text:
    D. & J. Ames vs. Blunt and others.
    Although an assignment for the benefit of creditors is fraudulent as to those who do not assent to it, the assignees are not answerable for the proceeds of assigned property actually paid to bona fide creditors of the assignee, pursuant to the assignment, before any others have obtained either a lega! or equitable lien on such property or the proceeds thereof.
    But if the assigned property was such as might be seized and sold on any execution, it seems it might still be levied on in the hands of a purchaser from the assignees, provided he had either actual or constructive notice of the fraud at the time of his purchase.
    This was an appeal from a decretal order of the vice chancellar of the first circuit. In 1817 E. M. Blunt being in failing circumstances, made an assignment of his property for the benefit of his creditors, to William Hooker, and authorized the assignee to use the property in carrying on the business in which Blunt had previously been engaged. Hooker continued the business until January, 1823, at which time he became insolvent. He then, in conjunction with Blunt, made an assignment of the property and effects of the establishment to the defendants, Burtis, Morgan and Bancker, in trust, to pay such assignees and certain other preferred creditors of the assignors, in the first place, and to distribute the residue of the proceeds of the assigned property to such of the other creditors as should consent to the assignment, and discharge the assignors from all further liability. At the time of this last assignment the assignors were indebted to the complainants, Blunt as the drawer and Hooker as the endorser, for the amount of a promissory note given in 1823. In the summer of 1827, separate judgments were recovered against Hooker and Blunt, for the amount due on the note; upon which judgments, executions against the property of the defendants therein respectively were issued and returned unsatisfied. And in October, 1827, the bill in this cause was filed, for the purpose of setting aside the assignment as fraudulent; and to obtain satisfaction of the complainants’ debts out of the assigned property. To this bill the assignors and assignees, and Joseph Blunt and his two brothers who claimed a part of the property under a purchase from the assignees in 1826, were made defendants.
    The following opinion was delivered by the vice chancellor, at the time of making the decretal order appealed from.
    W. T. M’Coun, V. C. The complainants are judgment creditors of Edmund M. Blunt and William Hooker, on separate judgments against the former as maker, and the latter as endorser of a promissory note, made in April, 1822; one judgment was recovered on the 25th June, 1827, and the other on the 2d July, 1822, and writs of fi. fa. having been issued and returned nulla bona, the complainants, on the 17th of October, 1827, filed their bill in this court, praying a discovery of the property of their debtors in the hands of the defendants, Burtus, Morgan and Bancker, and of the defendants, Edmund, George and Joseph Blunt, under certain bills of sale and assignments made by Edmund M. Blunt and Hooker, and seeking to set aside the assignments as void against creditors. The first transfers of property alluded to, are certain bills of sale and assignments of the personal estate of Edmund M. Blunt, made by him to William Hooker, on the 11th, 13th, and lath days of December, 1817, some of them being absolute in their terms, as upon an actual sale of the property, and others upon trust for the payment of certain debts owing by Edmund M. Blunt; and after paying the debts, the surplus to be accounted for to him. The debt owing to the complainants was not, however, one of them, the same not being then contracted. Hooker assumed and held possession of the property embraced in the bills of sale and assignments, and conducted the same line of business which Mr. Blunt had pursued, and at the same place, for several years; until at length becoming himself embarrassed with debts, and among the rest the debt to the complainants having been contracted, he, on the 3d of January, 1823, made an assignment to the defendants, Burtis, Morgan and Bancker. In this assignment Edmund M. Blunt "united as a party with Hooker. It recites that they were severally indebted to the parties of the second part, the assignees, and to other creditors, in divers sums of money specified in a schedule annexed ; and the note on which the complainants afterwards recovered judgment, is one of the debts enumerated. It then purports to transfer and assign the stock in trade, personal property and effects of the parties of the first part, at their nautical and mathematical establishment, No. 202, Water street, in the city of New-York, or elsewhere, including their outstanding debts, bills, notes and book accounts. By the trusts declared in this assignment, the assignees were to convert the property into money, either at public auction or otherwise, at such time or times, and for such prices as they should judge expedient and most for the interest of all concerned; or if the assignees should judge it expedient and most for their interest to continue the said establishment, the assignors, for a reasonable compensation, were to attend to the different branches of the business, subject to the superintendence and direction of the assignees. And out of any moneys which should be realized, the assignees were in the first instance to pay the debts due or to become due to two preferred creditors named in the assignment, next to themselves the assignees respectively, and one other person. And after the full payment of such debts, then the assignees were to make dividends of the residue among such of the remaining creditors of the assignors as should accede to the assignment, and discharge the assignors from all further liability. That after the final satisfaction and discharge of the debts thus provided for, the assignees should re-assign to the assignors whatever property, money, or effects should then remain in their hands, and the assignment should thereafter be null and void. The assignees took upon themselves the duties and responsibilities of the assignment, conducted the business under it in their own names for three years and upwards, making large advances, and receiving the money arising from the sale and disposal of the stock. Finally, however, they determined to bring the business to a close, and therefore agreed to sell the whole of the stock, property and effects remaining on hand, to the defendant Joseph Blunt, for the sum of $14,300. And on the 14th of October, 1826, they accordingly executed to him a bill of sale of the property, taking from him some money, and some property in part payment, and his notes endorsed by his brothers George W. and Edmund, for the balance of the purchase money. Edmund and George W. became interested with him in the purchase, for the purpose of taking charge of the property and continuing the business with the stock thus acquired. Articles of agreement were at the same time entered into between the three brothers and their father, Edmund M. Blunt, providing for the conducting of the business under the superintendence and care of Edmund and George W. Blunt, and in their names, and securing to the concern the services of their father, as a compiler and publisher of nautical books and charts for a certain salary agreed to be allowed to him. After all this had taken place, and whilst the business was going on under that arrangement, the complainants prosecuted their suits at law upon the note against both maker and endorser, and recovered the judgments before mentioned; and by the return of the executions unsatisfied and the filing of the bill in this cause, the complainants acquired an equitable lienmpon any property, money or thing in action, which at that time belonged to either of the debtors in the hands of the other defendants in this cause. Whether there is any thing .upon which such lien attached, necessarily involves an inquiry into the validity of the several assignments before mentioned, and the bona fides of those transactions. With respect to the sale and assignments made by Edmund M. Blunt to Hooker, in December, 1817, I consider them entirely out of the question» Even admitting they were merely colorable, and the property those instruments purported to pass still to have been the property óf E. M. Blunt, I cannot see how the complainants ■can derive any advantage from that circumstance. They were not creditors at the time, and before they acquired any right to call the transaction in question, it.was done away by the acts of the parties themselves, in making the subsequent assignment to Burtis, Morgan and Bancker; which was an assignment of substantially the same property, in which Blunt and Hooker united as if it was their joint properljg and the •object of which was to secure the debts owing by both. Whether the first was fraudulent or not is therefore immaterial; by the last the property was placed in the hands of third persons, and the complainants’ debt had just then been contracted. I think, therefore, the inquiry is limited to this last assignment, because here their rights as creditors, whatever they were, first attached. The question then turns upon the validity of the assignment of January, 1823. There is no evidence of its being fraudulent in fact. On the contrary, there was a good and sufficient consideration to support it. The assignees were respectively creditors, and there were other debts to a large amount for which it was necessary to provide, and which the assignees were induced to assume, in order to prevent a sacrifice of the property at forced sales. Under these -circumstances the assignment was made, and a preference was given to such debts as'were already a -charge upon the property, and to such as were owing or might become due to the assignees. So far the assignment was unexceptionable, and I am satisfied no fraud was intended by the assignees. They appear to have acted throughout in good faith, and from honest motives; at least nothing is shown to- the contrary. But I am nevertheless clearly of opinion the assignment was legally fraudulent, upon the face of it; and as such was voidable, at the instance of any of the creditors, by reason of the condition upon which the creditors in general were to be permitted to participate in the dividends. Such a proviso or condition is now uniformly held to vitiate the whole instrument". But before any measures were taken to avoid the assignment, the assignees had proceeded to execute the trusts, so far at least as to" sell the whole of the property. From January, 1823, to October, 1826, they were acting in.the business of the assignment, carrying the trusts into effect, and every creditor apparently acquiescing, without any attempt to prevent them from so doing. It is therefore by the implied consent and permission of the creditors that the assignees went on and executed the trust, so far as the sale of the property is concerned, and a bona fide purchaser from the assignees would, under these circumstances, acquire a title which the creditors ought not now to be permitted to disturb or impeach.
    The next question then is whether Joseph Blunt is a bona fide purchaser under the sale made to him in October, 1826. From a careful perusal of the answers of the defendants, and after an examination of the testimony in the cause, I am free to say that I have discovered, nothing which goes to impeach the fairness of that transaction. It appears to have been entered into from good motives, and with honest and honorable views; the price he agreed to pay was.the full value of the property, according to the evidence, and if sold at auction at that time, it would have produced only from eight to ten thousand dollars. The arrangement between Joseph Blunt and his brothers, under which they were to conduct the business, and by which they were to give their father employment, did not impair the sale, nor does it furnish any evidence of .a fraudulent design. It was urged on the hearing that this was all a contrivance to re-possess Edmund M. Blunt of the property, and to enable him to resume the business without satisfying his creditors. But it. must be recollected that when his sons took the- property from the assignees, they substituted the full value of it in money and securities, for the benefit of the creditors, and that Edmund M.- Blunt did not join in giving the notes or securities. His sons made the payments and gave the notes upon their own responsibility; and such as have not been paid, they are still liable to pay. Even if Edmund M. Blunt had any latent interest in the property, the result has shewn that it was worthless; for upon a sale of the whole in April, 1839, after public notice, and a fair exposure at auction, it produced short of $10,000, although, according to the evidence, there had been an augmentation of the stock, and a consequent increase of its value. Instead, therefore, of any thing beyond the cost, to which Edmund M. Blunt could be entitled, there was a large deficiency. It is important to notice this sale only in that one point of view. But again, it does not appear that Edmund M. Blunt had any interest in the property under the agreement xvith his sons, except a mere contingent and uncertain interest, founded upon the gratuitous offer of his son Joseph Blunt, that he should participate in his share of the profits upon the final settlement of the concern; xvhich has never become a vested interest of an value, and, as far as I am able to judge of it, is now at an end.
    Upon the whole, there are no grounds upon xvhich, in my judgment, I can decree an account against-the defendants, Joseph Blunt, Edmund Blunt and George W. Blunt, in relation to the property purchased of the assignees in October, 1826, or the business xvhich they have pursued since, by reason of any supposed or latent interest of their father in such property or business; and I shall not, therefore, direct any such account to be taken in favor of the complainants. There is, however, another branch of this case, in relation to which I think the complainants are entitled to an account. They acquired an equitable lien upon any property, money or things in action, which belonged to either of their debtors, at the time of filing their bill in this cause. I have already remarked that the assignment made to Burtis, Morgan and Bancker was voidable. And so far as the trusts created by that assignment were not executed at the time of filing the bill, the property, or any of its proceeds, then remaining in the hands of the assignees, must be considered as belonging to the assignors; and from that moment liable to satify the debt owing to the complainants, in preference to all others, by reason of their superior diligence in prosecuting to judgment and execution. But so far as the trusts were executed, and for every thing the assignees had actually done under the assignment, I shall hold them harmless. The absence of any proof of actual or intentional fraud on their part, and the great delay of the creditors in seeking to avoid the assignment, suffering the assignees to go on during all that time without objection, I think, warrants me in extending to them the protection of this court, for all -advances made xvbilst they had the property in their possession; so far as the receipts from the business and from the proceeds of the property sold were actually applied to the reimbursement of such advances, and to the payment of the moneys-owing to themselves and the other preferred creditors, before the filing the complainants’ bill.

