text:
    Reed vs. The Bank of Newburgh.
    1837. March 7.
    Where the president of a bank had hypothecated his private stock to secure the re-payment of a loan to himself, and for the purpose of redeeming the same took from the funds of the bank of which he was president a sum of money, without authority of the board of directors, which he offered to the mortgagee of the stock in' payment of the debt; Held, that the taking of the funds of the bank for such a purpose was a fraud upon the bank, and that the mortgagee of the stock acted correctly in refusing to receive the money, thus embezzled by the president of the bank, in the redemption of the stock.
    "Where a president" or other officer of a monied corporation, who has the custody of its funds, appropriates the same to pay his own debts, or for other private purposes, without authority of the directors of the corporation, it is a criminal embezzlement of the fund entrusted to his care; and his creditor who receives the money iii payment of his debt, knowing it fo be thus embezzled, is á participator in the fraud and felony, and may be coiri« pelled to refund the money thus received.
    A stockholder who has given another a proxy to vote upon his stock, even for a valuable consideration, is justifiable in revoking the proxy where it is about to be used for a fraudulent purpose.’
    This was an appeal from the decree of J. Emott, the former vice chancellor of the second circuit, dismissing the-complainant’s bill with costs. The substance of the allegations and charges, as stated in the bill, appear in the report of this case when it was formerly before the chancellor upon a demurrer.' (See 1 Paige's Rep. 216, S. C.) The answer of the defendants, which was subsequently put in, admitted the agreement of the defendants to loan the complainant $20,000, upon his note, secured by the transfer of stock in the Tradesman’s Bank, to the extent of ten per cent beyond the amount of such loan, estimating the stock at its market value; which collateral security was to be kept good to that extent, by the transfer of more stock from time to time if required by the defendants. The answer further stated that it was also agreed that the complainant should have a proxy to vote upon the hypothecated stock; and that in pursuance of such agreement 400 shares of the Tradesman’s Bank stock, worth at its then market value ten per cent above par, was transferred to Hunn, the cashier of the Bank of Newburgh, who gave the complainant a proxy to vote thereon. The answer denied the alleged tender of the amount of the $20,000 note in any other way than in the offer of a package of bills of the Tradesman’s Bank to Hunn the cashier of the defendants, at New-York, when the election of directors was taking place in the banking house of the Tradesman’s Bank, on the 3d of July, 1826, which offer was refused on the ground that it was not a legal tender. The defendants also admitted that Hunn revoked the proxy and voted upon the hypothecated stock himself at that election, against the wishes and remonstrances of the complainant. But they also stated, in their answer, as the reasons why he did so, that the improper proceedings of the complainant who was the president of the Tradesman’s Bank, had reduced the value of the stock in the market, and that he had violated his agreement in not transferring more stock, when applied to for that purpose, so as to keep the market value of the stock security ten per cent beyond the amount of the loan; and also that the complainant, in connection with a majority of liis associates in the direction, had entered into a conspiracy to sell a majority of the stock and give the control of the funds of the bank to an individual whose name was concealed, for their own private emolument, and thereby to ruin the bank and defraud its other stockholders. The defendants admitted that the hypothecated stock, soon after the election of July, 1826, became greatly depreciated or reduced in its value ; but they alleged that it was owing to the various frauds against the bank, committed by the complainant and his associates in the new board of directors'. The defendants in their answer also insisted that the complainant after the election of July, 1826, waived all claim against them on account of the alleged tender and the revoking of the proxy and voting on the stock, by transferring other stock to their cashier as collateral security for the original loan, in conformity to the original contract, and by applying to him for further time to pay the note and promising to give further security. The cause was heard upon pleadings and proofs. Upon the hearing, the counsel for the complainant did not ask for a decree allowing him to redeem the stock upon paying the amount due on the note; neither was there any offer to redeem contained in the bill. But the complainant claimed to have a decree against the defendants for the balance of the market value of the stock, on the day of the election, beyond the amount then due on the note, and that the note should be delivered up and can-celled ; on the ground that by the acts of their cashier at that time the defendants had made the stock their own.

      S. P. Staples, for the complainant.
    There was a sufficient tender. The defendants converted the stock and made it their own, by the revocation of the proxy and by voting upon it, and a right of action became thereby vested in Reed, without a tender, or demand and refusal. The defendants by their conduct have rendered themselves accountable for the value of the stock on the day on which they made it their own by the revocation of the proxy. The defendants, the Newburgh Bank, cannot avail themselves of the relation in which Mr. Reed stood to the Tradesman’s Bank as a justification for their conduct, nor set up his errors as a set-off for theirs.

      T. M’Kissock, for the defendants.
    There is no sufficient tender established by the complainant. A tender ought to have been made at the banking house of the defendants, or at least to their agents authorized to receive the same elsewhere. The conduct of the complainant has been such that a court of equity will not entertain his complaint nor grant him any relief. If the defendants are responsible at all, they are responsible only for the stock at its lowest value. For the fall of the stock clearly arose from the misconduct and wrongful acts of the complainant while president of the Tradesman’s Bank. The decision of the vice chancellor, dismissing the bill with costs, was right.
   The Chancellor.

From a careful examination of the facts in this case I can see no reason for disturbing the decree which the vice chancellor has made in this cause. I think the evidence shows conclusively that there was neither a legal tender of the amount due on the $20,000 note, nor even an offer to pay the same in any thing which Hunn was authorized to accept, or could have accepted, without violating his duty to the defendants as their cashier. Although the complainant was the president of the Tradesman’s Bank, and as such was entrusted with its funds, he had no right without the assent of the board of directors to take any portion of those funds out of the ordinary course of banking business and apply them to his own private purposes. And in this case, if he had succeeded in his attempt to embezzle the funds of the bank and pay his own private debt therewith, I am inclined to think he would have rendered himself liable to imprisonment in the state prison, for a violation of the act to protect banks against embezzlement by their officers or agents. (Laws of 1819, p. 314.) And if Hunn had received either the specie or the bills, knowing them to have been thus improperly taken from the funds of the bank by its president, he might also have subjected himself •to a criminal prosecution under the second section of the same act. The testimony conclusively shows that the payment of the complainant’s individual debt with the funds which were offered would have been a fraud upon the Tradesman’s Bank. And the circumstances were such as to satisfy Hunn, or any other reasonable man, that the president of the bank was about to commit such a fraud. If the money had been receive^, therefore, and the stock transferred under such a state of facts, the defendants would have lost their security for the debt, as there is not the least doubt that the Tradesman’s Bank could have compelled them to restore the money thus taken. I lay entirely out of view, as not material to the decision, the conflicting evidence as to the amount of bills which the complainant ran to the banking room and got at the time he made the offer. Neither is it material to inquire whether he left a check when he took the money, though it is very evident he did not; for the mere formality of leaving a check when he had not funds in the bank to meet it, or the fact that the money was handed to him by a clerk who was under his .control as president, could not make the taking of the money for such a purpose an honest transaction as against the stockholders of the bank. Neither could it authorize the defendants or their agent to receive and retain the money thus abstracted, as a valid payment of the complainant’s private or individual debt. Hunn was therefore right in refusing to be a participator in an act which would have been a fraud and felony on the part of the president of the Tradesman’s Bank.

I think he was also right in revoking the proxy and voting upon the hypothecated stock himself; and this without reference to the question whether the agreement to give the complainant a proxy to vote upon the hypothecated stock was not void as against public policy. Hunn may have been actuated by a desire to subserve the interests of his son-in-law and his friends merely. But if there were other and sufficient reasons which would have made it the duty of the holder of the stock, as an honest man, to exercise the right of voting himself, and not to permit his proxy to be used to promote fraud and injustice, other motives which may have influenced the agent of the defendants to do his duty cannot prejudice their rights. The facts in relation to this part of the case are correctly stated in the opinion of the vice chancellor. At the time of the loan and until about the 15th of June, 1826, the bank was in good credit; its stock being then from ten to twelve per cent above par. About that time a secret negotiation was commenced and carried on by the complainant for some person who was then known to him only, and whose name he has not yet revealed, with a number of the directors of the Tradesman’s Bank who held a majority of the stock. The object of this negotiation was to get the "stock into the hands of this unknown person, so as to control the election of directors which was to take place in July. Those directors whose stock was hypothecated to the bank, or who had given stock notes to the extent of the par value of their stock, had secret meetings at the house of the complainant, and on the 19th of June concluded an arrangement, which was embodied in a writing, by which they authorized Reed to sell their stock at 28 per cent advance ; 10 per cent in money, 14 in Life and Fire bonds, or in post notes of the Morris Canal and Banking Company, and 4 in the dividend which was to be paid two days after the election; or notes were to be substituted in lieu of their notes which had been given for loans upon stock. And they agreed, when the 24 per cent was paid, to furnish for the purchaser irrevocable proxies to vote on the stock, and a power to transfer the stock on the payment of the last instalment, or par value thereof. This arrangement was most fearlessly carried into full and complete effect by the complainant and his associate directors. And on the 3d of July the funds of the bank were put under the control or in the power of the unknown purchaser, who permitted some of the selling directors, together with the complainant, who severally retained a few shares of the stock, to be re-elected. The other persons elected directors under this arrangement were also one-share-men, or persons who held a mere nominal interest in the bank. The result of this arrangement, as had been correctly anticipated by Hunn and those who opposed the election óf these mere men of straw, was, that in less than fifteen days the bank sustained losses to the amount of more than $120,000. Checks and counter checks to a very large amount from persons who had no real funds in the bank were received, and advances were made, to persons without responsibility, upon Life and Fire bonds under orders which had no apparent connection with the bank. And as the vice chancellor justly observes, such was the rapid downhill course of the bank under its new government that it is now quite apparent that but for the interference of the courts, acting upon the officers of the bank and its managers, nothing less than a total and disgraceful bankruptcy would have ensued.” Although most of these frauds took place after the election of July, 1826, yet as they were such as might be fairly anticipated from the arrangement to sell the bank directorship to a person who was unwilling to have his name known, and whose stock notes were to be substituted for the notes of the former directors, Hunn did right to revoke the proxy and to vote himself upon the stock, with a view of defeating the iniquitious project, if possible.

