text:
    Densmore Oil Company versus Densmore et al.

    1. Any persons who own property of any kind may form an association with others and sell it at any price, without regard to the original cost, if there be no fraudulent misrepresentation.
    2. The vendors are not bound to disclose the profit which they may realize.
    3. The vendors would not be agents or trustees in their original purchase, and there would be no confidential relation which would affect them with a trust.
    4. Like other cases of vendor and vendee, they deal at arm’s length; their partners are in no better position than strangers.
    5. From the time persons form or begin to start such association, they stand in a confidential relation to each other, and to all others who may become members, and none of them can purchase property for the purpose of the association and sell it at an advance, without a full disclosure of all the facts.
    6. Such persons must account to the company for the profits.
    7. The same principle is in the law of partnership.
    8. Within the scope of the partnership, each partner is agent of the others, and cannot divest himself of that character without their knowledge and consent.
    9. The Act of July 18th 1863 (Mining Companies) does not require that the corporators should be subscribers to stock.
    10. They need not have an interest in the company; they are mere instruments of the law for organization.
    11. McElhenny v. Hubert Oil Co., 11 P. F. Smith 188, Simons v. Vulcan Oil Co., Id. 202, recognised.
    January 4th 1870.
    Before Thompson, C. J., Read and Sharswood, JJ. Agnew, J., at Nisi Prius.
    Appeal from Nisi Prius. In Equity: No. 21, to January Term 1866.
    On the 14th of November 1865 the Densmore Oil Company filed a bill against Amos Densmore, Emmett Densmore, Jonathan Watson, Clinton Roudebush, Adolph Hugel, Elisha D. Whitney, Francis C. Lawrence and Ira Canfield — Lawrence and Emmett Densmore were not served.
    The bill set out as follows, viz.:—
    1. The plaintiffs are a corporation under the act relating to corporations for mechanical, &c., purposes. * * *
    3. About March 1864 the defendants, Densmore, Watson, Roudebush and Canfield having acquired title to certain oil lands, &c., in Venango county and elsewhere, and believing that they could acquire rights to others, visited Philadelphia to obtain and to bring about the organization of an oil company to buy their lands, &c., and induced the other defendants to become confederates with them, upon promise of a share of the profits.
    4. A paper was prepared by them to procure subscriptions for stock, and after a few influential names and their own were signed for a large number of shares, it was handed about for general subscription.
    5. When the paper was so handed, it was represented that the defendants who had subscribed were embarked in the enterprise, and that the prospects were flattering; that the sum necessary to purchase the lands, &c., would be $250,000, and subscriptions to that amount were required. * * *
    7. When certain names had been secured to the list, articles of association, dated March 31st 1864, preparatory to forming a corporation, were signed — those who signed the articles acted as agents of all the subscribers for stock. At a meeting of the corporators, on the 21st of April 1864, the stock was divided into 50,000 shares of $10 each. The purchase from Amos and Emmett Densmore of certain oil land, &c. (specifically mentioned), for $250,000, was approved, and the president and directors were authorized to carry it into effect. And it was resolved that the capital stock should consist of the property authorized to be purchased with the improvements, they being valued at $500,000. The capital stock was directed to be issued free from further assessments. The corporators then elected directors and officers, and resolved that “ the certificates be issued in favor of the original corporators, as they may be entitled to the same, or to such parties as may appear to be entitled by allotment or subdivision of the said stock under the original corporators.” At a meeting of the directors, on the 22d of April 1864, Lawrence, one of the defendants and secretary of the company being present, a certificate required by the Act of Assembly was approved, sworn to and ordered to be filed with the auditor-general, &c. The certificate set forth the capital as $500,000, divided into shares of $10 each, and that $5 had been paid on each share. It was signed by Lawrence as treasurer. There was on the minutes a statement of the allotment of the stock, and certificates were directed to be issued in conformity thereto. The statement exhibited stockholders for 50,000 shares, and payments to the amount of $250,000. Amongst others, Amos Densmore, Roudebush, Watson, Whitney, Lawrence and Hugel appeared as holding 25,500 shares.
    8. At a meeting of the directors, May 3d, a deed from Amos and Emmett Densmore, dated April 25th 1864, was accepted, and at the same meeting Lawrence reported that he had paid the purchase-money.
    9. The certificate to the auditor-general that $5 had been paid on 50,000 shares was not true; it was untrue that Lawrence had paid the purchase-money.
    10. No money was paid by the Densmores, Watson, Roudebush, Whitney and Lawrence for the shares subscribed for by them.
    11. Densmores, Roudebush and Watson, the owners of the interests conveyed by the deed of April 25th 1864, were willing to take a sum much less than $250,000; that sum was fraudulently agreed amongst the defendants to be set up as the real price and that subscriptions, which, with their own, would be sufficient to make that sum, should be obtained — those subscriptions were to pay $122,500 in cash, while the defendants would not pay anything. Whitney, Lawrence and Hugel, without paying any money, or having any interest in the land, divided amongst themselves $32,500.
    12. At the date of the deed several of the properties conveyed by it did not belong to the Densmores, Watson, Canfield and Roudebush, the grantors;' they had given small sums for the properties which they did own; they had no right to make a profit at the expense of the other stockholders, and were bound to disclose all the circumstances. The Densmores, Watson and Roudebush, as corporators, acted as the agents for all the subscribers and represented them as corporators. As such agents, they fraudulently bought for themselves both the rights they had acquired and those they expected to acquire, and charged a sum sufficient to cover what they had paid and an enormous profit to themselves.
    The prayers were—
    1. For an account of the profits, &c.
    2. -For payment to the plaintiffs of $5 for each of the 25,500 shares.
    3. General relief.
    The Articles of Association and receipt were as follows:
    “ Know all men by these presents, that we, Francis C. Law- - rence, Jonathan Watson, Ira Canfield, Amos Densmore, Richard Levick, Adolph Hugel, Clinton Roudebush, and Robert Smith, associate ourselves together under the articles of agreement made and entered into under the provisions of an Act of the 18th day of July, A. D., 1863, entitled an Act relating to corporations for mechanical, &c., purposes, in order that we may be and remain a body corporate, under the name and style of the ‘ Densmore Oil Company,’ for the purpose of mining for oil, and manufacturing, preparing and transporting the same to market, and of enjoying all the rights and privileges conferred by the said Act of Assembly.
    “ It is further agreed that the mining and manufacturing business of the said company shall be carried on on certain tracts or leases of land situated along Oil Creek, Venango county, and that the business of the said company shall be transacted at the office of the said company, in the city of Philadelphia, where the corporate meetings shall be held. That the capital stock of the said company shall be $500,000, to be divided into shares at the first meeting of the said company, to be held on Thursday the 21st day of April, A. D., 1864, &c., for the purpose of organizing the same under the provisions of the aforesaid Act of Assembly, dividing the capital stock into shares, adopting by-laws for the regulation of the business of the corporation, to assess upon each share of stock such sum of money as the corporation may deem proper, &c.
    “ Witness our hands and seals this 31st day of March, A. D., 1864.”
    Signed by the persons named in the articles.
    “Received of Francis C. Lawrence, Treasurer of Densmore Oil Company, two hundred and fifty thousand dollars in full, of consideration of sale of oil rights and interests in real estate, in pursuance of contract of said company with Amos and Emmett Densmore. Amos Densmore.”
    The Densmores and Roudebush, three of the defendants, answered to paragraphs—
    3. In March 1864, the above defendants and Canfield owned the oil lands, &c., some had been so owned for more than three years, and the remainder for one year or more; no part had been purchased for the purpose of forming an oil company or disposing of it to an oil company. Amos Densmore offered to sell this property to persons in Philadelphia, amongst whom were Lawrence and Hugel, and afterwards Watson. As a result of negotiations it was determined to form a stock company based on the lands, &c., at a valuation of $250,000, the capital to be divided into 50,000 shares at $5 per share; Lawrence, Hugel and Watson were to manage the details of forming the company, perform the labor and superintend the formation. The Densmore Oil Company was accordingly formed with 50,000 shares at $10, each with $5 per share, paid in by the said properties; it was agreed by the Dens-mores and Hugel, Lawrence and Watson, that the Densmores should sell to the oil company the lands, &c., for $250,000 — this contract was afterwards consummated by payment of the purchase-money and transfer of the property to the company. Before this time, before the execution of the agreement and before the formation of the company, it was stipulated that the Densmores, Roudebush and Canfield should receive $122,500 in cash, and 16,000 shares of stock, and that Whitney, Lawrence, Hugel and Watson should receive 9500 shares.
    After the articles of association and before the final organizat’ion, 24,500 shares of stock had been sold to other persons by Lawrence, Hugel and Watson without any participation by these defendants. Lawrence afterwards paid $122,500 to Amos Dens-more, who after the organization received 16,000 shares of stock. The valuation of the property was reasonable; a short time after-wards $400,000 could have been got for it; these defendants had expended $100,000 in developing it, and in the machinery; the yield per day at the time was eighty barrels, worth $5 per barrel. There was no fraud nor concealment of facts.
    7. In executing the articles of association these defendants acted for themselves as corporators and not as agents for any subscribers to stock.
    9. The certificate to the auditor-general was true. The object was not to form a company with a money capital, but one w'ith the lands, oil interests, &c., referred to as the capital, at a valuation of $250,000 — this was understood by all who became interested; shortly after the organization the stock sold at $15 per share.
    10 and 11. There was no secret agreement between the parties named in these paragraphs; the sale was for $250,000, just in the manner that sum was paid.
    12. These defendants and Canfield, at the time named in this paragraph, were owners of all the property conveyed to the company. Watson had no actual interest in any of it, but held the legal title merely, of some portions. There was no fraudulent profit or fraud of any kind, neither these defendants nor Watson, as agents for the stockholders, bought any rights and charged their principals as alleged in this paragraph : the persons mentioned as subscribers never claimed or were entitled to take part in the organization, they being purchasers only, under a contract to deliver stock to them when issued.
    Watson, Hugel and Whitney each filed a separate answer, covering about the same ground as-the answer of the other defendants. They especially averred that they had no interest in the lands, &c.; that before any association was formed, they had been employed by the other defendants, who owned the land?, to dispose of them; that it was finally agreed that they should be sold for $250,000 to an association to be formed, the terms being that detailed in the answer of the other defendants.
    A replication was filed and an examiner appointed.
    The plaintiffs examined Amos Densmore, one of the defendants. He testified that in February or March 1864, he came to Philadelphia to dispose of the oil lands, &c., saw Lawrence and Hugel, and offered to sell the property, not including that belonging to Roudebush and Canfield, for $150,000, if the amount of stock to be retained by Densmore, should a company be formed, could be agreed upon. Afterwards Canfield and Roudebush applied to Densmore to have their property sold with his, and he told Lawrence and Hugel that they could have the whole for $122,500 cash and 16,000 shares of stock in a company consisting of 50,000 shares. After some negotiation it was arranged that a company should be formed with the property at $250,000 as the capital— the owners of the property to have cash and stock as above stated. Densmore received the $122,500 from Lawrence, and the deed was executed and delivered; $250,000 was a low price for the property, as such property was then selling. The stock was to be disposed of at $5 per share. The vendors were to receive $122,500 in cash, the proceeds of sale of 24,500 shares, and 16,000 shares of stock. Lawrence, Hugel, Watson and Whitney were to receive the remaining 95Ó0 shares for their services in forming the company and disposing of the stock.
    The certificate to the auditor general, given in evidence, recited the articles of agreement as above given, that the capital stock amounted to $500,000, divided into 50,000 shares of $10 each, and that $5 per share had been paid in ; that the company had been organized on the 21st of April 1864; Aaron S. Lippincott elected president, James M. Crossman, Oswald Jackson, Joseph B. Altemus, John Potter and Richard Levick, directors, and Francis C. Lawrence, treasurer. The certificate was signed by all these officers, except Levick, and sworn to by them May 3d 1864. The' subscription list, as recorded on the company’s minutes, is that mentioned in the bill.
    By the defendants’ evidence, it appeared that none of the persons who took stock signed any subscription paper, but that they agreed verbally with Lawrence, Hugel, &c., generally with Lawrence, to take stock; it was sometimes placed on a list, sometimes noted on a slip of paper by Lawrence, &e. Lawrence and his associates did not subscribe for any stock, but the certificates, by the direction of Densmore, were issued directly to them. Whitney and Lawrence were partners as commission merchants; their reputation for getting up companies was very high. Oil properties of great value could not be disposed of in any other way than by forming a company; the Densmore properties were considered very productive and of very great value.
    There was much other evidence. What is here given and that stated in the opinion of the court will sufficiently exhibit the case.
    Mr. Justice Sharswood, at Nisi Prius, dismissed the bill with costs.
    The plaintiffs appealed, assigning the dismissal of the bill for error.

