text:
    Varet, administrator, &c. and others vs. The New-York Insurance Company.
    Where the defendants had underwritten a policy for $15,000 upon a cargo of coffee, which cargo was afterwards seized under the Berlin and Milan decrees and condemned; and the assured after such seizure offered to abandon to the underwriters as for a total loss, which abandonment they refused to accept; and a colnpromise was afterwards made between the parties by which the assured consented to receive the sum of $5000, which was less than one third of the amount to which they would have been entitled upon an adjustment of their claim as for a total loss, and to cancel the policy; and compensation for the loss was subsequently made by the French government, $5000 of which compensation the commissioners under the French treaty awarded to the underwriters; Held, that upon the compromise with the insurers and the cancelling of the policy the whole of the claim to indemnity against the French government belonged to the assured; Held also, that the decision of the commissioners was not conclusive between the parties, as to which of them was entitled to the indemnity money under the treaty ; Held further, that the representatives of the assured were authorized to file a bill in chancery, to recover the money which the underwriters had obtained from the government of the United States, under the award of the commissioners; although they had a concurrent remedy by an action at law, against the insurers, for money had and received to their use.
    The court of chancery is not at liberty to relinquish its ancient and acknowledged jurisdiction of a case, although courts of law now afford a remedy to parties in like cases by the equitable action of assumpsit.
    May 7.
    This was an appeal from a decision of the vice chancellor of the first circuit overruling a demurrer to the complainants’ bill. In 1817, Icard, Mumford and Roulet, the last of whom together with the personal representatives of the two first are the complainants in this cause, shipped a cargo of coffee, sugar, and logwood for Marseilles, as joint owners ; upon which cargo the defendants became insurers to the amount of $15,000. The ship and cargo were after-wards seized in the port of Marseilles, under the Berlin and Milan decrees, and finally condemned. After the seizure the assured ofFered to abandon to the underwriters, who declined to accept the abandonment and pay as for a total loss. A compromise was afterwards effected between the parties, by which the assured consented to receive $5000, and to surrender up the policy ; which sum was less than one third of the amount to which they would have been entitled from the underwriters upon an abandonment to them of the spes recuperandi. Compensation for the loss was allowed by the commissioners, under the subsequent treaty with France; but instead of allowing the whole amount to the representatives of the owners of the cargo they allowed $5000 of the compensation to the defendants, on the ground that they supposed them entitled to the same because they had paid that sum upon the compromise of the claim against them as insurers. And the bill in this cause was filed for the purpose of obtaining the money and certificates which had come into the hands of the defendants under that decision of the commissioners.
    The following opinion was delivered by the vice chancellor upon the making of the decree which was appealed from:
    M’Coun, "V. C. The leading question in this cause is whether the award of the $5000 to the defendants, by the commissioners appointed under the French treaty and the act of congress of the I3th July, 1832, is conclusive upon the rights of the present litigant parties ?
    Upon the authority of Comegys v. Vasse, (I Peters, 193,) and the reasoning of Judge Story in that case, I am of opinion that the award is not thus conclusive. Although it is expressed in article 1st of the treaty that the government of the United States shall distribute the money among those entitled, in the manner and according to the rules which it shall determine; and the act of congress prescribes the duty of the commissioners to be to receive and examine all claims which may be presented to them under the conventions which are thereby provided for, according to the provisions of the same, and the principles of justice equity and the law of nations, and gives to the commissioners authority to make all needful rules and regulations for carrying their commission into full and complete effect ; and although, by a subsequent section of the act, the commissioners are to report a list of the several awards made by them, upon which the secretary of the treasury shall distribute in rateable proportions, among the persons in whose favor the awards shall have been made, such monies as may have been received into the treasury according to the proportions which their respective awards shall bear to the whole amount then received; and the secretary of the treasury is to issue certificates shewing the proportion which each one may be entitled to, of the amount that thereafter may be received, and such certificates are after-wards to be paid at the treasury, &c. to the legal holders of the certificates ; and although in making the payments, the secretary of the treasury shall first deduct such sums of money as may be due the United States from the persons in whose favor the award shall be made ; yet the principle must be the same as in Comegys v. Vasse, which arose under the Spanish treaty. There, by the 11th article of the treaty itself, commissioners were appointed to ascertain the full amount and validity of the claims, and within the space of three years (under the French treaty two years was the time limited) they were to receive, examine and decide upon the amount and validity of all the claims, &c. and they were authorized to hear and examine on oath every question relative to the said claims and to receive all suitable authentic testimony concerning the same, &c. The commissioners awarded a sum of money to the assignees in bankruptcy of Yasse, who afterwards brought an action against them for the money as rightfully belonging to him; and though the case was decided against him upon other grounds, it was held that the decision and award of the commissioners did not of itself constitute a bar or preclude his right. (See 1 Peters, 212.) So under the French treaty and the act of congress referred to, I think the awards of the commissioners are only to be considered as ascertaining what were proper claims upon the fund, and the amount of the respective claims, and to whom as between ■individuals and the government the money might be legally paid ; and not as settling the conflicting rights and equities of third persons who may be interested in or entitled to participate in the money, after the government has paid it to those in whose favor the award is made. These are matters more properly belonging to the ordinary tribunals of the country, and with which government has no immediate concern. It could hardly have been the intention of congress, in establishing this commission and prescribing as they have done the powers and duties of the commissioners, and of the secretary of the treasury in making the distribution, to determine all such conflicting claims among individuals. The reasons for this conclusion are well given in Comegys v. Vasse, and apply with equal force in the present case, notwithstanding some differences in the provisions of the treaties, and of the acts of congress carrying them into effect. The demurrer cannot therefore be sustained upon the ground of the conclusive and binding nature of the award, as respects the right clairried by the bill to call the money out of the hands of the defendants.
    The next question is, whether enough is shown by the bill to entitle the complainants to any relief. I am inclined to think the allegations of the bill are insufficient to raise an equity for that purpose. The fact that the defendants rejected the offers of abandonment and declined to pay for a total loss upon the policy of insurance, preferring to pay $5000 by way of compromise as for a partial loss, without an assignment or cession of the right of the assured to recover the subject insured, or any part thereof, or indemnity therefor, and upon the understanding that no interest in the property insured or its proceeds, or in any indemnity or account thereof, passed to or vested in the defendants, goes strongly to show that as between the contracting parties the spes recuperandi and all the benefit of it, even to the extent of the $5000 thus paid, remained with the assured. If this statement of the bill be true, and the property itself had been restored, it would still have belonged to the assured. And must not the money paid by the government, on accountofthe property which was not restored,have the same destination, and rightfully belong to the same owners ? From this short view of the case I do not feel warranted in saying, that the defendants may not be regarded trustees of the complainants in respect to the receipt of the five thousand dollars, and that the complainants may not follow it into their hands.
    This disposes of the demurrer, unless the complainants are to be turned over to their action at law, for money had and received. The remedy there may be difficult and doubtful in these respects: whether it should be undertaken in the joint names of the complainants or upon the ground of a partnership in the cargo insured ; whether it should be prosecuted in the name of Roulet, as the surviving partner of Jcard & Mumford in the adventure, or whether the claims of the complainants should be treated as several and distinct interests, requiring three several suits for aliquot parts of the $5000. To avoid these doubts and difficulties, I am disposed to say this court will entertain jurisdiction upon the present bill. The demurrer must therefore be overruled, with costs.

      A. H. Dana, for the complainants.
    The decision of the commissioners is not a bar to this claim. To be so, there should have been authority given to them to decide finally upon conflicting claims to the fund ; and they must have actually decided in pursuance of such authority, after hearing the parties. But no such authority was given to them. They are directed to examine claims, but no directions are given as to the manner in which parties are to be heard, nor what the commissioners are to decide. It was necessary to designate persons in whose favor the awards should be made,in order that the government of the United States might discharge itself of its trust by paying over the fund to them ; but this could not conclude the rights of persons having equitable claims upon the fund awarded. The granting to the commissioners of an authority beyond this would have exceeded the authority which congress had the light to bestow upon them. The fund having been received for the benefit of those entitled, all that the government had to determine was what claims were good as against France. They had no arbitrary power to prevent the equitable rights of individuals, to the benefit of the sums awarded, from being tried by the ordinary tribunals of the country. The question here is not between citizens of this country and the French government; but between the citizens themselves. It would not have been within the constitutional power of congress to have invested the commissioners with power to decide absolutely on such questions. Congress cannot establish any tribunals to determine private rights, except such as as are authorized by the constitution. They may establish judicial tribunals inferior to the supreme court. But the vesting of a summary authority in the commissioners, without appeal, would be to establish a court superior to the supreme court of the United States. The right of a claimant to the benefit of the fund awarded is a legal one, and as such is cognizable by the ordinary judicial tribunals. The fund was not a donation or gratuity to the claimants. Under the Florida treaty, where the power of the commissioners was not defined in express terms, it has been held that the commissioners had not authority to decide finally between the claimants. In this case the commissioners did not intend to decide finally upon the conflicting claims of individuals; and they never exercised the proper judicial authority for that purpose. Their proceedings were entirely ex parte.
    The loss of the insured in this case was total; the claim upon the French government for indemnity being all that was left. The defendants, upon the compromise with the assured, required no cession of the claim for indemnity, and none was made. It was in fact the understanding that they were to have no interest in such claim. There was, therefore, no right derived from the complainants by cession or contract. Neither had the defendants any equitable claim upon the ground of having paid part of the loss. They were liable for the whole loss, and a discharge from two-thirds of the amount for which they were liable, was an ample compensation for the spes recuperandi. The insured are, therefore, to be considered the purchasers of that hope whether it should turn out to be more or less valuable. The commissioners allowed for the whole claim less than half the amount of the actual loss. The complainants ought, therefore, to have the whole amount of their actual damage, as they have received but half. The defendants could not in any event be equitably entitled to more than that proportion ; that is, the half of what they paid on the compromise. And from that should be deducted the premium of insurance, which was included as part payment. '

