text:
    Van Hook and others vs. Whitlock and others.
    No suit could have been sustained against the individual stockholders of The Commercial Insurance Company of New-York previous to the expiration of its charter, in January, 1820; and the statute of limitations did not therefore commence running against such stockholders until that time. "
    The act of April, 1814, authorizing the discharge of an insolvent insurance company from its debts, upon its making an assignment of all its property for the benefit of its creditors, did not authorize a discharge of the stockholders from their individual liability for the debts contracted by the corporation before the passing of the act.
    The stockholders are not liable for any debts which were barred by the statute of limitations as against the company before the expiration of its , charter.
    The nature of the demand against the company makes no difference as to the length of time required to bar a suit against the stockholders, after the right of action against them had accrued by the dissolution of the corporation. .
    The creditors of the company had a concurrent remedy by a suit at law, or by a bill in equity, to recover the amount due from the individual stockholders respectively, under the provisions of the act of incorporation; and, in analogy to the limitation of actions at law, a suit in this court to recover the sum due from each stockholder within the same time.
    Upon a liability created by statute, the plaintiff may bring an action of debt or assumpsit, at his election, if no form of action is prescribed by the statute creating such liability. A suit in equity founded upon such liability would not therefore be barred till the expiration of the longest time limited for bringing either of those actions at law.
    Where the right to sue at law accrued before the revised statutes took effect, the time within which a suit will be barred depends upon the statute which existed previous to that time ; but where the right to commence the suit accrued since that period, the time within which the suit is to be brought must be regulated by the revised statutes.
    The same rules are applicable to suits in equity in cases where tire complainant has a concurrent remedy at law.
    Whether the time which has elapsed previous to the adoption of the revised statutes is to be taken into consideration in estimating the ten years within which a suit must be brought, which ia of exclusively equitable cognizance ; Gtuasre ?
    August 27.
    Where only one cause of action is stated in the bill, the defendant must ascertain what time of limitation is applicable to the case, and frame his plea accordingly.
    The court may permit a defendant to plead double, under special circumstances ; as where he could not make his defence by answer without setting out a long account, which would be unnecessary, if the defence sought to be made by plea was valid.
    The bill in this cause was filed on the 9th of January, 1830, by the complainants, in behalf of themselves and all the other creditors of The Commercial Insurance Company of New-York, against the defendants, as stockholders of that company at the time of its dissolution. The company was incorporated in April, 1805, to continue until the second Tuesday of January, 1820. By the twelfth section of the act of incorporation, (4 W. fy S. Laws of A/*. ¥. 147,) it was provided, that as to all debts contracted by the company before the second Tuesday of January, 1820, the persons, composing the corporation at the time of its dissolution should be responsible in their individual and private capacities to the extent of their respective shares in the stock of the company at that time. The bill set out various debts due to the complainants, respectively, from the company, upon policies underwritten previous to the passage of the act of the 15th of April, 1814, respecting incorporated insurance companies in cases of their insolvency; (3 Laws of New-York, 1814, 198, b.;) some of which debts had been reduced to judgments, and others of which had been liquidated by the company, but not paid. The bill further set forth that the corporation became insolvent, and was discharged from its debts, under the provisions of the last mentioned act, in July, 1814, and since which time there had been no property or effects of the company except what passed to the trustees under the assignment. That the property assigned was only sufficient to pay fifty-six per cent, of the debts, exclusive of interest; and that the residue remained unpaid. The bill further stated that the , defendants were the owners of various amounts in the stock of the company, at the expiration of its charter; and it prayed that an account might be taken of the debts due from the company, and of the amount of stock held by the defendants respectively, and that they might be decreed to pay their several shares of such debts in proportion to the amounts of their stock.
    The defendants G. Wright, G. Havens and J. Bogert, jun. pleaded in bar to the discovery and relief sought by the bill, “ the several acts and statutes now in force in this state for the limitation of actions and suits in respect of the matters and supposed causes of action or suit in the said bill of complaint mentioned.” And as to so much and such part of the supposed causes of action or suit, and each and every of them in the bill of complaint alleged, whereof there was concurrent jurisdiction in the courts of common law and courts of equity, the defendants pleaded that such causes of action or suit did not accrue at any time within six years before the filing of the bill, &c.; and as to all other matters stated in the bill they pleaded that the complainants’ right of action did not acsrue at any time within ten years before the commencement of the suit.

      R. Sedgwick & D. D. Field, for the complainants.
    The plea
    is double, inasmuch as it pleads two or more distinct statutes of limitations, or statutory bars. If there be different parts of the bill, to which different limitations apply, they ought to have been pointed out, and the plea should have been framed accordingly. (Salters v. Tobias, 7 John. Chan. Rep. 214. Beames, 44.) The plea is bad, inasmuch as it sets up in bar all the acts and statutes of limitations now in force; without specifying the same, or the periods of limitation referred to, so that it can be known what statutes are intended. It is also ambiguous and fishing, and does not state what causes of action in the bill are intended by “ those causes of action or suit whereof there is concurrent jurisdiction, in the courts of common law and in courts of equity.” The plea is bad, inasmuch as it pleads a bar or limitation.of ten years, without admitting that there is any cause of action in the bill