      E. S. Miller and Strong, for appellants.
    — One who is vendor cannot act as an agent for the purchaser : Gould v. Gould, 36 Barb. 271; Burton v. Wookey, 6 Maddock Ch. R. 367. Persons acting in a confidential character cannot purchase for themselves the property of those for whom they are acting: Sugden on Vendors, chap. 20, § 2; Conkey v. Bond, 34 Barb. 276; Remick v. Butterfield, 11 Foster (N. H.) 70; Fawcett v. Whitehouse, 1 Russ. & M. 132; Whithcote v. Lawrence, 3 Vesey 750; Michoud v. Girod, 4 Howard 555 : Ex parte Lacey, 6 Vesey 626; Reed v. Warren, 5 Paige Ch. R. 650; Aberdeen Railway Co. v. Blaikie, 1 Macqueen R. 461; Kimmell v. Geeting, 2 Grant 128; Hill v. Frazier, 10 Harris 320. A promoter of a company cannot buy land which will be needed by them and make profit on it: Bank v. Tyrrell, 5 Jurist N. S. 924; Hitchens v. Congreve, 4 Russ. 574. Nor buy shares in a company at reduced rate: Society v. Abbott, 2 Beav. 559; Beck v. Kantorowicz, 3 Kay & Johns. 230; Foss v. Harbottle, 2 Hare 488; Frazer v. Jones, 5 Id. 475; Gaskell v. Chambers, 26 Beav. 360 ; McElhenny v. Hubert Oil Co., 11 P. F. Smith 188; Simons v. Vulcan Oil Co., Id. 202. It would not be equitable to rescind the contract, for this would destroy the company; relief therefore will be given in some other form: Lewin on Trusts 468; Bradley v. Bosley, 1 Barb. Ch. R. 125 ; Jones v. Shackleford, 2 Bibb 412; Fisher v. Kay, Id. 434; Woodcock v. Bennett, 1 Cowen 711.
    January 10th 1870,

      O. M. Husbands and B. H Brewster (with whom was W. L. Hirst), for appellees.
    — The owners not having purchased the property for the use of the company, could sell for such price as they could get: Bank of London v. Tyrrell, 5 Jurist (N. S.) 927; The Great Luxembourg Railway Co. v. Magnay, 25 Beav. 586; Foss v. Harbottle, 2 Hare 489; Lindley on Partnership 481.
   The opinion of the court was delivered,

by Sharswood, J.

— There are two principles applicable to all partnerships or associations for a common purpose of trade or business, which appear to be well settled on reason and authority.

The first is, that any man or number of men, who are the. owners of any kind of property, real of personal, may form a partnership or association with others, and sell that property to the association at any price which may be agreed upon between them, no matter what it may have originally cost, provided there be no fraudulent misrepresentation made by the vendors to their associates. They are not bound to, disclose the profit which they may realize by the transaction. They were in no sense agents or trustees in the original purchase, and it follows, that there is no confidential relation between the parties, which affects them with any trust. It is like any other case of vendor and vendee'. They deal at arms length. Their partners are in no better position than strangers. They must exercise their own judgment as to the value of what they buy. As it is succinctly and well stated in Foss v. Harbottle, 2 Hare 489, “ A party may have a clear right to say, I begin the transaction at this time. I have purchased land, no matter how or from whom, or at what price. I am willing to sell it at a certain price for a given purpose.” This principle was recognised and applied by this court in the recent case of McElhenny’s Administrators v. The Hubert Oil Co., decided May 11th 1869 (11 P. E. Smith 188). “It nowhere appears,” said the present Chief Justice, “that McElhenny, the purchaser from Hubert, the original owner, did it as the agent of Messrs. Baird, Boyd & Co. and others, though he bought it to sell again, no doubt; he had a perfect right, therefore, to deal with them at arms’ length, as it seems he did.” And again: “If the property was not purchased by McElhenny for the use, and as agent for the company, hut for his own use, he might sell it at a profit, most assuredly. No subsequent purchasers from his vendees would have any right to call upon him to account for the profits made on his sale.” In that case, McElhenny, being the owner of property which had cost him only $4000, sold it to Baird, Boyd & Co., and others, who associated with him to form an oil company for $12,000, and it was decided that the company could not call him in equity, to account for the profit he had made.

The second principle is, that where persons form such an association, or begin or start the project of one, from that time they do stand in a confidential relation to each other, and to all others who may subsequently become members or subscribers, and it is not competent for any of them to purchase property for the purposes of such a company, and then sell it at an advance without a full disclosure of the facts. They must account to the company for the profit, because it legitimately is theirs. It is a familiar principle of the law of partnership, one partner cannot buy and sell to the partnership at a profit; nor if a partnership is in contemplation merely, can he purchase with a view to a future sale, without accounting for the profit. Within the scope of the partnership business, each associate is the general agent of the others, and he cannot divest himself of that character without their knowledge and consent. This is the principle of Hichens v. Congrove, 4 Russ. 562, Fawcett v. Whitehouse, 1 Russ. & M. 132, and the other cases which have been relied on by the appellants. It was recognised in McElhenny’s Admin’rs. v. The Hubert Oil Co., just cited; and also in Simons v. The Vulcan Oil Co., decided by this court, May 11th, 1869 (11 P. F. Smith 202). Both of these cases were complicated with evidence of actual misrepresentations as to the original cost of the property to the vendors. f In the opinion of the court in the last case, delivered by Thompson, C. J., it is said: “ If the defendants in fact, acted as the agents of the company in acquiring the property, they could not charge a profit as against their principal. Nor was their position any better if they assumed so to act without precedent authority, if their doings were accepted as the acts of agents by the association or company. If, in order to get up a company, they represented themselves as having acted for the association to be formed, and proposed to sell at the same prices they paid, and their purchases were taken on these representations, and stockholders invested in a reliance upon them, it would be a fraud on the company, and all those interested, to allow them to retain the large profits paid them by the company in ignorance of the true sums actually advanced.” The defendants in that case were subscribers with others, to the stock of a projected oil company, and after the plan had been formed, secured to themselves by contract, the refusal of the property which they afterwards sold to the company at a greatly advanced price.

The question now presented is, under which of these two principles is the present case to be classified. That will depend upon the facts, which, though the testimony is somewhat voluminous, may be briefly stated. Densmore, Roudebush and Canfield, three of the defendants, were the owners of certain lands, leases and rights, in Venango county, in the oil region. They had acquired them, so far as appears, with no idea of disposing of them, or of forming a company, but had spent over $100,000 in improving and developing them while they were owners. In March, 1864, they came to Philadelphia to ascertain whether they could be sold to advantage. They called upon Mr. Lawrence, another of the defendants, and consulted him as to the best mode of effecting this object. They stated that they were willing to accept $202,000, provided that sum could be procured clear of all expenses. That seemed impossible, unless by naming a price so much beyond that sum as would cover all such probable expenses and contingencies. The only mode by which so large an amount could be realized, was by the organization of a stock company, and to do that effectively persons must be employed as agents to sell or solicit subscription to the stock; and they must be gentlemen of character and influence, well acquainted with the subject, who could bring the land to the notice of those desirous of engaging in such an enterprise. The amount to be raised was large; the result uncertain. Several agents must be employed, and their compensation must be at a liberal rate. It was arranged that the price should be fixed at $250,000; that the stock should be 50,000 shares at $10 a share, and $5 to be paid in cash. Mr. Densmore and his associates agreed to take $122,500 in money, and the balance in stock, and that from this stock they would compensate the agents for their services. Mr. Densmore, who was examined as a witness on behalf of the appellants, testified: “ The $122,500 was the proceeds of the sale of 24,500 shares. That added to the 16,000 shares we were to get, amounted to 40,500 shares. The arrangement as I understood it was, that Messrs. Lawrence, Hugel, Watson, and perhaps parties unknown to me, were to receive the balance of the stock for their services in forming the company, and disposing of the stock.” The gentlemen named were accordingly engaged for this purpose. They procéeded and did sell the 24,500 shares in order to make the cash payment. There was no subscription paper. Mr. Lawrence and his associates did not subscribe for any stock. They did not appear, and were not held out as subscribers to those who made purchases from them. It is true, ¡that after the company was organized, the stock which they were to receive from Densmore, Roudebush and Canfield, as a compensation for their services, was issued to them directly — not to the vendors, and by them transferred. But this was done by a special order, as is satisfactorily explained in the testimony of S. B. Schneider: “I heard Mr. Densmore request Mr. Lawrence to have the Densmore stock, which he (Mr. Lawrence), Watson, IIugel and Whitney, were entitled to, issued direct to themselves, as he might not be here when the certificates would be ready.” It has not been, and cannot be controverted, that the stock which they received was part of that, which under the original terms of sale, Densmore, Roudebush and Canfield, were to have in payment of the purchase-money.