      As regards the sale to Joseph Blunt, I have already considered that an executed trust, before the filing of the bill, and therefore not to be disturbed. But with respect to the purchase money of $14,300, so far as that or the securities for it remained in the hands of the assignees as trust property, not actually applied to the payment of their own or other creditors’ debts, the complainants’ lien would attach. An account must therefore be taken of that money, and of all other moneys received or to be received-by the assignees, from or out of the assigned property; for the purpose of ascertaining the amount in the hands of the assignees, or either of them, at the time of filing the complainants’ bill, out of xvhich their judgments at laxv can be satisfied.
    In extending protection to the assignees, in the present case, for every thing done and executed by them before the complainants’ right accrued, I must not be considered as impugning the.doctrine that when an assignment is found to be fraudulent and void, by reason of some particular clause or provision contained in it, it shall be set aside entirely. And that the trustees, although creditors, shall not be permitted to retain any part of the property for the purpose of setting off their own debt, or of paying themselves, in preference to other creditors; hut shall account for all that comes into their hands under such an assignment. This is undoubtedly a salutary and xvholesome doctrine, and as such was adopted and enforced by Chancellor Kent, in Riggs v. Murray, (2 John. Ch. Rep. 565,) and has been recognized in all the leading cases on the subject of fraudulent assignments in our own courts ; and also in Harris v. Sumner, (2 Pick. 129,) and Halsey v. Whitney, (4 Mason, 206,) where all the cases, English and American, are examined by Justice Story.
    It will be perceived, however, that all these were cases where the trusts remained executory, and where the property assigned was levied upon, by execution or attachment, in the hands of the assignee, or its proceeds reached by bill and injunction, before a final appropriation to the objects of the assignment. And I think a just distinction may be drawn between such cases, arid those in "which the trusts have been carried into effect, previous to any attempt made by the creditors to set aside the assignment; especially where they have had sufficient time and opportunity, and have neglected to proceed. The present case ought at any rate to form an exception; for here four years and upwards were suffered to elapse, after the assignment in question was made, before the complainants undertook to prosecute either their legal or equitable rights, and no reason is assigned for the delay. It would be unjust, and might operate most injuriously, were the assignees at this late day to be required to undo all that had been done under the assignment, and to be thrown back, even upon an equality with all the other creditors; when at the same time the complainants arc not seeking to put themselves upon that equality, but to obtain a preference of payment in full of their demand. I must therefore say, as was said by the court in Haggerty v. Palmer, (6 John. Ch. Rep. 438,) that if the proceeds have been actuall}' appropriated by the assignees before the commencement of this suit, the remedy as to such proceeds is gone.
    The reference must take place as between the complainants and the assignees, Burtis, Morgan and Bancker, and the account must be taken upon the principles here stated; and until the coming in of the master’s report I shall reserve all further questions, even as to the costs of the other defendants,

      D. Graham, jun., for the complainants.

      J3. F. Halter Sf J. Blunt, for the defendants,
   The Chancellor.

The vice chancellor was right in refusing to go into an inquiry whether the assignment of 1817 was not fraudulent as respected the creditors of E. M. Blunt. It was valid as between the parties thereto; and as the complainants were not then creditors, it could not have been made to defraud them. Those who were then creditors, had a right to elect to take the provision made for them by the assignment, even conceding it to have been fraudulent. And they have a prior equity to be paid out of the property then assigned, or the proceeds thereof, if it can now be traced and identified, although it may have passed into the hands of the new assignees, for the benefit of other creditors. And if there are no creditors having such prior claims, then the rights of the complainants are the same, whether the first assignment was or was not fraudulent; as their judgments are against both the assignor and the assignee in that assignment.

Since the. decree of the vice chancellor was made in this cause, the case of Grover v. Wakeman, (11 Wendell, 187,) has been passed upon by the court of dernier resort. It cannot therefore be any longer doubted that the decision of the vice chancellor was correct, in declaring the last assignment fraudulent and void as against the creditors of the assignors; as those creditors could never get any part of the assigned property without submitting to the terms imposed, of giving up all farther claims against their debtors. But the vice chancellor has done what this court did in the case of Wakeman v. Grover—-refused to charge the assignees with that part of the proceeds of the assigned property which had been paid over to the preferred creditors, or distributed among them, previous .to the filing of the complainants’ bill. And, in reference to this question, a distinction is now attempted to be taken between an assignment fraudulent in law merely, and an assignment which is fraudulent in fact. The distinction between what is now called fraud in law, and that which is denominated by the counsel fraud in fact, appears to be that in the first case it is apparent from the terms of the assignment itself that the parties intended to do an act the legal effect of which would be to defraud the creditors, and that in the other the assignment upon its face is legal, but the fraudulent intent is made out from extrinsic evidence. Without stopping to inquire whether there is any real difference between the two cases, except as to the nature of evidence-by which the fraud is established, I must be permitted to say that I do not think the question, whether the assignees are to he charged with what they have distributed among the honest creditors, before the complainants had obtained either a legal or an equitable lien upon the property, depends upon any such distinction. It certainly would afford no protection to a person claiming as a'bona fide purchaser of real estate, under a deed or assignment which was fraudulent on its face, to insist that he was ignorant of the principle of law which rendered it fraudulent. The law presumes that every man is aware of the legal consequences of his own voluntary acts; although such may not always be the case in point of fact. And, acting upon that presumption, courts are not guilty of the absurdity of considering an act honest and fair as regards the rights of creditors, when at the same moment .they are bound to consider the act itself as illegal and fraudulent. The validity of the assignment depends upon the intention of the parties to commit or not to commit a fraud, presuming that they are aware of the legal consequences of that which they intend to do. I apprehend, therefore, that the liability of the assignees, for the proceeds of the assigned property which have been distributed to the bona fide creditors under the assignment, must depend upon the question whether the legal or equitable rights of the complainants have been impaired or affected by such distribution. In other words, whether they have been in fact defrauded thereby. The principle, then, upon which the decision of this court in Wakeman v. Grover and of the vice chancellor in the present case is sustainable, is, that the proceeds of the assigned property had been distributed, according to the directions of the assignors, in payment of bona fide creditors; to whom such proceeds might have been lawfully distributed by the assignors themselves at any time before the complainants had obtained any legal or equitable lien thereon ; and therefore that the complainants have not been .defrauded or injured by such distribution. But if the assigned property, or the proceeds thereof, had remained in the hands of the assignees, undistributed, at the time of filing the bill, which would have given to the complainants a lien thereon as the property of their debtor, the assignment being voidable by them at that time, it would be a fraud upon their rights to distribute the proceeds afterwards. The decree of the vice chancellor, therefore, appears to afford to the complainants all the relief to which they are entitled in such a case. No part of the assigned property remained in the hands of the assignees, in specie, at the time the complainants’ executions were issued; as it had all been sold to J. Blunt for its full value before that time. The remedy of the complainants, so far as the assignees were concerned, is therefore. against the proceeds remaining undistributed among the bona fide creditors at the time of filing the complainants’ bill.