      G. F. Tallman, for the defendants.
    The board of commissioners appointed under the act of congress, were authorized and required to examine into and determine not only upon the validity and amount of all claims to indemnity, but also as to the persons who were entitled to the same. The award, therefore, is final and conclusive as to all questions decided by them which were within their jurisdiction. And the claim of the complainants having been submitted to the board of commissioners and rejected by them, their decision is final, and cannot be re-examined in this or any other court.
    The award in favor of the defendants was correct and just; as they had actually sustained a loss by the act of the French government. But even if the defendants were not entitled to the award made in their favor, the complainants have no right to recover it from them. The United States only are entitled.
    Again; the complainants’ remedy, if any, is at law.
   The Chancellor.

The vice chancellor was clearly right in overruling the demurrer in this cause, notwithstanding the objections to the complainants’ right to relief upon the case made by their bill. There is no substantial difference in respect to awards made by the commissioners under the recent French treaty, and similar awards made under the previous treaty with Spain. The decision of this court in Delafield v. Colden, (1 Paige’s Rep. 139,) and a similar decision of the supreme court of the United States, in Comegys v. Vasse, (1 Peters’ Rep. 193,) which, was made about the same time, in cases arising under the Spanish treaty, are, therefore, authorities in point to show that the decision of the commissioners, awarding to the defendant a part of the fund given as an indemnity for the cargo taken by the French government, is not conclusive as between them and these complainants.

That the whole amount allowed for the seizure of the cargo belonged exclusively to the complainants, equitably as well as legally, cannot, I think, be doubted. If the underwriters, when there was a technical total loss of the cargo by the seizure, had accepted the abandonment and paid the $15,000, which they agreed to pay in such case, together with the expenses to which the assured had been subjected in endeavoring to save the property, they would unquestionably have been subrogated to the rights of the assured as to that part of the cargo which was insured by the defendants ; and the indemnity allowed by the treaty, to that extent, would have belonged to them. But by compromising the claim made by the assured for a total loss, without accepting the abandonment or stipulating for an interest in the spes recuperandi, the underwriters must-be considered as having relinquished any claim or interest in the future chance of recovery from the French government; in consideration of the relinquishment by the assured of their right to the other two thirds of the insurance money, in case the loss should eventual^ turn out to be total. And having by the compromise secured to themselves an exemption from this portion of their liability, in case the loss should be total, the underwriters cannot in equity or conscience insist upon the repayment of what they paid to the assured upon that compromise; although the result of such compromise has been favorable to the assured.

Although it is probable that an action for money had and received might have been sustained in this case, in the name of the surviving owner of the cargo, the case of Randal v. Cochran, (1 Ves. sen. 98,) shows that a remedy in equity is also given; upon the ground that the person receiving the fund under such circumstances is a trustee thereof, for the benefit of the party who is equitably entitled to the same. The equitable action of assumpsit is now allowed in many cases of this kind, where the remedy originally was inequity only. But the fact that a remedy now exists at law in such cagegj ¿oes not deprive this court of its ancient jurisdiction to grant relief here. Or, in the language of an English chancellor, this court is not at liberty to give up its jurisdiction because courts of law have fallen in love with it. But I admit it probably would be wise in the legislature to take from this court a great portion of the jurisdiction which is now concurrent with courts of law, and confine it exclusively to those courts; where the parties could have the benefit of an open examination of the witnesses in the presence of the court and jury.

The decision of the vice chancellor overruling the demurrer in this case is affirmed, with costs.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Barnum vs. Hempstead and others.
    An assignment for the benefit of creditors, by an insolvent assignor, which contains a provision for the payment, out of the proceeds of the assigned property, of future advances to the assignor, or of future liabilities which the assignees may assume for him, in preference to or to the exclusion of the debts which are due to creditors whose debts had been contracted previous to such assignment, is fraudulent and void as against such creditors.
    The only conveyance in trust for the benefit of creditors which is allowed by the revised statutes, and which can have the effect to transfer the legal title of real property to the trustees, is a simple conveyance in trust to sell the assigned property, for the benefit of the creditors, and to apply the pro ■ ceeds to the payment of the debts due to them. In such an assignment in trust, the equitable interests of the creditors in the property are such that the legal title of the trustees is incapable of being divided into several distinct estates, of which some may be valid although the others are invalid.
    Where a conveyance to trustees, in trust to sell the assigned property for the benefit of creditors, is coupled with other express trusts not authorized by law, the conveyance is inoperative, and will not transfer the title in the assigned property to the trustees.
    An assignment of his property by an insolvent for the benefit of his creditors, which assignment confers upon the trustees a discretionary power to give a future preference to a creditor, or to a class of creditors over others, in payment out of the proceeds of the assigned property, is fraudulent and void as against the creditors of the assignor.

      This was an appeal from the decision of the late vice chancellor of the eighth circuit, refusing to dissolve an injunction. The complainant was a judgment creditor of Hempstead & Keeler, and his execution upon the judgment had been returned unsatisfied. He thereupon filed his bill against them and the three other defendants in this cause, to set aside an assignment, of all the real and personal estate and dioses in action and effects of Hempstead & Keeler, to the other three defendants, on the ground that the assignment was void upon its face, and was intended to delay and hinder the complainant and other creditors in the collection of their debts. The assignment contained no express trust to sell the real or personal estate for the benefit of creditors; but the whole was conveyed upon the trust that the effects and the proceeds of the settlement of the estate assigned, and of the sale of the property, should be applied, firstly, to discharge the cost and expenses of executing the trust; secondly, to pay to Lay, one of the assignees, such sums of money as should from time to time be due to him from the assignors, and all such sums of money as he then was or should thereafter become liable to pay, or should pay, on account of the assignors, as endorser or otherwise ; and certain other sums, to his creditors named in the assignment, for monies which had been borrowed of them; thirdly, to pay the claims of all the endorsers of the assignor not provided for in the second class, and certain other creditors specified in the third class; and fourthly, to pay all the other creditors of the assignors rateably. And for the purpose of the better enabling the assignees to effect a settlement of the debts and credits of the assignors, the assignees were constituted the attornies of the assignors, with full power in their names or the names of the assignees to bargain, sell, convey, release, remise and encumber any or all of the real estate, and to sell, dispose of, exchange and deliver any or all of the personal property in any manner, and to collect, receive, receipt, cancel, sell, negotiate, release, assign, deliver or discharge the debts and evidences of debt so assigned, as fully and in the same manner as the assignors themselves might or could do. The assignment then contained a clause empowering the assignees, in their discretion, to pay in money or propertv or securities or otherwise, any claims or demands ... „ ... against the assignors on account ot any contracts m relation ^ [3U;jc¡;ng; or for lands, or upon any mortgage which they were liable to pay, or for any rent then due or to become due on leases then executed; and also to discharge all small debts due or to become due to persons in Buffalo, to an amount not exceeding in the whole five hundred dollars, in preference to any other classes of creditors. The defendants in their answer denied any intentional fraud in the assignment, and insisted that the provisions giving discretionary power to the assignees, to give preferences in the payment of certain claims and debts, were inserted in the assignment to prevent and avoid great sacrifices of property, and consequent loss to the creditors.

      May 7.

      C. B. Lord & T. Hastings, for the complainant.

      S. C. Hawley & S. E. Sill, for the defendants.
   The Chancellor.

The first objection which is made to the validity of the assignment in this case is, that it contains a provision to pay to Lay, one of the assignees, for his future advances to and future liabilities for the assignors, in preference to, or to the exclusion of the debts which are due to creditors whose debts had been contracted by the assignors previous to the assignment. If I was satisfied that such was the fair construction of the instrument, I should not hesitate for a moment to declare it fraudulent and void, upon that ground alone; as such an attempt to secure a future credit and benefit to the assignors, by means of the assigned property, to the prejudice of their present creditors, could not be sustained in any court. I am inclined to think, however, that this clause of the assignment will bear the construction that the monies therein referred to, which Lay might thereafter pay or become liable to pay on account of the assignors, was only meant to include such as he might pay, or become liable to pay, by reason of endorsements or other contingent responsibilities which he had already made, or incurred, on their account.

