 1841, 1842; a deed to be executed by the selling party within four days, and the said McMahan to give his bond and mortgage for the residue as above mentioned ; the selling party to give possession immediately, or to pay rent at the rate of $225 per annum until the first of May next.
    February 2d, 1839. McWhorter & Baldwin.
    James McMahan.”
    On the 6th of February the complainants, with their wives, made and acknowledged a deed, and sent it to the defendant, together with a bond and mortgage to be executed by him, pursuant to the terms of the contract; but he being then unwell requested the papers to be left with him by the commissioner. On the 7th of the same month they also sent to him a written notice that they elected to hold the premises as his tenants until the first of May, pursuant to the right reserved to them in the agreement, and at the rent mentioned therein. Four days afterwards the defendant called upon Judge Campbell, by whom the deed and bond and mortgage had been left with him, and signed the bond, and signed and acknowledged the mortgage before him. And the judge endorsed a certificate of such acknowledgment thereon, and left the papers with the defendant, who then avowed himself ready to execute the contract. But he neither delivered the bond and mortgage to the complainants, nor paid the third of the purchase money to them, which was payable on the- first of May, 1839, according to the terms of the agreement. On the contrary, he sent back the deed to the complainants, in the latter part of February j but without making any objection to the form of the deed, or to the description of the premises therein. The complainants relinquished the possession of the premises on the 1st of May, 1839, and sent the key of the store to the house of the defendant, who was absent from home, together with the money to pay the rent up to that time ; but the person who was in charge of the defendant’s business, in his absence, refused to receive the same.
    On the fifth of September thereafter the complainants filed their bill in this case, for a specific performance, waiving therein a sworn answer from the defendant. The bill stated the substance of the agreement between the parties ; but in attempting to set out the written memorandum of the agreement, at length, the complainants made a slight mistake, by inserting the words u together with the lot in rear of the same” instead of “ together with the lot in rear, or laneP The answer not being on oath, put in issue nearly all the material allegations in the bill; and insisted that the written memorandum was not intended as an agreement, on the part of the defendant, to purchase the premises, but merely as a proposition on the part of the complainants, containing the terms upon which they were willing to sell. The evidence showed, however, that the defendant had frequently, after the signing of the memorandum, spoken of it as an agreement on his part to purchase. No objection to the title of the complainants was stated in the answer. But upon taking the testimony, it was ascertained that at the time of the contract there was an outstanding mortgage upon these premises, and upon other real estate belonging to the complainants, which was still due ; the other property, however, upon which it was a lien, was worth more than the amount of such mortgage.
    The vice chancellor decided that the contract must be specifically performed if the complainants could make a good title. But as there was a mortgage on the lot, and there being no admission in the answer that the premises in the deed were the same as those described in the written memorandum, he directed a reference to a master to report upon the complainants’ title to the premises, and whether the same were, at the date of such report, free from incumbrances ; and that the master also inquire and report whether the premises described in the deed of the 6th of February, 1839, were the same as those contracted to be sold as described in the written memorandum. And all further directions were reserved until the coming in of the master’s report. From this decretal order the defendant appealed.

      A. Taber, for the appellant.
    The memorandum of agreement, for the performance of which this bill was filed, is void by the statute of frauds ; an agreement to be valid must be binding upon all the parties to the same. This contract was signed by Baldwin alone, in the name of the firm of Baldwin & Whorter, who were partners in the mercantile business and joint owners of the land. Baldwin could not bind McWhorter in the partnership name. (2 R. S. 69. Loyd v. Titus, 2 John. 430.) The memorandum contains no promise on the part of the defendant. If the memorandum was binding, the equity of the bill is not sustained by the evidence. It does not appear from the evidence that the defendant ever refused to fulfil the contract. There is no evidence that the complainants ever demanded the papers after the defendant executed them. The contract set out in the bill is different from the contract proved. (5 Wend. 538.) The complainants never gave or offered possession of the store to the defendant; and they never notified him where he could get the key;
      and they never tendered to him the money they were to pay for rent. The refusal or neglect of the complainants to meet at the office of Dixon & Smith to examine the papers as they had agreed, and their neglect afterwards to notify the defendant of their intentions for nearly three months, is a virtual relinquishment of' the contract by them, and exonerated the defendant. The premises were encumbered by a mortgage to the amount of $2000 and interest, at the time of the filing of the bill, and of the examination before the master. If the case is referred back to a master to take further proofs, the defendant should be permitted to introduce any defence and any proofs he may think proper. If the case is opened for further proofs to enable the complainants to patch up their case, they should be compelled to pay the defendant’s costs, as a condition.

      C. H. S. Williams, for the respondents.
    There was a sufficient execution of the contract on the part of the complainants within the statute of frauds ; both the complainants being present, and of course consenting to the method of execution. Baldwin wrote the names u McWhorter & Baldwin” to the contract, while McWhorter was present, and consented to it. Baldwin was then his authorized agent to subscribe his name to the contract, and it was his (McWhorter’s) act. (14 Johns. R. 484, and the, cases there cited. 2 Cowen § Hill’s Notes to Phil. Ev. 1268, 1280, 1. 3 Kent’s Com. 47, 48, and notes on same page. Cady v. Shepard, 11 Pick. 400. 1 Chit. R. 787. Skinner v. Dayton, 19 Johns. R. 513. Gram v. Seton, 1 Hall, 262. Mackay v. Bloodgood, 9 Johns. R. 285. 1 Wen. 326. 9 Id. 439. 12 Johns. R. 102.) The subsequent execution of the deed by McWhorter was such a ratification by him of the act of Baldwin, in placing his name to the original contract, as would estop him from denying Baldwin’s authority. And if McWhorter cannot deny Baldwin’s authority, the defendant certainly cannot. At the time the deed was executed, and long afterwards, the defendant treated the contract as a valid and subsisting one. (2 Cowen & Hill’s Notes to Phil. Ev. 1268.) The complainants having complied with the terms of the contract on their part, they are entitled to a specific performance on the part of the defendant. (Brown v. Haff, 5 Paige, 235, 240. Phyfe v. Wardell, Idem, 283, 286, 268. 3 Cowen, 467, 491, 505. Winne v. Reynolds, 6 Paige, 411. Newl. on Cont. 89.) The defendant cannot say he has never refused to perform the contract on his part. He should have averred his readiness to perform. The outstanding mortgage is no objection to a decree for specific performance. The other property covered by the mortgage is sufficient to satisfy- it. And it is sufficient if we remove this incumbrance at the time of the reference to the master to report as to the title. The premises described in the deed are the same as those mentioned in the contract. But no (objection was made when it should have been done, if there was any substantial difference. (6 Paige, 407. 7 Id. 24. 3 Wend. 249.) The defendant’s refusal to perform was not put upon this ground.
   The Chancellor.

