text:
    Morgan vs The New-York and Albany Rail Road Company and Coddington.
    A judgment creditor of a corporation, who files a bill to obtain satisfaction of his debt, out of the property and effects of the corporation, after the return of an executionat law unsatisfied, must proceed according to the provisions of the article of the revised statutes relative to proceedings against corporations in equity. And he does not obtain a preference in payment; but the whole property and effects of the corporation must be sequestered for the benefit of all its creditors rateably, except as to preferences created by the laws of the United States, or where liens upon the real estate of the corporation have been obtained by judgment or decree.
    The decree obtained upon a creditor’s bill filed against a corporation, and founded upon the return of an execution unsatisfied, is a decree not only for the benefit of the complainant in such bill, but also for the benefit of all other creditors of the corporation who may come in and establish their debts under such decree; or under an order of the court made previous to such decree, as authorized by the statute.
    A judgment creditor of a corporation, upon the return of his execution unsatisfied, may proceed either by bill or by petition, at his election, under the provisions of the 36th section of the article of the revised statutes relative to proceedings against corporations in equity. But a proceeding by bill, instead of petition, is the most proper course for commencing the suit, against the corporation, where the complainant also intends to proceed against the directors, or stockholders, to charge them personally, in case of a deficiency of the corporate property to pay the debts of the corporation.
    The stockholders of an insolvent corporation, who have not paid the full amount of their stock, are liable to the creditors of the corporation to the extent of what remains unpaid, upon their several shares of such stock; or of so much thereof as may be necessary to supply the deficiency in the assets of the corporation to pay its debts.
    Where the creditor of an insolvent corporation, whose execution against the corporate property has been returned unsatisfied, is ignorant of the names of the stockholders, whose shares of the capital stock have not been paid in full, he may pray for a discovery of their names; and after he has obtained such discovery, may amend his bill and make them parties, for the purpose of charging them personally for the deficiency, to the extent of their liability. Or he may wait until a final decree against the corporation has been made, and its effects have been distributed among the creditors, and may then file a supplemental bill, for the purpose of charging the stockholders personally for the deficiency to the extent of their statutory liability.
    An injunction which is to deprive the officers of a corporation of the control of the whole of the corporate property, cannot be allowed ex parte, upon the certificate of a vice chancellor or injunction master, out of court.
    But upon the appointment of a receiver of all the property and effects of a corporation, for the purpose of closing up its affairs, it is proper to restrain its directors and officers from collecting debts and demands due to the corporation, and from paying out, assigning or delivering any of its property, money ■or effects to any other person, or from encumbering such property.
    1843. May 2.
    This was an appeal from an order of the vice chancellor of the first circuit, appointing a receiver of so much of the property and effects of the New-York and Albany Rail Road Company as might be necessary to satisfy the complainant’s debt and costs. The complainant was a judgment creditor of the corporation, and his execution had been issued to the sheriff of the city and county of New-York, where the office or place of business of the company was kept, and such execution had been returned unsatisfied. The bill was in the usual form of creditors’ bills, but it also contained an allegation that there were many stockholders <of the company who had not paid up their stock in full, from whom balances still remained due ; which balances the complainant insisted should be applied to the payment of his judgment. He also alleged that he had applied to the defendant Coddington, the president of the company, for a list of such stockholders, but he could not obtain the same, and therefore was not able to set forth the names of such stockholders in his bill. And he prayed a discovery, from the defendant Coddington, of the names of all the stockholders of the company who had not paid up in full for their stock, and the amount of the deficiency due thereon.

      J. V. L. Pruyn, for the appellants.
    D. D. Field, for the respondent.
   The Chancellor.

The counsel for the complainant is in an error in supposing that this is a case in which a judgment creditor can obtain a preference in payment, out of the effects of an insolvent corporation, under the provisions of the revised statutes. The word defendant in the thirty-eighth section of the title relative to the court of chancery, (2 R. S. 173,) would undoubtedly include a corporation as well as an individual, if the rights of creditors as against corporations, upon the return of an execution unsatisfied, were not otherwise provided for in the revised statutes. But the legislature, in the act of April, 1825, to prevent fraudulent bankruptcies by incorporated companies, to facilitate proceedings against them, and for other purposes, (Laws of 1825, p. 449, § 5.,) adopted the principle, as to insolvent corporations, that equality among creditors is equity ; and directed that upon the return of an execution unsatisfied, the property and effects of the corporation should be sequestered and distributed equally, and in a just proportion, among all the creditors of the company. And this provision of the act of 1825 was re-enacted, substantially in the same form, in the thirty-sixth and thirty-seventh sections of the article of the revised statutes relative to proceedings against corporations in equity. (2 R. S. 463.) The manner in which the effects of the corporation are to be distributed, after a decree in the suit, is the same as is prescribed by the seventy-ninth section of the article relative to the voluntary dissolution of incorporations, (2 R. S. 471 ;) that is, by giving no preferences, except such as are created by the laws of the United States, and such as have been acquired by the docketing of a judgment, or decree, so as to create a lien upon the real estate of the corporation.

The final decree, which is to be obtained upon a bill filed by a judgment creditor of the corporation, under this thirty-sixth section of the article relative to proceedings against corporations in equity, is therefore a decree not only for the benefit of the complainant in the suit, but also for the benefit of all other creditors of the corporation who may come in and prove their debts, under such decree, or under an order of the court made previous to such decree, as authorized by the fifty-sixth section of the same title. (2 R. S. 466.) And the order appealed from should have extended the receivership to all the property and effects of the corporation, instead of limiting it to so much of such,property and effects as would be sufficient to pay the debt and costs of the complainant merely.

In all other respects, however, I do not perceive why the order appealed from is not a good appointment of a receiver, for the purpose of sequestering the property of the corporation, under this thirty-sixth section of the article relative,to proceedings against corporations in equity. The hill, it is true, contains some allegations which were not necessary to lie stated therein under this section ; and which are only required by the 189th rule of this court. But the provisions of that rule, although they were only intended to cover the case of an ordinary creditor’s bill against natural persons, are broad enough to reach -the case of a bill filed by a creditor of a corporation, under this 36th section, after the return of an execution unsatisfied. And there is nothing in that, or "in the three succeeding rules, which is inapplicable to a creditor’s bill filed against a corporation, after the return of an execution unsatisfied, where the final decree upon such bill is to be for the benefit of other creditors of the corporation, as well as of the complainant.

The word petition only is used in the 36th section. But every bill in chancery is in fact a petition to the court for relief. In the recent case of Judson v. The Rossie Galena Company and others, (9 Paige’s Rep. 598,) I came to the conclusion that a suit might properly be commenced against a corporation, under that section of the revised statutes, by bill as well as by petition ; and that a proceeding by bill is the most proper mode of commencing the suit, where the complainant intends to proceed against the directors or stockholders of the corporation, to charge them personally,in case the corporate property and effects should be found to be insufficient to pay all of the debts and liabilities of the corporation. Indeed the 45th section of that article of the revised statutes expressly recognizes the filing of a bill, against the directors or stockholders, as well as against the corporation, whenever the creditor whose execution has been returned unsatisfied seeks to charge such directors, or stockholders, on account of any liability created by law.

In the case under consideration it is expressly charged, in the bill, that there are stockholders of the corporation who have not paid in the full amount of their stock, but whose names are unknown to the complainant; and he prays for a discovery of the names of such stockholders and the amount due upon their stock.

The 5th section of the title of the revised statutes relative to the powers, privileges, and liabilities of corporations, (1 R. S. 600,) renders such stockholders liable to the creditors of the corporation, to the extent of what remains unpaid upon their respective shares of the capital stock of the company, or of such proportions thereof as may be required to satisfy the debts of the corporation. The complainant, therefore, when he shall have obtained a-discovery of the names of the stockholders who have not paid in the whole nominal amount of their respective shares of the stock of the corporation, as fixed by the charter of the company, will have the right to amend his bill; for the purpose of making them parties, to enforce their liability for the deficiency, to the extent, prescribed by the statute, if the property and effects of the corporation shall not be sufficient to pay and discharge all its debts. Or he may wait until a final decree has been rendered against the corporation, and the corporate effects have been distributed according to law, and may then file a supplemental bill, against such stockholders, to compel them to pay in the amount due upon their respective shares of the capital stock, or so much thereof as may be necessary to satisfy the residue of the debts of the company. (2 R. S. 465, § 9.)

9.) In this case the order for the appointment of a receiver was properly granted; but it was erroneous not to extend the receivership to all the corporate property and effects. It does not appear, however, from any of the papers which were before the vice chancellor, that the company owed any other debts except the complainant’s judgment. The appellants cannot complain, therefore, that the whole property has not been taken from the corporation and placed in the hands of a receiver. The order appealed from must be affirmed with costs.