      to which such a bar applies; and without specifying what part of the bill is intended. (Salters v. Tobias, 7 John. Ch. R. 214. Beanies, 44.)" Neither the old nor the new statute is applicable- to this suit, either by a limitation of six or of ten years, because this suit is founded on the statute of incorporation. If a suit at law could have been brought, it must, or at least might have been debt. (3 Barn. & Cres. 962. Tilson v. Warwick, 3 Mass. Rep. 307. Bigelow v. Cambridge Corporation, 7 Id. 204. Jeffrey v. Blue Hill Corporation, 10 Id. 370. United States v. Colt, 1 Peters' C. C. R. 145. Com. Dig. Debt, A. 1.) To such a suit, the statute of limitations could not -have been pleaded. (Comyn's Dig. Temps. G. 15. Talong v. Jackson, Cro. Car. 513. Jones v. Pope, 1 Saund. R. 38. Hodge v. Harridge, 2 Id. 64. 15 Viner’s Abr. 108. 4 Bacon's Abr. 471. Pease v. Howard, 14 Johns. Rep. 479. Bullard v. Bell, 1 Mason's R. 243. Angell on Lim. 165.) No statute of limitations applies to a debt arising out of a policy of the Commercial Insurance Company, because, by its charter, such policies are to be deemed specialties. Neither the old nor the new statute is applicable to such of the complainants as are judgment creditors; and the plea being therefore bad in part, is bad in toto. In suits against heirs and executors, the form of pleading the statute is the same as if the suit had been against the ancestor or testator. (1 Chitty, 103. 2 Saunders, 7, d.) Where there is a debt against principal and surety, both are considered as one, and an acknowledgment, by a principal takes the case out of the statute as to the surety. (Angell on Lim,. 270. 2 Pick. 579. 4 Id. 382.) The old statute of limitations of six years did not apply, because it did not, in terms, extend to cases in equity, and was adopted in equity from analogy only when it would conduce to justice. If either the old or the new statute was applicable to this suit, it did not begin to run until it was discovered that there would not be sufficient property of the corporation to pay the claims; and that was only when the last dividend was paid by the trustees, in April, 1829. For where a creditor has a specific fund, he shall be compelled to resort to that before charging the surety. (Hayes v. Ward, 4 Johns. Ch. R. 130.) Since the statute respecting suits in equity became a law, the former statute of limitations cannot be applied to any case over which, as in this case, a court of equity has peculiar and exclusive jurisdiction. The statute of limitations respecting suits in equity cannot apply so as to create a bar in this easel 1st, Because, by the terms of the present statute, the former statute cannot be applied to any case over which a court of equity has-peculiar and exclusive jurisdiction. 2d. Because, if applied on the ground of a dissolution of the company in January, 1820, the ten years had not expired when the bill was filed ; and-if applied on the ground that the company was dissolved in 1814, the limitation thus created would have run out before the statute became a law, and thus it would be made to impair the obligation of contracts, and would be opposed to the constitution of the United States. This suit was therefore .commenced in time, for these reasons : 1st. The corporation was not dissolved until the second Tuesday of January, 1820, and this fact having been alleged in the bill, is therefore admitted by the plea. 2d. This is a case over which a court of equity has peculiar and exclusive jurisdiction; and the defendants, by their plea, have admitted that a part of the bill, at least, presents such a case. (She v. Bloom, 5 John. Ch. R. 366. 19 Id. 474, 8. C. Briggs v. Penniman, 1 Hopk. 300. 8 Coioen, 387, S. C. Peck v. Ellis, 2 John. Ch. R. 136. Gow on Part. 130. 2 Kyd on Corp. 447. 7 John. Ch. Rep. 225. Philips v. Wickham, 1 Paige, 596. 2 Kents Comm. 250. 4 Com. Dig.-261, Franchises, G. 2. 1 Salk. 191.) 3d. The bill in this cause was filed, and process of subpoena issued, January 9th, 1830. If either the old or the new statute shall be adjudged applicable to this suit, yet the .case was taken out of the statute by the payment of the dividends mentioned in the bill. (Jackson v. Fairbank, 2 H. Bl. 340. Bryar v. Willcocks, 3 Cowen, 162. 15 Ves. 499.- Burt v. Palmer, 5 Esp. Rep. 145.)

      W. Slosson & G. Griffin, for the defendants,
    contended that there was a concurrent jurisdiction in the courts of common law and equity, in respect to the several demands stated in the bill of complaint; the complainants having a clear right, if the stockholders were liable at all, either in law or equity, to maintain an action at law upon an implied assumpsit, founded on the liability created by the statute, to the extent of the shares held by the stockholder; that the limitation, therefore, of six years applies to the whole of the demands ; that if, however, the demands, or any part thereof, were exclusively of equity jurisdiction, they were barred by the limitation of ten years, the Commercial Insurance Company having been dissolved, by the proceedings and assignment, in July, 1814.
   The Chancellor.

The second section of the act of April, 1814, (3 Laws of N. Y. 199, b.) makes the assignment, under the order of the proper officer, a full discharge, not only to the corporation but also to the president, directors and stockholders of the company, from all debts due at the time of the assignment. But as all the debts due to these complainants were contracted before the passing of that act, it was void as to those debts, as a law impairing the obligation of contracts. And according to the decision of the supreme court of the United States, in Sturges v. Crowningshield, (4 Wheaton’s Rep. 122,) and the doctrine established in our own courts since that decision, the debts due to these complainants were not discharged either as against the corporation or the individual stockholders.

The statute authorizing the discharge of the corporation as an insolvent debtor does not profess to make that discharge a dissolution of the company. On the contrary, there are provisions in the act which show conclusively that the legislature did not intend it should have that effect. And if the surplus of the assigned property was equal to one half the former capital of the company, the corporation was authorized to go on with the business of insurance. There was nothing in this case to prevent the complainants, who had not already obtained judgments for the amount of their demands, from suing the corporation, at any time during its legal existence, notwithstanding the discharge. And as the stockholders are only liable for the debts which were due from the corporation at the time of the expiration of its charter, if any of these claims were barred by the statute of limitations, as against the company, at that time, the defendants are not liable, although suits could not have been brought against them individually until after that period. If the corporation could have pleaded the statute of limitations in bar immediately previous to the expiration of the charter, the stockholders, who are only collaterally liable, may set up the same defence in bar of the claim against them. This plea, however, is not calculated to raise that question as to any part of the demands set forth in the complainants’ bill. There is no allegation here that the corporation did not undertake and promise, or that the complainants’ rights of action against the company did not accrue, within six years before the second Tuesday of January, 1820.

If the debts were actually due from the corporation at the time of its dissolution, it can make no difference whether they were due from the corporation by judgments, or specialty, or only by simple contract. The right of action against the stockholders is founded upon the statute; and the form of the action against them must be the same, whatever may be the nature of the original indebtedness of the company. If an action at law is brought against the stockholders, it must be either an action of debt or assumpsit, founded upon their liability created by the statute. As a general principle, wherever a party is under a legal liability to pay money to another in consequence of some supposed benefit received as the consideration for such liability, and where no particular form of action is prescribed by the common law, or by statute, to recover the amount so due, an action of assumpsit may be maintained upon an implied promise, founded on such legal liability. But if the liability of the defendant is founded upon some negligence or misconduct on his part, by which the plaintiff has sustained an injury, an action on the case is in general the appropriate remedy. I think this is a case in which actions of assumpsit might have been brought against the several stockholders to recover the amount due from each according to their respective liabilities. It is equally clear, however, that the creditors of the company might have brought actions of debt instead of assumpsit. Wherever a statute imposes a legal obligation upon one party to pay money to another, the person to whom the payment is to be made may maintain an action of debt for the money. (Per Bailey, J. 7 Dowl. & Ryl. 381. Comyn’s Dig. Debt, A. 1. Saund. on Pl 404.) The complainants, if they had sued at law, might have brought an action of debt, founded on the statute; and this court, which decides in such cases, in analogy to the statute of limitations, will not consider this plea a bar, unless it would have been a bar at law to any action which might have been brought there. The statute of limitations which was in force at the time the right of action in this case accrued, as to actions of debt, is a transcript of the 21 James I. ch. 16, § 3, and only extends to actions of debt for arrears of-rent, or which are founded upon contract without specialty. (1 R. L. of 1813, p. 186.) Under this statute, it appears to have been long since settled in the English courts, that the limitation of six years did not extend to the case of an action of debt founded upon a statutory liability; the statute being considered in the nature of a specialty. (Com. Dig. tit. Temps. G. 15.) And in the case of Bullard v. Bell, (1 Mason’s Rep. 243,) before the circuit court of the United States, in 1817, Judge Story reviewed the authorities on this subject, and decided that the statute of limitations did not extend to an action of debt, against the stockholders of a corporation, founded upon a statutory liability. The revised statutes require all actions of debt founded upon any contract, obligation, or liability, not under seal, except such as are brought upon judgments and decrees, to be commenced within six years. (2 R. S. 297, § 18.) This would embrace the present suit, founded upon a liability created by statute, although some of the demands against the company were in judgment. But the forty-fifth section of the title of the revised statutes, which relates to the time of commencing actions, (2 R. S. 300,) has restricted the application of the provisions of the four first articles of that title to cases where the right of action has accrued since the new statute went into operation. And all cases which arose before.that time are to remain subject to the laws previously in force. Although these articles relate exclusively to actions at law, yet the forty-ninth section of the sixth article applies the same limitations to suits in equity, where there is a concurrent jurisdiction in the courts of law and equity as to the subject matter of the suit. I think the fair construction of this last section is, that in cases of concurrent jurisdiction, this court must be governed by the legal rule, as it existed before the first of January, 1830, as to all suits in which the right of action accrued before that time, and by the new statute in those cases where the right to sue has. arisen since. The subsequent sections of the sixth article, limiting the time of commencing suits in equity, fix the period at ten years, in. cases where this court has exclusive jurisdiction, and where the subject matter of the suit is not cognizable in the courts of common law. The cause of action against these defendants as stockholders did not accrue until the dissolution of the corporation by the expiration of its charter, in January, 1820. Although this bill was filed within ten years from that time, yet it does not appear that a subpoena was taken out and served, or that a bona fide attempt to serve it was made within the ten years. If this were a case of exclusive equitable cognizance, and the plea was good in point of form, it might therefore be necessary to enquire whether the construction I have given to the forty-ninth section could be applied to these subsequent sections of the same article, or whether the suit must be commenced here within the ten years, including the time which had elapsed before the revised statutes took effect.