The allegation in the defendant’s answer that he was always ready and willing to perform the contract on his part, is fully rebutted by the proofs in the case. The complainants having executed and sent to him a deed, on the day mentioned in the contract, together with the bond and mortgage to be executed by him, it was his duty to perform his part of the agreement by returning the bond and mortgage to them, duly executed; as a sufficient demand was made when they were sent to him to be acknowledged before the judge and returned to them by the latter, who was their agent for that purpose. And if there was any objection to the deed itself, or to the description of the premises therein, or if the defendant wished the nominal incumbrance of the mortgage to Eason removed, it was his duty to make the objection, so as to. give them an opportunity to obviate it; which they probably could have done at once. (Winne v. Reynolds, 6 Paige’s Rep. 410.) From the testimony in the case, however, I think it is wholly improbable that: there was - any material variance between the store and lot contracted to be sold, and the premises as described in the deed. It is true the "contract calls the store fifty-six feet front and rear,, and the deed describes the lot as being nineteen feet wide.. The contract, however, describes the store as extending to the centre of the wall on each of the sides ; and, the deed also describes each of the side lines of the lot as running through the centre of the partition walls between the store on the premises and the stores adjoining the same. There is very little doubt therefore, that the words front and rear, in the contract, were intended to describe the length of the store from front to" rear, instead of the width thereof in front and in rear; although the latter appears to be the more appropriate meaning of the language used -in the agreement. But the description of the visible monuments— the side walls themselves—will control, as being more certain than the specified distance. The deed therefore will include the whole building to the centre of the side walls thereof, be the distance either more or less than the specified number of feet. And a conveyance in the very language of the description in the contract would convey nothing more. As both parties were in the store at the time, and could see the probable width thereof, there was no mistake, as to the subject matter of the contract, which could authorize either to resile from the agreement.

The variance between the written contract, as set out in the bill, and the contract as actually made by the parties, is wholly immaterial, for the language of each means the same thing. The lot in rear of the store was called a lane, because by the recited agreement between John McWhorter and the owners of the adjoining lots, it was to be kept open for that purpose. Hence it is described in the contract as the lot in the rear, or lane •, that is, the lot in the rear of the store which is sometimes called a lane.

The only real question in this case, therefore, is, whether the agreement of the 2d of February, 1839, was subscribed by McWhorter, or his agent duly authorized for that purpose, so as to make it a valid and binding agreement within the provisions of the revised statutes requiring contracts for the sale of lands to be in writing. The former statute of frauds only required such contracts to be signed by the party who was attempted to be charged upon the contract. Hence the question frequently arose whether the purchaser could not be charged upon his contract, although such contract was not signed by the vendors so as to make it legally binding upon them. No such question, however, can arise upon the present statute, which renders the contract for the sale of lands void, unless the contract, or some note or memorandum thereof expressing the consideration, is in writing, and subscribed by the party by whom the sale is to be made. (2 R. S. 135, § 8.) And in the recent case of Townsend v. Hubbard & Orcutt, (4 Hill’s Rep. 351,) the court for the correction of errors decided that the vendees were not liable upon a contract, which they had themselves signed, because it was not properly executed by the vendors, or their agent, so as to make it a valid contract under this provision of the revised statutes. Here the sale was to be made by both the complainants; and it was necessary, therefore, that the agreement should be signed by both of them, either in person or by an agent duly authorized, in order to make it a valid contract of sale, under this provision of the revised statutes. It was not perisonally signed by the complainant McWhorter ; as the signature of the names of McWhorter & Baldwin to the agreement is proved to be in the hand writing of the complainant Baldwin. Was it then signed by Baldwin for McWhorter, as his lawfully authorized agent for that purpose?

It is insisted by the appellant’s counsel, that to constitute a lawfully authorized agent to make a contract for the sale of land he must have a written authority. Such, however, was not the construction which had been put upon the former statute of frauds; and the revised statutes have not changed the law in this respect. The 9th section of the act of February, 1787, for the prevention of frauds, (1 R.L. of 1813, p. 78,) required conveyances and leases, which were to transfer an interest in lands in prmenti, to be signed by the party, or by his agent lawfully authorized by writing, in order to render them valid either at law or in equity. And the language of the 10th section was the same in this respect. But in the 11th section, which related to executory contracts for the sale of lands, &c. the words “ by writing” were left out; so that it was only necessary that the agreement should be signed by an agent lawfully authorized. Under this section, and under the corresponding provision in the English statute of frauds, it had long been settled that to make a valid executory contract for the sale of lands, or of an interest therein, it was not necessary that the authority of the agent should be in writing ; but only that the agreement itself should be in writing, and should be signed by him as such agent. (Coles v. Trecothick, 1 Smith’s Rep. 233. Barry v. Lord Barrymore, 1 Sch. & Lef. 29. Clinan v. Cooke, Idem, 22. 1 Sugden on Vend. 186, 10th Lond. ed.)

There is certainly some danger of fraud and perjury in permitting the authority o.f an agent, to contract for the sale of the lands of another, to be established by parol. And the revisers proposed to remedy the supposed defect in the former law, by requiring that the agent who signed such a contract should be authorized by writing; and they reported the 9th section of the title of the revised statutes respecting fraudulent conveyances and contracts, accordingly. But the legislature struck out the words V authorized by writing,” which were contained in that section as it was reported by the revisers, and substituted the words u lawfully authorized,” as contained in the previous statute on the subject. It is only necessary, therefore, to establish the fact, by parol, that the person signing such a contract, as agent for the seller, was lawfully authorized to sign it as such agent. And the supreme court, in the recent case of Lawrence v. Taylor, (5 Hill’s Rep. 107,) consider this as the. proper construction of this section of the revised statutes.

The testimony in this case, as to the authority of Baldwin to sign the name of McWhorter to the contract, in connection with his own, is such as to leave no doubt on the subject. Both concurred in the making of the contract, and were together when it was signed by one, in the names of both, as well as by the defendant. And both executed the deed, a few days afterwards, for the purpose of carrying into effect the agreement which had thus been made by them. I think the vice chancellor was therefore right in decreeing a specific performance of the agreement; in case the complainants should appear, upon the master’s report, to be able to make a good title to the premises.

The decretal order appealed from must be affirmed with costs. And the proceedings are remitted to the .vice chancellor, with directions to refer the matter to any master in the county of Chautauque, if the particular master named in the decretal order is no longer in office.