As the complainant has never disclosed the name of the person for whom he acted in reference to the purchase of the stock and to the election of the new board of directors, it may fairly be presumed that he was himself the unknown purchaser and secret manager of the affairs of the bank, by whose fraud and mismanagement the subsequent depreciation of the hypotheticated stock was produced. In this view of the case he would have no claim to relief on account of the loss which has been sustained by such depreciation, even if there had been a proper application to Hunn for lea. o to redeem the stock and a tender of the complainant’s own money on the day of the election.

The decree of the vice chancellor must therefore be affirmed with costs ; and with liberty to the defendants to apply to this court, at any time before the end of the next May term, for further directions as to any damages they may have sustained in consequence of this appeal.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Bigelow vs. Bush and others.
    A mortgagor who is personally liable to the mortgagee for the payment of the debt secured by the mortgage, but who has parted with all his right and interest in the mortgaged premises, is a proper party but not a necessary party to a bill to foreclose the mortgage.
    Where the mortgagor has conveyad the equity of redemption absolutely and without warranty, the mortgaged premises are the primary fund for the payment of the mortgage debt; and the grantee has no right to object that the mortgagor is not made a party to the bill of foreclosure.
    But where the complainant makes a mere surety of the mortgagor, for the payment of the debt, a party to the bill of foreclosure, for the purpose of obtaining a decree against such surety or his property if the proceeds of the mortgaged premises are found to be insufficient to satisfy the debt and costs, such surety has a right to insist that the principal debtor shall be made a party to the suit, if he is within the jurisdiction of the court.
    The fact that the principal debtor is an absentee, and has assigned all his right and interest in the equity of redemption of the mortgaged premises, is a sufficient reason for not making him a party to the bill of foreclosure, even where bis surety is made a party for the purpose of obtaining a decree over against such surety for a deficiency.

      1837. March 7.
    The bill in this case was filed to foreclose two mortgages % the first given by Henry Bush to secure the payment of $3000, and interest; and the last given by O. N. Bush as a collateral security for the payment of the amount secured by the first mortgage. G. A. Avery was made a defendant as a subsequent purchaser of the equity of redemption in the first mortgaged premises ; and the other defendants were made parties as judgment creditors, or as subsequent purchasers from O. N. Bush. It appeared by the bill that Henry Bush resided out of the jurisdiction of the court,' in the state of Ohio, and that he had no longer any interest in the mortgaged premises. He was not, therefore, made a party to the suit; and for that reason the defendants, O. N. Bush and G. A. Avery demurred to the complainant’s bill.-
    J. Rhoades, for the complainant.
    Henry Bush is not a necessary party. He has parted with all his interest in the property, and there can be no more necessity for making him a party than there is of making a mortgagee a party who has assigned his mortgage. (Whitney v. McKinney 71 John. C. R. 144.) This is not the case of a joint and Several bond, which is sometimes given by one as principal and the others as sureties ; in which it has been held that all the obligors ought to be made parties. (Madox v. Jackson, 3 Atk. 406. Bland v. Winter, 1 Sch. & Lef. 249.) Though the contrary was ruled by Lord King in Collins v. Griffith, (2 P. W. 313,) and the rule is dispensed with where the obligor is insolvent. (3 Atk. 406. Augustine v. Clark, 3 Swanst. 147, note.) And where the case can be decided as between the parties litigant, the circumstance that an interest exists in some other person whom the process of the court cannot reach, as if he be a resident of some other state,' ought not to prevent a decree. (Elmendorf v. Taylor 10 Wheat. 168.) I admit that if Henry Bush was a resident of the state, O. N. Bush being his surety, might insist upon his being made a party.
    S. Stevens, for the defendants.
    Henry Bush ought to be made a party defendant to the bill. All persons materially interested in the subject matter of the suit, either as complainants or defendants, must be made parties. (2 Paige’s Rep. 18.) Henry Bush is interested in the subject matter of this suit. He is the principal debtor. He may have a defence to this suit, on the ground of payment, usury, &c. And as he is bound to indemnify O. N. Bush and Avery$ one as his surety and the other as purchaser, he ought to have an opportunity of being heard. If a decree passes according to the prayer of the bill, a debt is established against Henry Bush, who is not a party and has had no opportunity of being heard in his defence. (See Johnson v. Hart, 3 John. Cas. 322.) Both Avery and O. N. Bush have an interest in having Henry Bush made a party. Co-obligors must, as a general rule, be made parties to a suit upon the joint obligation; (1 Simons & Stuart, 246. 16 Vesey, 326. 3 Atk. 406.) The only exception to this rule is, that an insolvent surety need not be joined. It is no answer' to this objection that Henry Bush is not a resident of the state. Ample provision is made in the revised statutes for non-residents parties.
   The Chancellor.

Henry Bush, the first mortgagor, was personally liable to the complainant for the payment of the debt secured by his mortgage *, and, if he had been within the jurisdiction of the court, the complainant might unquestionably have made him a party for the purpose of having a decree over against him for the residue, under the provisions of the revised statutes, in case the proceeds of the mortgaged premises should be insufficient to satisfy the debt and costs. He was, therefore, a proper party, although not a necessary party, to a bill of foreclosure against the grantee of the equity of redemption. In other words, so far as concerns this first mortgage, the complainant might, if he had thought proper, have made the mortgagor a party, for the purpose of having a decree over against him for a. deficiency. But the assignee of the equity of redemption, who had no interest whatever in that question, and who could not be in any way benefitted by having him made a party for that purpose, has no right to object that the original mortgagor is not a party to the suit. So far as the right's of an assignee of the equity of redemption are concerned, the mortgaged premises are the primary fund for the payment of the debt, unless the mortgagor has conveyed to him with warranty ; and the assignee may set up any defence which will be a bar to the complainant’s claim against the land.

The claim of O. N. Bush to have the first mortgagor made* a party depends upon a different principle. He is, in' this case, in the situation of a mere surety for the payment of the debt secured by the first mortgage; and, if the mortgaged premises are insufficient to pay the debt and costs, H. Bush is, in equity, bound to pay the deficiency, before resort is had to the lands mortgaged by O. N. Bush, or to the surety personally. Had it not been stated in the bill, therefore, that the original mortgagor was beyond the reach of the process of the court, I should have had no hesitation in ■ declaring that the demurrer on the ground that he was not a party, was well taken by O. N. Bush the surety. It remains then to consider the question whether a sufficient excuse is stated in the bill for not making Henry Bush a party to the suit.

Under the provisions of the revised statutes relative to proceedings against absentees, I can see no possible benefit jn this case which the. surety would obtain by having the absent mortgagor made a party to this bill of foreclosure. The proceeding against a defendant residing out of the state js strictly a proceeding in rem, and will not be binding upon him personally beyond our territorial jurisdiction unless he should think proper voluntarily to appear in the suit. (Story's Confl. of Laws, 458, § 546. Id, 508, § 609.) A decree over against Henry Bush, personally, for the payment of the balance which may remain after applying the proceeds of the premises first mortgaged, would therefore be of no possible use to the surety, or to those claiming under him; as-their rights against the principal debtor will be the same whether he is or is not a nominal party to this suit. For these reasons I think this demurrer is not well taken by either o£ these defendants. The demurrer as to Avery is clearly frivolous, as he had no pretence for insisting that H. Bush should be made a party to the suit, so far as related to the proceedings against the mortgaged premises in which Avery was interested. As to the other defendant, however, I cannot say that there was not sufficient doubt on the subject to authorize him to take the opinion of the court upon the question whether the principal debtor ought not to be made a party, as an absentee, although he resides in another state.

