text:
    In the matter of Catharine Roberts’ will and codicil.
    Where the testatrix and her husband left their domicil, in the island of Cuba, for the purpose of visiting or returning to their native country, and the testatrix afterwards returned to Cuba and was there when she received information of her husband’s death, and immediately after this event she announced her intention of remaining and fixing her residence permanently at that place, and shortly afterwards made her will there, according to the laws of Cuba ; Held, that it was a valid will of personal estate; and that the declarations of the testatrix, declaring her intention to remain in Cuba, were sufficient evidence to establish that as her domicil, although she shortly afterwards died on her voyage to New-York, where her husband was residing at the time of his death.
    The actual residence of a person at a particular place, with the intention of remaining there permanently, constitutes that place his domicil, at least until such intention to remain there has been abandoned. And the declarations of the person, where he has no inducement to falsify the truth or to deceive those to whom such declarations are made, are the best evidence of his intention to make his actual residence his permanent residence also.
    The status, or capacity of the testator to dispose of his personal property by will, depends upon the law of his domicil. But as to the mere formal execution of the will, it seems it is sufficient if it conforms to the laws of the place where it was executed.
    It seems also that a will of personal estate is valid if made and executed in conformity to the law of the testator’s domicil; although it does not conform in all respects to the law of the place where it is executed. But if the testator is not a citizen of this state, such a will cannot be proved, in this state, upon a commission from the court of chancery, or by the mere production of the foreign probate to the surrogate ; under the special provision of the revised statutes on this subject.
    October 6.
    Upon the application of John Calf, the brother and one of the next of kin of Catharine Roberts, the decedent, and one of the executors named in the codicil to her will, a commission and letters rogatory were issued to the island of Cuba, to take the proof of her will and codicil, alleged to have been executed at the Havana, in 1838. The decedent having no relatives in this country,-except her brother John Calf who propounded authenticated copies of the will and codicil for probate, the commission and letters rogatory were issued without notice, and were executed ex parte. Upon the return thereof, T. Yredenburgh of New Brighton, who had been appointed, by the surrogate of Richmond county, administrator of the estate of the deceased, came in as an intervener to resist the establishment of the will and codicil; as the proper representative of the rights of her other next of kin, who resided in England. The chancellor thereupon directed an issue to be formed and tried, between the proponent of the will and codicil, and the administrator, for the purpose of ascertaining the fact whether the decedent was domiciled in Cuba, or in this state, at the time such will and codicil purported to have been executed ; they not having been executed in the form prescribed by the revised statutes of this state. A new commission was also issued to take further proof on the subject. The administrator afterwards died, so that there were no longer any parties to try the issue. And Calf, the proponent of the will and codicil, thereupon applied to the court to have the order for an issue discharged j and that the will and codicil might be established by the court, upon the testimony taken under the several commissions, and letters rogatory which had been duly executed and returned.

      J. B. Purroy,
    as counsel for Calf the executor, insisted that the proof conclusively showed that the testatrix was domiciled in Cuba at the time of the execution of the will and codicil; and that the will and codicil were duly executed according to the law of Spain to pass her personal estate.

      F. S. Kinney,

    who was the solicitor for the administrator in his life-time, had notice of the application ; but as he did not profess to appear for any one who now had any interest in opposing the probate of the will and codicil, the chancellor decided that he had no right to be heard in opposition to the probate, or to the motion to discharge the order for an issue. The proofs were thereupon submitted to the court upon the ex parte argument of the counsel of Calf, the executor named in the codicil.
   The Chancellor.

The petition presented to this court, in February last, by the surviving brothers and sisters of Catherine Roberts, shows that all the next of kin who would be entiled to share in her estate, in case of an intestacy, except the children of her deceased brother W. Calf, are willing and anxious that this will and codicil should be established. It further appears, by the affidavit of the proponent, that he and the other surviving brothers and sisters have executed an assignment for the benefit of those children ; putting them upon the same footing in reference to the estate, as if their father had survived Mrs. Roberts, so as to take his share of the estate under the will. Under such circumstances, the statute having authorized the court, in its discretion, to dispense with a notice to the next of kin where a notice should be deemed unnecessary, I shall discharge the order for an issue, and proceed to decide the question as to the validity of the will and codicil; without any further notice to the next of kin of the decedent who are out of this country. But as the personal representatives of the deceased administrator have had no notice of this application, the order for the issue must be discharged without prejudice to their right, upon the settlement of his account as the administrator of the estate of Mrs. Roberts, to claim such compensation as he may have been equitably entitled to, if any, for expenses incurred by him in resisting the probate of this will and codicil ; in case it shall appear that such expenditures were made in good faith, and upon reasonable grounds of belief that the will and codicil were Hot duly executed to pass personal property.

The facts of the case, as established by the testimony taken under the commissions and letters rogatory, which have been duly executed in the island of Cuba, are substantially as follows : Cornelius Roberts and his wife, who were natives of Great Britain, went to Cuba more than thirty years since, where they became domiciled, and were the owners of two or three coffee and sugar plantations, in succession. In 1832 or 1833, they left Cuba for the purpose of visiting their native country. But it does not appear that they at that time contemplated a permanent removal from the island, either for the purpose of resuming their domicil of origin or of settling elsewhere ; though they disposed of most of their property before they left; leaving, however, their house fitted up and in a situation to be occupied by them on their return. As there is no evidence of intention to abandon their acquired domicil, at that time, the legal presumption is that such domicil continued, as well after as before they left it upon their last visit to their native country. Indeed, the evidence show that at that time they contemplated a return there to reside; or at least, that they had not then made up their minds to change their domicil. They subsequently came to New Brighton, on Staten Island, where both remained some time; and the husband finally died there, about the close of the year 1837, after his wife had returned to Cuba to see to their property which remained at that island. The testimony leaves it uncertain whether the husband and wife, previous to his death, had abandoned the intention of returning to Cuba to reside, and had concluded to fix their residence in this state ; though it appears that the existence of the Asiatic cholera at the Havana was probably the reason why they did not, upon their return from England, go directly there. It is probably unnecessary to decide the question whether the domicil of the husband was in fact changed from Matanzas, to New Brighton; where he was either temporarily or permanently located at the time of his death. For even if that was the case, the testimony taken under the last commission, and letters rogatory, fully establishes the fact, that Mrs. Roberts, immediately after the death of her husband, distinctly announced her intention of fixing her residence in Cuba, where she then was. Colonel Allyon, who appears to have been an intimate friend and acquaintance both of her and of Mr. Roberts, testifies that after she had heard of the death of her husband, and while she was staying in his family, as a guest upon the invitation of himself and his wife, she declared her intention to be to return to that place to reside, after she should have settled the affairs of her husband in this state. And she wished to re-purchase the coffee plantation which she and her husband formerly owned near Matanzas, for the purpose of making that her permanent residence ; as she said she had always enjoyed perfect health at that place. The wife of Col. Allyon also testifies that the decedent told her, after she had heard of the death of her husband, that the climate of her native country and the United States disagreed very much with her health, and for that reason that she had resolved to continue her domicil in Cuba where she acquired her property, and where the climate agreed with her health, adding, that she was going to take steps to re-purchase the coffee plantation which formerly belonged to her, on which she had always enjoyed good health. And the testimony of these two very respectable witnesses is corroborated by that of two or three others of her acquaintance; to whom she made similar declarations of her intentions to continue her residence in Cuba, and to return there as soon as she should have settled the affairs of her husband in this state.

These were not mere declarations of a future intention to change an actual residence, from Staten Island to the island of Cuba, for the purpose of changing her domicil. Such declarations, I admit, would not, without an actual removal from the former place of residence, be sufficient to constitute a change of domicil. But in this case, it must be recollected, that at the time the declarations were made her husband was dead ; and she5 havíñg no family, was actually residing in Cuba, where she declared it to be her intention to fix her permanent residence for the remainder of her life. Although it may be difficult to give any general definition of a domicil which will apply to all cases, and Lord Alvanley thought Bynlcershoek was wise in not hazarding a definition of the term, I think it cannot be doubted that the actual residence of an individual at a particular place, with the animais manendi, or a fixed and settled determination to make that his permanent residence for the remainder of his life, constitutes that place his domicil j at least until there is some evidence that his intention to remain there has been abandoned. And the declarations of the party himself, where he can have no object or inducement to falsify the truth or to deceive those to whom such declarations are made, are the best evidence of his intention to make his actual residence his permanent residence also. Here the declarations of the decedent appear to have been repeatedly and deliberately made, at different times and to various persons; and I think there can be no reasonable doubt that she intended what she said. The conclusion, therefore, at which I have arrived, from the evidence in this case, is that at the time of making this will and codicil the decedent was domiciled in Cuba. And the testimony shows conclusively that they were executed in due form to convey her property, whether moveable or immoveable, according to the Spanish law which was in force in that island ; although they rvere not signed and witnessed in the form required by the revised statutes, as to wills of real or personal property executed here.