If the assigned property had been in the hands of J. Blunt undisposed of at the time the complainants’ executions issued, it might be necessary to.inquire whether he could be considered a bona fide purchaser, so as to defeat the lien of those executions; inasmuch as he claimed through or under an assignment, which was fraudulent on its face. I am inclined to think the property would in that case have been liable to the lien of the executions, and might have been sold under the same. It does not appear, however, that any part of the assigned property, which was the proper subject of a seisure and sale on execution, remained undisposed of at that time. And even if that fact did appear, it still would be doubtful whether the lien of the executions was not lost by returning the same unsatisfied, without any attempt to make a levy. (See Opinion of Mr. Justice Nelson, 9 Wendell’s Rep. 561.) The price paid by Joseph Blunt, for the property on hand at the time he purchased, was the full value thereof. So much of the purchase money therefore as had been paid to the assignees, or applied to the payment of bona fide debts before the filing of the complainants’ bill, ought not, in justice and equity, to be charged upon him the second time; and so much thereof as remained then undistributed is already provided for in the account which is directed to be taken. If any of his notes were unpaid at the time of filing of the complainants5 bilí, and had not been turned out in payment of bona fide creditors previous to that time, the amount thereof will appear from the account which has already been directed ; and provision may be made in the final decree, making him liable over to the complainants, if the assignees should be found to be insolvent, so that the amount could not be collected of them. I presume he has not paid the notes to any other than a bona fide holder, since the commencement of this suit, without requiring an adequate indemnity. The whole value of the property sold to him being thus disposed of, it would be a useless expense to take an account for the mere purpose of attempting to trace the proceeds of that part of the property. And from the manner in which the business has been subsequently transacted, it would probably be impossible to take any thing like a correct account of such proceeds.

As there was no fraud in the sale of the property to Joseph Blunt, he having purchased for the full value, and the proceeds being all applied to pay bona fide creditors, I cannot see any thing objectionable in the arrangement he subsequently made with his father and brothers to endeavor to turn the property into cash, and at the same time to furnish his father with the means of livelihood. Even if he had given the whole of this property to his father, or had secured the use of the whole to him in such a manner as to protect it against the claims of creditors, it would be far from furnishing any evidence of fraud. Whatever frauds upon his creditors the father may have been guilty of, it cannot be a fraud in the son to pay the full value of the property out of his own funds for their benefit, and then to insure his parent a maintenance out of the property thus acquired.

I think the vice chancellor has in this decretal order done all that was necessary or proper to be done, in this stage of the cause, to protect the rights of the complainant against the fraudulent assignment of January, 1823 ; and that there is nothing in the decree which requires to be altered or modified. The decree or order appealed from must therefore be affirmed, with costs.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Fish vs. Miller.
    Where the complainant waives an answer on oath, no discovery or answer is necessary in support of a plea which covers the whole relief sought for by the bill.
    So toabillagainsta guardian filed, foran aecountand satisfaction for the estate of his wal'd which came to his hands, and to set aside a release obtained from the complainant on the ground of fraud, the defendant cannot plead tire release in bar of the account, and at the same time insist by his answer that he has fully accounted with the complainant for the property and effects-which came to his hands as guardian.
    Upon a replication to a plea, nothing is in issue except what is distinctly averred in the plea, and if that is established at the hearing, the plea is a bar to so much of the bill as it professes to cover.
    Where the bill charges that a release of the complainant’s demand was obtained by fraud and without consideration, it is not sufficient for the defendant merely to plead the release in bar of the suit, although it recites a good consideration for the giving thereofj but the plea should also contain an averment of the truth of such recital, so that the facts may be put in issue by the replication.
    This was an appeal from a decretal order of the vice chancellor of the first circuit, overruling the defendant’s plea, and permitting it to stand for an answer, reserving the benefit thereof to the defendant on the hearing. The bill sought for an account and payment of monies received by the defendant as the complainant’s guardian ; and also an account against him as the executor of the father of the complainant. The bill alleged various transactions of the defendant as such executor and guardian ; and that, after the complainant became of age, he called upon the defendant for an account and for the payment, of what might be found due upon such account, but that he could never obtain the same; that in March, 1825, upon a promise of the defendant forthwith to render such account and to pay what was due, and in anticipation thereof, he persuaded the complainant to go to the office of the defendant’s attorney and to execute a release, which was left with such attorney as an escrow, to be delivered upon th& defendant’s furnishing a satisfactory account to the complainant, and paying the balance which should appear to be his due; but that no account had been rendered or payment •made; and that the defendant had surreptitiously obtained possession of the release, and now claimed that the same was valid, and had been executed and delivered absolutely. The release, which was set forth in the bill from the original draft remaining in the hands of the attorney who prepared the same, recited that the defendant had stated an account with the complainant as his guardian, and as the sole acting executor of his father, and had paid to him the balance of such account. The defendant pleaded this release in bar of the account sought by the bill, and of any discovery of the estate which had come to his hands as such guardian or executor ; and by the averments in his plea, the defendant denied that he induced the complainant to execute the release in anticipation of his rendering an account to the complainant, or that it was so executed; or that it was delivered to his attorney as an escrow to be delivered to the defendant upon his furnishing a satisfactory account, or upon the payment of the balance of such account to the complainant, or upon any other condition whatever.
    D. Lord,jun. for the complainant:
    I. The plea covers all the relief sought by the bill It is insufficient, because it only puis in issue the execution of the release, while the bill impeaches the consideration of the release. A release duly executed is not a sufficient plea in equity, without averments in the plea shewing the true grounds and consideration on which it was made. Pursey v. Desbouverie, 3 P. Wins. 316. Cooper, 276. Beames, 227, 230. 1 Eden, 65. Beames, 225, 227, 230, This rule applies especially to a guardian settling with a ward just of age$ without any averment in the plea of the truth of the very recitals of the release.
    II. The plea covering all the relief sought by the bill, if the answer contain matter material to the defence aginst the relief, it overrules the plea. It makes two material defences. The issue on the plea then is either insufficient, Beames, 34, 35, or not decisive. Beames, 39.
    III. If the answer here could be looked into to aid the plea, it is insufficient for that purpose, because it does not shew a full account given, nor its truth. It does not shew on which side the balance was, nor that nothing was due; nor what was paid or delivered over, or that any thing was.

      S. ,R. Foot <$• B. W. Bonney, for defendant:
    I. The release pleaded is a perfect defence in bar of the right to the account required by the complainant in his bill.
    II. The plea is good in point of form, and by averments sufficiently covers all the grounds upon which it is sought to be impeached by the complainant.
    III. The complainant by his bill seeks to avoid the release upon the ground of misrepresentation and fraud, practiced by the defendant in procuring its execution, and in obtaining the ■ possession of it from the hands of Joseph Strong, with whom it is alleged to have been deposited in escrow. It is sufficient for the defendant in his plea to meet in general terms the charges upon which the complainant bases his right of action, in such manner as to put them in issue, and to place the parties in a condition to adduce testimony in relation thereto.
    IV. General averments only are requisite in a plea; and these need not extend beyond the case made by the complainant’s bill.
    V. The answer in support of the plea is full and perfect as to all the allegations of fraud, and all other equitable circumstances charged in the bill in avoidance of the release.
    VI. If the answer be not full in all particulars, the complain-' ant cannot take advantage of its insufficiency, inasmuch as he has in his bill expressly waived the necessity of an answer under oath, and the defendant was not required to support his plea by any answer. The same effect must be given to the plea as if it were supported by an answer perfect in every respect.
   The Chancellor.

The complainant having waived an answer on oath, no answer or discovery was necessary in support of the plea, which covert the whole reí if sought by the bill. I am inclined to think, however, that by putting in this unnecessary answer, the defendant has overruled his plea; as the answer of itself, independent of the plea, appears to be a good defence to the whole action, although it might not have been a full answer, so far as relates to the discovery sought by the bill, if the answer on oath had not beén waived. If the defendant has fully accounted with the complainant, and delivered over all the property and effects which belonged to him, he is not entitled to a new account, without showing some fraud or error in the former account; and none such is charged in the bill, whether this release was absolutely delivered, as alleged by the defendant, or otherwise. The defendant cannot be permitted to set up one valid defence, to the whole relief sought by the bill, in the form of a plea, and another full defence by the answer.

Again; the plea appears to be defective in not averring that the defendant had accounted with the complainant and paid him the balance of such account. This is expressly denied in the bill; and is therefore an impeachment of the whole consideration of the release. It is true the release recites, as facts, that such account' had been rendered and such payment made; and if the facts were properly put in issue, and it should turn out upon the proofs that the release was absolutely delivered, the release itself would be prima facie evidence of such facts. But the defendant should have distinctly averred these facts in his plea, so that upon a replication to the plea, the complainant might have had an opportunity of showing that the allegations in his bill were true, notwithstanding these recitals in the release. Upon a replication to a plea, nothing is in issue except what is distinctly averred in the plea; and if that is established at the hearing, the plea is an absolute bar to so much of the bill as it professes to..cover. It is very evident that upon a replication to this plea the truth of these recitals would not be put in issue; but only the fact that the release contained such recitals. And under such an issue, the complainant would not be permitted to introduce evidence to show that the recitals were false. (See Allen v. Randolph, 4 John. Ch. Rep. 698 ; Parker v. Alcock, 1 Young & Jervis, 432; Mitf. Pl., Edwards’ ed. 262, 323.