text:
    Tower vs. White and others.
    The provisions of the 132d and 136th rules of the court of chancery were intended to relieve the complainant from the expense and delay of a litigation between co-defendants, who were junior incumbrancers, previous to a decree of sale of the mortgaged premises. But, they were not intended to deprive the defendants of the privilege of setting out their respective rights, in their answers, so far as might be necessary to enable the court to make a proper decree for the sale of the mortgaged premises in parcels; so as to protect the rights of the several defendants, upon the reference as to the surplus moneys.
    Nor were such provisions intended to relieve the complainant, in a foreclosure suit, from the necessity of setting out in his bill all his claims upon the mortgaged premises; or to prevent the defendants from setting up, in their answers, any claims they might have to the equity of redemption, as incumbrancers or otherwise, as against the complainant.
    Where the defendant, in a foreclosure suit, puts in an answer claiming the absolute title to the equity of redemption in the mortgaged premises, subject only to the incumbrance of the complainant’s prior mortgage as set out in the bill, or sets up, in his answer, an incumbrance upon the mortgaged premises, in his favor, which is entitled to a priority over all other liens thereon except the mortgage set forth in the complainant’s bill, a decree in the cause, upon bill and answer, will preclude the complainant from afterwards setting up any other claims or incumbrances upon the mortgaged premises, as against such defendant.
    1843. November 21.
    The proper course for the complainant, in sucha case, is to amend his bill, and to set up therein all his claims and incumbrances upon the mortgaged premises ; so that they may be litigated, and disposed of by the decree in the suit.
    The complainant, in a foreclosure suit, is not entitled to come in, as a matter of course, under the provisions of the 136th rule of the court of chancery, and make a claim upon the surplus moneys arising from the sale of the mortgaged premises, and to have a reference a's to that claim.
    The defendants, in a foreclosure suit, who are owners of the equity of redemption in any part of the mortgaged premises, have a right to insist that the whole of the complainant’s incumbrances thereon shall be ascertained and settled by the decree; so that they and the other owners of the equity of redemption may, if they think proper, pay off his incumbrances, and prevent the necessity of a sale, where none of the other defendants have any specific liens upon the premises.
    This was an appeal, by the complainant, from- a decretal order of the vice chancellor of the fifth circuit overruling a master’s report, allowing an exception to the answer of the defendant White for impertinence. The bill was filed to foreclose a mortgage which had been assigned to the complainant, who was also the assignee of other mortgages upon the equity of redemption in the premises; but who in his bill had said nothing about these junior mortgages. The defendant White was the assignee in bankruptcy of two of the mortgagors in one of the junior mortgages, which was given upon an undivided portion of the equity of redemption which belonged to the bankrupts at the time of giving that mortgage. And the other junior mortgage was held by the bankrupts, originally, but had been assigned by them to the complainant. The defendant White, in his answer, after setting out his right as assignee in bankruptcy to an undivided portion of the mortgaged premises, stated the giving of one of the junior mortgages to the complainant, and the assignment of the other to him, by the bankrupts ; and averred and charged that the junior mortgages were so given and assigned to the complainant for the purpose of giving him an illegal preference, in fraud of the bankrupt laws. And the question upon the appeal was whether this part of the answer of the defendant was impertinent.

      C. P. Kirkland, for the complainant.

      A. Taber, for the defendant White.
   The Chancellor.

Without talcing time to examine the question whether the complainant’s exception did not cover too much, I am satisfied that the answer is not impertinent in the matters excepted to. Previous to the adoption of the 132d and the 136th rules of this court, in January, 1830, junior incumbrancers, who were made defendants, not only were authorized to litigate their claims with the complainant, but also with their several co-defendants, previous to the decree of sale. And as a general rule they were required to do so. (Renwick v. Macomb, Hopk. Rep. 277.) The object of these two rules was to relieve the complainant from the expense and delay of this litigation between co-defendants, or of attempting to set up their respective rights in his bill. But it was not intended by the court to prevent the defendants from setting out their respective rights, in their answers, so far as might be necessary to enable the court to make a proper decree for the sale of the mortgaged premises in separate parcels, or otherwise 5 so as to protect the rights of the several defendants, upon the reference which was to be had, under the last of these rules, as to the surplus moneys. Nor was it intended by the court to relieve the complainant, in a foreclosure suit, from the necessity of setting out, in his bill, all his claims upon the mortgaged premises; nor to prevent the defendants from setting up in their answers any claims they might have to the equity of redemption, as incrumbrancers or otherwise, as against the complainant. If the defendant therefore puts in an answer, as he has a right to do if the fact is so, setting up an absolute title to the equity of redemption, subject only to the complainant’s mortgage as stated in the bill, or sets up, in his answer, an incumbrance as a lien upon the mortgaged premises, in his favor, which is entitled to a priority over all other liens thereon except the mortgage set forth in the bill, the decree will be conclusive against the complainant, as to any other lien or claims he may have upon the premises, in case he neglects to file a replication to the answer and litigate the question in the usual way. The complainant should, in such a case, amend bis bill, setting up therein all his claims and.incumbrances upon the mortgaged premises; so as to have them litigated, and disposed of by the decree in the suit. For the 136th rule does not authorize the complainant to come in and have a reference, as a matter of course, to ascertain and settle the right to the surplus moneys. The language of the rule shows it was intended for the benefit of the defendants in the suit; and to save the necessitj of their making their claims by answer, where such claims could as well be settled under the order of reference.

The complainant’s counsel in this case is right in supposing that the decree, and the master’s deed under it, will cut off the lien of .these junior incumbrances, although they are not mentioned in the bill; provided they are not assigned before decree to some bona fide purchaser who shall give notice of his claim before such sale. But the defendant, as the owner of the equity of redemption in a portion of the mortgaged premises, has a right to insist that the whole of the complainant’s incumbrances shall be ascertained and settled by the decree ; so that he and the other joint owners of the equity of redemption may, if they think proper, pay off those incumbrances, and prevent the necessity of a sale, if none of the other defendants have any specific liens upon the premises.

The decretal order, of the vice-chancellor must therefore be affirmed, with costs.


text:
    Curtis and others vs. Hitchcock.
    The notice of lis pendens required to be filed by the revised statutes,"and by the rules of the court of chancery, does not afifect the rights of persons who do not claim under the defendants in the suit, or whose rights accrued previous to the commencement of such suit and who are not made parties thereto.
    The filing of such notice of lis pendens is still necessary, to make the filing of the bill a constructive notice to subsequent purchasers. But as the notice of lis pendens in mortgage cases, which is to be filed under the provisions of the act of May, 1840, contains all the requisites of both notices, that notice alone is sufficient, for both purposes, in foreclosure suits.
    Where the complainant amends his bill after the filing of the notice of lis pen-dens, in a foreclosure suit, by striking out the names of certain judgment creditors who are parties, the safer course is to file a new notice of lis pen-dens against the remaining parties.
    And where the bill is amended by adding new parties, after the filing of the notice of lis pendens, a new notice is necessary to be filed, to bar the rights of the judgment creditors of such new parties, as well as to make the amended bill constructive notice to subsequent purchasers from such new parties.
    Where the complainant, in a foreclosure suit, filed the ordinary notice of lis pendens previous to the passage of the act of May, 1840, and after the passage of that act he dismissed bis bill as against the judgment creditors who had been made parties to the "suit; Held, that the filing of a new notice of lis pendens, under the act of May, 1840, was necessary to bar the rights of such judgment creditors, and others claiming under them.
    It seems the legislature has the right to declare that the general lien of a judgment creditor, upon mortgaged premises, shall cease as against a bona fide purchaser under a decree upon the prior mortgage, upon a mere constructive notice to him in the county clerk’s office, unless such judgment creditor enforces his lien, by a sale of the premises upon execution, previous to a sale thereof under the decree in the foreclosure suit to which he is not a party.
    The neglect to file a correct notice of lis pendens, in a foreclosure suit, where proper proof of the filing of such notice is produced to the court upon the making of the decree, does not render such decree absolutely void, as to judgment creditors of the mortgagor who arc not made parties to the suit. But it is an irregularity, which will authorize such judgment creditors to apply to set aside the decree, and the sale under the same, if the application is made within a reasonable time after such irregularity is discovered by them ; without prejudice, however, to the rights of bona fide purchasers, at the master’s sale, who have paid the purchase money without notice of such irregularity.
    Where the complainant in a foreclosure suit is himself the purshaser under the decree in such suit, he is chargeable with constructive notice of an irregularity in neglecting to file a proper notice of the pendency and object of the suit. But where a stranger becomes the purchaser, and pays his purchase money before he has notice of such irregularity, he will be protected as a bona fide purchaser.

