author: McCoun, V. C. The Chancellor.

text:
    Holbrook & Ferme vs. The Receivers of the American Fire Insurance Company.
    1836. November 15.
    Where a party who had obtained a loan from an insurance company upon bond and mortgage, and who had also insured his property with the same company, which property was destroyed by the great fire in New-York ; by which fire the company was rendered insolvent, and receivers of its effects were appointed under the act of the 18th of January, 1836 ; and such receivers, for the purpose of depriving the assured of his legal right to set off the amount of his loss against the amountdue from him to the company on the bond and mortgage, refused to adjust the amount due him upon the policy, as required by that act; Held that it was the duty of the receivers to allow the set off; and that the court of chancery, upon a summary application, was authorized to order the receivers to allow the same.
    A receiver of an insolvent corporation, appointed under the act of the 18th of January, 1836, or appointed by the court of chancery under the provisions of the revised statutes relative to proceedings against corporations in equity, is bound to offset a liquidated debt due to the corporation, against an unliquidated debt due from the corporation to the same person; in the same manner as trustees of insolvent debtors are bound to offset cross demands arising from mutual credits as well as from mutual debts. In such cases the right of set off is not confined to liquidated debts or to such as might have been offset in a suit at law between the original parties ; but it also extends to all mutual credits, arising ex contractu, between such original parties.
    This was an appeal from a decision of the vice chancellor of the first circuit upon an application for instructions to the receivers of the American Fire Insurance Company of the city of New-York to allow the appellants’ set off. The facts of the case, as stated in the appellants’ petition to the vice chancellor, were as follows: Holbrook and Ferme, the appellants, were formerly general partners as merchants in New-York, and as such effected an insurance upon their goods, with the American Fire Insurance Company, to the amount of $8000, for one year. A few months afterwards, by an arrangement between the parties, Holbrook became the sole owner of the stock in trade, and the policy was so modified as to apply to his new interest in the goods. In March, 1835, the policy was renewed for the amount of $6000, for one year, for the sole benefit of Holbrook; and by the great fire, in December, 1835, the goods of Holbrook, exceeding in value the sum underwritten by the policy, were destroyed, and by the same fire the insurance company was rendered insolvent. In January, 1833, Holbrook obtained from the insurance company a loan of #4000, for which he gave a mortgage upon his real estate, and Ferme joined with him in a bond to the company as a collateral security for the payment of the amount of the loan, with interest; and in April, 1835, Holbrook also borrowed from the company the further sum of $4000, for which he gave his bond and mortgage, to secure the repayment, with interest, in one year. Soon after the loss, Holbrook made due proof thereof to the officers of the company. He afterwards applied to the receivers of the effects of the company, appointed under the act of the 18th of January, 1836, to adjust his claim under the policy, and to allow it to be offset againt the bonds and mortgages. No objection to the validity of his claim was made by the receivers; but they refused to adjust the loss and give him a certificate of the amount, as required by the third section of the act, as they wished to prevent him from offsetting the loss against the amount due on his bonds and mortgages to the company. And they subsequently brought a suit against him and Ferme upon the bond given for the payment of the first loan of $4000. Holbrook and Ferme thereupon presented their petition to the vice chancellor for an order directing the receivers to allow the set off, and to cancel the bonds and mortgages upon receiving the balance due thereon beyond the $6000 underwritten on the policy. The vice chancellor decided that as the amount payable under the policy was unliquidated, there was neither a legal nor an equitable right of set off, and that Holbrook, therefore, must pay the amount of both mortgages, and take only his rateable proportion of the effects of the insolvent company.
   The following is the vice chancellor’s opinion:

McCoun, V. C.

The only important point in controversy

in this case is, with respect to the right of set off. In another case, against the receivers of the Globe Insurance Company, I have just had occasion to examine the question of set off both at law and in equity, where the company held the bond and mortgage of the parties whose building upon the mortgaged premises the company had insured, and a loss to the whole amount of the sum insured was sustained by the destruction of the building, and where the loan of money upon the bond and mortgage and the making of the insurance upon the building were parts of the same transaction. In such case (a loss to the full amount insured being admitted) I consider the assured entitled to have the loss deducted or set off against the bond and mortgage debt, notwithstanding the securities have passed into the hands of receivers and maybe sued in their names; the receivers, like assignees in bankruptcy, taking subject to all the rights and equities existing against the company. (1 Paige 445.) But the present case is somewhat dissimilar, for here there is no connexion between the insurance on the stock of goods and the lending of the money on the bond and mortgage. They are not parts of the same transaction, and the court cannot infer from the circumstances any implied or tacit understanding that the money lent on the security of either of the bonds and mortgages should be held to meet the loss, if any, upon the policy on the goods. It might be otherwise if a loss had occurred upon the policies on the buildings forming a part of the mortgage security ; and from an implied agreement in such a case, a stronger equity to a set off or compensation might possibly be urged. (See 8 Wend. 115, and 5 Mason’s Rep. 208.)

But the great obstacles in the way of setoff in the present case are these: 1st, that with respect to one of the bond debts, it is the joint debt of Holbrook and Ferme, and the demand claimed to be set off belongs to Holbrook individually ; and 2dly, that the set off claimed upon the policy of insurance is of an unliquidated demand in point of amount, and not capable of being ascertained by calculation, and therefore not admissible under the statute. (2 R. S. 354.)

The first of these objections may be obviated perhaps by a reference to ascertain how the first loan was made, whether to Holbrook alone, he procuring Ferme to unite, with him in the bond merely as surety, or whether they were jointly borrowers and both principal debtors as the bond imports.

If in point of fact Holbrook was the borrower on his own account exclusively, and the other executed the bond as surety only, then upon the authority of Ex parte Hanson, before Lord Erskine, (12 Vesey, 346,) and S. C. subsequently before Lord Eldon, (18 Vesey, 232,) a set off in favor of Holbrook may possibly be allowed in equity, though not at law. (See 4 John. CL Rep. 15.) A decisive opinion on this point ought not, however, to be expressed, until the fact alleged in the petition, and controverted in the answering affidavit of the receivers, is ascertained; and if the other objection to the set off", viz. the unliquidated nature of the demand, is got over, then, before denying the set off against the first bond on account of its being the joint debt of the two obligors, I should feel warranted at least in handing the matter over to a master for inquiry. As to the nature of the debt or demand offered by way of set off, it appears to be well established, that a court of equity is governed by the same general rules as a court of law.

A claim or demand arising from tort or upon contract, sounding in damages not ascertained, uncertain, unliquidated in amount, and from its nature in these respects not the subject of a set off at law under the statute, is equally inadmissible as such in this court. (Duncan v. Lyon, 3 John. CL Rep. 351.) The demand to be set off" must be one arising upon judgment, or upon contract express or implied, either for real estate or personal property sold, or for money paid or services done ; or if it be not such a demand, the amount must be liquidated or be capable of being ascertained by calculation. (2 R. S. 354, § 18, sub. I, 3.) As the demand in the present case upon the policy of insurance is one arising upon contract, it so far comes within the statute, but it is neither for real or personal property sold, nor for money paid or services rendered ; it must be, therefore, a demand, the amount of which is liquidated, or ascertainable by calculation.

The term liquidated in the statute, must be understood in its popular sense settled, adjusted, reduced to a certainty in-amount; requiring the assent or concurrence of both parties, Now it is very evident the loss has not been thus liquidated, The assured produced proofs of his loss, preparatory to an adjustment of the amount, but neither the officers of the COmpany nor the receivers ever adjusted it with him or fixed upon any sum to be paid. On the contrary, they appeared to have purposely abstained from doing so. How then can it be considered a liquidated demand ? A policy of insurance against loss or damage by fire is necessarily an open policy, although a sum certain is specified in the policy as the amount insured. If a loss occurs, all that the insured is entitled to is indemnity to the extent of his loss, not exceeding the sum insured. The loss may be greater or it may be less, according to the value of the property destroyed. This is matter of proof and adjustment, and until it is adjusted and the amount of loss agreed upon or admitted by the underwriter, the claim or demand upon the policy remains unliquidated. In Gordon v. Bourne, (2 John. Rep. 150,) it was held that a claim upon an open policy of insurance against marine risks, even for a total loss, was of this nature, and could not be the subject of a set off under the statute as it then existed in the revision of 1801; and although by the subsequent revision of 1813, unliquidated demands might be set off, as has been clearly shewn in the opinions of Chancellor Walworth expressed on more than one occasion, yet by the present revised statutes we are brought back to the law of 1801, under which Gordon v. Bourne was decided, which is substantially the English statute of set off. (Reab v. McAllister, 8 Wendell, 109. Butts v. Collins, 13 Wendell, 139.) In Butts v. Collins, his honor, the chancellor, treats a demand as uncertain and unliquidated in point of amount, (and of course inadmissible as a set off,) where the defendant claimed the value of a certain number of pieces of flannel, which had been put into the plaintiff’s hands to be dressed and which had never been returned to him— the number of yards in each piece and the worth per yard all being proved. Mr. Senator Maison takes a different view of the subject, and explains what he considers are unliquidated, and what are liquidated demands—-drawing the line of distinction, and concludes that the claim there set up for the flannels by way of set off, was one which could be ascertained by arithmetical calculation, and therefore admissible. His opinion, however, did not prevail—a majority of the court appear to have concurred with the chancellor, and I am bound to follow his views of the law. This, then, must be regarded as a case of an unliquidated demand. But there is another branch of the question—if not yet liquidated, is the amount capable of being ascertained by calculation, for if so, it is still admissible under the statute 1