Now it can hardly be questioned, and indeed, apart from their alleged liability as confederates with the other defendants, it has not been questioned, that Densmore, Roudebush and Canfield, fall within the first principle hereinbefore stated. They had, for a considerable time, been the owners of the property, had acquired it with no reference to the formation of this or any other company, and had improved and developed it by a very large outlay of their own capital. They had a clear and undoubted right to put their own price upon it in the formation of a company, in which they were to be partners or associates. They did put upon it the price of $250,000, which it is admitted at the rates at which such property was then selling in the market, was a fair and reasonable, nay, even a low price. From my knowledge of mining properties in the oil region at the time,” said N. B. Browne, Esq., in his testimony, “ and especially of the leasehold and other interests conveyed to this company, I regarded their interests at the price named, $250,000, as cheaper than any that were offered in this market. Their actual productive value was very great; the leases were on what was regarded as the best territory on Oil Creek.” Had Messrs. Densmore, Roudebush and Canfield, employed no agents, but sold all the stock themselves, the transaction as to them could not have been impeached. They certainly stood in no confidential relation to the subscribers or purchasers of the stock in the future, when they acquired the property. This is necessary, as we have seen. A company or partnership must have been then formed or forming, or át least the project must have been started, in order that a.ny confidential relation should arise. How then is their position varied by the fact that they employed agents and agreed to compensate these agents by a transfer of a certain part of the stock they were to receive ? It is not easy to see. The whole $250,000, money and stock, when received, was their own absolute property: they could give or transfer it to whomsoever they pleased. If, as we have seen, they stood in no confidential relation to the company, no trust could attach to the price or any part of it in their hands. We may .discuss, therefore, the-case of Messrs. Densmore, Roudebush and Canfield, as clearly within the first principle to which we have before adverted.

But what confidential relation did the other defendants sustain to the purchasers of the stock or to the company ? It is a clear and unquestionable fact in the cause that they did not subscribe for a single share. Their contract was with Densmore, Roudebush and Canfield, to receive from them a part of their stock. Without an order from them, Mr. Lawrence and the others could not have compelled the company to issue any of it to them. If Densmore, Roudebush and Canfield, had received all the certificates to which they were entitled, and then réfused to transfer, the only remedy of Messrs. Lawrence and others, would have been against them to recover damages for violation of their contract. It is clearly proved that the paper among the exhibits headed “ Subscription List to the Densmore Oil Company,” was made out by Mr. Lawrence after the organization as a list of those to whom certificates of stock were to be issued. The names of Lawrence, Whitney, Watson, and Hugel, appeared on that list, but clearly only as appointees or assignees of Densmore, Roudebush, and Canfield. The same appointment or order might have been given by them to mere strangers.

It is strenuously contended, however, that if these defendants did not stand in a confidential relation to the purchasers of stock, then there was nobody who stood in that relation. But is there anything extraordinary in that ? Nine-tenths of the transactions and contracts of life are at arms’ length. If a man buys stock in the market of a broker, there is nobody who stands in any fiduciary relation to him. He acts on his own judgment He is bound to pay the broker the price agreed, and the broker is bound when paid to deliver him the stock. This was the only relation in which Lawrence, Whitney, Hugel and Watson stood to those who bought stock from them, and who according to all the testimony in the cause, so understood it. They supposed, as they state, that these gentlemen were to receive compensation for their services. What it was to be they did not inquire, because it was none of their business.

A strong effort, however, has been made, to show that these defendants, Lawrence, Whitney, Watson and Hugel, were purchasers from Densmore, Roudebush and Canfield, of an interest in the property, and sold it at an advance. But of this there is not a spark of evidence. It can hardly be pretended that Dens-more, Roudebush and Canfield, could have held them liable on a contract to purchase any interest in the land, or that the agents could in any event have sued them for not conveying to them such interest. If this was so, how can it be contended that they were vendors of any part of the property to the company ?

Densmore, Roudebush and Canfield were first and last the only vendors. They executed the deed, and very properly receipted for the whole of the purchase-money, for they were entitled to the whole of it. Nor is the fact that Lawrence, Whitney, Watson and Hugel, joined with Densmore, Roudebush and Canfield, as original corporators, and signed the articles for the organization of the company, under the Act of July 18th, 1863 (Pamph L. 1864, p. 1102), a fact of any signifieancy. That act does not require that the corporators should be subscribers to stock. They need have no interest whatever in the company to be formed. They are mere instruments of the law for purposes of preliminary organization. The moment that is accomplished, the amount required as capital paid in, the necessary certificate signed, and the charter granted, they are funeti officio. The corporation is thenceforth composed of the stockholders.

It is supposed that the cases of McElhenny’s Administrators v. The Hubert Oil Co., and Simons v. The Vulcan Oil Co., before referred to, ought to rule this cause. But an examination of the opinions in those cases will show that the facts upon which they were decided, were entirely different from those which appear on this record. The defendants there were subscribers to the stock; they became purchasers of the property after the project of a company was started, and moreover, falsely represented that they had purchased it at the same price at which they sold.

These facts, which were the grounds upon which those determinations were based, aré not, as we have seen, the facts of this case. It is not pretended that any false representation was made by any of these defendants in the sale of the stock. Some other points have been raised, which are, however, sufficiently disposed of in the opinion below.

Decree affirmed and appeal dismissed at the costs of the appellants.


source: Caselaw Access Project

author: by Read, J.

license: Public Domain

text:
    Korn versus Browne.
    1. The 7th section of Act of April 27th 1858 (Limitation of Ground-Rents) is retrospective.
    2. The lapse of twenty years without demand of payment 'is evidence from which a-jury may presume payment of arrears of ground-rent.
    <5. The retrospective bar of the act is constitutional.
    4. Without claim, demand, payment or acknowledgment of the existence of a ground-rent within twenty-one years, the Act of 1855 operates as an extinguishment, and the ground-rent is irrecoverable.
    January 4th 1870.
    Before Thompson, C. J., Read and Sharswood, JJ. Agnew, J., at Nisi Prius.
    Error to the Court of Common Pleas of Philadelphia: No. 417, to January Term 1869.
    This was an action of covenant for ground-rent, by John C. Browne against John Collins, with notice to Henry Korn, terretenant. The writ was issued April 14th 1868. The case was tried January 25th 1869 before Ludlow, J.
    On the 30th of January 1834, William P. Jones conveyed to John Collins a lot of ground, reserving a yearly ground-rent of $24, which ground-rent, on the 12th of October 1829, became vested in Anthony M. Zane. On the 7th of March 1840, Korn recovered a judgment against Zane, under which the ground-rent was sold to H. B. Pennoek, and the sheriff’s deed acknowledged December 11th 1841. It subsequently became vested 'in Thomas Pennington and was sold under a mortgage against him to the plaintiff. The sheriff’s deed was acknowledged January 4th 1868.
    The defendant gave in evidence a notice to plaintiff that on the trial he would be called on to prove the payment by defendant, or any one under him, of ground-rent within twenty-one years preceding the suit. He also gave in evidence a deed of) the ground-rent to himself from Zane, dated February 26th 1840. Also sale by the sheriff of a lot out of which the ground-rent issued; the deed having been acknowledged May 14th 1859, and conveyance by the sheriff’s .vendee to him April.19th 1861. There was no evidence of the payment of any ground-r#nt.
    The defendant asked the court to charge—
    3. “ If the jury find there has been no payment on this ground-rent to the plaintiff, or those under whom he claims, nor claim nor demand made therefor for twenty-one years preceding the commencement of this suit, and no declaration or acknowledgment made of the existence thereof by defendant or those under whom he claims for the like period, the verdict must be for the defendant.”
    The court answered: “ I do not think that the Act of 1855, upon which this point is based, applies to this case. I do not think the act is retrospective in its operation. And besides, there is no evidence in this case either of the collection or non-collection of the gronnd-rent, and therefore this point is declined.”
    January 10th 1870,
    The verdict was for the plaintiff for $12.50.
    On removal of the record to the Supreme Court by Korn, the terre-tenant, he assigned the answer of the court for error.

      J. M. Arundel, for plaintiff in error,
    referred to Act of April 27th 1855, § 7, Pamph. L. 369, Purd. 654, pl. 11. “In all cases where no payment, claim or demand shall have been made on account of' or for any ground-rent, annuity or other charge upon real estate for twenty-one years, or no declaration or acknowledgment of the existence thereof shall have been made within that period by the owner of the premises subject to said ground-rent, annuity or charge, a release or extinguishment thereof shall be presumed, and such ground-rent, annuity or charge .shall thereafter be irrecoverable: * * * Provided, that this section shall not go into effect until three years .from the passage of this act.” That construction of a statute which favors public convenience is to be adopted: Stormfeltz v. Turnpike Co., 1 Harris 560 ; Kerlin v. Bull, 1 Dall. 178. No statute of limitations or lapse of time discharges a ground-rent: St. Mary’s Church v. Miles, 1 Whart. 229. Legislation on kindred subjects may be resorted to in aid of the interpretation of a statute: Com. v. Penna. Ins. Co., 1 Harris 166. A retrospective law which does not impair the obligation of a contract is not unconstitutional: Underwood v. Lilly, 10 S. & R. 101; Tate v. Stooltzfoos, 16 Id. 37; Taggart v. McGinn, 2 Harris 157; Lycoming v. Union, 3 Id. 166; Journeay v. Gibson, 6 P. F. Smith 57. The onus of proving payment was on the plaintiff: Foulk v. Brown, 2 Watts 214.