The trust, so far at least as the real estate is concerned, appears however to be one which is not authorized by the existing laws of this state. The express trusts which are allowed by the revised statutes appear to be confined to the four classes specified in the fifty-fifth section of the article relative to uses and trusts. (1 R. S. 728.) And the statute is imperative, that where an express trust shall be created for any purpose not enumerated in the statute, no estate shall vest in the trustees. (Idem, 729, § 58.) . The only enumerated trusts, for the benefit of creditors, which can have the legal effect of transferring the estate to the trustees, are simple trusts to sell lands for the benefit of creditors; in which cases the equitable interests of the creditors in the property are such that the legal title, which is conveyed to the trustees, is not capable of being divided into several distinct estates, of which some may be valid although the others are invalid. Amd this court has already decided that if a conveyance in trust, for that purpose, is coupled with other express trusts not enumerated in the statute, and therefore not authorized by law, the title does not pass to the assignees by virtue of the conveyance in trust. An assignment in trust to mortgage or lease real estate, as well as to sell it, for the benefit of creditors, or as in this case to sell or encumber it for the benefit of creditors, cannot be sustained as a légal transfer of the estate, in trust. (Rogers & Sagary v. De Forest and others, In Chan. 4th Dec. 1838.)

Again; the provision, in this assignment, giving to the assignees a discretionary power to pay off or discharge a certain class of claims against the assignors, or certain small debts due from the latter, in preference to other debts provided for in the assignment, appears to be calculated necessarily to injure, delay and hinder creditors in the collection of their just debts. So long as debtors are permitted to make assignments of their property, in trust, for payment of their debts, without consulting their creditors on the subject, it is absolutely necessary, for the protection of the rights of the latter, that the equitable interests in the assigned property should be fixed and determined by the assignment itself. Neither the debtor, nor his friendly assignees, who are generally selected by himself, should have the power of giving preferences afterwards to any class of debts, or of creditors, whereby such creditors might be induced to relinquish some part of their claims, or to refrain from enforcing the same against the trust fund in the hands of the assignees, in the hope of obtaining a preference in payment on account of such indulgence, or by the relinquishment of a part of their claims. And an assignment which thus places any of the creditors in the power of the debtor, or of his assignees, must have the effect to delay or hinder his creditors in the collection of their debts. This view of the case is fully sustained by the opinion of Mr. Justice Sutherland, in the case of Grover v. Wakeman, (11 Wend. Rep. 203.) He says, “ It has repeatedly been decided that an assignment which does not declare the uses, but reserves to the assignor the power of subsequently doing it, is fraudulent and void. And if the assignor cannot reserve the power to himself of giving preference, he certainly cannot legally confer it upon his assignee : the same objection in principle exists inboth cases.” For these reasons I think the assignment in this case is void as against the creditors who think proper to repudiate the same. The decision of the vice chancellor which was appealed from was therefore right, and must be affirmed with costs.

         Ante, p. 172.


text:
    Weed vs. Smull & Miles.
    Where the complainant seeks to impeach and open a stated account, on the ground of fraud or mistake therein, if he not only impeaches the account, in his bill, but also charges that he has no counterpart of the account, and prays that it may be set forth in the answer, the defendant who pleads the stated account in bar of the suit, must annex a copy of the account to his answer in support of the plea.
    But where the complainant, by his bill, waives an answer on oath, no answer or discovery in support of the plea is necessary; and the defendant in that case may plead the stated account, in bar of the suit, without setting forth a copy thereof.
    If the complainant files a general bill for an account, without alleging or suggesting that there has been any settlement or statement of accounts tween the parties, the defendant may plead an account stated in bar of the suit, so far as it seeks for an account between the parties, without annexing a copy of the account to his plea.
    Upon a general bill for an account, if the defendant sets up a stated account in bar, the complainant will not be permitted to show mistakes or errors in such account; but he must amend his bill, as the settled account is prima facie a bar to the suit, until specific errors therein are assigned.
    This case came before the court upon the plea of the defendants to part of the relief claimed by the complainant in his bill. The complainant and defendants were copartners in the business of buying, selling, preparing and dealing in wool and sheep skins, in the city of New-York, from March, 1835, to July, 1836. And this bill was filed for an account of the partnership business from the commencement ; the complainant alleging that the accounts had never been settled, although about the time of the dissolution of the copartnership, the defendants made a statement of the account and submitted it to him for examination, and requested him to settle the same, which he refused to do. He also alleged in his bill that the statement so made out by them was incorrect and unjust, in several particulars pointed out in the bill; that the books of the copartnership, at the time that statement was furnished, were and still continued to be in the possession of the defendants. He therefore prayed for a decree for a full account and settlement of the copartnership dealings from the commencement; and for the payment of the balance which, upon such accounting, should be found due to him. He did not, however, ask for a statement of the account, in the answer of the defendants, but on the contrary an answer upon oath was expressly waived, by his bill.

      May 7.

      To so much of the relief, prayed for in the complainant’s bill, as sought for an account of the partnership transactions and business previous to the 16th of June, 1836, the defendants pleaded, in bar, a settlement of all the copartnership business and transactions, except the stock then on hand, up to and including the second of May, 1836; and the transfer of the complainant’s share of the profits of the business to his individual credit in the private accounts between him and the defendants; which accounts were also settled and stated at the same time ; and a similar settlement, of the copartnership business and transactions from and after the second of May up to and including the 15th of June, 1836, which accounts were signed by the complainant and defendants ; and which several stated accounts, as the defendants averred, were fully understood by the complainant at the time they were so settled and stated, and were in all respects correct, fair, just and true, and were a full account of all the copartnership dealings and transactions from the commencement of the copartnership down to and including the 15th of June, 1836. As to the residue of the bill the defendants put in an answer.

      B. W. Bonney, for the complainant.

      Joseph Law, for the defendants.
   The Chancellor.

The first objection which is made to the defendants’ plea in this case, is that they have not annexed copies of the stated and settled accounts, which they plead in bar of any account in relation to the copartnership business previous to the 16th of June, 1836. It is evident that the complainant has entirely mistaken the principle upon which this objection was intended to be based; and that the objection could not have availed him any thing, even if he had not deprived himself of the power to urge such an objection, by waiving the necessity of an answer on oath. The principle, as stated by Lord Hardwick, in Hankey v. Simpson, (3 Atk. 303,) is that where a bill is brought to impeach a stated or settled account, and the complainant not only impeaches the account but also charges that he has no counterpart thereof, and prays that the same may be set forth in the answers, the defendant, if he pleads the stated account in bar, must annex a copy thereof to his answer in support of the plea. Lord Redesdale refers to this principle; though he does not in terms confine it to a case where the bill admits that there has been an account stated between the parties, and seeks to open it upon the ground of error therein. (Mitf. Pl. 4 Lond. ed. 259.) It is evident, however, from the language used, that he is speaking of a bill to impeach or open an account stated, and not of a general bill for account, as this is. (See also Story’s Eq. Pl. 617, § 802. Davies v. Davies, 2 Keen’s Rep. 534. 2 Daniel’s Ch. Pr. 189.) Indeed there would be no use in applying such a principle to a plea in bar to a general bill to account, to which such a plea is put in; as the object of annexing the copy of the account to the answer in support of the plea, is to enable the complainant to counterprove the general averments, in the plea, negativing the charges of errors in the account stated; where such errors appear upon the face of the account. And it is the settled law of the court, that where the complainant files a bill for a general account, and the defendant sets forth a stated one, the complainant must amend his bill; as he will not be permitted to show error in the stated account, at the hearing, where there is no allegation in the bill of any such error. The stated account is prima facie a bar, until the particular errors in it are assigned. (Dawson v. Dawson, 1 West’s Rep. 170. Sumner v. Thorp, 2 Atk. Rep. 1.) In the present case this objection to the plea could not be sustained, even if the bill had been brought to impeach the account, and alleging specific errors therein; as the copy of the account annexed to the answer is no part of the plea, but is only a part of the discovery which the complainant may call for by his bill. And by waiving an answer on oath the complainant relinquishes all claim to a discovery, from the defendant, in aid of his suit. No answer whatever in support of the plea was therefore necessary.

Neither can I see any foundation for the objection that the answer overrules the plea. This is not a case in which a discovery is made, by the answer, of matters which the defendant by his plea insists he is not bound to discover; for the plea in this case is confined to a.part of the relief, sought by the bill, the whole discovery being waived by the complainant. And the allegation in the answer, as to the money being brought into the firm by the complainant and taken out again by him a few days afterwards, was not made as a defence to the accounting previous to the 16th of June, 1836, nor for the purpose of charging the complainant with the monies so drawn out. It was probably an. unnecessary answer to what was an immaterial allegation in the hill..

The plea must be allowed with costs ; and the part of the bill covered by the plea must be dismissed, unless the complainant thinks proper to take issue on the plea, upon payment of the costs of the hearing thereon, within the time specified in the 47th rule of the court.


text:
    Bonaffe & Boisgerard vs. Fowler and others.
    A judgment recovered against a corporation, after it has been dissolved, is not even prima facie evidence of a debt due from the corporation at the time of its dissolution; for the purpose of charging those who were then stockholders of the company with the amount of the judgment, in a subse. quent suit against them.
    Where the vice-president of a manufacturing corporation, after it had become insolvent, gave a note to his clerk, under the seal of the corporation, for an alleged debt due to himself; for the purpose of charging the stockholders of the company personally with the payment of the note ; Held, that the note, was not evidence of a debt due to the officer of the company who affixed the seal of the corporation thereto ; and that the persons to whom he had transferred the note by assignment, could not recover the amount thereof from the stockholders, after the dissolution of the corporation, without proving that it was given for a debt actually due.