The case of Osborne v. Etheridge, (13 Wendell. 339,) I think settles this point; for the opinion of the court by Chief Justice Savage, gives to that phrase of the statute a construction which restricts the operation of ascertaining or calculating the amount of the demand to be setoff, to the use of figures, to a mere arithmetical calculation; and that where resort must necessarily be had to the testimony of witnesses or evidence of any kind, to be weighed and passed upon by the court and jury in order to ascertain the amount of the claim or demand, the party must be left to pursue his remedy for it in a distinct action. The amount of the claim upon the policy of insurance in question, cannot be ascertained by the above method of calculation. If the sum mentioned in the policy, like that of a bill, a note or a bond, was the amount payable upon the happening of a loss by fire, without regard to the extent of such loss, then indeed it would be a liquidated amount, or one ascertainable by mere calculation, for nothing would remain except to compute the interest, if any, and add the principal and interest together. But more remains tó be done— proofs are to be gone into to establish the fact of loss of goods, and the assured’s ownership of such goods and their value—the exhibition of preliminary proofs and a particular compliance with all the terms and conditions of the policy. Under these circumstances the demand cannot be the subject of a set-off at law; and this court can go no further than a court of law in enforcing such a right. The receivers appear to have a legal advantage, and the equity of the creditors generally, in whose behalf they act, is equal at least to that of the petitioners, and it is not for this court under such circumstances to interfere.

C. O’Connor, for the appellants.

J. J. Rosevelt, for the receivers.

From this decision Holbrook and Ferme appealed to the-chancellor.

The Chancellor.

There can be no doubt as to the right of this court, upon a summary application, to direct the receivers to make the set off claimed in this case, if it is just and equitable that such set off should be allowed; and to stay the proceedings in any suits at law which may have been commenced upon the bonds given to the company. Independent of the general jurisdiction of this court over the receivers as officers of the court, a general power to direct and control receivers, of insolvent corporations in reference to the dsicharge of their duties, is expressly given to the court by the provisions of the revised statutes. (2 R. S. 464, § 41. Idem, 472, § 85.) And by the act of January, 1836, under which these receivers were appointed, they are made subject to all the obligations and duties which are imposed upon receivers under any law of this state; and the same jurisdiction is given to this court over them as over receivers in other cases. The sixth section of that act, which authorizes the court of chancery to restrain all proceedings against the corporation, either at law or in equity, shows also that the legislature intended that the legal and equitable rights of the creditors of the corporation should be adjusted in a summary manner under the direction of this court. If the vice chancellor has erred in relation to the legal or equitable rights of these petitioners, they are right, therefore, in supposing that their proper remedy was by an appeal to the chancellor.

The vice chancellor arrived at a correct conclusion that in ordinary cases, an unliquidated claim for loss upon an open policy of insurance cannot be offset, in a suit at law brought against the assured, by the underwriters, for the recovery of a debt due from the former to the latter. (2 R. S. 354, § 18, sub. 3. Gordon v. Bowne, 2 John. Rep. 150. Butts v. Collins, 13 Wendell, 139.) As a general rule, also, in cases of set-off, arising under the general provisions of the statutes on the subject, and where the demands which are sought to be set-off against each other arise out of separate and distinct transactions or contracts, courts of equity follow the legal rules of set-off which are applicable in suits at law; unless there are specal circumstances to take the case out of the general rule, and to show that the parties could not obtain their just and equitable rights by cross actions. (Harvey v. Wood, 5 Mad. Rep. 459. Duncan v. Lyon, 3 John. Ch. Rep. 351.)

In the case under consideration, however, even if Holbrook’s right of set-off depended upon the general provisions of the revised statutes on this subject, I think he has shown sufficient to authorize and require the equitable interference of this court to compel the receivers to adjust and liquidate the amount due to him from the insurance company under Ms policy, and to apply by way of set-off, so much of that amount as may be necessary to satisfy the last bond and mortgage executed by himself alone. It is a natural equity, where there are cross demands, that one debt should compensate the other, and that the balance alone should be paid by the party who owes the largest debt; and it is a rule of convenience merely which limits the legal offset to liquidated debts, or to those which are capable of liquidation by computation only. It would, therefore, in an ordinary case, be not only inequitable but unconscientious for an insolvent debtor to refuse to liquidate an honest debt due to one of his creditors, as to which there was in fact no doubt or dispute, for the sole purpose of depriving such creditor of the benefit of his legal right of set-off; and thus to enable the insolvent to collect a liquidated debt due to himself from such creditor, for the purpose of paying other creditors with the money thus collected. And that which would be unjust and unconscientious if done by the insolvent himself, certainly cannot be equitable and right when done by the officers of a court of equity who have succeeded to the rights and duties of the insolvent; especially if done, as- in this case> ^7 the palpable violation of a duty imposed upon them, as such officers, by the provisions of the statute under which they are appointed. The third section of the act of January, 1836, makes it the duty of the receivers as soon as they shall ascertain the amount of any claim against the corporation, to give a certificate thereof to the claimant. And as there was no reason to doubt, in this case, that Holbrook had in fact sustained a loss to the extent of the $6000 covered by the policy, it was not only inequitable, but was a neglect of a positive duty on the part of the receivers, to refuse to liquidate the amount due to him, as required by the statute, for the sole purpose of depriving him of the power to set-off the same against the debt due from him on his bond and mortgage; and thus to enable them to collect such bond and mortgage for the benefit of the general creditors of the insolvent company. If this claim had been adjusted by the receivers according to the directions of the statute, the sixty days allowed by the policy for the payment of the loss would have expired before Holbrook’s separate bond and mortgage fell due, and would therefore have been a good legal offset in any suit which might have been brought against him on that bond and mortgage.

Independent, however, of the general proivsions of the revised statutes relative to set-off, I think this was a case of mutual credits, which made it the duty of the receivers to allow the offset under certain special provisions of the revised statutes, which are made applicable to this case by the act of January, 1836, under which these receivers were appointed. The 36th section of the article of the revised statutes relative to the powers, duties and obligations of trustees and assignees of the estates of non-resident, absconding, insolvent or imprisoned debtors, (2 R. S. 47,) authorizes a set-off of cross demands, where mutual credits had been given, as well as where mutual debts existed, between the absent, insolvent, or absconding debtor and any other person -, and where the debt or claim of such other person is of such a nature as to entitle him to a dividend of the estate of the insolvent or absentee. This provision is made applicable to the receivers of an insolvent corporation, by the 42d section of the article of the revised statutes relative to proceedings against corporations in equity, (2 R. S. 464,) and by the 72d section of the article relative to the voluntary dissolution of incorporations. (Idem, 469.) The 42d section gives to the receiver appointed by this court, upon an adversary proceeding against the corporation, all the powers and authority conferred, and subjects him to all the obligations and duties imposed upon receivers appointed in case of the voluntary dissolution of a corporation. And by the 72d section, all the provisions of law in respect to trustees of insolvent debtors, the collection and preservation of the property of such debtors, &c. are declared to be applicable to receivers appointed upon such voluntary dissolution of a corporation. The 2d section of the act of January, 1836, for the more convenient adjustment of the affairs of certain insurance companies in the city of New-York rendered insolvent by the late fire in that city, also provides that the receivers appointed under that act shall be subject to all the obligations and duties imposed upon receivers under any law of this state. They are thus brought directly within this provision of the revised statutes relative to the offset of claims arising from mutual credits as well as mutual debts, between the trustees of an insolvent debtor and other persons. The right of set-off in this case, therefore, is the same as it would be in the case of an assignment under the insolvent act, which is more extensive, even in suits at law, than it would be under the general provisions of the revised statutes relative to set-off in ordinary cases, where the rule of convenience alone prevails, and where the parties may generally obtain a remedy for the recovery of their counter claims by cross suits in cases which are not provided for by the statute. The language of this section, in relation to set-off in the case of trustees of an insolvent debtor, is the same as that of the English bankrupt act; which has been repeatedly held not only to embrace mutual debts, but also all credits and transactions ex contractu, where the credit or contract must utimately terminate in a debt, although the debt had not been liquidated or become due and payable at the time of the bankruptcy; and it extends the right of set-off to every such debt or claim which the creditor of the bankrupt would have the right to prove and receive a general dividend for under the commission. Thus in the case of Graham and others v. Russell, (5 Maule & Selw. 498,) which was heard in the exchequer chamber before the twelve judges, under this provision of the bankrupt act in relation to mutual credits it was held that in a suit brought by the assignees of the bankrupt upon an open policy, against the underwriter, the latter might offset a debt due to him from the bankrupt arising out of a different transaction. That case was precisely like the present, except that the assignees were there suing for the recovery of an urn-liquidated demand under the policy and the defendant claimed the right to offset the liquidated debt, whereas in this case the liquidated demand belongs to the receivers, as the representatives of the estate of the bankrupt underwriters, and the unliquidated claim under the. policy belongs to the other party. The right of set-off, however, is the same, whether the unliquidated credit belongs to the plaintiff or the defendant in a suit at law.

