text:
    Mower and wife vs. Kip and others.
    The revival of a judgment by scire facias within ten years after the docketing thereof, will not continue or extend the lien of the judgment beyond the ten years, as against purchasers or incumbrancers whose rights accrued subsequent to the entry of the original judgment.
    Chancery gives effect to the lien of a judgment, as against subsequent purchasers or incumbrancers, upon a legal title, only so far as such lien could be enforced by execution at law. And the court, therefore, will not extend the lien to the interest due on a judgment, upon which no interest can be collected by execution at law, although in a suit upon the judgment the creditor would be entitled to recover interest by way of damages.
    As a general rule, the surety in a bond is not liable beyond the amount of the penalty, although the principal and interest due by the condition of the bond exceeds that amount. But it seems that interest, by way of damages for the detention of the debt during the time the defendant delays its collection by an improper or protracted litigation, may be recovered even as against a surety.
    Where a debt is secured by a bond and mortgage, the mortgagee has a lien upon the land for the whole amount of the principal and intererest due, according to the condition of the mortgage, although such amount exceeds the penalty of the bond.
    1836. April 19.
    Upon a money bond given by a principal debtor, the obligor is both legally and equitably liable for the whole amount of the'principal and interest secured by the condition of the bond, although such amount exceeds the penalty of the bond.
    This case came before the chancellor upon an appeal by the complainants, and upon a cross appeal by J. J. Rosevelt, one of the defendants, from a decree of the vice chancellor of the first circuit. The controversy related to the manner of distributing the proceeds of the sale of mortgaged premises, which had been sold under a decree of foreclosure in this suit; and as to the amount of such proceeds, to which the appellants were respectively entitled, as against each other, and as against the other parties in the suit. The appellant, J. J. Rosevelt, was a judgment creditor of Cornelius Kip, the mortgagor, for $2,279,49. His judgment was recovered before the giving of the mortgage, and before the passing of the act of April, 1813 authorizing the collection of interest upon executions on judgments thereafter to be recovered in suits upon contracts. (R. L. of 1813, p. 506.) The judgment was revived by scire facias, in 1821, more than ten years before the filing of the bill of foreclosure. The mortgage was given in May, 1813, by Cornelius Kip and wife to Mary Kip, now the wife of the complainant, J. B. Mower, to secure the payment of $1,650, with interest, on or before the first of June thereafter, in the manner mentioned in the condition of a bond, in the penal sum of $3,300, given to the mortgagee by C. Kip for the payment of the same debt. In 1816, C. Kip, the mortgagor, was discharged under the insolvent act, and all his interest in the mortgaged premises was transferred to S. Jones, his general assignee under the statute, for the benefit of his creditors. C. Kip afterwards died, leaving his widow, Susan Kip, one of the respondents, him surviving, and entitled to dower in the premises, subject to the complainants mortgage. The amount of the principal and interest due, according to the condition of the mortgage and the bond, exceeded the amount. of the penalty of the bond ; and the vice chancellor decided and decreed, that the complainants were only entitled to payment out of the proceeds of the sale of the mortgaged premises to the extent of the penalty of their bond, and the costs of foreclosure. From this part of the decree, the complainants appealed. The vice chancellor also decided and decreed, that the lien of the judgment must be postponed to that of the complainants, by virtue of their mortgage, and to the widow’s claim of dower in the surplus. And that Rosevelt, the owner of the judgment, was entitled to priority of payment, out of the proceeds of the sale, over S. Jones, the assignee under the insolvent act; but that he had no lien for interest on his judgment. Rosevelt appealed from so much of the decree as postponed the lien of his judgment to the lien of the complainants’ mortgage, and from that part of the decree which declared that he was .not entitled to the payment of interest on his judgment.

      C. O’Connor, for the complainants.

      J. J. Rosevelt, for the appellant Rosevelt.

      D. S. Jones, for Susan Kip and other defendants.
   The Chancellor.

There can be no doubt as to the correctness of the vice chancellor’s decision that the defendant Rosevelt lost his legal priority over the mortgagee, by his neglect to enforce the lien of his judgment within the ten years. The opinion of Mr. Justice Sutherland in Little v. Harvey, referred to by the vice chancellor, (2 Edw. Ch. Rep. 169,) has since been sustained by a decision of this court, upon the point which is now under consideration. (See Pettit v. Shepherd, 5 Paige’s Rep. 493.) The revival of the judgment by scire facias, within the ten yeai’s, could not have the effect to continue the lien as against bona fide purchasers or incumbrancers whose rights or liens had accrued after the docketing of the original judgment. The object of a scire facias is not to extend or continue the lien of the judgment, but to enable the plaintiff to enforce his lien by execution. Besides, in this case, it appears that more than ten years had elapsed after the revival of the judgment before the filing of the complainants bill; so that if the scire facias could have had the legal effect to extend the original lien of the judgment beyond the ten years, as against the complainants mortgage, the lien was lost by the subsequent neglect of Eosevelt to enforce that lien within the ten years after the judgment upon the scire facias.

The judgment never was a lien upon the land for any thing more than the nominal amount thereof, without interest. The rule of this court is to give effect to the lien of a judgment upon a legal title, so far as it could be enforced by execution at law. And where interest can be levied upon the execution, the judgment creditor is entitled to a preference over subsequent liens and the general creditors of the defendant in the judgment; but he is not entitled to a lien for interest upon a judgment which does not draw interest; although he may, in a suit upon the judgment, recover interest by way of damages. (Trustall v. Trappes, 3 Sim. Rep. 299. De La Vergne v. Evertson, 1 Paige’s Rep. 182.) So much of the decree of the vice chancellor as is appealed from by Eosevelt must be affirmed, with costs, to be paid by the appellant.

The appeal of the complainants presents the question whether a mortgagee can enforce the lien of his mortgage beyond the penalty of the bond, where the amount of principal and interest actually due exceeds that sum. This question does not appear to have been judicially settled in any of the courts of this country, except in the state of Massachusetts ; and but one or two cases are to be found in the English reports where the precise question has arisen, although the books are full of conflicting decisions as to the right of the obligee in a bond, in other cases, to recover interest beyond the penalty. There appears to be a well settled rule in the court of chancery in England, that in the taking an account of an insolvent estate, upon an ordinary creditor’s bill, the master is not to allow interest beyond the penalty of the bond, in favor of the specialty creditors, either as against the estate of a surety, or of the principal debtor. But the question appears to be unsettled there, whether any thing beyond the penalty can be recovered against the principal or the surety in an indemnity bond for the performance of covenants. From an examination, however, of all the cases on this subject, I think it may be considered as the settled law in this state, that as aganist the surety in a bond, the obligee cannot, in an action upon such bond, recover any thing more than the penalty of the bond, with interest thereon from the time when a personal demand was made upon such surety for payment. There is a technical right to recover interest upon a money bond beyond the penalty, by way of damages for the detention of the debt. If, therefore, the surety should delay the collection of the debt by an unreasonable protracted litigation, it might be proper to direct the jury to find damages to the extent of the interest which had accrued during such unreasonable and improper delay. (Warner v. Thurlo, 15 Mass. R. 154.) But as a general rule, the surety can only be considered as covenanting for the payment of the penalty of the bond, if the condition thereof is not performed by the principal debtor.