There appears to be some difference of opinion, among foreign jurists, whether a will of personal estate, or moveable property as it is called by the civilians, in which the testator has complied with the forms and solemnities required by the lex loci actus, is a valid testamentary disposition of such property ; although, in the form of its execution, such will does not conform to the requirements of the law of the testator’s domicil. The better opinion. however, appears to be, that so far as regards the mere formal execution of the testament, it is sufficient if it conforms to the law of the country where the will is made ; in ... . . . . „ ’, accordance with the maxim, locus regit actum. (See 17 Guyot’s Repert. De Juris. art. Testament, 186. 4 Burge’s Col. and Foreign Law, 583. Civil Code of Louis. art. 1589.) Probably the testament may also be. valid, if made and executed in conformity to the law of the testator’s domicil j although it does not conform, in all respects, to the lex loci actus. (See Target’s opinion in the case of the Butchess of Kingston’s will, 1 Collect. Jur. 324. Story’s Confl. of Laws, 391. 4 Burge’s Col. and For. Law, 582, 584, 590.) And it appears to be the generally received doctrine, at the present day, that the status or capacity of the testator to dispose of his personal estate by will, depends upon the law of his domicil.

Our revised statutes seem to contemplate the validity of a will of personal property, by a citizen of this state, if made in conformity to the requirements of our law ; although executed out of this state, and in a place where the local laws require the adoption of a different form. This appears to be a distinct recognization of the principle that the will may be valid, if made and executed in conformity with the law of the testator’s domicil. (2 R. S. 2d ed. p. 12, § 69.) The statute also, in express terms, authorizes a will personally executed out of the state, by a person not domiciled here, to be admitted to probate, provided it is duly executed according to the laws of the state or country where the same was made ; and prohibits all other foreign wills from being admitted to probate, under the special provisions incorporated into the statutes by the amendments of April, 1830. As those provisions refer to the mode of establishing foreign wills under a commission to be issued by this court, or upon the production of the foreign probate, alone to the surrogate without further proof, they do not necessarily exclude the idea that a will of personal property made by a testator domiciled abroad may be valid, if executed according to the law of his domicil; although the form of its execution is not in accordance with the law of the place where he actually executed it, during a temporary absence from his place of residence. ° f . . . But the mode of proving such a will here, if it is valid, as I think it would be, must be different from that which is prescribed by these special provisions of the revised statutes relative to foreign wills; and this court has no jurisdiction in such a case.

The conclusion at which I have arrived, in relation to the actual domicil of Mrs. Roberts at the time of executing her will and codicil, steers clear of any of these questions ; which must have arisen if it had appeared, from the evidence, that she had abandoned her domicil in Cuba for the purpose of resuming her domicil of origin in England, or that she had fixed her permanent residence in this state. Here the lex loci actus and the lex domicilii are the same; and they concur with the lex fori in declaring that the instruments propounded, as the will and codicil of the decedent, were valid testamentary dispositions of her personal estate. And they are entitled to probate here, under the commissions and letters rogatory, issued in this case, which have been executed under the authority of this court.

The usual decree must therefore be entered, establishing the authenticated copies of those instruments, which were returned with the first commission, as the last will and testament of the testatrix in relation to her personal estate ; and directing that such decree be transmitted to the surrogate of the county of Richmond, that he may record the same ; and directing him to issue letters testamentary or of administration thereon, in the same manner as if the said will and codicil had been duly proved before him.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    State of Illinois vs. Delafield.
    Where the legislature of a state authorized its officers to borrow monies for the use of the slate, and to sell its bonds or public stocks for that purpose, but for not less than their par value ; Held, that a sale of bonds or stocks which were to draw interest from the time of the sale, but which were to be paid for in future instalments only, and without interest, was a sale of such bonds or stocks for less than their par value; although the difference in exchange, between the state and the place of such sale, was equal to the interest on the instalments, in favor of the latter place.
    An agent for a state, who is authorized to borrow money upon a sale of its stocks, cannot, without an express authority from the state, sell such stocks on a credit.
    As a general rule, an agent for a sale must sell for cash, unless ho has an express authority to sell upon credit. But an authority to sell on credit may be implied, where from the general usages of the trade in which the agent is employed it is the custom to sell on credit.
    Where the agents of a state have made an unauthorized contract for the sale of its stocks on credit, or below their par value, to a purchaser who is chargeable with notice of the want of authority on the part of such agents to make such sale, the state may repudiate the contract; and willbc entitled to an injunction restraining the purchaser from disposing of the stocks, or of the proceeds thereof, where such stocks are negotiable, so that the state would be bound to pay the same to a bona fide holder to whom they had been transferred without notice of the illegality in the sale thereof by its agents.
    The public stocks of a state are not an article of merchandize which its agents are authorized to sell on credit, without an express authority, even where by the usages of trade it is the custom to sell such stocks on a credit when they are the private property of individuals.
    October 6.
    This was an application for an injunction, to restrain the defendant from selling, hypothecating, or parting with certain bonds or certificates of public stocks of the state of Illinois, or the proceeds thereof; and for the appointment of a receiver of the bonds or certificates which remained in the hands of the defendant, and of the proceeds or avails of such of the stock as had been sold. The bonds for $300,000 of the stock were signed by the governor and auditor of the state, and countersigned by the treasurer as directed by the act of the 9th January, 1836, for the construction of the Illinois and Michigan canal. And the bonds for $283,000, the residue of the stock, were signed by the fund commissioners, and duly countersigned by the auditor; as authorized by the act of February, 1837, to establish and maintain a general system of internal improvements. The interest upon the first bonds, at the rate of six per cent per annum, was payable semi-annually at New-York or Philadelphia, at the option of the holders ; the principal 'reimbursable at either of those places, at the pleasure of the state, after the year 1860. And the other bonds were payable in the same manner, except that the principal was not reimbursable until after the first of January, 1870. The first parcel were received by the defendant, under an agreement made by the agents of the governor, who was authorized by law to appoint agents to borrow money upon such stocks for the making of the canal; under an express prohibition, however, contained in the statute, that the stock should not be sold for less than its par value. And the last parcel was received by the defendant under an agreement made with the fund commissioners, who were also authorized to make loans of money for the internal improvement of the state, and to issue such bonds for the money loaned thereon ; but under a similar restriction, that the stock or bonds should not in any event be sold for less than their par value. The bonds in both cases were sold to the defendant on a credit; the money to be paid to the state in periodical payments, without interest, although the bonds were to be delivered to the defendant in advance, and were to bear interest immediately. The defendant had paid to the agents of the state about $170,000 towards the bonds, but made default in meeting the other instalments as they became due ; leaving more than $400,000 of the stipulated price of the bonds delivered still due and unpaid, according to the contracts.

      W. Kent & D. Webster, for the complainant.
    The contracts made with Delafield are illegal and void ; and this upon two grounds : 1. The stock was sold below its par value, in direct violation of the statutes under which it was authorized to be issued; 2. The agents of the state were not authorized to sell the bonds or certificates of stock upon credit. The agents appointed by the governor, who made the first contract, and the fund commissioners who made the second contract, were not judicial officers, but mere agents of the state ; and the statutes under which alone they could act were severally special powers of attorney, constituting such agents special agents of the state 5 and, a's such, they were to be governed by their instructions and the usages of trade ; and there is no distinction between the agent of a government and the agent of an individual. A person dealing with an agent with limited powers is bound to examine the authority of that agent. (Chitty on Cont. 58. Schimmelpennick v. Bayard, 1 Pet. S. C. Rep. 264. 15 East, 43.) The agents of the state had no authority except what was derived from the statutes of the state. The principal is not bound by the acts of the agent beyond his authority. (Story on Agency, 160, § 170. Beals v. Allen, 18 John. R. 363.) The sale was below par. The interest upon the bonds delivered under the first contract was tó commence running from their delivery; and upon those delivered under the second contract, was to commence running from the date of the contract 5 while the payments for the bonds were to be made at stated time's without interest, —the first payment to be fifteen days, and the last thirteen months, after the delivery of the bonds to Delafield. The time of the payments thus to be made being, upon the aggregate amount, about three and a half months upon the first contract, and about ten months upon the second com tract, after the delivery of the bonds. The difference in exchange between New-York and Illinois cannot be taken into consideration, or set off against the loss of interest. The money was to be raised, and the interest paid, and principal to be reimbursed, at the same place. The rate of exchange between New-York and Illinois had nothing to do with the contracts. The standard value of gold is about seven and a quarter per cent greater in this country than in England. And therefore the nominal rate of exchange between the two countries is greater by that amount than the real rate. But the agents of the state would not have been authorized to sell the bonds in London at a discount; though they might have sold them at the real par value according to the standard of gold by our laws. The idea of a sale at par excludes any allowance for the difference for exchange merely. A sale at par is a sale dollar for dollar. The state wished to borrow money, and it was only in furtherance of such wish that the legislature authorized a sale of the bonds; and the legislature intended that the bonds should only be sold by receiving a dollar in money for every dollar to become due and payable upon the bonds. Any part of a contract being contrary to statute, renders the whole contract void. (Chit, on Contr. 228, § 2. 1 Chit. Pl. 323, and cases cited. Crawford v. Morrell, 8 John. R. 253.)
    The agents had no authority to sell the bonds upon credit. An agent, whether general or special, has no power to sell on credit, unless expressly authorized so to do, except in cases where the property which he is employed to sell is of that description which is usually sold on credit. (Smith’s Merc. Law, 2d Lond, ed. 87.) It is not shewn that it was the usage of trade to sell stock on credit; and on the contrary, such was not the usage. (Wiltshire v. Sims, 1 Camp. 258. Story on Agency, 74, § 78.) The statutes of the state did not authorize the commissioners or agents to sell on credit; and such a sale was against the whole spirit of the laws of the state.
    There has been no ratification of the contracts. A contract can be ratified only by one who had power originally to authorize the making of the contract. The state by her legislative act expressly prohibited the sale of bonds for less than their par value ; and by the whole tenor and spirit of her acts, as well as by the custom of trade, which, being established, is the law, prohibited the sale on credit. Hence nothing short of an act of her legislature can validate a contract made in contravention of her statutes and the law. The acts which are alleged as amounting to a ratification, are mostly acts of the very agents who made the contracts originally. The silence of the state, through her legislature, would he no ratification. The only way for her to repudiate the contracts was to come, as she has come, into a court of equity for relief against the unauthorized and illegal acts of her agents. The contracts being unauthorized and illegal, any and every secondary contract, or subsequent act, is also unauthorized and illegal.
    The state has no remedy except against Delafield. The bonds are instruments transferable by delivery, and the state is bound in honor to pay them to a bona fide holder. A subsequent purchaser in good faith would not be required to know that their original transfer had been unauthorized or illegal.