Whether this case, therefore, be considered as coming under the general law of set-off, except for the improper and unconscientious refusal of the receivers to adjust the loss as it was their duty to do, or as coming within the more ex-.tended principle of the revised statutes relative to the adjustment of cross demands between the trustees of insolvent debtors and other persons, there cannot be any reasonable doubt that the amount of the last bond and mortgage, which was executed by the assured only, should be offset against the claim of Holbrook under the policy. The decision of the vice, chancellor against the right of Holbrook to offset a portion of his loss against the amount due from him on that bond and mortgage, was therefore erroneous and must be reversed. The receivers must adjust the loss under the policy, and cancel that bond and mortgage, upon receiving from Holbrook a written acknowledgment that the amount of the bond and mortgage, including interest thereon until the expiration of the sixty days from the time when the preliminary proofs were exhibited to the officers of the company, has been thus offset and allowed to him in the adjustment of his loss.

The claim of the appellants to offset the residue of the loss due upon the policy against the bond in which Ferme was jointly holden with the assured, does not come within either of the statutory provisions in relation to the right of set-off; and if the loss had been adjusted by the receivers according to the directions of the act of January, 1836, it could not have been offset in the suit subsequently brought upon the bond against Holbrook and Ferme jointly. The only way, therefore, in which an offset could be compelled, even if the receivers had done their duty in relation to the adjustment of the loss, would have been by an application to the equitable powers of this court, upon the ground that the loan was in fact made to Holbrook only, and that Ferme joined therein merely as his surety. If such was the real nature of the transaction, it would, in an ordinary case of insolvency, be a sufficient ground for the exercise of the equitable power of this court in granting relief beyond the strict letter of the statutes of set-off. But to entitle a party to such equitable relief in a case not provided for by the statute, he must either have an equity arising out of the contracts or dealings between the parties, from their connection with each other, or his natural equity to have one unconnected claim compensate or discharge another must be superior to any equitable claim which can be urged in favor of those for whose benefit his claim to an equitable offset is resisted. The natural equity to have mutual but unconnected demands between two parties who have been dealing with each other is, as a general rule, superior to the claim of any other creditor who has not dealt with the insolvent upon the faith of the specific fund against which the right of offset is claimed. In the case under consideration, however, as the petitioners had no right under either of the statutory provisions on this subject, to offset the loss which belonged to Holbrook alone against the bond upon which he and Ferine were jointly as well as severally holden to the company, there are some equitable considerations in favor of the general creditors of this insolvent company which render it doubtful whether this court should interfere in relation to this part of the appellant’s claim. The general creditors of the company, for whose benefit the receivers re-sist the claim of offset, are not in the situation of ordinary creditors of an insolvent debtor, who have dealt with him without any particular reference to the security of the debt or fund against which the offset is claimed. The charter of this company requires the capital stock, which is the security to which those who insure with the company must naturally look for their indemnity in the case of such a loss as this was, to be kept permanently invested on bond and mortgage. And I presume the loan of $4000, for which the bond and mortgage of 1833 was given Was a part of that capital stock, to which all those who insured with the company had an equal right to look for their indemnity. I have, therefore, though I confess with some doubt as to its correctness, arrived at the conclusion that the equitable claims of all the creditors of the company, who have suffered loss by the calamitous event which has deprived them of their property and rendered the company insolvent at the same time, to an equal share in the capital stock and funds of the company, is equal to the natural equity of having one unconnected demand satisfy or compensate another, in the absence of any statutory provision on the subject. So much of the decision of the vice chancellor as relates to the offset against the bond of Holbrook and Ferme must therefore be affirmed; and so much thereof as relates to the other bond and mortgage, and to the costs of opposing the petition} must be reversed. Neither party is to have costs as against the other, either upon the original application or upon this appeal. But as the receivers have acted for the benefit of the general creditors of the company, and probably under their directions, they will be permitted to retain their costs out of the fund in their hands: although they were clearly wrong in refusing to adjust the claim of Holbrook under the policy, for the purpose of depriving him of his legal right of set-off in relation to his own bond and mortgage. The proceedings are to be remitted to the vice chancellor, to the end that he may make such further order as may be necessary to carry into effect this decision.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Wendell vs. Lewis and others.
    1837. January 23.
    Upon the hearing of an appeal from the decree of a vice chancellor, no' other' evidence can be received or read than that which was read upon the hearing before the vice chancellor. Neither party, therefore, before the hearing of the appeal, will be permitted to open the order to close the proofs in the cause for the purpose of taking further testimony.
    If the decree of the vice chancellor is reversed, it seems.the chancellor may,in his discretion, allow the respondent to introduce new testimony as to facts discovered subsequently to the hearing before the vice chancellor,before he proceeds to make a final decree upon such appeal.-
    Where the vice chancellor has decreed that real estate in the possession of the appellant belongs to the respondent, the chancellor will not order a portion of such estate to be sold, upon the application of the appellant pending the appeal, to pay the taxes and assessments thereon, contrary to the wishes of the respondent, and while the appellant is receiving the rents and profits of the estate.
    The complainant in this Cause' was the purchase? of certain real estate in the city of Albany, under a judgment and execution against Stewart Lewis. And the object of this suit was to set aside several conveyances given on sales under pri- or judgments and executions, which the complainant alleged to be fraudulent as against him. The cause was heard upon pleadings and proofs, before the late vice chancellor of the fourth circuit. And he decreed the conveyances, under which the defendants claimed, to be fraudulent and void,- and that the complainant was entitled to the premises in controversy, subject to certain liens thereon in favor of some of the defendants for monies advanced to pay off prior incumbrances, &c. And a reference was made to a master to ascertain the amount of such liens, and of the rents and profits of the premises received by the defendants. From this decree Juliet Lewis and two of the other defendants appealed to the chancellor. And the case now came before him upon an application by the appellants to be per-niitted to take further testimony in the cause upon a point connected with the question of fraud as to one of the judgments under which they claimed; as to which .point they alleged that they neglected to take proof, previous to thé hearing before the vice chancellor, through mere inadvertence. The appellants also stated that the premises were subject to heavy. assessments, for improvements in that part of the city of Albany where the greater part of' the property was situated, and that some portions of the property had already been sold to pay such assessments. They therefore asked for an order to sell so miich of thé premises as might be necessaiy to discharge the taxes and assessments on the whole premises and to redeem the property which had already been sold. The appellants also alleged that they were females, principally dependant upon the property in controversy for their support, and that their liens thereon were not less than thirty thousand dollars ; so that in any event, they would be entitíed to a large-portion of the property, or of the money to be raised out of the same. They therefore asked for the sale of a reasonable proportion of the premises, for their support pending the litigation. - , . ..

      R. B. Bates & P. S. Henry, for the appellants.

      Levi H. Palmer, for the respondent.
   The Chancellor.