Such a limitation of liability, however, is not applicable to the principal debtor in a money bond. As to him, the amount secured by the condition of the bond is the real debt, which he is both legally and equitably bound to pay; and if he neglects to pay the money when it becomes due, there is no rule of justice or of common sense which should excuse him from the payment of the whole amount of the principal and interest, whether it be more or less than the formal penalty of the bond. I think also, upon examination, it will be found that there is no technical difficulty in recovering a judgment at law, upon the bond, which will be sufficient in amount to enable the plaintiff to levy the whole of the debt and interest and costs, justly due him by an execution upon such judgment. By the common law, the plaintiff, in an action upon a penal bond, is entitled to recover damages for the detention of the debt, beyond the amount of the penalty of the bond. And although the damages usually recovered in such cases are merely nominal, as the penalty of the bond is generally sufficient to cover the sum actually due with the interest thereon, yet the amount of such damages may be increased by the jury upon a trial, or added to the damages and costs upon taxation where there is a judgment by default, whenever the justice of the case requires the judgment to be entered in that form. (Moffath v. Barnes, 3 Caines, 49, n; Holdipp v. Otway, 7 Term Rep. 447, n.) I admit there are conflicting decisions on this subject in the- English courts; but the last one which I have been able to find is in favor of allowing interest beyond the penalty of the bond, by way of damages for the detention of the debt, to the extent, if necessary, of the damages laid in the plaintiffs declaration. (Francis v. Wilson, Ryan & Moody’s Rep. 105. See also Lord Lonsdall v. Church, 2 Term Rep. 388.) The general current of the American cases is in favor of allowing interest by way-of damages, beyond the penalty; and in many cases, this principle has been extended to the case of a surety. (See United States v. Arnold, 1 Gall. Rep. 348; Harris v. Clapp, 1 Mass. Rep. 308 ; Perit v. Wallis, 2 Dall. 252; State of Maryland v. Wayman, 2 Gill & John. 254; Tennant’s ex’rs v. Gray, 5 Munf. Rep. 494.) This question appears to have been deliberately settled by the supreme court of this state, as early as 1805, in the case of Smedes v. Houghtaling, (3 Caines’ Rep. 48.) Kent, C. J., there says: “ On a review of all the decisions on this subject, the court think this rule ought .to be adopted: that interest is recoverable beyond the penalty of the bond; but that the recovery depends upon principles of law, and is not an arbitrary ad libitum discretion in the jury.” This case was not overruled in the subsequent case of Clark v. Bush, in the same court, (3 Cow. Rep. 151;) although it appears to have been overlooked by the learned chief justice in his very elaborate examination of the cases on this subject, as it was not referred to by either of the counsel, and is not alluded to in his opinion. The question which the chief justice was examining, and the only one upon which any definite opinion was expressed by him in the case of Clark v. Bush, was, whether a surety in a mere bond of indemnity, given by him for the benefit of another person, was chargeable beyond the penalty of his bond; and the conclusion at which he arrived in that case, was unquestionably correct. That decision, therefore, did not conflict in any manner with the former decision of the court, that the principal debtor in a money bond may be charged with the money which is actually due, with interest thereon from the time it became due, although the amount of such debt and interest may exceed the nominal amount of the penalty of the bond.

Even if I am wrong in the conclusion at which I have arrived in this case, that the whole amount of the principal and interest due to the complainants could have been recovered in an action of debt upon the bond of the mortgagor, still it appears to be perfectly well settled, even in England, that interest may be recovered by the mortgagee, upon his mortgage, beyond the penalty of a bond given as collateral security for the payment of the same debt; and that too as against a surety. This was so held by Sir William Grant, the master of the rolls, in the case of Clark v. Lord Abingdon, (17 Ves. Rep. 106;) and the same principle had long before been settled by a decision of the house of lords upon an appeal from the court of chancery in Ireland. (Kirwan v. Blake, 4 Bro. P. C. Toml. ed. 532. See also Pitts v. Tilden, 2 Mass. Rep. 118.) The case of Lloyd v. Hatchett, (2 Anst. 525,) referred to upon the argument and in the opinion of the vice chancellor, appears to have been entirely mistaken; and when rightly understood, it does not appear to conflict with the decisions of Sir William Grant and of the house of lords, in the cases to which I have referred. The bond, in that case, upon which the court refused to allow interest beyond the penalty, does not appear to have been a bond for the payment of the same debt for which the mortgage was given. The mortgagor had assigned the equity of redemption to the complainants, for the use of his creditors at large, and the bill was filed against the mortgagee in possession, to redeem ; and it appears that the latter must have set up a claim for an additional debt, due upon a bond given about the same time with the mortgage, and claimed to be allowed the amount thereof, either as one of the general creditors, or as an offset against the rents and profits which he had received during the thirty-three years in which he had been in possession of the mortgaged premises. In the present case, the condition of the mortgage is not to pay the penalty of the bond ; but it is in terms to pay the $1,650 mentioned in the condition of the bond, at the time and in the manner mentioned in such condition. The mortgage, therefore, is to secure the payment of a specific sum of money, with the interest thereon, without any reference to the amount of the penalty of the bond which was given to secure the same debt.