      This was an appeal by the complainants, from a decree of the vice chancellor of the first circuit dismissing their bill in this cause. The object of the suit was to charge the defendants personally with a debt alleged to be due to the complainants from an insolvent manufacturing corporation, of which the defendants were stockholders at the time of its dissolution. The bill alleged, that the company was incorporated in 1825, under the general act of March, 1811, by the name of the New-York Laboratory Association, and commenced the manufacturing of white lead, &c.; that the company in transacting its business became indebted to the complainants, in the sum of $5,000, for which it gave unto them a sealed note, in December, 1827, payable to the order of Wm. A. Wishart, on demand; that in January, 1829, the complainants commenced an action in the superior court of New-York, against the corporation, in the name of Wishart, and in March of the same year they recovered judgment for the amount of the note, with interest and costs ; that on the 26th of November, 1828, the company was duly dissolved, and that the defendants in this suit were then stockholders of the company, for the number of shares respectively stated in the bill. Several of the defendants who were solvent put in their answers, admitting the incorporation of the company and that they were stockholders for the number of shares stated in the bill, and that a judgment was recovered against the company, as therein stated, in the name of Wishart. But they denied that tho company were ever indebted to the complainants; and they set up as a defence, that the sealed note was given under a fraudulent arrangement between the defendant Cazeaux, as vice president of the company, and the complainants, to Wishart the cleric of the former, for a pretended debt due to Cazeaux from the company, and for the purpose of charging the stockholders with that debt. Replications were filed to the answers; and the cause was heard upon pleadings and proofs as to the defendants who had answered.
    May 7.

      J. Anthon, for the complainants.
    The defendants being stockholders, are liable for the debts of the company to the extent of their respective shares of the stock. The indebtedness of the corporation to Cazeaux is fully established. And he, as vice president of the company, was authorized to draw the note in question. So far as this act required ratification, it was ratified by the acquiesence of the directors, and by the cognovit which was given by the attorney of the corporation, in the suit in the supreme court. The complainants in the present suit were bona fide creditors of Cazeaux, and are the bona fide owners of the obligation in question, by a transfer thereof to them before the dissolution of the company; and they thereby became creditors of the corporation. That transfer was also an assignment to them of so much of the debt due to Cazeaux by the company. The judgment is conclusive against the defendants— there being both authority and ratification in fact.

      T. Sedgwick & W. H. Maxwell for the defendants.
    The judgment stated in the bill is inoperative as against the defendants. The answer, shows that it was obtained by a fraudulent concealment of the facts which occurred at the creation of the note on which the judgment was obtained ; of which facts the directors and stockholders were ignorant, until after the rendition of that judgment. The proofs show fraud and concealment on the part of Cazeaux, and of the complainants or one of them, in procuring the note of the company. But if no fraud or concealment is shown, yet, as against the defendants the judgment is not conclusive. It is not only not between the same parties, but no privity existed between the parties to the suit at law and the present defendants ; or if any privity existed between the plaintiff at law and the defendants in this suit, none existed as between them and the present complainants. If Wishart was a mere nominal plaintiff, and sued as trustee, he was only trustee for Boisgerard the endorsee of the note, and Bonaffe as a third person was a stranger to the proceeding at law.
    Under the act of incorporation, the stockholders are responsible only for debts actually and bona fide due and owing by the company at the time of its dissolution. The company had no authority, by its charter, to issue notes or bills. The note in question was not issued by the authority of the directors, but was entirely unknown to them. It was issued by Cazeaux, to pay a private debt of his own, with which the company had no concern. The c.omplainants/by their agent, had sufficient notice that he intended to issue the note illegally, and that the issuing of it was a fraud upon the directors and stockholders.
   The Chancellor.

Upon an examination óf the evidence in this cause, I think the vice chancellor came to a correct conclusion, in dismissing the bill as against the defendants who appeared and defended the suit. The judgment recovered in the name of Wishart,in a suit commenced against the corporation more than two months after the time when it is alleged in the bill that such corporation wasduly dissolved, I think should not be considered even prima facie evidence to charge these defendants personally, as stockholders at the time of the dissolution. In Slee v. Bloom, (19 John. Rep. 456,) the debt for which the judgment was recovered was not disputed, and it was recovered previous to the time of dissolution upon which the decree of the court for the correction of errors was based. Spencer J., whose opinion prevailed in that case, fixes the time of the dissolution of the company, for the purpose of charging those who were then stockholders, on the 1st of February, 1818, when all the property of the corporation was sold under that judgment.

If we are at liberty to look behind this judgment, and see what was the situation of the parties in November, 1828, when the bill alleges that these defendants became liable as stockholders, on the dissolution of the corporation, which then took place, it is evident the complainants have not shown a case that entitled them to recover. The allegation in the bill, that the sealed note was given for a debt due to the complainants from the company, is wholly contradicted by the proof. On the contrary, it appears that Cazeaux, the vice president, made this note, payable to his own clerk, not for a debt due from the company to the complainants but for his own private debt to them ; under the pretence that the company owed him a much larger debt. If the complainants had proved that a debt to that extent was then actually due to him, perhaps his general authority to sign notes or bills for the corporate debts, might have authorized him to transfer a debt admitted to be due to himself, by giving a note therefor to a third person to whom he was indebted. But the giving such a note is not evidence that any thing was due from the company to himself, so as to authorize such a transfer. And as the agent of the complainants took the note for the mere purpose of getting a claim against the company, tó charge its stock holders, the onus of showing that the debt was actually due, was upon the complainants.

The corporation being insolvent at the time, the complainants could not in any event be in a better situation, as against the stockholders, than Cazeaux himself would have been if the note had not been made and he had himself filed a bill against the other stockholders, to compel contribution. In that case, it is very evident that Cazeaux would have been required to show that he had a debt against the company which was more than the amount of his contributory share, with the solvent stockholders, of all the debts due by the corporation, including his own ; and after all equitable claims and offsets against him had been allowed. Here the complainants have not been able to satisfy me that this debt was due from the company to Cazeaux ; much less that the company was indebted to them in the sum of 15,000, for which the note was given. As the note was given to Cazeaux’s clerk, and not directly to them, the allegation in the bill, that the corporation owed them the amount for which the note was taken in the name of the clerk for their benefit, is a material averment, which must be proved as laid, to enable them to succeed. And 1 am inclined to think that avermentwould not have been supported, even if they had proved that the note was given for a debt justly due from the company to Cazeax; as it was not originally given for their benefit.

For these reasons, the decree must be affirmed, with costs as to the defendants who appeared and answered, and who appeared by their counsel on the hearing of this appeal. I presume it was not the intention of the vice chancellor to direct the bill to be dismissed, as against Cazeaux and the other defendants against whom the bill had been taken as confessed. But if the complainants’ counsel supposes that such is the effect of the decree appealed from, he may-have it reversed as to those defendants. And may also apply to the vice chancellor for such decree as the complainants are entitled to against them, or any of them; after obtaining a master’s report of the truth of the facts alleged in his bill against such of them as were proceeded against as absentees. The proceedings are to be remitted to the vice chancellor.


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    Williams vs. Hance & Mott.
    Where W., who resided at Glen’s Falls, was indebted to H. & M. of the city of New York, and upon application to W., at the place of his residence, for payment of the debt, it was agreed between him and those creditors that they should give to him the term of three months for the payment of one half of the debt, and four months for the payment of the other half, upon his securing the debt by bond and mortgage ; and that he should, in addition to the legal interest, allow to them interest for fifteen days, for the time they estimated it would take them to obtain the money in the city of NewYork after it was paid, and the further sum of $20 for the travelling expenses of one of the creditors, who had come to Glen’s Falls to secure the payment of the debt; which $20, and the additional allowance for the fifteen days extra interest were included in the bond and mortgage; 'Held, that the bond and mortgage were usurious and void, although the debtor voluntary agreed to pay the half of the expenses of coming to his residence, from New York, to collect or secure the debt.
    Where no place of payment is specified in a bond and mortgage, the debt is payable at the residence of the mortgagee ; or to the mortgagee personally wherever he may be found. But if a debtor, in consideration that the mortgagees will make the mortgage payable at the residence of the mortgagor, instead of the place of residence of the mortgagees, agrees to allow them the difference of exchange between the two places, the contract will not, for that reason, be invalid; unless such agreement was a mere device, on the part of the mortgagees, to evade the usury laws, and to obtain more than legal interest for the use of their money.
    This was an appeal from a decision of the vice chancellor of the fourth circuit. The bill was filed and an injunction obtained to restrain the defendants from proceeding, under the statute, to foreclose a mortgage given to them by the complainant ; which mortgage he alleged to be usurious. The defendants lived in New-York, and the complainant, who resided at Glen’s Falls, in the county of Warren, was indebted to them in the sum of about $746. One of the defendants applied to him at his place of residence for payment of the debt; and it was finally agreed between them that the defendants should wait three months for one half of the debt, and four months for the residue thereof, upon the complainant’s securing it by mortgage. And he was also to pay $20, for one half of the defendant’s travelling expenses from New-York to Glen’s Falls, and to allow for fifteen days additional interest, for the time it would take, as the defendants alleged, to get the money, at the city of New-York, after it became due ; which two items of allowance, amounting to about $38, were included in the mortgage. The vice chancellor considered the mortgage as usurious on that account, and refused to dissolve the injunction.