      M. Arnold, Jr., for defendant in error.
    — The onus of proving payment was on the defendant: Foulk v. Brown, and Act of 1855, supra; Act of February 26th 1869, Pamph. L. 3. Laws should be construed to be retrospective, only when they are imperative: Taylor v. Mitchell, 7 P. F. Smith 211; Lingelfelter v. Ritchey, 8 Id. 485; Building Association v. Hecker, 3 Phila. Rep. 494; Neff’s Appeal, 9 Harris 243; Reiser v. Savings Fund, 3 Wright 137; Elliott v. Lyell, 3 Carr (Va.) 278; Helmere v. Shuter, 2 Shower 17 ; Gilmore v. Shooter, 2 Modern 310; Sturges v. Crowminshield, 4 Wheat. 122. There is no limitation as to ground-rents: St. Mary’s Church v. Miles, supra; Bronson v. Kinzie, 1 How. 319; Corporation v. Wallace, 3 Rawle 109; Webster v. Cooper, 14 How. 488.
   The opinion of the court was delivered,

by Read, J.

— But one question has been argued in this case, whether the 7th section of the Act of the 27th April 1855 has a retrospective as well as a prospective operation with regard to ground-rents.

“ After a lapse of twenty years, bonds and other specialties, merchants’ accounts, legacies, mortgages, judgments, and indeed all evidence of debt excepted out of the statute, are presumed to be paid. The court will not encourage the laches and indolence of parties, but will presume, after a great length of time, some compensation or release to have been made.” “ The rule of presumption, when traced to its foundation, is a rule of convenience and policy, the results of a necessary regard to the peace and security of society.”

The lapse of twenty years, without demand of payment, is evidence from which a jury may presume payment of the arrears of ground-rent. “Those only,” says Mr. Price, “who are accustomed to make or read briefs of title in Philadelphia, going back to the times of the first settlement, know how frequently occur ancient rent-charges and ground-rents, which the owners of the present day never heard of, and which generally have no doubt been honestly extinguished; while making this note the writer has such a single brief before him for an opinion, in which no less than three such charges occur as blemishes, grants or reservations more than a century ago, which no person living has any knowledge of.”

“ The law raises a legal presumption that a mortgage on which interest has not been paid for twenty years has been paid, and bars the recovery; and why should a ground-rent have a greater immunity against the presumption of extinguishment ?”

It will be observed that all these considerations apply most strongly to existing evils, where no payment, claim or demand had been made for thirty, forty, fifty or one hundred and fifty years, on account of or for any ground-rent, and it was a grievance which, after the lapse of three years, the 7th section of the Act of 1855 was intended to put an end to. The act was “ to amend certain defects of the law for the more just and safe transmission, and secure enjoyment of real and personal estate.”

It was a clear defect in the law, and the legislature applied the limitation of twenty-one years as to other real estate, to this species of real property, so that twenty-one years’ adverse possession bars all title to both land and ground-rent. The 7th section did not go into effect for three years, and gave ample time to all owners of ground-rents to make claims and demands for the same, so as to prevent the bar of the statute. This prospective commencement makes the retrospective bar not only reasonable but strictly-constitutional. In Smith v. Morrison, 22 Pick. 430, it was held, the revised statutes providing that all actions upon judgments shall be barred, unless commenced within six years next after the causes of action shall accrue — such provision was not unconstitutional as impairing the obligation of contracts, since, as it was enacted on the 4th of November 1835, and did not go into operation until the 1st of May 1836, the creditor had an opportunity in the interval to bring his action on any such judgment, recovered more than six years before the 1st of May 1836.

In Peirce v. Tobey, 5 Met. 172, the court say, “these statutes may well apply to contracts then in existence, allowing a reasonable time for creditors to institute their actions before the statutes took effect: Smith v. Morrison, 22 Pick. 430; Penniman v. Rotch, 3 Met. 216.” The case of Smith v. Morrison, 22 Pick. 430, is approved by Mr. Sedgwick, in his Treatise on Statutory and Constitutional Law, p. 691.

A similar idea in a different form is expressed in Ross v. Duval, 13 Pet. 64: “ It is a sound principle,” say the court, “ that where a statute of limitations prescribes the time within which suit shall be brought or an act done, and a part of the time has elapsed, effect may be given to the act; and the time yet to run being a reasonable part of the whole time, will be considered the limitation in the mind of the legislature in such cases.”

A pregnant example of a statute bar is to be found in the 6th section of the Act of 22d of April 1856, barring resulting trusts in five years, with its two years’ proviso.

We therefore think it was error in the learned judge, in his answer to the defendant’s 3d point, to say, “ I do not think that the Act of 1855, upon which this point is based, applies to this case.”

We think it did, and as the plaintiff did not prove any claim or demand or payment, or any declaration or acknowledgment of the existence of the ground-rent within twenty-one years, the statute presumption operated an extinguishment, and the ground-rent became irrecoverable.

Judgment reversed, and venire de novo awarded.


text:
    Stockton’s Appeal.
    1. Stockton leased of Conrad; the premises were sold to Twibill October 5th 1863, under a mortgage prior to the lease; the sheriff's deed was acknowledged March 7th 1864, and notice given to Stockton to quit; he left June 6th. Held, that Stockton was liable to Twibill for use and occupation from March 7tb.
    2. Twibill could have commenced ejectment March 7th, aDd recovered possession and mesne profits; or recovered possession and damages at the end of three months after notice, under the Landlord and Tenant Act.
    3. The Orphans’ Court is'a court of equity, it looks only to the justice of the demand, not to the form in which it is presented.
    4. The tort may be waived and assumpsit brought for the value of goods obtained by fraud. Per Bbewster, J.

      5. Remedy by assumpsit for use and occupation must be by agreement, which may be express or implied. Id.

    January 6th 1870.
    Before Thompson, C. J., Read and Sharswood, JJ. Agnew, J., at Nisi Prius.
    Appeal from the decree of the Orphans’ Court of Philadelphia: No. 28J, to January Term 1870.
    This appeal was from the decree of the Orphans’ Court distributing the estate of L. Coates Stockton, deceased, in the hands of his administrator, Anne F. Stockton. The only question controverted was the claim of George A. Twibill for the use and occupation by the decedent, of certain premises belonging to Twibill.
    The decedent had been tenant of George W. Conrad, of a storehouse in Philadelphia. On the 5th of October 1863 the premises had been sold by the sheriff under an execution against Conrad, under a mortgage prior to the lease, and were purchased by Twibill. The sheriff’s deed to Twibill was acknowledged March 7th 1864. Shortly afterwards, Twibill notified the decedent to quit, but he continued in possession until June 6th 1864, which appeared to have been three months after he received the notice. The administratrix having filed her account, showing in her hands a balance of $6596.98, it was referred to William M. Bull, Esq., as auditor for distribution. Twibill’s claim was for the use and occupation of the premises from the day of the sheriff’s sale, being eight months, at $100 per month. He made no claim in virtue of the lease from Conrad, under which the decedent held prior to the sheriff’s sale.
    The auditor in his report said: * * * “ A. purchaser at sheriff’s sale notifying a tenant to quit, dissolves the relation of landlord and tenant, and, by so doing, forfeits the right to rent which he can only claim in quality of landlord.
    “ The claimant here, as a purchaser at sheriff’s sale, being thus disqualified in consequence of his disaffirmance of the lease between the decedent and the defendant in the execution from recovering upon the contract — can he recover for use and occupa tion?
    “ To support a claim for the use and occupation, there must be an actual contract, either express or implied, and an action can be maintained only where the plaintiff treats the occupier as a tenant.

      “ In the claim before the auditor, there was no express contract, nor can any be implied, for any such inference is negatived by the fact that claimant disaffirmed the existence of any contract by the notice.” * * *
    The auditor disallowed the claim of Twibill, and distributed the fund between the widow and heirs.

      Twibill excepted to the report.
    The Orphans’ Court (Brewster, J.), after stating the facts, delivered the following opinion, July 3d 1869:— * * *
    “ Ordinarily it would seem to be strange that a man should be permitted to occupy land admitted to be the property of another without making the owner some compensation. It would also appear to be remarkable if the owner of the land could not — as can many other parties — waive the tort and sue in assumpsit. It must be conceded that Mr. Twibill could have maintained ejectment and recovered mesne profits. And if so, why should he not be permitted to abandon the fiction of force, and sue upon the implication to pay for what was taken, which would prevail against' him who spoiled the freehold of a load of coal or a bushel of apples? It is familiar law that the tort may be waived, and assumpsit brought for the value of goods obtained by fraud. * * * “ The difficulty of applying these principles to the action for use and occupation is, that this remedy seems to have been unknown to the common law. Assumpsit for use and occupation is the creature of the statute 2 Geo. 2, ch. 19, § 14, by which it is enacted that ‘ it shall and may be lawful to and for the landlord, where the agreement is not by deed, to recover a reasonable satisfaction for the lands * * * held * by the defendant in an action on the case for use and occupation.’
    “ As the Act of Parliament speaks of ‘ agreement not by deed,’ it has been held that assignees of a bankrupt tenant, entering upon their own motion, were not liable for the balance of the year’s rent: Naish v. Tatlock, 2 H. B. 320. Other cases to the same effect are cited by Gibson, C. J., in Mackey v. Robinson, 2 Jones 172.'
    “ From these authorities it would seem to be very clear that the statute only gives the remedy where there is an agreement. But this agreement need not be express — it may be implied. Thus use and occupation lies where the tenant holds over. And we are told that to support the action the plaintiff must prove—
    “ 1. An occupation by the defendant.

      “ 2. That such occupation was by permission; and that ‘ the action lies only where there is an actual contract, either express or implied.’