I am satisfied, however, that this is not a.suit over the subject matter of which a court of equity has exclusive and peculiar jurisdiction, within the meaning of the fiftieth section of the statute. The complainants had a remedy, though I admit a very difficult and imperfect one, by actions at law against the several stockholders, for the amount which each was liable to contribute towards the payment of the respective debts due from the company.

Again ; this plea is bad in point of form. It is evident that there are not several and distinct rights of action set up in the bill, some of which are alone cognizable in equity and the others subjects of concurrent jurisdiction. If the complainants or any of them had a remedy at law as to a part of their debts,

they had the same remedy as to the whole. The pleader has, however, pleaded the six years limitation as to a part, in which he supposes there may be a concurrent jurisdiction, and the ten years limitation as to the residue; but without specifying, in any other way, the particular matters in the bill to which each limitation was intended to be applied. In addition to this, these defendants have pleaded in bar of the whole discovery and relief sought for in this bill, the several statutes of limitations now in force in respect to the matters in the bill mentioned. It is impossible to take any issue on such a' plea. The plea is also double in setting up the several statutes as a bar to the whole bill, and two several periods of limitation as a bar to distinct but undefined parts thereof. Whenever a plea or demurrer does not extend to the whole bill, or there Is a demurrer as to one part and a plea to another part, or separate pleas to distinct parts of the bill, the plea or demurrer should clearly express what part of the bill it is intended to cover, or the particular parts to which each defence is intended to be applied. (Lube’s Eq. Pl. 336. Devonsher v. Newenham, 2 Sch. & Lef. 199. Chetwynd v. Lindon, 2 Ves. 451.) This is an attempt to plead double, under a pretence of applying different defences to different parts of the bill. The causes of action, so far as the statutes of limitation are concerned, were all alike; being founded upon the statute liability only. The pleader, however, appears to have doubted-as to the particular-limitation which was applicable to this case ; and whether it was to be governed by the old law, or by the revised statutes which went into operation a few days previous to the filing of the bill. Instead therefore of deciding this question for himself and drawing his plea accordingly, he pleads the statutes, generally, to such parts of the bill as they may be applicable to. If the old statute is in force as it respects the whole subject matter of the bill, then that statute is pleaded to the whole, and the new statute as to the residue; but if the new statute governs the case, that is intended to be pleaded as a bar to the whole, and the old statute as to what remains. If it is a case of concurrent jurisdiction, then he pleads that the suit was not commenced within six years ; if a case of exclusive equitable cognizance, then the defence is that it was not commenced within ten years. This mode of pleading cannot be allowed. The defendants should either have put in an answer, in which they might have set up as many different defences as were deemed advisable, or they should have applied to the court for leave to plead double if . there was any thing in the case which could render such a proceeding necessary. Such permission was given in the case of Gibson v. Whitehead, (4 Mad. Rep. 241,) to save the expense of setting out long accounts in the answer. The -correctness of that decision is indeed questioned in a late elementary work, (Willis on PI. 493, note e.;) but a subsequent writer on the subject of equity pleading, of distinguished ability, supports this decision of the vice chancellor. (Lube's Eq. PL 348.)

The question whether there is any equity in this case, on the face of the complainant’s bill, cannot properly be raised upon the argument of this plea. Although at law there is a rule that, upon a demurrer, the party must fail whose pleading is first defective in substance, it does not apply to a plea in this court, which must stand upon its own merits alone. A plea cannot be substituted in the place of a demurrer here. (1 vern. Rep. 78. 2 Paige's Rep. 180.) If therefore the discharge of the company and its stockholders under the insolvent act of 1814 is valid as against the debts due to these complainants, on the ground that these have come in and received their dividends in the assigned property, under the act, Shis plea cannot be sustained.

As the plea is defective both in form and substance, it must ye overruled with costs.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    In the matter of Stevenson.
    August 27.
    The authority of the court of chancery to accept tfie resignation of a trustee, and to discharge him from his trust and appoint a new trustee in his place, relates only to cases where the trustee has become vested with the trust estate, or has made himself answerable as trustee by accepting the trust, or by doing some act in his character of trastee.
    By the common law, if a devise was to two upon trust, and one refused to accept the trust, it was a good devise to the trastee who did accept
    M. Trotter, by his will, devised and bequeathed his estate, both real and personal, to his executors named in his will, of whom the petitioner, was one ; to hold the same upon certain trusts in the will mentioned. The petitioner stated that he had renounced the execution of the will, which had been proved by the other executor only; and that he.had wholly refused to accept the trust, and had never interfered with the real or personal estate of the testator, either as executor or trustee. ' He therefore prayed that he might be discharges from his trust under the will, by an order of this court.

      J. L’Amoureux, for the petitioner.
   The Chancellor.

In this case I think the order of the court discharging the petitioner as trustee is wholly unnécessary. By the common law, if a devise was made to two persons upon trust, and one of them refused to accept the trust, it was a good devise to the trustee who did accept. (Nicholson v. Wandsworth, 2 Swanst. Rep. 370. Adams v. Taunton, 5 Mad. Rep. 438. Bonefant v. Greenfields, 1 Leon. Rep. 60.) The estate in this case was devised to the petitioner and Wendell, as executors; and the former having renounced the execution of the will, and not being named in the letters testamentary granted to his co-executor, was superseded thereby. The whole estate in trust is therefore vested in Wendell, the executor who has proved the will. (2 R. S. 70, § 8, 15.) The special authority which has been given to this court by the revised statutes to accept the resignation of a trustee, and to discharge him from his trust, relates only to those cases where the trustee has become vested with the estate, or has made himself answerable as trustee by accepting the trust, or by doing some act in his character of trustee. In such cases this court may appoint a new trustee in the place of the one whose resignation has been accepted. But here the devise to the executors in trust constituted a joint tenancy ; and by the refusal of the petitioner to execute the will, the whole interest vests in his co-executor, in trust, without any act of this court.