The usual order must therefore be entered overruling the demurrer, with costs, and requiring the defendants to pay the costs and put in their answer within twenty days or that the bill be falten as confessed against them.


text:
    H. & M. C. Gouverneur vs. Titus, administratrix, &c.
    1837. March 7.
    Where the owner of the north east corner of a lot of land sold the same, but by mistake conveyed to file purchaser the northwest comer ofthe lot, which belonged to another person ; and the purchaser afterwards sold the same land to the complainants in payment of an antecedent debt, but made the same mistake in his conveyance to them ; and upon the discovery of the mistake the grantor and grantee in the first deed joined in a deed to the complainants, for the north east corner of the lot, for the purpose of correcting the error in the former deeds ; Held, that the complainants were entitled to the land in equity in preference to the defendant who had purchased in the same, after notice of the mistake, under a judgment recovered against the original vendor after the giving of the first deed but before the giving of the deed in which the error was corrected.
    As a court of equity will not allow the legal Hen ofa judgment to be enforced against a vendee who had purchased and paid for his land before the recovery of the judgment, a purchaser of the land under such judgment, who at the time of his purchase had notice of the equitable rights of the original vendee, will not be permitted to hold the land as against him or his assigns.
    Tins was an appeal from a decree of the vice chancellor of the first circuit. The object of the complainants’ bill was to restrain the defendant from perfecting a legal title to certain real estate in the county of Franklin. The defendant claimed under a judgment which at law overreached the legal title of the complainants to the premises in question, in consequence of a mistake in the description of the land in the first conveyance from the judgment debtor, which conveyance was previous to the judgment, but which mistake had been corrected in a subsequent deed from him. The facts in the case, so far as they are material to a correct understanding of the rights of the parties, are as follows: On the 8th of August, 1827, Abijah Hammond, being the owner of 3109 acres of land, the premises in controversy in this cause, in the north east corner of township No, 8 in great tract No. 1 in McComb’s purchase, in the county of Franklin, sold the same, together with several other parcels of land in the same county, to his son C. H. Hammond for $2000. But in the conveyance which was executed at that time the 3109 acres were by mistake described as lying in the north west corner of the township, instead of in the north east corner. Subsequent to this conveyance the defendant recovered a judgment against A, Hammond, in the supreme court, for a very large amount, which thus became a lien upon the premises before the mistake in the conveyance was discovered. Previous to that time A. Hammond had given a bond and mortgage upon 10,000 acres of wild land in the same township, to secure the payment of a debt due to the complainant for about $7000 and interest. This mortgage was afterwards foreclosed in chancery, and the premises were bid in by the complaina3its on the 30th of May, 1829, leaving a large por, tion of their debt unpaid. And on the same day, in pursu, anee of a previous agreement between them and Abijah Hammond and C. H. Hammond, to convey to them the premises in controversy in full satisfaction of the balance or deficiency which might be due to them on the bond given with the mortgage, Charles H. Hammond gave to them a deed that was intended to cover the 3109 acres which he then supposed had been conveyed to him by his father; but the description being copied from the deed of August, 1827, the same error occurred in the conveyance to the complainants, and was not then discovered. The defendant afterwards caused the 3109 acres to be sold upon her judgment, and bid in the same herself; at which time the mistake in the deeds had been discovered and she had notice thereof. On the 16th of December, 1829, for the purpose of correcting the error in the previous conveyances, Abijah Hammond and C. H. Hammond joined in a new conveyance or deed of confirmation to the complainants ; in which deed the premises were correctly described. The alleged mistake in the conveyance from A, Hammond to his son C, H. Hammond, and in the deed from the latter to the complainants, was fully established by the proofs in the cause ; and the premises not having been conveyed to the defendant by the sheriff upon the sale under the execution, the vice chancellor declared the premises discharged from the lien of the judgment, and decreed a release by the defendant and a perpetual injunction against her claim under the judgment. He also decreed costs to the complainants out of the estate in the defendant’s hands as administratrix. (See 1 Edwards’ Ch. Rep. 477, S. C.) From this decree the defendant appealed to the chancellor.

      S. A. Foot, for the appellant.
    The mistake in the deed from Abijah to Charles H. Hammond cannot be corrected in favor of the grantee or of the complainants, against the defendant, without full proof that it was given for a valuable consideration and without any fraudulent intent. The complainants must prove affirmatively, that the deed was given, for a valuable consideration and in good faith. They have failed to produce any such evidence. The complainants are not purchasers for a valuable consideration, having ta? ken their deed to secure or satisfy a pre-existing debt, and are not therefore entitled to the aid of this court against another creditor. Their debt is not extinguished, It still remains. The court never interferes to aid one creditor against another, to secure or procure payment of his debt, To give a deed, mortgage, note, &c. the character of having been given for a valuable consideration, the party receiving the same must have irrevocably parted with something of value on the credit of it. (Bay v. Coddington, 8 John. Ch. Rep. 56. 4 Paige’s Rep. 215, 3 Idem, 421. 1 Hall’s Rep. 562.) The complainants’ deed was taken as payment of a pre-existing debt, not for any new consideration .paid or given at the time; and the pre-existing debt was not released.

      T. L. Ogden & W. H. Harrison, for the respondents.
    It is clearly established by the proofs that the two conveyances from Abijah Hammond and wife and from Abijah Hammond and wife and Charles H. Hammond to the complainants, were intended to convey to the grantees 3109 acres in the. north east corner of the township No. 8, or St. Patrick, and that the description of these lands as being situate in the north west corner was a mere mistake: which mistake, both conveyances having been made on a valuable consideration, ought to be rectified according to the intent of the parties. The defendant having purchased with notice of the mistake and of the complainants’ rights, is, and without notice would be subject to all the equities of the complainants against the defendant in the suit at law. (Burn v. Burn, 3 Ves. 522. Wiser v. Blackley, 1 John. Ch. Rep. 607. Rogers v. Rogers, 1 Paige’s Rep. 170. 5 John. Ch. Rep. 226.) The complainants, under the circumstances of the case, are entitled to a release and to a perpetual injunction, according to the prayer of the bill. A bona fide unregistered mortgage will prevail over the general lien of a subsequent judgment. The defendant ought to pay costs. In this transaction she does not act as administratrix. She has transcended her duty as such. (1 Paige's Rep. 280, 472. 11 John. Rep. 555. 1 John. Ch. Rep. 473, 508.)
   The Chancellor.

It is admitted by the counsel for the appellant that the fact of the mistake in the two original conveyances of August 1827 and May 1829 is fully established by the evidence in the case; and as the defendant had notice of such mistake before the purchase of the premises under her execution, she acquired by that sale no greater right, as against C. H. Hammond or those who had subsequently acquired his equitable interest in the premises, than she previously had under the judgment itself. (Eells v. Tousley, 1 Paige’s Rep. 280.) I cannot discover upon what principle the defendant claims the right to inquire into the amount or sufficiency of the consideration of the conveyance from C. H. Hammond to the complainants* or whether that deed was given for a present consideration or in payment of an antecedent debt. By the deed of confirmation they have obtained all the legal and equitable interest both of C. H. Hammond and of his father in the land ; the legal title at that time being still in Abijah Hammond. And the erroneous conveyance to them of May, 1829, and the circumstances connected therewith, are only material to show that the deed of confirmation was intended to carry into effect a previous arrangement, and was not the mere purchase of a right in litigation. In other, words, if C. H. Hammond, previous to the agreement of May, 1829, had an equitable right to a conveyance of the legal estate in the premises discharged of the lien of the defendant’s judgment, the complainants, by the deed of confirmation, have acquired both the legal estate and that equitable right, and are therefore entitled to the relief claimed by their bill. But if C, H. Hammond had no such equitable right, then the payment to him of a present consideration in money, at the time of the conveyance of May 1829, could not have helped their case as the lien of the judgment had then attached, and in that case would overreach their title in equity as it now does at law.

The defendant is estopped by her covenant with Abijah Hammond and C« H. Hammond, in the release of the 10th of December, 1829, from impeaching or calling in question the consideration of the deed to C. H. Hammond of August, 1827, in any suit or action respecting the premises in controversy. And by the deed of confirmation which was executed six days afterwards the complainants became entitled to the benefit of this covenant, as the assignees of the premises or subject matter to which the covenant related. The vice chancellor is clearly right in the construction of this covenant; as it is evident from the whole instrument, when its different parts are taken together, that it was intended to provide for the very case now under consideration. The facts in relation to the mistake were then all fully known. C. H. Hammond agreed to release to the defendant all his interest in the lands conveyed to him by his father, for the purpose of relieving him from the judgment; leaving the defendant to enforce the lien of the judgment against this 3109 acres which had not actually been conveyed by the deed, provided she had the equitable right to do so under the circumstances of the case. But as he had released all his right to the other lands to the defendant, he did not intend to permit her to question the bona lides of the transaction with his father in relation to that conveyance, either in a litigation with himself or with those to whom he had agreed to convey this 3109 acres. If such was not the intention of the parties it is impossible for me to conceive for what object this covenant was inserted in the release; The question which the parties intended to leave for future litigation unquestionably was, whether the equitable right to have a conveyance of the land intended to be embraced in the deed but left out by mistake, should be allowed to prevail as against the legal lien of a subsequent judgment against the grantor. That question had been decided in this court a short time previous, though the decision was probably not known to these parties at that time, as the first volume of Paige’s Reports had not then been published.