It was suggested upon the argument that an injunction had been granted, by which the officers of the corporation were deprived of the control of the whole property. Such an injunction should not be issued ex parte, on the certificate of a vice chancellor or injunction master out of court. But upon the appointment of a receiver of all the property and effects of a corporation, for the purpose of closing up its affairs, it is proper that the court should make it a part of the order, that the directors and officers of the corporation be restrained from collecting any debts or demands due to the company, and from paying out, assigning, or delivering any of the property, moneys, or effects of the corporation to any other person, and from incumbering the same. The affirmance of the order, therefore, is to be without prejudice to the right of either party to apply, to the vice chancellor, to have the receivership extended to all the property and effects of the corporation ; and to have an injunction granted in the proper form, if it has not already been regularly issued.

Order accordingly.


source: Caselaw Access Project

author: The Chancellor

license: Public Domain

text:
    Pratt vs. Babcock & Dixon.
    1843. May 3.
    Where a defendant in a creditor’s suit has been discharged under the bankrupt act, subsequent to the commencement of the suit, the complainant will he permitted to dismiss his bill as to such defendant without costs.
    This was an application by the complainant for leave to dismiss his bill as to Babcock, one of the defendants, who had been discharged under the bankrupt act subsequent to the commencement of this suit.

      O. Mead, for the complainant,

      H. Sheldon, for the defendant.
   The Chancellor

said that where a defendant was a proper party, as one of the judgment debtors, at the time of the filing of the bill, and had subsequently been discharged, it was a matter of course to permit the complainant to dismiss his bill as to sucb pai'ty, if the application was made within a reasonable time after the complainant had notice of the discharge under the bankrupt act; unless the defendant would stipulate to waive the benefit of his discharge.

Order accordingly.


text:
    Hall, executrix, &c. vs. Bamber and others.
    1843. May 16.
    Where the complainant is the owner of two mortgages upon the same premises, and the whole of the junior mortgage has become due and payable, and the first mortgage, which is payable by instalments, has not all become due, the complainant is entitled to a decree to sell sufficient of the mortgaged premises to pay the whole of both mortgages, unless the defendant, previous to the sale, pays the last mortgage and the costs of foreclosure, together with the instalments which have become due upon the senior mortgage-
    The bill in this case was filed to foreclose two mortgages upon the same premises, given at different times. The senior mortgage was payable by instalments, and only a part thereof had become due ; but the whole of the junior mortgage had become due and payable.

      H. Adams, for the complainant,
    asked for a sale of the whole of the mortgaged premises.
   The Chancellor

said, that if a sale should be found to be necessary, the property ought not to be sold subject to the incumbrance of any part of the prior mortgage ; the whole amount of which mortgage, whether then payable or not, must first be satisfied out of the proceeds of the sale of the premises. He therefore directed a decree to be entered that the master sell so much of the mortgaged premises as might be necessary to satisfy the whole of both mortgages and the costs of foreclosure and sale ; unless the defendants, before the sale, should pay the amount of the last mortgage and costs, and of the instalment which had become due and payable on the first mortgage ; with the usual directions as to subsequent instalments, if such payment was made before the sale.


text:
    Gee vs. Southworth.
    1843. May 17.
    Where an injunction bill is tiled to stay the collection of a judgment, upon the ground that it is usurious, the court will not allow to the complainant the favor of substituting a bond with sureties, instead of bringing the money into court, upon granting the injunction ; unless he offers in his bill to pay the amount due for principal and legal interest, and waive the forfeiture.
    This was an application by the complainant for an injunction to stay the collection of a judgment at law, upon the ground of usury ; and for liberty to give a bond with sureties, instead of bringing the amount of the judgment into court, as directed by the statute,

      R. J. Hilton, for the complainant.
   The Chancellor

said, that the statute having directed the money to be brought into court, upon the granting of an injunction after judgment, permitting a bond with sureties to°be substituted was out of the usual course of proceedings, and was a great favor to the complainant; which favor ought not to be granted, unless he was willing to do equity, by waiving the forfeiture in his bill, and permitting the defendant to collect the amount justly due for principal and legal interest; that if the complainant insisted upon the forfeiture he must bring the money into court, to abide the event of the suit.

Order accordingly.


author: The Chancellor.

text:
    Carroll vs. Sand and others.
    1843. July 18.
    Where an injunction to stay proceedings in a suit at law, before issue joined, is granted ex parte, by an injunction master or by a vice chancellor out of court, it must contain a provision that the defendant shall be at liberty to proceed to judgment; and if the officer upon whose certificate the order for the injunction is entered does not direct such a provision to be inserted, the injunction will be set aside for irregularity.
    The master who takes a bond with sureties, upon the allowance of an injunction, in the cases provided for in the thirty-fist rule of the court of chancery, must require the sureties to justify.
    The provisions of the 172d rule of the court of chancery apply to all cases in which an officer of the court is directed to approve of sureties; either under a special order of the court or by virtue of any of its general rules.
    This was an appeal from an order or decision of the vice chancellor of the first circuit refusing to set aside, modify, or dissolve an injunction ; and ordering the defendant Sand, and his attorney in an ejectment suit against J. M. Brown, to vacate the judgment entered in such suit, or that an attachment issue against them. The bill in this cause was sworn to on the 18th of July, 1842. On the 20th of the same month it was filed, and an injunction was obtained on a certificate of the vice chancellor, acting as an injunction master, restraining all proceedings on the part of Sand to obtain possession of a lot of land in the city of New-York; and restraining him from exercising any authority or control over the lot, or intermeddling, or interfering with the same, and from receiving or collecting the rents thereof, or exercising any acts of ownership in relation to the lot. But the day before the filing of the bill and the issuing of the injunction, Sand had commenced an action of ejectment against Brown, who was not made a party to the suit in chancery, to obtain possession of the premises. And after the service of the injunction Sand proceeded in that suit to judgment, and issued an execution for his costs only, but did not take out any other execution. Nothing was stated in the bill as to the commencement of this ejectment suit; and the injunction was granted by the vice chancellor without knowing that any such suit had been commenced. Another objection to the regularity of the injunction was that the sureties in the bond, which was given upon the allowance of the injunction, did not justify, as required by the 172d rule.

      L. H. Sandford, for the appellants.

      W. C. Russell, for the respondent.
   The Chancellor.

I think the vice chancellor erred in sustaining this injunction, as a valid injunction to restrain the proceedings in the ejectment suit against Brown, which suit was commenced previous to the filing of the bill and entering the order for the injunction. If the complainant knew of the ejectment suit, which was commenced on the 19th of July, at the time when she filed her bill in this cause, the next day, she should, before filing such bill, have amended the same, by stating the fact of the commencement of the ejectment suit, and by making the defendant in the suit at law a party. And she should also have applied to the vice chancellor to modify his certificate for an injunction, by directing the insertion of the provision required by the 33d rule, in such cases, that the defendant should be at liberty to proceed to judgment at law in the ejectment suit notwithstanding the injunction. It is true the solicitors of the complainant state that they were not aware of the commencement of the ejectment suit at the time the injunction was allowed; but that is not sufficient to establish the fact that their client was ignorant of the fact at that time. Even if she was ignorant of the fact, that would not justify the extension of this injunction to restrain the plaintiff, in the ejectment suit, from proceeding to judgment therein, contrary to the settled practice of the court. For this reason, the injunction, so far as it is supposed to operate to stay the proceedings in the ejectment suit, or the filing of a suggestion and proceeding to ascertain the mesne profits, under the statute, must be set aside or modified. And as Brown is not a party to the suit, Sand cannot be restrained from collecting his costs and mesne profits, so far as Brown is concerned. But if the right to such mesne profits are in controversy between the parties in the present cause, this may be a proper case to direct them to be paid into court, to abide the event of the suit, when they shall have been ascertained and collected by the sheriff.

I think the vice chancellor also erred in supposing that the injunction master was not bound to require the sureties in the bond, given upon the allowance of the injunction, under the last clause of the 31st rule, to justify as in other cases. The object of allowing the injunction master to dispense with sureties in certain cases, was to enable the complainant to give his own bond, where his personal responsibility, in the opinion of the officer allowing the injunction, would, in the class of cases there specified, afford ample protection to the defendant. In other words, that the master might accept a bond without sureties, where the complainant himself was worth more than double the amount of the damage which the defendant would probably sustain, by reason of the injunction, if the complainant' should fail in sustaining it. But where the officer allowing the injunction, in the class of cases mentioned in that clause of the 31st rule, is not satisfied with the sufficiency of the complainant’s own bond, and thinks that one or more sureties should join in the same, he should require such sureties to justify, in double the amount of the penalty of the bond which he may think necessary to cover the damage the defendant may sustain by reason of the injunction. The provisions of the 172d rule are general, and apply to all cases in which an officer of the court is required to decide upon the sufficiency of sureties, either under a special order of the court, or by virtue of any of its general rules. The whole of this injunction must be set aside for irregularity, therefore, unless the sureties named in the bond in this case justify, before the vice chancellor, within twenty days, or a new bond is filed with sureties who shall thus justify. And in case of such justification the injunction is still to be modified as before directed.