Both upon principle and upon authority, therefore, the mortgagees are entitled to the full amount of their debt secured by the mortgage, with the legal interest thereon; and so much of the decree of the vice chancellor as is appealed from by the complainants must be reversed, with costs ; which costs must be paid out of the fund raised by the sale of the mortgaged premises, in preference to the payment of the allowance to the widow for her dower, and to the amount due to the defendant Rosevelt, on his judgment.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Dakin and others vs. Demming and others.
    A surrogate lias no jurisdiction to cite the personal representatives of a deceased executor to account before him as the representatives of the first testator, when none of the effects of such testator came to their hands in that character.
    But upon the application of a person who as a legatee or distributee of the first testator is a creditor of the deceased executor, the surrogate has authority to cite the representatives of the latter to account for the estate of their own testator or intestate; and upon such accounting the surrogate is authorized to liquidate and determine the amount of the claim against the estate of such testator or intestate as the representative of the first testator.
    Where the surrogate has not jurisdiction of the subject matter of the suit or proceeding before him, no assent or submission of the parties can give him such jurisdiction. But where the objection to the jurisdiction is not taken before the surrogate, but is made for the first time in the appellate court, the appellant will not be allowed costs upon the reversal of the senierlce or decree of the surrogate, unless the same is found to be erroneous upon the merits also.
    1836. April 19.
    Where the general guardian of an infant settles with the executors or personal representatives of the decedent for a legacy or distributive share of the estate due to his ward, the settlement is so far conclusive upon the infant when he arrives at full age, as to throw upon him the burthen of showing that there was error in the account upon which such settlement was made.
    The statute allowing to executors, &c. upon the settlement of their accounts, a compensation for their services applies to all settlements made after the passing of the original act, although the services had been performed before. And in cases coming within the statute, the surrogate has no discretion to refuse to allow to the executor or administrator the commissions established for such services,
    This was an appeal from a decree of the surrogate of the county of Oneida. The appellants were the executors of Jedediah Sanger, deceased, who was the surviving executor of David Demming, who died in 1809. Demming, by his will, bequeathed to his adopted daughter, Joanna Demming, and to her two children, certain- personal property particularly specified in his will, and made them his residuary legatees of the personal property not otherwise disposed of by the will; and he also bequeathed to his executors all his notes of hand, except those due from his brother, to be held by the executors in trust for the use and benefit of Joanna Demming and her two children, excepting thereout so much as might be sufficient to defray his funeral expenses and to pay his just debts. The personal estate, exclusive of the specific legacies to others and the notes and cash of the testator, were inventoried at $940,57; of which the general guardian of the two infant children of Joanna Demming received from the executors $624,86, about two thirds thereof in specific articles, and at the inventory prices, shortly after the death of the testator. The notes of the testator, exclusive of those specifically bequeathed to the brother of the testator, and those which were marked as bad upon the inventory, were inventoried at $531,37, of which amount one note of $16, was marked as doubtful. The cash of the testator on hand at the time of his death, was $141,18, making with the good notes $656,55. The amount paid out for debts and funeral charges and the expenses of administrator!, as allowed by the surrogate, exclusive of any commissions or other allowance to the executors for their time and trouble, was about $368,39. And on the 9th of October, 1816, the guardian of the two children of Joanna Demming, received the executors notes of hand, due to the estate, to the amount of $196,01; and he gave his receipt therefor, declaring it be in full discharge of the notes and property willed to the executors in trust for the use and benefit of such infant children. In April, 1832, the two children of Joanna Demming cited the executors of Sanger to account before the surrogate, for the personal estate of Demming which came to the hands of the executors of Demming, or either of them. The surrogate thereupon proceeded to take an account of the estate of Demming; and by charging the executors with some of the notes inventoried as bad, and with interest on the notes, and making no allowance to them for interest on the notes which were delivered to the guardian, beyond the nominal amount of such notes as mentioned in the receipt, and allowing nothing to the executors for their services or commissions, he found a balance due to the petitioners of $235; which sum together with $37,37i costs, the executors of Sanger were decreed to pay out of the estate of Sanger. From this decree the executors appealed to the chancellor.

      H. Denio, for the appellants.

      T. Jenkins, for the respondents.
   The Chancellor.

There is not the least reason for supposing that any of the effects of Demming’s estate ever came into the hands of the appellants as the executors of Sanger, who was the surviving executor of Demming. The surrogate, therefore, had no jurisdiction or authority to cite them to account before him as the representatives of the estate of Demming; although Sanger, who was the surviving executor, died before the revised statutes had deprived the executor of an executor of .the right to administer upon or control the estate of the first testator. But the surrogate has an unquestionable right, upon the application of a legatee of the first testator, who as such legatee is a creditor of his executor, to cite the personal representatives of such executor to account for the administration of the estate of their own testator or intestate. (2 R. S. 92, § 52. Idem, 116, § 18.) And upon the final settlement of the accounts of that estate, the surrogate is- authorized to determine and liquidate the amount of the claim of the legatee against the estate of such testator or intestate as the representative of the first testator; whether such claim was against him in his character of executor, or merely as a trustee under the will of the first testator. (See 2 R. S. 95, § 71.) It is very evident, however, that the proceeding's in this case were not instituted by the respondents for the purpose of calling the appellants to account for their administration of the estate of Sanger, and to obtain a payment of a claim in their favor as the creditors of his estate. It was strictly a proceeding to compel the executors of Sanger to render an account of the administration of the estate of Demming by the executors of that estate. And it was so understood, both by the surrogate and the parties; for the legatees of Demming, and not those of his deceased executor Sanger, were the persons who were cited to attend upon the final settlement of the account. Such a proceeding was improper and wholly unauthorized, if the account of Sanger’s estate was to be settled as upon an application of the petitioners as his creditors. And the surrogate has taken an account of the administration of the estate of Demming only, and has decreed the payment of the amount found due, upon that accounting, out of the estate of Sanger in the hands of his executors ; but without making a single inquiry for the purpose of ascertaining whether the estate of Sanger was sufficient to pay all his debts, or even the amount of this decree. The surrogate having proceeded without jurisdiction, his decree is erroneous, and must be reversed on this ground, even if his decision was right on the merits of the case as presented before him. Although this objection to the jurisdiction of the surrogate does not appear to have been urged before him, still if the court had not jurisdiction of the subject matter of the suit between these parties, no assent or submission of the parties could give it such jurisdiction. Abat v. Songy’s estate, 7 Mart. Rep. 274. Coffin v. Tracy, 3 Caines’ Rep. 129. But as the objection to the jurisdiction of the surrogate is made for the first time in the appellate court, I should not be disposed to give costs to the appellants, in a case where the costs upon the appeal are in the discretion of the court, as in this case, (2 R. S. 613, § 2,) if the decision of the surrogate was right upon the merits; which appears to be the only question that was actually presented by the parties for the consideration of the judge a quo. I shall therefore proceed to consider that question, in reference to the costs upon this appeal.