As the law upon which the rights of these parties depend is now considered as settled by numerous decisions both in this state and elsewhere, there is no ground for disturbing the decision of the vice chancellor. And as this litigation has been carried on by the defendant for the benefit of the estate which she represents, I cannot say it was an improper exercise of the discretion of the vice chancellor upon the question of costs, to charge the costs of the suit upon that estate. The decree of the vice chancellor is therefore affirmed with costs.


text:
    Stephenson vs. Stephenson and others.
    1837. March 7.
    Where a hill has been filed against an infant defendant and a general answer thereto has been put in by the guardian ad litem, the infant upon his arriving at full age, and before decree, is entitled as a matter of right to an order for leave to put in a new answer, upon his showing to the satisfaction of the court that a new or further answer is necessary to protect his tights.
    A bill against an infant while he remains a minor, is a bill for relief merely, as the answer of the guardian ad litem cannot be used as evidence either for or against the infant. And if the infant after he becomes of age applies and obtains leave to put in a new answer in person, it is proper to allow the complainant to amend his bill so as to waive an answer on oath as to him.
    Whether an answer on oath can be waived as to one only of several defendants, who have a joint interest in the subject of the litigation ? Qutzre.

    Tins was appeal from a decision of the vice chancellor of the first circuit. At the time of filing the bill in this cause William Stevenson, one of the defendants, was an infant and put in a general answer by his guardian ad litem.
    After he arrived at the age of twenty-one, upon an affidavit that a special answer would be necessary to protect his rights, he applied to the court for leave to put in a new or further answer or defence to the suit. The vice chancellor gave him permission to file a new answer, or to plead or demur to the bill as he should be advised ; but allowed the complainant to amend his bill so as to waive an answer on oath from this defendant. From this last part of the decision of the vice chancellor William Stevenson appealed.

      W. S. Sears, for the appellant.

      W. Silliman, for the respondent.
   The Chancellor.

The appellant could not have made any defence under the answer of T. Stevenson which he could not have made under the general answer put in by his guardian ad litem. The abandonment of the defence by T. Stevenson could not, therefore, in any way alter or prejudice the rights of the appellant. But in this stage of the suit, and before he had taken any steps in the cause in his own name after he came of age inconsistent with such a claim, it was a matter of course, upon his showing that a further answer was necessary to protect his rights, to permit the minor who had arrived of age to put in a new defence. The general answer is merely a denial of the allegations in the bill. And where the infant has any distinct and separate defence which requires other matters to be put in issue, not contained in the bill, it is right and proper to give him an opportunity to put in a new answer when he arrives at age, in case the guardian ad litem, either through ignorance of the infant’s rights or otherwise, has neglected to put in an answer which is sufficient to cover the whole defence. The vice chancellor was therefore right in allowing the appellant to make a new defence.

But. as the appellant chose to abandon the answer put in by the guardian ad litem, it was also a matter of course to permit the complainant to amend his bill, so far as the rights of this defendant were concerned. At the time the bill was filed, and when this defendant was an infant, it would have been useless to waive an answer from him on oath, as his guardian ad litem could not put in an answer which could be used as evidence either for or against the infant. (Bulkley v. VanWyck, 5 Paige’s Rep. 536.) It is in consequence therefore of this special application to put in a new answer by the defendant in person after he is of age, that it becomes necessary for the complainant to decide whether he will make this .a mere bill for relief against this defendant, as it in fact was while he was a minor, or a bill for a discovery and relief, as it would now be if he should not amend so as to waive the necessity of an answer on oath. There is nothing in the case which shows that there is any other adult.defendant who has a joint interest with the appellant; and the question does not therefore arise whether an answer on oath can be waived as to one and not as to the other in such-a case.

The decision of the vice chancellor was right; and. the order appealed from must be affirmed with costs.


author: C. H. Ruggles, V. C. The Chancellor.

text:
    Sweet and others vs. Jacocks and others.
    1837. March 21.
    Whore a feme covert, after having two children by her husband, abandoned him and lived in adultery with J., during which time she had eight other children supposed to be the children of J., and then died, after which time her father died intestate leaving a large real and personal estate, the whole of which was claimed by the two first children, and a part of which was also claimed by J., acting in behalf of the eight younger children; and thereupon a compromise was effected, in consequence of which the two first children released eight tenths of the property to J., for the benefit of the others, but the conveyance on its face was absolute to J., who never gave any declaration of trust; and afterwards the estate was partitioned and eight tenths thereof set off to J.; Held, that the beneficial interest in that portion ofthe property which was released to J. belonged to the eight younger children, and that J., could not set up their illegitimacy as a defence to their claim; and thatthe legal liens of judgment creditors of J. upon the property could not prevail against the equitable claim of such children.
    Where a person undertakes to act for another, he is not allowed to deal in the subject matter of such agency on his own account and for his own benefit. And if such agent takes a conveyance in his own name of an estate which he undertook to obtain for another, he will in equity be considered as holding the estate in trust for his principal for whom he undertook to act as agent in the purchase.
    Where a fund is in court, arising from the surplus monies in a foreclosure suit, or is in the hands ofthe officers of the court, it is a matter of discretion with the court to direct a bill to be filed to ascertain the rights of conflicting claimants, or to settle their rights upon a reference to a master. And a claimant who has obtained a reference to ascertain his right to such surplus cannot afterwards object to the claims of other persons, as improper to be settled on a reference without a bill filed by them.
    A judgment obtained against the owner of an equity of redemption in mortgaged premises, after a decree of foreclosure but before a sale of the premises by the master, has an equitable lien upon the surplus monies produced by the sale under the decree. Miter, if the judgment was docketed subsequent to the sale.
    This was an appeal from a decretal order of the vice chancellor of the second circuit, relative to the surplus proceeds of mortgaged premises sold under a decree in this cause. The mortgaged premises, with other real estate, belonged to John Cornell, who died in February, 1817, intestate ; upon which event, one fifth of his real property and a portion of his personal estate passed to the legitimate children of his daughter Sarah Montfort, then deceased. Mrs. Montfort had two children while she continued to reside with her husband; Phebe, the wife of C. Peckham, and Peter Montfort. She afterwards lived in adultery with the defendant, Francis Jacocks ; and while she was so living with him, during the life ofher husband, she had eight other children, who were the respondents in this appeal and the claimants of the surplus proceeds of the mortgaged premises, in opposition to the claims of Jacocks and his creditors. After the death of Cornell, the two eldest children of Mrs. Montfort attempted to make partition of his property; claiming the entire one fifth of the real and personal estate. Jacocks, in behalf of the other children, employed counsel to resist that claim, insisting that the other children were entitled to share equally with them in that one fifth of the estate ; such other children being then all infants. A compromise was finally made, by which the two eldest children released to Jacocks eight tenths of the share of their mother in the real and personal estate, and the property was afterwards divided accordingly—Jacocks taking the conveyance in his own name. In the partition of the seal estate, the premises sold under the decree in this cause, together with other lots which he had subsequesitly sold, were set off to Jacocks. And after the partition Jacocks gave to Van Cott the mortgage which was foreclosed in this cause. J. Rymph had a judgment against Jacocks, and was made a party to the bill of foi’eclosure. S. Cleveland recovered a judgment against Jacocks after the decree of foreclosure, but whether before or after the sale of the premises by the master, it did not appear. The surplus proceeds of the mortgaged premises were between fifteen and sixteen hundred dollars. And upon a reference to the master to ascertain the rights and priorities of the several claimants of this surplus, the master rejected the claim of the eight children of Mrs. Montfort to any part of the same, and decided that the judgments of Rymph and Cleveland were to be first paid, and that F. Jacocks was entitled to the residue. Upon exceptions to the master’s report, the vice chancellor decided thatF. Jacocks was only entitled in equity to a life estate in the real and personal property released and conveyed to him by the two eldest children of Mrs. Montfort, for the benefit of the other children, and that such other children were entitled to the remainder in equal portions. He also decided that the judgment creditors of F. Jacocks were not entitled to any greater interest in the fund, as against the equitable rights of the children, than Jacocks himself had; and a reference was directed to a master to state the account between Jacocks and the children, so as to ascertain the rights of the several parties in the surplus upon these principles. From this decision of the vice chancellor, F. Jacocks and Cleveland appealed.
   The following opinion was given by the vice chancellor upon the making of the decretal order appealed from:

C. H. Ruggles, V. C.

The land which produced the fund in question was conveyed by Peckham and wife and P.Mont-fort toF. Jacocks by a releasein fee, absolute, without any express trust; and the grantee has never given any declaration of the trust in writing. He cannot therefore be charged as trustee unless by reason of some fraud practiced in obtaining the conveyance. But the circumstances under which the release was obtained by him are such as make him chargeable with a fraud, and to render him liable to account as a trustee, notwithstanding the statute of frauds which requires all declarations of trusts to be in writing. It is clear that Jacocks had not the least shadow of alega! claim to any part of the real or personal estate of John Cornell, deceased. There was no pretence that he was the husband of Sarah Montfort, and the circumstances under which he had lived with her were certainly not calculated to inspire those who were lawfully entitled to that estate with any feelings of regard or affection for him. And yet it is found that the deed from Peckham and wife and Peter Montfort conveyed to him a large interest in three valuable parcels of land. One of them, the mortgaged premises, sold for $4000, and another he sold for $585. There is no proof in relation to the value of the Fishkill farm. Jacocks estimated the persona] property whichhe obtained at $1500, according to the testimony of Mrs. Williams. It is plain, therefore, that by some means and on some pretence, he has had of the estate a sum which exceeds $6000, and is probably ipuch greater, and for which he has paid not more than $100, and it is doubtful whether he has paid more than one dollar. It is most extraordinary that property to this amount should have been conveyed to him without liability to account for it to some one, and without consideration paid somewhere. So, however, it is claimed by Francis Jacocks.