The proceeding to judgment in the ejectment suit against Brown, so as to place the defendant Sand in a situation to take possession of the premises whenever, or as soon as, the injunction was dissolved, does not appear to have been improper under the circumstances of this case, and is not shown to have been any injury whatever to the complainant. And Brown, who is not a party to this suit, is not entitled to the interference of this court to protect him against a mere technical violation of an injunction which had been irregularly issued. The part of the order which directs the appellants to stipulate to vacate the judgment, and pay the costs, or that an attachment issue against them, must therefore be reversed, and the motion of the complainant denied, with costs, to be paid to the appellants Sand and Turney.

Order accordingly.


text:
    Van Slyke, administrator, &c. vs. Schmeck.
    1843. July 18.
    Technical defects in an appeal bond, upon an appeal to the chancellor from an order or decree of a surrogate, are amendable by the appellate court, under the provisions of the revised statutes on that subject.
    And a formal defect in the petition of appeal filed in the court of chancery ( upon an appeal from a surrogate, may also be amended, upon terms.
    But if the appeal bond is not approved by the surrogate within the time allowIowed by law for appealing from his decision, the appeal is irregular and must be dismissed; and the appellate court has no power to remedy such a defect.
    This was an application to dismiss an appeal from the sentence and decree of the surrogate of Niagara county, for the payment to the respondent, of $1054,40 and interest. The decree appealed from was entered on the 30th of December, 1842, and on the 28th of January thereafter the appellant filed in the office of the surrogate an appeal, together with a bond to the respondent in the penalty of $100, with two sureties, whose affidavits were annexed, stating that they were householders, and were each worth $200 over and above all just debts and responsibilities. But the bond was not approved by the surrogate; who was absent from home at the time the bond was left at his office, and who did not return until the evening of that day. When he was applied to to approve the bond, about a month afterwards, he declined to do so ; not only on the ground that it was too late, but also because he did not deem the sureties responsible for the amount required. The bond was also defective in form ; the condition thereof being that the appellant should diligently prosecute the appeal to effect and pay all such costs as should be adjuded against her in the event of her failure to obtain a reversal of the decision appealed from; instead of a condition to prosecute her appeal to effect, and to pay “ all costs that should be adjudged against her by the court of chancery,” as required by the 108th section of the title of the revised statutes relative to writs of error and appeals. The petition of appeal filed with the register was also defective in form. For it did not show who were intended to be made parties to the same, as respondents in the appeal.

      J. L. Curtenius, for the appellant.

      H. Gardner, for the respondent.
   The Chancellor.

If no other difficulty existed in this case than the technical defect in the condition of the bond, that could be remedied by allowing the appellant to amend, under the provisions of the revised statutes on that subject. (2 R. S. 556, § 34. Potter v. Baker, & Paige’s Rep. 290.) The formal defect in the petition of appeal is also one which this court would permit the appellant to amend, upon payment of costs, &c.

But the statute declares that the appeal shall not be effectual until a bond shall be filed with the surrogate, with two sufficient sureties, to be approved by him. (2 R. S. 610, § 108.) If the appeal bond, therefore, is not approved by the surrogate within the time allowed by law for appealing, the appeal is irregular and must be dismissed j as this court has no power to remedy such a defect. Here the bond was not approved by the surrogate 5 and he states in his affidavit that he did not consider the sureties responsible for the amount required. Their affidavit of justification was not equivalent to an approval of the sureties by the surrogate. For if he. doübted their responsibility, it was his duty to examine them on oath as to the particulars of their property, where it was situated, &c. and as to the nature and amount of their debts and responsibilities, before he approved the appeal bond. A bond properly approved not having been filed with the surrogate within the thirty days allowed by law for appealing, the appeal filed with him was irregular and must be dismissed, with costs.


text:
    Renwick vs. Cooper, administrator, &c. Cooper, administrator, &c. vs. Renwick and others.
    Proceedings to revive an appeal to the chancellor from the sentence or decree of a surrogate must be in the same form, substantially, as proceedings to revive a suit upon an appeal to the chancellor from an order or decree of a vice chancellor, in a suit commenced in the court of chancery.
    Where two persons having separate and distinct interests in the estate of the decedent, appealed from the sentence or decree of the surrogate upon the settlement of the accounts of the administrator, and one of the appellants assigned all her interest in the estate to other persons and died before any further proceedings were had upon the appeal, and the other appellant, being a female, afterwards married, and neither the surviving appellant and her husband, nor the assignees of the deceased appellant, caused the proceedings upon the appeal to be revived within eighty days from the time of such abatement of the suit, the appellate court, upon the application of the respondent, made an order that the assignees, or the surviving appellant and her husband, cause the proceedings upon the appeal to be revived, in the names of the parties then interested therein, within a specified time, or that the appeal be dismissed, with costs to be paid by the surviving appellant.
    Where a respondent, in an appeal from the decision of a surrogate, assigns his interest in the subject matter of the appeal, and afterwards dies, the proceedings must be revived against the assignees of such deceased respondent.
    1843. August 1.
    And where the appellant had not filed his petition of appeal before the abatement of the proceedings, by such assignment and death of the respondent, the appellant should state in his petition of appeal the fact of such assignment and death, and the names of the persons who have become interested in the appeal in consequence thereof, and should insert a prayer therein that they may answer such petition of appeal.
    And upon the filing of such petition of appeal, the appellant is entitled to the usual order that the persons thus made respondents therein put in their answer to the same within twenty days, after service of a copy of such petition of appeal and notice of such order, in the manner prescribed in the 118th rule of the court of chancery, or that the appellant be heard ex parte.
    But if any of such respondents are infants, a guardian ad litem must be appointed, and the order to answer must be varied accordingly, as directed by the 118th rule.
    This was an application by J. T. Cooper to dismiss the appeal in the first entitled cause, and to revive the proceedings upon the last appeal, or for such other order as might be proper under the following circumstances. Olivia E. Renwick was the administratrix, and J. T. Cooper the administrator of J. Renwick deceased, and both were cited to account before the surrogate of Rensselaer county, and the final sentence and decree of the surrogate was made in March, 1830. From a part of that decree Jane Renwick, the mother of the decedent, and Olivia E. Renwick, his widow, who were entitled to distributive shares of his estate, appealed to the chancellor; and J. T. Cooper, the administrator, appealed from another part of the decree. The first named appellants filed their petition of appeal, but the persons who were intended to be made respondents therein were not named. Before any further proceedings were had on either appeal Jane Renwick died, having in her lifetime assigned all her property to James and William Renwick as trustees for herself and children. And Olivia E. Renwick, the other appellant in the first appeal, and one of the respondents in the last, intermarried with Orrin Goodrich.
    J. Van Buren, for J. T. Cooper.

      J. Rhoades, for Mrs. Goodrich.
   The Chancellor.

In the recent case of Jauncey v. Rutherford, (9 Paige’s Rep. 273,) it was decided that the proceedings to revive upon an appeal, to the chancellor, from the sentence or decree of a surrogate, were to he substantially in the same form as the proceedings to revive a suit upon an appeal from the order or decree of a vice chancellor, in a suit commenced in chancery. Here one of the appellants has died, after assigning all her interest in the subject matter of the appeal to trustees ; and the other being a feme sole at the time of the appeal, has subsequently intermarried with one who is not a party to the appeal. As neither the survivor and her husband, nor the assignees of the deceased appellant, have caused the proceedings to be revived within the eighty days mentioned in the statute, (2 R. S. 185, § 124,) this appears to be a proper case to require the surviving appellant and her husband, and those who represent the deceased appellant, or one or the other of them, to cause the proceedings to be revived, in the names of the parties now interested in the subject matter of the appeal, within a limited time, or that such appeal be dismissed, with costs to be paid by the surviving appellant. The English practice appears to be, where the suit abates before decree, by the death of a sole complainant, or of all the complainants where there was more than one, to require the representative to revive the suit within a limited time, or that the bill be dismissed without costs. (Chowick v. Dimes, 3 Beav. Rep. 290. Canham v. Vincent, 6 Lond. Jur. 206.) And such was the effect of the decision of Chancellor Sanford in the case of Pells v. Coon, (Hopk. Rep. 450.) But by the revised statutes, this court, in such cases, is authorized either to order the revival of the suit in the names of the representatives of the deceased complainant, where the defendant has any interest in having it revived, or to direct a dismissal of the bill with costs, where the defendant merely wishes to get the suit out of court and to obtain satisfaction for the costs already accrued. (2 R. S. 185, § 119.) In the present case the respondents in the first appeal have no interest in having the proceedings upon that appeal revived, if the surviving appellant and her husband, or those who have succeeded to the rights of the deceased appellant, do not think proper to revive and prosecute the appeal for their own benefit. The proper course, therefore, is to dismiss that appeal with costs, to be paid by the surviving appellant, if she and her husband, or those who now represent the interest of the deceased appellant, do not cause the appeal to be revived within sixty days after the entry of the order upon this decision.