      E. S. Van Winkle & G. Griffin, for the defendant.
    The bill does not make out a case which entitles the complainant to relief in equity. The complainant has an adequate remedy at law for the injury complained of in the bill. (Mitf. Plead. 109. 8 Com. Dig. 61. 4 John. Ch. 559. 2 Ibid. 522. Anon. 12 Mod. 514. 1 Sch. & Lef. Rep. 25.) The defendant acquired a valid title to the bonds in question, by virtue of the contracts with the fund commissioners of the respondent, the subsequent ratification of those contracts by the respondent, and the payment to, and acceptance by the respondent, of a portion of the consideration agreed to be given for the bonds, in pursuance of the contracts for their sale. The defendant, therefore, simply held the relation of debtor to the respondent, for whatever balance might be due upon those contracts. The remedy of the complainant in such case is complete by suit at law to recover such balance. The fact that the defendant is not of sufficient responsibility to meet any recovery that might be had at law, forms no ground for the interposition of a court of equity. But if, as is claimed by the bill, the contracts were void, so that the defendant acquired no title to the bonds, still the remedy of the respondent is complete at law. The value of the bonds, or the bonds themselves, at the election of the complainant, can be recovered of the defendant at law. The payment of the bonds can be justly and legally resisted by the complainant, whether they are in the hands of the defendant or third persons. No case of fraud is alleged or pretended, as the ground of a concurrent equitable jurisdiction. (5 Ves. 618. 4 John. Ch. 352. 2 Dal. 402. 3 Swans. 491, note. Mitf. Pl. 136, 141.)
    The bill is not signed by the complainant, nor by any person authorized to bind her, nor filed by her authority. Any decree, therefore, which might be given upon this bill,, would not be obligatory upon her, and would therefore be no protection to the defendant. (13 Brown. Ch. 321. 1 Ves. jun. 275. 1 Wash. C. C. 274. 6 John. Ch. 49.)
    If the foregoing positions should be held untenable, then we submit that the whole equity of the bill is disproved by the affidavit of the defendant. The contracts are shewn to be valid. The fund commissioners were the general agents of the complainant for making sale of the bonds; they claimed to have authority to sell on the terms they did. Whether they had such authority or not, depended upon the construction of the statutes of the state of Illinois, After the contracts were made they were approved by the governor and auditor, and the bonds in question were issued in fulfilment of the contracts on the part of the respondent, The defendant was fully justified in giving credence to the construction which those high functionaries put upon their- own statutes. The state of Illinois has not only, by her legislative action, expressly refused to repudiate the contracts, but has ratified and confirmed them; by the acts of her governor, her fund commissioners, her auditor, by receiving payments upon the contract, and applying them to her own use, by the payment of the interest on the bonds and by her legislative action. And she cannot now, in a court of equity, repudiate them if she would, (Paley on Agency, 143, 172. Smith’s Merc. Law, 60. Routh v. Thompson, 13 East, 274. Prince v. Clark, 1 Barn. & Cress. Rep. 187. Smith v. Hodson, 4 T. R. 211. Clarke v. Perrier, Freem. Ch. Rep. 48. Kemp v. Pryor, 7 Ves. Rep.
      237. Ward v. Evans, 2 Salk. Rep. 442.) Her only remedy, therefore, is upon the contracts; and she can no more resort to a court of equity to enforce payment upon them than she could to collect any other ordinary debt.
    The complainant violated the terms upon which the contracts were made, and thereby reduced the value of the bonds in the hands of the defendant greatly below the price which he had agreed to pay for them. Under such circumstances, the complainant has no equitable claim to any remedy or relief beyond what she can obtain at law.
    The defendant had disposed of all the bonds prior to the filing of the bill, and had none of them in his possession or under his control. No injunction, therefore, restraining him from diposing of or parting with the bonds, can be necessary or available. The complainant then is simply a creditor at large of the defendant, for whatever balance may be legally due from him for those bonds. Such creditor is not entitled to a receiver, or an injunction to restrain his debtor from making any disposition of his property he may choose. (Higgins v. Armstrong, 2 John. Ch. R. 144.)
   The Chancellor.

There are no controverted facts in this case which have any bearing upon the questions to be decided on this application. The state bonds, or certificates of public stocks, which are the basis of this controversy, purport to have been issued in accordance with the provisions of the statutes of Illinois, authorizing the governor in the one case, and the fund commissioners in the other, to issue such securities. If these securities, therefore, pass into the hands of bona fide holders, who have no notice of any irregularity, or want of authority on the part of the officers or agents of the state who put them in circulation, the complainant is both legally and equitably bound to pay them to such holders. The state cannot indeed be sued by any private individual or corporation. It therefore may be impossible to coerce a payment by any legal process, unless the stock should come into the possession of a sovereign state •, or should get into the hands of a debtor of the state of Illinois, so as to be a proper subject of set-off in a suit against him by the complainant for the debt. But the honor or faith of the state is nevertheless as much pledged for the redemption of these securities, which she has permitted her agents to put in circulation, as that of an individual would be under similar circumstances. Whether the complainant is or is not liable to a suit by the bona fide holders, into whose hands these bonds or certificates may happen to come in the usual course of business, her exemption from legal process cannot then be properly urged as an objection to her claim to relief in this court. If, therefore, the contracts with the defendant were unauthorized, and have not been subsequently ratified by the state, or by her agents duly empowered by her to ratify such contracts, the complainant is entitled to the relief asked for here. She cannot be compelled to sue in a court of law, upon invalid agreements of her agents, in which suit she could only recover the amount stipulated in their contracts if she should recover any thing thereon.

The counsel for the State of Illinois insist that the contracts made with the defendant were illigal and unauthorized on two grounds : First, That the stock was sold below its par value, in direct violation of the statute under which the bonds were authorized to be issued. Secondly, That the agents of the state were not authorized to sell the bonds or certificates of stock upon credit. The contract of the 23d of April, 1839, was =for a sale of the bonds to the amount of $300,000, and the interest was to commence running on the bonds from the time of their delivery to the defenda?it, which was to be on or before the 10th of June. The first payment thereon was to be made by a deposit of $50,000 in one of the free banks of New-York, fifteen days after the delivery of the bonds. It was not, however to be drawn for immediately, but by drafts at not less than ten days sight. And the residue was to be paid in instalments of $50,000 each, on the first day of August, September, October, November, and January thereafter, without interest j in bank notes of some bank or banking association in the city of New-York.

If will be seen, that by this arrangement the state was subjected to a loss of interest, upon an average, of about 108 days upon these instalments; even if the stock was not delivered until the 10th of June, the latest time allowed by the contract for its delivery. In addition to this, the state was to run the risk of a suspension of specie payments by all or any of the banks or banking associations of the city of New-York. For the defendant, by the terms of the agreement, had a right to make the five last payments in a depreciated currency, if any of those institutions should have suspended specie payments at the time when any of those instalments became due. and payable.

The contract made by the defendant with the fund commissioners, on the 7th of May, 1839, for the sale of $283,000 of internal improvement bonds, was still more unfavorable to the state. The interest on those bonds was to commence running from the date of the contract. But the amount of the loan to the state was payable in instalments of $50,000, on the first days of December, February, March, April, and May then next, without interest; and the last instalment of $33,000 was payable on the first of June, 1840. By computation it wall be found that the credit thus given was equal to about ten months upon the aggregate amount, making a loss of interest to the state of more than $14,000, at the rate of interest wdiich she was paying on the bonds in the mean time. The contract does not specify where the deposites are to be made, to the credit of the Bank of Shawneetown, for the use of the state. And therefore, by its terms, would probably have authorized the deposite of the money in New-York, or at the Bank of Shawneetown, in the state of Illinois; at the election of the defendant. I presume, however, it was intended by the parties that the money should be deposited in some bank or banking association in the city of New-York ; and that this was a mere slip in the drawing of the contract.

It is very evident that such contracts were not sales of these bonds at not less than par, according to the intent and meaning of the statutes of Illinois, under which the officers of the state were authorized to contract for the loan. For if the officers could issue bonds which would draw interest immediately, and still be allowed to give the purchaser of such bonds the use of the money loaned for ten months, without interest, they could with the same propriety, so far as the statutory prohibition was concerned, have sold the bonds upon a contract that they should be delivered and draw interest immediately, and that the purchaser might advance the nominal amount of the bonds in instalments of from one to five years ; as the same might be wanted by the complainant to carry on her public works.