      May 27.

      N. Dane Ellingwood, for the appellants.

      E. H. Kimball, for the respondent.
   The Chancellor.

The vice chancellor was clearly right in supposing this mortgage was usurious, notwithstanding the denial of the defendants, in their answer, that they intended to violate the usury law. The respondent was neither legally nor equitably indebted to them for any part of the travelling expenses from New-York; and although he did, as they allege in their answer, voluntarily agree to pay the half of such expenses, it is evident that such agreement was in consideration of their forbearing payment of the real debt, for the term of three and four months. It was, therefore, a stipulation to receive $20 which was not due to them, in addition to the legal interest, for the forbearance of money due; and was a direct violation of the statute of usury.

As the defendants had a right to insist that their money, when it became due, should be paid to them at their place of residence, if the debtor, in consideration that they would make the money payable at his residence instead of theirs, had agreed to give the difference of exchange between the two places, I see no objection to such a stipulation; provided it was not a mere device to evade the usury law and to obtain more than legal interest. It does not appear in this case, however, that the mortgage was made payable at the complainant’s place of residence ; and if no place of payment was stated therein the money was payable where the mortgagees resided, unless the mortgagor should pay it to them when he found them from home. Upon a mortgage conditioned to pay the money to the mortgagee generally, without specifying any place of payment, it would be clearly usurious to stipulate for fifteen days additional interest, on the alleged ground that it would take that time to get it from the residence of the mortgagor; as he would be legally bound,bythe contract, to pay interest until the money was paid at the place where by law it was payable, the residence of the mortgagee.

The order appealed from must be affirmed, with costs.


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    Innes vs. Lansing and others.
    Where a limited copartnership becomes insolvent, the property and effects of the firm are a special trust fund for the payment of all the copartnership debts, rateably, except debts due to the special partner. And any creditor of such insolvent firm, although-ho has not proceeded to judgment and execution at law for the recovery of his debt, may file a bill in chancery, in behalf of himself and of all other creditors of the limited copartnership, to restrain the insolvent partners from disposing of the property and effects of the firm contrary to law; and for a receiver; and to have the copartnership funds distributed among all the creditors rateably according to the statute.
    Where a creditor files a bill in behalf of himself and all others, who shall come in and prove their debts under the decree and contribute to the expenses of the suit, he may discontinue his suit at any time before there has been a decree therein for the benefit of himself and the other creditors. And the defendant, at any time before such decree, has the right to have the
      bill dismissed, upon paying what is due to the complainant, with interest and costs.
    The filing of a bill by one creditor, in behalf of himself and others, will not prevent another creditor from filing a similar bill, previous to a decree in the first suit. But as soon as a decree is obtained in either suit, for the benefit of all the creditors, the proceedings in all other suits may be stayed; if no other relief can be obtained in such other suits than could be had under the decree already made.
    May 27.
    This was an application on the part of the Lansings, two of the defendants, to stay all further proceedings in this suit, and for a dissolution of the injunction which had been issued therein. The defendants, in March, 1838, entered into a limited copartnership, as wine merchants in the city of New-York, under the firm of Lansing & Co., in which firm the two Lansings were the general partners and the defendant Dakin was the special partner. Previous to the filing of this bill the firm, as well as the acting or general partners, became insolvent. The complainant thereupon commenced this suit, in behalf of himself and of all the other unsatisfied creditors of the firm, for the purpose of obtaining the appointment of a receiver of the property and effects of the copartnership, and for a distribution of the proceeds thereof among the complainant and other creditors, rateably ; and for an injunction to restrain the defendants from receiving or disposing of the effects of the firm. From the affidavits and other papers read upon this application it appeared that some other creditors had filed a similar bill, previous to the commencement of this suit; and that, upon a subsequent application, a receiver had been appointed in that suit, to take charge of the property and effects of the firm.

      J. Rhoades, for the complainant.
    S. A. Foot, for the defendants.
   The Chancellor.

The defendants are premature in their application to stay the proceedings in this suit, as there has as yet been no decree in the other cause, for the benefit of all the creditors of the firm, under which this complainant could come in and prove his debt. And until such decree has been obtained he is not authorized to interfere with that suit. In cases of this kind it is competent for the complainant to settle with the defendants, and to withdraw his suit, without the consent of the other creditors, at any time before decree. And the defendants themselves may claim the right to have the bill dismissed, upon paying what is due to the particular creditor by whom the suit is brought, together with his costs of suit as between party and party. (Pemberton v. Topham, 2 Land. Jurist, 1009.) The proceedings in the suit of another creditor cannot therefore be stayed, unless a decree has been obtained to which he may make himself an actual party by coming in under the same. But as soon as such a decree has been obtained, whether in the first suit instituted or in the last, it is a matter of course to order the proceedings in all the other suits to be stayed; if no other relief can be obtained in such suits than could be had under the decree already made. (Pott v. Gallini, 1 Sim. & Stu. Rep. 206. Moore v. Prior, 2 Young Coll. Rep. 375. Shepherd v. Towgood, Turn. 4 Russ. Rep. 379.)

The question then arises whether either suit is properly instituted, by a creditor at large of the insolvent copartnership. For if this court has no jurisdiction of the case the injunction must be dissolved, although the application to stay the proceedings is refused. The title of the revised statutes relative to limited partnerships, (1 R. S. 764,) appears to have constituted the effects of the firm a special fund for the benefit of all the creditors ; which fund, in case of insolvency, is to be distributed among such creditors rate-ably, in proportion to the amount of their respective debts. By the fifteenth section, the special partner is prohibited from withdrawing any part of the capital of the firm, or any of its effects except actual profits made upon the original capital. And by the 20th and 21st sections, every sale, assignment, or transfer, of any of the property or effects of the firm, or of the property or effects of a general or special partner, after the firm or himself has become insolvent, or in contemplation of such insolvency, with the intention of giving a preference, either to a creditor of the firm or to a creditor of the general or special partner, is declared to be void as against the creditors of the partnership. The general and special partners are also prohibited from confessing any judgment, creating any lien upon the partnership property or the property of any of the partners, or giving any security, under such circumstances and with such intent. It is evident, from these statutory provisions, that the legislature could not have intended that a creditor of such insolvent limited partnership should be compelled to proceed to judgment and execution at law, the necessary effect of which might be to give him a preference over other creditors, before he could be permitted to file a bill in this court, to prevent the partnership funds from being wasted by the insolvent partners, and to obtain payment of a rateable portion of his debt out of the fund. Although any creditor, therefore, may proceed at law for the recovery of his debt, unless a decree has been obtained in this court for the benefit of all the creditors equally, or the property has been transferred to a trustee or receiver for the purpose of having such a rateable distribution thereof, I think this court is bound to carry into effect the principle of the statute ; by treating the property of the limited partnership, after insolvency, as a trust fund for the benefit of all the creditors. And if the insolvent partners neglect to place the partnership effects in the hands of a proper and responsible trustee, to be distributed without delay among all the creditors of the firm, other than the special partner, rateably, in proportion to the amount of their several debts, either due or to become due, any creditor may file a bill in this court in behalf of himself and the other creditors of the firm; and may have a receiver appointed to protect the trust fund, and to distribute it among the several creditors who may come in and prove their debts, under the decree to be obtained on such bill.

I regret that I am obliged to extend the jurisdiction of this court to this new class of cases. But whenex'er the legislature creates new rights in parties, for the protection and enforcement of which rights the common law affords no effectual remedy, and the statute itself does not prescribe the mode in which such rights are to be protected, this court, in the exercise of its acknowledged jurisdiction, is bound to give to a party the relief to which he is equitably entitled under the statute. For these reasons' I think this bill was properly filed. The application to dissolve the injunction, as well as that to stay the proceedings, must therefore be denied with costs. And either party may apply to have the same person, who has been appointed receiver in the other suit, appointed also in this; or aa order may be entered extending the receivership to this cáuse also upon filing the written consent of the defendants to that effect.