In the case of the cross appeal, by the petitioner Cooper, it appears that the respondent, Jane Renwick, assigned all her property to trustees previous to her death. As they have succeeded to her interest, the appeal should be revived against them, as the parties now in interest; and the case should then proceed against them, and against Mrs. Goodrich and her husband, and the other surviving respondents if there are any others. An order must therefore be entered accordingly. And in this case, as the appellant ‘does hot appear to have filed his petition of appeal, the proper course for him is now to file such a petition, stating, among other things, the death of one of the respondents and that the trustees have succeeded to her rights, and the intermarriage of the respondent Olivia E. Renwick pending the appeal, and praying that she and her husband and the said trustees, and such other persons interested in the decision appealed from, as were intended to be made parties to the appeal, (naming them,), may answer such petition of appeal, &c. And upon filing such petition of appeal the usual order may be entered, that the respondents therein put in their answers to the same within twenty days, after service of a copy of the petition of appeal and notice of the order in the manner prescribed by the 118th rule of this court, or that the appellant be heard ex parte | unless some of the respondents are infants, in which case a guardian ad litem must be appointed, and the order to answer must be varied accordingly.

The better course, in this case, on the part of the appellant Cooper, would have been to have combined the petilion to revive and the petition of appeal, and the prayer to answer the same,in one petition ; in analogy to a bill of revivor and supplement, where the original bill had not been answered previous to the abatement of the suit. But as that has not been done in this cash, a petition of appeal must still be filed, stating therein the order to revive which has been made upon the present petition. And if the appellant. succeeds in his appeal, and recovers costs thereon, he will only be entitled to such costs as he would have received if the petition of appeal and the petition to revive had both been embraced in the same petition.


text:
    Boynton vs. Jackway and others.
    1843. August 1.
    The power of the court of chancery, to give possession to the purchaser of real estate, at a master’s sale, by a writ of assistance, only extends to those persons who are parties to the foreclosure suit, or who have come into possession of the premises subsequent to the commencement of the suit, under, or with the assent of, those who are such parties.
    A tenant of the mortgagor, or a person who has gone into possession of the mortgaged premises under the mortgagor subsequent to the mortgage, but before the commencement of the foreclosure suit, must be made a party to the suit to enable the court to turn him out of possession, by a writ of assistance, upon the application of the purchaser under the decree; although the tenant, or person so in possession, has no defence, and might bo turned out of possession by an ejectment suit brought against him by the purchaser.
    This was an appeal from a decision of the vice chancellor of the seventh circuit, denying the application of a purchaser at a master’s sale for a writ of assistance, to put him in possession of the mortgaged premises. The writ of assistance was asked against the mortgagor, who was a party to the suit, and against his two sons who were not parties, but who were in the same family with him upon the premises. The premises formerly belonged to the father of the mortgagor, the grandfather of the'other respondents, who .conveyed fifty acres thereof to IX S. Jackway, the mortgagor, in 1814. In 1829 the latter went into possession of the house on the premises; and in 1833 his father altered the deed of the fifty acres, so as to make it embrace one hundred and fifty acres of the premises. In 1834, D. S. Jackway mortgaged the whole farm, embracing about 180 acres, to secure the payment of about $624 and interest, which mortgage was foreclosed in this suit. At the time of the commencement of the foreclosure suit, in 1839, the mortgagor and his two sons were living together in the house upon the premises ; and, as they all swore, the sons were tenants of the grandfather, and occupied the farm upon shares under him, from the spring of 1837. They also claimed that the mortgagor and his father had lost all title to the farm, which was worth about $9000, under a sheriff’s sale, previous to 1819, upon a judgment against both, recovered in 1816, upon which sale G. Clark purchased the farm for $38 ; under which sale the sons of the mortgagor claimed to have derived title to the premises, subsequent to the master’s sale in the present case.

      W. L. F. Warren, for the appellant.

      T. R. Strong, for the respondent.
   The Chancellor.

As the property was bid off by Clark previous to April, 1819, for a mere nominal sum, and the premises have been held by W. Jaques and his son ever since, without any claim of title under the sheriff’s deed for more than twenty years, there can be very little doubt that the attempt to overreach the mortgage by purchasing in the title under the sheriff’s sale, is a fraud upon the purchaser under the master’s sale in this suit. The fact that the sons redeemed the premises when the same had been sold under a subsequent judgment against their father, is also inconsistent with the supposition that they believed he had no interest in the premises, either possessory or otherwise, in 1842. But as the father and sons all swear that the sons were in possession of the premises at the time of the commencement of the foreclosure suit, they cannot be turned out of the possession upon a writ of assistance to be issued in this suit.

The power of this court to give possession to the purchaser at the master’s sale, by a summary proceeding, only extends to those persons who are parties to the foreclosure suit, or persons who have come into possession under or with the assent of those who are parties, subsequent to the commencement of the suit. It makes no difference, therefore, whether these two respondents were, at the commencement of the foreclosure suit, tenants of the premises under their father or under their grandfather. As to the 150 acres embraced in the deed which was altered in 1833, there can be no doubt that the mortgagees, and those claiming under them, would be entitled to the possession of that part of the premises, not only as against the mortgagor, but also as against the grantor in that deed and his grandsons, who swear they went into possession under him since the giving of that deed and the- execution of the mortgage. For if, as is alleged, the grantor in the deed of the 150 acres was entitled to the possession for life, under an agreement with the person who claimed title under the sheriff’s deed, he transferred his life interest to his son, in the 150 acres, by the alteration of the deed in 1833 and he was merely tenant at will to the son subsequent to that time. And if he has put his grandsons in possession, with the permission of the mortgagor, either express or implied, subsequent to the mortgage, they cannot be permitted, in an ejectment suit brought by the purchaser at the master’s sale, to set up an adverse title acquired by them subsequent to the mortgage, to prevent his enjoying the possession of the premises at least during the lifetime of their grandfather. But to enable this court to divest them of that possession, by a writ of assistance in this suit, the complainant should have made them parties to the suit, as persons who had gone into possession under the mortgagor, or with his assent, subsequent to the mortgage. The vice chancellor was therefore right in refusing the writ of assistance as to the two sons of the mortgagor who were not parties to the suit.

I am not satisfied, however, that the mortgagor was not in the actual possession, of some part of the house at least, at the time of the commencement of the foreclosure suit in February, 1839. It is not pretended that the mortgagor rented the whole house to them, so as to deprive him of the right to remain there with his family ; and as the house belonged to him, and not to his father, under the deed of the 150 acres, there does not appear to be any ground for supposing he would relinquish the possession in favor of his father or of those who were to work the land on shares. Indeed I can see no good reason for relinquishing the possession of any part of the 150 acres to the tenants of his father, unless his object was to defraud the mortgagees or some other creditors. And the mortgagor does not swear explicitly to the fact that he ever agreed, either with his father or with his sons, to relinquish the exclusive possession of any part of the premises to any of them.

The order appealed from, so for as relates to a writ of assistance against the mortgagor and to the costs of opposing the application, must be reversed, so as to enable the purchaser at the master’s sale to divest the mortgagor of his possession; if the purchaser does not wish to join him as a defendant in the ejectment suit which he may think proper to bring against his sons to recover the possession of the premises. The order must direct a writ of assistance to issue as to him, but not as to the sons, and neither party is to have costs as against the other, either upon the original application or upon this appeal.

Order accordingly.


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    Kellogg vs. Conner and others.
    1843. August 1.
    Where the owner of the equity of redemption, in lands subject to apl'ior mortgage, again mortgaged them to a trustee in trust to secure the payment of -debts due to different persons, and afterwards assigned the equity of redemption, in trust, for the payment of his debts, giving preferences to debts not provided for in the second mortgage; and the premises were afterwards sold under a decree in a foreclosure suit upon the first mortgage, and one of the creditors whose debt was provided for in the second mortgage, afterwards purchased the equity of redemption from the assignees, and redeemed the premises from the master’s sale, under the act of May, 1837, concerning the sale of real estate by mortgage; Held, that as the purchaser of the equity of redemption from the assignees was under no legal or even equitable obligation to redeem for the benefit of his co-cestui que trusts in the second mortgage, his redemption of the mortgaged premises was neither at law nor in equity a redemption for their benefit.

      Held further, that if the trustee to whom the second mortgage was given had redeemed, his redemption would, in equity, have been a redemption for the benefit of himself and all the other creditors whose debts were provided for in that mortgage.