The defendant endeavors to avoid this difficulty by his affidavit that the rate of exchange, between New-York and Illinois, at the time of making these contracts, was five per cent in favor of the former place. He infers, from that circumstance, that the funds in New-York would be worth five per cent premium to the state. And therefore, that the bonds were not sold under their par value ; as that would be equal to the interest on the bonds, for the ten months, at six per cent per annum. I presume he speaks, in his affidavit, of the rate of exchange at the city of New-York ; and not that the state could sell the drafts in Illinois at five per cent premium, in gold or silver, or its equivalent. And he certainly had no right to presume the legislature intended to authorize its officers or agents to turn brokers'; and to buy up the bills of the Illinois banks, in the city of New-York, or drafts upon the banks, or upon individuals, for the purpose of reimbursing the state for the loss of interest. Besides, the difference of exchange in the city of New-York, in favor of that place, would not necessarily be the same in Illinois; where the state would have to sell its drafts to obtain the money and realize the difference in exchange.

If I correctly understand the word exchange, it includes an allowance for the time necessary to collect the draft and to obtain a return of the avails thereof, as well as the expense and risk of transmitting the specie or its equivalent; where the draft is drawn at the place in favor of which the balance of trade is found to be. It necessarily follows from this, that the difference of exchange in favor of New-York, at that place, would be greater than in the state of Illinois where these drafts were to be drawn. For a broker in the city of New-York, in purchasing a draft on Illinois, or the bills of its local banks, in addition to his charge for the expense and risk of obtaining the specie or its equivalent from that state and bringing it to New-York, would have to add something for the loss of interest, from the time "when he advanced the money in New-York until he could reimburse himself at that place out of the proceeds of his draft, or of his local bank notes; whereas a purchaser, in the state of Illinois, of a draft on New-York, in favor of which latter place there was a balance of trade, would only pay a premium equal to the expense and risk of transmitting the specie, or its equivalent, to New-York, where the funds were wanted by him ; with a trifling addition, if he wished to send the draft by mail, for the more rapid transmission of a draft than of gold or silver. The affidavit of the defendant, therefore, is not sufficient to show that if the difference in exchange between the two places had continued the same, at the time these several instalments fell due, as it was at the making of the contract, the drafts could have been sold in Illinois for a premium which would have been equivalent to the interest on the bonds for the ten months allowed to the defendant by the last contract.

But I cannot concur in the opinion, so confidently expressed by the counsel for the defendant, that the difference in exchange between New-York and Illinois must be taken into consideration, in determining the question whether the bonds were sold at their par value. The very idea of a sale of a bond, or draft, or other security for the payment of money, at 'par, is that it is to be sold dollar for dollar of the amount due and payable thereon; without any allowance for the expense or risk of collection, or for the time necessary to transmit the funds from one place to another. Such is the popular or generally received meaning of the terms par, or par value; and this was unquestionably the sense in which these terms were used by the legislature of Illinois, in the statute under which the officers of the state were authorized to issue these bonds, or certificates, as securities for the loans made by them in behalf of the state. Should a merchant in New-York agree to sell goods to his customers, and to take his pay in a draft on Philadelphia at par, or in the bills of the Philadelphia banks at their par value, neither would ever think of deducting from three to five per cent, from the face of the draft or bills, on the ground that the difference in exchange was at that rate in favor of New-York. It is evident, from these statutes, that the legislature of Illinois contemplated a sale of the stocks, which they authorized to be issued, in the eastern commercial cities, and of some of them in Europe. The officers of the state were for that reason authorized, by some of the laws, to make the interest as well as the principal of the bonds payable at such place either within or without the United States, and in such currency, as might be agreed on. They were even empowered to execute the bonds in foreign languages. Still the legislature were careful to restrict their agents, in all of these cases, so that they should in no event be authorized to sell the stock of the state at less than par value. I am perfectly satisfied, therefore, that the officers of the state were not authorized to sell the bonds at a discount, by reason of any difference in the actual rate of exchange between the place where the sales were made, and wdiere the bonds themselves were made payable, and the state of Illinois. The legislature correctly supposed, that if the principal and interest of the bonds should be made payable where the money was loaned, the lenders could not reasonably claim a premium upon such loans on account of any difference in exchange. For if the rate of exchange should be in favor of the place where the loan was made at the time of issuing the bonds, the legislature had provided an equivalent for that difference, by allowing the principal and interest of the bonds to be made payable at the same place.

I agree, however, with the distinguished counsel for the complainant who last addressed the court, that upon the sale of the bonds in foreign countries, the legislature contemplated a sale at the actual par, and not the mere nominal par, between the United States and such foreign countries. It is well known to commercial men, that the nominal difference of exchange between this country and England is much greater than the real difference; that while the nominal par value of a pound sterling is but four dollars and forty-four cents and a fraction of a cent, its real value is rising of nine per cent more ; not seven and a quarter per cent, as the counsel erroneously supposed. This difference arises partly from a change in the comparative value of gold and silver bullion since the time "when a Spanish milled dollar, or eight shillings of the currency of the colony of New-York, was equal to four shillings and six pence sterling money of England; and partly from the actual difference in the value of gold in the United States and in England, especially since the act of congress of 1834. The British sovereign is equal to a pound sterling in England ; and is by law receivable and payable at that rate in all commercial transactions, in that country. That of course regulates the value of gold bullion there. But, by our laws, the English sovereign is equal in value to $4,85, or about that sum, in payment of debts here; and other British gold coins bear the same relative value to the gold and silver coins of the United States. Exchange on England is therefore actually at par, when a bill at sight can be purchased at the rate of $4,85 to the pound sterling ; although such bill is then nominally purchased at about nine and a quarter per cent pemium. As the nominal difference in exchange between this country and England has not averaged more than from eight to ten per cent in favor of the latter for several years, it will be seen, from this view of the subject, that the real difference in exchange has been little or nothing during that time. There is, therefore, no absurdity in supposing that the legislature of Illinois contemplated the probability that the sterling bonds of the state could be sold for their actual par value in London; especially those in which the interest as well as the principal was made payable there, such interest being one per cent above the legal rate of interest in England.

I think also the counsel for the complainant are right in supposing that these state officers and agents were not authorized to contract for a sale of these bonds on a credit. As a general rule an agent for sale, unless he has an express authority to sell on a credit, must sell for cash. An authority to sell on credit is implied, however, where from the general usages of the trade in which the agent is employed it is the custom to sell on credit. But if the property, which the agent is employed to sell, is of a description which is usually sold for ready money only, he is not authorized to sell it on credit without an express authority to do so. (Smith’s Merc. Law, 2d Lond. ed. 87.) In the case of Wiltshire v. Sims, (1 Camp. Rep. 258,) where a broker employed to sell stock, without any special instruction to sell it on credit, had sold it upon a credit of fourteen days, Lo d Ellenborough held that the agent was not authorized to sell on a credit; and that the owner of the stock, therefore, was not bound by the contract. This case is referred to with approbation by Mr. Justice Story, in his very learned and valuable commentaries on the Law of Agency. (Story on Agency, 74, § 78.) In that case his Lordship inquires, “ did any one ever hear of stock being absolutely exchanged for a bill at fourteen days?”

Here we have no evidence as to any general usage in this state for the sale and absolute delivery of stocks on a credit, by brokers empowered to sell. But I believe, in fact, that they do not usually sell and actually deliver stocks without receiving payment therefor at the time ; unless they are specially authorize i by the owner of such stocks to sell on a credit. Even if the usage was otherwise, however, as to sale of stocks belonging to individtials, that would not authorize the officers or agents of a state, who were empowered to borrow money for its use, to contract to sell and deliver the public securities on credit, without an express authority for that purpose. The two or three recent instances, in which states have had the misfortune to lose large amounts of their stocks in consequence of the mistakes of their agents, in suffering such stock to go out of their hands before they received the money agreed to be loaned, cannot amount to a general usage to sell state stocks on a credit.

Indeed, the very idea of selling these state bonds on a credit is entirely inconsistent with the spirit of the statutes of Illinois, under which these bonds were to be issued. The state securities, in the hands of its agents, were not an article of merchandize. The object was to borrow money; not to sell stock in the ordinary way in which stock held by individuals is sold. The statute does, indeed, authorize the agents of the state to contract for loans payable by instalments, as the money may be wanted for the use of the state. But this provision does not imply that the lenders are to receive the securities of the borrower before the money agreed to be loaned is actually lent. I am not aware that any sane and solvent man ever borrowed money by giving his negotiable securities in advance to the lender, and taking in payment therefor such lender’s promises instead of cash ; unless the promises were put in such a form as to be convertible immediately into cash, at some rate, and were intended to be sold at a discount to raise money elsewhere. In this case, however, the agents of the state contracted to deliver the securities of their government in advance, and to take a mere agreement, which was not negotiable, to pay the money to the state by instalments, at future times. This was not a borrowing of money ; but it was a sale of the state securities on credit, as an article of merchandize, without any authority, express or implied, to give such credit. The necessary result of such a transaction must be that if there is any great fall in the price of the stock, before the time for the actual payment of the money arrives, the lender will be unable or unwilling to fulfil his agreement, and. the state will lose its securities. Upon this ground, therefore, as well as upon the ground that the sales of the stocks were below the par value, the agreements with the defendant were wholly unauthorized, and were not binding on the complainant.