      1843. November 21.
    This cause came before the court upon a demurrer to the complainants’ bill. The object of the bill "was to obtain the specific performance of a contract for the purchase of a lot of land in the city of New-York by the defendant. And the only question in controversy between the parties, was whether the complainants, who had bid in the lot upon a master’s sale under a decree of foreclosure, could give a perfect title to the lots, discharged of the equity of redemption of certain judgment creditors of the mortgagor. The foreclosure suit was commenced in December, 1839, against the mortgagor, and several of his judgment creditors whose judgments were liens upon the mortgaged premises, subsequent to the date of the mortgage. And on the day of filing the bill, a notice was filed-in the office of the clerk of the city and county of New-York, which, in all respects, was in conformity with the form of the notice which was subsequently required to be filed under the act of May, 1840, to reduce the expenses of foreclosing mortgages in the court of chancery. On the 6th of June, 1840, after that act went into effect, the complainants entered an order to dismiss their bill as against the judgment creditors, who had never been served with process, nor appeared in the suit ; supposing that it was no longer necessary to continue, them as parties, and that their equity of redemption would be cut off by a sale under the decree. But the complainants neglected to file a new notice of the lis pendens. And more than six months after the act of May, 1840, went into effect, the foreclosure suit was brought to a hearing, as against the remaining defendants, and proof was made to the court, in the usual form, of the filing of the notice of lis pendens, more than forty days previous to such hearing. The usual decree of foreclosure and sale was thereupon entered; which decree contained the following clause : “ It is further ordered, adjudged and decreed, that the defendants in this suit, and all persons claiming or to claim from or under them, subsequent to the commencement of this suit, and all other persons, although not parties to this suit, who have any liens by judgment or decree subsequent to the said mortgage of the complainants, or any liens or claims thereon by or under any such subsequent judgment or decree, either as puchasers, incumbrancers or otherwise, he and they are hereby declared to be forever barred and foreclosed of and from all equity of redemption and claim, of, in and to the premises so sold and every part and parcel thereof.”

      W. C. Noyes, for the complainants.
    The foreclosure of the mortgage executed by Stuyvesant to Joseph D. Beers, was regular and effectual to bar the rights of subsequent judgment creditors of Stuyvesant. This title cannot be impeached at law, for however irregular the proceedings may have been, they would enable the purchaser to gain possession of the premises, and having done so, he could defend himself in his possession, under the mortgage, against an ejectment or any action at law, brought by the judgment creditor or any one claiming under the lien of such judgment. (Jones v. Clark, 20 Johns. Rep. 51. 4 Kent’s Com. 164, &c.) The act of 1840, §§ 8, 9, was substantially complied with. The bill shows that a notice of lis pendens had been filed before the taking effect of the act. It was not necessary to file a new notice. Proof of the filing of the notice as required by the act was made. The provisions of section 8 of the act of 1840, and the last clause of section 9 requiring proof, &c. are merely directory - and a decree pronounced would, under the provisions of the 9th section, be valid, without the filing of a notice of lis pendens, or furnishing proof of such filing, upon the hearing. Liens of judgments, and decrees, are matters affecting the remedy, and are not of the substance of the contract. It is competent therefore for the legislature to prescribe the time during which the liens of judgments shall remain, and how they shall be displaced or barred. The decree is conclusive unless the court should set it aside on motion. It contains provisions barring the rights of subsequent judgment creditors, and it is to be presumed that the court had jurisdiction to make such decree, unless the contrary is shown.

      W. C. Wetmore, for the defendant.
    The rights of judgment creditors subsequent to the mortgage of the complainants, are not barred by the foreclosure. It is a fundamental rule of all judicial proceedings that the rights of a party interested can only be affected thereby after notice of such proceedings, either actual or constructive. Judgment creditors are such parties, and as ’such are entitled to notice. (Edwards on Parties, 173, pl. 88.) If notice is omitted the decree does not affect their rights. (Idem. Haines v. Beach, 3 John. Ch. Rep. 459.) In making the decree in question the court has acted either, first, by virtue of its general equity jurisdiction, or, second, by virtue of statutory enactments. If by virtue of its general equity jurisdiction, then the decree cannot bind judgment creditors not served with process. (Edwards on Parties, 173, pl. 88, ut supra. Haines v. Beach, 2 John. Ch. Rep. 459.) If the court acted by virtue of statutory enactments, giving it new powers, or varying the manner of proceeding, especially dispensing with personal notice to persons entitled to such notice, then such enactments must be strictly complied with. Such provisions cannot be considered,as directory merely. They divest the rights of incumbrancers if the course of proceeding indicated is had, and not otherwise. The act of 1840 directs the filing of a notice of lis pendens forty days before the hearing. A notice filed before the act took effect does not come within the words or spirit of the act. Judgment creditors were entitled to look in the county clerk’s office for a notice filed after the passage of the act. The 9th section must be taken as a whole. It provides that no decree shall be made barring the rights of judgment creditors not parties to the suit, unless such notice of lis pendens is filed as required by the act, and prooí thereof is furnished at the hearing. When both these conditions are complied with, then the effect of the decree is declared to be a bar to the rights of subsequent judgment creditors, not otherwise. This is not a case in which the conrt can enlarge its jurisdiction against the words of a statute. It is like the power given to make decrees against absent, concealed, and nonresident defendants. It is like the case of third persons purchasing under a power. They are bound to take notice of any defects in the execution of it.
   The Chancellor.

Two questions are presented for the consideration of the court in this case : First, whether this was a good and sufficient notice under the provisions of the act of May, 1840; and Second, if it was not, whether the eighth and ninth sections of that act are merely directory, so as to make the decree of foreclosure, and the sale of the mortgaged premises, an absolute bar of the equity of redemption of all persons claiming under a judgment, or decree, which was subsequent to the mortgage, although the provisions of the statute have not in fact been complied with. Previous to the act of May, 1840, the standing rules of this court required a notice of the lis pendens to be filed, in a mortgage or partition suit, immediately after the filing of the bill. The object of that notice, however, was to enable the master to give to the purchaser, under the decree, a good title as against all persons claiming, under the defendants in the suit, by a subsequently acquired title. But it had no effect whatever upon persons who did not claim undej the defendants, or whose rights accrued previous to the commencement of the suit, and who were, not made parties. (2 R. S. 174, § 48. Rule 133, 174.) These notices are still required to make the filing of the bill a constructive notice to subsequent purchasers. But as the notice of lis pendens, in mortgage cases, which is to be filed under the 8th section of the act of May, 1840, contains all the requisites of the notice which the revised statutes required to make the filing of the bill a notice to subsequent purchasers^ and is to be filed in the same office and indexed in the like manner, only one notice is now required to be filed, for both purposes, in foreclosure suits.

