text:
    The Hudson and Delaware Canal Company vs. The New-York and Erie Rail Road Company.
    Where a rail road corporation is authorized by statute to construct its road upon a particular route, a mere temporary injury to a canal which has been previously authorized and constructed, and which can be compensated in damages, is not sufficient to justify the granting of an injunction to step the progress of the work.
    But if the rail road corporation is constructing its rail way upon such route without authority, and such construction will probably injure the works of the canal company, an injunction will be granted to restrain the construction of the rail way upon the route of the canal.
    It is no objection to the construction of a rail road on the route of a canal that the road cannot be traversed by steam engines, after it is completed, without frightening the horses upon the towing path of the canal, so as to destroy the navigation of such canal. But if the rail road company attempts to use steam engines upon the road, instead of horses, after the road is completed, the remedy of the canal company is to apply for an injunction to restrain the use of such engines.
    Where the charter of a rail road company requires the whole line of the road to be surveyed and located, and the certificate of location to be filed in the clerk’s office, before the commencement of the work, the corporation is not authorized to change the route of its road after it has been once located, and a certificate of such location made and filed.
    If a rail road corporation, which is authorized by statute to select a route for the road, and to construct the road thereon, cannot construct its road without imminent danger to the works of a canal company previously constructed, under a similar authority from the legislature, the rail road company will be restrained by injunction from constructing its road upon that route.
    October 19.
    This was an application for an injunction, to restrain the New-York and Erie Rail Road Company, and its officers and agents, from constructing the railway of that company between the Delaware section of the complainants’ canal and the river Delaware, or on the berme side of that section between the canal and the crown of the cliffs above the same. The bill, after setting forth the original act incorporating the Delaware and Hudson Canal Company, for the purpose of making a slack water navigation between the rivers Delaware and Hudson, the act of April, 1824, giving to that company the same powers, privileges, and authority, for the purpose of making a canal or slack water navigation from Carpenter’s point on the river Delaware, to the mouth of the river Laekawaxen; and the several acts of the legislature of Pensylvania on the subject of such canal and the rail road connected therewith, and that the complainants, in pursuance of the powers and privileges conferred upon them by the said several acts, had established a complete line of communication from the Hudson river at Eddyville for the distance of about one hundred and twenty-five miles, by means of a canal from the Hudson to the mouth of the Laekawaxen, and np the last mentioned river to its head waters, and by rail road from thence to the mining district of Pennsylvania, and after setting forth the extensive and valuable interests which would be jeoparded by any interruption of the navigation of their canal, proceeded to state, that in the construction of the canal,from a point on the Delaware opposite the mouth of the Laekawaxen towards the Hudson, the complainants wmre compelled, by the rough and mountainous character of the country, to follow the course of the river Delaware, about 24 miles to Port Jervis; that for a portion of that distance, which is called the Delaware section, their canal was on the brink of the river’s bank and often encroached upon the bed of the riverj that the channel or pass through which the river flows along nearly the whole of that section of the canal was very narrow, without any strand or level shore, the hanks of the river rising from the wateris-edge in almost perpendicular cliffs of rock, so that the complainants were compelled to create an artificial bed for their canal by making wide excavations in the rocky cliffs in some places, and in others by building up, for miles in extent, a foundation of broken rocks, from ten to twenty-five feet high, between the cliffs and the centre of the stream, and that on such foundation the greater part of the canal was built, together with the towing path, which was' on the river side of the canal ; that owing to the narrowness of the channel of the river it frequently became necessary, during freshets, which were common there, to cut away the hank of the canal, to turn the waters of the river into its channel, or bed, lower down, to prevent the destruction of the canal; that it was impossible to make a rail road between the river and the top of the cliffs, on either side of their canal, without depriving the complainants of the beneficial use of that section of the canal; and that the making of such rail road would entirely destroy many of the privileges and advantages secured to them by their charter, and by the several acts of the legislature relating to the same. And the bill particularly specified the various ways in which the making of the rail road by the side of the canal, on that section, would injure the navigation and endanger the existence of the canal.
    The complainants further stated, in their bill, that the defendants had applied to them for permission to construct their rail road between the river and the cliffs, on this section of the canal, which permission was refused, absolutely and unqualifiedly ■; notwithstanding which refusal, the defendants threatened to construct their rail road on that route, and had proceeded to lay out and survey the same as the route of their road, and that a great number of workmen had collected for the purpose of proceeding in the construction of the railway as soon as the weather would permit. They further alleged that the route thus surveyed was a departure from the line of the rail road as formerly surveyed and adopted by the company, which line passed through the interior of the county of Sullivan, and struck the Delaware at the Collicoon creek thirty miles above the mouth of the Lackawaxen 5 upon which original route, as the New-York and Erie Rail Road Company had stated in a public report, published by them in February, 1841, the road was under contract from the Collicoon creek, sixty-five miles, to Middletown, in the county of Orange. The bill also charged that the New-York and Erie Rail Road Company had not the pecuniary ability, or other means, of making good the damage which the complainants would sustain by the construction of the road adjacent to the canal on the Delaware section thereof 5 their road, the only property of the company, being heavily mortgaged to the state.
    The bill was sworn to by the president of the Delaware and Hudson Canal Company ; and was also supported by the affidavits of the chief engineer and of the agent of the company, showing the situation of the land, &c., upon the Delaware section of the canal, and the injury and danger to the works of that company by the proposed construction of the rail road at the place contemplated. And in opposition to the application for an injunction, the answer of the defendants was read, denying some of the allegations in the bill, particularly that the construction of the road in the place proposed would endanger the canal of the complainants, as stated in the bill; and showing a contemplated benefit to the New-York and Erie Rail Road Company, of two and a half millions of dollars, by the making of their road in the place now contemplated, instead of making it through the interior of Sullivan county where the route of the road was originally surveyed. The defendants, in their answer, also denied that any wrork had been done on the original route of the rail road between the Collicoon creek and the point of departure of the new route near Port Jervis, or that the route first proposed had ever been formally designated or located between those points, so as to deprive the company of the power to select a different route for that part of their road. To the answer the defendants annexed maps of the survey of the new route, showing the location of the centre line of the road, and its distance from the waters of the canal for the entire route upon the Delaware section.
    D. Lord,jun., # G. A. Biclcnell, for the complainants*

      W. Kent Geo. Wood¿ for the defendants.
   The Chancellor.

The question presented for consideration in this case is one of very great consequence to the complainants, if their apprehensions of injury to their canal from the making of the rail road upon its margin are well founded. And it is also of vast importance to the New-York and Erie Rail Road Company, if its officers and agents are right in their estimate of the benefit it will derive from the adoption of the contemplated route for its road, instead of the more northern location through the interior of the county of Sullivan. If it is impossible to construct the road by the Delaware route without destroying the navigation of the canal and the valuable interests which have grown up in connection with that artificial line of internal communication, the defendants certainly cannot be permitted to proceed and make their road there; at least until provision has been made by law to compensate the owners of the canal for the value of their property which will be thus destroyed. On the contrary, if the road can be thus constructed without any material detriment to the rights or the property of the complainants, it appears to be a matter of vital importance to the interests of the rail road company, that such company should be permitted to construct their road in the valley of the Delaware; even if the difference in the cost of the road, and of its value when completed, would be but a tenth of what they estimate the difference to be between a rail road running through the valley of the Delaware, and one constructed on the route as originally surveyed, from the Collicoon creek through the interior of Sullivan county.

There can be no doubt of the right of this court to interfere in a case of this kind, where the consequence of a refusal would be to permit the defendants to do a material and irreparable injury to the complainants’ property. But if the defendants are authorized by law to construct their road on this route, a mere temporary injury, which could be compensated for in damages, would not justify this court in stopping the progress of a great public work, although that work is nominally made by a joint stock company. The papers before me, however, show such a probability of injury by the construction of the rail road upon the line of the canal, that I should not hesitate to grant an injunction at once, if the complainants had succeeded in showing that the rail road company had already located its road upon ^le more northerly route, so as to preclude them from changing such location without the consent of the legislature. (See 1 Nicholl & Hare’s Railway cases, 135.) But I am satisfied that the complainants have failed in establishing the fact that the road had been legally located upon the northerly route.