Petition dismissed.


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    Grimstone vs. Carter and others.
    August 27.
    Upon a motion made to dissolve an injunction upon ¡bill and answer, every allegation positively sworn to in the bill, and which is not substantially denied in the answer upon the defendant’s own knowledge, must be taken as true.
    If the purchaser of real property knows that a person other than the vendor is in the actual possession thereof at the time of his purchase, or before ho has paid the purchase money and obtained the legal title, he cannot protect himself as a bona fide purchaser, against the equitable rights of the person in possession, of whom he made no inquiries as to the nature of that possession.
    Where two persons have equal equities, and neither has the legal title, the prior equity must prevail; and the one who has the subsequent equity-will not be permitted to defeat the right of the other by obtaining a conveyance of the legal estate, after he has notice of such prior equity.
    There is no difference in principle between a purchaser in good faith, under the recording act, and a bona fide purchaser, as récognized by the decisions of courts of equity in other cases.
    Where an absolute deed is given, but the same is accompanied by a written defeasance, contained in a separate instrument, showing that the conveyance was only intended as a mortgage, the deed and defeasance must both be recorded in the book of mortgages to protect the holder of such security against the claims of subsequent bona fide purchasers from the mortgagor.
    This was an appeal from a decision of the vice chancellor, of the eighth circuit, dissolving an injunction. The facts of the case as they appeared by the bill and answer, were substantially as follows: On the 5th of July, 1830, the complainant was the owner of lot No. 54, in Brighton, containing 210 acres, and also of another small lot of land in the same town containing about nine acres ; upon the first of which lots there were three mortgages, amounting in the whole to about $ 1700. To obtain the means of satisfying these mortgages the complainant agreed to convey the whole of both lots to the defendant, Levi Carter, who agreed to pay off the mortgages. Carter also agreed to re-convey to the complainant the nine acre lot whenever he should be requested so to do ; and also to re-convey the north half of lot No. 54, upon receiving the balance of the mortgage monies paid by him, after deducting therefrom $1600 and interest. The complainant accordingly gave to Carter a warranty deed of both lots, which was duly recorded, on the 9th of July, 1830 ; and Carter gave him a written agreement to pay off the mortgages, and to give him a re-conveyance of the nine acres, and of the north half of lot No. 54, as before mentioned. The complainant thereupon continued in possession of the north half of the lot No. 54, and Carter took possession of the south half. In May, 1813, Carter conveyed the whole of that lot to the defendants Seymour and Wells, who paid a full consideration therefor, supposing they were obtaining a good title; they having first searched the records and found a regular chain of title to Carter and that there were no recorded incumbrances thereon. But previous to the execution of the conveyance to them, and before the payment of the consideration for their purchase, they were informed by Carter that the complainant was living on the north part of the lot; and the possession of that half of the lot was not to be delivered to the purchasers, by Carter, until the first of April thereafter. The defendants Seymour and Wells, supposing from the complainant’s conveyance that he was only a tenant at sufferance to Carter, made no particular inquiries as to the terms of his possession ; and the complainant was not informed that they were about purchasing the property. But when they called upon him afterwards, and informed him of their purchase, he stated to them that Carter had done wrong; and told them of the agreement to re-convey the north half to himself. .

      The following is the opinion of the Vice Chancellor;
    Gardner, V. C.
    For the purposes of this motion it must be conceded, that the complainant was in the actual possession of the north half of the lot of 210 acres conveyed by him to Carter, as mortgagor, and that this possession was known to Wells and Seymour before the payment of the purchase money, although after the execution and registry of the deed from Carter, it is an established principle that to support the defence of a purchaser for a valuable consideration without notice, the answer must aver not only that the purchaser had not notice at the time of the execution of the deed, but that the purchase money was paid before notice. (7 John. Ch. R. 68. 1 Hop. Rep. 48.) Wells and Seymour are therefore purchasers with actual notice of the possession of the complainant, but not of the precise extent, nor of the character of his claims to the land in controversy. The single question then presented by the pleadings is whether, under the circumstances of this case, this notice is sufficient to oust these defendants of their defence as bona fide purchasers. Independent of the registry acts, actual notice of the possession of the complainant would, beyond doubt, have been sufficient to put the defendants upon enquiry, and would at least have been equivalent to constructive notice of any claim legal or equitable to the land in question. (16 Vesey, 249. 5 John. Ch. Rep. 29. 1 Merivale, 282. 2 Vesey, 437. 13 Id. 118. 2 Paige’s Rep. 300.)
    Whether the notice in question is equivalent to notice through the medium of the county records, is another and very different question. The notice, say the court, in Dey v. Dunham, (2 John. Ch. Rep. 190,) that is to break in upon the registry acts must be such as with the attending circumstances will affect the party with fraud. Notice to put a party on enquiry is not sufficient. The chancellor thought in that case that no fraud was imputable to the plaintiff, although his deed gave him express notice of the existence of the mortgage, but not of the sum secured by it. His decision was reversed by the court of errors upon this, ground, but the principles assumed in that decision were not questioned. On the contrary, the general rule, upon the subject of notice, established in
      Hine v. Dodd, (2 Atk. 275,) and Jotland v. Stainbridge, (3 Vessey, jun. 478,) was expressly recognized by Platt, J. who delivered the opinion of the court. In Jackson v. Van Valkenberg, (8 Cowen, 264,) the subject of notice was again discussed, and the authorities reviewed. The opinion of Chancellor Kent, in Dey v. Dunham, was quoted with approbation, and the principle deduced from the authorities is summed up in this: that a second conveyance will be regarded as bona fide, unless tainted with fraud; that express notice of a prior lien is, per se, evidence of fraud; but that constructive notice alone is not sufficient to establish such an imputation. (8 Cow. 264.)
    I have been able to discover no case in our own courts which is at all in conflict with those above cited. Governeur v. Lynch, (2 Paige’s Rep. 300,) which was strongly urged upon the argument, was the case of a vendee in possession of land under a contract to purchase, and it was determined that the possession was constructive notice of his equitable rights. The same rule would apply to a tenant in possession, and, we may add, to all others, of whose claims, legal or equitable, notice cannot be given through the medium of the county records. Here the complainant claims as mortgagor. The law requires him to proceed one step farther; to show not merely a constructive notice, but in addition, attending circumstances which will affect the purchaser with fraud. (8 Cow. 264.) All that can be fairly claimed for the notice to these defendants is, that it was sufficient to put them upon enquiry. It was indeed urged upon the argument that the possession of the complainant was direct notice, per se, to the defendants, of the particular claim of the plaintiff, and that the purchase by the former was fraudulent in law, whatever might be their intention.
    No authority was cited in support of this position, for the reason, it is presumed, that none could be found. Such an assumption would at once confound all distinction between express and implied notice ; a distinction fully recognized by all the decisions upon the subject. The only fact of which these defendants had notice was the possession of the complainant.