The notice in question in the present case was filed in conformity with the provisions of the revised statutes, and the 133d rule of this court. And until the act of May, 1840, went into effect, it certainly could not in any way affect the rights of judgment creditors who were not parties, or any persons claiming under them. Indeed the notice was that the judgment creditors, whose rights the complainants now insist were barred by the decree, were in fact made parties to the suit; so that if they had seen that notice, subsequent to the time when the act of May, 1840, went into effect, and without being informed that the bill had afterwards been dismissed as to them, they could hardly have supposed it was necessary for them to apply, under the statute, to be made parties to the suit, to enable them to protect their rights as judgment creditors of the mortgagor. The safer course, where the complainant dismisses his bill, in a foreclosure suit, as against a judgment creditor who has a subsisting lien, or leaves his name out of the bill by amendment, is to file a new notice of the pendency of the suit against the remaining parties ; so as to render it perfectly certain that the judgment creditor, whose name is left out after the filing of the first notice, will be barred by the foreclosure and sale. And when the bill is amended, by adding new parties, after the filing of the notice of lis pendens, a new notice is absolutely necessary, to bar the rights of the judgment creditors of such new parties, as well as to make the amended bill constructive notice to subsequent purchasers from such new parties.

But what is to my mind a conclusive objection to the notice, in this case, which was filed several months before the passage of the act of May, 1840, is the fact that a subsequent incumbrancer would not be required to search the clerk’s index previous to the time when that act went into effect; nor would he think of searching long previous to that time, to see whether a notice had not been filed, for the purpose of barring his equity of redemption, under a law which had no existence when such notice was filed and indexed. The filing of such previous notice of lis pendens, in-this case, therefore, was -not a compliance with the provisions of the act of May, 1840 ; and was not a good constructive notice to the judgment creditors, as to whom the bill was subsequently dismissed, of the proceedings against the other parties alone, to foreclose the mortgage upon the premises upon which these judgments were liens. They have not, therefore, had the opportunity which the legislature intended to give them, to come in and be made parties to the foreclosure suit, and to protect their rights, if they had any.

The remaining question to be considered is, whether their equity of redemption is barred by the decree of foreclosure and sale, although the provisions of the act of May, 1840, as to the filing of a notice of lis pendens, have not been complied with either in form or in substance. That question is one which is comparatively of small importance to the complainants in the present suit, as I presume the equity of redemption of these judgment creditors is of little or no value, and that the complainants will only have to wait until the five years, from the 4th of June, 1840, have expired, or to advertise and sell under the statute, in order to get a perfect title to the premises in controversy. It is a question of great importance, however, to all purchasers of real estate under decrees of foreclosure. For I have observed there is great carelessness in many cases in filing the notices of lis pendens in mortgage suits. And with all the vigilance which the chancellor and vice chancellors are able to exercise, in such cases, I have no doubt that many decrees are entered where the notices filed have not been in substantial compliance with the statute. Indeed, it is impossible for the court to know with certainty, in any case, whether the statute has been complied with, without a particular acquaintance with the description and location of the mortgaged premises. For although the notice on its face purports to be in compliance with the statute, and tq state the town and village, or city and ward, as well as the county in which the mortgaged premises are situated, and the date of the mortgage, the parties thereto, and the time of recording the notice stated in such notice, it may be, and undoubtedly often, is, incorrect in some of these particulars, from the want of the requisite information on the part of the solicitor who drew the notice, and his neglect to take the necessary means to obtain it. From the division of towns, and the changes in the names of towns and villages, &c. it often happens that at the time of filing the notice of lis pendens, the mortgaged premises are in a different town, or ward, or village, from the one in which they were when the mortgage was given ; and the solicitor who resides at a distance from the premises may not be aware of the fact. In such cases if he relies upon the description in the mortgage alone, in drawing his notice of lis pendens, he will generally get it wrong, so that it will not be in compliance with the statute. The only safe course for the solicitor who draws the notice, where he is not personally acquainted with all the particulars which the statute requires to be inserted therein, is to make proper enquiries and obtain the necessary information before he commences the suit. And he cannot safely and conscientiously make the usual affidavit, that more than forty days previous thereto a notice of the pendency of the suit, containing all the particulars required by the act of the 14th of May, 1840, to reduce the expenses of foreclosing mortgages in the court of chancery, had been filed in the office of the clerk of the county-in which the mortgaged premises were situated at the time of filing the bill, and at the date of such .notice, until he has made the necessary enquiries to ascertain that all these particulars were correctly and truly stated in the notice filed, as required by the statute.

The question under consideration is also of importance to persons not parties to the suit, whose equity of redemption is to be barred by the foreclosure and sale; especially if the statute should be construed to extend to the owner of the equity of redemption, who had become such by a purchase at a sheriff’s sale under a judgment or decree, previous to the commencement of the foreclosure suit. As to creditors who have only a general lien upon the equity of redemption, but no fixed and certain interest in the land itself, as purchasers or' mortgagees thereof, at the time of filing the complainant’s bill, the legislature probably had the constitutional right to declare that such genera] lien should cease and terminate, as against a bona fide purchaser under the decree, unless such creditor should proceed and enforce his lien by a sale of the lands, by execution, previous to the sale in the foreclosure suit; although such creditor should have no notice of such suit except a mere constructivenotice arising from the lis pendens itself. And if the legislature had such a right, the neglect to file a correct notice of the pendency of the suit, in the county clerk’s office, as required by the 8th section of the act of May, 1840, might be considered as an irregularity merely, which would enable the creditor to apply and set aside the decree and sale within a reasonable time after he had notice of such irregularity ; but without prejudice to the rights of a bona fide purchaser, who had parted with his money upon the faith of a decree of this court, and without any notice of the irregularity in the proceedings. Such, I am inclined to think, is the fair construction of the act in relation to the rights of such creditors. The 8th section directs the filing of the notice of lis pendens, and prescribes the form and substance thereof. And the next section directs that it shall not be necessary that any person having a lien by any judgment or decree, upon the land contained in any mortgage, subsequent to such mortgage, or any person having any lien or claim by or under such judgment or decree, be made a party to the suit for the foreclosure of such mortgage. It then declares, in general terms, without reference to the 8th section, “ that every decree of foreclosure and sale of lands mortgaged, shall bar and foreclose all claim of equity and redemption of every person having such subsequent judgment or decree, and his heirs and personal representatives, and all persons claiming under him or them, subject to the provisions of the subsequent sections of the act.” And the last clause of the 9th section, which directs that no such decree shall be made unless proof should be given, in such manner as shall be required by the court, that such notice of the pendency of the suit has been filed, as is required by the next preceding section, for at least forty days before such decree phall be made, does not make the decree absolutely void as to the creditors who are not made parties, where such proof is in fact given; although it should afterwards turn out that the person who made such proof was under a mistake in supposing that a notice had been filed which contained all the particulars required by the act.