From the receipts which were given to the executors of Demming, by the general guardian of the appellants who were then infants, I am satisfied that the executors fairly accounted with such guardian for the shares of the personal estate, exclusive of the notes and cash of the decedent, which belonged to the infants ; and that the surrogate after the lapse of twenty-three years, should not have opened that account, although the nominal amount of the specific articles delivered to the guardian, at the inventory prices, differed between two and three dollars from two thirds of the whole amount as stated in the inventory. It appears from the receipt which was taken for victualling the appraisers, that the inventory must have been made out by them as early as the third of October, 1809; and it would not be surprising if some trifling article of the clothing, to the value of two or three dollars, had been applied to their use, or lost or destroyed without any fault of the executors, between that time and the 25th of December, when the inventory was sworn to, and when the last receipt of the guardian for their share of the specific articles was given. I am perfectly satisfied, therefore, that the executors of Demming faithfully discharged their duty in respect to this part of the property at least; and that it was the intention of the guardian to receive the articles mentioned in his two receipts of the 21st and 25th of December, 1809, in full for the two thirds of the specific articles of personal property bequeathed to his wards. The nominal amount of notes included in the receipt of the new guardian of the infants, jn October, 1816, exceeded by a few dollars, the share of the infants in the good notes and the cash, as orginally inventoried after deducting the amount paid for debts and funeral expenses, &c. as allowed by the surrogate. As the interest was not cast upon the notes in the original inventory, it may be fairly presumed that the notes when turned out to the guardian, for the benefit of the infants, were taken in the same manner, and that the amount actually due on such notes, including the interest thereon, exceeded the nominal amount thereof, as mentioned in the receipt. Again ; the receipt of the guardian was expressed to be in full for the notes and property bequeathed to the executors in trust for the benefit of the infants. It was evidence,therefore, of a settlement between the executors and the guardian, as to this part of the estate of the testator ; and such a settlement was so far conclusive upon the infants, when they became of age, as to throw upon them the burden of proving that there was error in the account upon which such settlement was made. The surrogate; was clearly wrong in presuming that the notes of J. Whitney, which were inventoried as bad, had actually been collected by the executors, from the mere fact that they attempted to collect them and were afterwards compelled to pay the constable’s fees out of the estate. The fact that the constable called upon the executors about a year after the judgment was rendered, for the payment of his fees, and that by the justice’s certificate, the judgment appeared to be standing in full force, is pretty strong presumptive evidence that the defendant therein was unable to pay; as he appears to have been at the time of taking the inventory. If the judgment was actually collected, or collectable, the respondents, who were attempting to impeach the settlement made between their guardian and the executors sixteen years before, were bound to establish the fact by proof less equivocal than the mere payment of a constable’s fees for serving a summons. And if it were necessary, to support the settlement made by the guardian, after such a lapse of time, I think it might be fairly presumed that the note mentioned as doubtful, or even that some of those inventoried as good were not collectable, or were not in fact due. As the respondents, when they arrived at age, thought proper to wait until after the death of the surviving executor before they instituted this proceeding to open an account which had been settled by their guardian many years before, they were at least bound to call upon that guardian, if living, or to show by a reference to the accounts of his guardianship, if he was dead, the amount actually due for principal and interest on the notes belonging to the estate of Demming, which were received by him on account of their share of such estate.

The settlement between the executors and the guardian was before the passage of the "act of April, 1817, authorizing the court of chancery to make an allowance to executors, administrators and guardians, upon the settlement of their accounts, for their services in the discharge of their trusts. Such an allowance, therefore, would not be proper in an account which was liquidated and finally settled at that time. -But the statute was retrospective in its operation, and was intended to embrace cases where the services had been performed before the passing of the statute if the settlement of the account took place afterwards; and such, I believe has been the uniform construction of "the statute. If the surrogate, therefore, considered the settlement made with the guardian in 1816, as a nullity, and that the executors were bound to account for the whole estate which had come to their hands according to the inventory, crediting them only with such sums as had been paid by them to the guardians from time to time, he should at least have allowed the executors their commissions as fixed by the chancellor under the statute. Indeed the statute under which the surrogate supposed he was proceeding to take this account, is imperative that he shall allow the personal representatives such commissions; and this court has recently decided that the surrogate has no discretion on the subject. (Halsey v. Van Amringe, April 5th, 1836, on apPml from tlle surrogate of New-York.)

Upon every view which I have been able to take of this casei therefore, I am satisfied that the sentence appealed from was erroneous in substance, as well as on account of the want of jurisdiction. And it must be reversed with the costs of this appeal, to be paid by the respondents,

       Ante, p. 12.


text:
    In the matter of the Receivers of the Globe Insurance Company.
    1836. April 19.
    The receivers of an insurance company which was rendered insolvent by the great fire in the city of New-York, appointed pursuant to the act of January, 1836, are subject to the control of the court of chancery. And an order of the court directing or controlling them in the discharge of their duties is not only binding upon them, but also upon the creditors of the insolvent corporation.
    Where bills or petitions are filed in the first or third circuit, the designation or marking of the paper in conformity to the seventh rule of the court determines the question whether the suit or proceeding is instituted before the chancellor, or before the vice chancellor of the circuit where the bill or petition is filed.
    When a summary proceeding has been commenced and is pending before a vice chancellor, who has thus obtained jurisdiction of the case, the chancellor will not proceed upon an original petition in relation to the same matter.
    Directions as to the duties of receivers of insolvent corporations in the settlement of the claims of creditors and in the distribution of the fund.
    This was a petition of the receivers of the Globe Insurance Company, appointed under the act of the 18th of January, 1836, for the more convenient adjustment of the affairs of certain insurance companies in the city of New-York, rendered insolvent by the late fire in that city, for the order and direction of the court relative to the discharge of their duties. All the facts necessary to a correct understanding of the decision are fully stated in the opinion of the court.
    R. G. Rankin, for the petitioners.
   The Chancellor.

Most of the questions presented for the decision and direction of the court, are those in which the creditors of the corporation are interested; and no direction should be given by the court in relation thereto, without giving those creditors a chance to be heard. Although these receivers are not appointed by the court of chancery, the legislature intended that they should be subject to the control of the court, in the same manner as receivers of insolvent corporations appointed by the court of chancery under the provisions of the 41st section of the article of the revised statutes relative to proceedings against corporations in equity; (2 R. 8. 464;) and they possess all the powers of receivers thus appointed. There can, therefore, be no doubt as to the power of the court to control and direct them in the execution of their duties, and that any order of the court in relation thereto, made upon a summary application, will not only be obligatory upon the receivers, but binding upon all the creditors of the corporation, so long as it remains in full force; and that the remedy of the receivers or of any creditors who may be dissatisfied with such order, is by an appeal. It will also be the duty of the court to enforce obedience to such orders as may be made in the premises, and to protect the receivers, by injunction, from all suits and prosecutions by the creditors of the corporation, for any thing done by such receivers in obedience to the orders of the court.

It was the intention of the legislature, not only in the act of January last, but also in the provisions of the article of the revised statutes to which I have before referred, to provide a summary mode of closing up the concerns of insolvent corporations, without the expense and delay of formal suits to settle and ascertain the claims of creditors. It would thei'efore be improper to permit any such suits to be commenced by creditors to ascertain their rights to a distributory share of the fund; but they should be compelled to submit them to a reference under the provisions of the statute; and if any creditor refuses to present his claim for adjustment, the distribution of the fund should be made without reference to such claims, except in those cases where the receivers are able to ascertain and liquidate the amount suc^ cla^m by the books and papers of the company in their possession. But as it would be impossible to give personal notice to all the creditors, to present their claims for adjustment, and a notice in the papers might not reach those creditors who reside out of the city within the short time which is necessary to a speedy adjustment of the claims against the corporation, so that the sufferers by the fire shall not be kept out of their share of the fund for any considerable length of time, the receivers should endeavor, as far as possible, to ascertain the amount justly due to each creditor, whether he actually presents his claim therefor or otherwise. And at the meeting of the creditors, to be called pursuant to the 74th section of the revised statutes, (2 R. S. 470,) if any questions arise which require the direction and decision of the court before a distribution of the fund is made, they may be submitted in a summary manner, or upon the petition of the party making a claim to preference in payment, or other claim against the fund ; and upon such notice as the court may think proper to direct, if the service of a personal notice is impracticable, or would be inconvenient or expensive. But as the order of the court upon such an application must be decisive of the rights of the parties unless appealed from, the court should not proceed upon a mere ex parte hearing, without directing some notice to be given, either in the public papers or otherwise, so that the several creditors interested in the fund and whose rights might be affected by the decision, may have an opportunity to be heard. It would therefore be improper for me, upon this ex parte petition, to undertake to give any direction to the receivers in relation to the various questions which appear to have arisen, even if I had jurisdiction of the case ; although some of those questions appear to be so plain as not to admit of a reasonable doubt.