The decree of the vice chancellor is affirmed, with costs; and the proceedings are remitted.


text:
    Havens & Dorr vs. Hussey and others.
    The implied authority, arising from the ordinary contract of copartnership, does not authorize one of the partners, without the assent of his copartners, to make a general assignment of the copartnership- effects, to a trustee, for the benefit of creditors, and giving preferences to one class of creditors over another.
    This was an appeal from a decision of the vice chancellor of the first circuit, refusing to dissolve an injunction, and directing the appointment of a receiver. The complainant Elizabeth Havens, and the defendant Abby Hussey, were co-partners in a clothing store in the city of New-York, under the name or firm of E. Havens & Co.; and for the purpose of carrying on the business of the firm, they executed a written power, constituting J, Havens, the son of the complainant, and F. G. Macy, one of the defendants, their altornies, with full power and authority for that purpose. The business was carried on by such attornies for about three years, when the firm became insolvent; whereupon the complainant gave to her son a special power to act in her behalf in closing up the concerns of the firm, and a negotiation was commenced between him and Abby Hussey for that purpose. The parties uot being able to agree, the defendant A. Hussey, without, the consent of her copartner and against the known wishes of her son who was present and attending to her interests, executed an assignment of all the partnership property and effects to the defendants, F. G. Macy and R. G. Folger, in trust, to pay certain favorite creditors in preference to the general creditors of the firm. Whereupon the present bill was filed for the purpose of closing up the concerns of the copartnership; to restrain the assignees from proceeding on the assignment; and for the appointment of a receiver of the property and effects of the firm ; so that a rateable distribution thereof might be made among all the creditors, under the direction of the court.

      Elias H. Ely, for the complainants.

      B. F. Butler <$• J. Van Burén, for the defendants.
   The Chancellor.

In the case of Egberts v. Wood, (3 Paige’s Rep. 517,) I had occasion to refer to most of the cases relative to assignments of partnership effects made by one of the copartners. And I then arrived at the conclusion that, from the nature of the contract of copartnership, one of the partners, during the continuance of the partnership, might make a valid assignment of the partnership effects, or so much thereof as was necessary for that purpose, in the name of the firm, directy to one or more of the creditors in payment of his or their debts; although the effect of such assignment was to give a preference to one set of creditors over ariol her. But as it was not necessary for the decision of that case, I did not express any opinion as to the validity of an assignment of the partnership effects by one partner, against the known wishes of his copartner, to a trustee, for the benfit of the favorite creditors of the assignor ; in fraud of the rights of his copartner to participate in the distribution of the partnership effects among the creditors, or in the decision of the question as to which of the creditors, if any, should have a preference in payment out of the effects of an insolvent concern. The present case presents that point distinctly for the decision of the court. And upon the most deliberate examination of the question, I am satisfied that the decision of the vice chancellor is correct; that such an assignment is both illegal and inequitable, and cannot be sustained. The principle upon which an assignment by one partner in. payment of a partnership debt rests is, that there is ail implied authority for that purpose from his copartner, from the very nature of the.contract of partnership; the payment of the company debts being always a part of the necessary business of the firm. And while either party acts fairly within the limits of such implied authority, bis contracts are valid and binding upon his co-partner. One member of the firm, therefore, without any express authority from the other, may discharge a partnership debt, either by the payment of money, or by the transfer to the creditor of any other of the copartnership effects; although there may not be sufficient left to pay an equal amount to the other creditors of the firm. But it is no part of the ordinary business of a copartnership to appoint a trustee of all the partnership effects, for the purpose of selling and distributing the pro-* ceeds among the creditors in unequal proportions. And no such authority as that can be implied. On the contrary, such an exercise of power by one of the firm, without the consent of the other, is in most cases a virtual dissolution of the co-partnership ; as it renders it impossible for the firm to continue its business. The case of Harrison v. Sterry, (5 Cranch’s Rep. 300,) which perhaps has gone as far as any other on this subject, was not sustained as an assignment of all the partnership effects to a trustee for the payment of preferred creditors. It professed to be the transfer of a certain specific portion of the partnership property, for the purpose of saving the credit of the firm, and to raise funds to carry on the partnership business. And upon the ground that it was not in fact what it professed to be, but was merely intended to give a preference to particular creditors, the court held the assignment void, as a fraud upon the bankrupt laws. It was only upon the supposition that the assignment was in fact what it professed to be, that Chief Justice Marshall held it to be within the power usually exercised by a managing partner.

It was said, upon the argument, that the assignment now under consideration was at least good for Hussey’s share of the effects of the firm. But as it appears the firm was insolvent, she had no interest which could equitably be assigned. And if her legal interest in a moiety of the property passed to the assignees, they hold it subject to the equitable right of the other copartner to have it distributed equally among all the creditors of the firm.

The order appealed from is affirmed, with costs; and the proceedings are to be remitted to the vice chancellor.


author: The Chancellor

text:
    Taylor and others vs. Bogert.
    Where the jurat to the answer is defective, and the defendant has leave to amend by adding a proper jurat to the answer on file, the amendment is not complete until a copy of the amended jurat is served on the complainant’s solicitor; who has thirty days thereafter to put in his replication.
    A question arose in this cause as to the regularity of the replication filed to the defendant’s answer. The jurat to the answer as erignally filed was defective, and the defendant had subsequently obtained an order permitting the jurat to the answer on file to be amended.

      J. J. Lansing, for the complainants, insisted that they had thirty days after the service of a copy of the amended jurat to put in their replication.

      J. Rhoades, for the defendant,"contended that the amended jurat referred itself back to the filing of the answer; and that the replication should have been filed within thirty days after the service of the copy of the answer, as originally drawn.
   The Chancellor

decided that the answer was not to be considered perfect until the service of a copy of the jurat, as amended. And that the complainants’ replication being filed within thirty days after such service, it was regular ; as the answer was not to be deemed sufficient until twenty days after notice of such amendment.


text:
    Campbell and others, executors, &c. vs. Bowne and others.
    Where a feme sole, who should have been made a defendant, marries after the commencement of the suit against the other defendants, she cannot be brought before the court with her husband by an amendment of the original bill; but a supplemental bill will be necessary.
    But if a feme sole marries after suit brought against her, the suit does not abate ; and it is only necessary to malte a suggestion of the marriage, and to obtain an order that the husband and wife be named as parties in the subsequent proceedings.
    The coming of age of an infant party does not abate the suit; nor does it render a supplemental bill necessary, unless his interest in the subject of the suit is changed by that event.
    Where an infant defendant, upon coming of age, neglects to appear by a solicitor in the place of his guardian, the complainant must apply for an order that he appoint a solicitor, as in cases of the death or removal of the solicitor of a party.
    The provision of the revised statutes, that an executor of an executor shall have no authority to commence or prosecute an action relating to the estate of the original testator, did not abate a suit properly commenced by such substituted executor before the revised statutes went into effect. But the right to continue the suit is suspended until administration de bonis non is granted ; when the court, upon a proper application, will make an order that the suit proceed in the name of the administrator so appointed. Where new' parties are brought before the court, either by amendment or otberw'ise, who should have been made parties to the original bill, such new parties may avail themselves of any valid defence which they had, under the statute of limitations or otherwise, at the time they were actually made parties to the suit.
    This was a petition to revive, and for leave to file a supplemental bill and to amend the original bill. The suit was commenced in February, 1828, by the complainants, as executors of William Edgar the younger, who was the executor of William Edgar the elder, to foreclose several mortgages given to the latter by R. L. Bowne. At the time of filing the bill, the mortgagor was dead; and Naomi Bowne, his widow, and nine other persons who were alleged to be his heirs at law, together with fifty-three judgment creditors, were made defendants. The widow, and five of the persons named in the bill as heirs at law of the mortgagor, appeared ; four of them, being infants, appeared by the fifth as their guardian. Three of such infants had since become of age ; and one of them, a female, had intermarried with J. B. Skillman. Nine of the persons named as judgment creditors also appeared in the cause, but no further proceedings were had therein previous to the supposed abatement of the suit, by the operation of the revised statutes, in January, 1830. Before the filing of the bill, Rowland L. Bowne, one of the heirs of the mortgagor, had died, leaving a widow and two children ; and by his will had authorized his executor and executrix to sell bis real estate, and divide the proceeds among his children. And the widow subsequently married Chester Jarvis. But the fact of the death of R. L. Bowne being unknown to the complainants, he was, by mistake, made a party defendant; and Emma Bowne, one of his children, was also, by mistake, made a defendant as one of the children and heirs of the mortgagor. Three other persons, who had no interest in the premises, were, by a similar mistake, made defendants, as heirs of the mortgagor; and four others, who were children and heirs, were not made parties. The petitioner, H. L. R. Edgar, who had taken out letters of administration with the will annexed, upon the estate of W. Edgar the elder unadministered, asked to revive the suit in his name as such administrator, and for leave to amend the original bill, by striking out the names of those who had been improperly made parties defendants, and substituting the names of those who had been left out by mistake, with appropriate charges as to their several interests in the premises; and for leave to file a supplemental bill, for the purpose of bringing before the court such other persons as had acquired any interest in the premises, subsequent to the commencement of the suit.