The eight younger children of Sarah Montfort are regarded as illegitimate, and as the offspring in fact of F. Jacocks, whose name they bear. But it is to be remembered that they were born during the lifetime of Montfort, the husband of their mother, who may notwithstanding any evidence in this case have had access,to his wife during the whole period of her cohabitation with Jacocks. There was therefore no slight ground for a claim on their part to an interest in the estate of John Cornell. Their claim was asserted by Jacocks, and it was most, clearly the basis of the compromise between Peckham and Montfort on the one side and Jacocks on the other, upon which compromise the deed of the 17th June, 1818, was given. The children in whose behalf Jacocks professed to act were infants for whom, notwithstanding the circumstances of their birth, Peckham and wife and Peter Montfort felt a regard as the children of their mother; and Jacocks, whilst in treaty for the conveyance, made the strongest expressions of affection and kindness for them as his own offspring, alleging that he would be as unwilling to wrong them as any other parent would his children. He made no definite and distinct claim of right for himself, though he said that he wanted a living out of the property. But he declared his intention that the children should have it after his' déath; or in his own words, “ after he had done with it.” It was further stated also, that the children being minors, the taking the deed in his name would facilitate the proceedings in partition and the settlement of the estate which was desirable to Peckham and wife, who lived in one of the western counties. It was moreover stated to Peckham that Jacocks, acting for the benefit of the children as well as himself, would be equitably accountable to them for their interest in the property.

The conduct of Jacocks was corrupt and fraudulent in betraying the trust which he assumed, of acting as the agent and protector of his children in enforcing and settling their claim to an interest in the land. Under the circumstances which exist in this case, the taking the deed in his own name was in itself a fraud. He cannot be permitted now to say that the children being illegitimate had no title and have therefore lost nothing by his means. Their alleged rights were the foundation of the arrangement by which he has received $8000. Their claims were the consideration in fact on which the deed was executed. If he had not undertaken to arrange and conduct their business, some other friend might have done so, and have brought the negotiation to a successful and beneficial result. The agent for infant children cannot be permitted to take to himself the entire property acquired by his agency without liability to account for it. It is one of the most familiar principles of equity that no one shall take advantage of a fiduciary relation between himself and another to make gain to himself. Although Jacocks was the self-constituted agent of his children in the compromise between Peckham and Montfort, this principle is not the less applicable to his case. When he assumed the agency he assumed its duties and responsibilities. The children chose to affirm the authority on which he professed to act; and he will not be allowed now to deny it. A trustee is not permitted to purchase trust property. (Jeremy's Eq. Jur. 393, 4.) An agent cannot become the purchaser indirectly of property entrusted to him to sell. (Lowthn v. Lowthn, 13 Vesey, 95. Whitcomb v. Minchn, 5 Maddock, 91. Woodhouse v. Meredith, 1 Jac. & Walk. 204.) Much less can an agent dealing in behalf of his principal, professing to settle and compromise a claim in behalf of such principal take the entire fruits of the negotiation to his own use. And yet, in order to resist the claim now made by the children of Jacocks, it seems to be necessary that he should support the affirmative of the proposition to its full extent. If the claim of the children was in fact the substantial basis and inducement which led to the grant by Peckham and Montfort, (and of that there is no doubt,) it seems to be immaterial to inquire whether they intended the deed for the benefit of the children or of Jacocks. The latter intention would only make them parties to the fraud without relieving Jacocks from the imputation or the responsibility. But the evidence plainly shews that Jacocks endeavored to impress them with a belief that the conveyance was to be for the benefit of the children ; and they were made to understand that Jacocks, acting for the children, would be accountable in equity to them, although the deed was drawn to him. Peckham and Montfort were therefore innocent of any intended fraud. This claim of the children, although it is not strictly and technically a resulting triist, has in it the substantial equity of such a trust, because the supposed title of the children was substantially the consideration of the release of 1818 by Peckham and Montfort to Jacocks.

S. Cleaveland, for the appellants.

The rule of court under which these proceedings are instituted contemplates legal liens and interests, such as are consistent with the title and estate set forth in the bill of foreclosure, not equitable interests, or such as are adverse to the title under which such proceedings of foreclosure were had. If the children of Jacocks claim the surplus monies by adverse title, alleging fraud, &c. their remedy should be by bill. No trust ever existed ; if any did exist, it being by parol, it is void unless it be a resulting trust, which it is not. The trust attempted to be set up is so vague and uncertain that a court could not decree its execution; hence it is void for that reason. No legal rights of the Jacocks’ children have been impaired or affected, either by the purchase of Jacocks or sale under the decree 5 if any ever existed, they can be enforced against the occupants of the land of which John Cornell died seized. The infants are not legally before the court, and are not bound by any decree that has been or can be made in the cause; hence the decree is in regard to them erroneous.

There are other grounds on which Francis Jacocks would be liable to account to the claimants in this case, but it is not necessary to point them out. The only doubt in my mind is, whether F. Jacocks is entitled to any beneficial interest whatever under the deed of 1818. Inasmuch, however, as there is evidence of the intention of Peckam and Montfort that he should have a life estate in the premises, and the claimants themselves appear to think the arrangement proposed in the draft of the trust deed made in 1820 to be reasonable and just, I take that substantially as the basis of the disposition of the fund in question. And the judgments against Jacocks are liens only on his interest in the land, and not on the equitable interest of the children, (1 Paige’s Rep. 130, 280. 2 John. Rep. 267.)

J. Brush, for the respondents.

From the facts in the case, the eight children who are the claimants are to be presumed to be the lawful children of Sarah Montfort, the daughter of John Cornell, deceased, and entitled to eight tenths of one fifth of his property. (1 Bac. Abr. 512.) If the claim of heirship of the eight children to the estate of John Cornell, deceased, was even doubtful, the fair and bona fide settlement of that claim is a sufficient consideration for a settlement, and is binding upon the parties if the infants choose to have it binding. The claim of the eight children was the only consideration for the conveyance given to J. Jacocks upon such settlement, he not having the least shadow or pretence of a claim on his part. The evidence shows what that settlement was and that it was made for the benefit of the children. The settlement created a trust estate for the benefit of the eight children, whether Francis Jacocks was either honest or dishonest in the inducement he held out to obtain the deed. (1 Paige’s Rep. 147.) Francis Jacocks has wasted more than the value of his life estate, so that all that remains belongs to the eight children. The judgment creditors have a lien only upon the right of Francis Jacocks, none upon the equity of others. (1 Paige’s Rep. 130 and 380. 2 id. 267.) Proceedings by petition to obtain the surplus was the proper course for the children, (1 Paiges Rep. 181.)

The Chancellor.

If the judgment of Cleveland was docketed before the sale by the master, it was an equitable lien upon so much of the surplus monies as F. Jacocks was entitled to, although the judgment was obtained after the decree of foreclosure; as the court would stay the sale upon the application of a creditor having such a judgment lien, on his paying the mortgage money and costs, and the claims of all others who had prior legal or equitable liens or interests in the mortgaged premises. But if his judgment was recovered after the property was struck off to the purchaser, by the master, he never had any legal or equitable lien upon this fund or upon the premises which produced it; and being a mere creditor at large of Jacocks, he would have no right to interfere in this controversy until he had exhausted his remedy at law against Jacocks. (Douglass v. Huston 6 Ham. Ohio Rep. 162.) The conclusion at which I have arrived on other points in this case, however, renders it unnecessary for me to consider the question whether Cleveland has shown such a lien upon the fund as to authorize him to join with Jacocks in the appeal. It is also wholly immaterial to the rights of tire respondents, for if they have no claims upon the fund, it is of no consequence whatever to them how it is disposed of as between Jacocks and his creditor. And if they have any equitable claims as against him, the law is now perfectly well settled that the legal liens of his judgment creditors, whether the judgments were recovered before or after the decree, cannot in this court be permitted to prevail against the prior equitable claims of the respondents upon this specific fund. (White v. Carpenter, 1 Paige’s Rep. 217. 1 Story’s Eq. 398, n. 1, Arnold v. Patrick, ante, p. 310.)