By the fourth section of the original act of incorporation of the New York and Erie Rail Road Company, (Laws of 1832, p. 404,) the directors, after their examinations and surveys had been completed, were to select, and by certificates under their hands and seals, to designate the line, course, or way, which they should deem most advantageous for their rail road, and to file one of such certificates in the office of the register of the city of New-York, and one in the clerk’s office of each of the counties through which the. rail road should pass ; which line, as thus designated, was to be deemed the line on which the corporation should construct its road. Under that act it was probably necessary for the company to designate the whole line of the road from the city of New-York to Lake Erie, and to file the certificates thereof in the proper offices before they proceeded to construct any part of the road; and before they could acquire the legal title to lands, for the scite of the road, by purchase. Certainly it would have been necessary for them to do so before they could have been authorized to enter upon the lands of individuals, without their consent, for the purpose of making the road over the same, or to apply to the vice chancellor for the appointment of commissioners to appraise the damages of the owners of such lands. And when the line of the road had been thus designated by the directors, they would not have been authorized to change the route of the same without the authority of a subsequent act of the legislature, if such change interfered with the rights of any individual, or corporation, or the interests of the public. It is very evident, however, that no such designation of the whole line of the road was ever made. For by the amendatory act of May, 1835, the company are authorized to commence their road at any point in the route designated therefor, and to file certificates from time to time, designating sections of the line, course, or way of such road, in the offices of the clerks of the respective counties through which the same shall pass, as they proceed in the location thereof. (Laws of 1835, p. 287.) Under the last mentioned act the certificates produced by the complainants on the hearing of this application, have been made and filed. And if the counsel for the Hudson and Delaware Canal Company are right, in supposing that such certificates embrace any part of the original route, as surveyed from the Collicoon creek eastwardly through the interior of the county of Sullivan, which cannot be connected with the proposed route along the Delaware section of the canal, the rail road company is concluded by that location; and it cannot now be changed without the authority of a new act of the legislature.

Upon examining these certificates, however, I cannot see why the route of the road designated therein may not readily be connected with the proposed route by the side of the canal. Four of the certificates designate portions of the line of the road, in the town of Cochecton, which may be west of the diverging point of the two routes, at the Collicoon creek j as it appears by the map that the town of Cochecton lies on both sides of that creek. And there is nothing in the description of the route in either of those certificates, or in the certificate of the location of a section in the town of Liberty, from which I can discover that any of the sections thus located are eastwardly of that diverging point. The sixth certificate is of the location of a section of the road commencing in the town of Mount Hope in the county of Orange, near the corner of a meadow occupied by a Mr. Loomis, and running northwesterly a few thousand feet. But whether this section is east of ‘the diverging point of the two routes, near Port Jervis, between that point and the town of Goshen, or is to the westward of that point, does not appear from any thing contained in the certificate of location. In addition to this, I have been furnished with an affidavit since the hearing of this motion, made by the chief engineer of the rail road company, in which he states that the locations in these certificates are not inconsistent with the adoption either of the northern or the southern route ; the five first being locations of sections of the road northwest of the Collicoon creek, and the sixth being the location of a section at the Deer-park gap of the Shawangunck mountain, through which each and every route of the road hitherto designated must necessarily pass, and including the diverging point of the two routes near Port Jervis. He also states that he does not know or believe that any certificates have been filed which conflict or are inconsistent with the adoption of the route along the canal. Whether this affidavit has been placed before me irregularly, or by the consent of both parties, I do not stop to inquire. For the allegation in the bill that the road has been located on the northern route, through the interior of the county of Sullivan, is denied in that part of the answer m which the same engineer swears that it has not been formally located on that route, so as to deprive the company of the power to designate a different route for that part of the road. And the certificates of location, unexplained, do not conflict with that denial in the answer.

It is not denied that the directors of the rail road company, in their report published in February last, represented the whole line of the road from the Collicoon creek easterly t<? Middletown, a distance of sixty-five miles, as being under contract. I presume, however, if that statement was technically true, that the contracts for the making of the road upon that route were merely nominal, and were entered into for the purpose of producing an effect upon the public mind in reference to the supposed progress of the road. But even if such contracts were entered into bona fide, and with the intention of having the road constructed upon that route under such contracts, it would not be sufficient to conclude the company, and to deprive it of the power to change the route, with the assent of the contractors, if the directors had not actually designated and located the line of the road, or any part of it, upon that route, in the manner prescribed by the act of incorporation and the subsequent act amending the same.

The principles upon which this court interferes by injunction, in cases of this kind, are stated in the case of The Mohawk Bridge Company v. The Utica and Schenectady Rail Road Company, (6 Paige's Rep. 554.) And, for the reasons there stated, it is no objection to the location of this rail road upon the route of the canal, that it cannot be traversed by locomotives without frightening the horses on the towing path, so as to destroy the navigation of the canal. After the road is completed, if the use of locomotives shall be found to have that effect, an injunction may be applied for to restrain such use, and to compel the rail road company to draw their trains over this part of the road by horse power only. The real question to be taken into consideration at this time, therefore, is whether the mere construction of the rail road, upon the line designated in the surveys annexed to the answer of the defendants, will be so imminently dangerous to the canal and the navigation thereof as to render it improper for the defendants to attempt such construction.

The surveys of the defendants certainly show that it must be exceedingly difficult to build a rail road on that route without serious injury to the navigation of the canal. For it appears that the centre line of the rail way is very frequently within fifteen or twenty feet of the waters of the canal, and that at some points it is within ten or twelve feet. And the situation of the adjoining cliffs, for miles, is such that it is probably impossible to construct the road at a greater distance from the canal on the berme side. The difficulty of constructing that part of the road which is to be made between the canal and the river, without .materially injuring the canal, and the towing path which lies on that side of it for the entire distance of the Delaware section, must be equally great. Upon the papers before me, however, I cannot say it is impossible, with proper care and precaution, to construct and maintain the rail road on the ^ne designated in the surveys without material injury to *he rights and property of the complainants, or putting them in imminent hazard. The application for an injunction must therefore, for the present, be denied.

The value of the interests at stake, however, are so great, and the case is one of so much doubt, that if the complainants wish for an issue to settle the question whether the rail road can be thus constructed and maintained without material injury to the canal, or to the navigation thereof, or imminently endangering their rights in this respect, they may have such an issue, to be tried at the circuit in the county of Orange. And if such issue is found in favor of the complainants, an injunction may issue as prayed for in the bill, upon filing the postea and the clerk’s certificate of the trial in the office of the assistant register, without any further application to this court. The question of costs upon this motion, and of the issue, if the complainants elect to have one in this stage of the suit, are to abide the further order of the court.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Whelpley vs. Van Epps and Spencer.
    Where the jural to an answer stated that the defendant swore that the facts stated in the answer, instead of the matters stated in the answer, were true ; Held, that the verification of the answer was sufficient, and was a substantial compliance with the form of the jurat prescribed by the 18th rule of the court of chancery.
    October 19.
    This was an application to take the answer of the defendant Yan Epps off the files, for irregularity, on account of an alleged imperfection in the jurat.

      H. C. Whelpley, for the complainant.

      Cyrus Stevens, for the defendant.
   The Chancellor.

Two objections are made to the • form of the jurat in this case : 1st. That the defendant swears that the facts were true, in the past tense; and 2d, That he merely swore that the facts stated, in the answer, and not the matters therein stated were true. The jurat is in the usual and proper form, so far as relates to the matter of the first objection. It is not in the form of an affidavit in the present tense ; but is a certificate of the officer, stating what the defendant had sworn to. And it is properly in the past tense, certifying that the defendant appeared before him at the time therein specified, and swore that the facts stated in the answer were true; that is, that they were then true.

The second objection is equally untenable. Although the officer, by inadvertence in administering the oath, or by mistake in drawing up the jurat to the answer, has substituted facts for matters, which latter is the word used in . the 18th rule, prescribing the manner in which bills, answers, and petitions shall be verified upon oath, the jurat is sufficient. The rule merely specifies the substance of the oath to be administered to the party, and not the precise words which are to be used. And there cannot be a doubt, in this case, that if any allegation in this answer was known by the defendant to be false, at the time he swore to the same, he might be convicted of perjury, upon proof of such knowledge. The word facts, as stated in this jurat, means the same thing as matters ; that is, the matters in the answers which are therein stated as facts.

The motion must therefore be denied, with $8 costs. And the complainant is to have the same time to file his replication to the answer, after the entry of the order upon this decision, as he had when the motion was made.

Order accordingly.