The want of notice of lis pendens is not an objection which goes to the jurisdiction of the court. For the 9th section of the act renders it unnecessary to make the lien creditors parties; and by necessary implication authorizes the court to make the decree upon due proof of the filing of the notice of lis pendens. In this respect, therefore, it is analogous to the case of a proceeding against an absentee, where, by mistake or otherwise, proof of the due publication of the order to appear is made and the usual decree entered thereon ; and it afterwards turns out that the order has not been published for the length of time required by the statute. Such a decree would undoubledly be irregular ; and might, as against the complainant in the suit, be opened upon the application of the absentee, if he applied within a reasonable time after he had notice that a decree had been entered against him. But a bona fide purchaser under the decree of foreclosure and sale would be protected in his purchase. (Jackson v. Rosevelt, 13 John. Rep. 97.)

The case under consideration, however, is not the case of a bona fide purchaser who has paid his money and obtained title to the land under a decree, valid upon its face, and without notice of any irregularity in obtaining such decree. Here the complainants in the foreclosure suit themselves were the purchasers under the decree, and they are chargeable with notice of the irregularity in obtaining it. (Jackson v. Caldwell, 1 Cowen’s Rep. 622. Simmons v. Catlin, 2 Caines’ Rep. 61.) And the defendant in this case, who had himself discovered the irregularity before he had completed his purchase, would not have been entitled to protection, as a bona fide purchaser, if he had proceeded to complete it by paying the consideration .money after-wards j although he would have been protected if he had paid the purchase money and obtained the deed before the irregularity was discovered. As the case now stands, it will be a matter of course to permit these judgment creditors to come in and make a defence, if they have any, upon the usual terms, upon an affidavit that they have applied the first opportunity after they discovered that the decree had been entered. Or, if the property has been sold below its true value, although they have no defence, to the suit itself, they will, upon a similar affidavit, be permitted to have a resale of the premises, upon giving security to pay the costs thereof, in case the premises upon such resale do not bring sufficient to pay the amount reported due to the complainants upon the mortgage, with interest and the costs of the suit. But as the foreclosure is valid as to the defendants in that suit, and as to all persons claiming under them subsequent to the filing of the bill and the notice of lis pendens, as required by the revised statutes, the decree as to them cannot be opened, so as to impair the rights of the complainants in any way, as against them, either on a resale or otherwise. But this defendant was not bound to complete his purchase, under the written contract set out in the bill, without a release of the equity of redemption from these junior judgment creditors.

The defendant’s ciemurrer is therefore allowed, with costs.


text:
    Reed vs. Marble.
    Where M. gave a bond and mortgage to W. for a part of the purchase money of a house and lot, which the latter afterwards assigned to another person, and such assignee afterwards delivered the bond to W. and authorized him to give it up to the mortgagor upon receiving from him a reconveyance of the mortgaged premises, and such arrangement was effected and a deed given and the bond given up to be cancelled, without notice to W. or the mortgagor, that the assignee of the bond and mortgage had assigned his interest therein to R.; Held, that W. was a competent witness for the mortgagor, in a suit brought by R. for the foreclosure of the mortgage, to 'prove his agency and authority, and the agreement made by him to receive the reconveyance and to discharge the personal liability of the mortgagor upon the bond; and that no written power to W. was necessary to enable him to receive such reconveyance, for his principal, and to discharge the personal liability of the mortgagor upon the bond.
    1843. November 21.

      Held also, that the agreement having been consummated, and the reconveyance executed, before W. or the mortgagor had any notice of the revocation of the agency of W. by such assignment of the bond and mortgage to R., the mortgagor was discharged from personal liability upon his bond.
    The assignee of a bond and mortgage must give notice of the assignment, to the mortgagor, if he wishes to protect himself against a bona fide payment by the latter, to the assignor or his authorized agent.
    Even the recording of an assignment of a bond and mortgage is not constructive notice to the mortgagor, of such assignment, but is only constructive notice to subsequent assignees or purchasers from the original assignor.
    The owner of the equity of redemption in the mortgaged premises is a necessary party to a suit for the foreclosure of a mortgage. And where the mortgagor has conveyed his equity of redemption in the mortgaged premises to another, no suit in chancery can be instituted against the mortgagor, for the payment of the mortgage debt, without making the grantee of the equity of redemption a party.
    Where it appears upon the complainant’s bill, to foreclose a bond and mortgage, that the owner of the equity of redemption is not a party to the suit, the defendant may demur.
    This was an appeal from a decree of the vice chancellor of the eighth circuit, dismissing the complainant’s bill with costs. In July, 1835, E. B. Wesley sold and conveyed a lot in Buffalo to the defendant Marble, and took back from him a bond and mortgage, to secure the payment of $700 of the purchase money. Wesley assigned the bond and mortgage to Allen, and the latter assigned and delivered them to J. D. Jennings, in March, 1837. In the fall of 1838, Jennings called upon Wesley to inquire as to the responsibility of Marble, and learning that it was doubtful, left the bond with Wesley, with a request that he would see the mortgagor and get him to give to Jennings a deed of the premises. And he authorized Wesley to give up the bond to Marble, to be cancelled, if he would give him such deed. Wesley shortly afterwards made an arrangement with Marble to convey his equity of redemption to Jennings upon those terms; and on the 8th of May, 1839, a deed from Marble and wife to Jennings was made and executed, purporting to be for the consideration of one dollar and of the giving up by Jennings of the bond to be cancelled, by which deed Marble and wife conveyed to Jennings the mortgaged premises, in fee. And Wesley made and signed an endorsement upon the bond, stating that by order of Jennings the bond was given up to Marble to be cancelled, and that Jennings agreed to discharge him from all personal liability on the mortgage given therewith. But as Marble’s wife was then absent, so that the deed could not be executed by her, the deed and the bond were left with the scrivener, who drew the deed, with directions to deliver up the bond to Marble when the deed should be executed by the wife and duly acknowledged. On the 17th of July, 1837, which was shortly after the return of Mrs. Marble, the deed was acknowledged by Marble and his wife, and was delivered to Wesley, or left with the scrivener for him. And the bond with such endorsement thereon -was delivered up to Marble, pursuant to the previous arrangement. The deed was duly recorded on the 22d of the same month.
    Jennings, by an assignment annexed to the mortgage, dated in December, 1838, but which was neither witnessed nor acknowledged, assigned the bond and mortgage to H. Mead of Lockport, reciting therein that the bond was temporarily lost, but covenanting to deliver it to the assignee or to pay all damages, and also covenanting that <f>700, and interest from July, 1837, was then due upon the bond and mortgage. And in April, 1839, Mead made a similar assignment of the bond and mortgage to the complainant, except that Mead did not guaranty the production of the bond. But no notice of either of these assignments was given to Marble, or to Wesley, previous to the execution of the deed to Jennings and the delivering up of the bond to be can-celled, on the 17th of July, 1839; although that fact was put in issue by the pleadings, and the complainant attempted to prove a notice on that day. Immediately after-wards, however, the complainant made his claim as the assignee of the bond and mortgage upon Marble, and instituted a suit at law against him to recover the debt; which suit was subsequently discontinued.
    In August, 1839, the complainant filed his bill against Marble to foreclose the mortgage, without making Jennings, to whom the legal title to the equity of redemption had been previously conveyed, a party; waiving an answer on oath from the defendant. The defendant, in his answer, set forth the agreement with Wesley, as the agent of Jennings, for the giving up of the bond to be can-celled and discharged, upon the conveyance of the equity of redemption in the mortgaged premises to the latter, and the execution of the conveyance accordingly; and that he had no notice of the assignment of the bond and mortgage, by Jennings, and never heard of it until after the agreement was executed. He also insisted in his answer that Jennings, in whom/the legal title to the mortgaged premises then was, should have been made a defendant in the bill of foreclosure. Wesley was examined as a witness for the defendant, to prove the fact of his agency and the other matters of defence; and a motion was made to suppress his deposition, which motion was denied by the vice chancellor. The testimony of J. H. Reed, a witness on the part of the complainant, was suppressed. The decree dismissing the bill was directed to be without prejudice to the complainant’s right to file a new bill against Jennings.