      As evidence of title, that possession was in its nature equivocal, being equally consistent with an ownership in fee, with the equitable rights of a vendee under a contract to purchase, and the relation of landlord and tenant, as stated by Carter to the defendants. In certain cases, the law would bind them at their peril to act upon this evidence, and to inquire into the nature and extent of the claim of the occupant; and this is all, it is believed, which is meant by constructive notice, or notice to put a party upon inquiry. Upon this point, the case of Oxwick v. Plumer, (Bacon’s Abr. tit. Mortgage, E. 3, p. 666,) is conclusive, if authority were necessary. Oxwick was mortgagee of eight acres of copy-hold, held by his mortgagor under a covenant from his father to surrender the same. The mortgage was foreclosed, and the mortgagee by decree was let into possession ; after which, the father of the mortgagor then being thirteen years out of possession, surrendered to Plumer for a valuable consideration, and the latter being duly admitted, brought his ejectment, and the other filed his bill to be relieved. The bill was dismissed, with costs ; the court determining that the equities of the parties were equal, (which could not be, if the possession of Oxwick was express notice, or equivalent to express notice to Plumer,) and that the legal title must prevail; that the covenant to surrender, though pri- or, “ could not be set up against him who had no notice of it.” If, then, the notice to these defendants was constructive merely, and the authorities above cited are law, it was insufficient to deprive them of the protection afforded by the registry acts. Again, it was said by the counsel for the complainant, that the defendants were guilty of gross loches, in not inquiring into the title of the complainants, which was equivalent to a fraud, and that the honesty of their intention was no excuse. This is in fact the same question that has been discussed above, in another form. But in this point of view, it may be deemed a sufficient answer to say, that in a case like the present, gross negligence, or the omission of ordinary caution, ought not to be imputed to an individual who purchased land •upon thé strength of evidence which would induce a court of law to determine in favor of the validity of the title of his vendor, when that title is impeached by one who could, by the exercise of ordinary prudence, have protected himself and given notice of his rights to others under the registry acts.
    Let us test the conduct of the defendants by this rule. They knew that the complainant was in possession of a part of the premises mentioned in the bill. This possession was-presumptive evidence of a title in fee in the occupant, subject like any other presumption to be rebutted by written evidence that the fee of the land was in another. The records of the county, made legal evidence for this purpose, showed an absolute conveyance, with covenants of warranty from the complainant to Carter. The presumption from the possession of Grimstone was then repelled, and a court of law upon this evidence must have determined that the possession of the complainant, if not tortious, was in subordination to the title of Carter. It is difficult for me to conceive how the defendants can be guilty of loches for coming to the same conclusion from the same premises. The same remarks will apply to the claim of the complainant under his mortgage. The answer avers that the records were searched, and that no mortgage was registered against the premises. The above facts contained in the clerk’s certificate, unless the registry act is to become a dead letter, were evidence to these defendants not only that no mortgage was registered, but that none whatever was outstanding against the premises. “ The plain intention of the statute,” says Spencer, Ch. J. in Jackson v. Campbell, (19 John. Rep. 283,) “ is to give notice through the medium of the county records to persons about to purchase. If they search and find none, they ought never to be affected by any dormant or concealed mortgage. If the purchaser, confiding that there exists no mortgage, none being on record, parts with his money and takes a deed, the statute is his protection.” The defendants did search, and found no mortgage, and even believing, as they swear, that none existed, they parted with then- money; and if the above decision is law, their confidence was founded on legal evidence. Instead, therefore, of being charged with gross negligence, no reason is perceived why they are not entitled to protection against this concealed mortgage.

      The next inquiry will be, if the circumstances attending the purchase, in connection with the possession of the complainant, were sufficient to affect these defendants with fraud. The bill does not charge these defendants with purchasing with a view to defeat the claims of Grimstone ; and the answer unequivocally denies all knowledge or suspicion of that' claim. And it appears, to me that the facts detailed by the defendants go strongly to corroborate this general averment. In the first place, Grimstone had conveyed the entire lot of 210 acres to Carter. The defendants found him in the actual possession of the south half of this land, with a claim of title to the whole, and that claim supported by the evidence of the county records, showing, in the manner above mentioned, the land free from ipcumbrance, and a title regularly deduced from Ambrose Hall to Grimstone, and from the latter to Carter. The bargain was more than a month under consideration, and it is a remarkable circumstance, which I trust will be found susceptible of satisfactory explanation, that the attorney in whose office, and, for a part of the time, in whose hands this defeasance was lodged, was the agent of Carter in his communications with these defendants, and assisted in drawing the deeds when the bargain was consummated, without in any manner apprising them of a fact which must have at once put an end to the negotiation. Whatever opinion may be formed of the conduct of those agents in whom the complainant reposed confidence, I can see nothing in these circumstances which casts any suspicion on the integrity of these defendants. •
    Upon the facts in this case, the conduct of the complainant upon the question of negligence stands, to say the least of it, unfavorably contrasted with that of the defendants. The statute, as we have seen, renders it the duty of a person creating a trust, or having rights of which notice may be given through the medium of the county records, to give or at least make it the interest of others to give that notice, under the penalty of forfeiting those rights in the case of a purchaser for a valuable consideration. How has the complainant discharged his duty in this respect to himself and third persons 1 His deed to Carter is absolute for the whole 210 acres ; he acknowledged this deed, it must be presumed, with a view to its being recorded ; he knew, or was bound to know, that it would be recorded as a deed, since, according to the bill, an absolute transfer to Carter of one half of the lot was intended by the parties. The other moiety was to be subject to a secret trust between the parties to it, of which they never intended to give notice to the public. That such was their intention, I infer from the manner in which the writings were drawn, and from the fact that by the stipulation, the defeasance of which one copy only was made, was to remain in the hands of a mutual trustee. It could not therefore be recorded without the assent of the complainant, and that assent was neither asked or given. “ The intention of the act (says Mr. Sugden, in speaking of the registry acts, Law of Vendors, p. 471,) was to secure subsequent purchasers and mortgagees against prior secret conveyances and fraudulent incumbrances.”
    In the present case, the complainant, instead of constituting Carter a mortgagee by the instrument ordinarily adopted for that purpose, and thus cast upon Carter the responsibility of procuring the instrument to be recorded, from a regard to his own interest, has chosen to create a secret trust, and through ignorance, gross negligence or fraud, has invested Carter with the means of perpetrating fraud, either upon himself or bona fide purchasers. If Iris confidence has been violated, and he has been grossly defrauded by his trustee, as there is too much reason to believe, these defendants at least are guiltless of all participation in that fraud, and are not to be held responsible for its consequences.
    The injunction as to Welles and Seymour must be dissolved.
    M. T. Reynolds & A. S. Alexander, for the complainant.
    The only question presented by these pleadings is this : whether the complainant’s being in actual possession of the north half of the 210 acre lot, having and claiming certain equitable rights, and the fact of this possession being known to these defendants before their payment of the purchase money, was notice to them that the complainant had rights, and that they must take the land subject to those rights.