There is not any suEcient cause-shown for the-negléct to produce the proof in relation to the value of Stewart Lewis’ property, which would authorize the opening-of the order to close the proofs, in this stage of the cause, even if. the appellate court had jurisdiction to. rehear the case on new evidence which was not before .the vice chancellor. It appears, from the complainant’s depositions, that he examined witnesses as tozthe value of Stewart Lewis’ property at the time of giving the $80,000 judgment to his mother which is charged to be fraudulent. And if those witnesses did not state the value of the property correctly, the defendants should then have introduced other witnesses to prove its true, value. It would be very unsafe to permit parties thus to avail themselves of testimony which might appear to be in their favor in one view of the case, and to contradict it afterwards by the testimony of other witnesses, when, by the decision of the court, they found it might have an important bearing against them in another view. Another and conclusive answer to this part of the application is, that it is now settled by the highest judicial tribunal in the state, that upon an appeal from a vice, chancellor to the chancellor no other evidence can be received or read upon the hearing than that which was before the vice chancellor. While the case of Mitchell v. Lenox and others was pending before me upon an appeal from the vice chancellor of the first circuit, the respondents, upon a special application for that purpose, were permitted to prove two papers signed by the appellant, which had been discovered subsequent to the hearing before the vice chancellor, as exhibits de bene esse; the question as to their admissibility as evidence upon the appeal being reserved until the hearing. Those two exhibits, if admissible as evidence on the hearing of the appeal, were conclusive against the appellant upon the point on which the appeal was brought. When that case was finally heard before me, I intimated an opinion that this newly discovered evidence could not be read for the purpose of preventing a reversal of the decree of the vice chancellor, if that decree was erroneous upon the evidence which was before him; although the appellate court might not, perhaps, in such a case, consider itself bound, upon the reversal of the decree of the vice chancellor, to proceed and make a final decree in the cause upon the original evidence alone, when it was perfectly apparent that injustice must be done to the respondents by such a proceeding. And 1 suggested that where the newly discovered testimony was in favor of the respondent, the proper course probably would be to hear the appeal upon the original testimony; and if the decision of the court below was found to be erroneous and was reversed on that ground, to ask the appellate court, instead of proceeding to make a final decree, to remit the cause to the vice chancellor with permisssion to the respondents to apply to open the rule for closing the proofs, so that the newly discovered evidence could be introduced before a final decree was made; or, that after the reversal of the decree by the chancellor, the cause should be retained before him for a final decision therein, with a similar permission to the respondents to apply to open the. proofs and introduce the new testimony previous to such final decision. But as I came to the conclusion that the decree of the vice chancellor upon the" original testimony before him was not erroneous, it became unnecessary for me to decide the question whether such newly discovered evidence could be received upon the hearing of the' appeal, where both proceedings were in the same court but before different officers thereof. And whén the cause came before the court for the correction of errors, in December, 1835, on an appeal from my decision affirming the decree of the vice chancellor," the same question was raised and discussed there. That court, upon the.final decision of the cause, and after fully considering the question, adopted a resolution of which I have a ■ manuscript note: “ That on an appeal from a vice chancellor the cause is not before the chancellor in the nature of a re-hearing, but is an appeal strictly; and on such appeal no: other evidence or pleadings can be received than were before the vice chancellor.” This decision of the court of dernier resort disposes of that part of the present applicacation which relates to the introduction of new testimony to be used upon the hearing of the appeal.

The affidavit on the part of the complainant leaves it doubtful whether the respondents have any lien upon the premises in controversy which can entitle them to a support out of any part of the proceeds of the land if it should be sold. And it also appears that the applicants are in the receipt of between one and two thousand dollars yearly,: for the rent of a portion of the premises, which ought to be applied in the first place to pay taxes and assessments upon other portions of the property pending the litigation. While the decree of the vice chancellor remains unreversed, I must, take the complainant to be the legal as well as the equitable owner of the property, subject only to the payment of such liens thereon as the appellants may hereafter establish before the master upon the reference. It would therefore be contrary to every principle of justice to order his property to be sold, either for the support of the appellants or to pay assessments on the land, while they are wrongfully retaining the possession from him, and applying the rents and profits to their own use. And as both parties have an equal right to attend at the corporation sale and prevent the sacrifice of any more of the property than is necessary for the payment of the assessments and expenses, .and ample time is given for the redemption of what is already sold, there is no necessity which can justify the court in exercising the extraordinary power of ordering the property to be sold, to save it from being lost pending the litigation; especially in a case where the party who is presumptively entitled to the property under the decree of the vice chancellor is unwilling to consent to a sale.

The whole of the appellant’s petition must therefore be denied with costs.


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    New vs. New and Snyder.
    1837. January 23.
    Where a bill is filed against a lunatic or an habitual drunkard and his committee jointly, it is a matter of course to appoint the committee guardian ad litem, to appear and answer the bill for the lunatic or drunkard, if the committee has no interest in the controversy adverse to that of the person for whom he is committee. And an order for that purpose, made upon the ex parte application of the committee, is regular.
    Whether the complainant can in any case have the benefit of a discovery, by a personal answer on oath, from a drunkard or an infant ? Quoire.

    Jacob New, upon a commission issued out of this court, was found to be incapable of managing his own affairs by reason of habitual drunkenness, and a committee of his person and estate was appointed. The complainant after-wards filed his bill in this suit, against the drunkard and his committee, for the specific performance of a contract alleged to have been made by the drunkard previous to the issuing of the commission. The committee afterwards' applied to the chancellor, ex parte, and obtained an order appointing him guardian ad litem to appear and defend the suit for the drunkard, and to put in an answer for him, as well as for himself as-such committee.

      J. W. Edmonds, for the complainant,
    thereupon applied to set aside the order as irregular, on the ground that the complainants’ solicitor was entitled to notice of the application for such order; and he also claimed the right to a personal answer from the drunkard himself.

      J. Rhoades, in behalf of the committee,
    opposed the motion. He insisted that the ex parte order, appointing the committee the guardian ad litem to appear and . defend the suit for the drunkard, was regular. That the drunkard being incapable of conducting his own .affairs was incompetent to put in an answer in his own name; and that the committee was the proper person to answer and defend the suit for both.
   The Chancellor.

In the case of lunatics it appears to be well settled that they are to defend suits in equity by their committees; and that upon a joint bill filed against the lunatic and the committee of his estate, the latter, if he has no interest adverse to that of the lunatic, is, as a. matter of course, appointed guardian to appear and answer for him. (1 Coll. on Lun. 353. Shelf, on Lun. 424.) Where it appears from the complainant’s own bill that the t party proceeded against has been found to be a lunatic and that his estate is under the care of a committee, as by his own showing he is not entitled to a personal answer from the lunatic, he has no claim to notice of the application to appoint the guardian ad litem to appear and answer, any more than he' would have in the case of a defendant who is proceeded against as an infant. And as the statute puts ideots, lunatics, habitual drunkards and other persons of unsound mind upon the same footing, both as to the guardianship of their persons and the management of their estates, the same course of practice is equally applicable to all. The order in this case was therefore regularly entered.

As the complainant in the present case has expressly waived an answer on oath from the defendants, the question does notarise whethera complainant can,in any case, have the benefit of a discovery from the drunkard, in his rational and sober moments, as to facts within his own knowledge only. If any such discovery can be obtained either from an habitual drunkard or a minor, who are both considered as incapable of protecting their own rights and must therefore answer by their legal guardians, a very special case must be made by the complainant’s bill, showing the absolute necessity of such a discovery to prevent a failure of justice; and the same must be verified by his oath. But in an ordinary case, if the drunkard was permitted to put in his answer in person, especially without oath, and to admit away his rights, it would be useless for this or any other tribunal lo attempt to protect his property against his own improvidence.

Motion denied, with costs.


text:
    McIntyre and others vs. The Trustees of Union College and E. Nott.
    Where the complainant makes an officer of a corporation a party defendant for the purpose of obtaining a discovery as against the corporation, no relief either general or special should be prayed against such officer. And the prayer of the bill should be so framed as to show distinctly that the relief sought is intended to be confined to the corporation, and that no relief whatever is to be'asked as to the officer of the corporation, at the hearing, even as to costs.
    If the bill contains no prayer for either specific or general relief, it is considered as a hill of discovery merely, although the word decree is erroneously inserted in the prayer for process of subpeena. But if the bill prays any relief whatever against a defendant who is made a party for the purpose of discovery only, such prayer makes it a bill for relief as well as discovery as to such defendant, and authorises him to put in an answer containing e full defence.

      1837. January 23.
    An exception for impertinence will be overruled if the expunging of the maiter excepted to will leave the residue of the clause, which is not covered by the exception, either false or wholly unintelligible.
    The complainant cannot except to a part of the defendant’s answer, as impertinent, which refers to and explains the meaning of a schedule annexed to such answer, without also excepting to the schedule itself as impertinent.
    Separate exceptions to the same matter, the one for scandal and tlie other for impertinence, cannot be allowed; as nothing in a pleading can be considered as scandalous which is not also impertinent.
    An exception for insufficiency of the answer will not lie on account of a? mere neglect of the defendant to answer as to the correctness of a simpfe arithmetical proposition which is stated in the complainant’s bill.
    The bill in this cause was- filed by the complainants against the corporation of Union College, and against Eliphalet Nott, who is president of the faculty of the college and-also- a member of the board of trustees, in relation to various transactions- between the complainants, or some of them, and. the trustees of the college, and with Dr. Nott, relative to the-lotteries in which Yates and McIntyre'and-the college were interested. The complainants in their bill-charged," among other things, that' in 1826, Dr. Nott took an unjust and unconscientious advantage of their situation- and necessities, when they, and their sureties were in iminent danger of being ruined for want of means to meet their engagements with their creditors, to extort from them an agreement to allow an additional per centage to that which they had previously agreed to pay the college upon the purchase of the lotteries, on the amount of tickets sold, as the only terms on which he would consent to raise for them #100,000, which they then needed to relieve them-from their pecuniary difficulties. The complainants- also alleged that a settlement which was made about twx> years" and a half afterwards between A. McIntyre and Dr. Nott,upon the basis of that agreement, upon which settlement the latter received-notes of the firm of Yates & McIntyre to the amount of about #212,000 as the balance then due# was unauthorized by the other members of the firm and by the trustees of the college; and that McIntyre in the settlement of this account acted under a misapprehension of the facts and of his rights. The bill, after charging a variety of pretences on the part of the defendants# who-Were alleged to be confederating together and with others to injure the complainants, prayed an answer and discovery from Dr. Nott upon oath, and from the other defendants under their corporate seal, and that the said confederates might be decreed to assign and transfer, or deliver up to the complainants to be cancelled, the notes and securities in the bill mentioned and then held by the treasurer of the corporation or some other of the confederates, or for other specific relief; and also for general relief.
    To this bill the defendants put in their joint and several answer ; to which answer the complainants filed fifty exceptions for impertinence, and twenty for insufficiency. Four of the exceptions were submitted to by the defendants, and the others were referred to a master, who disallowed five of them, and reported that the other sixty-one were well taken. The complainants excepted to the master’s report as to the disallowance of the five, and the defendants as to the allowance of the others. The cause was heard before the chancellor upon the several exceptions to the report of the master.