text:
    Quackenbush and others vs. Leonard and others.
    Where an application was made to the surveyor general for a grant of several lots of land for the mutual benefit of L., Q. and W. and the applicants entered into a written agreement between themselves by which it was stipulated that L. should pay to the state the purchase money for the lands as the same should become due and should obtain the patents, and that such purchase money and interest should be refunded to him out of the proceeds of the sales of the lands, and-that he should release one-third of the land to each of his associates after the whole monies due to him should he paid; and the patents were afterwards issued to the executors and trustees of L. by whom the purchase money was paid; Held, that the executors and trustees of L. took the legal title to the land as trustees for all who were beneficially interested therein under the agreement. And Q. having transferred his interest in the lands to another person by an absolute conveyance, but in fact for the security of a debt of $ 1480, which was stated in a written defeasance which authorized the creditor to sell the lands to pay the debt, and the creditor afterwards sold his interest in the land to the executors and trustees of L. for $1000 only ; Held, further, that the conveyance from Q. was only a mortgage, and that the executors and trustees of L. were only enlilled to hold it for ihe amount paid by them, and the interest thereon, and not for the whole $1480.
    Trustees who buy in an outstanding incumbrance against the trust estate are only entitled to hold such incumbrance as a security for the amount actually paid by them therefor, with the interest thereon.
    The principle of not giving effect to an agreement for the compounding of interest, which is to become due, is not based upon the usury laws; but is adopted as a rule of public policy, to prevent accumulations of compound interest in favor of creditors who neglect to collect their interest when it becomes due. And the principle upon which the rule is founded does not apply to a case where one man advances money to purchase property for the benefit of himself and another, to be refunded to him with compound interest, out of the proceeds of the sale of the property.
    Where three persons agree to purchase lands for their joint benefit, and that one of them shall advance all the money upon the purchase, to be refunded out of the proceeds of the sale only, it is not a contract for the loan or forbearance of money; and- a stipulation that the one who advances the money shall receive more than one-third of the land or of the proceeds thereof, in consideration of making such advance, is not usurious.
    October 19,
    This was an appeal from a decision and decree of the vice chancellor of the fourth circuit. The original bill was filed by Gerrit Quackenbush, in 1834, against the acting executrix and executors and trustees of Timothy Leonard, deceased, and against J. B. Leonard, one of his heirs at law, for the specific performance of certain agreements, and to redeem such agreements from an assignment thereof to J. Williams, by way of mortgage or pledge for the security of a debt, under the following circumstances :
    In January, 1814, Timothy Leonard, Gerrit Quackenbush and George Webster, entered into an agreement, under seal, reciting that Leonard had applied to the surveyor general for a grant of 62 lots of land in the Essex Tract, in the county of Essex, for the mutual benefit of the parties, and it was thereupon agreed between them that Leonard should advance and pay to the state all the consideration money for such lots, as the same should become due, and obtain patents as soon as might be after the payments were completed; and Quackenbush agreed to transact all the business about the disposition and sale of the lands thus purchased, for their mutual benefit, without any other compensation than for his actual expenses, which were to be borne equally by the parties. And whenever the parties sold any of the lands, so much of the money arising from the sale as should be sufficient to reimburse Leonard for the moneys advanced, with interest thereon at seven per cent, to be compounded from and after the 25th of January, 1820, was to be paid to him. And it was further agreed, that if the patents for the lands should be issued to either in his own name, he would release one equal third part of such lands to each of the other proprietors, or his heirs or assigns, after the whole moneys due to them respectively should have been paid as provided for in that agreement.
    And in February, 1814, the same parties entered into another agreement in writing, under their respective hands and seals, containing a recital of a similar application for a grant of 87 lots, in the North River Head Tract, in the same county, for their mutual benefit; and whereby they agreed that Leonard should advance and pay the consideration money to the state and obtain a patent for those lots; and that, as a premium for advancing the money, in addition to the principal and interest, he should be entitled to seven of the lots,’To be determined by lot, and the residue of the lands should be chargeable with the moneys advanced by him. And Quackenbush agreed to transact all the business about the disposition and sale of such lands, for their mutual benefit, without any compensation, except for his expenses, which were to be borne equally by such proprietors. This agreement also contained a provision, similar to the first, to reimburse Leonard forj the monies advanced, and interest thereon, out of the purchase money arising from sales; the interest to be compounded after the 24th of February, 1820. It also contained the like provision that if the patents should be issued to either in his own name, he should release one equal undivided third of the residue of the land to each of the others, exclusive of the seven lots to be drawn by Leonard, after the whole moneys due on the purchase of the lands should have been repaid to Leonard.
    Soon after the making of these agreements, Leonard, who had contracted with the surveyor general for the lots in both agreements mentioned, died. And by his will, made in April, 1814, after making certain specific devises and bequests to his wife, he devised and bequeathed the residue of his real and personal estate to his executors in trust for the purposes of the will; and authorized them, or a majority of them, to sell such parts of the real estate as they should deem proper and consider most beneficial for his estate. In 1815, under an act of the legislature authorizing the same, the acting executors and trustees received from the surveyor general certificates for the several lots mentioned in the two agreements, and gave to him their bonds for the payment of the unpaid purchase money then due the state. They afterwards paid such bonds, and obtained patents for the lands as such executors and trustees. The patent for three of the lots in the Essex Tract was obtained in 1816; and the patents for the residue of the lots in that tract, and for all the lots in the North River Head Tract, were obtained in February, 1819. Webster, in 1816, released and transferred to Quackenbush all his right and interest under the second contract, to the 87 lots in the North River Head Tract. Quackenbush afterwards applied to one of the executors and professed a willingness to do all that he was bound to do under the contracts, in superintending the sales of the lands. But he had then failed, and was irresponsible, and the offer of his services was not accepted ; nor did the executors ever recognize him as having any interest in the lands, or any right to interfere in the sales thereof.
    On thq 25th of March, 1828, Quackenbush, by a conveyance which was absolute on its face, sold, transferred, and assigned to J. Williams, his executors, administrators and assigns, all his right, title, interest and claim in or to the sixty-two lots in the Essex tract, mentioned in the first agreement, describing therein the lots in that tract for which the patents had been obtained by the executors of Leonard. And he authorized him, or his personal representatives or assigns, to demand from Webster and the representatives of Leonard, or from either of them, a division of the 62 lots of land, according to the agreement, and after receiving a transfer of the one third part thereof, to hold the same to his own use, with power to bring suits either in his own name or in the name of the assignor ; and that all recoveries of damages which might be had or obtained against Webster or the representatives of Leonard by arbitration and award, judgment of court, decree in equity, or in any other manner arising out of the non-performance of the agreement, should be and they were thereby absolutely and irrevocably assigned and transferred to Williams and to his heirs and assigns, and also all his claims, and demands, either in law or equity, against Webster and the estate of Leonard, or to the 62 lots of ground, founded upon the agreement or arising out of the same. On the same day Quackenbush also, in the same manner, sold and conveyed to Williams all his right and interest in the 87 lots in the North River Head Tract, and in the second agreement, as well that which he was entitled to under' such agreement, as that which he had acquired by the assignment of Webster to him. At the same time Williams gave to Quackenbush an instrument, which stated that the two assignments were made for the sole purpose of securing the payment of $1480,50 with interest; and he agreed that if Quackenbush paid him that amount and interest on or before the first of April then next, he, Williams, would re-assign to Quackenbush the agreements, covenants and lands therein mentioned, and all the interest he had acquired by such assignments •, but if the money was not paid, Williams was to be at liberty to sell and dispose of so much of the lands mentioned in the agreements as should be requisite, without any improper or unnecessary sacrifice of the same, to make the said sum of $1480,50 and interest, together with his reasonable expenses for selling and disposing of the same; and was to re-assign the residue of such lands to Quackenbush.
    Williams having waited about four years without receiving payment from Quackenbush, and having endeavored in vain to sell the contracts for the amount of the debt and interest, commenced a negotiation for the sale of them to the executors of Leonard; in which negotiation the executors offered to assign to him all the right and interest of the estate of Leonard in the lands mentioned in both contracts, on being reimbursed the purchase money which had been paid therefor, with interest and taxes, which offer was declined by Williams ; and the executors finally offered him $1000 for the contracts. Quackenbush was informed of this offer by Williams, and told that he must either pay the debt or give him other security therefor, or that he should dispose of the agreements to the executors for the $1000 which had been offered. But Quackenbush paid no attention to these repeated solicitations ; and when finally told by Williams that he should sell them for the $1000 so offered, unless he gave him other security, he replied that he could not do any better, and that if Williams must sell he must. Williams thereupon sold and transferred to the executors of Leonard all his right and title to the two agreements and to the lands therein mentioned, for the $1000 ; and covenanted that he had full power and authority to sell and assign and convey to them all the interest in the two agreements and the lots therein mentioned, which was or purported to be vested in him by the assignments thereof.
    The executors sold part of the lands patented by the state j and had contracted for the sale of other lots, and received a part of the purchase money on such contracts. But after applying all the monies received for lands sold or contracted for, there still remained due, for the original purchase money advanced by Leonard and his executors, on account of the two tracts and for taxes, including interest thereon according to the terms of the agreements, more than $30,000, at the time of putting in the answer of the defendants, in February, 1834.
    The cause was heard and decided by the late vice chancellor of the fourth circuit in 1835. But before the entering of the decree upon that decision Quackenbush died. And, in 1839, the suit was revived in the names of his children and heirs, upon their petition; but without prejudice to the right of the defendants to object that the personal representatives of the decedent were not made parties to the order of revival. A decree was thereupon entered, in conformity with the decision of the late vice chancellor, declaring that the complainants, as such children and heirs, were entitled to a specific performance of the first agreement, upon reimbursing the estate of Leonard, for all sums of money, expenses and advances, in pursuance of and according to said agreement, with interest, and to a specific performance of the second agreement upon similar terms ; that the assignment to Williams was a mortgage and that the complainants were entitled to redeem the same; that on its appearing, upon an accounting before a master, that the estate of Leonard was reimbursed, with interest, for the monies advanced upon the first agreement, and also for the amount paid to Williams, the complainants would be entitled to a release of the equal undivided third part of the lands mentioned in the pleadings as having been purchased in pursuance of that agreement, and to a discharge and satisfaction of record of such mortgage; that upon its appearing on such accounting that such estate was reimbursed, with interest, for all sums of money advanced and expended according to the second agreement, and also the amount paid Williams for the conveyance of the mortgage, the complainants would be entitled to a release of the equal undivided two thirds of the lands mentioned in the pleadings as having been purchased in pursuance of that agreement, and also to a discharge of such mortgage ; that upon its appearing upon such accounting that the estate had been reimbursed, with interest, for all monies advanced upon both agreements taken together, and also the amount paid to Williams, the complainants would be entitled to a release of one third of the lands purchased in pursuance of the first, and of two thirds of the lands purchased in pursuance of the second agreement, and also to a discharge of the said mortgage 5 that if it should appear upon such accounting that the estate was not reimbursed as aforesaid, the complainants would be entitled to a release of one third of the lands purchased in pursuance of the first, and of two thirds of the lands purchased in pursuance of the second agreement, and to a discharge and satisfaction of the mortgage, on such reimbursement being made, in the manner specifiedin such agreements as to the purchase money, and by an actual payment of the amount paid for the mortgage.
    It was further ordered and decreed that it be referred to a master to take an account of all sales which had been made of any of the said lands and of all sums received upon contracts of sale, either for principal or interest, or which with due diligence might have been received, and the time of such receipt, &c. ; that in taking such account the master charge the defendants with all lumber taken from the premises by them, and with all losses which had happened by reason of the selling for inadequate prices, or to irresponsible persons, or at improper times, and for waste committed by persons who had entered under contracts with them, and that he make no allowance to them for negotiating sales of the land ; that the master take an account of what was due to the estate of Leonard for monies advanced and paid out for the lands in pursuance of and according to the said two agreements, and also an account of what was due for the amount paid Williams for the mortgage ; and reserving all further questions and directions until the coming in of the master’s report, except that, after the execution of the releases of the undivided portions, the complainants might apply for partition upon the foot of the decree. From this decree, and every part thereof, the defendants appealed to the chancellor.