      1. A plea of purchase for a valuable consideration, without notice, must aver that the vendor was in possession, and also that the purchase money was actually paid. (Jewett v. Palmer, 7 John. Ch. R. 65. 2 Mad. Ch. Pr. 383. Walwyn v. Lee, 9 Vesey, jun. 32. Daniels v. Davison, 16 Id. 249, 252.) An answer setting up this defence should be as full as a plea. The argument in reply to this is, that the complainant, having conveyed by absolute deed, was merely a tenant at sufferance, and that possession of the tenant is possession of the landlord. But the pleadings show that the complainant was a mortgagor in possession of the north half of the lot; and so the vice chancellor views if throughout his opinion. If so, the legal title is to be considered in him; the mortgage is only a security, and the complainant cannot in any view be deemed a tenant to Carter. (Runyon v. Mesereau, 11 John. Rep. 534. Coles v. Coles, per Spencer, J., 15 Id. 319.)
    2. Persons claimmg as purchasers without notice, must not only deny all notice, but every circumstance from which notice may be inferred. It is fair to presume that a person other than the vendor being in possession, would lead to inquiry and a knowledge of the occupant’s claims. ( Galenline v. Erwin, Hopk. R. 48, 55, 56. Murray v. Ballou, 1 John. Ch. R. 566. Heatly v. Finister, 2 Id. 158. Smith v. Low, 1 Aikyns, 489.) Against this point it is urged that notice to break in upon the registry acts must be such as will, with the attending circumstances, affect the party wüh fraud. (Dey v. Dunham, 2 John. Ch. R. 190. Jackson v. Van Valkenburgh, S Cowen, 260.) Mr. Justice Platt, in the case of Dunham v. Dey, (15 John. R. 555,) lays down this rule : that where the proof of notice is clear and certain, it is, per se, evidence of fraud in him Who attempts to defeat a prior incumbrance by setting up a subsequent deed. The inquiry then is, how particular and certain must this notice be 1 We contend that actual possession is such clear, certain and notorious prima facie evidence of right, that it is, per se, evidence of fraud in the purchaser who does not inquire what the rights of the possessor are; or, at least, that he must take the land subject to the claim of such occupant.

      3. If a person is in possession of land, a subsequent purchaser has constructive notice of the possessor’s rights, and takes the land subject to all his equitable claims. (Governeur v. Lynch, 2 Paige, 300. Chesterman v. Gardner, 5 John. Ch. R. 29, 32. Allen v. Anthony, 1 Meriv. 282. 2 Ves. 437. 13 Id. 118. Daniels v. Davison, 16 Id. 249. 17 Id. 433, S. C. Tuttle v. Jackson, 6 Wend. 213, 226, and cases there cited.) This rule as laid.down in Governeur v. Lynch, and fully sustained by the ■opinions in the other cases cited on this point, is surely broad enough to include the case before us; and indeed we can perceive no reason why a lessee or purchaser in possession should be notice any more than a mortgagor in possession who has equal equities. The reason of the principle seems to be this : that possession being prima facie evidence of right, and that without it no title can be completely good, (3 Cruise, 330,) the law compels the purchaser to ascertain the claim of such actual occupant, or at his peril to take the land, charged with all the equitable rights of such tenant. Nor is there any hardship in the operation of this rule ; at all events, it is no worse in extending it to mortgagors in possession than to lessees or purchasers.
    The deed from Grimstone to Carter was made in July, 1830; that from Carter to Welles and Seymour in May, 1831. Now suppose Grimstone’s deed to be absolute and indefeasible, and that some two months after its execution, Grimstone had taken a contract of purchase from Carter, paid four fifths of the purchase money, and entered into and held possession under this contract, or suppose Carter, for a valuable consideration, had given him a lease for 900 years, at a pepper corn rent, it is conceded by the. opinion of the vice chancellor that Welles and Seymour would be bound to take the land subject to these rights, even if, after diligent search, they had found a perfect, unincumbered, recorded title in Carter. In reason, can there be any difference between the case supposed and the one under discussion ?
    It is said that Grimstone, by giving a deed absolute on its face when in fact it was only a mortgage, enabled Carter to perpetrate a fraud. The same argument would hold equally good in the supposed case of the contract to purchase. Grim-stone in that case should take a deed, give back a mortgage, and thus spread the whole title upon the records. By neglecting to do so, he invests Carter with power to commit a fraud.' But the answer in both cases is, that we were in actual possession, exercising notorious acts of ownership over the property, and this was sufficient notice to apprise all the world that we had claims, though not-of their extent; and if any person wished to know what our rights were, it was then-duty to make the necessary inquiries.
    The vice chancellor takes a distinction between a mortgagor and a purchaser in possession. It is this :• that a mortgagor has power to secure himself under the registry acts, and that a purchaser has not. In this view, we apprehend, the vice chancellor is mistaken, inasmuch as we have already shown how a purchaser may spread the whole title upon the records. But the case of Governeur v. Lynch .could not have turned on this distinction, for two reasons : I. This distinction is not assigned as the ground; and 2. When the facts on which this decision arose occurred, contracts for the purchase of land, we think, could be recorded. By the 4th section of the New Revised Laws, p. 370, it is declared that “ every deed, conveyance or writing, whereby the right or title to any lands may be affected in law or equity, shall be recorded," &c. By several late statutes the provisions of this section have been extended to almost all the state. But the late revision expressly excludes mere contracts from registry. (1 R. S. 762, § 38. See also Session Laws, cited under this and the 1st section of this chapter, 1 R. S. 756.) The case in 6 Wendell, 213, which recognizes and establishes the same principle as that laid down in Paige, was clearly a case where a party might protect himself under the registry acts.
    Again, the vice chancellor assumes another ground which we think is not tenable, and that is, that constructive notice is only sufficient to put a party upon enquiry, and not sufficient to break in upon the registry acts. The circumstances amounting to constructive notice, may in some instances be such as to produce as clear, certain and convincing proof as express notice itself; and then, according to Mr. Justice Platt, it wl . ; be, per se, evidence of fraud.

      We conceive that altogether another view may be taken of this subject. „ The bill does not charge the defendants Welles and Seymour with fraud in the purchase; it is framed with a totally different aspect, it proceeds upon the principle that the complainant having actual possession of the land, with certain equitable rights, is not-to be deprived of that possession, nor of those rights, without his assent. That his possession was notice to all the world that he had rights, though not of their precise nature or extent. And that under these circumstances Welles and Seymour might either enquire what his rights were, or at their own peril take the land, subject to all just claims of the complainant, be they more or less. The bill presumes that these defendants took the land chargeable with the equitable rights of the complainant, rather than cast upon them the odious imputation of fraud. Upon this 3d point the vice chancellor cites the case of Oxwick v. Plumer, (Bac. Abr. tit. Mortgage, E. 3, p. 666,) to show that possession is not of itself notice. It must be admitted that this authority conflicts with those cited by us; but the latter being subsequent decisions, and the most important of them in our own courts, they must be considered as overruling the former. It ought to be observed, however, that this question, of possession being notice, does not appear to have, been discussed in Oxwick v. Plumer, nor until a much later period.