      J. Rhoades, for the petitioner.
   The Chancellor.

If there had been no change of parties since the filing of the original bill, and no change in the interest of those who should then have been made defendants, the amendments asked for would have been allowed as of course. A difficulty, however, is presented in this case from the fact that the widow of R. L. Bowne, who should have been made a party to the original bill but was not, has since that time intermarried with Jarvis; and the husband must now be made a party to the suit. The case is otherwise with Eliza Bowne, who was served with process while a feme sole, but who has subsequently intermarried with Skillman. The suit does not abate by the marriage of a female defendant; neither is it necessary to file a supplemental bill to bring her husband before the court. It is only necessary, in such a case, to make a suggestion of the marriage and obtain an order that the husband and wife be named as parties in the subsequent proceedings. (Milford's Pl. 58. 1 Hoff. Pr. 385.) As this suit is now situated, there must be a supplemental bill to get the widow of R. L. Bowne and her husband before the court; and in that bill the complainant may state, by way of amendment, the interests of all such parties as should have been made defendants to the original bill, and, by way of supplement, may state such new interests as have occurred by marriage or otherwise; he may thus bring all the necessary parties who are now interested in the premises, before the court. The original bill may also be amended, by striking out the names of all the defendants who had no interest in the premises at the time that bill was filed, together with the allegations as to their interests. This suit is not abated, or this amendment could not be allowed in the present state of the cause. The coining of age of an infant defendant, or even of an infant complainant, does not abate the suit; nor does it render a supplemental bill" necessary, unless his interest in the subject of the suit is changed by that event. Where an infant defendant has appeared by guardian, the proper course for the complainant, if the defendant does not himself voluntarily appear by a solicitor after he is of age, is to apply to the court for an order that he appoint a solicitor ; in the same manner as where the solicitor of a defendant dies, or is removed or suspended.

The suit was not'technically abated by the operation of the provision of the revised statutes, which declares that an executor of an executor shall have no authority to commence or maintain any action or proceeding relating to the estate, effects, or rights of the original testator. (2 R. S. 448, §11.) But when the revised statutes went into operation, the right further to prosecute the suit was suspended, until administration de bonis non was granted to the petitioner, as authorized by the seventeenth section of that article of the statute which relates to the granting of letters testamentary. (2 R. S. 71.) Although some of the executors of the original testator survived William Edgar the younger, who alone had proved the will, yet, as they subsequently renounced the executorship, letters testamentary were properly granted to the petitioner ; in the same manner as if such renouncing executors had been actually dead, or had not been named in the will. The fourteenth section of the title of the revised statutes, relative to the rights and liabilities of executors and administrators, (2 i?. S. 115,) is, therefore, applicable to this case ; as the suit was commenced by executors who have become incapable of acting any further in the affairs of the estate of the first testator. And the suit must now be continued in the name of the petitioner, as the pérson who has succeeded to the rights of the executors of the acting executor in the prosecution of this suit. If the change of the rights of the complainants were the only defect necessary to be remedied in this case, it would have been sufficient for the administrator de bonis non to have made- an affidavit of the facts, and, upon a regular notice to the parties who had appeared in the cause, to have applied for an order that the suit proceed in his name instead of the names of the original complainants, who are superseded in their trust, as to the estate of W. Edgar the elder, by the operation of the revised statutes. But as it is necessary for the petitioner to file an original bill in the nature of a supplemental bill, for the purpose of bringing some new parties before the court as defendants, the proper course for him appears to be, to file such bill in his character of administrator de. bonis ñon, for the purpose of having the benefit of the former proceedings in the suit; and in the same bill to set out the necessary facts, either as amendatory, or as supplemental matters, for the purpose of bringing all persons now having any interest in the mortgaged premises, before the court. He is therefore entitled to an order for leave to file such a bill; in which he may make the whole proceeding rectus in curia, even without any amendment of the original bill; as it will bs sufficient for him to state the mistakes which have occurred as to parties in such original bill, and the change of interest which has taken place as to other parties, either by lapse of time or otherwise, as reasons for not making persons parties to the supplemental bill who never had any interest in the subject matter of the suit, or whose interest therein no longer exists. Such a bill will be in the nature of an original bill as to those persons who should have been made parties in the first place, and will be a supplemental bill as to those who were served with process in the original suit, or who have subsequently derived title through or under them. The rights of the new parties would be the same upon an amendment of the first bill; as the court cannot, by an amendment, deprive those who are made parties by such amendment, of any defence which they had, either under the statute of limitations or otherwise, when they were actually made parties to the suit.

        See Asbee v. Shipley, Mad. & Geld. Rep. 296, S. P.


text:
    The Bank of Ogdensburgh vs. Arnold and others.
    Where, in a suit for the foreclosure of a mortgage, the whole amount is not due, if the master reports that the premises can be sold in parcels, without injury to the interests of the parties, only so much of the premises can be sold as will be sufficient to satisfy the amount then due, with costs; although the residue will be insufficient to satisfy the mortgage money which is yet to become due.
    If the whole amount secured by the mortgage has become due, and the mortgaged premises are not of sufficient value to pay the debt and costs, the court, upon the filing of the bill, may, upon due notice to the defendant, appoint a receiver of the rents and profits of the premises, or otherwise secure such rents and profits for the satisfaction of the debt and costs.
    But where the mortgagee has neglected to take a specific pledge of the rents and profits of the mortgaged premises for the security of his debt before it becomes due, he has no equitable right to the rents and profits in the mean time ; and in case of the death of the mortgagor, his judgment creditors are entitled to a preference in payment out of such rents and profits.

      The wife joining with her husband in a mortgage for the security of his debt, is, after his death, entitled to the rents and profits of her dower, or other interests in the premises, until foreclosure; and where the debt is payable by instalments, and the amount which has become due can be satisfied by a sale of one parcel only of the premises, the income of her share of the residue cannot be taken to satisfy that part of the debt which is not yeVdue.
    In May, 1831, Jacob Arnold and J. A. Ford borrowed of the complainants $10,000, and to secure the payment thereof gave a bond and mortgage; in which mortgage Maria S., the wife of Jacob Arnold, also joined. The interest on the bond and mortgage was to be paid semi-annually; but no part of the principal was to become due until May, 1836; and the last instalment was not payable until 1841. J. Arnold died insolvent, in March, 1834, leaving his wife surviving, and two infant children who were his only heirs at law. Previous to his death, J. Arnold gave another mortgage upon the same premises; the payment of which mortgage was guaranteed by the complainants. At the time of the death’of J. Arnold, one half year’s interest was due upon the complainants’ mortgage; and they shortly thereafter filed their bill in this cause to foreclose that mortgage. The bill was ■ taken as confessed, as against all the defendants, except the infant heirs of J. Arnold, who put in the usual answer by their guardian ad litem. The master reported that the mortgaged premises were worth about $12,000, and could be sold in parcels; but that much of the value of the property was in buildings, and the mortgaged premises might not, upon a sale, produce more than the amount of the debt, and if the sale was deferred until the debt became due, the security would prove insufficient. A decree was thereupon made for the sale of the property in parcels, or so much thereof as was necessary to pay the amount then due, with the costs of the suit; reserving to the complainants the right to apply for a further order of sale when another payment became due. The complainants thereupon presented a petition, staling these facts, and that Maria S. Arnold, the mother of the infant defendants, was in the receipt of the rents and profits of the premises, and had not applied the same to the payment of the interest due on the mortgage, and that she refused to let the complainants into the receipt of such rents and profits, to be applied on the mortgages. They therefore prayed for an order directing the sale of the whole of the mortgaged premises, or that the complainants might be let into the possession of the rents and profits, or that a receiver might be appointed. Maria S. Arnold, the widow, together with the guardian ad litem of the infant defendants, put in an answer to this petition, stating that they believed the mortgaged premises were an ample security; that the property mortgaged originally cost J. Arnold, the mortgagor, over thirty thousand dollars, and was at the time of his purchase believed to be a good investment, and worth that sum; but that owing to several failures, which had thrown a large amount of real estate into the market in the village where the mortgaged premises were situated, a sale of such premises could not now be made without a great sacrifice of the real value of the property. They also stated that the infant defendants had no means of support except the rents of the mortgaged premises, a part of which were applied for that purpose. The widow also stated that she had offered to the complainants to surrender to them all the mortgaged premises, except one house and lot, producing about $150 annually, and to allow them to take the rents and profits and apply them in satisfaction of their mortgage.

      J. Edwards, for the complainants.

      B. Perkins, for the widow, and the infant defendants.
   The Chancellor.

Previous to the revised statutes, this court, up on a bill of foreclusure, could direct the whole mortgaged premises to be sold, or a part thereof only, as should be most conducive to the ends of justice, in reference to the equitable rights of all parties; although a part only of the mortgage money had become due. But the power of the court in this respect has been somewhat restricted by the revised statutes. The 163d section of the title of the revised statutes relative to the court of chancery, (2 R. S. 193,) directs a reference to a master to ascertain and report the situation of the mortgaged premises; and if it appears from his report that the premises can be sold in parcels, without injury to the interest of the parties, then so much only of the premises are to be sold as will be sufficient to pay the amount then due, with costs; and the decree is to remain as a security for any subsequent -default in the payment of sums thereafter to become due. This provision of the statute appears to be imperative upon the court: and it certainly cannot be departed from, except in cases where the complainant has some equitable claim upon the rents and profits of the premises which will accrue before the mortgage debt becomes payable. In this case Mrs. Arnold joined with her husband in the mortgage; and of course her dower interest in the premises is pledged for the payment •of his debt, so far as the same can be reached and applied for ■that purpose under a decree of foreclosure, made in conformity to the statute. Beyond that, the complainants have no equitable claim whatever against her dower interest in the premises, or against her personally. When she joined with her husband in this mortgage, payable at the expiration of ten years, she impliedly reserved to herself the right, in case of Ms death, to receive so much of the rents of the premises, remaining unsold from time to time, as belonged to her for her dower. And until the complainants have entitled themselves to a sale of the land pledged by her as a security for the debt of her husband, they have no lien, either at law or in equity, upon that portion of the rents and profits which belong to her.