      B. Buel § S. Stevens, for appellants.
    The agreements mentioned in the bill of the complainant, gave Quackenbush no title or interest in the lands purchased. If he acquired any right by virtue of said agreements, it was a mere chose in action, a mere personal claim or right of action against Mr. Leonard, in case he refused to comply with the agreements on his part. It necessarily follows that the mortgage by Quackenbush to Williams of his title and interest in said contracts, was a mortgage of a chattel. The right and title of Williams to the contracts, and to all the interest of Quackenbush therein, became complete and absolute in Williams before his sale and assignment to the defendants. The defendants acquired a perfect and absolute title to the contracts by their purchase from Williams. If Williams had not an absolute title before he sold, yet the sale itself being what he was expressly authorized to do by the mortgage, gave a perfect and absolute title to the purchaser. The sale alone was a valid foreclosure of all the rights of Quackenbush. The complainants are not entitled to a specific performance of the contracts. They were void, being without consideration. Equity will not compel a specific performance of such contracts, but will leave the party to such remedy as he can get at law. The defendants have not been reimbursed the purchase money, interest, and taxes. More than twenty years had elapsed before the commencement of this suit. The defendants have always refused to recognize Quackenbush’s right to any interest in the lands. After sucha great lapse of time, the complainants are not entitled to a specific performance, but must be left to such remedy as they can obtain at law. A bill to redeem or compel a re-assignment of the contracts could not be maintained even against Williams, without averring a tender of the debt due and a refusal to accept it. Much less can such a bill be maintained against the assigns of Williams, without such tender. No tender is averred in the bill. The vice chancellor erred in not allowing the defendants compound interest ,on their advances ; and in not allowing them seven lots to be drawn for, &c., as provided for in the agreement for the eighty-seven lots ; and in limiting the amount to be paid to them on account of the assignment from Williams to $1000; and also in subjecting them to the losses.

      John Crary, for the defendants.
    The property in question is real and not personal estate. The complainants, to obtain a decree for a specific performance, must show that they have an interest in the land. This the personal representatives could not do ; for the land, on the death of the ancestor, descended to the heir—and the suit is properly revived in the name of the heirs. The rights of the complainants are not altered by the purchase of the defendants from Colonel Williams ; for the defendants were trustees, and made so by Mr. Leonard’s will, and by their own acts, as it respected Quackenbush. The contracts with Mr. Leonard gave Quackenbush the right to make the sales; of which right the defendants have deprived him. The sale made to Williams operated as a mortgage, of which the defendants had notice, when they purchased of him; and any person having an interest may redeem.
   The Chancellor.

I can see no absolute necessity in this case for reviving the suit in the name of the personal representative of Quackenbush, as well as of his heirs at law. If the original complainant was entitled to a decree for a conveyance of any part of the lands purchased under the agreements, it was such an equitable interestin real estate as would descend to his heirs at law under the provisions of the revised statutes j (1 R. S. 751, § 1, 21,27 ;) and they alone would have the right to revive the suit as,to any of the lands which remained unsold at the time of his death, in 1835. It is true the personal representative would be entitled to his share of the purchase money of lands which had then been sold, if the estate of Leonard had been more than reimbursed for the advances and expenditures. But the only effect of a neglect to revive the suit in the name of the representative who would be entitled to such surplus, is that no decree can be made against the appellants for the payment of any surplus. And if the defendants wished to have the personal representive before the court upon the taking of the account which was necessary to be taken for another purpose, so as to preclude him from questioning the correctness of that account afterwards, they should have proceeded to revive the suit against him ; instead of objecting to the revival by the heirs at law of that part of the suit in which they claimed an interest as such heirs. (See Hoffman v. Tredwell, 6 Paige’s Rep. 308.) If the heirs, as such, had no interest, the decree must of course be reversed and the bill dismissed as to them.

The principal and most important question in the case is whether all the interest of Quackenbush under the two agreements of 1814, and to the lands which had been purchased from the state as contemplated by those agreements, was extinguished by the sale to the executors and trustees of Leonard, by Williams, in 1832; or whether by virtue of such sale and assignment they merely acquired an interest, as the assignees of a mortgage, subject to the right of Quackenbush to redeem from them by paying the amount due upon the mortgage. Even if the conclusion at which the vice chancellor arrived upon that question was correct, however, which I shall presently consider, the decree appealed from is erroneous in some of the particulars referred to by the counsel upon the argument of this appeal.

By the terms of his conveyance to the executors, Williams sold, assigned and conveyed to them all his right, title and interest in the two agreements, and in and to the lands therein mentioned; with a covenant that he had full power to sell, assign and convey to them all the interest in such agreements, and in the lots therein mentioned, which was or which purported to be vested in him by the assignments from Quackenbush. It is clear, therefore, that if they did not acquire an absolute title to all the interest which Quackenbush had at the time he assigned to Williams, they would, if mere strangers, have acquired all the interest of Williams as a mortgagee. And the heirs of Quackenbush, in that case, upon a bill filed by him to redeem, must have paid to the appellants the whole amount due to Williams, upon the mortgage, at the time of his assignment thereof to them, in 1832, and the interest which had since accrued ; and not merely the $1000 which they paid to him for that assignment. But here the appellants are met by the rule of equity that a trustee buying in a debt or incumbrance against the estate held by him in trust, can only be allowed the amount actually paid therefor, with interest thereon. (Lewin’s Law of Trustees, 289. Darcy v. Hall, 1 Vern. 49.) I cannot, therefore, say that the decree is erroneous in not allowing the appellants the full amount due upon the mortgage.

From the minutes of the decree it is probable that the vice chancellor intended that the estate of Leonard should be reimbursed the interest as well as the purchase money advanced for the lands specified in each agreement, according to the agreements respectively ; that is, by computing simple interest on the advances as they were made from time to time, until the expiration of six years from the dates of the respective agreements, and by compounding the interest annually after that period. But as the decree is drawn up, it is doubtful whether such can be its construction; and if not, the decree is erroneous in this respect. Although, in an ordinary loan of money, courts do not give effect to a stipulation for the future compounding of interest which shall not be paid at the time agreed upon by the parties, there is no rule of law, or principle of public policy, which forbids its allowance in a case like the present. Here the parties enter into contracts respecting the purchase of lands for their mutual benefit; and providing for the distribution of such lands, or the proceeds thereof, among themselves, after the purchase money and other necessary expenses of the sales, &c. shall have been paid. It was as proper, therefore, for Leonard to insist upon a stipulation that if sufficient was not realized from the sales of land to refund the monies advanced by him with simple interest at the end of six years, he should be entitled to a further allowance, by way of compound interest, after that period, as it was that he should agree to allow Quackenbush all actual expenses he might incur in the disposition and sale of the lands for their common benefit. The principle of not giving effect to a stipulation for the compounding of future interest upon a debt does not arise from the usury laws. It is merely adopted as a rule of public policy, to prevent an accumulation of compound interest in favor of negligent creditors, who do not collect their interest when it becomes due ; which negligence is found, in the end, to be an injury rather than a benefit to the debtor. This principle of public policy, therefore, does not apply to contracts like those under consideration, where the person who advanced the whole money to purchase lands for the mutual benefit of himself and others had no right to demand payment of either interest or principal until the same could be realized out of the proceeds of the lands when sold.