      J. C. Spencer, for the complainants.

      M. T. Reynolds, for the defendants.
   The Chancellor.

The first thirty-three exceptions for impertinence all depend upon the same principle. These exceptions to the different parts of the joint answer of- the defendants, are exceptions to the same so far as it purports to be the individual answer of Dr. Nott as well as the answer of the other defendants. And the complainants by their exceptions seek to convert this part of the answer into an answer for the corporation only. In this they have proceeded upon the erroneous supposition that Dr. Nott had no interest in the defence of the suit, and for that reason was not entitled to insert any new matters of defence in his answer, but merely such facts and circumstances as were strictly responsive to the charges and allegations contained in the bill. It was not pretended upon the argument that the parts of the answer referred to in these exceptions were impertinent, and furnished no valid matters of defence, if this was a bill for relief against Dr. Nott as well as against the corporation. For this reason I have not examined this part of the answer for the purpose of determining the question whether the matters referred to in these thirty three exceptions, or any of them, could' have been considered as impertinent if exceptions thereto had been taken in a different form. If these matters furnished no valid defence as to the defendants against whom "relief was prayed in the bill, and could have no influence upon the decision of the court upon the question of costs, or as to the relief if any which might be given in the suit, they should have been excepted to in the usual form as impertinent; so that the whole of each clause or allegation might have been stricken out of the joint answer of .both defendants. The counsel for the complainants is clearly wrong in supposing that this is a bill for relief only against the corporation, and that as against Dr, Nott it is a mere bill of discovery against an officer of the corporation, in aid of the suit. Where an officer of the corporation is made a defendant for the purpose of'discovery merely, no relief either general or special should be prayed against him. And the prayer of the bill should be so framed that it will distinctly appear that all the relief sought is intended' to be confined to the other defendants, and that none will be asked against such officer at the hearing, even as to costs. . If there is either a general or a special prayer for relief which is applicable to the officer of the corporation as well as to other defendants, he is entitled to put in an answer containing a full defence. Otherwise he might be surprised at the hearing by an application for costs, or for some other relief against himself or his property, upon grounds which he might have fully obviated by his answer. It is settled in this court, although I find there are two very recent decisions the other way in England, (Ambury v. Jones, Young’s, Exch. Rep. 199, and James v. Herrioit, 6 Sim. Rep. 428,) that if a bill contains no prayer, in the usual form, either for specific or general relief, it may be considered as a bill of discovery merely, although the word decree is e rroneously inserted, in the prayer for process of subpoena, after the word direction; which latter word instead of the former should be inserted in the prayer of process upon a bill of discovery. (Schroeppel v. Redfield, 5 Paige's Rep. 245.) In the case now under consideration, however, it is not a mere mistake in the prayer for process, although such a mistake has actually occurred here. But there is also in this bill a distinct prayer, in the usual form, for both specific and general relief; part of which prayer for specific relief, and the whole of the prayer for general relief, are as applicable to Dr. Nott as to the corporation of Union College. And the bill itself also contains allegations and charges, which if sufficient to entitle the complainants to relief against the college, might also entitle them to relief, to some extent at least, against Dr. Nott personally. Most of the notes and securities received from Yates and McIntyre are stated to have been received by him. Whether they have all been delivered to the treasurer of the corporation, is not stated by the complainants: But as they charge, as a fact within their own knowledge and not upon information and belief merely, that Dr. Nott had no authority from the corporation to make the settlement with McIntyre, in 1828, and that the same has not been ratified or confirmed by the corporation as the act of their agent, the natural presumption would be, until otherwise explained, that Dr. Nott still had the notes taken from McIntyre on that occasion or some of them at least in his possession. And if he did not put in an answer and defend himself against this and other similar charges, the complainants under their specific prayer for relief against him as one of the confedarates, or under their general prayer, might perhaps claim a decree against him personally for the delivering up of these notes and for the payment of the costs of the suit. Under such circumstances it was not only his right but his duty to himself and his family to make a full defence in his answer. The decision of the master as to the first thirty-three exceptions for impertinence was therefore erroneous. Those exceptions must be overruled; and the defendants’ exceptions to the master’s report in this respect are allowed.

The answer states that the defendant Nott, by virtue of an authority conferred upon him as president of the college by a certain resolution of the trustees, immediately assumed, and during the whole period occupied by the drawing of the lottery under the act of April, 1822, and the several subsequent laws on that subject, with the full assent and approbation of the defendants, continued to exercise the superintendance and direction of all matters pertaining to the interests of the defendants in the lottery. And by the 35th exception for impertinence the complainants seek to strike out from the answer the allegation, or part of the sentence, from which it appears that Dr. Nott continued during the whole period there mentioned, to exercise such superintendence and direction with the assent and approbation of the trustees of Union College. This allegation appears to be material to the defence of Dr. Nott at least. And it is also responsive to the bill; as the complainants have charged that as to some of those matters he acted without authority and that his acts in that respect had never been ratified by the trustees. This exception to the answer should therefore have been overruled by the master.

Neither does the subject matter of the 36th exception appear to be impertinent. The complainants allege that they proceeded to the sale of the tickets and the drawing of the lotteries with due dilligence, and that they became embarrassed in consequence of having hastened the drawings, upon the urgent solicitations of Dr. Nott. And they urge that fact as a reason why the agreement of 1826 was unconscieniious and ought not to be enforced. In answer to this the defendants say that Yates and McIntyre did not proceed with due diligence, but that the drawings of the lotteries were intentionally delayed for the purpose of facilitating the introduction of foreign tickets into the New-York market through the medium of an office at Jersey city, kept by H. C. & A. J. Yates ; and the market on one occasion was left unsupplied for a month. And that when Dr. Nott remonstrated against the delay he was told by Henry Yates, who afterwards became a partner with the other complainants and is now seeking to set aside the agreement of 1826 and the subsequent settlement as unconseientious, that he had consented to the delay for the purpose of enabling Yates and McIntyre to get rid of the tickets in a class of the Pennsylvania Lottery in which they were engaged. The whole of this part of the answer is therefore responsive to the bill. And the declarations of H. Yates, though made before he became a partner in the firm, may now be received to contradict the charges which he makes in the bill, and to displace the equity which he and his co-complainants attempt to set up ; at least so far as concerns his own interest. The 36th exception, and also the 49th which relates to the introduction of such foreign tickets into the New-York market, through the medium of an office at Jersey city, as one of the reasons for the delay of the drawing of the New-York lotteries, should therefore have been overruled by the master. Another objection to the 49th exception is that if the words New-York market, which are embraced therein, are stricken out of the answer, a part of the same clause, which is not covered by the exception, will be rendered wholly unintelligible, or at least false; as the part of the answer which is left, if it refers to any market, will refer to the general market for the sale of lottery tickets, of course including Jersey city which appears to have been fully supplied, and will not be confined to the New-York market as it was intended to be in the answer of the defendants as now sworn to.