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    Corning & Horner vs. Cooper.
    Where, upon the reference of exceptions to an answer for insufficiency, it was agreed by the counsel for the respective parties, in the presence of the master, that the rule as to the time for procuring the master’s report on the exceptions should be suspended; in consequence of which agreement the master did not make a certificate enlarging the time for filing his report; Held, that a report of the master, allowing the exceptions, was regular, although made after the expiration of the twenty days specified in the rule for that purpose.
    The 121st rule of the court of chancery, requiring all private agreements relative to the proceedings in a cause to be in writing, does not apply to agreements made by the parties, or their solicitors or counsel, in the presence of the court; or to an agreement relative to the proceedings on a reference, made in the presence of a master, and certified by the master to have been thus made.
    The report of a master, aEowing exceptions to an answer for insufficiency, is not irregular, as against the defendant, because the master has neglected to fix the time within which the defendant shaE answer the exceptions; as the only effect of such a neglect of the master, is to compel the complain, ant to make a special application to the court, to obtain a further answer, if the defendant does not answer voluntarily.
    This cause had been set down and noticed for hearing, by the defendant, upon bill and answer; and this was an application on the part of the complainants to strike it from the calendar for irregularity, on the ground that the answer had not been perfected. Exceptions were taken to the answer, and some of them were allowed by the master; but the defendant’s counsel insisted that the exceptions had been waived, by the neglect of the complainants to procure the master’s report within the time prescribed by the 54th rule of this court. He also insisted that the report was irregular, inasmuch as the master had not fixed the time within which the defendant was to put in his answer to the exceptions. On the part of the complainants the master’s certificate was produced, showing that upon the return of the summons an adjournment of the hearing of the exceptions was asked for and granted; that it was then agreed in the presence of the master, by the counsel of the parties, that the rule as to the time for procuring the master’s report upon the exceptions should be suspended; and in consequence of such agreement that he did not make a certificate for enlarging the time for filing the report, as required by the rule.

      June 3.

      M. T. Reynolds, for the complainants.
    Azor Taber, for the defendants.
   The Chancellor.

The agreement in the master’s office, to suspend the rule, in other words to waive the objection that the master’s report was not made and filed within the twenty days after the entering of the order to refer the exceptions, made the subsequent filing of the report regular. The objection that such agreement was not in writing, and signed by the parties or their counsel, is not well taken. The provisions of the 121st rule do not apply to an agreement, between the solicitors or counsel of the parties, made in the presence of the court; or to an agreement, relative to the proceedings on a reference, made in the presence of the master, and which agreement is certified by him. The master through inadvertence neglected to fix the time for putting in the further answer; but that was an error which did not injure the defendant, as he had the right to put in his further answer immediately if he thought proper. The only effect of it was to compel the complainant to make a special application to the court to obtain a further answer. The cause must therefore be stricken from the calendar, and the defendant must answer the exceptions in thirty days, after notice of the order to be entered on this decision. Upon the other facts appearing in the affidavits, however, I think this is not a case for charging the defendant with the costs of this application.


text:
    Dodge vs. Dodge.
    Where it was doubtful from the master’s report, in a suit for a divorce on the ground of adultery, whether the complainant had not voluntarily cohabited with the defendant after she had knowledge of the last act of adultery which was proved to have been committed by him; she having cohabited with him subsequent to her knowledge of several previous acts of adultery; Held, that it was a proper case to be referred back to the master, to enquire and report whether there had been a condonation of the last acts of adult’ery, by a voluntary cohabitation of the defendant with the complainant after she had discovered that he had been guilty of such adultery.
    Upon a reference to a master, upon a bill for a divorce on the ground of adultery, it is the duty of the master to examine witnesses and report the evidence,*as to all the material facts charged in the bill, together with hie opinion thereon; particularly as to the averments in the bill which are required to be inserted therein, by the 163d rule of the court of chancery, as to condonation, collusion, &c.
    This was an appeal from a decision of a vice chancellor, denying an application for a divorce, upon a bill taken as confessed against the defendant. From the master’s report there did not appear to be any doubt that the defendant had been guilty of the adultery charged in the bill; but the vice chancellor refused to grant the divorce, because there was some reason to suppose that the complainant had voluntarily cohabited with the defendant after she had knowledge of such adultery.
    June 3.

      D. Graham, for the appellant was heard ex parte.

   The Chancellor.

From the evidence annexed to the master’s report there was certainly much reason to believe the complainant had cohabited with the defendant, voluntarily, after the first acts of adultery of which he had been guilty, and with a knowledge of his guilt. Whether she cohabited with him at all, after the last act of adultery committed by him, is a matter of much more doubt. On this subject the master’s report is defective. The order of reference, under the 164th rule of this court, requires the master to take proofs, and to report, as to all the material facts charged in the bill. And one object of requiring certain averments tobe inserted in the bill, as directed by the 163d rule, was to enable the court, under the usual order of reference, to obtain a report of all the necessary facts, from which the chancellor was to ascertain and determine whether there had been collusion between the parties, or a condo-nation of the offence ; and whether the suit had been commenced within the time prescribed by the statute, after the discovery by the complainant of the adultery charged in the bill. It is the duty of the master, therefore, to examine the witnesses, who are produced before him, particularly as to the subject of those averments, as well as to all other facts charged in the bill; and to report the proofs to the court, together with his opinion as to the truth of every allegation or averment in the bill. The vice chancellor, instead of denying the divorce absolutely in this case, should have referred it back to the master, to re-examine the witness who had been previously produced before him and such other witnesses as might be produced, and to report such examinations, and his opinion whether the complainant had voluntarily cohabited with the defendant after she had discovered that he had been guilty of all or any, and if any which, of the acts of adultery charged in the bill and proved before the master.

The decree of the vice chancellor must therefore be reversed and it must be referred back to the master accordingly. And, upon the coming in of such supplemental report, the complainant may apply to the chancellor, upon any motion day, or at the term, for a decree thereon; if the facts, as thus ascertained, will authorize a decree for a divorce.


text:
    Jumel, administratrix, &c. vs. Jumel and Lagardere.
    Where the intestate, in 1824, gave a bond and mortgage upon a lot of land, of which he was the owner, to secure the payment of $6000; and the lot was afterwards sold and conveyed to B., subject to the payment of the mortgage, who afterwards conveyed the premises to a trustee, for the separate use of the wife of the mortgagor; and after the death of the mortgagor, the cestui que trust of the mortgaged premises who became entitled to the legal estate in the equity of redemption under the provisions of the revised statutes, administered upon the estate of the mortgagor; Held, that the mortgaged premises were the primary fund, in equity, for the payment of the bond and mortgage; and that the administratrix, who was the owner of those premises subject to the payment of the mortgage, could not, in the settlement of her accounts as administratrix, be allowed for the principal and interest which she had paid to the mortgagee, subsequent to the death of her husband, the mortgagor.
    Where, in a conveyance of real estate, it was expressly stated that it was understood and agreed, by the parties to such conveyance, that the premises were thus conveyed subject to a previous mortgage thereon, executed by the grantee in such conveyance, and to all interest due or to become due thereon; Held, that as between the grantor and the grantee, the mortgaged premises were the primary fund for the payment of the mortgage debt.; and that if the mortgagor was afterwards compelled to pay that debt to the mortgagee, he would be entitled, in equity, to be subrogated to the rights of the latter, and to reimburse himself out of the mortgaged premises. Held also, that a subsequent purchaser of the premises, from the grantee in such conveyance, took them subject to the same equity; although the deed to such subsequent purchaser did not in terms refer to the lien of the mortgage, or describe the lands as being conveyed subject to such lien
    The surrogate, upon the settlement of the account of an executor or administrator before him, has jurisdiction to examine and decide upon all claims between such executor or administrator and the estate of the decedent, whether such claims are legal or equitable; so as to make a final settlement and distribution of the estate, according to the rights of the several parties interested therein.
    Where the personal representative of a decedent appeals from a sentence or decree of the surrogate, directing the payment of money by the appellant upon the final settlement of his accounts, and such sentence or decree is affirmed, the respondents are entitled to interest on the sums awarded to them by the judge a quo ; as damages for the delay occasioned by such appeal.
    This was an appeal from the sentence or decree of the surrogate of the city and county of New York, made upon the settlement of the account of the appellant, as the admin* istratix of S. Jumel her late husband, upon the application of the respondents who were entitled to a distributive share of his estate. And the only question arising upon the appeal was, whether the administratix was entitled to be allowed, upon the settlement of the account, and the distribution of the estate, for the principal and interest of a bond and mortgage, paid by her under the following circumstances: In September 1824, S. Jumel the intestate, being the owner of the lots and buildings at the corner of Broadway and Liberty streets, in the city of New York, gave a mortgage thereon to E. Berger to secure the payment of $6000 and interest, for which sum the intestate gave his bond to Berger at the same time. In January 1826, S. Jumel conveyed the same lots and premises, subject to the mortgage to Berger, and to all the interest due or to grow due thereon and to all the rights and privileges of the said mortgage, to R. J. Macy, in trust to permit the rents and profits to be received by the agent of Mrs. Jumel, the appellant, during her life and for her separate use, and after her death to re-convey the premises to S. Jumel the grantor or his heirs or assigns, or as he or they should direct and appoint. In May thereafter, the intestate being then in France, he gave to his wife a general power of attorney, whereby she was authorized, among other things, to sell and convey all or any of his real estate in New York, as she should deem best for his advantage and benefit. Under that power she after-wards conveyed the mortgaged premises in fee, to Mary Jumel Bownes, subject to the mortgage to Berger; and in which conveyance she joined with the grantor and her trustee, as assenting to the same. A few days after the execution and recording of this conveyance, M. J. Bownes, the grantee therein, conveyed the same premises, together with other lots in New York, to M. Werckmeister; in trust to receive the rents and profits of the premises thus conveyed, and to pay the same over to Mrs. Jumel the appellant, or at her election to suffer her to use, occupy, and possess the premises and receive the rents and profits thereof for her separate use, free from the control of her then present or any future husband. But in this conveyance to the trustee of the appellant no mention was made of the mortgage to Berger. The conveyance was for the nominal consideration of one dollar. S. Jumel returned to New York in 1828, and continued to reside there with his wife until the 22d of May, 1832, when he died intestate; and the appellant administered on the estate. She continued to pay the interest on the bond and mortgage to Berger, from time to time as it became due, until the 25th of November, 1835, when she paid off the principal of the debt, and took a receipt therefor upon the bond, and the mortgage was afterwards duly discharged on the record. The mortgaged premises were fully proved to be worth at least $20,000. Upon these facts the surrogate decided that the administratrix was not entitled to claim, as against the personal estate, the amount of principal and interest she had paid to Berger on the bond and mortgage. From which decisions he appealed to the chancellor.