      Held also, that a subsequent offer of the second mortgagee to redeem from the purchaser of the equity of redemption, who had previously redeemed, gave no rights to the second mortgagee; as the amendatory act of April, 1838, gave to the redeeming assignee of the equity of redemption all the title of the original purchaser at the master’s sale, without making any provision for a redemption from him by a prior mortgagee, or judgment creditor.
    This was an application on the part of the complainant for a new trial of an issue awarded by this court.
    Jacob Conner was the owner of certain premises, subject to two mortgages thereon to Ida Thorn, previous to November, 1837. On the first of November, 1837, he mortgaged the premises again to Josiah Kellogg, the,complainant, in trust, to secure $550 due to the mortgagee, $180 to H. Loveland, $200 to J. Mundell, $100 to the defendant John Naylor, $141,62 to G. Chaun, and $107,12 to W. M. Udall. The administrator of Ida Thorn foreclosed the two first mortgages upon the premises and obtained a decree of sale, in April, 1838. On the 8th of February, 1838, Conner assigned the equity of redemption in the mortgaged premises to Bergen and Hegeman, together with all his other property, in trust for the payment of his debts j giving preference in payment to debts not secured by the mortgage to Kellogg. In June, 1838, the premises were sold under the decree of foreclosure and bid in by Hatheway for $1950. And Naylor having been erroneously advised by his counsel, who probably had not seen the amendatory act of April, 1838, that Kellogg, the mortgagee and trustee, could not redeem the premises under the act of May, 1837, concerning the sale of real estate by mortgage, purchased the equity of redemption, from the assignees of Conner, for the sum of $3800 ; and then, as the owner of such equity of redemption, Naylor, in May, 1839, redeemed the premises from the sale made by the master in June, 1838 ; and the certificate of the master was duly executed and filed as directed by the statute.
    The complainant alleged in his bill that Naylor paidthe sum of $2120,63, the redemption money, to the master, and redeemed the mortgaged premises to and for the use, benefit, and behoof of himself and the complainant and of all the other persons mentioned in the condition of the bond and mortgage to Kellogg. This allegation in the bill being put in issue by the answer of the defendants, the issue was awarded as to the fact thus alleged; which issue was decided in favor of the defendants.

      S. G. Huntington, for the complainant.

      J. Dikeman, Jun. for the defendants.
   The Chancellor.

Naylor was not the trustee for Kellogg, nor was he under any legal or equitable obligation to redeem the mortgaged premises for the benefit of Kellogg, although Naylor was one of the cestui que trusts for whose benefit Kellogg took the junior mortgage upon the premises. If Kellogg the trustee had redeemed by virtue of the trust mortgage, it would undoubtedly have been, in equity, a redemption for the benefit of all the cestui que trusts, in proportion to their respective debts, after paying the redemption money and interest; as it would have been inconsistent with his trust to redeem for his own benefit exclusively. Saylor, however, as the owner of the equity of redemption for which he had agreed to pay the assignees $3800, was under no obligation to protect the rights of the prior mortgagee ; as he had no duty to perform towards any of the creditors of Conner whose debts were secured by the mortgage given to the complainant.

The only question for the jury to determine, therefore was, whether Saylor did in fact redeem, either by agreement or otherwise, for the use and benefit of the complainant and the other creditors whose debts were secured by that mortgage. And upon that point I think the jury came to the correct conclusion, that he did not.

The disposition of the purchase money of the equity of redemption which Saylor agreed to pay to the assignees of Conner, was a matter with which the complainant had no concern, as no part of that money belonged to him. It belonged to the creditors of Conner who were preferred in the assignment $ and if the assignees have misapplied it, in paying the debts of Saylor and others which were not preferred, the preferred creditors will have the right to call the assignees to account for such a misapplication of the proceeds of their sale of the equity of redemption to Saylor 1 but it cannot give Kellogg the benefit of Saylor’s redemption.

Neither could Kellogg’s subsequent offer to redeem make Saylor’s previous redemption enure to his benefit. For, by some inadvertence, the 5th section of the amendatory act of April, 1838, gives the redeeming assignee of the equity of redemption all the title of the original purchaser at the master’s sale, without making any provision for a redemption from him by a prior mortgagee, or judgment creditor.

The motion for a new trial must therefore be denied with costs.


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    Henry vs. Henry & Tompkins.
    1843. August 2.
    Where one of the members of the firm had assumed the payment o£ all the copartnership debts, and a creditor’s bill was afterwards filed against him and his copartner upon a judgment recovered against both for copartnership debt; Held, that the creditor could not obtain a receiver of the separate property only of the copartner who was merely in the situation of a surety for the payment of the debt, without showing some excuse for not extending the receivership to the copartnership effects, and to the separate property of the defendant who was the principal debtor.
    This was an application for the appointment of a receiver, upon a creditor’s bill, of the property of the defendant Tompkins only. The counsel for Tompkins showed that upon the dissolution of the copartnership between him and the other defendant the latter had assumed the payment of this and the other copartnership debts. And he insisted that the complainant should have applied to extend the receivership to the copartnership effects, and to the separate property of the other debtor, as well as to the property of Tompkins who stood merely in the situation of a surety.

      J. Howe, for the complainant.
    D. Wright, for the defendant, Tompkins.
   The Chancellor

decided that it was the duty of the complainant to proceed against the copartnership effects, and the separate property of the defendant who was the real debtor ; so that the same might be delivered over to the receiver for the protection and indemnity of the other defendant, who was in the situation of a surety for his co-defendant for the payment of his debt. And as no good reason was shown for not applying for a receiver of the property of the other defendant, and of the copartnership effects, the application must stand over to enable the complainant to give notice of the application to the other defendant.


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    Russell vs. Kinney & Van Hook.
    1843. August 2.
    Where a decree is made by the assistant vice chancellor, and is entered with the clerk of the circuit in which the court is held by him, the subsequent proceedings upon such decree are under the direction and control of the vice chancellor of that circuit.
    If a decree is appealed from and security given to make the appeal a stay of proceedings, and the party in whose favor the decision was made proceeds upon the decree, notwithstanding such appeal, an application to set aside his proceedings for irregularity must be made to the vice chancellor who has jurisdiction of the case, and not to the chancellor.
    This was an application by one of the defendants to set aside the proceedings upon a decree made by the assistant vice chancellor, upon the ground that an appeal from such decree had been duly entered and that security had been given to make such appeal a stay of the proceedings.

      F. S. Kinney, for the appellant.

      J. Rhoades, for the respondent.
   The Chancellor

decided that the application must be made to the vice chancellor of the circuit in which the decree appealed from was entered. He said that where a decree was made by the assistant vice chancellor and entered with the clerk of the circuit in which the court was held by such assistant vice chancellor, as directed by the statute, the vice chancellor of that circuit had the jurisdiction and control of the subsequent proceedings upon that decree. And that if a party in whose favor a decree is made proceeds thereon after an appeal has been entered, and the proper steps have been taken to make such appeal a stay of proceedings, an application to set aside his proceedings for irregularity must be made to the vice chancellor having the direction and control of such proceedings, and not to the chancellor.


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    Skidmore vs. Davies & Shaw.
    1843. August 15.
    The remedy of a party aggrieved by an irregular ex parte order made by a surrogate, is to apply to the surrogate to vacate or set aside the order ; and not by an appeal to the chancellor.
    Upon the removal of a guardian of an infant, by a surrogate, it is a matter of course to require him to account, and to pay over the balance, if any, which shall be found remaining in his hands upon such accounting. An ox parte order to that effect, and appointing a time for the removed guardian to attend before the surrogate and render his account, is not irregular.
    Where two separate and distinct orders of a surrogate are embraced in one appeal, the appellant should either give a separate appeal bond on each; or should give one bond, with a penalty large cnjjigh to cover the appeal from, both orders, and with a condition broad enough to cover the damages and costs which may be awarded upon the affirmance of both orders.
    The sureties in the appeal bond, upon an appeal from the order or decree of a surrogate, are not only liable for the costs of the appeal, but. also for the damages which may be awarded to the respondent if the appellant does not prosecute his appeal to effect.
    Prosecuting an appeal to effect, according to the condition of the appeal bond, means a prosecution of the appeal to a successful result; and the condition of the appeal bond is broken if the appellant fails in his appeal.
    Where two separate and distinct orders of a surrogate are embraced in one appeal, and only one appeal bond is given for both, the surrogate is not authorized to take a bond in a less penalty than two hundred dollars; and if he does so, the appeal may he dismissed for irregularity, with costs.
    This case came before the chancellor upon appeal from two separate and distinct orders or decisions of the surrogate of the city of Mew-York. The surrogate having removed the appellant Skidmore from his office and trust as guardian of the person and estate of the respondent, Mary Isabel Shaw, and directed H. E. Davies to be appointed in his place, made a further order, on the 26th of April, 1343, that Skidmore account for the moneys which had come to his hands as such guardian, or which ought to have been received by him as such guardian, and pay over to the new guardian whatever sum might be ascertained on such accounting to be in his hands 3 and appointed the 2d of May then next, at the surrogate’s office, as the time and place for rendering such account. The appellant after-wards applied to the surrogate to set aside or .open that order 3 and on the 2d of May, 1843, that application vr.s denied by the surrogate, with costs. SLidnoro thereupon gave notice to the surrogate that he had appealed from both of those orders, to the chancellor, and executed an appeal bond in the penalty of $100 only, upon such appeal from the two separate and distinct orders.