The part of the answer which is covered by the 37th exception contains the admission of J. B. Yates, in one of the verbal communications with Dr.Nott about the time of making the agreement of January, 1826, that the embarrassments under which Yates and McIntyre were then laboring, were produced by the unwarrantable speculations in which that firm had been engaged. This admission is pertinent, therefore, as it contradicts the allegation that those embarassments had arisen from the hastening of the drawing of the lotteries at the request of Dr. Nott. And as the complainants, by the interrogating part of the bill, had required the defendants to set forth whether any and what communication passed between the parties, about that time, for increasing the' amount which in their former agreement they had stipulated to pay, the defendants, in stating the communication which took place between J. B. Yates and Dr. Nott on that subject, had a right to insert any part of the communication which could have a hearing upon the questions in litigation in the cause. And as responsive to this interrogatory the matters covered by the 39th exception are also pertinent. That exception embraces the allegation in the answer, that upon the return to New-York of J. B. Yates after the interview between him and Dr. Nott at Schenectady, about the 4th of January, 1826, both he and his then partner expressed by letter their conviction of the ruin in which they must have been involved but for the timely interference of Dr. Nott in their behalf, and also their entire approbation of the written memorandum sent by Mm, embodying the result of that interview; and that true copies of so much of those letters as relates to the matters of the suit are contained in Schedule D. If this exception is allowed it destroys the reference to these letters; in effect striking out of the answer the whole of the letters in schedule D. The first of which letters is certainly one of the. communications called for by the bill; as it contains a direct reference to, the agreement which was executed a few days afterwards, states that they had looked over Dr. Nott’s memorandum and saw nothing wrong in it, and that they would write an agreement pursuant to its directions. This letter of the I7th of January, 1824, is also very material to the defence of the defendants; as it shows that the agreement of the 24th of January was deliberately entered into by Yates and McIntyre, and in accordance with a promise contained in that letter; at which time, as the letter shows, they had received the $100,0.00 in the notes of Mr. James, which Dr. Nott had procurred for them, and they then entertained no fears that their credit would not be fully sustained. And although previous to the actual execution of the agreement of the 24th of January, as appears by the answer, the disastrous result of the drawing of another lottery had again placed Yates and McIntyre in jeopardy, so that Dr. Nott was obliged to raise $40,000 more for them upon the pledge of his own and his wife’s property, this letter of the 17th of January is still material to the defence ; as it shows that they had deliberately made up their minds to execute such an agreement at a time when they did not suppose it would be necessary to save themselves or their friends from ruin, and when they were under no other moral duress than that which they arc now under, arising from their previous promises. The 37th and the 39th exceptions should therefore have been overruled by the master ; as an exception for impertinence must be disallowed if it cannot be sustained in to to.

The 38th exception covers an allegation, the substance of which is again repeated on the 26th page of the answer, where it is connected with other matters which render it material. And as it is not admissible to insert the same matter twice in a pleading, except in those cases where it may be necessary to qualify or explain something connected with it, this exception was properly allowed by the master.

The 40th exception embraces a part of the answer which refers to the letters in schedule L. and connects them with the answer. And if this exception is allowed the schedule which will remain will be rendered perfectly unintelligible. (Franklin v. Keeler, 4 Paige’s Rep. 382.) If the whole of the schedule, as well as that part of the body of the answer which explains what it means was impertinent, the whole should have been excepted to; and the exception must be overruled for that reason. And if any of the letters embraced in that schedule were material, which I think is the fact, then the exception should be disallowed on the ground that its allowance would destroy a material part of the answer. The master should therefore have overruled this exception.

The 41st and 42d exceptions were not well taken. The bill charges that Yates and McIntyre made payments, on account of the 6 31/1060 per cent, mentioned in the agreement of the 30th of May, 1826, which agreement was subsequently modified, to the amount of $192,199,74. And in the parts of the answer excepted to, the defendants admit the complainants paid that precise sum on that account; and show the manner in which it accrued. In the part of the answer covered by the first exception the defendants show that Dr. Nott received, as the proportion due on that account from the 2d of June, 1829 to the 1st of May, 1830, (after making a deduction on account of an alleged mistake) the sum of $75,557,56, And in the part covered by the last exception they show that he received, as the proportion due under the stipulation of July, 1830, .(one of the modifications'of the agreement as to the 6 fW per cent,) the sum of $116,642,-18, after making a deduction which was to have been paid in the Albany lottery lands ; which two sums make up the one hundred and ninety two thousand one hundred and ninety nine dollars and seventy four cents mentioned in. the bill as .paid on that account. These matters being responsive to the bill, the whole cannot be rejected as impertinent, although perhaps each clause of the answer excepted to' contained a few unnecessary words. The statement of the amount which Yates and McIntyre were bound to pay over, and the times and manner in which it accrued, was certainly pertinent as matters of defence. The 41st and 42d exceptions should for these reasons have been disallowed.

The 43d, 44th and 45th exceptions, all relate to a single paragraph in the answer. The first covering the whole paragraph, and the two last only a part thereof; one of the latter being for impertinence and the other for scandal. It is evident, therefore, that only one of these three exceptions could in any event be sustained. For if the first was allowed the whole paragraph must be stricken out of the answer, and the other two exceptions would fall of course. And if either of the two last was allowed, the other, which covered precisely the same matter, must fall for the same reason. Seperate exceptions to the same matter for scandal and also for impertinence cannot be taken; for nothing in a pleading can be considered as scandalous which is not also impertinent. In this case, however, independent of the matter of form, the master was right in overruling these exceptions ; as the matter excepted to is responsive to that part of the bill which denies that two of the board of managers appointed by the defendants rendered no service, or that the services of none of them were of any value except those of Henry Yates. And if responsive they are not impertinent. It also may be very material to the defence in this cause, that the' defendants should put the fact in issue, if the' cause should hereafter be heard on pleadings and proofs, that H. Yates, their agent and treasurer, entered into the copartnership with Yates &. M’Intyre, and continued to act in such capacity without the knowledge of the trustees of the college, so that the defendants may not be prejudiced by any act of his as such treasurer or agent; especially as it is alleged that many of the payments of the firm of which he was a member were made to him as treasurer of the corporation. (See Ramsden v. Cass, 2 Mad. Pr. 276.)

The matter of the 46th exception appears to be respon-sive to a distinct allegation in the bill. The complainants allege that the losses spoken of in the letter of the 4th of January, 1826, were losses which Yates & M’Intyre had sustained in consequence of being obliged to advance for prizes, &c. and by the failure of purchasers of tickets, to pay, &c. But as the letter, though dated on the 4th of January, was not actually written and sent by Yates & M'Tntyre until sometime afterwards, the answer, in response to this allegation in the bill, says the defendants are not informed save by the bill itself, whether the particular losses referred to in the letter and those mentioned in the bill are the same. But if they are the same, then they were referred to in the antedated letter as of a time when they did not exist; as they did not occur until after the fourth of January, 1826, the nominal date of the letter, and therefore could not have been the grounds upon which the application for assistance which was actually made on the fourth of January was urged, as stated in a previous part of the bill. That is the obvious meaning of this part of the answer, and if the fact there stated is true, that no such losses had been sustained on the 4th of January, it was very material to the defence that it should appear in the answer. This exception should therefore have been overruled. And the 47th exception should also have been overruled, because the part of the answer covered by that exception is responsive to the alie» gation that the terms of the letter of the 4th of January were dictated by Dr. Nott j and shows on the contrary that one of the complainants intentionally varied the terms of the letter from the verbal agreement, for the purpose of rendering it more favorable to Yates & M’Intyre.

The matter included in the 48th exception is responsive to that part of the bill relative to the hazards Dr. Nott had run to sustain Yates & M’Intyre and prevent their failure; and shows that he had been the endorser for considerable sums at different banks. As the complainants alleged that Dr. Nott received money enough from them, and had it on hand, to meet all responsibilities and indemnify himself, he had a right to show by his answer what his responsibilities were. That exception should therefore have been overruled.

The part of the answer covered by the 50th and last exception for impertinence, relates to a matter which took place since the commencement of this suit, and is therefore not strictly responsive to the allegation which is met and denied in the first part of the same paragraph of the answer. And as this part of the answer, if put in issue, might lead to the introduction of the report of the committee of the corporation, made pendente lite, as evidence of the facts alleged, this exception which would otherwise have been frivolous was properly allowed by the master. (Hawley v. Wolverton, 5 Paige’s Rep. 522.)

The 51st exception, which is for insufficiency, was not well taken and should have been overruled. It could not possibly be material to the litigation in this suit to know the precise sums which had been paid or which are still due to Holland and Horsfall, two of the board of managers, for their services. The complainants themselves have considered it impertinent to state how much the defendants agreed to pay to H. Yates the other manager; and have succeeded in getting the fact that he received $13,000 for his ser- • vices, stricken out of the answer. It is therefore absurd for them to insist upon knowing what has been paid or agreed to be paid to the other two. The answer admits the appointment of the board of managers; and shows that they performed valuable services. And that is all that can be material in the present suit.

The 52d exception to the answer was not well taken. There is no positive allegation in the bill that the agreement of January, 1826, was not assented to by the trustees by any valid corporate act; but the suggestion of the fact is introduced by way of recital merely, in support of a conclusion of law. And if the complainants wished an answer as to the truth of the facts thus assumed to exist, by the use of the word inasmuch, they should have founded an interrogatory upon this recital. (Mechanics’ Bank v. Levy, 3 Paige’s Rep. 606.) This exception, therefore, should have been overruled by the master.