The decree is also erroneous in declaring the complainants entitled to two thirds of the whole eighty-seven lots in the North River Head Tract, upon the estate of Leonard being reimbursed the monies advanced. By the terms of the agreement those lots were not to be divided equally between the parties; but Leonard was entitled to seven lots, to be drawn for by him in the first instance, and the remaining eighty, only, were to be divided.between him and Quackenbush and Webster after he had been remunerated for his advances out of the proceeds of the sales. A stipulation of that kind, in such an agreement, was not usurious. For it was not a contract for the loan or forbearance of money, either within the letter or the spirit of the usury laws ; there being no agreement on the part of Quackenbush or Webster to refund any part of the purchase money advanced by Leonard, if the lands should not sell for enough to reimburse him for the purchase money advanced, and interest thereon. Indeed the bill itself proceeds upon the ground that the estate of Leonard is entitled to remuneration out of the proceeds of the lands only, if I rightly understand it. And if it were otherwise, the decree should direct a sale of so much of the land as might be necessary to reimburse the estate for the advances, in case it should appear that it had not already been reimbursed out of the proceeds of the lands sold.

Again ; if the complainants were entitled to redeem the lands from the sale by Williams, provision should have been made in the decree for an allowance to the defendants, upon the taking of the account, for the monies paid by them for taxes upon the lands; as that was a necessary expenditure for the benefit of all parties interested in such lands, and should be first paid out of the proceeds of the lands sold by the executors and trustees of Leonard.

It does not appear to have been the intention of the parties to these agreements to give to Quackenbush the exclusive right to make sales of the lands which were to be purchased from the state, or to secure to him any right or benefit by that clause in which he agrees to transact all the business about the disposition and sale of the lands without any compensation, other than his actual expenses while engaged in that business. The object of that clause evidently was to secure to the other parties the right to such gratuitous services if they thought fit to require them. The executors of Leonard, therefore, had a right to waive a stipulation in the agreements which was inserted therein merely for the benefit of their testator, if they thought fit to perform the same services themselves, gratuitously. But as it appears by the answer that Quackenbush was ready and willing to perform the services, which he was to do gratuitously, his interest in the land ought not to be charged with any expenditure for making sales of the land, during his life, with which it would not have been charged if he had negotiated the sales personally. And no allowance for expenses subsequent to his death should have been made, except such as were absolutely necessary to carry the agreements into effect, by selling so much of the land as was necessary to reimburse the estate of Leonard for his advances and interest, in addition to the taxes on the land. The necessary expences of surveys, conveyances, &c., which must have been a common charge upon the proceeds of the sales even if Quackenbush had negotiated the sales personally, should have been allowed to the appellants, in taking the accounts. They should also be allowed the additional expense, if any, which they have incurred since his death, in negotiating sales and collecting the purchase monies; so far as such sales may have been necessary to reimburse the estate, according to the spirit of the original agreements. And they ought not to have been charged for waste committed on the lands by purchasers, or for the irresponsibility of such purchasers, in cases where sales were made in the usual way of selling such lands, and to persons who at the time of the sales were apparently responsible. But if they sold lands below their fair value, in consequence of selling at improper times, or of their neglect to make the proper inquiries as to the real value of the lands sold, it was proper to charge "them with the true value.

The right of the complainants to redeem from the sale made by Williams, depends to a great degree upon the nature of the interest which Quackenbush was entitled to under the two agreements with Leonard and Webster. For if he had an equitable right to one third of the lands in both tracts, under the original agreements, and acquired a similar interest in another third of the North River Head Tract by the subsequent conveyance from Webster, subject only to the claim of Leonard’s estate for his portion of the original purchase money, then the executors, at the time of their purchase from Williams, held the legal title to his portion of the land as his trustees ; with the right to sell so much of it only as was necessary to reimburse the estate for its advances, &c. And in that case the rule of equity, which I have before referred to, would have deprived them of the power of buying in the trust estate for their own benefit; even if Williams had the power to sell and convey an absolute interest to a stranger without a foreclosure. On the contrary, if the appellants’ counsel are right in supposing that the agreements of 1814 gave to Quackenbush a mere personal claim, upon Leonard, or his estate, to recover damages for the non-performance of his part of the agreement, Williams had an unquestionable right to sell that claim, according to the terms of the defeasance, after reasonable notice to Quackenbush of his intention to do so if his debt was not paid ; without the delay and expense of a formal foreclosure by a decree in equity, or of advertising for six months under the statute. It is unnecessary, therefore, to decide the question, which was raised upon the hearing of this appeal, whether a formal foreclosure is necessary to bar the equity of redemption of the mortgagor upon the pledge or mortgage of amere contract for the purchase of real estate, where the mortgagee is authorized by the mortgagor to sell such contract for the best price he can obtain for it if the debt is not paid.

Upon a careful examination of the terms of the agreements of 1814, I think it is .evident the parties intended that each should have an equitable estate and interest in his portion of the lands to be purchased from the state ; although they appear to have contemplated that the certificates of purchase, and even the patents for the lands, might be taken out in the name of Leonard, who was to make the necessary advances. By the recital in each agreement it appears, that an application had already been made to the surveyor general for the purchase of the particular lots in each tract, for the joint benefit of the parties, at the time of the execution of those agreements respectively. And probably the eighth of the purchase money had been paid, as required by the statute, upon making such application. (1 R. L. of 1813, p. 297, § 21.) Indeed it appears from the schedules annexed to the answer that the first payment in each case was made on the day of the date of the agreement. The payment of that instalment, and the execution of the agreements respectively, gave to each of the parties to the same an equitable interest in the specific lands which had thus been applied for. And when the executors afterwards obtained the certificates, under the act of February 1816, they held them for the benefit of Quackenbush and Webster, as well as of the estate of Leonard. The legal title which was afterwards transferred to such executors by the patents, therefore, was held by them as trustees for all who were then beneficially interested in such lands, according to their respective rights and interests under the agreements and the assignment from Webster. I therefore conclude that the vice chancellor was right in declaring that the complainants were entitled to redeem from the mortgage given to Williams, and to have a conveyance of the legal interest in their share of the two tracts, exclusive of the seven lots in the North River Head Tract, when they should have so redeemed, and when the estate of Leonard should have been reimbursed for its advances.

The appellants, however, are entitled to have the usual provision, which is always inserted in a decree to redeem, that the redemption money shall be paid within a certain specified time after the amount due shall have been ascertained, or that the complainants’ bill be dismissed with costs; which dismissal of the bill is a perpetual bar to any future claim of an equity of redemption in the mortgaged premises. The usual time allowed for that purpose is six months. Upon the coming in and confirmation of the master’s report, therefore, if it does not appear that the $1000 paid for the purchase from Williams, with the interest thereon, has been fully satisfied, in addition to the reimbursement of the estate of Leonard for its advances, &c. and all other charges and expenses, for taxes and otherwise, which are properly payable out of the proceeds of the sales, the complainants must, within six months, pay the amount reported due upon the mortgage, with interest thereon from the date of the master’s report, to the executors or their solicitor, for the benefit of the estate of Leonard, or the bill must be dismissed with costs.

The master to whom the case is referred must designate, in the manner specified in the second agreement, seven of the lots in the North River Head Tract, to be held by the trustees for the exclusive benefit of the estate of Leonard, and must specify such lots in a separate report; to the end that such report may be filed and confirmed without waiting for the coming in of his general report. And if any of the lots thus drawn have been already sold' by the executors, the respondents are not to be charged, in the account, for the value of such lots, or for the purchase money received therefor ; nor are they to be credited for taxes or other expenses upon any of the seven lots thus drawn by them.

The proper mode of stating the accounts, under the decree, exclusive of what was paid upon the purchase from Williams, will be to compute the simple interest on the receipts and disbursements, in relation to the lands specified in each agreement separately, until the expiration of the six years from the date of the contract, including monies received for lands sold, &c. and then to make annual rests, for the purpose of giving the estate compound interest upon its advances, until the debt due to the estate on account of each agreement is extinguished ; and after that, to allow interest on the receipts and disbursements as shall be just.

The allegation in the bill that Webster had conveyed or released his interest in the Essex tract to the trustees, is denied in the answer, and is not sustained by proof. He or his representatives are necessary parties to a suit for the partition of that tract. It is also doubtful whether the heirs at law of Leonard ought not to be made parties to a suit for that purpose, under the special provisions of his will and the operation of the revised statutes upon the estate of the trustees. The provision in the decree relative to the partition of the estate is therefore erroneous.