It is said, however, that the state of Illinois has confirmed the acts of the agents who made these sales ; and that it is now too late to rescind the agreements as having been made "without authority. But no officer or agent of the state had any power to make or to authorize the making of such contracts orginally; and of course none of them had the power to confirm them afterwards. For no person can confirm an unauthorized agreement, made by another, unless he had himself the power to authorize the making of such an agreement. As the sovereign power of the state, by a legislative act, had prohibited any of its officers or agents from selling its stocks below their par value, it follows, of course, that nothing short of a law of the state, proceeding from the same authority, can legalize such a transaction.

I admit that the general ficancial agents of a state may sometimes interpose their powers to protect its interests, where they are endangered by the unathorized acts of others. And probably in this case, those agents might have made an arrangement with this defendant for- a return of the securities which he had not sold, and for a compromise of the claim against him for the others, to prevent an entire loss of this stock ; which arrangement a court of justice might consider as binding upon the state. But if they had any power to make a settlement of the claims of the state against the defendant, for the stocks received by him under these unauthorized contracts, it must be to make an agreement in the nature of an accord and satisfaction of such claim ; and not by way of affirmance of the original unauthorized contracts. Whether any such power existed it cannot he necessary now to determine ; for there is no grounds for a pretence, in this case, that there has been any accord or satisfaction. The defendant has received and retains the bonds of the state to the amount of $583,000, and has paid for them but $170,000. The balance he has neither paid nor agreed to pay, except by the original contracts which he now refuses to fulfil.

The fact that one branch of the legislature temporarily concurred in the report of its committee that these contracts were unauthorized, could not have the effect of injuring him, by depreciating stocks which he had previously sold. And if he did not wish to sustain a loss upon those which still remained on hand, his proper course was to offer to return them to the agents of the state ; instead of selling them afterwards at a loss, and thereby compelling the state to pay to others the whole nominal amount of the bonds which he had obtained from its agents without authority. If the. bonds had been sent by him to England to be sold, as suggested by his counsel, he should at least have offered to return them as soon as they could be sent for and received back from that country.

The contract for the delivery of the bonds being wholly unauthorized, and there having been no subsequent ratification by the legislative power of the state of Illinois, or by any officer or agent who had the power to ratify these illegal sales of the stocks, an injunction must be granted as prayed for. And it must also be referred to a master in the city of New-York to appoint a receiver, and to take from him the requisite security unless the complainant should prefer to have the New-York Life Insurance and Trust Company appointed such receiver, in which case no security is to be required. The defendant must also assign and deliver over to the receiver, on oath, under the direction of the master, such of the stocks or bonds, if any, as are now in his possession, or under his power or control; and the proceeds of such stocks or bonds as have been sold, pledged, or hypothecated by him, and all contracts, securities, and other property taken therefor.

The receiver is to have the usual powers for the conversion of the securities, and the proceeds of such sales, into money, and to deposit such moneys in the trust company, to accumulate, as often as the sum of $1000 shall be rec.eived beyond the necessary expense of the trust. The Illinois bonds, if any, are not to be sold by the' receiver, but are to he deposited in the trust company for safe keeping, to abide the further order of this court.

       Affirmed by the court for the correction of errors, December, 1841.


author: The Chancellor

text:
    White vs. Hess and others.
    Where there are several defendants, and there is but one suit pending between the complainant and the first defendant named therein with others, it is sufficient, in the entitling of an affidavit, to entitle it in the name of the complainant against the first defendant, and others ; without setting forth the names of all the defendants at length.
    November 17.
    The affidavit upon which the motion in this case was founded, was entitled "Broughton White v. Frederick Hess and others,” without setting forth the names of all the other defendants in the suit; and was objected to on that ground.

      C. E. Clark, for the complainant.
    D. Burwell, for the defendants.
   The Chancellor

decided that the affidavit was properly entitled to render the deponent liable for perjury if the affidavit was false. That where there was but one suit pending, in which White was the complainant and Hess and others were defendants, it was sufficient to entitle the affidavit in this manner; without setting forth the names of all the other defendants at length. And that where the defendants were numerous, if the solicitor unnecessarily stated all their names at large, in entitling the cause, he would not he authorized upon taxation to an allowance for the extra folios thereby made in the affidavit.


text:
    Rhoades, trustee, &c. vs. Canfield and others.
    Where a trustee who "had two sums of money, belonging to different cestuis •que trust, loaned both sums to one person at the same time, and took sepa* rate mortgages upon the same premises, to secure the payment of the monies loaned, and without intending to give a priority to cither mortgage i Held, that the ccstuis quo trust were entitled to bo paid ratcably, out of the proceeds of the sale of the mortgaged premises, the amount of such pro» ceeds not being sufficient to pay both; although one of the mortgages happened to be received by the clerk, to be recorded, a short time previous to the other.
    Where two mortgages upon the same property are given simultaneously, to different persons, and without any intention to give a preference to cither) and each mortgagee is aware of the giving of ihe other mortgage at the time ho receives his own, neither of them is entitled to a preference in payment, under the recording act; although one of them procures his mortgage to be first recorded.
    But it seems that if the mortgage first recorded should be foreclosed, and the premises should be sold under such foreclosure, to a bona fide purchaser who had no notice that the mortgage last recorded was executed simultaneously with the other, such purchaser would hold the premises discharged of ‘the lien of the mortgage last recorded.
    January 5.
    James Porter having in his hands two sums of money, one as the trustee of Jane Cantine and her children, and the other as the trustee for S Hy Ann Visscher, loaned both sums to the defendant Canfield, at the same time. He took separate mortgages therefor, upon the same property, executed and acknowledged at the same time, and bearing the same date; and without intending to give the one a preference over the other. The clerk, in recording the mortgages, marked the one given to Porter as the trustee of Mrs. Cantine and her children, as having been recorded five minutes previous to the other, and so entered the same on the record. The premises, upon foreclosure, being insufficient to p.iy both mortgages in full 5

      A. Dana,

    who had been appointed trustee of Mrs. Cantine and her children, upon the death of Mr. Porter, insisted that the priority of the recording of the mortgage given to Porter as the trustee of Mrs. Cantine and her children, entitled them to a preference in payment.

      J. Rhoades,
    who had in like manner been appointed the trustee of Miss Yisscher, who was an infant, claimed in her behalf that the loss should be sustained by the cestuis que trust rateably, in proportion to the amounts of their respective mortgages.
   The Chancellor.

There is no dispute in this case as to the fact that the mortgages were given simultaneously, to secure the loans made at the same time, by Porter the trustee. And there was no reason existing why he should give one mortgage a preference over the other. If the agent, therefore, who took the mortgages to the clerk’s office to be recorded, did in fact deliver the one to the clerk, for that purpose, five minutes before the other, there is no provision of the recording act which entitles the holders of the mortgage first delivered for record to a preference in payment on that account. The first section of the chapter of the revised statutes relative to the recording of deeds and mortgages, &c. (1 R. S. 756,) only gives a preference to a subsequent mortgagee in good faith, and for a valuable consideration, whose mortgage shall be first recorded.

It is not necessary here to inquire whether one of two mortgages given at the same instant of time can be considered as subsequent to the other, so as to entitle it to a preference on account of priority of recording, where both mortgages were given bona fide and without any knowledge by the respective mortgagees that the other mortgage on the same premises was. to be given at the same time. Such an occurrence is not very likely to take place. For it would be difficult if not impossible to prove that both mortgages were delivered at precisely the same moment; except where they were delivered. to the same person, or to the Several mortgagees in the presence of each other; so that each mortgagee would be chargeable with notice of the giving of the other mortgage at the time he received his own.

Where the same trustee or agent takes two mortgages on the same property of the mortgagor, at onetime, neither of those mortgages is entitled to a preference over the other, either at law or in equity; where no such preference was intended to be given by the mortgagor, or by the trustee who took such mortgages. To entitle one mortgage to a preference over another, under the recording act, merely on account of the prior registry thereof, the mortgagee claiming such preference must have taken his mortgage, and paid the consideration therefor, without notice of the equitable rights of the other mortgagee under a prior or a simultaneous mortgage. But notice to the trustee or agent who takes the mortgage, and pays the consideration therefor, is in equity notice to the cestui que trust, or principal, for whose benefit such mortgage is taken. Here Mr. Porter took both mortgages to himself at the same time, through the medium of Ba Forge his agent. And the subsequent mistake in recording the one mortgage five minutes before the other, whether it was the error of the agent or of the recording officer, did not have the legal effect to give one mortgage a preference over the other, as between the respective cestuis que trust for whose benefit respectively those mortgages were taken. A different question might have been presented if the mortgage which was first recorded had been foreclosed under the statute, or otherwise, and the premises had been sold to a bona fide purchaser who had no notice that the two mortgages were given simultaneously.