      W. Skidmore, appellant, in proper person.

      H. E. Davies, for the respondents.
   The Chancellor.

Upon the merits I can see no reason whatever for sustaining the appeal from either of these orders. Upon removal of the guardian it was a matter of course to require him to account, and to pay over to Ms successor the balance, if any, which should be found remaining in his hands upon such accounting. An appeal from an initiatory order of that kind, therefore, could o:iiy have been for the purpose of delay.

The application to set aside that order was also properly denied. As the sole object of the order was to appoint a time and place for the appellant to attend and render an account of his guardianship, and to pay over the balance in his hands when it should have been ascertained, the order was merely consequential upon the order of the 21st of April. And at the time appointed for him to appear- and render his account he would of course have an opportunity to be heard, and to produce witnesses in relation to such account, if the respondents were not satisfied with the account as rendered by him. If the appeal had been properly entered, therefore, both orders should be affirmed with costs.

Upon examining the return of the surrogate, however, it appears that the appeal itself is erroneous and musí, for that cause, be dismissed.

If the first order had been irregular, as the appellant supposed, his remedy was not by appeal to the chancellor, but an application to the surrogate to see aside the order as irregular was the proper course. (Gibson v. Martin, 8 Paige’s Rep. 481.) And an appeal from the decision of the surrogate of the 2d of May, denying such application, was wholly inconsistent with the appeal from the order of the 26th of April. For he could not appeal from the order itself as erroneous, and also at the same time, by a separate appeal, call upon the judge, ad quem, to reverse the decision of the surrogate of the 2d of May and set aside the previous order, as irregularly entered.

Again ; the appeal is irregular and must be dismissed upon the ground that the statute has not been complied with, in taking security upon the appeal. Where several distinct decisions and orders have been made by the court below, in the same suit, and between the same parties, it is sometimes permitted to the party who considers himself aggrieved by such decisions to embrace them all in the same notice of appeal. But where the proceeding is in the nature of a separate and distinct appeal from each order, as in this case, the appellant must either execute a separate appeal bond upon the appeal from each order, or he must give one bond upon the appeal with a penalty sufficiently large to cover the appeals from both orders, and with a condition which is broad enough to embrace the damages and costs oí both. (Tyler v. Simmons, 6 Paige’s Rep. 127.) If the appeal bond was only intended as security for the costs of the appeal, yet the respondent’s costs may be very much increased by having two or more separate and distinct orders embraced in an appeal.

But the liability of the surety on an appeal from an order or decree of the surrogate is not limited to the costs of the appeal merely. For the condition of the appeal bond is not only that the appellant will pay all costs that shall be adjudged against him by the court of chancery, but also that he will prosecute his appeal to effect. (2 R. S. 610, § 108.) Prosecuting an appeal to effect must mean to prosecute it successfully; as in the case of a replevin bond conditioned to prosecute the suit in replevin to effect. (7 Mod. Rep. 381. Carthew, 248. 3 Wend. Rep. 54.) If the appellant, therefore, does not succeed in his appeal, the condition of the appeal bond is broken. And in addition to the costs of the respondent, the statute authorizes this court, upon affirming the decree or order appealed from, or upon the appeal being discontinued or quashed, to award damages to him for the delay and vexation which has been caused by the appeal. (2 R. S. 618, § 35.) The sureties in the appeal bond, therefore, may be liable for the amount of such damages in addition to the costs of the appeal. And as the statute requires a bond with sureties in the penalty of at least one hundred dollars upon an appeal from an order or decree of a surrogate, the appellant cannot deprive the respondent of the benefit of full security, upon the appeal from each distinct order or decree of the surrogate, by including two or more of them in one appeal and giving a bond in the penalty of $100 only. In a case like the present, therefore, the surrogate was not authorized to take an appeal bond in a penalty which was less than two hundred dollars.

The appeal must therefore be dismissed, with costs.


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    Irving and others, executors, vs. De Kay and wife.
    The proper time for filing a cross bill, when such a bill is necessary, is at the time of putting in the answer to the original bill, and before issue is joined by the filing of a replication to such answer.
    And where the defendant neglects to file his cross bill until after issue is joined in the original suit, he is not entitled to an order to stay the proceedings in that suit until an answer shall have been put in to the cross bill, without showing a sufficient excuse for the delay in filing his cross bill.
    Under the provisions of the revised statutes, set-offs are allowed, in suits in the court of chancery for the recovery or payment of money, in the same manner and with the like effect as in actions at law. And a cross bill is not necessary to enable the defendant to avail himself of a legal set off in such a suit.
    But no such set-off can be allowed in a foreclosure suit in chancery, under the provisions of the revised statutes, which could not have been allowed, as a proper subject of set-off, in the analogous case of a suit at law for the recovery of the mortgage debt.
    A defendant in a suit in chancery, who has not a legal right of set-off, and who files his cross bill to avail himself of an equitable set-off to the complainant’s demand, must not only show the existence of a debt due to him from the complainant, but he must also show that the complainant is insolvent, so that injustice will be done if the set-off is not allowed, and the defendant is left to his remedy by a separate and independent suit; or the defendant must state some other ground of equity, in his cross bill, which would have been sufficient to sustain an original bill in chancery for a set-off.
    1843. August 15.
    A debt due from a testator previous to his death is not a proper subject of offset, under the provisions of the revised statutes, against a debt due to the executor, and contracted with him since the testator’s death.
    In a foreclosure suit brought by the executors to obtain satisfaction of a mortgage given to them by one of the residuary legatees of the testator, the share of the defendant in the residuary estate before such share has been liquidated and ascertained, is not a legal set-off. And it cannot be made a proper subject of equitable set-off" upon a cross bill, to which the other legatees of the testator are not parties.
    This was an appeal from an order of the vice chancellor of the first circuit, staying all proceedings in this suit until the complainants therein should have put in and perfected their answer to the cross bill filed by the defendants De Kay and wife. One object of the present suit was to foreclose or obtain satisfaction of a mortgage upon a part of the real estate belonging to George C. De Kay and wife, in right of the wife, in the city of New-York, given to the complainants by De Kay and the special guardian of his wife, who was a minor at the time of the giving of such mortgage, to secure the payment of $6000 and interest, which was loaned by the complainants, as executors of the estate of H. Eckford deceased, to the said special guardian of Mrs. De Kay, for her support, &c. Another object of the suit was to obtain an injunction to restrain the defendants De Kay and wife from the further prosecution of a suit at law against Tillou, one of the complainants, for certain rents and profits of the real estate of Mrs. De Kay, and to have such rents and profits, and other rents and profits received by two of the other complainants, offset against the amount due upon the bond and mortgage. That bill was filed in April, 1842, and after a lapse of four or five months De Kay and wife put in an answer thereto, which was excepted to for impertinence, and a considerable portion thereof was expunged, upon reference of the exceptions to a master. Upon the application of the defendants the injunction was dissolved upon the ground that the executors, as such, had no right to receive the rents of Mrs. De ICay’s real estate, and that Tillou and the others who had received such rents were personally liable therefor, and had no right to offset the same against the amount due to them as executors, upon the mortgage. The decision of the vice chancellor dissolving the injunction was afterwards affirmed upon appeal to the chancellor. And De Kay and wife thereupon proceeded in their suit at law against Tillou, and collected the rents for which that suit was brought. A replication was afterwards filed to the answer, and in February, 1843, an order to produce witnesses was entered and served upon the solicitor of the defendants •, but they examined no witnesses in relation to any of the matters of defence set up in their answer. And on the 16th of May thereafter the proofs in the cause were closed, and notice of hearing was served for the June term of the vice chancellor. On the 6th of June, De Kay and wife filed their cross bill stating various claims against the estate of Henry Eckford, some in favor of De Kay in his own right, and some in right of his wife, and some against three of the complainants in the original suit, for rents belonging to Mrs. De Kay which they had improperly received and applied to the use of Eckford’s estate ; and also claiming a distributive share of that estate under the will of Mr. Eckford, and praying that those several debts and claims might be ascertained and offset against the mortgage of the complainants in the original suit. Upon this cross bill, and without showing any excuse whatever for their neglect to file the same before the issue was joined in the original suit, the complainants therein applied to the vice chancellor and obtained an order staying all proceedings in the original suit, until the defendants in the cross bill should have fully answered the cross bill.

      F. B. Cutting, for the appellants.

      G. C. De Kay, for the respondents.
   The Chancellor.

If the cross bill in this case showed a case of equitable set-off, which it was impossible for the defendants to avail themselves of by a proper answer in the original suit, they were not entitled to an order to stay the proceedings without showing some excuse for their neglect to file their cross bill before this suit was at issue. Here the defendants were served with the bill in the spring of 1842, and there is no pretence that any new fact has been discovered since that time rendering a cross bill necessary. And yet they have waited more than a year, and until the original suit was in readiness for hearing and had actually been reached in its regular order upon the calendar, before their crossbill is filed. The proper time for filing a cross bill, where such a bill is necessary, is at the time of putting in. the answer, to the original bill and before the issue is joined by the filing of the replication. And as the matters of defence upon which a cross bill is founded must be stated in the answer to the original suit, as well as in the cross bill, it can seldom be necessary to delay the filing of the cross bill till after the original cause is at issue.