      “ As to this implication of contract, Mr. Stephens further tells us that ‘ the terms of the statute may seem in strictness only to include the cases in which the relation of landlord and tenant exists. But the courts have given a wide and liberal construction to it; and it now appears to be settled that wherever one party occupies by the permission of another, although no agreement for such occupation was in contemplation between the parties, the fact of the one having occupied by the sufferance of the other is sufficient to raise an implied assumpsit by the other to pay for his occupation.
    “ In the case before us the sheriff’s vendee could have brought his ejectment the day after he received his deed. He permitted the tenant to occupy the premises for three months. This, in the language of the authority quoted, raised an implied assumpsit by the tenant to pay for the occupation; and the exception is therefore sustained. * * *
    “ It will thus be seen that no one of the cases relied on by the accountant is at all • conclusive against this claim. On the con-_ trary, they all support Mr. Stephens’s statement, that mere permission or sufferance raises the implied assumpsit. Indeed it is difficult to understand why there should be a distinction between this and many other kindred cases familiar to the student. The law presumes a promise to pay the man who saws wood or does any work for another upon simple command; or indeed by bare permission. The person who uses the goods of another is supposed to have promised to pay what they are reasonably worth. What distinction should there be between land and merchandise, the title and circumstances being all admitted?” * *
    “We do not regard the provisions of the Act of June 16th 1836, Purd. 450, as. interfering with the claim, for the special remedy for the recovery of damages for detention of the premises can only be invoked where the ‘ person in possession * * * shall refuse * to comply with the notice to quit.’ Indeed, the complainant must swear that the person is in possession ‘ at the time of the application’ to the justice. That was impossible in this case, for the tenant had complied with the notice; and it is plain that the law referred to can never be invoked where the- occupier moves away the last day of the three months.
    “ It would seem to be contrary to all equity that he should not pay for what he has thus enjoyed. We do not, however, see that the claim can extend back prior to the acknowledgment of the deed. The act says that the purchaser may, {after the acknowledgment of the deed,’ give notice; and to that date his claim would seem to be limited by Bank v. Wise, 3 Watts 394; Braddee v. Wiley, 10 Id. 362; Borrell v. Dewart, 1 Wright 134; Hayden v. Patterson, 1 P. F. Smith 265.
    “ Subject to this modification of the claim, the exception is sustained.”
    The court decreed to the exceptant $300, with interest, from June 6th 1864.
    The administratrix appealed to the Supreme Court and assigned this decree for error.

      W. PC. Yerhes (with whom was T. P. Potts), for appellant.—
    Use and occupation cannot be maintained without proof of a contract express or implied: 3 Stephens N. P. 2718; Pott v. Lesher, 1 Yeates 576; Wharton v. Fitzgerald, 3 Dall. 503. The statute 11 George 2, c. 19, § 14, which gives this remedy, requires an agreement. Permission or sufferance is not sufficient: Stephens N. P. 2721; Henwood v. Cheeseman, 3 S. & R. 500. The right to the current rent is subject to the will of the purchaser at sheriff’s sale, by the Act of 1836: Menough’s Appeal, 5 W. & S. 433.
    January 10th 1870,
    The purchaser may affirm or disaffirm the lease, and he elects to do the latter by giving notice to quit: Bank v. Ege, 8 Watts 436; Hemphill v. Tevis, 4 W. & S. 535.
    No action for use and occupation can be maintained where possession has been treated as that of a trespasser: Birch v. Wright, 1 Term R. 378. Ejectment is the only remedy: Mackey v. Robinson, 2 Jones 172. He cited also Richey v. Hind, 6 Hammond 371; Stockett v. Watkins, 2 Gill & Johns. 326 ; Lloyd v. Hough, 1 How. 153.

      H. Flanders, for appellee, was stopped by the court.
   The opinion of the court was delivered,

by Read, J.

— L. Coates Stockton was in his lifetime tenant or lessee of the premises 216 Market Street, an'd during his occupancy, they were sold by the sheriff, under proceedings to foreclose a mortgage thereon, which was a lien prior in point of time, to the lease under which the decedent was tenant.

The property was sold by the sheriff on the 5th day of October 1863, purchased by George A. Twibill, and the sheriff’s deed to him was acknowledged on the 7th day of March 1864. The purchaser served a notice upon decedent to give up the possession within three months, and on the 6th of June 1864, the said decedent gave up possession of the premises.

Before the auditor, Mr. Twibill claimed $800, which was rejected, and upon exceptions filed to the report, the court sustained the same and decreed the payment of $300, with interest from June 6th 1864, to the said George A. Twibill for the use and occupation of the premises from the 7th March 1864.

From this decree this appeal is taken. On the 8th of March 1864, Twibill could have commenced ejectment in which he could have recovered the possession and the mesne profits. If the decedent had held over after the expiration of the three months, upon proceedings under the Act of Assembly, before two justices or aldermen he would have recovered the damages assessed by the jury. In the one case it would be called mesne profits, in the other damages. But the decedent stood neither ejectment, nor the summary proceeding before the aldermen, but quietly surrendered the possession.

For this occupation and use of the premises, the decedent was undoubtedly bound to make compensation, and whether this be called mesne profits, or damages, or could be recovered in an action on the case for use and occupation, is entirely immaterial, for the Orphans’ Court is a court of equity, and looks only to the justice of the demand, and not to the form in which it is presented. The decree reaches the real justice of the case, and it is therefore affirmed at the costs of the appellant.


author: by Thompson, C. J.

text:
    Rushton versus Rowe.
    . 1. Rushton gave a mortgage to George. Rowe issued a foreign attachment against George, and on scire facias recovered judgment against Rushton as garnishee. Held, that Rowe could maintain a scire facias on the mortgage in the name of George to Rowe’s use.
    2. The attachment was a seizure of the mortgage as belonging to George, and the law regarded it as an assignment to Rowe.
    3. The mortgage was to Lyman and John George, trading as “ L. A. George & Co.; ” the attachment was against Lyman George and William George, trading as L. A. George & Co.” Held, that the misnomer of one of the partners was unimportant, the name of the firm being accurate.
    4. Interest, after the service of the attachment, could under the circumstances, be recovered against the mortgagor.
    5. The rule that interest ceases from the service of the attachment, does not apply where the delay is produced by the litigiousness or unreasonable conduct of the garnishee.
    6. When the garnishee has been ready and willing to pay debt' and interest he is within the rule.
    7. A sure way for the garnishee to avoid liability for interest would be to pay the money into court.
    January 6tb 1870.
    Before Thompson, C. J., Read and SharsWOOD, JJ. A&new, J., at Nisi Prius.
    Error to the District Court of Philadelphia: No. 94, to July Term 1869.
    This was a scire facias sur mortgage, issued January 19th 1866, at the suit of Lyman A. George and John C. George, trading as L. A. George & Co., to the use of Edward Rowe, trading, &e., against Josiah Meredith, James Rushton and Margaret Rushton.
    On the 15th of July 1857, James Rushton and Margaret his wife, in consideration of one dollar and “ divers other causes and considerations,” conveyed to Josiah Meredith a tract of land in Philadelphia, in trust for the sole and separate use of the said Margaret Rushton for her life, and not to be liable for the debts of her present or any future husband; and after her death to such persons as she shall appoint by will and for want of a will to her children living at her death, &c., with proviso that the trustee may, with the consent of Mrs. Rushton, sell or mortgage the premises, &c.

      On the 23d of October 1857, Meredith, the trustee, and Rush-ton and his wife, executed a mortgage of the premises to Lyman A. George and John C. George, trading as L. A. George & Co., to secure the payment of $1124.43. On the 18th of January 1858, Edward Rowe issued a foreign attachment in case against ’“ Lyman A. George and William George, trading as L. A. George & Co.”; to this writ the sheriff returned, “attached as commanded and summoned James and Margaret Rushton as garnishees.” On the 9th of November 1858, judgment was entered against the defendants in the attachment for $1271.56. L. A. George and J. 0. George, who resided in Massachusetts, took the benefit of the insolvent laws of that state, and Charles Stoddard and Charles C. Burr were appointed their assignees in insolvency; on the 2d of February 1858, the Georges, in pursuance of the order of the insolvent court, executed an assignment to them of all their joint and separate estate, &c. On the 8th of October the Georges executed to Stoddard and Burr, as assignees in insolvency, a specific assignment of the mortgage, in which assignment the foregoing proceedings in insolvency were recited.
    On the 9th of November 1858, a scire facias, at the suit of Rowe, on his judgment in foreign attachment, was issued against “James Rushton and Margaret Rushton, garnishees of Lyman A. George and William George.” On the 30th of September 1865, rules were taken by the plaintiff in the foreign attachment and in the scire facias, to amend the record by substituting the name “John C. George” for “William George;” these rules were discharged October 7th 1865, and on the 13th there was a verdict for Rowe, and “ that there is in the hands of the garnishees $1664.05.” The'verdict was afterwards set aside as to Margaret Rushton, and judgment entered on-it January 17th 1866, against James Rushton. Rowe, claiming that the judgment against the garnishees passed to him an equitable title to the mortgage, commenced.these proceedings.
    The foregoing facts appeared on the trial, May 15th 1867, before Hare, P. J., who charged the jury that if they believed the evidence, no sufficient defence was made out, and the plaintiff was entitled to recovei the principal sum secured by said mortgage, with interest.
    The verdict was for the plaintiff for $1790.40.
    Rushton took a writ of error, and assigned the instruction of the court for error.

      T. B. Greenbank.

    — The title of the Georges in the mortgage was divested by the assignment to Stoddard and Burr, and the suit cannot be maintained in the name of the mortgagees : Pryor v. Wood, 7 Casey 142; Partridge v. Partridge, 2 Wright 78. The attachment being of the moneys of William George, there cannot be execution against John C. George: Horbach v. Knox, 6 Barr 377. The attachment .should have been laid on the premises mortgaged: Act of May 8th 1855, § 3, Pamph. L. 532, Purd. 493, pl. 10. Interest should not have been allowed : Mackey v. Hodgson, 9 Barr 469.
    January 13th 1870,

      C. Guillou, for defendant in error.
    — A party attaching a claim is thereby entitled to all the securities for its payment: Mehaffey v. Share, 2 Penna. R. 361; Farmers’ Bank v. Fordyce, 1 Barr 454; Roberts v. Halstead, 9 Id. 34; Kramer and Rahm’s Appeal, 1 Wright 71. And this is the case even if the particular security were specially excepted: Foster v. Fox, 4 W. & S. 92. The transfer of a mortgage need not necessarily be in writing : Craft v. Webster, 4 Rawle 255; Donley v. Hays, 17 S. & R. 402; Partridge v. Partridge, 2 Wright 80. As to interest: the garnishee must be without fault: Irwin v. Railroad, 7 Wright 488.
    During the argument Sharswood, J., referred to Hoover v. Samaritan Soc., 4 Whart. 445.
   The opinion of the court was delivered,

by Thompson, C. J.