The form of the 53d exception does not appear to reach any material allegation in the bill. If there is any charge, which is not answered, that a mistake has occurred in the agreement of January, 1826, the exception should be that the defendants have not admitted or denied the existence of the mistake. If the mistake is admitted, the manner in which it occurred is immaterial; and if denied, it will be impossible to state how it happened. This exception is not well taken, and it should have been disallowed.

As to the 54th exception, I have found it utterly impossible, even with the assistance of the able counsel who argued the cause, to form any idea upon what allegation or charge in the bill the exception, or the interrogatory to which it relates, are founded; or to ascertain how it can be material or proper for the defendants, in their answer, to furnish the adverse party with a sworn argument upon the construction of the public laws of the state. The answer explicitly denies the allegations contained in the bill, that Dr. Nott claimed the sum there mentioned as the true sum to which Union College and the other institutions were entitled ; and there was no person against whom any valid claim could then have been made. And the defendants, on the 5th and 6th pages of their answer, show, as far as under the circumstances it was possible for any one to state, what was the probable extent of their legal rights, in connection with the other institutions, under the act of April, 1822. So much of the interrogatory as could be material, and I think much more, is therefore answered; and the exception should have been disallowed by the master.

The 55th exception was fully answered, and therefore was properly overruled by the master. He should also have disallowed the 56th exception, as it calls upon the defendants to answer a mere arithmetical proposition ; as whether six and four added together will not make ten. A defendant can never be called upon to answer such an allegation. The master should also have disallowed the 57th exception, as it is wholly immaterial at whose instance the two and a quarter per cent received the particular name of the President’s fund,- The rights of the parties to this litigation would be precisely the same if, at the request of " another person, it had been called the Tutor’s fund. The 58th exception should also háve been disallowed; as the matter of this exception appears to be sufficiently answered upon the 7th, and 8th pages of the defendants’ answer. The 59th exception was not well taken, and should have been disallowed. The allegation in the bill is, that the letter of May, 1826, was written under the dictation of Dr. Nott, who furnished the terms and language; which in this allegation must be understood to mean the same thing. The denial that the letter was written under his dictation, is a substantial denial of the charge. If the complainants meant the court should understand that Dr. Nott drew the letter, and that they only signed it or copied it from his draft, they should have so stated the fact in their bill.

The 60th exception should also have been disallowed, The charge in the bill that the accounts stated wholly depart from and essentially vary the terms of the original and supplemental contracts, is a mixed question of law and fact, which it was impossible to answer in the terms of the .charge without attempting to swear to the legal construction of written instruments. But the answer shows what construction the defendants put upon the contracts, and that it was in conformity with such construction of those contracts, as modified by the parties in the subsequent contracts, that •the accounts were settled. And that according to that con-«traction they were entitled to the per centage upon the scheme selling price, and that the rebate of interest was to be allowed only where the per centum was paid, as is explicitly stated in the agreement of the 24th of January^ 1826 ; upon which principles the accounts were settled. I do not see how it is possible to present these questions any clearer by a further answer. And if the agreement of the 24th of January, 1826, is set aside, for any reason, it will be then for the court to decide whether this account can be opened for the purpose of charging the per centage upon the scheme price, instead of the scheme selling price of the tickets ; and calculating the rebate of interest as contended for by the complainants in their bill, instead of calculating it upon the principles of the contract of the 24th of January, 1826, upon which the accounts were settled in this respect. The answer at pages 23 and 39 shows that the difference between the scheme price and the scheme selling price, as the two different schemes or estimates of the tickets in the lottery are called in the answer, constitutes the difference between the $4,492,208 upon which the complainants contend the per centum should be computed, and the $4,948,596, upon which, as appears by the account itself, the settlement was made. And the casting of the interest from the date of each drawing also appears upon the face of the account.

The residue of the exceptions, ten in number, are excep lions to the answer of Dr. Nott as an individual, for insufficiency; and they cover precisely the same ground as the ten preceding exceptions to the answer of all the defendants for insufficiency. And they seem to have been put in upon the erroneous supposition that Dr. Nott was not a defendant in the suit, and therefore that the previous exceptions to the answer of the defendants did not reach him. But as I have before shown that he was not only nominally, but actually a defendant in the cause, the whole of these exceptions should have been overruled, on the ground that they were irregular or informal and were embraced in the previous exceptions, if the defendants’ counsel had not submitted to answer two or three of them. The others must be overruled.

The five exceptions to the master’s report taken by the complainants, and the 37th and 45th taken by the defendants, which object to the allowance of the 38th and 50th exceptions to the answer for impertinence, must be disallowed ; and the impertinent matter referred to in the two last mentioned exceptions must be expunged from the answer. Sixty-six exceptions having been taken to the report of the master, and the defendants having succeeded as to 64 of those exceptions, and the complainants only as to 2, the defendants must be allowed sixty-two sixty-sixths of their costs upon the exceptions to the report. And neither party is to have any costs on the reference to the master, j


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    Speiglemyer, administrator, &c. vs. Crawford.
    1837. January 23.
    A creditor by decree in chancery is entitled to the same relief upon a credit- or’s bill as a creditor by judgment at law. And he may file his bill to reach the equitable assets of the party who is decreed to be personally liable to pay the debt, upon the return of án execution against such party unsatisfied, although he has not exhausted his remedy against the surety of such party.
    A surety who is entitled to be subrogated to the rights and remedies of the „ creditor as against the principal debtor may, if he does not actually pay or discharge the debt, make a valid agreement with the creditor that the latter shall proceed by a creditor’s bill against the principal debtor to collect the debt from him, and thereby to relieve him as surety; although the arrangement between the creditor and surety is such that the suit upon the creditor’s bill is substantially for the benefit of the surety, and for his indemnity.
    A false assertion by the vendor as to the mere value of the property he is about to sell, without any misrepresentation or deception as to any other-matter of fact, is not a sufficient ground for relief to' the purchaser, either . at law or in equity. The law presumes that each party to a contract of sale relies upon his own judgment as to the Value of the property sold, where the facts on which the value of such property depends are equally known to both.
    This was an application to appoint a receiver of the| property and effects of the defendant, upon a creditor’s bill founded upon a decree of this court, after an execution had been issued upon such decree and the sheriff had returned such execution unsatisfied. From the petition and bill in this suit, upon which the application was founded, it appeared that the complainant’s intestate formerly had an equitable lien, for a debt, upon certain real estate ; which real estate the present defendant, C. Crawford, afterwards sold and conveyed to C. Tripp with warranty. Subsequent to such sale the complainant filed a bill in this court against Crawford and Tripp to obtain satisfaction of his lien, in wdiich bill the fact of such conveyance to Tripp was stated. In that suit both of the defendants appeared and put in their answers. And a decree was afterwards made against the defendants therein for the payment of the complainant’s debt and costs; to be levied of the property of the defendant C. Crawford, if the same could be thus collected, and if not, to be levied of the property of the defendant Tripp. After the return of the execution unsatisfied, the defendant Tripp made an arrangement with the complainant’s solicitor, by which the latter received the amount of the decree from Tripp as a special deposit, but not as a payment of the decree ; and this suit was therefore instituted for the purpose of collecting the debt and costs which remained unpaid, out of the equitable interests and choses in action of C. Crawford which could not be reached by the execution against her upon the original decree. The defendant in opposing the application read an affidavit, in which she stated that she received from Tripp, as a part of the consideration of the premises conveyed to him, a lot of land which he falsely and fraudulently represented as being more valuable than it really was ; and that she afterwards re-sold that lot to him at a loss of more than half the nominal amount at which she received the same from him originally.

      R. W. Peckham, for the complainant.
    J. Holmes, jr., for the defendant.
   The Chancellor.

The bill in this cause, as well as the decree in the original suit, in which the. defendant and Tripp 'wpre both parties, shows that C. Crawford is primarily liable for the payment of the debt and costs decreed to be paid to the complainant. And this court has already decided that a creditor by decree in chanóery is entitled to the same relief against the equitable interests' and other property of his debtor, upon the return of an execution unsatisfied, as a creditor by a judgment at law. (Clarkson v. DePeyster, 3 Paige’s Rep. 320.) Neither is there any thing in the defendant’s affidavit to show that she ever had any equity as against Tripp, which could protect her against his claim for indemnity upon her covenants of warranty, in the conveyance to him# even if she is not estopped by the decree in the original suit, awarding .execution against her property in the first instance, from insisting that she was not primarily liable for the payment of the whole of the complainant’s debt and costs.