The rights of the infant defendants depend upon a different principle. As it is alleged that their father died insolvent, they are of course liable to his creditors, in equity, for whatever comes to them by descent from him, as his heirs at law, whether in the shape of rents, or otherwise. But the mortgagees have no specific lien upon the rents of the mortgaged premises until the mortgage money becomes due, so as to entitle them to a foreclosure of the mortgage. In the mean time the mother, as guardian by nature of the infants, is entitled to receive their share of the rents and profits; (1 R. S, 718, § 5;) which rents and profits belong to the creditors oí' their father, according to the priority prescribed in the statute. And if there are any judgment creditors, they will be entitled in preference to the complainants, who are mere specialty creditors. If the whole mortgage money was now due, and the premises were not of sufficient value to pay the debt and costs, the court might consider the complainants in equity, as immediately entitled to the whole estate pledged as a security for the payment of such debt and costs; so as to authorize the appointment of a receiver of the rents and profits, in anticipation of a decree, at any time after the filing of the complainants5 bill. But no such equity can arise where the debt is not yet due; and where the mortgagee has neglected to take a pledge of the rents and profits of the whole premises to keep down the accruing interest in the mean time. This decree óf sale, which has been made in conformity with the directions of the statute, has already provided for the payment of what is now due; and I can see no valid reason for depriving the widow of her dower in that part of the premises which is not necessary to be sold until further payments become due. The offer made by the widow to" relinquish to the complainants the rents of all the mortgaged premises, except the one house and lot, and to permit them to receive such rents and profits to keep down the accruing interest until the debt becomes due, appears to me to have been reasonble, under all the circumstances of this case; as she could not be expected to relinquish a temporary provision for the support of herself and children, which the statute had secured to her, without receiving any equivalent therefor.

Petition dismissed,


text:
    Scott vs. Shufeldt.
    "Where the parties were white persons, and the complainant was, charged by the oath of the defendant as the putative father of her bastard child, and the complainant thereupon, believing the child to be his, married her to obtain his discharge from the proceedings against him under the bastardy ■act, and he subsequently ascertained that the child was a mulatto, and that the defendant knew that fact at the time she swore it to be his, she then having been delivered and seen the child; Held, that the complainant was entitled to a decree declaring the marriage contract void, on the ground that his consent was obtained by fraud.
    If a party knowing that he cannot be the father of a bastard child is induced to many the mother to avoid a prosecution, it is no ground for annulling the marriage contract on the ground of fraud, although he should afterwards be able to establish the fact that the child was not his.
    Although it is legally impossible that a white man should have a mulatto child by a white woman, yet if the former, before the birth of the child, believing it to be his child, marries the mother on the ground of such belief, it seems he cannot have a decree annulling the marriage, notwithstanding her concealment of the fact from him that she had received the embraces ■of a negro about the time she was receiving his.
    The bill in this case was filed for the purpose of annulling a marriage contract, on the ground that the consent of the husband to such marriage was obtained by fraud, force and coercion. The bill alleged that the complainant had occasionally visited the defendant, and that she afterwards made oath before a magistrate that she had been delivered of a bastard child, and that the complainant" was the father of such -child ; that the complainant was thereupon arrested upon a warrant, and was required to give bail as the putative father of such bastard; and believing it to be a white child, and being unable to procure bail, he consented to marry the defendant, and was thereupon married to her by the magistrate before whom he was brought on such warrant; that he subsequently ascertained that the child, of which the defendant had been delivered a few days previous, was a negro child; the complainant and defendant being both white persons; and that he had not cohabited with the defendant subsequently to such marriage. - The complainant, therefore. prayed that the marriage contract between him and the defendant might be annulled, and declared and decreed to be void, on account of the fraud, force and coercion, by which his consent thereto had been obtained. The bill having been taken as confessed,

      Killian Miller, for the complainant, now moved for an order of reference to a master to examine and report as to the truth of the allegations contained in the complainant’s bill, and that special directions be given to the master on the subject of the reference.
   The Chancellor.

There is nothing in this case which

can authorize the court to declare the marriage contract void on account of force or coercion. Although the statute authorizes the court to annul a marriage when the consent of the complainant was obtained by force, it never was intended to apply to a case where the putative father of a bastard elects to marry the mother, instead of contesting the fact, sworn to by her, that be is the father of the child. There is no pretence in this case that the magistrate, who issued the warrant, upon which the complainant was arrested, was not acting in good faith. The only ground upon which this bill can be sustained, therefore, is, that the complainant was defrauded by the defendant, by her inducing him to suppose he might be the father of her illegitimate child, when she in fact knew it was not bis, but the child of a negro. If he knew it could not be his child, there was no fraud as to him, although he afterwards ascertained that it was the child of a negro, instead of its being the child of some white person other than himself. From the allegations in the bill, however, it is probable he had some reasons to suppose it might, be his child, although he appears to have had doubts on that subject from the beginning. Under such" circumstances, if the mother, at the lime she charged him as the putative father, and induced him to marry her under the supposition that the child might possibly be his, knew it was not his child, but that it was the child of a negro, she was not only guilty of perjury, but she also intentionally defrauded the complainant in such a manner as to authorize this court to declare the marriage contract a nullity. If the child had not been born at the time of the marriage, the complainant would have had some difficulty in showing that he had been intentionally deceived and defrauded by the defendant, as she might possibly have supposed the child to be his, although she had also had connection with a negro about the same time. But if she knew it was a black child at the time she charged the complainant with being the father thereof, I am not such a convert to the theory of Br. Mitchell, suggested by him in his evidence in Whistelo’s case, (3 Wheeler’s Cr. Cas. 194,) as to believe it possible she did not intend to commit a fraud upon the complainant; by charging him as the father of this child, when she had the most satisfactory reasons for beliving it could not be his, but that it was in fact the child of a negro, with whom she must also have had connection.

I shall therefore direct a reference to a master residing in the county of Columbia, to report as to the truth of the matters alleged in the complainant’s bill. And particularly, that the master ascertain and report whether the child of which the defendant charged the complainant as being the father, was a negro or mulatto child; and whether, at the time she made that charge, and at the time of the marriage, she knew or had reason to believe it was a negro or mulatto child, and intentionally concealed that fact from the complainant. The master must also ascertain and report "whether the parties to this suit have voluntarily cohabited as husband and wife since the alleged marriage. And the master is to report the testimony which he shall take in the case, with his opinion thereon, without delay: to the end that upon the coming in of that report, a decree of nullity may be pronounced if the allegation of fraud, in this respect, shall be established by the proof.

       See Beck's Medical Jurisprudence, 5th edition, voL 1, 485»


text:
    King vs. Donnelly and others.
    Where one of several trustees refuses to accept and execute the trust, the whole estate vests in the others, in the same manner as if he were dead or had not been named as trustee.
    But where land is devised in trust, and all the devisees decline the trust, the legal estate nominally vests in them for the benefit of the cestui que trusts, if the trust itself is legal; although the execution of the trust in such a case devolves upon the court of chancery, under the statute, so that the nominal trustees may be removed and others appointed in their places if necessary,
    A new trustee, under the statute, cannot be appointed except upon the application of a party interested in the execution of the trust; or by a decretal order made in a cause, where such new trustee is proper to carry into effect the decree of the court.
    In a partition suit, where the legal estate in an undivided shave of the premises is in a trustee, if a new trustee is substituted in his place pending the suit, by an appointment by the chancellor under the statute, the new trustee must be brought before the court by a supplemental bill.
    The complainant in this case filed his bill for the partition of certain premises, an undivided share of which premises was devised to two of the defendants, in trust, for the use of the other defendant. The trustees, who had never acted, put in an answer and disclaimer, refusing to accept and execute the trust. The complainant thereupon applied to the court, by petition, for the appointment of a new trustee of the share of the premises which had been so devised in trust.

      J. King, complainant, in person.
   The Chancellor.

Where several persons are named as trustees, and one of them refuses to accept and execute the trust, the whole estate will vest in the others who act, in the same manner as if he were dead or had not been named as a trustee. (Hamp. on Trust. 90. 3 Paige’s Rep. 430.) It is otherwise where lands are devised to trustees, and all the devisees decline the trust. There the legal estate must of necessity vest in the devisees, for the benefit of the cestui que trust, who is the real object of the testator’s bounty, if the trust itself is legal; and they cannot wholly defeat the intention of the testator by a refusal to accept the trust. But in that case, although the legal estate nominally vests in the trustees designated by the testator, yet, as he cannot compel them to act, against their wills, the execution of the trust necessarily devolves upon the court of chancery. This is a case, therefore, within the equity of the seventieth and seventy-first sections of the article of the revised statutes relative to uses and trusts. (1 R. S. 730.) And these trustees, who decline the execution of the trust confided to them by the will of the testator, may be removed by the 'chancellor, and others, if necessary, may be appointed in their places. The complainant in this suit, however, is not the proper person to ask for their removal and for the appointment of new trustees. The statute directs it to be done upon the bill or petition of a person interested in the execution of the trust. And it is not necessary, for the purposes of this suit, that any new trustees should be appointed; as the nominal trustees in whom the legal estate is vested, and the cestui que trust, who is fully competent to protect his own interest in the trust property, are parties to the suit. The partition, therefore, will be valid without any change of parties. And, upon a final decree in the cause, the court can appoint a trustee ; or it may direct the trust to be executed by an officer of the court, if a sale of the premises should be decreed. Should a new trustee be now appointed, it would subject the parties to the expense of a supplemental bill to bring him before the court, before any valid decree could be made of the premises; as the legal estate in an undivided part thereof would then vest in the new trustee thus appointed. (Lube,. 186.)