The loss in this case must fall upon the holders of the two mortgages rateably in proportion to the amount due upon each ; and the claim against the mortgagor for the deficiency must be apportioned in the same manner. As between Mrs. Cantine and her children, the money for their part of the proceeds of the sale must be apportioned according to the amount of the principal which would eventually belong to the children, and the arrears of interest which were due to her at the time of the sale, so that the loss may be sustained by them rateably and then she must be paid the interest for life on so much of the principal as may be saved. Mr. Dan, the trustee is directed to apportion that part of the fund accordingly ; and to reinvest the principal and pay over the interest or income thereof from time to time, pursuant to the terms of the trust.


text:
    Judd and others vs. Seaver and others.
    Where the holder of a valid note sells it for less than the amount due there^ an, and endorses it to the purchaser, the latter is entitled' to recover the whole amount of tho note from the maker and prior endorsers; but can> only recover from the seller, on his endorsement, the amount of the-purchase money* and interest thereon from the time of the purchase.
    And whore the purchaser of such note procures a renewal of the note, by the same makers and endorsers, after it has been duly protested for nonpayment, if the renewed note is void on the ground that an usurious premium was received for tho extension of credit upon suck renewal, the rights of the purchaser remain the same against the makers and endorsers, of the original note. And he may recover against them the amount for which they were liable before such renewal, after deducting therefrom the amount of the usurious premium received by him on the renewal..
    Where a valid note is purchased for less than, tho amount, due thereon* and-is endorsed in blank by the seller, and the purchaser afterwards sells the note to another, who purchases it without notice that the prior purchaser was-not entitled to recover the full amount of the note against his immediate endorser, whereby the last purchaser is enabled to recover the whole face of the note, with interest, against such endorser, the latter may recover back, from the person to whom he sold the note, the excess which he has been compelled to pay beyond the amount of the purchase money and', interest.
    Undcrthe provisions of the revisod’statutes, as they existed previous to the act? of May 1837, the bona fide purchaser of an usurious note, who had.notico that it was usurious before ho had fully paid for the same, can only recover from tho maker to the extent of the purchase money which had bccnxpaid; by him before he was notified that tho note was usurious..
    Upon a bill in chancery for relief against a usurious contract, the court is net; authorised to decree payment to the defendant of tho amount equitably duo, unless the complainant has given the court authority to make such a decree, by offering in his bill to pay whatever is equitably due.
    Xhc admissions in the answer of one of the defendants in a suit arc not evidence against his co-dpfendant. But where one co partner, in a joint $ind several answer put in by both, makes admissions as tohis-own_acts_ re^ative to the business of the firm, and the other co-partner states his belief that what is thus admitted by his co-partner is truc, a decree may be made against both upon such admissions.
    January 25.
    This was an appeal from a decree of the late vice chancellor of the eighth circuit. The facts in the case, so far as they could be ascertained by the admissions of the defendant Follett in the joint and several answer put in by him and his copartner Á. C. Stevens, were as follows : On the 8th of June, 1832, A. Hawkins, one of the complainants, came to the office of Follett & Stevens, who were brokers—Follett alone being present—and offered to sell them a negotiable note which Hawkins then had in his possession, for the sum of $300, drawn by G. J. Judd and endorsed by L. Judd, the other complainants in this suit• which note was dated the 3d of June, and was payable at the Bank of Genesee three months after date. Follett agreed to purchase the note, and to pay $279 therefor, provided Hawkins wmuld endorse it; which the latter agreed to do, and received that amount from the partnership funds of Follett & Stevens. When the note became due, it was protested for non-payment. Hawkins thereupon applied for an extension of credit; and Follett, in behalf of himself and Stevens, agreed to take a new note for the $300, drawn and endorsed in the same manner, payable at the same bank in three months, upon receiving a premium of $21 and the interest on the note for three months. The note was renewed accordingly on the 10th of September, 1832, and the premium of $21 was paid. When this note became due it was protested for non-payment. In December, 1832^ probably a short time after the dishonor of the note, Follett & Stevens, or rather Follett, sold it to the defendant Seaver, for its full amount, without disclosing to him any of the circumstances in relation thereto. Follett guarantied-the collection of the note and charged himself with the amount thereof on the books of the firm ; and took Seaver’s note for $300, one half of which was paid a few days afterwards, and the residue remained unpaid at the time of the commencement of this suit. Seaver thereupon brought a suit on the note in the supreme court against the maker and both of the endorsers of the note, jointly, and they subsequently tendered to him the sum of $258, which they insisted was all that he was equitably entitled to on the note ; which sum he refused to receive. They also tendered the same sum to Follett & Stevens, and demanded from them the delivering up of the note ; which sum Follett & Stevens refused to receive, upon the ground that they had previously sold the note.
    The complainants thereupon filed their bill in this cause, against Seaver, and against Follett & Stevens the original holders of the note, to stay the proceedings at law and for a discovery of the usury; alleging, among other things, that the' original note was made and endorsed for the purpose of raising money for the use of the maker thereof, and that the suit was prosecuted in the name of Seaver for the benefit of Follett & Stevens, and in order to deprive the complainants of their defence at law on the ground of usury. The defendants denied all knowledge of the alleged fact that the original note did not belong to Hawkins at the time he sold the same to Follett & Stevens. On the contrary Follett stated in his answer, that at the time of such sale he believed, from the representation made by Hawkins, that it was a valid and available note in the hands of the latter, which could be collected by him. The cause was heard upon the pleadings and proofs. The vice chancellor decreed that the complainants should pay to the defendant Seaver the amount advanced by Follett & Stevens to Hawkins on the original note, with interest thereon from the 8th of June, 1832, when the purchase of that note was made, and the costs in the suit at law upon the note and the costs of Seaver in the present suit, within thirty days, and that Seaver have execution therefor; and that upon the payment of those sums Seaver be restrained from proceeding against the complainants in the supreme court or in any other court, upon the note, and that it be delivered up to be cancelled. The vice chancellor also decreed a dismissal of the bill as against Follett & Stevens, with costs. The complainants appealed from the whole decree.

      E. C. Dibble, for the appellants.

      D. H. Chandler, for the respondents.
   The Chancellor.

I think there can be very little doubt as to what were the real merits of this case ; but there certainly is considerable difficulty in determining what is the proper decree to be made in the cause to protect the equitable rights of the several parties, who appear upon the record to have separate and distinct interests in relation to the subject of litigation. Upon a careful examination of the subject, however, I have arrived at the conclusion that the decree appealed from is erroneous, not only in form, but to a certain extent in substance.

One difficulty in the case arises out of the decision of the court for the correction of errors in the case of Cram v. Hendricks, (7 Wend. Rep. 569.) There is no admission or proof whatever in this case to establish the allegation in the bill that the original note was made for the purpose of raising money for the drawer ; and Follett states in his answer, that at the time of his purchase be believed it to be a good and available note in the hands of Hawkins. According to the case of Cram v. Hendricks, therefore, Follett & Stevens had the legal and equitable right to recover the whole amount of that note against the maker, and against L. Judd, the first endorser. But as against Hawkins, who sold the note to them, they were only entitled to recover the $279 which they actually paid to him for the note, with the legal interest on that amount from the time of the purchase. And as the substituted note, which Follett & Stevens afterwards received under the usurious agreement to receive twenty-eight per cent for the forbearance of payment for three months, was clearly void as to them, they still had the same equitable rights against the complainants respectively as if the original note had been retained by them ; less the amount of the usurious premium received upon such renewal. (See Williams v. Allen, 7 Cowen’s Rep. 316.) And it would make no difference as to the equitable rights of Follett & Stevens, against either of these complainants, whether the $21 paid upon the renewal of the note, was received from the maker, or the first endorser, or was advanced by Hawkins the second endorser out of his own funds. For in neither event would they have any equitable claim to be paid twice ; but if the money was paid by Hawkins, he would be entitled to recover it of the maker, or first endorser of the note, if paid for their benefit. If the suit at law*, therefore, had been brought by Follett & Stevens, and these facts had been proved, they would have been entitled to a verdict against the maker and the first endorser, for the full amount of the original note, and interest thereon from the time it became due; after deducting the $21 paid at the time of the renewal, and the interest thereon from that time. But as against Hawkins, the second endorser, who sold the first note, they would only have been entitled to a verdict for the $279 and interest from the time of the sale; after deducting the $21 afterwards paid, and interest thereon.

It appears by the answer of Seaver, that although he purchased the note bona fide, without notice of the usury or any of the other equities between the previous parties to the note, he had not, in fact, paid to Follett, at the time he had such notice by the filing of this bill, as much as was equitably due upon the note from each of the complainants. And it does not appear that the note which he gave to Follett, a part of which is still unpaid, was a negotiable note so that he can be made liable therefor to any other person. I am also inclined- to think the evidence in the case establishes the fact that the note in question here was sold to Seaver after it had become due and was dishonored. Upon either of these grounds, therefore, if the facts admitted in the answer of Follett and Stevens had been established against the defendant Seaver, he would not have been entitled to protection as the bona fide holder of the note for a valuable consideration, for the whole amount thereof; under the provision of the revised statutes on that subject which was in force when the note was transferred to him. (See 1 R. S. 772, § 5. Hackley v. Sprague, 10 Wendell, Rep. 113. Wyatt v. Campbell, 1 Moody & Malk. Rep. 80. Crook v. Jadis, 6 Car. & Payne’s Rep. 191. Vallance v. Siddel, 2 Nev. & Per. Rep. 78.)