The decree appealed from must be modified in conformity with this opinion. And neither party is to have costs as against the other upon the appeal. Some of the executors having died pending the appeal, the decree must be entered nunc pro tunc as of the time of the argument. And an order may now be entered, suggesting the death of such executors, and directing the suit to proceed against the surviving executrix and executor of the estate of Leonard,

       The decree of the chancellor in this case was affirmed, upon appeal to the court for the correction of errors, in December, 1842.


text:
    Brown and others vs. Southworth and others.
    The courts of common law have no authority to take testimony, upon a commission issued for that purpose, except such authority as is conferred upon those courts by statute; and in taking such testimony the regulations prescribed by the legislature must be strictly complied with.
    But the court of chancery, independent of any statutory authority, has always possessed the power to issue a commission for the examination of witnesses, either in or out of the state, and to direct the manner in which the commission shall be returned.
    And the manner of executing and returning commissions to take testimony in the court of chancery, is regulated by the rules and practice of the court, and not by any statutory provision, except as to the right of parties and their counsel to be present and to examine and cross examine the witnesses orally.
    By the settled practice of the court of chancery a commission for the examination of witnesses, in suits pending in that court, may be returned by the commissioners by mail, directed to the proper officer of the court with whom the depositions are to be filed, unless the court has made a special order for the return of the commission in a different manner.
    The commissioners, after taking the testimony of witnessess under a commission, should enclose the commission and the depositions under their seals, and should severally write their names upon the outside of the envelope. But a mere irregularity of the commissioners, in suffering one of their number to write the names of all the commissioners upon the envelope, through mistake or inadvertence, where there is no doubt as to the genuineness of the depositions and that they have not been altered since they were taken and certified by the commissioners, will not prevent the court from receiving the testimony.
    Where by mistake the witness intended to be examined under a commission was not rightly named therein, but the commissioners notwithstanding such mistake, examined the witness upon the interrogatories annexed to the commission ; Held, that the deposition was extrajudicial and could not he received as evidence in the suit.
    The article of the revised statutes relative to taking the testimony of witnesses out of the state, only applies to the taking of such testimony in actions brought in courts of common law.
    October 19.
    This was an application on the part of the complainants for leave to read, upon the trial of an issue directed in this cause, certain depositions taken in the state of Indiana, under a commission issued out of this court. The commission was granted by a special order of the court; but through inadvertence the order contained no direction authorizing the commission to be returned by mail. In the petition upon which the order was obtained the name of one of the witnesses was stated to be either James or Imes one Hurd. But in the order, and in the commission he was called James Hurd only; whereas the true name of the witness who was intended to be examined, and who was in fact examined under the commission, was Imus Hurd. The commission was in all other respects duly executed, and the depositions properly certified by all the commissioners. But the certificate upon the outside of the commission, of the sealing up thereof, &c., was only signed by one of the commissioners, in person ; the names of the others being in his hand writing. And the commission was sent by mail,, directed to the assistant register, and was received and opened by him, and the depositions thus received were filed in his office. When the issue was called up for trial the depositions were objected to by the counsel for the defendant Southworth. And the circuit judge considering the objection valid that the commission and depositions had been returned by mail without authority, he permitted a juror to be withdrawn, for the purpose of enabling the complainants to make this application,

      S. A. Foot, for the complainants.

      Azor Taber, for the defendants.
   The Chancellor.

In Richardson v. Gere, (21 Wend. Rep. 156,) the supreme court decided that depositions taken under a commission were not admissible in evidence, where the return had been transmitted to the clerk through the post office; unless a previous order had been made by the officer who settled the interrogatories, directing the commission to be returned in that manner. But the counsel for the complainants is right in supposing that the decision in that case is inapplicable to the case of a commission issuing out of this court. Courts of common law have no authority to take testimony under a commission, except what is derived from the statute. In taking such testimony, therefore, the regulations prescribed by the legislature must be complied with. And one of the regulations prescribed by the statute, for the taking of testimony under a commission in a court of law, is that the officer who settles the interrogatories shall direct the manner in which the commission shall be returned. (2 R. S. 394, § 15.) The article of the revised statutes relative to taking the testimony of witnesses out of the state, is only applicable to actions brought in courts of law ; although many of its provisions were adopted from the practice of the court of chancery in relation to commissions.

This court, however, independent of any statutory regulation, always possessed the power to issue a commission for the examination of any witness, either in or out of the state, and to direct the manner in which the same should be returned. The 78th section of the title of the revised statutes relative to the court of chancery, authorizing the chancellor, or the vice chancellor before whom the suit is pending, to direct the issuing of a commission to take testimony, is only in affirmance of the power which this court before possessed and exercised. And the manner of executing the commission, and returning the same, depend upon the rules and practice of the court, and not upon any statutory provisions, except so far as is specified in the 83d section of that title of the revised statutes. (2 R. S. 181.)

The ordinary mode of returning a commission for the examination of witnesses in chancery, according to the English practice, was for one of the commissioners to deliver it in person to the officer of the court with whom it was to be filed; or for one of the commissioners to deliver it to an agent, or some third person, to be delivered to such officer. And in the latter case the bearer of the commission was to deliver it personally, and to make oath that he received it from one of the commissioners, and that it had not been opened or altered since he so received it. (1 Newl. Ch. Pr. 425. 2 Dan. Ch. Pr. 516.)

But at a very early day the court authorized a commission which was to be executed abroad to be returned by mail. (Newland v. Horseman, 2 Ch. Ca. 76.) And in this court it has for many years been the practice to make it a part of the order, that the commission might be returned by mail, directed to the register, or clerk, whenever such a direction was asked for by the counsel, upon a special application to the court for a commission. I believe the practice of returning the commission by mail, without a previous ordei; of the court, has also been very common, for the last ten years, in cases where the commission was issued upon a petition presented to the register or clerk, pursuant to the directions of the 69th rule. And I can see no reasonable objection to the sanctioning and adopting that practice in all cases ; as the return of a commission by mail is equally safe as a return of it by a special messenger. The sanctioning of this practice will also save the delay and expense of special applications to the court, for directions on the subject, in that numerous class of cases where the commission is issued upon a petition to the register, or clerk, without a previous order of the court. It may, therefore, be considered as the settled practice of this court, that a commission for the examination o.f witnesses, In suits pending here, may be returned by the commissioners by mail, directed to the proper officer of the court with whom the depositions are to be filed, unless there is a special order of the court to the contrary.

There was an irregularity, in sealing up the commission in this case, in not having the name of each commissioner, upon the outside of the package, subscribed in his own proper hand writing. By the practice of the court the acting commissioners, after they have enclosed the commission and depositions, under their seals, should severally write their names upon the outside of the envelope. (Hind's Ch. Pr. 351. Gray's Sol. Pr. 14, 27.) When the commissioners were sworn to secrecy, and it was considered important to prevent the depositions of witnesses from being seen by the parties, or their solicitors or agents, until all the testimony in the cause had been closed and an order for the publication of the depositions had been obtained, great strictness was required in sealing up and returning the commission and testimony, to prevent the possibility of the parties obtaining a knowledge of the contents of the depositions. But as the practice of taking the testimony in secret has been abolished in this state, it is only necessary now that the court should be satisfied the depositions are genuine, and that they have not been altered since they were sworn to by the witnesses. And even when the testimony was taken in secret, a neglect to comply with all the usual forms did not prevent the testimony from being read, where the court was satisfied that the depositions had neither been seen nor altered after they were taken before the commissioners. Thus in the case of Smales v. Chayter, (1 Dick. Rep. 99,) where the person entrusted with the commission lost it on the road, and it was picked up by travellers and brought to the office of one of the masters, upon their affidavit that they had not opened or altered the same, the depositions were ordered to be received in the same manner as if they had been regularly returned. So in Bourdien v. Trial, (2 Fowl. Exc. Pr. 80,) where the messengers who brought the commission from abroad, being detained, in quarantine upon the coast, sent the commission up to the solicitor by the coach, the court, upon a subsequent affidavit of the messenger as to the identity of the package and of the seals, which were unbroken, ordered the depositions to be received. In the present case there is no doubt as to the genuineness of the depositions, and that they have not been altered since they were taken and certified by the commissioners. The complainants must, therefore, be permitted to read all the depositions except that of Imus Hurd, although only one of the commissioners subscribed his name upon the outside of the package.

The objection to the deposition of Hurd is that, owing to the mistake in his Christian name, he was not one of the witnesses that the commissioners were authorized to examine. He would not, therefore, by the laws of any country, be guilty of perjury if his deposition was false. Many of the states have passed laws requiring witnesses to attend and be examined upon commissions issued out of the courts of other states; and some of them have, in terms, made false swearing in such cases punishable as perjury. (See Rev. Stat. of Mass. 571, 576, § 13, 53.) I do not know whether there is any thing in the statutes of Indiana upon this subject. But as a general principle, the depositions of witnesses under a commission should be taken in such a manner as to subject the witness to punishment for perjury, if his deposition is false, should the state or country where the commission is executed have any law for the punishment of perjury in depositions thus taken. The testimony of this witness cannot, therefore, be read, without the consent of the defendant. But if such consent is not given, the complainant may have a new commission, for his examination, directed to the same commissioners, or any of them; and an order to stay the trial of the issue until such commission can be executed and returned.