Petition dismissed.


text:
    Baring & Willing vs. Moore and others.
    Where, by an order for the resale of mortgaged premises, the master was db rected to put up the premises at a particular sum, and resell the same if that amount or a larger sum was bid therefor, and at the sale the premises were struck off to a purchaser for the sum specified, and thereupon the master, acting under the direction of the complainants’ solicitor, and with-* out any previous intimation to that effect, insisted upon the immediate payment of the bid in specie, although the purchaser offered to pay the same in good current bank bills, or in good drafts on specie paying banks at Albany, or to pay the amount in specie as soon as it could be obtained from the banks where it could be found ; and the master immediately put up the property again upon the terms that specie should be paid down, and no person purchasing on these terms, he reported that the terms upon which the resale was directed had not been complied with ; It ivas held, that the conduct of the master was improper and unjustifiable, and that the purchaser was entitled to a deed of the premises, upon payment of the amount of his bid ; and the report of the master was set aside, and he was directed to execute to the purchaser a deed upon such resale.
    It seems a master is liable for the costs of setting aside his report of sale and of the subsequent proceedings thereon, if his conduct as such master has been grossly improper and oppressive.
    In January, 1834, a sale, of lot No. 13, in Binghampton, • which had been made by a master in chancery, was set aside, and the master was directed to resell the premises, provided the sum of $3500 should be bid therefor upon such resale. From this order the purchaser at the first sale appealed to the court for the correction of errors; and the order of the chancellor was subsequently affirmed by the appellate court. Pending that appeal, the master, acting under the direction of the solicitor for the complainants, who was the brother and partner of the appellant, proceeded to a resale of the premises under the order, notwithstanding he knew of the entering of the appeal. At the time appointed for the sale, O. Tyler, the son-in-law of Whipple upon whose application the resale was ordered, appeared and bid $3500 for the premises, and the same were struck off to him by the master. The complainants’ solicitor, and their agent who was also present, then insisted that the master should receive nothing but specie from Tyler for the amount of his bid. And the master, acting under their direction, demanded the immediate payment of the specie; although he was offered the whole amount in current bills, or in a good and available draft on one of tlie banks in Albany, or that the xvhole amount should be paid in specie, provided time xvas given to procure it from "Albany, or any other place xvhere it could be had. The master again put up the property, upon the terms of an immediate payment of the bid in specie, although he knexv that specie to the amount of $3500 could not then be had at that place ; and no person being able to bid the sum required, on those terms, he closed the sale and reported that the condition of the order for resale had not been complied with. The effect of this report of the master, if sanctioned by the court, would be to deprive Whipple of the benefit of his order of resale, and to allow the purchaser to retain the premises for the sum of $2400, which was the amount paid by him at the first sale. Whipple", and Tyler the purchaser, thereupon applied to the chancellor for an order, directing the master to convey the premises to Tyler, the purchaser, upon the payment of the amount of his bid; or for such further or other order as should be proper ypon the facts disclosed.

      ¿S. Cheever3 for Whipple and Tyler.

      J. A. Collier, for the complainants.
   The Chancellor.

By the decision of the court for the correction of errors, upon the appeal from the order of the 7th of January last, the former purchaser has no longer any interest adverse to the claim of the petitioners upon the present application ; as the amount which they ask to pay into court on the last sale is much more than is to be refunded to him under the order which has been affirmed. It is not necessary, therefore, that I should decide the question whether the appeal bond for costs which was filed in this case was sufficient to stay the proceedings upon the order appealed from; or whether the appellant should not also have given a bond for the use and profits of the premises of which the appellant was in possession under the former sale, as directed by the 85th section of the article of the revised statutes relative to appeals. (2 R. S. 606.) The complainants certainly have no right to object that the sale of the premises pending the appeal was irregular, as the master was acting under the directions of their solicitor. And their agent, the representative of the Mathers, has no right to object., as the solicitor acted under instructions from him.' As the amount bid upon the first sale was not sufficient to pay the amount reported due to the complainants, it was for their interest to have the premises resold for a larger sum; and of course it was for their interest that the order appealed from should be affirmed. It is also for their interest that the second sale should be carried into'effect, although their solicitor and their agent attempted to prevent bidding at the second sale, by instructing the master to demand specie. And yet the solicitor has subsequently entered an order to confirm the master’s report; the effect of which confirmation would be to deprive his clients of the balance due them on the decree.

Indeed, it is impossible for me to resist the conclusion at which I have arrived in this case, that the whole of the proceedings on the part of the original purchaser, and of the agent and solicitor of the complainants, have been conducted with a view,in one way or another, to defeat the petitioner, Whipple,of the benefit which was intended to be .secured to him by the order.of the 7th of January last. The purchaser, as he had a perfect right to do, appealed from that order ; and if he had. succeeded on that appeal, his purpose would have been fairly and legitimately effected. But in case he failed on the appeal, if purchasers could be prevented from bidding to the amount of $3500 on the resale, he would still retain the premises at his former bid of $2400. Either through mistake or otherwise, his appeal was so entered as to leave it extremely doubtful whether it operated as a stay of proceedings as to any of the parties; but more especially as to the complainants who were not named as obligees in the bond for costs. The agent of the complainants, and who had placed the bond and mortgage in this- case in the hands of the purchaser at the first sale, and his partner, for collection,, then gave written instructions to the latter, who happened to be the solicitor on record, to direct the master to proceed to a resale, although they both knew of the pendency of the appeal. The master, under the direction of the solicitor, advertised the premises for sale for the seventh of March ; the order for the resale, authorizing such resale to be made upon a notice of two weeks. No steps were taken by the former purchaser to stay these proceedings; but he appeared at the time and place of sale, and gave formal notice to those who had come there to bid, that he was the owner of the premises and had the master’s deed therefor; that he had also appealed from the order directing a resale, and that they must therefore purchase at their peril. The solicitor and the agent of the complainants were present also, but made no request to the master to postpone the sale. And as the master proceeded to offer the premises for sale, notwithstanding this notice to the bidders, Tyler, the son-in-law of Whipple, who had the necessary funds, and had come there with the intention of bidding to the amount of $8500, in compliance with the condition contained in the order for the resale, bid that sum ; and no person offering to bid more, the premises were struck off to" him by the master. He was then informed by the master, for the first time, that the immediate payment of the amount of his bid, in specie, would be required. The agent, and the solicitor for the complainants, also insisted upon the payment of the amount of the bid, in specie ; although by the terms of the order under which the sale was made, no part of the proceeds of the sale was to be paid to them or to the complainants, but the surplus, after refunding to the former purchaser the amount he had paid upon the first sale,, was to be paid into the register’s office, to abide the further order of the court. Tyler not being able to obtain the specie at that place, the premises were' again put up for sale, upon the terms of the immediate payment of the whole purchase money in' specie ; and no person being able to bid to the amount required, and to pay the specie therefor instantly, the master declared the sale closed, and immediately made his report. That report, instead of being sent to the register’s office at Albany, where the solicitor of Whipple, resided, was, for some cause which is unexplained, sent to the assistant register’s office at New-York; and an order of confirmation was entered there-» on at the latter place, by the- solicitor for the complainants* four days after the time of such resale. The whole amount 0f tpjg pUVChase money was offered to be paid to the master,, immediately after the sale, in current bills or in a good and available draft on a bank in the city of Albany; where the surplus proceeds of the sale were to he deposited by the master. And the affidavit of the former purchaser is positive that he neither demanded or required the payment of specie for what was-coming to him. The master, therefore, is left without a shadow of excuse for this most unjustifiable proceeding, on his part, to deprive the purchaser on the resale of the benefit of his purchase, .and to defeat the whole object of the court in directing a resale-of the premises. From the facts disclosed in this case, I am left to'the alternative of concluding that he is either wholly ignorant of the duties of his office and has been used as the tool of others, or that he has intentionally acted most iniquitously and oppressively in this matter. There is no pretence that he had any doubts as to the goodness of the bank bills offered to him in payment; or that he feared the draft which was offered on one of the' banks in Albanjr, would not be paid to him, or to the register, upon presentment thereof at the bank. But even that would have been no sufficient excuse for this proceeding; as he might have retained the deed until he ascertained whether the draft was paid, or until the purchaser should .have a reasonable time" to procure the specie from Albany, or from some other place where it could be obtained. It is well known ’that for years, bank notes have been nearly the only circulating medium of the country; and that they have been uniformly received by sheriffs and masters, upon sales of property. by them, except where -special notice was given before the sale.that specie would be required at the time of such sale.' This court, therefore, in the case of Neilson v. M'Donald, (6 John. Ch. Rep. 201,) characterized the conduct of a sheriff, who had surprised the defendant, at the moment of the sale,' with an unexpected demand for specie^as a grievous abuse of power, for the purpose of oppression and extortion. And although the decree in that case was reversed in the court for the correction of errors, on other grounds, none of the judges differed in opinion with Chancellor Kent as to the impropriety of the sherifPs conduct. Mr. Justice Woodworth says: “The conduct of the officer was altogether unjustifiable, wanton and oppressive ; and it is neither palliated or excused by proving that he acted under, the orders of the plaintiff in the execution.” The language of Justice Sutherland is equally strong and explicit. And the chief justice, who voted for the reversal of the decree, says : 66 A reasonable time should have been given to the respondent to obtain the money, particularly when the sheriff could not possibly sustain any loss from the indulgence.”