Another difficulty, however, presents itself upon this part of the case. The defendant Seaver, in his answer, denies all knowledge of the fact as to the purchase of the original note at a sum less than the full amount thereof, or indeed that there ever was such a note ; or that any usurious premium was demanded or received at the time of giving the note which he afterwards bought of Follett and Stevens, or of one of them. And there was no evidence whatever given in the cause to establish those facts as against him. The admissions in the joint and several answer of Follett and Stevens, and which the latter swears he believes to be true, are sufficient to found a decree upon against Follett, and his copartner who was bound by his acts in relation to the business of the firm. (Pritchard v. Draper, 1 Russ. My. 191. Wood v. Braddick, 1 Taunt. Rep. 104.) But by the settled principles of this court that answer of Follett & Stevens is not legal evidence of any fact as against their co-defendant Seaver. (Gresl. Eq. Ev. 24. Phenix v. Assignees of Ingraham, 5 John. Rep. 313. Morse v. Royal, 12 Ves. Rep. 362. Clark’s adm. v. Van Reimsdyck, 9 Cranch, 153.) The complainants, therefore, have wholly failed in making out a case entitling' them to any relief against the defendant Seaver, who is entitled, both at law and in equity, to the whole amount of the note as against all of the complainants. And if the bill had been absolutely dismissed with costs as to the defendant Seaver, which would have been conclusive against them upon the question of usury in the suit at law, they would have had no right to complain of the decree in that respect. I think, however, the vice chancellor erred in making a decree against them in this court for the payment of any part of this note, and the costs in the supreme court absolutely ; and authorizing Seaver to take out execution upon such decree. This court, in cases of usury, sometimes decrees payment to the defendant of the amount equitably due from the complainant to him. But those are cases in which the complainant has himself authorized the court to exercise such a jurisdiction ; by offering to pay whatever should be found to be so due, and waiving a forfeiture as to every thing, except the usurious premium. (1 Sch. & Lef. Rep. 441. 1 Mad. Ch. 4 Am. ed. 45.) The bill in this case contains no offer to pay the defendants any thing ; and if they had made that objection to the discovery of the usury they probably might have been excused from making a discovery, which might possibly subject them to the loss of what was equitably due on the note, as the law then stood. (Livingston v. Harris, 3 Paige’s Rep. 528.) The bill being filed after the suit at law was at issue, if the complainants stayed the proceedings in that suit by injunction, as prayed for in their bill, it must have been upon the giving of security to pay the debt and costs which might be recovered in that suit, and also the costs which they might be decreed to pay in this court; as directed in the statute. (2 R. S. 188, § 139.) Under such circumstances, as the absolute dismissal of the bill upon the merits as to Seaver, would be conclusive upon the rights of the complainants as between him and them in relation to every question which had been in issue and passed upon here, the proper decree, as to him, was a dismissal of the bill with costs ; and leaving him to his remedy upon his bond after he should have perfected his judgment at law. That part of the decree of the vice chancellor must be reversed and modified accordingly ; and without costs as to either of those parties as against the other on the appeal.

It remains to consider whether the vice chancellor was right in dismissing the bill, as against the other defendants absolutely, and with costs, notwithstanding the admissions in their answer. I have already stated what were the equitable rights of those parties respectively, in relation to this note and the usurious premium, as those rights existed previous to the sale to Seaver. And no one who examines the pleadings and proofs in this case can for a moment doubt, that the whole object of that sale, on the part of Follett, was to deprive the complainants of the power to make any defence to a suit which might be brought for the collection of the note. For if it had remained the property of the firm, and had been sued in their names, Follett might have been compelled, upon a bill of discovery, to admit what is contained in his answer here. That would have formed a good defence to the suit upon the note pro tanto; even if the drawer and endorsers could not have given evidence for each other establishing the same facts. This, therefore, does not appear to be a case in which the vice chancellor, in the exercise of a sound discretion, should have awarded costs against the complainants in favor of Follett & Stevens.

. Besides, the decree is erroneous in dismissing the bill absolutely and unconditionally against those defendants. For if Seaver recovers the whole amount of this note against Hawkins as the endorser, when as between him and the other defendants he was only liable for the amount recovered by him on the purchase of the note, and legal interest thereon, he will be entitled to recover back the excess, in the equitable action of assumpsit, against those who have compelled him to pay it by selling the note without giving the purchaser notice of his rights. And perhaps it is not too late to recover back the usurious premium in the same manner. The bill should, therefore, as against those two defendants, have been dismissed without costs ; and without prejudice to the right which any of the complainants who may pay the note to Seaver, may have against Follett & Stevens, or either of them, on that account. That part of the decree must be reversed and modified accordingly ; and without costs to either party as against the other upon this appeal.


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    Wood and others vs. Bolard and Pickard.
    Where a debtor, who had made an assignment of his property for the purpose of defrauding his creditors, was proceeded against by one of the creditors on account of that fraud, under the act to abolish imprisonment for debt and to punish fraudulent debtors, and was convicted of such fraud ; Held., that a second assignment of his property, made by him after he was arrested but before the decision of the judge upon his case, in which assign, ment he had given a preference to his other creditors over the one who had commenced such proceedings against him, was in fraud of the prosecution against him- under the statute, and was therefore void.
    After an insolvent debtor has been arrested, under the fourth section of the act to abolish imprisonment for debt, &c. he is not in a situation to make a valid assignment of his property and to give preferences therein to others of his creditors, to the injury of the prosecuting creditor ; nor can he confess a judgment in favor of some of his creditors, for the purpose of giving such preferences.
    January 25.
    This was an appeal from a decree of the late vice chancellor of the 8th circuit, setting aside two assignments of the property of Bolard to Pickard, and a judgment given by the former to the latter, as fraudulent and void ; and directing the judgment of the complainants against Bolard to be paid by the defendant Pickard, the fraudulent assignee, out of the assigned funds in his hands; together with the costs of this suit. On the 6th of Jan., 1835, Bolard, the judgment debtor, made an assignment of his property to Pickard % which assignment was fraudulent under the decision in the case of Grover v. Wakeman, and for other reasons. On the 13th of the same month the complainants instituted proceedings against Bolard, under the act to abolish imprisonment for debt and to punish fraudulent debtors, for making a fraudulent assignment of his property to delay and hinder his creditors in the collection of their debts j and a warrant ivas issued against him, upon which he was arrested the same day. On the next day Bolard was carried before the judge who issued the warrant, and añera hearing before him was found guilty of the fraud charged, and was ordered to be committed ; but having given the bond required by the fifth subdivision of the tenth section of the act, he was discharged. After the arrest of Bolard on the warrant, but before the decision against him was made, he executed a second assignment of his property to Pickard upon trusts somewhat different from those in the first assignment; but gave therein preferences to some of his creditors over others, and over the complainants in this cause. And he also executed to Pickard a bond and warrant of attorney, to enable him to enter a judgment and sell the property, for similar purposes. This last mentioned assignment, and the judgment, as well as the previous fraudulent assignment, were set aside by the decree of the vice chancellor in this cause.

      A. C. Bradley, for the appellants.

      E. J. Chase, for the respondents.
   The Chancellor.

I am inclined to think the second assignment and the bond and warrant were fraudulent and void as against the complainants and other creditors of Bolard who did not assent to the same ; independent of the fact that they were made pending the proceedings under the statute, and in fraud of those proceedings. It is not necessary, however, to go into the examination of that point; as I think the objection, that the last assignment and the bond and warrant were a fraud upon the rights which the complainants had acquired, under the non-imprisonment act, to prevent their debtor from giving preferences, was well taken. If a proceeding of the kind which was attempted here could be sustained the statute would be a perfect dead letter ; as the whole benefit which it gives to the creditor who proceeds for a fraud already committed, is to prevent the removal of the debtor’s property out of the jurisdiction of the court to defraud his creditors, or the disposal of it for that purpose ; and to prevent him from assigning it with a view to give a preference. (Laws of 1831, p. 398, § 10, sub. 5.) And if it is once established that the debtor, after he has been arrested on the warrant, may make a valid assignment of his property to the exclusion of the creditor who has prosecuted him for his previous frauds, and can then be discharged upon giving a bond that he will not assign that which has already gone from him, for the purpose of giving such preference, no man of sense would ever think of proceeding against his debtor under the provisions of this statute. In the case of Hurst, (7 Wend. Rep. 239,) where the insolvent, on the same day that he presented his petition to be discharged under the insolvent act, confessed a judgment to his mother in trust for all of his creditors, the supreme court decided it was a fraud upon the law to attempt to appoint his own trustee in this way, instead of leaving it to the officer granting the discharge to appoint a trustee who should he under his control and direction.

The proceedings under this part of the statute of 1831 are remedial, and must be construed liberally for the purpose of carrying into effect the spirit and intent of the act oí the legislature. And no court which has a proper regard for the due administration of justice can ever sanction such a fraud upon the laws of the state as was attempted by the defendants in this case.

The decree of the vice chancellor declaring the judgment and the last assignment, as well as the previous assignment, fraudulent and void as against the complainants, was therefore right, and was in accordance both with the law and the justice of the case. The decree appealed from must be affirmed with costs j and with interest on the amount decreed to be paid by the court below, from the date of that decree, by way of damages to the complainants for the delay and vexation caused by this appeal.


text:
    Rogers vs. Salmon and others.
    Where the owners of a village plat induced the complainant to purchase lots therein, at very high prices, by exhibiting to him a map of their contemplated village, which stated that a dock was to be made upon a part of their property in the immediate vicinity of those lots, and such statement on the map was made for the purpose of enhancing the value of the lots sold to the complainant, and such owners, in order to induce him to make the purchase, promised and assured him that the tract of land which was to be the scite of such future village should be laid out into village lots, that the streets should be opened and graded, and that buildings should be erected in such village and such dock constructed without delay, and the complainant, relying upon such representations and promises, paid one fourth of the purchase money for the lots and gave a bond and mortgage thereon for the residue; and such owners afterwards abandoned the intention of building the dock, or of making any of the other promised improvements, whereby the value of the lots purchased by the complainant was reduced to one sixteenth of the purchase money agreed to be paid by him ; Held, upon demurrer to the complainant’s bill, that lie was entitled to relief against the payment of the residue of the purchase money secured by his bond and mortgage.
    January 25.
    This was an appeal from a decree of the vice chancellor of the first circuit, allowing the demurrer of the defendant Salmon to the complainant’s bill, for want of equity. The bill was filed to prevent the collection of a bond and mortgage given to the defendants Salmon and Simonson, and afterwards assigned by them to the other defendant in this suit; and to have such bond and mortgage declared void by a decree of this court, and delivered up and cancelled.