      J. L. Curtenius. for the appellant.
    S. G. Havens, for the respondent.
   The Chancellor.

Wesley was a competent witness to prove the fact of his agency and the other matters testified to by him. And no written power was necessary, to authorize him to receive a conveyance of the equity of redemption in the mortgaged premises and to agree to give up the bond of the mortgagor, and to discharge the mortgagor from his personal liability for the debt, in consideration of such conveyance. No question therefore arises upon the statute of frauds in relation to that matter. If the conveyance had not actually been made by Marble until after he had notice of the revocation of the agency of Wesley, by the assignment to Mead, a question would have arisen, whether the agreement by parol to convey, which was not binding on Marble under the statute of frauds, was binding upon Jennings so as to divest the claim of his assignee to recover upon the bond. I think it would not. The complainant, however, has wholly failed to establish notice of the assignment by Jennings, or any thing which was sufficient to put Marble on inquiry, until the bargain was consummated by the execution of the deed, and the giving up of the bond, with the agent’s endorsement thereon. The agent had left the bond and deed with the scrivener, with directions to give up the bond when the deed was executed by the wife and duly acknowledged. It is not material therefore, whether Wesley took the deed on the 17th of July, or Marble left it at that time with the scrivener for him. Either would be a good delivery to Jennings, so as to pass the title to him.

The assignee of a bond and mortgage, as well as assignees of other choses in action, must give notice of the assignment, if he wishes to protect himself against a bona fide payment to the assignor, or his duly constituted agent, by the mortgagor. Even the recording of an assignment of a mortgage is only constructive notice to subsequent purchasers or assignees of or from the mortgagee, or the original assignor. But by the express provisions of the revised statutes, the recording of the assignment is not of itself to be deemed notice of such assignment, to the mortgagor, or his heirs or personal representatives, so as to invalidate any payments made by them, or either of them, to the mortgagee. (1 R. S. 763, § 42.)

Again; the objection was well taken, in the answer, that Jennings, to whom the legal estate in the equity of redemption was conveyed previous to the filing of the complainant’s bill, was a necessary party to the foreclosure suit. And it appears by the bill that the complainant had actual notice of the execution and recording of that deed, before this suit was commenced. And where the mortgagor has conveyed his interest in the equity of redemption, no suit in this court, to foreclose the mortgage, can be commenced against him without making the owner of the equity of redemption a party although the mortgagor is still liable upon his bond for the deficiency. For where the owner of the equity of redemption is not a party to the suit, the master’s deed will give no title to the purchaser as against him. And in the recent case of Cornell v. Prescott and wife, (In Chan. Oct. 5th, 1843,) where it appeared upon the face of the bill, in a foreclosure suit against the mortgagor and a subsequent mortgagee of his grantee, that the owner of the equity of redemption was not a party to the suit, this court decided that a demurrer to the bill was well taken.

The testimony of J. H. Reed was properly suppressed ; as the mere declarations of a stranger were not proper evidence for any purpose, and the objection that the agent only had authority to give up the bond upon receiving a good deed,” cannot be sustained. The evident meaning of that expression, was that the defendant should give such a deed as would convey the whole title wdiich he received from the mortgagor^ the time of giving the mortgage ; so as to save to Jennings the expense of a foreclosure suit for the purpose of cutting off the rights of persons claiming under the mortgagor. No incumbrances were proved, nor was there any pretence at the hearing that any such existed. If Jennings wanted the deed on record, his agent was the proper person to see that it was recorded.

The order appealed from must be affirmed with costs.


text:
    Roosevelt, administrator, &c. vs. Ellithorp and wife. The same vs. The same.
    Where the defendant, in his answer, merely states the substance of a deed in his possession, without annexing a copy of the deed to his answer, and craves leave to refer to the same when produced, he makes it a part of his answer so far as to entitle the complainant to an order for the production of the deed.
    But if no such order is obtained, and the deed itself is not produced upon the hearing, only the substance of such deed, as it is stated in the answer, is considered before the court as a part of the pleadings in the suit.
    Where the grantor who has conveyed with warranty is called as a witness in behalf of his grantee, the latter may release his interest so as to make him a competent witness. And if no objection is taken to the competency of a witness thus situated, before the proofs in the cause are closed, the objection to his competency will be considered as waived, and cannot be made for the first time at the hearing of the cause.
    As a general rule, an executor or administrator who files a bill in chancery, for the recovery of a debt that accrued in the lifetime of the testator or intestate, and which is apparently due to the complainant in his representative character, will not be personally charged with costs, although his bill is dismissed upon the merits.
    But costs in chancery are discretionary even where the suit is brought by an executor or administrator in his representative character. And if the suit is groundless and vexatious, he may be charged with costs personally.
    So, if an executor or administrator brings a suit in chancery, which from papers in his possession he had good reason to believe was unfounded ; or where by ordinary care and diligence, in ascertaining the facts, he would have ascertained the suit to be unfounded, the court, in its discretion, may charge him with costs personally, if the estate in his hands is insufficient to pay such costs.
    A suit is wantonly brought by an executor or administrator, within the meaning of the provision of the revised statutes on that subject, where it is brought by him without probable cause, or where he has not exercised ordinary care and diligence to ascertain whether there was any just cause of action.
    Where the complainant is the holder of two mortgages upon the same premises, and given by the same mortgagor and to the same mortgagee, the practice of the court of chancery does not authorize him to file two separate bills to foreclose such mortgages.
    Where a feme covert dies intestate, either as to her separate estate, or as to choses in action which as a married woman she had no right to dispose of by will, and the husband afterwards dies leaving her assets unadministered, it is not necessary for his personal representatives to take out letters of administration on her estate, to enable them to institute suits for the recovery of such assets. But they may institute such suits in their characters of personal representatives of the husband; averring the fact that he survived his wife.