From the undisputed facts in this case it appears that F„ Jacocks had no pretence of claim on his own account to any part of the real or personal estate of Cornell, Even if he had been the husband of Mrs, Montfort, instead of holding towards her the relation which he did, the whole of her share of the property would have belonged to her children exclusively, as she died in the lifetime of her father. And the evidence clearly shows that Jacocks made the claim to the property and assumed to act as the voluntary guardian or protector of the rights of the infant children in resisting the claims of the two adult children to the whole, and in making the compromise by which eight tenths of the share was conveyed to him. No one who adverts to the circumstances under which the conveyance to him was made, can believe that he could have obtained the same except in his assumed character of protector of the rights of the infant children, and under a belief on the pait of the grantors that their natural brothers and sisters were to have a beneficial interest in the property thus conveyed. Although Mrs. Montfort was living in adultery with Jacocks at the time of the birth of the eight younger children, it does not appear that the real husband did not have access to her so that he might have been the father. Upon the maxim,pater est quern, nuptin demonstren, therefore, this claim to part of the property in behalf of the infants was not entirely without foundation. And the person who has assumed to act for them, and who has actually obtained the property under a conveyance intended for their benefit, cannot now be permitted to insist that they had no interest in that property and that he holds it discharged of the trust.

It may even be admitted for the purpose of deciding ■this controversy, and the other joint owners have acted upon such presumption in the subsequent partition of the estate, that the whole legal title to the one fifth was in the two eldest children previous to their conveyance, but that they voluntarily relinquished a portion of their legal rights to Jaeocks' for the benefit of these younger children of their mother, to settle a family dispute the litigation of which must necessarily bring disgrace upon her memory. Even then I am not aware of any principle of law or equity, and certainly there is nothing in the code of good morals, which could authorize the paramour, under such circumstances, to claim the whole benefit of this conveyance, which was not intended for his use but for the use of the infant offspring of his guilt and infamy. It is a settled principle of equity that where a person undertakes to act as an agent for another he cannot be permitted to deal in the matter of that agency upon his own account and for his own benefit. And if he takes a conveyance in his own name of an estate which he undertakes to obtain for another, he will in equity be considered as holding it in trust for his principal. (Parkist v. Alexander, 1 John. Ch. Rep. 394. Lees v. Nuttall, Taml. Rep. 282. 2 Mylne Keen, 819, S. C.) More especially, in a case where he assumes to act as the agent and protector of the rights of infants and in that character obtains a conveyance in his own name which was intended for their benefit, will he be considered as holding the legal title in trust for them. In this case, therefore, Jacocks took the property in the character of trustee for the eight minors in whose behalf he made the claim. And he has no equitable right to the rents and profits or proceeds of any part of the property, except his claim for the sums actually expended by him in securing the title, and such sums as he may have expended for the support of the respondents respectively beyond the value of their services.

The only error of the vice chancellor, therefore, was in making a decretal order which was too favorable to the appellants, by giving to Jacocks the benefit of a life estate in the property to which he was not entitled. But as the suiv plus proceeds of the mortgaged premises are the only matters now in controversy, the taking of this account being for the sole purpose of ascertaining the right to this fund and apportioning it properly among the respondents according to the amounts which are due to them respectively from Jacocks, which amounts are now an equitable lien on this only remaining fund, the respondents will not probably be eventually prejudiced by the error of permitting him to have the benefit of a life estate in the property conveyed to him by the two elder children. There is certainly nothing in the decretal order of the vice chancellor of which these appellants had any right to complain.

As the fund was in court, and Jacocks elected to proceed on a reference to a master, under the rule, for the purpose of settling the rights of the several claimants to the surplus, it does not lie with him to object that this was not a proper mode of settling the controversy between him and the respondents, and that there should have been a more formal proceeding by bill, in which all other matters in controversy might have been finally disposed ofbetween the parties. A claim having been made upon the fund in court, neither party could be permitted to take it out, without giving security to refund, until the right to the same was settled in some manner. And if he was not willing to have the rights of the respective parties ascertained in this manner, he should, instead of asking for a reference, have himself filed a bill, or have asked to be permitted to take the fund out of court upon giving security to refund the same with interest and costs if the other claimants should succeed in establishing an equitable right to the same. And Cleveland, who was not a party to the suit, certainly stands in no better situation than the other claimants in this respect, as he comes in under the order of reference merely. In this stage of the proceedings none of the parties were in a situation to make any such objection, even if it would have been valid at an earlier period of the investigation. But there is, in fact, no ground whatever for the objection. This summary mode of adjusting conflicting claims to the surplus proceeds of mortgaged premises was adopted for the purpose of saving the costs of a multiplicity of suits, and of useless litigation. And where the fund is in court or in the hands of its officers, it is a matter of discretion merely, whether the court will direct a bill to be filed to ascertain the rights of different claimants, or refer it to a master and authorize them to litigate their claims before him, with the privilege of an appeal to the court itself, if any of the parties are dissatisfied with his decision.

The decretal order appealed from is affirmed with costs.


text:
    Van Duzer vs. Van Duzer and others.
    1837. March 21.
    Where the husband has violated the marriage contract, or has been guilty of an act which entitles the -wife to a decree for a divorce, or a separation, and for alimony, she is in equity entitled to a restoration of the property which the husband holds by virtue of his marital rights. And the court of chancery, upon the bill of the wife filed for the purpose of obtaining aidivorce or separation, will not only protect her right to such property as against the husband himself, but also as against judgment creditors, and others who do not stand in the situation of bona fide purchasers without notice of her equitable rights and of her intention to enforce them by a suit for a divorce or separation.
    So where the husband has married a ward in chancery without the consent of the court or of her legal guardian, the court, upon the ground of the husband’s contempt, has jurisdiction to interfere, upon the application of the friends of the infant wife even without her consent, to restrain the husband and his creditors from intermeddling with her estate until a proper settlement is made for the support of the wife and of the issue of the marriage.'
    But where the husband has been guilty neither of a contempt in acquiring the legal title to his wife’s property, nor of such misconduct as entitles her to a divorce or a decree for a separation from bed and board, the court of .chancery cannot, upon the application of the wife, interfere with the husband’s legal title as tenant by the curtesy initiate in his wife’s property, so as to place it beyond his reach or the reach of his creditors and secure it for the support of the wife and her children.
    The court of chancery will protect the wife’s equity in the property which the husband acquires by the marriage, whenever the husband comes into that court as a party for the purpose of enforcing his claim to such property. And it seems the court may also protect her equity in personal property to which she is entitled by bequest or under the statute of distributions, or in her choses in action which the husband has not reduced to actual possession, even where the husband has a remedy at law to recover the property, and therefore does not ask the aid of the court of chancery to enforce his marital rights.
    This was an application to dissolve an injunction upon bill and answer. The bill was filed against the husband of the complainant and two of his judgment creditors, to restrain the latter from selling the husband’s interest, as tenant by the curtesy initiate, in the real estate of the wife which belonged to her before her marriage; the husband being insolvent and worthless, and neglecting to provide for her and her children. Several other matters were embraced in the bill which were not material to the decision of the question as to the right of the judgment creditors to a dissolution of the injunction.

      M. T. Reynolds, for the complainant.

      I. R. Van Duzer & H. G. Wisner, for the defendants.
   The Chancellor.

The answer fully denies all the allegations in the bill impeaching the consideration of the judgment. Although the judgment creditors admit they had occasionally gambled with the husband of the complainant, and that it is impossible for them to say whether they have won more money from him than he has from them, yet they both explicitly swear, in their answer, that not one cent of the monies for which the judgment was obtained was won at gaming, or grew out of any gaming transactions. Neither do I think it competent for the wife, in such a case as this, to impeach the consideration of a judgment recovered against the husband, unless she can also satisfy the court that the judgment is the result of collusion, or of a conspiracy between her husband and mere nominal creditors to deprive her and her children of an equitable right to a provision for support out of her property. There is no doubt, however, as to the fact that the husband has ruined himself by gambling ; and that if his interest as tenant by the curtesy initiate in his wife’s real estate is sold on the execution upon this judgment, his wife and her infant children will be left without any means of support during his life. The only question to be decided, therefore, upon the present application is, whether this court has any power to reach this life interest so as to preserve it for her support ; and thus to protect her and her helpless children against a vicious and improvident husband and his creditors.