I am satisfied however, upon examination, that I have no jurisdiction of this case except upon appeals which may be made from the decisions of the vice chancellor of the first circuit therein. Although the act of January, 1836, appears to give jurisdiction to the court of chancery generally, which would authorize either the chancellor or the vice chancellor to take original cognizance of the case, the second section of the act directs the certificate of the appointment of the receivers to be filed with the clerk of the court of chancery for the first circuit. As the assistant register is the clerk of the first circuit only in relation to proceedings before the vice chancellor, this provision appears to indicate an intention on the part of the legislature that these proceedings should be commenced and conducted, in the first instance, before the vice chancellor of that circuit. But even if the parties had a right to commence and carry on the proceedings upon this receivership before the chancellor or the vice chancellor at their election, it is too late, after the jurisdiction of the vice chancellor has attached by the institution of the proceedings before him in this matter, to apply to the chancellor directly in any future stage of the proceedings, except by appeal; unless the vice chancellor is interested or otherwise disabled from hearing the application, so as to authorize it to be made before the chancellor under the act of January, 1834. The seventh rule of the court directs the register and assistant register to enter the proceedings in causes pending before the chancellor, in books separate and distinct from those in which the proceedings before the vice chancellor are entered and kept, and also to keep the pleadings and other papers in such causes separate and distinct. And to enable them to keep them separate and distinct, the solicitor or other person filing the papers is required to designate, on the back thereof, whether the proceeding is before the chancellor or before the vice chancellor. And as bills and petitions are addressed to the chancellor in all cases, the designation or marking of the paper, in conformity with the seventh rule, is the only mode of determining the question whether it was the intention of the party to institute his proceedings before the chancellor or before the vice chancellor, when such papers are filed in the first or third circuits. By the exemplified copies of the proceedings which were filed in this cause, under the second section of the act of January last, it appears they were all marked as filed “ before the vice chancellor of the first circuitand the official oaths of the receivers are marked in the same manner. This marking of the papers, therefore, independent of the statute itself, must be considered as conclusive evidence of the election of the corporation and the receivers to give jurisdiction of the case to the vice chancellor. And his jurisdiction of the case having once attached, it would be improper for the chancellor to proceed upon an original petition in relation to the same matter, which the vice chancellor was competent to hear and decide. (Kennedy and others, infants, 5 Paige’s Rep. 244. In the matter of Hopper, a lunatic, Idem, 489.) The petition must therefore be dismissed, but with liberty to the petitioners to apply to the vice chancellor in such a manner as they may be advised. It may, perhaps, be proper for me to suggest, that the act of January last only contemplates the appointment of receivers to take charge of the property of the insolvent corporation and to distribute it among the creditors ; that the corporation itself is not to be dissolved by a decree of the court upon this proceeding, but remains in existence for the purpose of enabling its officers to take the necessary steps to raise a new capital under the act of February last. I cannot see, therefore, that the receivers have any thing to do with the stock of the corporation, or with the transfers thereof upon the books of the company. The subject appears to be under the exclusive control of the directors and officers of the corporation.


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    Neilson vs. Neilson and others.
    1836. July 19.
    Whore the testator in the life time of his first wife devised to his son lands to the value of $1500, to be taken at an appraisement, and to be selected by the decree out of any of the lands of the testator excepting two farms specified in the will; and the testator, after the death of his first wife, married another wife, who survived him and claimed dower in all his real estate and had it assigned to her; Held that the devisee was entitled to lands, to the full value of SI 500, exclusive of the claim of dower, or of any other claims thereon which might diminish its value.
    The bill in this cause was filed for the purpose of obtaining a judicial construction of a clause in the will of the complainant’s father, by which he gave to the complainant land to the value of $1500, to be taken at the appraisal of men, ont of such of the testator’s lands as the devisee should select, except two farms devised to -the testator’s then wife, and to one of his other sons. After the making of the will the wife died; and the testator remarried and died leaving the second wife surviving. After his death the widow claimed her dower in all the testator’s real estate, and the same was assigned to her under an order or decree of the surrogate. The complainant afterwards selected lands which had not been set off to her for dower, as the lands out of which his $1500 in value was to be taken on appraisal, and he insisted that he was entitled, under the will, to lands of that value exclusive of any claim of dower or other incumbrance thereon. The other devisees refused to appoint appraisers to set off land to him to that value, but claimed a deduction equal to what the widow’s dower in the lands selected would have been if it had not been assigned to her in other lands. The cause was submitted upon the case as stated in the comglainanant’s bill.
    E. H. Kimball, for complainant.
   The Chancellor.

The rights of the parties under this will, in reference to the question now presented, were in nowise altered by the change which took place in the testator’s family after the making of the will. The devise of the farm to the first wife was neither in terms, nor by necessary implication, a devise to her in lieu of her dower, She might, therefore, if she had survived her husband, have claimed her dower in all the other real estate of the testator, as the second wife has done. The devise to the complainant of land to the value of $1500, to be taken at the appraisal of men, means land which shall be of that value, over and above all charges, incumbrances, or claims thereon, which might render it less valuable to the owner thereof. He is therefore entitled to lands which are worth $1500, beyond any claim or right of dower therein ; and the other devisees were in the wrong in resisting the claims of the complainant as stated' in the bill.

There must be a decree declaring his rights accordingly. If the parties cannot agree upon the quantity of land to be set off to him to satisfy this provision of the will, it must be referred to a master residing in the county of Saratoga to designate three reputable freeholders of that county to set off to him lands to the value of SI500, beyond all legal or equitable claims and incumbrances thereon, out of the farm selected by him as that out of which his legacy was to be satisfied as mentioned in the bill. And the certificate of such appraisers, specifying the lands thus assigned to him, describing the same by metes and bounds, must be acknowledged or proved in the manner required by law for the proof or acknowledgment of deeds or conveyances, and recorded in the book of deeds in the clerk’s office of Saratoga county; and the complainant must thereupon immediately be let into the possession of the land thus assigned.

The complainant’s costs of this suit should be paid out of the property devised or bequeathed to the residuary legatees and devisees.