— The result of the issue between Rowe and Rushton et al., settled, so far as our inquiry can go in this case, that there was in the hands of the latter, due to L. A. George & Co., the sum of $1664.05, as of the date of the verdict on the scire facias against the garnishee Rushton. That case is not before us now, and we cannot regard any argument predicated of the idea that the debt due by Rushton, secured by mortgage, had passed prior to the verdict by assignment to anybody else. The time for the consideration of any question of that kind was on the trial, or on a review of the trial of that case. It is entirely out of the case in hand. As the Act of the 13th of June 1836 makes it the duty of the jury trying the issue between the attaching creditor and garnishee, to find what goods or effects, if any, were in the hands of the latter at the time of the service of the attachment, and the value thereof, we are to presume that this was done in proper form, showing that the mortgage of the garnishees was attached and unpaid, and was of the value of the sum found, viz., $1664.05. This was a seizure of the security as belonging to L. A. George & Co. To make that available to the creditor it must be sued upon, and the law regards the attachment of it as an assignment to the attaching creditor. This was not controverted by the counsel for plaintiff in error. But it is alleged that a misnomer of a member of the firm of L. A. George & Co., in the title of the firm in the scire facias against the garnishees, destroys the identity of the firm in that case with the firm described in the mortgage, and therefore the plaintiffs here are not the assignees of the mortgage by operation of law, and not entitled to sue. We see no such consequences as that legitimately flowing from this error in the baptismal name of a member of the firm. The mortgage was to the firm of L. A. George & Co., and that was the firm which the judgment of the court settled Was indebted to the plaintiff in the attachment, and that is the firm, in the absence of testimony to the contrary, to which the mortgage in suit was given to secure the debt, attached. The identity is to be presumed from the identity of name. We need not dwell on this. The jury in finding money in Rushton’s hands alone, secured by mortgage, must have -regarded the property mortgaged as his, as the debt secured was his. But about whose property it was, we are not called upon at this time to determine anything. Rushton is debtor to L. A. George & Co., and if the property pledged for its payment is not legally bound for it, that will be a question to be determined between the purchaser, whoever he may be, of the mortgaged premises, under the judgment on the mortgage, and its claimant. If Rushton conveyed the property to his wife, being a debtor at the time, or intending to engage in business which was hazardous, and required the creation of debts, it is not very likely that there will be much trouble in the case of the wife’s title. Still less, if he did it to delay, hinder or defraud creditors. But all this is left to be decided when a controversy arises about it, if ever. The last matter to be noticed is, whether the mortgage bore interest after the service of the attachment. It is true, there are cases in our books, such as Mackey v. Hodgson, 9 Barr 468, and Irwin v. The Railroad Co., 7 Wright 488, which decide, that a garnishee is not bound to pay interest during the litigation about the liability of the property or money in his hands, to answer the debt of the defendant. In both these cases the controversy was in the nature of an interpleader, although not so in form; and in the latter it was made a consideration also, that the garnishee had been ready and willing to pay the debt in his hands, to the party rightfully entitled. Both cases deny the rule where the delay has resulted from the litigiousness of the garnishee. If he has made difficulties, and produced delays himself, which are unreasonable, the rule does not apply.

In charging as the learned judge did, that if the jury believed the evidence, no sufficient defence was made out, and the plaintiff was entitled to recover the principal sum secured by the mortgage with interest, we must presume that he did it in view of the whole testimony, and that the delay was owing to the defendant Rushton, and not occasioned at all by adverse contestants for the money. This appears in the case, and was uncontradicted, and the judge committed no error in assuming the facts to beso, and in charging that interest was to be paid, according to the express contract in the mortgage, and was recoverable up to the time of trial. If it had appeared anywhere that the defendant stood ready to pay the debt and interest, he would have brought himself within the rule ; in fact, if the alleged assignee had appeared and engaged in the controversy as a claimant, it might have made a difference, hut even then, we think a willingness to pay and not litigate, should have appeared, in order to relieve from liability for interest. We will not say that the defendant was bound, in order to relieve himself from interest, to ask leave to pay the money into court to abide the contest; less might suffice, hut this would, in all such cases, he a sure way of avoiding the liability. On the whole, we see no error in this record which requires reversal of the judgment, and it is affirmed.


text:
    Wickersham’s Appeal.
    1. One of two executors filed an account in which were charged full commissions; he was cited in the Orphans’ Court to pay the other executor his proportion. Held, that the Orphans’ Court had no jurisdiction.
    2. The claimant was not a distributee of the estate on account of commissions.
    3. The commissions do not stand on the same footing as a creditor.
    4. The remedy by an executor, &c., against his co-executor for his share of compensation is in a common-law court.
    5. Adams’s Appeal, 11 Wright 94, Walker’s Estate, 9 S. & R. 224, recognised.
    January 7th 1870.
    Before Thompson, C. J., Read and Sharswo'od, JJ. Agnew, J., at Nisi Prius.
    Appeal from the decree of the Orphans’ Court of Philadelphia, in the estate of Thomas. Wickersham, deceased: No. 223, to January Term 1870.
    On the 9th of October 1869, Morris S. Wickersham presented a petition to the Orphans’ Court, setting out that Cadwalader Wickersham and the petitioner were appointed executors of the will of Thomas Wickersham, deceased, which was proved January 28th 1858. At that time the petitioner was absent in Europe, and Cadwalader took possession of the assets. The petitioner, on the 8th of September 1858, was qualified as executor, and took upon himself the burden of the trust as co-executor with said Cadwalader, who continued acting executor until May 1869, when he filed an account claiming a credit of $9351.30, as executor’s commissions, which credit was allowed by the auditor to whom the account was referred. The auditor’s report, dated January 17th 1861, was confirmed. No final settlement had been made by Cadwalader; the unadministered assets are still in his custody; he refuses to account to the petitioner for the portion of the assets to which the petitioner is entitled, claiming that all belongs to him.

      February 7th 1870,
    The prayer was for a citation to Oadwalader to show cause why he should not pay to the petitioner $4675.65, half the commissions, with interest. A citation was accordingly awarded. The respondent demurred because the petition set forth no claim or demand or debt against the estate of Thomas Wickersham, or any matter relating to that estate, cognisable in the Orphans’ Court; and because the Orphans’ Court has no jurisdiction to apportion between executors commissions for services as such.
    The court sustained the demurrer and dismissed the petition.
    On appeal by Morris S. Wickersham to the Supreme Court, this was assigned for error.

      8. Hood, for appellant,
    referred to Act of June 16th 1836, sect. 19, art. 3, and 8 Pamph. L. 792, Purd. 764, pl. 8; Kittera’s Estate, 5 Harris 422; Ashford v. Ewing, 1 Casey 213; Springer’s Appeal, 5 Id. 208; Swain v. Ettling, 8 Id. 486, 489; Black v. Black, 10 Id. 354; Holliday v. Ward, 7 Harris 485; Whiteside v. Whiteside, 8 Id. 473; Gochenaur’s Estate, 11 Id. 460; Bull’s Appeal, 12 Id. 286 ; Woodward’s Appeal, 2 Wright 322; Horner v. Hasbrouck, 5 Id. 169; Adams’s Appeal, 11 Id. 94; Hughes’s Appeal, 7 P. F. Smith 179; Girard Life Ins. Co. v. Wilson, 7 Id. 182.

      G. W. Biddle, for appellee,
    cited Davis’s Estate, 1 Phila. Rep. 360; Walker’s Estate, 9 S. & R. 223; Ashton’s Estate, 5 Whart. 240 ; Adams’s Appeal, 11 Wright 94.
   The opinion of the court was delivered,

by Thompson, C. J.

— The appellant petitioned tlje Orphans’ Court for a citation to his co-executor to “show cause why he shall not pay your petitioners the sum of $4675.65, with lawful interest on the same,” which he alleges was his share of commissions as one of the executors of Thomas Wickersham, deceased, and which he charges was allowed by the Orphans’ Court and received by his co-executor, the appellee. These commissions were allowed in bulk; that is, were not apportioned by the Orphans’ Court, and were received by the appellee in 1861. The appellee demurred to the petition and denied the jurisdiction of the Orphans’ Court in the premises, and the court below sustained the demurrer; whether that was right, is the question now to be determined.

That it was cannot be denied. The money claimed was not in the Orphans’ Court, but in the hands of one over whom the Orphans’ Court had no jurisdiction as to the matter in controversy. It is not money of the estate the appellee holds. ' His co-executor is not a distributee of the estate on account of commissions earned. His compensation does not stand on the same footing as a creditor. If it did it would be subject to abatement like other debts, in case the estate were insolvent. This is never the case, as we all know. I will not say that the Orphans’ Court might not apportion the commissions allowed between co-executors and administrators; but if it be not done, and one receives all, the remedy of the other is in the common-law courts on the implied assumpsit raised by the possession of the money. It would be a novelty to witness a contest between the executors in the Orphans’ Court in regard to mutual claims against each other for money jointly earned and received after the whole estate has been settled and the money all distributed to those entitled as distributees. That would be legal, although novel, if we were to sustain the principles of this appeal. Of course, if this were the law, then one executor would be obliged to file an account in the Orphans’ Court, not with the estate, but with his co-executor, and it would have to go through every process that executors’ accounts are liable to, viz., notice, reference to an auditor, exceptions and decree of distribution and appeal. This too, in a matter wherein the money in controversy is not held in trust for the estate, and where the claimant is not a creditor of the estate, as shown by Adams’ Appeal, 11 Wright 94. In Walker’s Estate, 9 S. & R. 223, it was said, that if the services of executors are unequal, they shall do justice among themselves by assigning a share of the commissions to each, in proportion to his trouble; if they choose to divide it equally it is their business and no concern of the court. The same thing was said in Nolen’s Estate, 5 Wh. 240; in Davis’ Estate, 1 Phila. Rep. 360, it was held, per Thompson, P. J., “ the amount allowed includes the whole commissions to which both (Adams’) are entitled for all services included in the account, which it is not for us to apportion.” That decision was acquiesced in and has always been the rule of that court. No other could exist. We cannot assist the appellant to escape any of the incidents of a common-law action if they stand in the way of a recovery. If he has delayed action too long, that is his fault; the law cannot be changed to aid him against his own delay. There being no error in the record, the decree of the court below dismissing the petition is affirmed at the costs of the appellant, and this appeal is dismissed with costs.


author: by Sharswood, J.