Order accordingly.


text:
    Shepherd vs. Guernsey and Collier.
    The holders of the protested notes of an insolvent banking association, under the provisions of the general banking law, are not entitled to a preference in payment, out of the funds in the hands of the comptroller for the security of the circulating notes of the association, over the other creditors whose notes have not been protested ; but all the holders of circulating notes of the insolvent association are entitled to be paid rateably.
    Equality, among creditors having a common right to payment out of a fund provided for the benefit of all, is a settled principle of equity.
    October 19.
    This was an application to dissolve an injunction, which restrained the comptroller from giving a preference in payment to the holders of protested notes of an insolvent banking association, over the holders of notes of the association which had not been so protested. The funds in the hands of the comptroller were the proceeds of stocks deposited with him, by the Bank of Western New-York at Rochester, for the security of all the holders of its circulating notes, according to the provisions of the general banking law of 1838. That bank stopped payment, and some of its notes were protested, and the protests were filed in the office of the. comptroller in February or March, 1841 ; after which time it had wholly neglected to redeem any of its circulating notes, and was hopelessly insolvent. Several creditors, who held the circulating notes of the association at the time of its failure, had them duly protested for non-payment and caused the protests to be filed in the office of the comptroller. They thereupon claimed a preference in payment over notes subsequently protested, and over those which had not been protested ; upon the construction which had been given to the general banking law by the late comptroller. And this bill was filed, by one of the holders of the circulating notes of the association, to restrain the giving of such preference, and to have the fund applied to the payment of all the notes rateably and equally. The present comptroller, upon being served with the injunction and subpoena, gave notice to the holders of the protested notes that he did not intend to defend the suit? and that such of them as wished to claim a preference must employ counsel and defend it at their own expense. f J x This motion to dissolve the injunction was, therefore, made in the name of the comptroller, by the counsel for the holders of protested notes who claimed such preference in payment.

      W. S. Johnson, for the complainant.

      J. V, L. Pruyn <$f M. T. Reynolds, for the defendants.
   The Chancellor.

The only question raised in this case by the counsel of either party is, whether the holders of protested notes of an insolvent association, organized under the general banking law, are legally and equitably entitled to a preference in payment, out of the fund pledged to the comptroller for the payment of all the circulating notes of the bank ; or whether all the holders of its circulating notes are entitled to participate equally, and rateably, in case there is a deficiency in the fund to pay all such notes in full 1

The original act of 1838, under which this claim of preference arises, is obscure in many of its provisions j and it has more than once been found necessary to attempt to improve it by amendments. I think, however, from the whole act taken together, that it was the intention of the legislature to make the stocks, and the bonds and mortgages, transferred to the comptroller by a banking association, a common fund for the security of all the circulating notes of the institution which upon their face purported to have been so secured. The last clause of the 5th section of the act, shows it was the intention of the legislature to have the circulating notes of these associations at all times fully secured, either by stocks or by bonds and mortgages and stocks together. In giving directions to the comptroller, therefore, to make provision for the payment of all the circulating notes of an association which had suffered any of its notes to be protested, out of the fund pledged for the payment of such circulating notes, the legislature does not appear to have contemplated the contingency of the fund being found insufficient to pay all such notes in full. And if the language of the statute is not so clear and explicit as to render it certain that they intended the holders of the protested notes should be paid in full, in the event which has happened, in preference to the holders of notes not so protested, it is a proper case for the application of those equitable principles which are constantly acted upon by this court in cases of the like nature.

The 4th section of the act of 1838 provides, that in case of the protest of any of the circulating notes of a banking association, for non-payment, upon filing such protest in the office of the comptroller, he shall give notice to the makers of the protested notes to pay the same; and if they are not paid within ten days thereafter, unless he is satisfied there is a good defence to the payment of the protested notes, he shall immediately give public notice that all the circulating notes issued by such association will be redeemed, out of the trust funds in his hands for that purpose. Thus far, this section is in strict accordance with the principle of natural equity and justice, that where a common fund is provided for the benefit or security of several persons each is entitled to his rateable proportion thereof, in case of a deficiency in the fund to satisfy the equal claims of all in full. But the fourth section further declares, that it shall be lawful for the comptroller to apply the trust funds, belonging to the makers of the protested notes, to the payment and redemption of such notes, and to adopt such measures for the payment of all the circulating notes of the bank as will, in his opinion, most effectually prevent loss to the holders thereof. No one can doubt that, by this clause of the section, it is equally the duty of the comptroller to provide for the payment of the notes not protested as of those which are. But the counsel for the holders of the protested notes insist, that because the payment of such notes is first mentioned they are to he fully paid, in preference to the others, in case of a deficiency; and that, even as between the holders of protested notes, those which were first protested are entitled to a preference over others which were subsequently protested. Such, however, is not the ordinary rule of construction which is adopted by courts of justice in similar cases.

In the common case of a direction, in the will of a testator, to pay several pecuniary legacies out of his estate, if it happens that the fund provided for the payment of such legacies is not sufficient to satisfy all, each legacy must abate rateably. And the executor is not at liberty to pay the first legatee named in the will in full, although the payment of that legacy was first directed by the testator. The presumption, in such cases, is that the testator intended that all the legatees should be paid equally. Such presumption of intended equality will not be repelled by any ambiguous expressions in the will, but must be allowed to prevail unless the will contains unequivocal evidence of the testator’s intention to give some of the legatees a preference, in case the fund should be found to be insufficient to pay all. Thus in Brown v. Allen, (1 Vern. Rep. 31,) Lord Nottingham held, that where a testator gives several pecuniary legacies, as £100 to one and £50 to another, although he directs the legacy of £100 to be paid in the first place, yet if the fund falls short that legacy must abate proportionably. The same principle of construction was recognized by Lord Hardwick, in Blower v. Merret, (2 Ves. sen. 420.) And in the more recent case of Beeston v. Booth, (4 Mad. Rep. 169,) Sir John Leach held, that the expressions, in a will, “ I direct that my executors shall, in the first place pay to A. in the next place to B. and then to C.” &c., were not evidence of an intention that the first should be paid in full, in case of a deficiency in the fund; as they did not necessarily import any thing more than the order of payment, out of the first monies which the executor should have that might be applicable to the payment of legacies. That those expressions were, therefore, consistent with the presumed intention of the testator that all the legatees should be equally paid, in their order.

I am not prepared to say that expressions as strong as those, if used in an assignment for the benefit of creditors, or in a legislative act, might not be sufficient to indicate an intention to give a preferable claim upon the fund, as well as a priority in the order of payment. These decisions, therefore, are merely referred to for the purpose of showing the strength of the principle, that equality among persons having a common right to payment out of a fund provided for the benefit of all is equity, and the length to which courts of justice have gone to sustain that principle and to give it its full effect. The principle, therefore, ought not to be departed from, in this case, without clear evidence of an intention to give to one creditor a preference in payment over another. And such evidence I have not been able to find in any of the provisions of the act of April 1838.

The 11th section of that act does, indeed, direct the payment of all bills or notes as to which default has been made in payment. But it contains no indication of an intention on the part of the legislature, that none but protested bills should be paid, or that those which were first protested should be paid first in full, in case of a deficiency. On the contrary, this section appears to be based upon the principle that a neglect, by a banking association, to pay any of its protested notes, for ten days after notice to pay them has been given by the comptroller, in the manner specified in the fourth section, is a failure of the bank; and that thereby the institution is in default as to the paying of all its notes then in circulation.

But whatever may be the precise meaning of the 11th section of the act, I am satisfied it never could have been the intention of the legislature, by any of the provisions of this statute, to give a preference to bankers and brokers over other members of the community, who had received the circulating notes of these associations in the ordinary course of business. Yet such must, unquestionably, be the effect of giving a preference to the notes first protested, as claimed in this case. For the brokers and bankers, who in the course of their business wrou!d become possessed of large amounts of the circulating notes, would alone be capable of sustaining the expense of a journey to the bank, the costs of a protest, and the trouble of filing it in the comptroller’s office in time to obtain a priority. And they would probably be the first of the bill holders who would be apprized of the failure of the association to redeem its circulating notes.

Although the language of the general banking law, therefore, was so vague as to have misled the late worthy comptroller, and thus rendered it proper for the last legislature to amend the law, so as to remove all doubt upon the subject for the future, I have arrived at the conclusion that this claim for a preference cannot be sustained under the original act; and that the holders of all the circulating notes were entitled to be paid rateably,in case of a deficiency of the fund, whether the notes held by them had or had not been protested.

The motion to dissolve the injunction is, therefore, denied.


author: The Chancellor

text:
    Spear and Patten vs. Given and Eells.
    The provision of the revised statutes requiring the court of chancery to disv miss suits concerning property where the matter in dispute, exclusive of costs, does not exceed the value of $100, refers to the costs of the suit in the court of chancery. A creditor’s bill may, therefore, be filed where the agrégate amount of the debt and costs included in the complainant’s judgment, and still due, exceeds one hundred dollars.
    October 22.
    This was an application for a receiver upon a creditor’s bill. And the defendants’ counsel objected that the coqrt ought not to take jurisdiction of the caseras the amount pf the debt for which the judgment in the suit at law was rendered was less than $100; although the debt and costs in that suit exceeded that sum.