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    Burns vs. Morse & Platt.
    1836. July 19.
    Where a judgment was confessed, for a debt which had not become due and payable and which was also fully secured by mortgage upon real estate, to enable the plaintiffin that judgment to sell the defendant’s personal estate on an execution, and thus to place such property beyond the reach of other creditors who were about to obtain executions against the same ; Held, that such judgment and the proceedings thereon were fraudulent and void as against the other creditors. And that upon a bill filed by a credit- or whose execution had been returned unsatisfied, to reach such property and to stay the proceedings under the fraudulent judgment, the court was authorized upon the granting of the injunction to dispense with a deposit of the amount of the judgment or security to pay the same.
    Process issued out of the mayor’s court of the city of Rochester may be tested on any day in term on which such court shall sit, and be made returnable on any other day of the same term or at the next term, in the same manner as process issued out of the courts of common pleas of the several counties.
    This was an appeal from the decision of the vice chancellor of the eighth circuit, refusing to dissolve an injunction issued upon a creditor’s bill. The bill charged the recovery of a judgment in favor of the complainant against Morse, one of the defendants, in the mayor’s court of the city of Rochester, in May term, 1836, and the issuing of an execution thereon returnable at the same term, which was returned nulla bona; and that, for the purpose of defrauding the complainant of his debt and preventing him from collecting the same, Morse had a few days previous to the recovery of such judgment confessed a judgment in favor of Platt, the other defendant, for a sum which was not yet due and payable, and which was previously secured by mortgages upon real estate; upon which judgment Platt had taken out 'an execution and levied upon the property of Morse.

      J. Rhoades, for the appellants.
    S. Stevens, for the respondent.
   The Chancellor.

The fraud in obtaining the judgment of Platt is sufficiently charged in the bill to authorize the court to dispense with the deposit of any monies, or the execution of a bond, upon obtaining an injunction to stay the proceedings on that judgment." (2 R. S. 190, § 147.) If the judgment was confessed for a debt which was not then due and payable, or for more than was then actually due, or if the whole amount was fully secured upon real estate, and the judgment was given for the purpose of covering the personal estate also, so as to prevent the complainant from obtaining satisfaction of his debt out of such property, and with a view to defraud him, as charged in the bill, the whole judgment and the proceedings under it are fraudulent and void as against him, and must be set aside. Again; the question whether security ought to have been given upon the granting of the injunction, under the provisions of the revised statutes, was not properly presented upon a mere application to dissolve the injunction upon the matter of the bill only. Even if the fiat upon the back of the bill could be considered as a part of the bill upon such an application, that does not show that the deposit required by the statute was not made. -To raise that question, the defendants should have founded their application upon the bill, and also upon an affidavit that no deposit or security had been given, or upon a certificate of the clerk to that effect.

The vice chancellor is also right in the construction which he has given to the act to incorporate the city of Rochester, when taken in connection with several provisions of the revised statutes. The 19th section of the title of the revised statutes relative to mayors’ courts in cities, which provides that no process in any mayor’s court should be tested and made returnable the same term, (2 R. S. 219,) would probably have applied to the mayor’s court of Rochester, which was established since the revised statutes went into operation, if a different provision on this subject had not been contained in the act of incorporation of that city. But the second section of the tenth title of that act provides, in terms, that all laws regulating the practice of the courts of commom pleas of the several counties, conferring judicial powers on them, authorizing the commencement of suits therein, regulating the removal of such suits and authorizing the issuing of process, shall be applicable to and binding upon the said mayor’s court. (Laws of 1834, p. 333.) And one of the laws regulating the practice of the several courts of common pleas and authorizing the issuing of process, and which is thus made applicable to and binding upon the mayor’s court of Rochester, is, that all writs or process which shall issue out of either of the said courts may be tested on any day of the term in which such court shall sit, and be made returnable On any other day of the same term, or at the next term. (2 R. S. 210, § 11.) The execution in this case was therefore regular; and the return thereof unsatisfied authorized the filing of this bill, and the issuing of the general injunction as against the judgment debtor.

The order appealed from is therefore affirmed, with costs.