Again ; there appears to be no necessity for a cross bill in this case. For if the defendants had a legal right of set-off against the mortgage debt, all that was necessary for them to do, was to state such set-off in their answer to the original bill. Under the provisions of the revised statutes, in suits for the recovery or payment of money, set-offs are to be allowed in this court, in the same manner and with the like effect as in actions at law. (2 R. S. 174, § 40.) If the defendants, therefore, had any such legal set-off in this case as is contemplated by the provisions of the revised slatutes relative to set-offs in courts of law, all that was necessary for them was to state the nature and particulars thereof in their answer to the original bill, in analogy to a plea of set-off in an action at law, and to produce proof upon the hearing in support of such answer. (Chapman v. Robinson, 6 Paige’s Rep. 627.) But no such set-off can be allowed in a foreclosure suit, under the provisions of the revised statutes, which could not be allowed, as a proper subject of set-off, in an analogous case in a suit at law for the recovery of the mortgage debt. And where the defendant has not such a legal right of set-off, his cross bill must not only show the existence of a debt due from the complainants in the foreclosure suit, but also that they are insolvent; so that injustice would be done if such set-off was not allowed and the defendant was left to his remedy against them by a distinct and independent suit. Or the defendant must state some other ground of equity in his cross bill, which would have been sufficient to sustain an original bill in this court for a set-off.

Neither of the claims mentioned in the cross bill appears to be a proper offset against this mortgage debt, under the provisions of the revised statutes. The claim of Mrs. De Kay against the executors, for the rents and profits alleged to have been received by Mr. Eckford in his lifetime, is a debt due from the estate, and not from the executors personally, in their character as executors. It is not, therefore, a legal offset against a debt in their favor created since the death of the testator; according to the decision of the supreme court in the case of Fry v. Evans, (8 Wend. Rep. 530.) And that decision is in accordance with the settled rule of law in England upon this subject.

The answer sets up an agreement, by the complainants in the foreclosure suit, to account for the rents of the Love Lane property received by them, at the rate of $900 a year, if the conveyance of August, 1826, should be declared to be an absolute deed of the premises. But the answer is not sworn to, and no proof has been produced to support that allegation. Nor do I find any such charge made in the cross bill, which is put in upon oath. The cross bill, therefore, contains nothing to show that the executors were authorized by De Kay and wife to receive the rents and profits of the property ; and from aught that appears, whoever received such rents and profits received them without the consent of De Kay and wife. The remedy of the defendants, therefore, is by an action against the individual who received the money ; and neither party has the right to have them offset against this mortgage debt; as has already been decided in this suit, upon the application to dissolve the injunction, in relation to other rents which were in the same situation.

The individual claim of De Kay against the estate of Eckford, for the $2500 placed in his hands in 1834, is also a claim against the estate of Eckford which could not be offset against this mortgage, even if the mortgage debt was due from De Kay individually, for the reasons before stated. And as he has failed in establishing that claim against the executors, in the suit at law brought for the recovery thereof, the claim cannot be urged as a subject of either legal "or equitable set-off.

The only remaining claim of offset relates to what the complainants in the cross bill suppose Mrs. De Kay may be entitled to as her distributive share of the estate of her grandfather, under the will. This of course could not be the subject of a legal offset until her share of the estate should have been ascertained and decreed to be paid, either by this court or by the surrogate having jurisdiction to decree an account and distribution of the property. Such an account cannot be taken in this suit, to which the other parties entitled to distributive shares under the will are not parties. It is impossible, therefore, that such a claim, either as a legal or equitable offset, should be allowed in this court. Upon the merits of the case, then, if the delay in filing the cross bill was satisfactorily accounted for, or the same had been filed and this application made before the filing of the replication to the answer, the order to stay the proceedings until this cross bill was answered, would have been erroneous.

The order appealed from must therefore be reversed with costs, including the costs of the complainant in opposing the application before the vice chancellor ; which costs are to be costs in the cause and to be taxed as a part of the general costs of this suit, if the complainants succeed in obtaining a decree for the foreclosure and sale of the mortgaged premises.


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    Youngs vs. J. C. & W. B. Morrison.
    1843. August 15.
    It is not necessary, in a creditor’s bill, to state the docketing of the judgment except in those cases where the judgment hits been recovered in a local court, and the execution has been issued to a different county from that in which the court was held.
    Where a judgment is recovered in the supreme court, so that the execution may be issued to any county in the state, it is no objection to a creditor’s bill that the judgment had not been docketed in the county to which the execution was issued.
    This was an appeal from a decision of a vice chancellor overruling the demurrer of the defendant W. B. Morrison.

      C. Stevens, for the appellant.

      H. F. Clark, for the respondent.
   The Chancellor.

The objection that it does not appear by the complainant’s bill that the judgment had been docketed in the office of the clerk of the county to which the execution issued is not well taken. It is only necessary to docket the judgment, in order to authorize the issuing of the execution, where the judgment has been recovered in a local court and the execution is to be issued to the sheriff of a different county from that in which the judgment was. recovered. (Laws of 1840, p. 335, § 30.) Where the execution is issued to the sheriff of the county in which the judgment was recovered, or if such judgment was in the supreme court so as to authorize the issuing of an execution to any county in the state, the execution is regular although the judgment has not been docketed so as to give it a preference as a lien upon real estate. And the defendant in a creditor’s bill cannot object that the complainant has not taken the proper steps to enforce his judgment against property which had been sold by the defendant to bona fide purchasers previous to issuing the execution .

Decretal order appealed from affirmed.