      July 2.

      B. W. Bonney & Geo. Griffin, for the appellant.

      J. W. Benedict & C. O. Connor, for the respondent.
   The Chancellor.

The two questions which present themselves for consideration on this appeal are; whether as between the estate of S. Jumel the intestate, and the owner of the mortgaged premises at the time of his death, the land was the primary fund for the payment of the mortgage debt ? and if so, whether the surrogate was authorized to settle this question between the parties, and to disallow the claim of the administratix to a credit for the amount paid by her for the principal and interest due on the mortgage 1 Previous to the revised statutes, where a decedent died seized of real estate which he had himself mortgaged, and where he was also personally liable to the mortgagee for the payment of the mortgage debt, his personal estate was the primary fund for the payment of the debt; as between the heirs at law or devisees of the mortgagor and the distributees of the personal estate. This case, however, does not depend upon that principle, as this is not a contest between different owners, of the personal property and the real estate, which belonged to the decedent at the time of his death. The question here arises between the estate of the intestate, and the owner of mortgaged premises which the intestate had sold and conveyed, during his lifetime, by his attorney, subject to the lien of the mortgage. The deed to Mary Jumel Bownes, which, in the absence of any proof to the contrary, I must presume to have been given on an absolute and bona fide sale to her under the power of attorney, recites the conveyance to Macy, in trust, and that M. J. Bownes had contracted with Mrs. Jumel the beneficial owner of a life estate in the mortgaged premises, and with S. Jumel who was the beneficial owner of the remainder in fee, for the absolute purchase of their several rights and interests in the premises; so as to vest in her, as the grantee of the parties of the first, second, and third parts, an absolute estate in fee simple in the premises, subject only to the mortgage thereinafter particularly mentioned. And then the concluding clause of the deed declares it is understood by the parties to the same that the conveyance is subject to the mortgage to E. Berger for $6000, and to all interest due or to grow due thereon. It is not perceived how language could be more explicit, to show the intention of the parties that the grantee was to take the premises subject to the payment of the mortgage. And the grantee having accepted the conveyance subject to that implied condition, she was bound, as between her and S. Jumel the mortgagor, to pay off and discharge the mortgage; so as to relieve him from personal liability to Berger on the bond. Although this could not deprive Berger of the right to resort to the personal liability of the mortgagor, or to the mortgaged premises, at his election, to obtain satisfaction of his debt, yet if the grantee of the land permitted the'debt to be collected of the grantor, upon his bond, instead of paying it herself, as she was bound to do in equity according to the implied condition in her deed, he had an equitable claim to be subrogated to the rights of the mortgagee ; to enable him to reimburse himself by a resort to the mortgaged premises for that purpose. And as this equitable right to resort to the land, as the primary fund for the payment of the mortgage debt, appeared upon the face of that deed, through which the grantee of Mary Jumel Bownes obtained his title, he is chargeable with notice of that eqeitable right, equally as if the deed to himself had, in terms, declared that he was to take the premises subject to the payment of that mortgage. Indeed no such constructive notice to Werckmeister was necessary, as he was a mere trustee; and his cestui que trust was a party to the previous deed, and. therefore had actual notice that the land was conveyed to Mary Jumel Bownes subject to that mortgage. This did not create any personal liability, however, on the part of the cestui que trust, to pay off and discharge the mortgage, as she was a feme covert at that time, and could not charge herself personally with the payment of a debt. But the land itself as her separate property in the hands of her trustee was thus charged. And as its value was far beyond the amount of the mortgage and the interest thereon, both at the death of her husband and subsequent to that period, that fund should have been resorted to for payment of the debt, instead of paying it out of the estate of S. Jumel. If a stranger had taken the mortgaged premises subject to the payment of this mortgage, or if the premises had remained in the hands of Mary Jumel Bownes, the original grantee, it would have been the duty of Mrs. Jumel, as the administratrix of her husband, when she paid off the mortgage debt out ofhis estate, to have taken an assignment of the mortgage; so as to reimburse the estate out of the mortgaged premises. And if the mortgagee refused to assign the mortgage to her, upon being paid the amount out of the decedent’s estate, he might have been compelled to do so, or compelled to resort to the mortgaged premises in the first instance. But as the administratix was herself the owner of the mortgaged premises, her equitable interest therein, as cestui que trust, being turned into a legal estate by the provisions of the revised statutes, (1 R. S. 727, § 47,) she should have paid the mortgage out of her own property, which was the primary fund for that purpose, instead of paying it out of the estate of the decedent in her hands as administratrix. It is evident, therefore, that the surrogate was right in supposing she had no equitable claim to be credited the amount of this debt, or the interest thereon after the death of her husband, in the settlement of her accounts with the estate.

That the surrogate had jurisdiction to examine and settle this equitable claim, in favor of the estate, to reimbursement out of the .mortgaged premises, and to make a final settlement and distribution of the estate according to the actual rights of the several parties, whether those rights depended upon legal or upon equitable principles, was settled by this court in the case of Gardner v. Gardner, upon appeal from a decision of the surrogate of New York, in March, 1838, (ante, p. 112.)

The surrogate, in stating the account, has credited the appellant with the amount paid by her upon the bond and mortgage to Berger, and has charged her with the same sum as a debt due by her to the estate. But the result is the same as if he had merely refused to credit her with those payments upon the ground that she was not authorized to pay them out of the estate, when she had, in her own hands, the real estate mortgaged ; which real estate was primarily liable, and was an ample fund for that purpose. The appellant cannot, therefore, complain of this mode of stating the account, as she was not prejudiced thereby.

The sentence and decree of the surrogate is affirmed, with costs, to be paid by the appellant. And the respondents are also entitled to interest on the sums awarded to them respectively, by the surrogate, by way of damages for the delay occasioned by this appeal. The cause may be retained here, and an execution may be issued out of this court, to collect the amount due the respondent, including such interest and the costs.


text:
    Minor and others vs. Betts and others.
    Under the provisions of the act of 1833, authorizing the appointment of the registers and clerks guardians ad litem of infant defendants, in partition suits, the court of chancery may appoint the register, or clerk, guardian ad litem of an infant defendant who is an absentee, without security; and without any notice of the application to the infant, except the general notice for the absentee to appear and answer.
    No one but a register or clerk can be appointed the guardian of an infant de. fondant, in a partition suit, without giving security for the faithful performance of his trust.

      This was an application to appoint the register of this court guardian ad litem of infant defendants in a partition suit; the infants living out of the state and having been proceeded against by advertising under the statute.
    July 2.

      J. Rhoades, for the complainants.
   The Chancellor.

The only question in this case is, as to the power of the court to appoint the register guardian ad litem of an infant defendant, in a partition suit, without security, under the provisions of the act of 1833, when the infant resides out of the state, so that notice of the application cannot be given to him, or to his general guardian, as required by that act. There is no doubt as to the power of the court to appoint any of its officers the guardian ad litem in such a case, although no one but a register, or clerk, who has given security for the performance of his official duties generally, can be such guardian ad litem, even for an absentee, without giving security to the infant as required by the fourth section of the title of the revised statutes relative to the partition of lands. (2 R. S. 317.) But as the statute has, in express terms, authorized the court to appoint the register or a clerk such guardian, and to dispense with the security required in other cases, I think it will be most conformable with the intent of the legislature to make the appointment of one of these officers ; and without notice to the infant who resides out of the state, except the general notice to appear and answer, which has been duly published, as required by law.