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    McWhorter vs. Agnew.
    1836. July 19.
    Where by a deed of settlement, in anticipation of marriage, the property of the wife was conveyed to a trustee, in trust for her use until the marriage, and after the marriage for her-separate use notwithstanding such coverture, and after her death for the use of such person or persons as she should by will and notwithstanding such coverture appoint, and in default of such appointment to the use of her heirs, and to the exclusion of the intended husband either as tenant by the curtesy or otherwise; so that the wife should not at any time thereafter, either by herself or in conjunction with others, have the power of exonerating, releasing or discharging the property from the operation of her settlement, or of receiving any portion thereof except the annual income thereof; Held, that by the operation of the rule in Shelly’s case, the husband having died before the wife, the limitation of the equitable estate to the wife for life, with an unlimited power of appointing the inheritance by will, united itself with the equitable estate in remainder to her heirs generally', so as to create an equitable estate in fee in the whole property in the event that had happened. And that having united this equitable fee with the legal estate, by a conveyance from the trustee, she was able to give a perfect title to the property to a subsequent purchaser thereof.
    Where the whole equitable interest in real property is in a feme covert, with a general power of appointment by will, such power of appointment is appendant or appurtenant to her equitable estate; and upon the death of her husband and a conveyance of the legal estate to her by the trustee, such power is merged or extinguished, in equity as well as at law. Jlliler where the power of appointment is a mere power in trust, for the benefit of others who have an interest in the execution of the power.
    The object of the complainant’s bill in this cause was to compel the specific performance of a contract, by the defendant, for the purchase of two lots of land in the city of New-York. The cause was heard on bill and answer; the facts on which the rights of the parties depended not being disputed, and the only question being whether the complainant was able to convey a perfect title to the premises in question. The complainant, Frances Caroline Greenleafe Lawrence, before her marriage with Alexander C. Mc-Whorter, in 1818, was seized in fee of certain real estate in New-York, including the two lots in question ; and the objections to the title arose out of a deed of settlement, executed in November, 1818, a short time previous to and in contemplation of the intended marriage. By this deed of settlement between the complainant of the first part, W. S. Pennington and H. Howland, as her trustees, of the second paid, and A. C. McWhorter, her intended husband, of the third part, she conveyed the premises in question, together with her other real estate and certain personal property, to the parties of the second part and the survivor of them in fee, in trust for her own use until the intended marriage, and after the marriage in trust for her separate use and benefit, notwithstanding her coverture, free and clear and discharged of and from all and any management, control, or power, or present or future debts or responsibilities of her intended husband ; and also at any time thereafter to sell, lease and convey the real estate or any part thereof unto any persons whomsoever, and for such prices or for such estates either in fee simple, for terms of years, or otherwise, as the complainant should in writing, finder her hand, and notwithstanding her coverture, direct or designate, and to unite with her in any "deeds, leases, conveyances or other instruments in writing, which counsel should deem suitable and requisite or proper therefor; and to collect, receive and discharge the consideration monies and rents, in the names of the trustees, but for her use and benefit under such marriage settlement, in such manner as she should, notwithstanding her coverture, direct; and upon which sales the purchasers were not to be held accountable for the due application of the purchase money. And upon the further trust to hold the property for the use of such persons and for such shares, portions or estates therein as the complainant should by her will, or other instrument in the nature of a will, designate or appoint, notwithstanding her coverture ; and in default of such appointment for the use of her heirs, to the exclusion of her said intended husband either as tenant by the curtesy or otherwise. It was further declared by the deed of settlement to be the true intent and meaning thereof, that the property or estate thereby conveyed in trust should be so conveyed, restricted and held, that at no time thereafter, under any pretence whatever, nor by any device, should the complainant, either by herself or in conjunction with others, have the power or authority of exonerating, releasing, or discharging the property from the operation of the deed of settlement, or of receiving or enjoying any part or portion thereof, except the annual or other interest or income thereof; and that any other property or estate which the complainant might thereafter acquire or become entitled to in her own right, either by gift, devise, bequest, descent or otherwise, should be conveyed and vested in the trustees upon the like trusts. A further provision was made in the trust deed, for the appointment of a new trustee, in the place of one who should die be removed or become unable to act, by the remaining trustee and the complainant jointly, notwithstanding the coverture, and to convey to and invest him with the trust property, in the place of the one so dying, being removed or becoming unable to act. Subsequent to the marriage, H. Howland, one of the trustees, was discharged from his trust by an order of the court of chancery, and G. H. McWhorter was duly appointed in his place, in the manner specified in the deed of settlement. The husband and the other trustee died, leaving the complainant and the new trustee surviving; who; in 1827, united in a petition to the chancellor for leave to the surviving trustee to account with the complainant in regard to the trust, and for permission to convey to her the trust property, and that he might thereupon be discharged from the trust. An order to that effect was entered accordingly, and G. H. McWhorter, the surviving trustee, in pursuance thereof, conveyed the trust property to the complainant ; who subsequently contracted with the defendant for the sale of the two lots in controversy in this suit. The defendant was advised by his counsel, and by his answer insisted that it was the object of the marriage settlement to render the real estate embraced therein inalienable during the life of the complainant, and only alienable at her death, by will; and that she could not, therefore, convey to him a clear and perfect title to the premises. But he submitted to perform his contract of purchase if the court should be of opinion that the complainant had a good and valid title to the lots in question, and could legally convey the same to him.
    S. A. Foot, for the complainant.
    The property is either subject to the trusts contained in the deed of marriage settlement, or is not; and in either case Mrs. McWhorter has a full right to sell and convey it. If the property is subject to the trusts, she is the sole trustee, and has authority as such to sell and convey. If the property is discharged of the trust, then she is the absolute owner, and can sell and convey it in that capacity. The equitable estate was always in her after the execution of the deed of settlement. And on the principle established in Shelly’s case, having now the legal estate, she is the absolute owner of the property. 4 Kent’s Com. 214 to 222, 2d ed. 1 Bridg. Dig. 643.

      D. Lord, jr., for the defendant.
    The deed between Mrs. McWhorter and the trustee of September, 1827, and the petition and order in chancery recited therein,- being voluntary acts, and not adversary proceedings, do not extinguish the trusts as to the estate. The title is bad during her life, or for any shorter term, and it cannot be forced on a purchaser. By the marriage settlement of November, 1818, the estate is conveyed to trustees, so as to secure the actual use to the wife for her life ; giving her a power of appointment by will, with a remainder to her heirs, in default of such appointment. She has also the power of changing the speci - fic property by sale and re-investment, but under a restriction against her extinguishing the trusts or touching any thing but the annual income by her acts inter vivos. Such restriction is valid, because, 1. It does not render the land inalienable ; and 2. It is not contrary to the policy of the law to restrain alienation during one life ; 3. It is not repugnant to the estate ; 4. It does not prevent the alienation of the remainder, if a vested remainder, in her; 5. It is not a question here between creditors and a grantor to her own use; 6. A feme covert, treated in equity as a feme sole and owner of the estate, may be restrained from alienation by words of express restriction. (Jaques v. Methodist E. C. 17 Johns. R. 548.)
    The conveyance of September, 1827, was a direct violation of the expressed intention of the settlement. It was an attempt to extinguish the trust by uniting the legal estate with the interest of the' cestui que trust. The wife did thereby assume, in conjunction with the trustee, to exonerate the property from the operation of the trusts, and to receive a part of the trust fund beyond the annual income.
    The trusts do not necessarily cease with the coverture. The body of the deed contains no limitation to this period. And as the tenor of the deed went to secure the annual in? come for her life, with no power to sell her own interest, it may be taken as a motive of the marriage, that such a provision was secured to the wife for the benefit of the children.
   The Chancellor.

As this was an executed and not a mere executory trust, and as the limitations were both limitations of equitable estates or interests of the same nature, the rule in Shelly’s case applied to the equitable estate conveyed by this deed of settlement; for equity follows the law in such a case. The limitation of the equitable use to the complainant for life, with a general power of appointment of the inheritance by will, notwithstanding her coverture, united itself with the equitable use in the remainder to her heirs in default of such appointment; so as to vest the whole beneficial interest in the inheritance, as well as in the life estate in the complainant, as her separate estate, in fee simple, free from the control of her husband, and divested of any equitable claim on his part to an estate by the curtesy therein. (See Jickling’s Leg. and Eq. Estates, 286.) Upon the death of her husband, therefore, the whole beneficial interest in the trust estate was in her, and subject to her absolute control and disposition, with the assent of the trustee who held the legal estate for her sole use and benefit. The subsequent conveyance to her by the surviving trustee again united the legal and equitable estates which had been separated by the deed of settlement. This, therefore, enables her to give a clear and perfect title in fee to purchasers of the estate, unless the power to appoint the inheritance, which was reserved to her in the original deed of settlement, is one which cannot be released or extinguished in equity, although it is merged at law.