      J. Rhoades, for the complainants.

      R. J. Hilton, for the defendants.
   The Chancellor

said the words “ exclusive of costs” in the 37th section of the title of the revised statutes relative to the court of chancery, (2 R. S. 173,) directing the court to dismiss every suit concerning property, where the matter in dispute, exclusive of costs, does not exceed the value of $100, refers to the costs of the suit in that court merely. That a judgment creditor, therefore, who had recovered a judgment in a court of law, and upon which judgment there was due for debt and costs more than $100, was authorized to file a creditor’s bill; although the amount due upon such judgment, exclusive of the costs included therein, was less than $100, at the time of filing such bill.


text:
    Shirley vs. Shirley and Lambert.
    Where personal chattels are bequeathed to a feme covert for her separate use, or to a single woman free from the control of her future husband, the court of chancery will protect her interest therein, against the creditors of her husband, although no trustee is named in the will of the testator to hold them for her separate use.
    But where chattels are bequeathed to a feme covert generally, or without any restriction, and have been reduced to possession by the husband, with her consent, they become his property in equity as well as at law, and may be taken in execution for his debts.
    If a feme covert, who has a separate estate, purchases articles of furniture with the rents and profits of such estate and puts them into the possession of her husband, without any agreement or understanding with him that he shall hold them as her trustee, or that the title shall be vested in any other person for her separate use, the articles thus purchased become the property of her husband, and are liable to be sold for his debts.

      October 27.
    This was an appeal by the complainant from a decree of the vice chancellor of the first circuit dismissing her bill. 'The complainant was the wife of the defendant W. W.
    Shirley, and the bill was filed to protect the furniture in (q,e house of her husband from a mortgage thereon, given by him to the defendant Lambert, under the following circumstances : A part of the furniture was claimed as having-been bequeathed to the complainant by her deceased aunt; and as to the residue, she claimed that she had purchased it with monies which she received for the rents of real estate, which had been devised to her for her separate use free from the control of her husband. The defendant Lambert having obtained a judgment and execution against the husband and being about to levy the same upon his property, the husband, with the knowledge of the wife, mortgaged this furniture to secure the payment of that debt at a future day. And the debt not being paid, Lambert was proceeding to enforce the mortgage against the property.
    J. Rhoades, for the appellant.

      J. Wallis, for the respondent Lambert.
   The Chancellor

decided that as the specific articles of furniture bequeathed to the wife by her aunt, were not bequeathed to her separate use, or free from the control of the husband, they were subject to his control, and were liable to his debts after they had been reduced to possession by him. That where personal chattels were bequeathed to a feme covert for her separate use, or were bequeathed to a single woman free from the control of her future husband, the court of chancery would protect her interest therein against the creditors of her husband, although no trustee was named in the will of the testator to hold them for her separate use. (Newland v. Paynter, 4 My. & Cr. Rep. 408.) But that where they were bequeathed to her generally, without any such restriction, and had been reduced to possession by the husband with her consent,, they became his property in equity as well as at law. That the furniture purchased by the wife, with the monies received for the rents of her separate estate, and mixed with the other furniture of the husband, was also his property and liable to his debts; there being no agreement or understanding between them at the time of the purchase, that such furniture should be kept by him as her trustee merely, or that the title thereof should be vested in any other person for her separate use.

Decree affirmed with costs to be paid by the next friend of the appellant.

       See Crane v. Brice, 7 Meeson & Welsby’s Reports, 183; Rex v. French, Russell & Ryan’s Crown Cases, 491; St.John’s case, Godolphin's Orphan’s Legacy, 153; and 4 Viner’s Abridgment, 48, S. C.


text:
    In the matter of Hazard, an infant.
    Where the special guardian of an infant, who was authorized by an order of the court of chancery to sell real estate, in conjunction with an adult tenant in common with the infant, reported a sale of the property, which sale was confirmed, and upon an application to compel the supposed purchaser to complete his contract the purchase was denied, and it appeared that the special guardian had made his report of the sale upon verbal information derived from the adult tenant in common merely, the application to compel the supposed purchaser to complete his purchase was denied; with costs, to be paid by such special guardian.
    A special guardian who sells property of an infant, under an order of the court of chancery, should enter into a written contract with the purchaser, subject to the ratification of the court, specifying therein' the terms and conditions of the sale, and the manner in which the purchase money is to be secured and the time of payment. And such written contract should be signed by the special guardian and by the purchaser, so as to prevent any dispute as to the terms and conditions of the sale.
    November 17.
    This was an application by the special guardian of an infant to compel R. L. & A. Hill, the supposed purchasers of the real estate of the infant, to complete their purchase.
    The petitioner had reported that he had contracted with the Hills for the sale of the infant’s estate, subject to the ratification of the court, pursuant to an order authorizing him to sell the same; and the court had thereupon confirmed the report of sale, and directed the guardian to complete the purchase accordingly. In answer to the application, the supposed purchasers swore that they had never made any agreement, either in writing or by parol, to purchase the property of the special guardian.

      J. Rhoades, for the petitioner.

      A. Taber, for It, L. & A. Hill.
   The Chancellor

held, that in such a case the guardian could not have an order to compel the supposed purchasers to take the property, without showing an agreement which was legally or equitably binding upon them, so as to support the jurisdiction of the court to enforce performance thereof by a summary application. He said the proper course for the special guardian in such a case was to make an agreement in writing, for the sale of the property, subject to the ratification of the court; specifying in such agreement the terms and conditions of the sale, and the manner in which the purchase money was to be secured, and the time of payment. And that such agreement should be signed by himself and the purchasers, so as to prevent any dispute as to the terms and conditions of the sale.

The guardian having reported the sale in this case upon the verbal information of an adult joint owner of the premises, and without having made any bargain for the sale, and the supposed purchasers having denied on oath that they ever made an.y agreement with him, or wdth any one in his behalf, the court allowed them their costs of opposing the application, to be paid by the special guardian.


text:
    Stow vs. Pearce.
    Where a defendant neglected to attend before a master on a reference, in obedience to a summons served upon his solicitor, and showed for cause against the usual order, to attend before the master in four days and to pay the costs of the application, that he was absent from home when the summons was served and had no information of it until after the order to show cause was served; Held, that as the solicitor neglected to appear before the master, to excuse the default of his client and to obtain an adjournment of the hearing, the defendant must pay the costs of the proceedings to compel his personal attendance before the master on the reference.
    December 7.
    The defendant having neglected to attend before a master, on a reference, under a summons served upon his solicitor, showed for cause against the usual order, to attend before the master in four days and to pay the costs of the application, that he was absent from home when the summons was served on his solicitor, and did not hear thereof until after the order to show cause why he should not be punished for his contempt was served on his solicitor.

      Eb. Clark, for the complainant.
    D. L. Seymour, for the defendant.
   The Chancellor

said it was the duty of the solicitor, upon whom the summons was served requiring a personal attendance of his client before the master, to give notice thereof to his client. And if the client, by reason of absence or otherwise, was unable to attend the master upon the return day of the summons, the solicitor should attend, for the purpose of excusing the default of his client and obtaining an adjournment for a reasonable time, to enable the defendant to attend according to the order of the court.

That if the solicitor neglected to attend, upon the return of the summons, and excuse the default of his client, the latter must pay the costs of the proceedings of the adverse party, to compel a compliance with the order requiring the defendant to attend personally before the master on the reference.

Order accordingly.


text:
    Hartwell vs. White and others.
    Where a defendant in a foreclosure suit, who is proceeded against as an ab. sentee, applies to be let in to defend, after decree and before a sale of the mortgaged premises, and does not swear to a defence on the merits, he must pay the costs already accrued, subsequent to the time for his appear, anee, and must also give security to pay the future costs of the suit if he does not succeed in his defence.
    If the absentee swears to a good defence upon the merits, and states what it is, the court will not require him to pay costs, where he applies the first opportunity after he has notice of the proceedings against him, although the complainant denies upon oath that any such defence exists. But the court in such a case may require the absentee to give security to pay the costs already accrued, and the costs of the future litigation, if he shall not succeed in his defence.
    December 10.
    The bill in this case was filed to foreclose a mortgage, and after a decree had been obtained, but before the sale of the mortgaged premises, White, one of the defendants against whom the bill had been taken as confessed as an absentee, applied to be let in to make a defence and to stay the proceedings upon the decree in the meantime; and in his petition he swore to a good defence to the suit and stated what that defence was. On the part of the complainant, affidavits Avere produced to show that the absentee had no such defence as was stated in his petition.

      C. B. Lansing, for the complainant.
    v?. Taber, for the defendant White.
   The Chancellor

said the court could not try upon affidavits the validity of the defence stated in the petition j and that the affidavits on the part of the complainant could only be received for the purpose of regulating the discretion of the court as to costs, as the absentee had a right to come in and defend upon payment of such costs as the court should deem reasonable. (8 Paige’s Rep. 506.) He said that if the absentee did not swear to a defence upon the merits, the court would require him to pay the costs already accrued, subsequent to the time for his appearance, and to give security to pay the future costs of the suit in case he did not succeed in his defence. But if he swore to a good defence and stated what it was, and the complainant produced affidavits to show that no such defence existed, the court in its discretion might require the absentee to give security to pay the costs which had already accrued and the costs of the future litigation, in case he should fail in establishing a defence to the suit.