text:
    Barclay’s Appeal. Hooker’s Estate.
    1. A payment on account of an existing debt is an unequivocal acknowledgment, and will take it out of the Statute of Limitations.
    2. It must plainly appear that the payment was on account of the very debt.
    3. An independent account against a creditor in the books of a debtor amounts to nothing.
    4. A charge against a creditor is no admission of another and different debt alleged to be due by him, though evidence of that debt may be found in another part of the book.
    5. Burr v. Burr, 2 Casey 284, remarked on.
    January 7th 1870.
    Before Thompson, C. J., Read and Sharswood, JJ. Agnew, J., at Nisi Prius.
    Appeal from the decree of the Orphans’ Court of Philadelphia: In the estate of Herman Hooker, deceased.
    Herman Hooker died in September 1865, leaving a will with codicils, which were proved October 14th 1865. Mary J. Hooker and Richard McCauley, the executors, settled an account, showing in their hands a balance of $9053.01. The account was referred to James H. Campbell, Esq., as auditor, for adjustment and distribution. After making some alterations in the account, the auditor found the balance for distribution to be $9553.
    The only matter controverted in the Supreme Court was a claim made by James J. Barclay, administrator, &c., of Charles H. Alden, deceased. This claim was founded on the following obligation, not under seal, dated February 1st 1841:—
    *“We, Herman Hooker and Samuel Agnew, of the firm of Hooker & Agnew, of Philadelphia, hereby acknowledge to be due to Charles Henry Alden, of Philadelphia, the sum of $4000, which sum was loaned to the late firm of Hooker & Claxton, and is by this instrument transferred as a loan also to us. This sum we agree to pay in full to the said Charles Henry Alden, his heirs, executors or assigns, at the expiration of eight years from this date and not before; provided the firm be not previously dissolved, and provided also we pay to the said Alden portions of the said sum in amount not less than $500 at any one time within the said space of eight years: provided also, we pay to the said Alden semi-annually, on the first days of January and July of each year, legal interest on the said sum of $4000.
    “ In the contingency of failure in business, we hereby agree to consider the above sum as a preferred debt.”
    The principal contention as to this claim was, whether it was barred by the Statute of Limitations. Alden died before January 20th 1847. The only evidence of a recognition of this debt was found in the books of Hooker, which were produced before the auditor by his executors and offered in evidence by the administrator of Alden. In these books there was an account with Alden, commencing February 13th 1841, in “Ledger No. 1, folio 78,” containing debits and credits, each side for merchandise and cash. This account was continued to October 20th 1845, when it is carried to folio 420, and, without break or change, up to January 10th 1848; when, without balancing or footing it up, the name “Mrs. Alden” is brought into it, and it is footed up at $239.16, “to folio 423.”

      At folio 420, also in same ledger, an account is opened to “ J. J. Barclay for the estate of Mr. Alden,” commencing April 16th 1847, and containing charges only, amounting to $1809.20; this amount is carried to “New Ledger.”
    The account in the name of Mrs. Alden is continued on folios 423, 425, and in Ledger No. 2, through several folios, until July 2d 1855, when the debits of her account amounted to $1661.27, and she was credited by that “ amount to J. J. Barclay.” This closed her account to that date.
    On the 3d of February 1851 the account of “ J. J. Barclay” is opened in “ Ledger No. 2.” He is charged with “ amount from old ledger,” being the above amount, $1661.27, of Mrs. Alden, and other items to July 2d 1855; and credited: “ 1855, July 1st. By amount of note originally given to 0. H. Alden for money loaned, $4000,” leaving a balance in Barclay’s favor of $829.53, which is carried to “New Ledger.”
    The account against Mrs. Alden is again opened, in Ledger No. 3, August 20th 1855. The debits are for merchandise, cash, &c., and on May 1st 1857, the amount against her was $3Í3.44; on that day there is a credit, “ By J. J. Barclay, administrator, for amount of her bill rendered to date, $313.44.”
    There is another account of “ J. J. Barclay, administrator of C. II. Alden,” commencing January 15th, and .ending October 1st 1857. Of the debits one is Mrs. Alden’s account, $313.44, and another, “ Cash $100.” He is credited with $829.23, “ amount from old ledger” ; this leaves a balance of $416.09 in his favor, which is carried, as of October 1st 1857, to Ledger No. 4. This is the last account with Barclay.
    In Ledger No. 4 there is an account opened with Mrs. Alden. It commences September 11th 1856, and continues till April 27th 1857. The debits then amounted to $145.48, and were all for merchandise. The credits to that date were, “ Merchandise, $1,” “ H. Hooker, $144.48,” the latter dated May 1st 1857, then balancing the account; after this time there were no credits to Mrs. Alden. The account continued against her with charges of merchandise, cash, “ order C. H. Alden,” &e., till June 28th 1859. After which followed these three items :—
    “1860.
    May 8th, “ per draft Alden $5 64
    July 2d, “ Burns & Sieg’s draft, 30 99
    1861.
    January 1st, “ “ “ “ 9 76”
    The whole including the items after May 1st was footed up, $309.79; after this there was no other account with Mrs. Alden. The auditor reported allowing the Alden claim.
    On exceptions by the executors of Hooker, the Orphans’ Court (Ludlow, J., delivering the opinion) sustained the exceptions for the reason that there was no evidence “ reviving the debt or preventing the operation of the statute,” and recommitted the case to the same auditor, “ with instructions to readjust his report in conformity with these views.”
    January 13th 1870,
    The auditor accordingly, in another report, disallowed the Alden claim. To this report exceptions were filed, which were dismissed and the report confirmed absolutely, December 13th 1869.
    The executors of Alden appealed to the Supreme Court, and assigned the decree of confirmation for error.

      G. W. Biddle, for appellant.
    — The Statute of Limitations was no bar: McCandless’ Appeal, 11 P. F. Smith 9.

      J. H. Grendell and E. 8. Miller (with whom was W- Vogdes), for appellees.
   The opinion of the court was delivered,

by Sharswood, J.

— There can be no more unequivocal acknowledgment of a present existing debt than a payment on account of it, and according to all the authorities, this is all that is required to take a case out of the Statute of Limitations. Rut then it must plainly appear, and not be matter o.f conjecture merely, that the payment was made on account of the very debt which is in dispute. This principle was settled in Burr v. Burr, 2 Casey 284, which, whatever may be thought of the propriety of the application of it to the facts of that case, stands so far as regards tbe principle itself, unimpeached. Certainly an independent account standing in the books of the debtor against the creditor, amounts to nothing at all. Such really was the most that can be said of the evidence relied on in this case, if even so much as that can be said. That assumes that the charges against Mrs. Alden were charges against the administrator. It is clear that a charge against the creditor is no admission of another and different debt alleged to be due by him, though evidence of that debt may be found in the same book. The account however in which the items of charge within the six years are found is not an account against the decedent or his administrator, but against Mrs. Alden the widow. It is true that it does appear from the same books that previous charges of the same character, after having been first entered separately, were subsequently brought into and entered in accounts with the administrator as credits against what was undoubtedly the debt in controversy. Had the amount of the charges in the last account against Mrs. Alden, including the three items bearing date within the six years, been entered in like manner in an account with the administrator, it would have been unanswerable. But this was not done. In the first account with the administrator, in which the note for $4000 is credited and debits from a previous account with him, there is also the debit of an amount from the account against Mrs. Alden. This was July 2d 1855. The same thing is repeated in a subsequent folio, brought down to May 1st 1857. The balance of that account, $416.09, is carried over to a new account with the administrator, and is entered as o'f the date of October 1st 1857. But on the other side of that new account there is no entry of any debit. On a separate folio from May 2d to June 28th 1857 there are several charges against Mrs. Alden, and then, after an interval of nearly two years, two items in 1860 and on January 1st 1861, in all $46.39. These are the entries which it is contended take the case out of the statute. They are not entered as payments nor as debits against the administrator, but as charges against Mrs. Alden. Had the debt in dispute been fully paid, these entries might have been made. How then can they be regarded as clear evidence that at the time he made them the debtor acknowledged this debt as then subsisting? We may conjecture that there was an agreement between the debtor and the administrator that whatever Mrs. Alden was properly charged with should be credited against the debt, but after all it is mere conjecture with no evidence to support it. It would be quite as reasonable on the other hand to surmise that on the 2d of July 1855, the administrator, being satisfied of the correctness of the charges against Mrs. Alden, agreed to allow the amount as a credit, and that on October 1st 1857, the same arrangement and settlement took place. Indeed this conjecture is more plausible than the former one; for if there was an agreement that whatever Mrs. Alden received should be allowed on this account, why were not the items so entered as they arose, and why especially when the credit of $416.09 to the administrator was carried over to a new account on October 1st 1867, was no entry made on the other side of $23.21, which stood charged to Mrs. Alden between May 1st 1857 (the date of her last account debited to him) and October 1st 1857, the date of the entry of the balance to his credit? It is all mere conjecture. It is impossible therefore to see in these books any sufficient evidence of an agreement accepted by the debtor to allow whatever might be justly charged to Mrs. Alden as a credit against this debt, and any evidence whatever of an actual credit of the three items of 1860 and 1861.

The determination of this question adverse to the appellant renders the examination of the other points unnecessary.

Decree affirmed, and appeal dismissed at the costs of the appellant.


text:
    Mays et al., Assignees of Born, versus The Manufacturers’ National Bank of Philadelphia.
    1. An assignment in bankruptcy, no matter when made, takes effect as if it had been made at the commencement of the proceedings.
    2. Of such assignment by operation of law, the whole world is bound to take notice.
    3. Payment to a bankrupt after filing the petition, although bonft fide made and without actual notice, is not valid.
    4. Born, after the filing of a petition against him, deposited in a bank money which was afterwards paid on his checks. Held, that the payments were valid.
    5. The assignment transfers only the property which the bankrupt owned at the filing of the petition.
    6. The earnings and acquisitions of the bankrupt after the commencement of the proceedings are his own, subject to his eventual discharge.
    7. If he does not succeed in obtaining his. discharge, his subsequent acquisitions remain liable to his creditors.
    8. The onus is upon the assignee to prove that the property was the bankrupt’s at the commencement of the proceedings.
    January 10th 1870.
    Before Thompson, C. J., Read and Sharswood, JJ. Agnew, J., at Nisi Prius.
    Error to the District Court of Philadelphia: No. 93, of July Term 1869.
    This was an action of assumpsit, brought by Samuel V. Mays and Charles W. Hornor, assignees in bankruptcy of August Born, against The Manufacturers’ National Bank of Philadelphia.
    On the 31st of January 1868, a petition by a creditor was filed in the District Court of the United States for the Eastern District of Pennsylvania, asking that Born be declared a bankrupt. In an issue, a jury found that he was a bankrupt, and on the 26th of February 1868 he was so adjudged. Due publication of the adjudication was made in accordance with the order of the dourt; the plaintiffs were appointed assignees on the 28th of March.
    This case was tried February 2d 1869, before Greenbank, J., when, in addition to the above facts, the plaintiffs gave in evidence the bank book of Born, in which the first entry was—
    “ 1868, February 6th. Balance from old book, $409.12.”
    There were other entries of credit up to April 1st, which, with the above balance, amounted on that day to $2616.42, against which Born was charged with a number of checks, commencing February 6th and ending April 4th, when there was in his favor a balance of $29. The checks were given in evidence by the defendant. It was not denied on the trial, that these checks were paid by the bank in good faith, without actual notice or knowledge of the proceedings in bankruptcy against Born.
    The plaintiffs submitted a number of points, on which they asked the court to charge the jury. The question raised by them was, whether the payments having been made by the bank on checks of Born after the commencement of the proceedings in bankruptcy were valid. Judge Greenbank refused all the plaintiffs’ points, and charged:— .
    January 24th 1870,
    “ The question in this case is one of law alone, the facts being undisputed. The point has been decided by this court in bane, on the hearing of the rule for judgment for want of a sufficient affidavit of defence, that the ’bank not having knowledge or actual notice of the proceedings in bankruptcy of August Born, is not liable to the assignees in bankruptcy for the moneys drawn out by him prior to notice.
    “ I therefore instruct you, that your verdict may be for the plaintiffs for the balance remaining due, after giving the defendant credit for the amount of the checks given in evidence, drawn by August Born, to wit, the sum of $29, and I decline generally to charge as requested by the plaintiffs.”
    The verdict was for the plaintiffs for $29. They took a writ of error, and assigned for error, the answer to their points and the charge of the court.