The conclusion at which 1 have arrived, in this case, is, that Tyler is entitled to a conveyance of the premises which were struck off to him, upon the payment of the amount of his bid• and that the master should have reported him as the purchaser on the resale. The master’s report must, therefore, be set aside. And he must execute a deed to Tyler, and report him as the purchaser at the resale, for the sum of three thousand five hundred dollars; provided the amount of his bid, with interest thereon from the time of this decision, is paid to the master, or, in case of his absence from his office or place of residence when the purchaser or his agent applies there to make payment, is deposited to the credit of the master in the Broome County Bank, within thirty days after the purchaser or his solicitor in this matter has notice of this decision.

As the master has had no opportunity to be heard upon this application, it would be improper to charge him with the costs thereof at this time; although it appears that his improper conduct in relation to the sale has rendered the application necessary. I shall therefore reserve the decision of the question of costs until after the coming in and confirmation of the new report, which the master is directed to make of the sale • when the petitioners are at liberty, upon due notice to the master and to the solicitor of the complainants, to apply for such further directions as to their costs upon this application, as may be just.


text:
    Somers vs. Torrey.
    Where the defendant, who was insolvent, had recovered judgment against the complainant in an action of slander, and the latter filed his bill to offset another judgment against the defendant which had been assigned to the complainant by F. during the pendency of the slander suit; and the defendant, by his answer, after denying that the assignment was made absolutely and in good faith, and averting that it was made without consideration and was merely colorable, proceeded to charge the complainant with having uttered the slanderous words for which the defendant’s judgment was recovered, at the instigation of F., and to aid him in a design of destroying the defendant’s character, under a promise of indemnity from F., and that, F.’s judgment was assigned to the complainant in pursuance of such promise of indemnity ; Held, that these charges in the answer were not material,to the defence, and were scandalous and impertinent.
    The counsel who signs a pleading containing scandalous or imperfect matter is guilty of a contempt of the court, and is personally liable to the adverse party for the costs of the proceedings to have the scandalous or impertinent matter expunged.
    This case came before the chancellor upon exceptions to a master’s report, disallowing two exceptions to the defendant’s answer. The defendant recovered a judgment against the complainant in an action of slander; and this bill was filed for the purpose of off-setting against that judgment the amount of another judgment against Torrey, the defendant, which, as the bill alleged, was assigned by G.- W. Fitch to the complainant, during the pendency of the slander suit and a few months before the trial therein. The defendant, in his answer, which was put in without oath, denied that the assignment of the judgment by Fitch to the complainant was made absolutely and in good faith. On the contrary he insisted that if any such assignment was made, it was without consideration and merely colorable; and was made for the purpose of enabling the complainant to offset the judgment against any judgment which might be recovered against him in the slander suit. The defendant then further stated, in his answer, that before the speaking of the slanderous words for which he had recovered judgment against the complainant, Fitch had become the declared enemy of the defendant, and had entered into a conspiracy with several persons for the purpose of destroying his character, by imputing to him the crime of perjury ; that the complainant, without any individual hostility to the defendant, but merely to accommodate Fitch, and to aid Mm in his purpose of destroying the defendant’s character, uttered the slanderous words for which his suit was brought; with an understanding that the complainant was to be indemnified by Fitch against the consequences of such slan-, derous aspersions upon the defendant’s character. And that if the judgment was assigned by Fitch to the complainant, as alleged in the bill, it was assigned in pursuance of such understanding, and for the purpose of enabling the latter to offset it against any verdict or judgment which might be recovered against him in the slander suit. To this statement in the answer the complainant excepted, as scandalous and impertinent.

      W. H. Seward, for the complainant.
    JM". T. Reynolds, for the defendant
   The Chancellor.

The statement in the answer which is covered by these exceptions, if it is not responsive to the bill or material to the defence of the suit, is not only impertinent, but is a gross slander upon one who is not a party to the suit, as well as upon the complainant. And the counsel who puts his hand to such scandalous and impertinent matter, is not only liable to the animadversions of the court, but is also chargeable with the costs of the proceedings, to have it expunged from the records of the court. (Mitf. Pl., Edw. ed., 48, 318.) It certainly could make no difference, as to the complainant’s right of off-set, whether he had slandered the defendant to gratify his own malice, or merely as the convenient tool of another. For that slander, with all its aggravations, the defendant Torrey had the right to appeal to a jury of his country for redress; and the complainant having been convicted of the slander, I am bound to presume the jury has given against him such damages as were proper, under the circumstances as disclosed at the trial. The statement excepted to in this answer as scandalous and impertinent, is calculated to degrade the slanderer still lower in the public estimation, by inducing a belief that he was only acting as a willing instrument to gratify the malice óf another, who had entered into a conspiracy to fix upon Torrey the charge of perjury. It is also calculated to injure the reputation of. a third person who. is not a party to the suit, and who has, therefore, no opportunity to prove the falsity of this statement as to himself. And it would bé a disgrace to the administration of justice, if any court should permit its records to be used for such purposes merely. If the complainant is the bona fide assignee of á judgment against the defendant, it can make no difference in the result of this suit, whether the slander for which the defendant recovered his judgment was the result of the complainant’s own malice, or of the. malice of another. The first part of the answer puts in issue every thing that is material for the defence; and it will enable the defendant to give evidence of any thing which would show that the assignment of the judgment to the complainant was not made in good faith, or that the judgment was transferred upon an illegal consideration. The residue of the answer was unnecessary, and therefore impertinent ; as the defendant is not permitted to put the sáme matters twice in issue, by allegations in different parts of his answer. The exceptions must be allowed, with costs; and the impertinent and scandalous matter must be expunged.

         The counsel whoso name is put to a pleading containing scandalous or impertinent matter is personally liable to the adverse party for the costs of the proceedings to expunge the scandal or impertinence. (Doe v. Green, 3 Paige,. 349.) So if a solicitor files a scandalous affidavit, he is guilty of a contempt of the court, and may be personally charged with th'e expense of taking'it offofthe files. . (Ex parte Wake, 1 Mont. & Bligh’s Rep. 259.)


text:
    Studwell vs. Palmer.
    tf the party in whose favor an interlocutory decision of a vice chancellor is made wishes to limit the time for appealing, he should have the order entered, and give notice thereof to the adverse party without delay; as the latter has fifteen days, after the receipt of notice of such order, to appeal from the decision.
    Et is no objection to the validity of an appeal bond, that one of the sureties therein is the solicitor of the appellant.
    This was a motion to dismiss an appeal, from an interloculory order of a vice chancellor, for irregularity. The order appealed from was entered on the 28th of October, 1834, but was never served on the solicitor of the appellant; and he saw a copy of the order, for the first time, on the 8th of November. The appeal bond, with a notice of the appeal, was sent to the clerk, to be approved and filed, witbin two days thereafter ; but the bond having inadvertently been drawn with a penalty of $100 only, the same was returned for correction, and was not filed until the 20th of November. Another objection to the regularity of the appeal was, that the appeal bond was executed by the solicitor for the appellant, as one of the sureties therein.
    J. Rhoades, for the appellant.

      D. Wright, for the respondent.
   The Chancellor.

The- appeal was entered within the lime limited by the statute. The parties against whom the order was made had fifteen days to appeal, after the receipt of notice of the order appealed from. And as the order was never served upon the defendants, or their solicitor, they are not chargeable with notice thereof until the 8th of November, when their solicitor first saw the order. This point was expressly decided in the recent case of Eldridge v. Howell, (4 Paige’s Rep. 457.) If the party in whose favor an interlocutory decision is made, wishes to limit the time for appealing therefrom, he should draw up and enter the order, and serve a copy thereof upon the solicitor of the adverse party without delay.

It is not a valid objection to the regularity of the appeal? that one of the sureties in the appeal bond is the solicitor: for the appellants. In the common law courts, where formal exceptions are taken to the sufficiency of bail, it is a good ground of exception that one of the proposed bail is an attorney or counsellor of the court. But the case of Scott v. Craig, (I Wend. Rep. 35,) cited by the respondent’s counsel from the decisions of the supreme court, shows that even in- that court it is not a ground for quashing a writ of error, that one of the bail in error is an attorney. The rule in the common law courts is merely technical; and neither the statute or the rules of this court contain any prohibition against a solicitor’s becoming a surety in an appeal bond. It would, therefore, be manifestly unjust to apply such a technical rule to this case? for the purpose of depriving the defendants of the benefit of their appeal.

The motion to dismiss the appeal must be denied, with costs.