The register, therefore, is appointed the guardian ad litem of the infant defendants, according to the prayer of the complainant’s petition.


text:
    Perrine & Pixley vs. Striker.
    The act of 1837, to prevent usury, which requires the usurer to answer on oath as to the alleged usury, for the purpose of enabling the adverse party to deprive him of the money actually loaned, with the legal interest thereon, as well as of the usurious premium, is not a violation of the section of the constitution which declares that no person shah be compelled, in any criminal case, to be a witness against himself.
    The surety in an usurious contract, as well as the principal debtor, is a borrower, within the intent and meaning of the fourth section of the act of May, 1837, to prevent usury, which authorizes the borrower to file a bill in chancery for the discovery of or relief against the usurious contract or security.
    The act of 1837, to prevent usury, does not authorize the borrower to file a bill in chancery, for a discovery, or for relief against an usurious contract, where he has a perfect remedy and defence at law, to a suit brought upon such contract, by the examination of the plaintiff in that suit as a witness to prove the usury. And if there are any circumstances in the case by reason of which it would be impossible or difficult for the borrower to obtain perfect relief against the usurious contract at law, they should be stated in his bill in chancery, when he applies to that court for a discovery or relief.
    Where the usurious contract is a negotiable security, which may be sued in the name of a third person who has no knowledge of the usury, or in the name of a plaintiff who cannot be examined as a witness in the court of law, the borrower may file a bill in chancery, under the provisions of the act of May, 1837, for a perpetual injunction and to have such usurious security delivered up and cancelled.
    July 2.
    This case came before the court upon a demurrer to the complainants’ bill. The object of the bill was to obtain a perpetual injunction against the prosecution of a suit at law upon an usurious note given by one of the complainants as principal, and by the other as his surety, to the defendaant, upon a loan of money. The bill stated that the note was given in March, 1836, for $300, payable in seven months, with interest; but for which note the defendant loaned only the sum of $287,50, the residue of the $300 being deducted upon an usurious agreement that the lender was to have at the rate of fourteen per cent per annum for the use of the money loaned. And the complainants alleged that the defendant had brought a suit at law, upon the note, and that they were unable to prove the usury, on the trial in that suit, as the facts were known only to themselves and to the defendant. The demurrer was both as to the discovery and to the relief sought by the bill. And the defendant stated, as causes of demurrer, that the discovery sought by the bill might subject him to a forfeiture, and to criminal punishment as for a misdemeanor; that Pixley, the surety, not being a borrower of the money, was improperly joined as a complainant in the bill: and that the complainants had a perfect and adequate remedy or defence at law, as the defendant in this suit might be examined by the complainants as a witness in the action at law on the note, under the provisions of the act of May, 1837, to prevent usury.

      A. C. Paige, for the complainants.
    As the law stood previous to the act of May, 1837, for preventing usury, the complainant, when he filed a bill in this court for a discovery was required to pay, or offer to pay the amount equitably due. (1 R. S. 772, § 8. Livingston v. Harris, 3 Paige's Rep. 528. 11 Wend. 339, S. C.) But by the act of 1837, the legislature intended to change the law in this respect. The fourth section of that act gives the borrower the right to file a bill in this court, as well as the right to call the usurer as a witness upon the trial of his suit at law. These remedies are concurrent and cumulative. The act of 1837 declares that a bill may be filed here. That it is competent for the legislature to alter a rule of equity, as applied by the court of chancery, was conceded by Mr. Justice Sutherland, in the case of Livingston v. Harris.

    The act of 1837 only alters the remedy of the borrower, by compelling a discovery of the usury by an answer on oath. But the contract itself, which was previously void, on account of the usury, is not altered in any respect by the statute.
    The objection, that the act compelled the defendant to discover, by an answer on oath, matters which may subject him to an indictment and conviction as for a misdemeanor, is obviated by the last section of the statute, which prevents the answer from being used on the trial of an indictment for the usury.
    A surety is a borrower, within the spirit and meaning of the statutes relative to usury, and is entitled to the like remedies of the principal debtor. (11 Wend. 336, per Sutherland, J.) The seventh section of the seventh article of the constitution does not apply to this caseas this is not a criminal case within the meaning of that section.
    H. B. Cowles, for the defendant.
    The complainants . should have offered, in their bill, to pay the principal and interest of the money received of the defendant. The defendant shows that he cannot answer the bill without subjecting himself to a criminal prosecution, and to punishment for a misdemeanor. (1 R. S. 772, § 2. 2 Id. 626, § 39,45.)
    Again ; the complainant has no right to call upon the defendant for a discovery of the usury charged in the bill; as he can examine him as a. witness in the suit at law, under the provisions of the act of May, 1837. And the discovery; if made, may subject the defendant to a forfeiture.
    Pixley, one of the complainants, has no right to the discovery sought for by this bill, as he was not the borrower; the loan having been made to Perrine alone.
    The act of 1837, requiring the defendant to answer on-oath, for the purpose of enforcing a forfeiture against him, is in conflict with the provision of the constitution, which declares that no person shall be compelled, in any criminal case, to be a witness against himself.
   The Chancellor.

The objection that the discovery sought by the bill may subject the defendant to a crimnal prosecution is not well taken. The eighth section of the act of May, 1837, to prevent usury, expressly provides that the answer of a defendant in such a case shall not be used against him before any grand jury, or on the trial of any indictment against him. Whether any criminal prosecution can be instituted in any other form against the usurer, it is not material to inquire; for the legitimate construction-of this section must be, although the word indictment only is used, that his answer shall not be received as evidence on the trial of any criminal prosecution against him. This usurious discount was received in this case long before the passing of the act of 1837, and the defendant could not be indicted under that act, which subjects the usurer to fine and imprisonment; he is therefore not liable to any crimnal prosecution. And as he has never received’ any thing from the complainants, but has only made an usurious discount of a note which is not negotiable, and therefore of no value to him, it being void, no action will lie to recover back the money, under the third or fourth sections of the title of the revised statutes relative to the interest of money. (1 R. S. 760.) As the forfeiture of the money loaned, or the recovery of the usury where it has been received, are specific penalties prescribed for the violation of the provisions of that title, such a violation was not an indictable misdemeanor under the section of the revised statutes referred to by the counsel for the defendant on the argument. (2 R. S. 696, § 45, [39].) By the common law, a defendant in a suit in this court could not be compelled to answer any charge, or interrogatory, which might subject him to a penalty or forfeiture, or any loss in the nature of a forfeiture. And this principle was also applicable to witnesses in suits at law; who could not be compelled to disclose the fact of usury, where such disclosure would have the effect to deprive them of the recovery of the whole debt. (See opinion of Sir P. York, afterwards Lord Hardwicke, in Sel. Cas. by a Solicitor, 19. Mauran v. Lamb, 7 Cowen’s Rep. 174.)

I may be permitted to doubt whether it is strictly consistent with the spirit of our institutions and of an enlightened legislation, to tempt the conscience of any man so far as to compel him to make a disclosure of an usurious bargain, by his answer on oath; where the necessary effect of such answer is not merely to prevent the recovery of the usurious interest, or premium, but also to deprive him of the power of ever obtaining satisfaction of the money actually lent, with the legal interest thereon. The legislature, however, has expressly authorized such a proceeding, in terms which it is impossible to misunderstand, and which cannot bear any other construction. It is, therefore, the duty of courts of justice to submit to this declaration of the legislative will, and to carry the law into full effect, unless it clearly conflicts with the provisions of the constitution. The seventh section of the seventh article of the constitution declares, that no person shall be compelled in any criminal case to be a witness against himself. But I am not prepared to say that this is a criminal case, within the meaning of this provision of the constitution; although the effect of the discovery sought must necessarily be to prevent a recovery of the money actually lent, and is therefore in the nature of a forfeiture.

The objection, that the surety is made a complainant with the person who was the real borrower of the money, is not well taken. The money was lent upon the joint and several note of both complainants, and both are sued in the action at law. The surety therefore was a necessary party to this bill, as a bill for relief, whether he could file a bill alone and in his own name or not. (Bailey v. Inglee, 2 Paige’s Rep. 278.) I am moreover inclined to think that both the principal debtor and the surety are to be considered in this case as borrowers, within the meaning of the act of May, 1837. And this is in accordance with the opinions expressed by Justice Sutherland and Senator Tracy in the case of Livingston v. Harris, in the court for the correction of errors, (11 Wend. Rep. 329.)

The remaining question is whether the bill shows a case entitling the complainants to come into this court, either for discovery or relief. As this note is not negotiable, and must therefore be sued again in the name of this defendant, even if the present suit at law in his name is discontinued, it is very evident that a discovery, by the aid of this court, is not necessary to enable them to prove the usury upon the trial of any action at law which may be brought upon the note. For the statute expressly authorizes the defendant in a suit at law, where the defence of usury is set up in the plea or notice, and verified by oath, to examine the plaintiff as a witness to prove the usury. (Laws of 1837, p. 487 § 2.) It is true, the statute of 1837 declares that the usurer may be compelled to answer, on oath, any bill that shall be exhibited against him in this court for relief or discovery or both. But it could not have been the intention of the legislature to compel the court of chancery to take jurisdiction of every question of usury, although a perfect remedy, both as to discovery and relief, could be had in the court of law. If this note was negotiable, so that it had been or could be sued in the name of a third person who knew nothing of the usury, or who, not being the usurer, could not be examined as a witness, for the borrower, in the court of law, it might be a proper case to come into this court for a perpetual injunction, or to have the usurious note delivered up and cancelled, as authorized by the act of 1837. But upon the case as made by this bill, I do not see any ground whatever to justify this court in withdrawing the question of usury from the consideration of a jury, in the court of law, where the suit upon the note was brought. If there are any special circumstances, by reason of which the complainants would be deprived of the benefit of the defendant’s evidence in the suit at law, they should have been stated in the bill; and the complainants may now be permitted to state them by way of amendment. But as the case now stands, the demurrer must be allowed. And the bill must be dismissed with costs, unless the complainants shall within twenty days amend their bill, and pay the costs of the demurrer and of the argument thereof.