The law at the present day appears to be well settled that a false assertion by the vendor, merely as to the value of the property which he is about to sell, or as to the amount of its future income# where there is neither a warranty as to value, nor a misrepresentation of any fact respecting the property which is not a mere matter of opinion, forms no substantive ground for relief either at law or in equity. A naked assertion by the vendor as to the present or future value of property does not imply knowledge, but must necessarily be understood by-the purchaser as a mere matter of judgment or opinion; and upon a subject as to which the purchaser is generally supposed to be as competent to form a correct judgment as the vendor. 1 .will not attempt to defend the morality of a false assertion either by the seller or the buyer, in relation to his real opinion as to the value of property which is the subject of negotiation between them. It is sufficient to say the law presumes that each relies upon his own judgment and opinion as,to the value of property, rather than upon the opinion of the other party to the negotiation, where the facts upon which the value of the property depends are equally known to both. In the present case, the fact that Tripp had formerly offered to sell the Schoharie lot for S500, is a circumstance from which it might perhaps be inferred that he did not really believe it was worth the sum of $800; which he said was its actual value, when he sold it to the defendant at that price in part payment of the land purchased from her. But as the offer of the lot to another at a less price could not alter or diminish the intrinsic value of the property, and as no inquiry was made of him on the subject, he was not legally bound to disclose the fact of such offer. Tripp, therefore, stands in the situation of a mere surety for the defendant for the payment of the complainant’s debt and costs in the original suit in this court; and if he had paid the decree, he would, in equity, have been entitled to an assignment of all the rights and remedies of the complainant, to compel payment and satisfaction of the debt and costs by the defendant as the principal debtor. He would also, in that case, have been permitted to file a creditor’s bill against the defendant in his own name, founded on such original decree, to obtain satisfaction out of her property which could not be reached by the execution on such decree. (Dowbiggin v. Brown, Young’s Ex’c. Rep. 111. Cuyler v. Ensworth, in Chan. 5th April, 1836, ante, p. 32.) He was, therefore, authorized to make the arrangement which he did, that the complainant should proceed in the present suit to collect the amount, if possible, out of the estate of the principal debtor. And as the original decree awarded execution in the first instance against the seperate property of the principal debtor, it was not necessary that the complainant should have exhausted his remedy against the surety also, before he proceeded by a creditor’s bill against her alone.

The usual order for the appointment of a receiver must therefore be entered.-


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    Gibbs vs. Mennard.
    1837. January 23.
    Where the defendant, who was a resident of Cape Breton, as the master of a" merchant vessel, executed a bond atTurksIsland in the penalty of £1000, with the complainant as his surety, conditioned that the vessel of which he was master should not, upon her departure from the Bahama Islands, carry out of the government thereof any slave or servant without leave of the owner or master, and upon the sailing of the vessel a slave, who had concealed himself without the knowledge of the defendant, was thus transported from Turks Island to New-Yorle, whereupon a bill was filed against the defendant, to compel him to indemnify the complainant as his surety in the bond, and for a ne exeat; Held, that the complainant was not entitled to a ne exeat until he had been actually sued, and a judgment had been recovered against him upon the bond, as such surety for the defendant.
    In an ordinary case of suretyship for a debt which is justly due, if the principal debtor neglects to pay it at the time stipulated in the contract, the surety may file a bill against such debtor and the creditor, to compel the former to pay the debt and the latter to receive it, and thus to relievo the surety from further liability. But this principle of equity is not applicable to the case of a surety in a bond to the government, where a breach of the condition is a forfeiture of the whole penalty of the bond; as the court of chancery will not lend its aid to enforce a forfeiture or penalty against the principal in the bond, before the surety lias become absolutely fixed with the payment of the penalty by the recovery of a judgment against him as such surety.
    This was an appeal from an order of the vice chancellor of the first circuit discharging a ne exeat. The complainant’s bill stated that the brig Felix, of which the defendant was master, was at Turks Island in May, 1835, and while there a bond was executed to the king, by the defendant as principal and the complainant as surety, in the penalty of £1000, currency of the Bahama Islands, conditioned that the brig Felix should not at her departure carry out of that government any servant or slave without leave of the master or owner; that when the brig sailed she had on board and brought with her to New-York a slave or servant without leave of his master or owner, and that by reason of the premises the bond became forfeited and the complainant, as surety for" the defendant, became liable to pay the penalty of the bond, which is equal to $2500, U. S. currency. The bill also charged that the defendant was about to depart from this state to his residence at Cape Breton. The bill was not sworn to by the complainant; but his brother, as his agent or attorney, annexed thereto an affidavit, in which he swore that he saw the slave, or servant, whom he knew to belong to the estate of R. Smith at Turks Island, on board the brig at New-York; that the defendant admitted he had been brought from that island without leave of his master or owner ; and that the defendant was about to sail from New-York to Cape Breton, where he resided. The agent also swore that the complainant was then at Turks Island, and that from the information received from him and from the defendant he. believed all the allegations in the bill were true. Upon the motion the defendant produced his own affidavit, and the affidavits of several other persons who came with him in the brig, from which it appeared that the colored man secreted himself on board before the brig sailed, and was not discovered-by the defendant until it was too late for him to turn back; and that upon his arrival at New-York, the defendant endeavored to send him back, and had engaged a passage for him in another vessel, when he was taken from on board the brig by order of the civil authority and placed beyond the defendant’s control.
    E. Paine, for the complainant.

      F. B. Gutting, for the defendant.
   The Chancellor.

From the facts which are stated in the bill, and in the affidavits in this case, independent of the denial of the defendant in his answer that the complainant ever signed the bond as his surety either by his consent or with his knowledge, which I lay entirely out of view, as it appears to be doubtful whether the answer was regularly before the vice chancellor on the motion, I think the defendant was properly discharged from custody on the ne exeat; and the bond given to the sheriff should also have been delivered up and cancelled.

In an ordinary case of suretyship for the payment of a debt, the surety, after the debt has become due, may institute a suit in equity against the principal debtor and the creditor, for the purpose of compelling the former to pay the debt and the latter to receive it, and thus to relieve the surety from further responsibility. (Warner v. Beardsley, 8 Wend. Rep. 199. King v. Baldwin, 2 John. Ch. Rep. 561. 17 John. Rep. 384, S. C.) In the case of Sealy v. Laird, (3 Swans. 368,) referred to by the appellant’s counsel on the argument, where Lord Alvanley, upon an ex parte hearing, and after much hesitation, allowed a ne exeat, the surety had actually been sued for the debt which the principal was in equity bound to pay, and a judgment had been recovered against him therefor. And I am not aware of any case which has gone farther than that, in giving equitable bail to the surety in a suit against the principal debtor.

In the case under consideration the bond is in the nature of a penalty or forfeiture. And if the condition thereof is broken, the government, or sovereign, to whom it is given may at law recover the whole $2500 as a stipulated forfeiture, and without reference to the actual injury sustained by the master or owner of the colored man who escaped from servitude on board the brig. (Ray v. The Duke of Beaufort, 2 Atk. Rep. 194. Benson v. Gibson, 3 Idem, 396. The United States v. Hatch and Barstow, 1 Paine’s C. C. Rep. 336.) And it would be contrary to the settled principles of this court to interfere actively, either in behalf of a surety or .otherwise, to compel a party to pay a forfeiture or penalty before it had been legally ascertained that either the defendant of his surety would or could be compelled to pay such penalty. Under the circumstances of this case it is at least doubtful, notwithstanding the opinion of the agent >yho has sworn to his belief of the truth of the allegations contained in the bill, whether either of the parties to this suit are legally liable for the payment of the bond. Without knowing, however, the precise terms of the colonial law under which the bond was taken, it is impossible to form a correct opinion on that question. And it is not pretended in this case that the complainant’s agent had any other knowledge of the terms of that law than what might be inferred from the condition of the bond. But whatever may be the legal rights of the obligee, if this colored man escaped on board of the brig without any fault on the part of the .master or of those under his control, and the defendant attempted, in good faith, to restore the slave to his master but was prevented by the interference of the civil authorities of this country, to which the defendant did not belong, I cannot believe it probable that the government of the Bahama Islands, or any other civilized government, ever would enforce this penalty against one of its own citizens who stands in the situation of an innocent surety. If the bond is forfeited at law, probably no suit in equity could be instituted by the surety at Turks Island to be relieved against the penalty. But the governor and his council, who constitute the court of chancery for the Bahamas, would undoubtedly, in another capacity, remit the forfeiture upon the facts disclosed here. At least I may safely say that the court of chancery there, which possesses the ordinary jurisdiction and is governed by the general principles which are applicable to the court of chancery in the mother country, would not grant a tie exeat insulis, or sustain a bill in equity against this defendant to compel him to pay this penalty, before any proceedings had been instituted against the surety for the recovery thereof. And as these parties, from their residence, appear to be both British subjects, and the defendant was on the point of departure for his own domicil at Cape Breton when this bill was filed, the complainant could not reasonably call upon this court for the exercise of its extraordinary jurisdiction to enforce the payment of the penalty or forfeiture, when it is very evident that no such relief would have been granted to him by any of the courts in his own country.

The order appealed from must therefore be affirmed, with costs.