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    Holmes and others vs. Williams.
    1843. August 15.
    Where the holder and apparent owner of negotiable paper, sells it to a bona fide purchaser, at a discount, representing it to belong to himself and to be business paper, the transaction is not usurious as between the vendor and vendee of the paper, although the representation of the vendor was false, and it was in fact paper which had been made for the purpose of being sold at an usurious discount in the market.
    This was an appeal from a decree of the vice chancellor of the fifth circuit dismissing the bill of the complainants with costs. The facts of the case are stated in the following opinion of the vice chancellor.
    Gridley, V. C. The two first named complainants constituted a mercantile firm in Utica, and were indebted to the defendant in a large sum of money. In the month of December last, S. Holmes, one of the said firm, had in his hands a draft for $2500 drawn upon the house of Morgan, Butler & Co. of New-York, by Ford & Smith, D. Vanderbilt & F. C. Chapman, and endorsed in blank by L. Harvey, which draft at the time had never been accepted or negotiated, but was accommodation paper, belonging to the drawers, made and endorsed to raise money on, for their benefit, and placed in the hands of Holmes for that purpose alone. This draft Holmes negotiated, sold and transferred by endorsement to the defendant, at a sum considerably below the amount due by its terms, and applying a portion of the consideration upon an existing demand of the defendant and receiving the remainder in cash—Holmes representing to Williams at the time that the draft was business paper and was the property of himself or himself and partners. In January following, the drawers applied to Holmes for the re-delivery of the draft; whereupon he applied to the defendant to take up the draft, which was effected under the following agreement: That the two Holmes, with Kellogg as surety, should give the defendant their note, due on May 4th, 1839, for the amount due on the draft, and that a suit should be commenced against the Holmes, upon which they should give a cognovit upon w'hich judgment should be entered and execution issued and levied on the property of the two Holmes, returnable at the next term thereafter. The bill prays that the defendant may be perpetually enjoined from prosecuting the judgment execution, and that the same may be decreed to be satisfied of record, by the said defendant; and that he also may be decreed to deliver up the note to be cancelled.
    The first question material to be decided is whether the purchase of the draft was usurious so that it was a void security in the defendant’s hands. Were this a new question of construction to be settled under the statute, I confess I should think it was not. There is a good legal reason why a security, actually tainted "with an original act of usury, should be held void in the hand of a bona fide and innocent holder. For the statute has declared it so in terms and in all such cases as of notes given in violation of the statute against gaming, horse racing, &c. Courts have uniformly held the securities void not merely against the payees and holders, with notice, but against holders receiving them for value and before maturity and without notice. But to hold a security purchased as this draft was, tainted with usury and void in the hands of the purchaser, the purchase must be decreed, pro hac vice, a loan—a mere contract of borrowing and lending. It is true that a contract of purchase in words is very properly held to be in construction of law a contract of loan—when such a device is resorted to to cover a transaction which is really a loan. But how is such a transaction to be regarded as a loan upon principle when the purchase is bona fide 1 Suppose the contract to be written out, describing A. the owner of a bond made by B. and setting out the sale of it for a sum less than the amount due on its face, and providing that a portion should be applied on a demand due from the seller to the purchaser and the residue paid in money—and suppose farther that on the part of the purchaser it is a bona fide purchase, and not intended by him as a cover for a loan, there being nothing in the law making such a purchase (if real) unlawful : it would seem to be doing violence to the contract as it is set forth in words, and also as understood in the minds of the parties, especially of the purchaser to hold it a loan and not a purchase. Was there ever an agreement to loan money in the case supposed either in fact or intentl Did two minds ever meet and assent in fact or intent upon any such contract, and does not the law by its potent power of construction, when it declares such a purchase usurious, annihilate the actual agreement of the parties and substitute another in its stead totally different from it, thus changing an act in itself lawful into one which is declared to be a violation of a penal statute 1 When one intentionally takes eight instead of seven per cent, though he may not intend to be guilty of usury, he is nevertheless guilty, for he intends to do what he does, but mistakes the law. Here, however, he buys a security which turns out to be accommodation paper, but he never agreed to buy any such paper; he contracted to buy it as being business paper. He was mistaken in the fact, not in the law. Nevertheless, it is the settled doctrine of the courts that such a transaction is usurious. (See 2 John. Cas. 66, 206, 2d ed. ; 15 John. Rep. 44, 355 ; 7 Wend. 569.) The consequence of this doctrine as applied to this case is, that the draft was, in the hands of the defendant, so far as respects his right to maintain an action on it, tainted with usury and void.
    The next question is whether the note made by the complainants to secure the amount due upou the draft when such draft was taken up, is also usurious and void. The complainant’s counsel insists that it is a new security, substituted in the place of an usurious one, and therefore is itself tainted with usury. And such is undeniably the true doctrine as applied to ordinary cases of new securities substituted in the place of usurious ones, and is illustrated by the case of renewals of a usurious note ; and I apprehend that a change of a part, or even all of the names upon the paper, would not alter the legal rule. The defendant’s counsel admits the existence of this rule, but maintains that it is not applicable to a case where the holder of the tainted security is innocent of the usury in fact; and that the defendant in this case, though his purchase of the draft was technically usurious, is entitled under this rule to stand in the place of an innocent holder.
    What then is the rule as to securities given in the place of usurious ones, to secure the amount to an innocent holder of the latter ? In Cuthbert et al. v. Halsy, (8 Hum-ford 4* East, 390,) the plaintiff brought debt on a bond for $2680, conditioned to pay $1340 with interest, and the defendant pleaded that the bond was given for securing money lent by one Plank to the defendant upon a usurious contract between Plank and the defendant, &c. On the trial, it appeared that Plank discounted eighteen promissory notes of the defendants amounting to £1344. 2s. 3d., and took usurious interest on them. Plank afterwards carried them to the plaintiffs, his bankers, who gave him credit for them.. When the notes fell due the plaintiffs applied for payment, and the defendant paid him £44. 2s. 3d. in money, and gave the bond in question for the residue. Lord ICenyon was of opinion that the plaintiff should recover, and so ruled, allowing a rule to show cause. On the argument of the cause at bar the defendant’s counsel strenuously urged that the bond in question was but a substituted security, and cited various cases in which such securities had been held usurious. The judges, however, were unanimously of opinion that this rule, though they fully admitted its existence, and its application in ordinary cases, did not apply to a case where the substituted security was given to an innocent holder. So, too, in Powell v. Waters, (8 Cowen, 690, 691,692,) Chancellor Jones, (after having said that Parish, who discounted the first note, knew it was not business paper, and that his knowledge affected his partners,) declares that the note then before the court was a substituted security for the first, and therefore void; and adds that such substituted security, given to an innocent holder, would be valid. He says that a new security taken by such a meritorious holder of the usurious note, has a just claim to protection. The rule then is clearly established, that an innocent holder of paper substituted for usurious paper will be protected, and that the ordinary principle, which declares that a new security is infected with the same usury which tainted that for which it is substituted, is inapplicable to an innocent holder of usurious paper.
    Is the defendant to be regarded as an innocent holder of the draft in question in this suit 1 It is true, that by a series of decisions, which I have already cited, the act of purchasing the draft, (though .he erroneously supposed it to be business paper, and therefore a lawful article of sale and purchase) was technically legally usurious 1 But was he guilty in intent and in fact % Could he have been punished upon an indictment under the act of 1837 1 On the contrary, was he not the innocent purchaser of this paper, and the victim of the civil disabilities incurred under the act by the most flagrant false pretences of one of the individuals who now asks a court .of equity to visit upon him the consequences which flow from such fraudulent misrepresentations 1 Though this draft be held void in the defendant’s hands, yet, could he not sustain an action against S. Holmes for the loss he suffered by reason of his false affirmation that the draft in question was his own property, and therefore a lawful subject of purchase, when it was not; by reason of which the very act of purchasing rendered the purchase void 1 Could he not also recover in an action for money had and received, the money he advanced upon this purchase ; which was valueless, solely by reason of the fraudulent concealment and misrepresentation of a fact in relation to the draft 1 Can a man by the grossest fraud, amounting, as I think, to the offence of obtaining money by false pretences, get another’s money (without any intentional fault on the part of that other,) and not be responsible for it at law 1 I think not. I think S. Holmes was liable to the defendant for the money he obtained from him by the fraudulent transfer of paper which he falsely declared to be his own, and which, if it had been so, would have been a valid and available security in the defendant’s hands. If then this money was really due and recoverable from Holmes, would not a note given by S. Holmes alone, to secure it, be good and available against him 1 Suppose that the defendant had, while he held the draft, learned that it was not the property of Holmes, and that by Holmes’s false representation he had parted with his money under circumstances which rendered the draft void in his hands, and had called on Holmes and charged him with the fraud, and Holmes had then taken up the draft and given his own note instead of-it; could Holmes defend himself against a suit on such note on the ground of usury 1 Would it not be allowing him to succeed in a defence founded on his own fraud instead of the fraud of his antagonist 1 Suppose he had transferred a forged note, or a note infected with existing usury, or void for any other cause, affirming it to be good and denying the facts which rendered it void, would he not be liable 'l And if he had got back the void paper and given his own note in its stead, could he defend himself in a suit upon such note 1 I think the 'merits of his defence would be the same in all the cases I have supposed. If the new security then would have been free from objection for usury, if executed by S. Holmes alone, it must be so notwithstanding others signed the note as sureties. In Cram, v. Hendricks, (7 Wend. 584,) the chancellor, in commenting on the case of Muir v. O’Ruggles, (15 John. Rep. 57,) says in express terms, that the broker who sold the bill to the purchaser was liable to him for the money advanced, though the note might be void in the hands of such purchaser, he, like the defendant in this case, supposing that the agent owned the bill. This opinion of the chancellor, though not necessary to the decision of that case, is entitled to great weight as the opinion of a learned jurist; and the weight of that authority I think is somewhat strengthened by the fact, that the chancellor was for holding the doctrine impeaching securities for usury with greater strictness and rigor than a majority of the court in the case then before them. I am not prepared to say that Holmes would have been responsible for more than the money he advanced, especially in an action for money had and received or money paid ; though he probably might be for the full amount of the draft in an action on the case. But however that may be, I do not think that embracing in the new note the whole amount of the draft would render that note usurious, provided it would not otherwise be so. If the false affirmation had been true, the draft would have been available to the defendant for the whole amount of it, and if Mr. Holmes had chosen to indemnify him by giving him a note for that amount, I do not -see that it would be usurious ; or even that he could in a suit upon this note have set up a defence as to the excess. To sustain this bill, however, the note must be adjudged void for usury, which, for the reasons before stated, I am of opinion cannot be maintained. To sustain it would be to make the court the organ of great injustice; I do not mean merely by enforcing the statute against usury even in its utmost rigor, severe as that statute is—for he who will knowingly violate the statute must not complain if he is compelled to suffer the extreme penalties of the act—but it would present Mr. Holmes in the attitude of fraudulently obtaining the defendant’s money for worthless paper, and after receiving back the paper and giving his own note as an equivalent, then asking the court of chancery to make his fraud successful, and to protect him in the possession of its fruits, by declaring the note thus given void for usury. I cannot but think that to carry the principle to such an extent would be, in the language of Lord Kenyon in the case before cited from Durnford & East, extending it further than policy or the words of the act require. I have already remarked, that in my judgment the securities must stand or fall with this principle, that if this note would be good if made by SylvanusfHolmes alone, it must be adjudged good though others unite with him in securing a demand due from and legally collectable of him.
    The conclusion to which this view of the subject brings me, without examining the other questions raised and discussed by the counsel, is that the bill should be dismissed with costs.

      S. Stevens, for the appellant.

      S. Beardsley, for the respondent.
   The Chancellor

said that he concurred in the opinion of the vice chancellor, that where the holder and apparent owner of negotiable securities sells them at a discount, to a bona fide purchaser who has no knowledge of the purpose for which such securities were made, the holder representing such securities to belong to himself and to be business paper, the transaction was not usurious as between the vendor and the vendee ; although the representation of the vendor was false, and the securities were in fact made for the sole purpose of being sold at an usurious discount in the market.

Decree affirmed with costs.