      T. W. Clerke, for the appellant.
    Whenever a wrong has been perpetrated, for which redress in a court of law is difficult or dubious, or not well defined, a court of equity will interpose. (Hovenden, 11.) In the case of Fullangar v. Clarke, (18 Ves. 483,) it is expressly declared that courts of equity will relieve against a deed, when it has been unfairly obtained, although there might not have been such a degree of fraud as to invalidate the instrument. And in this case, and also in the case of Chesterfield v. Janson, (2
      Ves. 125,) it is declared that for this purpose, equity will presume fraud. But it will go further than this ; and although a person has a perfect remedy at law to recover for the breach of an ag-reement connected with any written obligation, yet if he cannot avail himself of it as a defence to an action on the obligation, or even if there should be any difficulty in his doing so, he can come into chancery to have the obligation cancelled. (Reed v. Bank of Newburgh, 1 Paige, 215.) The case of Gallagher v. Brunel, (6 Cowen, 346,) is not against the appellant. That was an action in a court of law for a false affirmation as to the credit of a third person. Courts of equity take a different view of fraud from courts of law. They are not bound down by general rules. In new cases they are at perfect liberty to apply such new principles as their enlightened conscience may dictate. (Hovenden, 11, 13, 15.) What may be considered fraud according to the immutable principles of morality, will be considered fraud by a court of equity, where circumstances are shown bringing the case within the principles upon which its peculiar jurisdiction is founded. (1 Maddock’s Ch. 205.) The question whether fraud is confined to the misrepresentation of a subsisting fact is determined by the case of Beaumont v. Dukes, (Jacobs’ Rep. 422, 4 Cond. Ch. Rep. 195.) Courts of equity will undoubtedly in many cases refuse their aid in enforcing specific performance, upon slighter circumstances of impeachment than they would venture to set aside or annul an instrument. But wherever fraud appears, whether in the form of suppressio veri or suggestio falsi, chancery will just as readily set aside the contract as it would refuse aid in enforcing its performance. (Seymour v. Delancey, 3 Cowen, 445. 1 Mad. Ch. 208.) Courts of equity will go still further, and if a man upon a treaty for any contract makes a false representation, whether knowingly or not, by means of which he puts the party bargaining under a mistake upon the terms of bargain it is a fraud, and is relievable in equity. (1 Mad. Ch. R. 209, 211, and the cases there cited.)

      J. H. Magher, for respondent.
    Complainant charges that the defendants, or some of them, agreed with him to do certain things which they'have not yet done; and because they have not performed the acts they agreed to do, he alleges that their agreement in that behalf was a fraudulent representation. This is attempting to make a breach of contract a misrepresentation, A representation cannot be made of a thing in futuro ; to be a representation at all, it must apply to a matter or thing past or in esse. To represent that something shall be done hereafter, is to promise it, and the party acting on such promise gives credit to it, whereby it becomes an agreement, and is not the subject in itself of fraud ; for failure to perform an agreement is not fraud. In this case the defendants are said to have promised to make certain improvements, and that they have not done so. But does it follow that they may not yet make those improvements 1 It is not alleged that they were to perform this promise within any specified time. And suppose the mortgage should be declared void and given up, and the defendants should afterwards make these ? If the agreement of the defendants is a binding and valid one, it can be enforced in a court of law, and the complainant can recover all damages he may have sustained in consequence of its breach. There is no allegation of insolvency or want of responsibility of either of the defendants. And the complainant’s remedy is perfect at law, either by suit for his damages, or in defence of any proceedings which may be instituted to collect the bond given by him. The general allegations of fraudulent representations, where no particular charges are made, and where such allegations are not sustained by any statement of facts in the bill, cannot entitle the complainant to avoid the securities he has given. Nor can he rely upon the assertion that the property he has purchased is of less value than he supposed, and that he gave too great a price for it; that fact, if so, might perhaps be urged in defence of a suit on the bond, under a plea of partial failure of consideration, but not otherwise. The complainant shows that he knew all about the property, its situation and improvement ; that a map was made, and by that map he understood fully the condition and character of the property he was buying.
   The Chancellor.

As the respondent has not thought proper to answer the allegations in this bill, every thing stated therein which goes to show that the complainant has a claim to relief of any kind, in this court, must be taken as true. From those statements, it appears that during the prevalence of the speculating mania, which recently afflicted so many of the citizens not only of this state but of the whole union, the complainant was induced to purchase of the defendants, Salmon and Simonson, three small lots in a lithographic village to be located upon Staten Island, at the price of sixteen hundred dollars which lots are now of no value except for the purpose of pasturage, and are not worth more than one sixteenth of the sum he agreed to pay for them. One fourth of the purchase money was paid down by the complainant, and the bond and mortgage in question were given by him, to Salmon and Simonson, to secure the payment of the residue of the $1600, with interest thereon. The bill further states, that Salmon and Simonson exhibited a lithographic map of the future village ; on which map it was stated that a dock would be made upon a part of the property, in the immediate vicinity of the lots sold to the complainant; which statement on the map was made for the purpose of enhancing the value of the property ; and that in the negotiation of the sale between them and the complainant such map was referred to as a constituent part of the contract, and as explanatory of the intentions of the vendors in relation to the property. The bill also states, that in order to persuade the complainant to make the purchase they promised and assured him that the tract of land which was to be the scite of the village, and of which the lots sold to him formed a part, should be laid out into lots ; that the streets should be opened and filled up or graded without delay; that buildings should be erected, and the dock constructed, &c. It is also alleged, that in making the contract for the purchase of his three lots the complainant relied entirely upon those representations of Salmon and Simonson, and other representations of theirs that the consideration which he agreed to pay was a just and proper consideration for the benefits which thereby purported to be secured to him as the purchaser. ' It is hardly necessary to add, that the bill likewise shows that the contemplated village has not come into existence ; that no dock has ever been built, nor have any other improvements been made in this embryo village which is still in la sein du temps ; and that Salmon and Simonson have abandoned the intention of building the dock, or of making any of the other contemplated improvements upon the property.

The question presented for the consideration of the court upon this bill certainly is not without its difficulties. It cannot be said to be a case of original fraud, as the bill does not state that the assurances and promises of the vendors, as to the building of the dock and the laying out and opening of the streets, &c. were not made in good faith at the time these lots were sold. But if they have since found it would not be for their interest to lay out and improve the contemplated village, and to build the dock, in conformity with the promises and assurances which they held out to the complainant to induce him to give this extravagant price for some of the village lots, it certainly does appear to be inconsistent with the principles of equity, as well as of sound morality, that they should now compel him to pay this bond and mortgage j after he has already paid four times as much as the lots are actually worth if those contemplated improvements should not be made.

The case of Donelson v. Weakley, (3 Yerg. Rep. 178,) decided in our sister state of Tennessee, in 1832, in which the opinion of the court was delivered by Chief Justice Catron, now one of the judges of the supreme court of the United States, appears to be an authority directly in favor of sustaining the complainant’s bill in the present case. There, the owners of the site of a prospective town sold the lots therein at public auction ; and, in the language of the bill in that case, one of their agents at the sale, in a speech to those who were present, “ portrayed the future glory of the place in such poetic strains that the complainant was transported.” The lots were sold on a credit of one, two, and three years. And the agent, as the proof in the cause showed, just before the sale commenced, promised and assured the bidders that the owners of the town plat would make a canal and basin and locks connecting the contemplated town with the Tennessee river; the location of which canal and basin was marked upon the town plat exhibited at the sale • and the benefit which the town would derive from the same was urged upon the bidders, by the auctioneer, as enhancing the value of the property. Lots to the amount of $140,000 were sold ; and the complainant Donaldson purchased ten lots, for which he bid about six thousand dollars. He gave his notes for- the purchase money, payable in three annual instalments, as specified in the terms of sale, and took a bond for a deed of the lots when the last instalment should be paid. There was no doubt that at the time of the sale it was the intention of the vendors to go on in good faith and make the improvements. But it was denied, in the answers of the defendants, that the making o.f the contemplated improvement formed any part of the agreement; or that any time was fixed for the completion of the canal and basin, which they expected to make out of the moneys to be raised from the purchasers at the sale. And nothing was said on that subject in the writings which were executed between them and the purchasers. The agents of the vendors commenced the canal and basin, and expended about $10,000. thereon. And they did not abandon it until it had become apparent that the town would never be settled, and the canal of no use; as the lots were then of no value as town property. The court, however, decided that the purchase having been made upon the faith of the representations made at the sale, and the vendors not having gone on and completed the contemplated improvements within a reasonable time thereafter, the complainant was entitled to be released from the contract and to have his notes can-celled.

Upon the authority of that case, and on the equity arising from the several matters stated in this bill, I shall reverse the decision of the court below, and overrule the demurrer with costs. But I express no opinion as to the nature or extent of the relief which the complainant will be entitled to if all the facts stated in his bill shall eventually turn out to be true ; as the case made by the bill may be materially varied by the answer and the proofs,