      S. M. Hopkins H. F. Penfield, for defendants.
    The defendants Welles and Seymour are bona fide purchasers for a valuable consideration fully paid, without notice of any claim upon the estate. And this,"although not a good weapon of attack, yet as a defence, affords a perfect shield for the defendants in a court of equity. (Sugd. Law of Vendors, 476. Oxwick v. Plumer, Bacon’s Abr. tit. Mortgage, E. 3. Frost v. Beekman, 1 John. Ch. Cas. 288. 18 John. Rep. 544, S. C. Jackson v. Henry, 10 Id. 185. Whittick v. Kane and others, 1 Paige’s Rep. 202.) The case of Oxwick v. Plumer seems to be a leading case upon the great doctrine of law, where equities are equal. Welles and Seymour have obtained fairly a perfect recorded title under the registry laws of the state.

      And this affords them a perfect protection, which can be avoided only upon the ground of fraud. (Sudg. Law of Vendors, 471. Jackson v. Burcott, 10 John. Rep. 457. Jackson v. Elston, 12 Id. 452. Jackson v. Van Valkenburgh, 8 Cowen’s Rep. 260. Hine v. Dodd, 2 Atk. 375. Jolland v. Stainbridge, 3 Ves.jun. 478. Dey v. Dunham, 2 John. Ch. Rep. 182. 15 John Rep. 555, S. C. Berry v. Mutual Ins. Co. 2 John. Ch. Rep. 603. Brinkerhoof v. Lansing, 4 Id. 65. See also Eyre v. Dolphin, 2 Ball & Beat. 301.) Welles and Seymour have been deliberate, cautious and vigilant. The records were searched at Utica, Canandaigua, Geneva and Rochester. Their title deeds were all duly, recorded before they paid for the farm. Fraud or gross negligence is imputable- to the complainant. He reposed upon the good faith of Carter for his security. If Carter has deceived him, he must not visit the evils of his negligence and misplaced confidence upon the heads of the defendants Welles and Seymour. (Jackson v. Campbell, 19 John. Rep. 281. Berry v. Mut. Ins. Co. 2 John. Ch. Rep. 603. White v. Moore, 1 Paige’s Rep. 551.) The complainant insists that he retained possession of the north half of the farm. That this was sufficient to put Welles and Seymour on inquiry, and that they were bound to enquire under what right or title he was in possession. That his equitable title as mortgagor in possession gives him a claim upon the interference of a court of chancery superior to that of the defendants Welles and Seymour. (Daniels v. Davison, 16 Vesey’s Rep. 250. 17 Idem. 433, S. C. Governeur v. Lynch, 2 Paige’s Ch. Rep, 300.) The court has no evidence that the complainant was in possession of the half—the north half of the farm in particular. The bill is not evidence, and the answer states that Carter was in possession and building a bouse, and that he told Welles and Seymour that the complainant was living on the north part of the farm by permission of Carter, and jointly with him. But the answer does not state that the complainant possessed the north half of the farm.
    Admitting that the complainant possessed the north half, and that Welles and Seymour had notice thereof, that was not enough to put Welles and Seymour even on inquiry. Welles and Seymour heard nothing of the complainant’s possession until after Carter had exhibited to them an absolute deed of the whole farm from the complainant, executed less than a year before, and the certificate from the clerk of Monroe, shewing that there was no mortgage or other conveyance on record from Carter to the complainant; nor until after the defendants knew that Carter was certainly in possession of the lot, and building a framed house on it. They were therefore warranted in believing Carter’s assertion that he controlled the possession of the complainant, whatever it was. (St. Andrews Church v. Tompkins, 7 John. Ch. Rep. 14. Berry v. Mut. Ins. Co. 2 Id. 603.) The complainant by his deed furnished Carter with the means of practicing a deception upon Welles and Seymour. He will be estopped from denying that the nature and design of his deed was what it purports to be on its face, where the rights of bona fide purchasers intervene, who have purchased upon faith of the deed. (Lupin v. Marie, 2 Paige’s Ch. Rep. 172.) But the complainant claims under a written defeasance, designed to control the operation of his deed and make it a mortgage. He was bound to have the defeasance registered. The act in such case is imperative, and a notice or state of facts, sufficient to put Welles and Seymour upon inquiry, is not suffi"cient to break in upon the registry act. (Jackson v. VanValkenburgh, 8 Cowen’s Rep. 260. Dey v. Dunham, 2 John. Ch. Rep. 182. White v. Moore, 1 Paige’s Rep. 551.) This is the law in the state of New-York, whatever may be the law in England. (Berry v. Mut. Ins. Co. above cited.) The registry laws are not so universal, nor so much favored in England as in the United States; and yet the better opinion is, that this is the law in England, in cases where their registry acts apply. (See opinions of Cowper, Alvenly and Hardwicke, in the cases; cited; also Eyre v. Dolphin, 2 Ball & Beat. 301.) This is the doctrine in the cases of deeds and mortgages; and it may well consist with the rule in case of leases and contracts, to be found in some of the English cases, “that purchasers are bound to take notice of the possession of tenants in actual occupancy, and that notice of the existence of a lease or contract, is notice of the contents or terms of such leases or contracts. (See Kents opinion in the case of Frost v. Beekman, 1 John. Ch. Rep. 288. Same, 18 John. Rep. 544. Also the opinion of Woodworth, in Jackson v. Van Valkenhurgh, 8 Cowerts Rep. 260.)
    The complainant’s bill might have been démurred to. It states Welles and Seymour to be purchasers for valuable consideration, and that they have obtained a good recorded title, and omits to allege any notice to them of the complainant’s secret, and equitable rights. The complainant has no equity against Welles and Seymour upon his own showing; and this going to the whole equity of his case, may be objected by them at the hearing.
    The agreement between the complainant and L. Carter stated in the bill is vague and indefinite, and cannot be enforced by this court, by reason of its uncertainty. (1 Mad. 426.) It is uncertain as to the time when it. is to be completed; as to the amount to be paid by the complainant; the time when payment is to be made; and the manner in which payment is to be secured. This court is therefore required to make an agreement for the parties. The agreement relied on by the complainant was in writing, and deposited with P. Carter, and afterwards with Nash, as agents for the complainant and L. Carter. Nash then knew of the complainant’s claims under his agreement. He was the agent as well of the complainant as of L. Carter, and he was also privy to and acting in th» negotiation between Carter and the defendants Welles and Seymour. He stood by and saw it consummated, without notifying Welles and Seymour of the complainant’s claim.
    If it be urged that Welles and Seymour, claiming as purchasers bona fide without notice, are bound to aver their grantor in possession when he conveyed to them, we answer that Carter was in possession actually of all except what the complainant might claim; and as to that, the complainant having conveyed fay absolute deed, was merely a tenant at sufferance thereafter. And then the possession of the tenant was the possession of the landlord. (2 Maddock, 322.)
    In reference to title, the general rule in equity is, that where two parties have equal equities, a court of chancery will leave them to their rights and titles at law. Should the complainant contend that the agreement under which he claims is to be regarded as an agreement for a purchase, we answer, 1. His bill treats the agreement as a defeasance to the deed and designed to make it a mortgage in effect, and he cannot now change his ground in this cause. 2. The agreement was a defeasance in fact, and must be so regarded; it was between the same parties, executed at the same time, and designed to control and alter the natural effect of the absolute deed.
   The Chancellor.