      O. W. Hornor, for plaintiffs in error,
    referred to Bankrupt Act of March 2d 1867, §§ 14, 27, 28, 35, 39, 42, 44, “ Acts of Congress,” &c. 159, et seq.

    The proceedings in bankruptcy are notice to all the world; the assignment relates to the commencement of the proceedings and payments to the bankrupt after that time are illegal: Ex parte Foster, 2 Story 158 ; Carr v. Gale, 3 Woodb. & M. 67; Bramwell v. Eglinton, Law Rep. 1 Q. B. 494; Exley v. Inglis, Id., 3 Exch. 247. Lis pendens is notice: Taylor v. Carryl, 12 Harris 261.

      A. It. Smith, for defendants in error,
    referred to Bankrupt Act, supra. Such property only as bankrupt has at the time of the assignment, or has been fraudulently conveyed, should pass to the assignees: Dormer v. Brackett (U. S. Dist. Court, Vt.) 5 Law Rep. 392. Only the estate that bankrupt had at the commencement of the proceedings, not that afterwards acquired, should pass: In re Patterson (D. C. U. S. South. Dist. N. Y.) 6 Int. Rev. Record 157; In re Rosenfield (D. C. U. S. N. J.) 15 Pittsburg Leg. Journal 245; Grant’s Case, 2 Story C. C. R. 312.
   The opinion of the court was delivered,

by Sharswood, J.

— The counsel for the parties, with all their learning and research, have not been able to produce any decision upon the question, whether where the debtor of a bankrupt, in good faith and without knowledge or notice of the proceedings against him, pays him a debt, he can be compelled to pay it over again to the assignee ? The reason may he that the language of all bankrupt laws, previous to the Act of Congress of March 2d 1867, was such as to preclude the question from arising. In England, by the statute 13 Eliz. c. 7, the property of the bankrupt vested in the commissioners from the time of an act of bankruptcy committed; and payments made by a debtor to a bankrupt, after a secret act of bankruptcy, would under the statute have been void. The injustice of this relation back was so apparent, that Parliament, by the statute 1 Jac. 1, c. 14, made such payments, until notice of the act of bankruptcy, good; but still left payments, after commission issued, as they stood under the statute of Elizabeth. To the present time the law in England rests on the same basis; that all contracts, conveyances and dealings to and with a bankrupt in good faith and without notice before the filing of the petition, are valid: otherwise, after the filing: Eden on Bankruptcy 258; stat. 4 Geo. 4, c. 16, 12 & 13 Vict. c. 106. By the Act of Congress of April 4th 1800, § 13 (1 Story’s Laws 737), the commissioners were empowered to assign all the debts due to the bankrupt, which assignment should vest the property and right thereof in the assignee: Provided, that where a debtor shall have bond fide paid his debt to any bankrupt, without notice that such person was bankrupt, he or she shall not be liable to pay the same to the assignee, or assignees.” This just and liberal provision was not contained in the Act of Congress of August 19th 1841 (5 Story’s Laws 28, 29), but it declared “ that all dealings and transactions by and with any bankrupt bond fide made and entered into more than two months before the petition filed against him or by him, shall not be invalidated or effected by this act: Provided, that the other party to any such dealings and transactions had no notice of a prior act of bankruptcy, or of the intention of the bankrupt to take the benefit of this act.”

The Act of Congress of March 2d 1867 has no express provision on the subject. The case is necessarily left to the legal effect of the assignment provided by the act. The 14th section enacts “ that as soon as said assignee is appointed and qualified, the judge, or where there is no opposing interest, the register shall, by an instrument under his hand, assign and convey to the assignee all the estate real and personal of the bankrupt, with all his deeds, books and papers relating thereto; and such assignment shall relate back to the commencement of said proceedings in bankruptcy, and thereupon, by operation of law, the title of all such property and estate, both real and personal, shall vest in said assignee.” The only and natural construction of these words is, that the assignment,, no matter when made, shall take effect by operation of law, as if it had been made at the commencement of the proceedings, or on the day of filing the petition. It is undoubtedly well settled that of such an assignment by operation of law the whole world is bound to take notice: Hitchcox v. Sedgwick, 2 Vernon 156; where it was said that there was a difference where a man had divested himself of his estate by his own act, and where it was taken out of him by Act of Parliament, where-unto all persons are supposed to be parties, and are concluded by it: Callet v. De Gols, Cas. Temp. Talbot 65. The same principle was applied by this court to the case of an insolvent debtor under the Act of March 26th 1814 (6 Smith’s Laws 195), which provided that “ the trustee or trustees shall be deemed vested with all the estate of such debtor at the time of his or their appointment.” “ This divestment of his debt,” said Duncan, J., in Wickersham v. Nicholson, 14 S. & R. 118, “ was by positive law, and the assignment a notorious judicial act, of which all the world was bound to take notice. It is constructive legal notice, and as binding to every intent as actual notice to the individual.” It was accordingly decided in that case that a payment to the insolvent, the day after his assignment and discharge, by one who had not actual notice of it, was not valid. We are compelled to apply this same principle to the case of a payment to a bankrupt boná fide made and without actual notice after the commencement of the proceedings — namely, the filing of the petition, to which time, by the express provision of the Act of Congress, the assignment relates.

It must be admitted that this is an unjust and cruel law; and the effect of it may be to make bankrupts of honest and solvent men, who are only desirous of fulfilling their legal obligations. That all the world has notice of a transfer by operation of law, in proceedings in bankruptcy, is a mere fiction — not true in reality — whatever care the law may take to give public notice through newspapers. All men cannot afford to take all the newspapers, and if they did, have not time to read all the advertisements. Life is too short, and other cares too pressing for that. The attention of Congress ought surely to be called to this subject, and some suitable provision made to protect those who deal honestly, in good faith, and without notice, with bankrupts.

There is, however, another important question which arises on this record. The proceedings in bankruptcy against August Born were commenced by filing the petition January 81st 1868, and he was adjudicated a bankrupt February 26th 1868. His bank account with the defendants below, which was all the evidence produced to charge them with the receipt and possession of any of his property, showed a balance from old book under date of February 6th 1868, and all the deposits made by him were subsequent to that date. Now, if we give the fullest effect to the relation of the assignment to the commencement of the proceedings, it must be held to operate in the same manner as if it had been then made. It follows, logically, that it only transfers the property which the bankrupt then had. Of course we do not speak of fraudulent conveyances made by him previously. This is not only the literal construction of the act but accords with its spirit and policy. It is the most humane and liberal interpretation that the earnings and acquisitions of the bankrupt subsequent to the commencement of the proceedings shall be his own, subject to his eventual discharge. If he does not succeed in procuring that, they remain liable to execution or attachment by his former creditors. It is certainly good policy to hold out encouragement to continued effort and industry. Besides, if this is not the date of the transfer, what is? The adjudication or the discharge? A considerable period may elapse between the filing of the petition and either of these. If his acquisitions in the mean time are in any event to pass to his assignees, he will be likely to fold his hands in inactivity, content with the allowance made him by the law. It is true, that by the 16th section debts provable are those due at the time of the adjudication, but it is also true that by the 32d section the certificate of discharge is expressed to be “ from all debts and claims which by said act are made provable against his estate, and which existed on the day of , on which day the petition for adjudication was filed.” It would rather seem to follow that the adjudication was also meant to relate to the day of filing the petition, otherwise it is not easy to reconcile these provisions. In Re Charles G. Patterson, a bankrupt, in the District Court of the United States for the Southern District of New York, 6 Internal Rev. Rec. 157, Judge Blatchford, in an able and elaborate opinion, adopts and vindicates this construction of the Act of Congress. “ The intent and purport of this provision” (§ 14), says he, is, that the property which was the property of the bankrupt at the time of the commencement of the proceedings in bankruptcy, and no other property, shall vest in the assignee, and shall vest in him as of the time of the commencement of such proceedings, no matter when the assignment to the assignee is actually executed. It does not mean that the property, which is the property of the bankrupt at the time the assignment is executed, and also the property which was his property at the time of the commencement of the proceedings, shall pass to the assignee.” He accordingly decided that a bankrupt cannot be examined as to property acquired or business done after the date of filing the petition. And this decision was followed by Judge Field, in the District Court of the United States for New Jersey, in Re Isaac Rosenfield, Jr., a bankrupt, 15 Pittsburg Leg. Jour. 245.

There was no evidence adduced in the court below to show that the balance in the bank, February 6th 1868, or the subsequent deposits, belonged to August Born, the bankrupt, on the 31st January 1868 — the day the petition was filed. They may have been given to him by friends — or bequeathed to him by will, or acquired by his own industry, after that date. The onus was certainly on the plaintiffs below to show affirmatively that they w^ere his property at the 'time the assignment by relation took effect. They failed entirely to do this, and there was consequently no evidence for the jury to charge the defendants even with the balance which was found by the verdict.

Judgment affirmed.