If the wife has any equitable rights as against the husband himself, she is equally entitled to protection as against the lien of a judgment; which cannot in this court be permitted to overreach a prior equitable claim upon the land, although at law it is a lien upon the legal estate of the husband. Had the husband, therefore, before the recovery of the judgments, been guilty of any act which entitled the wife to a decree for a divorce or a separation, and for a support fQr herse]f anc[ children out of his estate, and had this bill been filed for that purpose also, I should have found no difficulty in giving effect to that prior equity against the general lien of the judgments, as well as against the acts of the husband himself. In such cases this court considers the husband as having, by his misconduct and criminality, forfeited all equitable right to the wife’s property which he acquired by virtue of the marriage, whether the same be in possession or in action. And upon the ground that she is in equity entitled to a restoration of the property which he has forfeited by a wilful breach of the marriage contract, the court may, upon a dissolution or permanent suspension of the marriage contract, restore to the injured' wife the whole of her property which has not already passed into the hands of bona fide purchasers. .Upon the ground also that her equitable claim relates back to the time of the commission of the offence which entitled her to a divorce or a suspension of the marital rights of the husband, the court may not only protect that equity against the husband himself but also against all others except bona fide purchasers, or those who have obtained a specific lien upon the property without notice of her equitable rights and that she intended to enforce them by a bill for a separation. And a judgment creditor who has only a general lien, and which accrued subsequently to the husband’s forfeiture of his marital rights, is not entitled to enforce it against this prior equity of the wife.

It was upon this principle, as I understand the facts in the case, that the late Chancellor Kent decreed a perpetual injunction against the creditors of the husband, in Haviland v. Myers & Bloom, (6 John. Ch. Rep. 25, 178.) It is true the language of the court in that case would seem to imply that the learned chancellor intended to decide that the general equity of the wife to a support out of marital property originally hers, extended to such property which the husband had already reduced to. possession, as well as to that ivhíeh lay in action only; so as to authorize her to file a bill to protect the property actually in the possession of an improvident husband against him and his creditors. But from the reference to that case in his commentaries it is evident that the language used in the reported decision on that subject was only intended to be applied to the wife’s property in action, so far as the question of her general equity merely is concerned. (2 Kent’s Comm. 2d ed. 141.) There is another class of cases, however, and the case of Udall v. Kenney, (3 Cowen’s Rep. 590,) belongs to that class, where this court may interfere in behalf of the wife or her children, and take from the husband not only the property in action which he has acquired by the marriage but also that which he has reduced to possession, for the purpose of securing a suitable provision for the wife herself and also for the issue of the marriage. But these are cases where the husband has married a ward in chancery, without the consent of those who by law are entrusted with the protection of her property and her rights. In such cases as the husband is guilty of a contempt, and as the whole property of the infant feme covert is under the special protection of the court, the court itself even without the consent of the wife may, upon the application of any of her friends in her behalf, restrain the husband and his creditors from inter-meddling with her estate until a proper settlement is made for the benefit of the wife and the issue of the marriage.

How far this court is authorized to interfere for the protection of the wife’s equity in the marital property, not under the protection of this court, which the husband has not reduced to possession, does not appear to be fully settled. There appears to be no doubt, however, as to the power of the court to protect her equity in such property when the husband or his assignee is obliged to resort to this court for relief. (Howard v. Moffat, 2 John. Ch. Rep. 206.) The decisions, however, still leave the question in doubt how far this court can interfere, upon the application of the wife, to protect that species of property against the improvidence of the husband, where either he or his creditors can reach it without the aid of a court of equity; though Chancellor Kent, as I think correctly, supposes that the court may interpose to protect the wife’s right to a legacy or portion by will or inheritance, notwithstanding the husband has a remec¡y at ¡aw for recovery thereof. And he says, “ Perhaps chancery ought, on just principles, to restrain the husband from availing himself of any means, either at law or in equity, of possessing himself of his wife’s personal property in action, unless he would make a provision for her.” (2 Kent’s Comm. 139, 141. 4 Paige’s Rep. 64.)

In the case under consideration, however, with the strongest desire to protect, if possible, this unfortunate wife and her helpless children, who are about to be reduced to beggary in consequence of the improper conduct of an improvident and gambling husband and father, aided and encouraged perhaps in his vicious courses by those who are now about to take from the wife and children their only means of support, I have not been able to find any principle either of law or of equity which can authorize this court to interfere with the husband’s legal estate, as tenant by the curtesy initiate in his wife’s real property, so as to place it beyond his reach and the reach of his creditors. The general rale of law is well settled, that by the marriage the husband takes an immediate vested interest in his wife’s freehold estate for their joint lives, at least, and an absolute right to all her personal property in possession, unless the same is in the hands of a trustee, or is protected by an ante-nuptial contract. The case of Thomas v. Sheppard, before the court of appeals of South Carolina, (2 M’Cord’s Ch. Rep. 36,) is a direct decision upon the question now under consideration; and after a careful examination, I have not been able to find that any judicial tribunal has adopted or sanctioned a principle of equity which would necessarily lead to a different conclusion. The opinion of the learned commentator upon American law, who has carried the doctrines of the wife’s equity as far as it had ever been supposed to extend by any judge who has preceded him, evidently is that it does not extend so far as to authorize a court of equity to seize upon property which formerly belonged to the wife, hut in which the husband has, without fraud, obtained a vested legal interest in possession by virtue of his marital rights; unless he has forfeited his right by a breach of the marriage contract, so as to entitle the wife to a decree of separation. And as the whole doctrine of the wife’s general equity depends upon a course of judicial precedents, I do not feel myself authorized to go beyond this plainly marked boundary, in a case where there is no pretence that the husband has been guilty of any act for which the wife intends to seek a dissolution of the marriage, or a judicial separation.

The injunction must therefore be dissolved.


text:
    Hunt vs. Wallis and others.
    A chamber order made by a vice chancellor or an injunction master, giving further time to answer, and not entered in the minutes as an order of the court, is a mere nullity if not authorized by the 125th rule; and an application to set aside such an order is unnecessary.
    A vice chancellor has no power to make a chamber order, in a suit before him, except were he is authorized by a general rale. But an order made by the vice chancellor before whom the cause is pending will be deemed as made in court and not as a chamber order, where it is drawn up and entered with the clerk as an order of the court.
    An irregular order made by the court and entered as a special order, although made ex parte, is not void, but remains in force until it is set aside by the court, or is waived by stipulation.
    Where several applications in a cause are decided at the same time, if the party who draws up the order on such decisions neglects to state therein a part of the directions of the court which were given, the adverse party, instead of entering a seperate order, should propose amendments to the first order as drawn up ; or he should apply to have such order corrected so as to embrace therein the whole directions given by the court on such applications.
    Where a party drew up and entered an order not warranted by the decision of the court, and appealed therefrom, and the court afterwards set aside the order as improperly entered, the appellate court, upon the application of the respondent, ordered the appeal to be dismissed.
    Where the respondent draws up and enters an order which is appealed from by the adverse party, it does not lie with the respondent to object that such order is not in conformity to the decision of the court, as to the part thereof which is appealed from. But the court by whom the order was made may direct the order to be corrected, so as to conform to the decision, notwithstanding the appeal. And if the order is thus entered, the appellant is at liberty to elect either to abandon the appeal or to consider it as applicable £o the order as amended.

      1837. March 21.
    The court of chancery does not open an order to take the bill as confessed in a foreclosure suit, or in any other case in which the defendant has an interest to delay the proceedings, on a mere affidavit of merits although the default is excused. But the sworn answer which the defendant intends to put in must be produced; or he must state in his affidavit or petition to open the default, the nature of his defence and his belief in the truth of the matters constituting such defence.
    The affidavit of the solicitor, showing a meritorious defence and the nature thereof, is not sufficient unless he is himself acquainted with the facts; and even then a sufficient excuse must be shown for not producing the affidavit or sworn answer of the defendant.
    This case came before the court upon two appeals by the complainant upon orders considered as entered with the clerk of the first circuit; and also upon an application to dismiss both appeals under the following circumstances. The bill and notice of the order to answer were served on the 29th of December. On the 8th of February, after the time for answering had expired, the defendant’s solicitor obtained from the vice chancellor a chamber order extending the time for answering thirty days; which order was served the same day upon the law partner of the complainant’s solicitor. But the chamber order being considered irregular, an order was entered on that day to take the bill as confessed and notice thereof was given to the defendant’s solicitor. The complainant’s solicitor afterwards gave notice of an application to the court to set aside the chamber order for irregularity, with costs. And the solicitor of the adverse party made a cross application, at the same time, to set aside the order taking the bill as confessed and all subsequent proceedings, for irregularity, with costs, and to allow the defendants thirty days to answer; or for such other order as the court might see fit to grant. Both motions were heard together, on the 20th of February; and the next morning the vice chancellor decided that the chamber order should be set aside without costs to either party, but that the order to take the bill as confessed should also be vacated, and the defendants allowed twenty days to answer the bill, upon payment of costs. The clerk, however, misunderstood the decision of the vice chancellor, and made an entry in his rough minutes that the motion to vacate the order taking the bill as confessed was granted upon payment of costs, and that the cross motion to set aside the chamber order was denied, but without costs. The defendant’s solicitor thereupon drew up an order, and entered it with the clerk the same day, reciting the hearing of the motion and cross motion, and directing that the order to take the bill as confessed be vacated, and that the defendants have twenty days to answer, on payment of the costs of the defendants’ motion, but that no costs be allowed to either party on the complainant’s motion; a certified copy of which order was served upon the complainant’s solicitor. On the next day thereafter the complainant’s solicitor drew up and entered with the clerk another order, denying the motion to vacate the chamber order of the 8th of February without costs to either party. And on the same day he entered seperate appeals from this order and from the order drawn up and entered by the defendant’s solicitor. A notice was immediately given to the complainant’s solicitor to attend before the vice chancellor to correct the orders according to the decision which had been made upon the motions. The vice chancellor after hearing the parties, directed the order drawn up on the part of the complainant, and delivered to the clerk to be entered, to be withdrawn from the files of the court, the same not having been entered in the book of orders. And he also directed the order entered by the defendant’s solicitor to be amended so as to conform to the decision, by adding a clause thereto directing the chamber order of the 8th of February to be set aside. The complainant’s solicitor protested against this proceeding, on the ground that he had appealed from the orders. And although the defendant’s solicitor offered to permit him to withdraw the appeals, he insisted upon going on with the same, and noticed them for hearing before the chancellor.
    J. Greenwood, for the appellant.