Upon the final hearing of this cause, the complainant will .be holden to strict proof of the agreement set up in his bill, on which he founds his claim to the equitable interference of this court; and if he does not succeed in establishing such agreement, bis bill must be dismissed, whatever may be the result of the present application. In this stage of the cause, however, and before he has had an opportunity to examine his witnesses, every allegation positively sworn to in the bill, and which is not substantially denied in the answer, upon the defendant’s own knowledge, must be taken as true. The case then presented on the appeal is this: The complainant was in possession of the north half of lot No. 54, at the time of the purchase by Seymour and Welles, under a written agreement from Carter to reconvey that part of the lot to him, upon the payment or security of the small belance due on the mortgages over and above the $1600 which Carter was to pay for the south half of the lot. And these purchasers from Carter took their conveyance, and paid the purchase money for the whole lot, after they had actual notice of the complainant’s possession ; and without making any inquiries as to the extent of his rights, or the nature of that possession.

It is the settled doctrine of this court that where the equities of the parties are equal, and neither has the legal title, the one who has the prior equity must prevail. Nor will this court permit the party having the subsequent equity to protect himself by obtaining a conveyance of the legal title, after he • has either actual or constructive notice of the prior equity. (Tourville v. Nash, 3 Peer Wins. 307. More v. Mayhem, Freem. Ch. Rep. 175. Wigge v. Wigge, 1 West’s Rep. 680. 1 Atk. Rep. 384, S. C.) To protect a party, therefore, and to enable him to defend himself as a bona fide purchaser for a valuable consideration, he must aver in bis plea, or state in his answer, not only that there was an equal equity in himself, by reason of his having actually paid the purchase money, but that he had also clothed his equity with the legal title before he had notice of the prior equity . And if the person claiming the prior equity is in the actual possession of the estate, and the purchaser has notice of that fact, it is sufficient to put him on inquiry as to the actual rights of such possessor, and is good constructive notice of those rights. (Chesterman v. Gardner, 5 John. Ch. Rep. 33. Mien v. Anthony, 1 Meriv. Rep. 282. Taylor v. Baker, Daniel’s Rep. 80, note a.) These principles are all distinctly recognized by the vice chancellor in his decision in this case; but he supposes there is a distinction between a purchaser in good faith, under the recording act, (1 R. S. 756, § 1,) and a bona fide purchaser, within the decisions of courts of equity in other cases. In reason there certainly can be no foundation for such a distinction. And if this case depended upon the construction of the words subsequent purchaser in good faith, as used in the recording act, the result would he the same. My opinion on that point is fully expressed in the case of Tuttle v. Jackson, ex dem. Hills, in the court for the correction of errors, (6 Wend. Rep. 213;) which opinion I believe was concurred in by all the members of the court who joined in the decision which was made in that case.

I apprehend, however, that the vice chancellor is under a mistake in supposing that this is a question of notice under the recording act. The object of that statute was to protect a subsequent bona fide purchaser against a previous conveyance of the legal estate, or of some part thereof; and which conveyance would be valid as against the subsequent purchaser or mortgagee, if the recording act had not been passed. But a subsequent bona fide purchaser needed not the aid of the registry act to protect him against a prior equity, or a mere agreement to convey. Having the legal title under his conveyance, he would be able t.o defend his title at law; and the plea that he was a bona fide purchaser for a valuable consideration, would afford him a full protection against an equitable claim of which he had no previous notice. In the case under consideration the legal estate was absolutely vested in Carter, by the deed of July, 1830; and although by the executory agreement to reconvey, such deed, in equity, was nothing but a mortgage as to the north half of lot No. 54, yet a bona fide purchaser from the holder of the absolute deed would have been protected, both at law and in equity, if no recording act had ever been passed. (Whittick v. Kane, 1 Paige’s Rep. 202.) Therefore, as to the equitable claim of this complainant, it was perfectly immaterial whether the deed from him to Carter was recorded or otherwise. The only benefit to be derived from the recording of that deed would be to protect the purchaser, claiming under the same, against a subsequent grantee of the complainant, who might, perhaps, become a purchaser of the property without notice of the existence of such a deed. If that deed could be considered as coming within the provisions of the third section of the recording act, (1 R. S. 756,) so as to constitute the relation of mortgagor and mortgagee between the complainant and Carter, no benefit could be derived from the recording thereof; because it was not recorded in the book of mortgages. Neither was the writing explanatory of its being designed only to have the effect of a mortgage recorded with it, and at the same time. The object of that section of the statute was to protect bona fide purchasers from the mortgagor. It is therefore the duty of the person who receives such a mortgage to have the defeasance recorded with his absolute deed, in the book of mortgages; otherwise he derives no benefit from the recording of such deed. But the rights of the mortgagor are the same, whether the deed and defeasance which constitute the mortgage are recorded or not.

I apprehend, however, that at law this must be considered as an absolute and valid conveyance of the whole lot; with an agreement to resell and reconvey the north half, upon the terms and conditions specified in the contract. And such an agreement, being a mere equitable claim upon the estate which could not affect the title of a bona fide purchaser without notice, is expressly excepted from the provisions of the statute requiring conveyances to be recorded. (1 R. 8. 762, § 38.)

.This is undoubtedly a hard case for the purchasers, who supposed they were getting a good title. But as the complainant was not aware of their negotiation for the purchase of the property, and therefore had no opportunity to apprize them of his equitable claim to a re-conveyance of the north half of the lot, it would be equally hard to deprive him of his property without consideration. Seymour and Welles1, were informed he was in possession, which by the settled law 1 of the land was sufficient to put them on inquiry, and to de- i prive them of the defence of bona fide purchasers without no- f tice of his rights. And they, in the language of Lord Eldon, \ having neglected to take the obvious precaution of inquiring i as to the nature and extent'of the tenants interest in the property, they must suffer the consequences of their neglect.

The order appealed from must be reversed, with costs; and the injunction must be retained until the hearing. But it must be without prejudice to the right of the respondents Seymour and Welles, to bring an ejectment suit, and to proceed to judgment therein, unless the complainant shall, within thirty days stipulate to deliver up the peaceable possession of the property to them, and pay the value of the mesne profits to be ascertained by a master under the direction of the court, if he does not succeed in establishing his equitable right to a re-conveyance upon the final hearing of this cause.

       In Buck v. Halloways Devisees, (2 J. J. Marsh. Rep. 180,) the court say, “The only sensible rule is, that actual’residence upon the land is notice to all the world of every claim which the tenant may legally assert in defence of his possession.”