      1843. November 21.
    This was an appeal by the complainant from a decree of the assistant vice chancellor, dismissing the bill in each of these causes with costs. In October, 1811, H. A. Outhout sold and conveyed the mortgaged premises, as the attorney of Eliza Evertson, to D. Smead, and took back a bond and mortgage for the purchase money, payable with interest, the one half on the 1st of May, 1812, and the residue in one year thereafter. It was shortly afterwards discovered that by mistake this mortgage did not include the whole of the purchase money, and another mortgage was thereupon given by Smead, for the deficiency, upon the same premises, bearing the same date, and payable at the same times as the first. The mortgaged premises, by divers mesne conveyances, came to Ely Beecher, who conveyed them to Mrs. Ellithorp in 1829, previous to her marriage. H. A. Outhout was the agent of the mortgagee, for the purpose of collecting these and other mortgages due to her ; and, as the assistant vice chancellor decided, had received the whole amount due upon these two mortgages previous to her death, which was several years before the conveyance from Beecher to Mrs. Ellithorp. Eliza Evertson, the mortgagee, married S. W. Stephens, who died in 1831, and who survived his wife, although that fact was not stated in the bill in either of these causes. In 1839 the complainant, as the administrator of Stephens who married the mortgagee in December, 1819, filed a separate bill to foreclose each of these mortgages, averring therein that the whole amount of the principal moneys, together with the interest thereon from the 2d of May, 1821, was due and unpaid. Ellithorp and wife, in their answer, averred upon information and belief, that the whole amount of the principal and interest had been paid. They stated the conveyance from Beecher to Mrs. Ellithorp, in 1829, and made profert thereof in the usual form. But neither party produced such conveyance on the hearing ; nor did it appear whether it was a mere quit-claim deed or a conveyance with warranty.

      H. W. Warner, for the appellant.

      Chesselden Ellis, for the respondents.
   The Chancellor.

I think the assistant vice chancellor arrived at the correct conclusion that the whole amount due upon each of the mortgages had been paid previous to the death of the mortgagee. The statement made by Outhout, the agent, in April, 1823, shows that the interest was paid to that time, and that $227,26 of the principal only, was then due. And if the testimony of Beecher is to be credited, as to the date of the $125 receipt, of which there is no doubt, the whole amount was subsequently paid to Outhout, either as the agent of the mortgagee, or as the admitted equitable owner of the bonds and mortgages in right of his own wife, whose property, by mistake, had been conveyed to the mortgagor as the land of Eliza Evertson.

The testimony of Outhout was objected to, on his examination, as an interested witness, but was properly received \ as his interest was balanced in establishing the fact of his agency. And his interest, if any, was against the defendants in proving the actual receipt of the money upon the bonds and mortgages \ as he thereby discharged the mortgaged premises and charged ' himself with the amount, if he should not afterwards be able to show his right to retain the money as between him and the representatives of the mortgagee.

The objection that Beecher was interested is wholly untenable. The complainant did not think proper to call for the production of the deed from Beecher, to show whether he had or had not conveyed with warranty. Where the defendant in his answer, as in this case, states the effect of a deed in his possession, without annexing a copy thereof, but for greater certainty craves leave.to refer to the same when produced, he makes it a part of the answer so far as to entitle the complainant to an order for the production of the deed. But if no such order is obtained, and the deed itself is not produced upon the hearing by either party, only the substance of the deed, as stated in the answer, is to be considered before the court as a part of the pleadings in the suit. It does not therefore appear that Beecher ever had any interest in favor of the parties calling him as a witness. Again, if he had an interest, it was one which might have been released, if any objection to his competency had been made before the proofs were closed. It was therefore too late to object to his competency for the first time at the bearing, even if it had appeared that he had conveyed to Mrs. Ellithorp with warranty. (Town v. Needham, 3 Paige’s Rep. 546.)

The only remaining question is whether the decree was right in charging the complainant personally with the costs of the defence, in case the estate of Stephens, in the hands of the administrator, should be found insufficient for that purpose. As a general rule an executor or administrator who commences a suit, in this court, to recover a debt that accrued in the lifetime of the testator, or intestate, which debt is apparently due to him in his character of personal representative, and can only be recovered by a suit in such representative capacity, is not personally liable to the defendant for costs, although the bill is dismissed upon the merits. But the costs in this court are discretionary, even where the suit must be brought by the executor or administrator as such. And if he brings a groundless or vexatious suit, he may be charged with costs personally. (Executors of Getman v. Beardsley, 2 John. Ch. Rep. 274.) So if he brings a suit which from papers in his own possession he had reason to believe was unfounded, or where by ordinary prudence in ascertaining the facts he -would have knowm to be so, the court in its discretion may charge him personally with the costs, if the estate in his hands is insufficient. Even in a court of law, under the provisions of the revised statutes, the court may award costs against an executor or administrator who wantonly brings a suit, or who brings or conducts it in bad faith. (2 R. S. 616, § 17.) By wantonly bringing a suit, as contradistinguished in this section from bringing it in bad faith, I presume the legislature must have intended the institution of a suit, by an executor .or administrator, without probable cause, or where he had not exercised ordinary care and diligence in ascertaining whether there was any just cause of action.

Here it appears, from the proofs in the cause, that the bonds and mortgages came from the possession of Nitchie; and from the endorsements on the bonds it appeared that Outhout had been the agent of the mortgagee, to collect the monies due on the mortgages. With ordinary diligence, therefore, the complainant might have ascertained, by enquiring of Nitchie and Outhout, the true state of the case, and that there was nothing due to him, as the personal representative of Stephens, on these bonds and mortgages.

Again; the complainant averred in the bill in each suit that the whole amount of the principal secured by the mortgage, and the interest thereon from May, 1821, was still due and unpaid; when, from the endorsements upon the bonds in his own possession, he knew that the whole amount due upon both was less than $250, in May, 1821. In addition to this, he not only unnecessarily, but contrary to the settled practice of this court, which is for the complainant to state all of his junior incumbrancers upon the mortgaged premises in his bill to foreclose his prior mortgage, commenced two separate and distinct foreclosure suits, upon these two mortgages, on one piece of land, given by the same mortgagors to the same mortgagee, and which mortgages at the time of filing these bills belonged to the same person, if there was any thing due upon them.

For these reasons I think the two foreclosure suits were wantonly instituted, within the true intent and meaning of the provision of the revised statutes before referred to, and that the awarding of costs to the defendants was a proper exercise of the discretion of the assistant vice chancellor, under the circumstances proved.

Although the defendants might have demurred to both bills, on the ground that they showed no right in the administrator of the husband of the mortgagee to foreclose these mortgages, it not being stated when Mrs. Stevens died, or that her husband survived her, the evidence shows that the complainant was the proper person to institute the suits, under the provisions of the revised statutes ; the husband having, in fact, survived his wife. For by the last clause of the 29th section of the revised statutes relative to the granting letters testamentary, and of administration, (2 R. S. 75,) it is provided that if the husband shall die, leaving any assets of his wife unadministered, they shall pass to his executors or administrators, as a part of his personal estate ; but shall be liable for her debts to her creditors, in preference to the creditors of the husband. Where the wife dies intestate, therefore, either as to her separate estate or as to her choses in action which she has no right as a feme covert to dispose of .by will, and the husband afterwards dies, leaving her assets which belong to him as her survivor unadministered, it is not necessary for his personal representatives to take out letters of administration on her estate, to enable them to institute suits for the recovery of such assets. But they may institute suits in their character of personal representatives of the husband stating in their declaration, or bill, that he survived his wife.

The decree appealed from must be affirmed, with costs.