      C. Edwards, for the respondents.
   The Chancellor.

It is not very material to the rights of the parties whether this cause is disposed of upon the appeals from the orders as originally entered, or upon the motion to dismiss the appeals in connection with the c 'leías amended by the vice chancellor to conform to his decision. The result in either case will be the same, as the order drawn up by the complainant’s solicitor is not erroneous, even in the form in which he thought fit to enter it. A chamber order granted by an injunction master, or by a vice chancellor out of court, giving further time to answer, is a mere nullity if it is not authorized by the 125th rule; and an application to the court to set it aside is an entirely useless proceeding. In this respect it is entirely different from an irregular order made by the court upon an ex parte application, which remains in force until it is set aside. Although the suit or proceeding is before a vice chancellor, he has no jurisdiction or authority to make a chamber order to affect the proceedings in the cause, except so far as such an order is authorized by some general rule. But as the court is always open, an order made by him at his chambers is considered as made in court, provided it is regularly drawn up and entered with the clerk as an order made by him in court. In this case the order for further time to answer after the expiration of the forty days would have been perfectly regular if, instead of its being made and served as a mere chamber order, the vice chancellor had directed an order to the same effect to be entered with the clerk, and the same had been so entered and served before the entry of the order to take the bill as confessed. But the complainant’s solicitor having treated the chamber order as a nullity, as he was authorized to do, was himself in an error in afterwards applying to set it aside with costs. And as he "had asked for costs in his notice, and thereby compelled the adverse parties to appear and oppose the motion to save themselves from costs, the vice chancellor would have been authorized to deny the motion, and to give the adverse parties the costs of opposing such a useless application. If, therefore, the appeal from the order entered by the complainant is not dismissed upon the ground that the vice chancellor never made or intended to make such an order, the order itself should be aErmed; because it would not have been erroneous for the vice chancellor to have denied the complainant’s application if he had thought proper to do so.

But the whole proceedings in relation to this separate order and the appeal from the same were erroneous; and that appeal must be dismissed. If there was any real dispute as to what the decision of the vice chancellor actually was, his certificate and directions to the clerk is better evidence of what he intended than the rough minutes of the clerk, who without knowing all the facts of the case is very liable to misapprehend the details of a decision. In this case it is evident the clerk misunderstood some part of the directions which were actually given, as nothing is said in the rough minutes relative to allowing the defendants twenty days to answer, which was unquestionably embraced in the decision. Where several applications are decided or several directions in a cause are given at the same time, by the court, it has already been intimated in a reported case that it is improper to enter separate and distinct orders for the purpose of swelling the costs, or of rendering several appeals necessary. (Gregory & Selman v. Dodge, 2 Paige's Rep. 90.) In such cases, unless the court shall otherwise direct, the whole should be embraced in one order. And if the party entitled to draw up the order does not embrace the whole which the adverse party wishes to have inserted, the latter should apply to have the order corrected so as to conform to the decision.

In this case the order as drawn up by defendant’s solicitor and served, purported to contain the decision of the court upon both applications ; and it actually contained a direction as to the costs of the complainant’s application, which was all that was material. It was therefore wholly irregular for the complainant’s solicitor to attempt to enter another and distinct order upon that application. But if he supposed it to be for the interest of his client that it should appear whether the application to vacate the chamber order was granted or denied, he should have applied to have the order as drawn up by the other party corrected by inserting a proper clause on that subject. And he could not by drawing up and appealing from an order which the vice chancellor had never made or authorized to be entered, compel this court to hear and decide such an appeal, or deprive the vice chancellor of the power of expunging from the records of his court such an unauthorized order. The defendants have also adopted the proper course to test the correctness of the proceedings of the vice chancellor with, respect to that order, by this application to dismiss the appeal from the supposed order which is no longer in existence.

The appeal from the order entered by the defendants* solicitor depends upon principles somewhat different. As the defendants themselves had caused that order to be' drawn up and entered, and had served a certified copy of it upon the adverse party, it does not lie with them to say that the appeal from the order thus entered was irregular ; although the order did not contain all the directions which the vice chancellor intended should be inserted therein. But the vice chancellor himself had a right to direct the order to be corrected, and to give the complainant the benefit of that part of the decision which was in his favor, so as to render it unnecessary for him to go on with the appeal if the neglect to insert such a provision was the only ground of complaint. After the correction was made, therefore the complainant was at liberty either to abandon the appeal or to consider it as applying to the order as corrected, which is now the only order in existence. The complainant having determined to proceed with the appeal, it is to be considered as an appeal from the order of the 21st of February as now correctly entered on the records of the court before the vice chancellor. The application to dismiss this appeal must therefore be denied. And this court will now proceed to examine the order appealed from, and affirm or reverse it upon the merits.

From what has been before said, it will be seen that the vice chancellor was right in refusing to give to the complainant the costs of a useless application, to set aside the chamber order for further time to answer, which the appellant’s solicitor had himself before that time considered and treated as a nullity. That part of the order appealed from must, for that reason be affirmed, even if an appeal would lie from the decision of a vice chancellor, upon the mere question of interlocutory costs which are in the discretion of the court, as to which the contrary is now settled. (See Winslow v. Collins, 3 Paige’s Rep. 88.) The chamber order in this case being absolutely void and inoperative, the order to take the bill as confessed was perfectly regular. It is evident, therefore, that the complainant was entitled to the full benefit of that order, unless the defendants made out such a case as to authorize them to be let in to defend, according to the course and practice of the court. I do not think either of the defendants made out a case entitling them to the relief which was granted by this order. If there was a good defence to the suit upon the merits, the defendant who had such a defence to make was the proper person to state upon oath that such a meritorious defence existed, and to show what that defence was. The affidavit of the solicitor is not sufficient unless he is himself acquainted with the facts constituting the defence 5 and even in that case a sufficient excuse must be shown for not producing the affidavit or sworn answer of the defendant. Besides it is the settled practice of this court not to set aside a regular order to take a bill as confessed, in a foreclosure suit or in any other case where the defendant has any interest or inducement to delay the proceedings, upon a simple affidavit of merits, although an excuse is given for his default. But in such cases the defendant must either produce the sworn answer which he proposes to put in, so that the court may see that he has merits, or must, in his petition or affidavit, state the nature of his defence, and his belief in the truth of the matters constituting such defence, so far at least as to enable the court to see that injustice will probably be done if the order to take the bill as confessed is permitted to stand. The only one of the defendants in this case who has made an affidavit does not pretend that he has any defence ; although he says he advised one of his co-defendánts to put in an answer, as he had a good defence. The order was manifestly wrong in setting aside the default as to Wallis, and giving him farther time to answer. And if Barsalon or Hart believed they, had a meritorious defence, they were the proper persons to state what, it was. The only thing that has the appearance of a defence is the fact stated in the affidavit of Wallis, that Merritt once claimed to be the owner of the bond and mortgage, and that some one had told Wallis they belonged to Merritt although the suit was brought in the name of Hunt. If the fact was so, it might be a technical defence to the suit, as this court requires the bill to be filed in the name of the real party; but that could hardly be considered as a defence upon the merits. All this, however, is fully explained in the affidavit of Merritt himself, showing that the bond and mortgage were sold and assigned to the complainant, for a full consideration, before the suit was commenced. And even Wallis does not swear that he believes the story which was told him as to the complainant not being the real owner of the bond and mortgage. It is very evident, therefore, to my mind that there is nó real defence to this suit, and that the object of the defendants is delay. For these reasons I think the vice chancellor erred in vacating the order taking the bill as confessed as to any of the defendants, and giving them further time to answer. That part of the order appealed from must therefore be reversed with costs ; and an order must be entered denying the application which the defendants' made to the court below, with costs.

As the defendants have succeeded in their application to dismiss the one appeal, but have failed as to the other, neither party is to have costs upon the motion to dismiss. The whole directions in this court are to be embraced in one order, and the proceedings are to be remitted to the vice chancellor.