This power to appoint the inheritance by will notwithstanding the coverture of the complainant, was clearly a power appendant or appurtenant to her .equitable interest in the trust property. And as the power of appointment was general, so that no other person or class of persons .could have any beneficial interest in the execution of the power, there was no good reason why the complainant, after the death of her husband, should not be permitted to extinguish the power, and to reinvest herself with the legal title and the absolute control of the property, as she held the same previous to the deed of settlement. And if the power is gone at law, equity will not revive it, or again separate it from the legal estate so as to defeat the title of her grantees. During the existence of her coverture there might be good reasons for endeavoring, if possible, to place the inheritance as well as the life estate beyond her control, unless with the consent of her trustees, except by means of a will which might be revoked by her at any time during her life. And without such a provision as is contained in the deed of trust, depriving her of the power of defeating the settlement which had been made for her sole benefit, the influence of the husband over his wife might have been such as to have induced her to unite with him in an application to this court to change the nature of the trust, or to have a reconveyance of the legal estate to her, so as to put it within the control of her husband without the assent of the trustees. During the coverture of the wife and while the legal estate remained in the trustees, the only way in which the property could have been conveyed, so as to extinguish the power and give a good title to the purchaser, was by a conveyance in which the trustees should join with the husband and wife; as she could not otherwise dispose of the inheritance independently of the power, which power could only be executed by a revocable will. But upon the death of her husband and the reconveyance to her of the legal estate, her right to dispose of her absolute interest in the property in fee resulted from her absolute ownership; in other words, the exercise of the right is no longer dependant upon the mere power reserved to her in the deed of settlement. Even if the power itself were not merged in the legal estate, a purchaser from her would now obtain a perfect title under any of the ordinary forms of conveyance ; as she could not afterwards defeat her grant by an exercise of the power of appointment. (See Sugden on Powers, 5th Lond, ed, 61.)

Again ; the object of the deed of settlement in this case was not to deprive the complainant of the control of her property in case of the death of her husband during herlife, but merely to preserve the same for her use, and to enable her to dispose of it by will if she should die during her coverture. The whole object of the trust was therefore at an end by the death of her husband ; and the object of the trust having ceased to exist, she was entitled in equity to a re-conveyance of the legal estate from the trustee. And upon such conveyance the power to appoint the inheritance by will was merged in the legal estate, both at law and in equity.

The complainant is, therefore, entitled to a specific performance of the contract for the sale of the two lots in question, and her deed to the purchaser will give to him a perfect title to the premises.


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    Wolcott, administrator, &c. vs. Sullivan & Hull.
    Where an agent, having the money of his principal to be loaned, lent it to VV. for three years, with interest payable semi-annually, and took a mort, gage therefor in his own name without disclosing the fact that it was the money of a third person ; and at the same time took from the mortgagor a lease of the mortgaged premises for throe years, for his own use, reserving the rent to be paid semi-annually, and shortly after assigned the bond and mortgage to the real owner thereof; Held, that the mortgagor was not entitled to offset the rent which accrued subsequent to the time when he had notice of the facts, and after he had been forbidden to pay the principal or interest of the mortgage to such agent, without showing that the agent was insolvent and that he could not have collected such rent from him.
    1836. August 2.
    If a party comes into chancery to obtain relief on the ground that he has not an adequate remedy at law, he must satisfy this court that his claim to relief is just and equitable, or it will not interfere in bis behalf.
    Where the landlord covenants to keep leasehold premises in tenantable repair during the term, itis the duty of the tenant to give him notice of the fact if the premises become ruinous or untenantable; especially where the tenant has, by the terms of the lease, secured to himself the right to make such repairs, and to deduct the expenses thereof from his rent.
    This case came before the chancellor upon appeal. Oliver Wolcott, the original complainant, was the owner of a house and lot .in the city of New-York, a part of which was in the occupation of the defendant, G. Sullivan, in January, 1828. The complainant being desirous of obtaining a loan of money upon the house, and Sullivan having in his hands $5000 to invest upon bond and mortgage, as the agent of the defendant Commodore Hull, proposed to loan that amount to the complainant, upon the security of the house, for three years from the first of May then next; and as the lease of the house expired in May, he also proposed to take a lease to himself for the term of three years from that time, at an annual rent of $1000, payable half-yearly. The money of Commodore Hull was accordingly lent to the complainant, and Sullivan took a bond and mortgage therefor, in his own name, without disclosing the fact that the money belonged to any other person ; and at the same time the complainant leased the premises to Sullivan for the three years from the first of May, 1828. The mortgage was duly recorded, and was shortly after its date assigned to Hull, the real owner thereof; but the assignment was not recorded until July, 1829. The complainant had no actual notice of the assignment, or that Sullivan was not the owner of the money loaned, until March, 1830, when Commodore Hull informed the complainant, by letter, of the real facts, and forbid his paying either principal or interest to any other person. The rent due at the time of such notice had all been paid ; and all the rent up to May, 1830, except $175, was settled by Sullivan, who applied the interest up to that time towards the rent, and subsequently accounted with Hull for the same. The rent which accrued subsequent to May, 1830, together with the $175, part of the half year’s rent which fell due on that day, Sullivan refused to pay on account of an alleged breach of the covenants in the lease, in not putting the premises in tenantable repair; and the complainant took no steps to collect the same, and subsequently insisted upon the right to offset the rent against Commodore Hull’s mortgage. In May, 1831, a few days after the mortgage became due, the complainant’s solicitor tendered to Hull’s agent, or offered to pay him, $4115, the amount due on the mortgage deducting the rent, on condition that he would receive the same in full satisfaction, or would give up the bond and mortgage to be cancelled, or execute a release thereof. The agent declined receiving the money on any of these conditions, but offered to receive it generally in payment, as far as it would go, leaving the question whether any thing more was legally due to be settled thereafter, and without prejudice to either party. The complainant thereupon filed his bill in this cause, against Sullivan and Hull, praying that he might be permitted to redeem the mortgage and to offset the rent against the same, and for an account and satisfaction of the amount due for rent; and that the defendants,or one of them, should procure the bond and mortgage to be delivered up and cancelled. Commodore Hull, in his answer, claimed the whole amount of his mortgage, including interest thereon from the first of May, 1830 ; and he insisted that the complainant was not legally or equitably entitled to offset the rent which fell due after he received notice of the assignment of the bond and mortgage, and of the equitable right of Hull to the bond and mortgage originally; and that he should have collected the rent of Sullivan, who was the proper person to pay the same. Sullivan, by his answer, insisted that only a small sum was due for the rent, because he had sustained great damage on account of the premises not being kept in tenantable repair, and because he had relinquished the possession of the premises to the complainant, and removed therefrom in November, 1830. He also insisted that another person claimed to be the owner of the premises, and had forbidden his paying the rent to the complainant; and that he was therefore not bound to pay it until he had been indemnified against such claimant. The cause was heard upon.pleadings and proofs. And the vice chancellor before whom the same was heard decided and decreed, that the complainant had not the right to set off the rent due to him on Sullivan’s lease, and which had accrued after he had notice of the rights of Hull, against the bond and mortgage belonging to the latter; that the defendant Sullivan was not entitled to any deduction from his rent on account of the premises being out of repair; and that he was bound to pay rent up to May, 1831. The complainant was therefore declared to be entitled to redeem, upon payment of the amount due upon the bond and mortgage, including the interest thereon from May, 1830, after deducting' the rent, if any, due at the time of the notice of the assignment; and a reference was accordingly directed, to ascertain the amount due. The decree also directed an account to be taken of what was due from Sullivan for rent, after deducting the amount actually expended by him for repairs upon the premises, and which had not been previously settled for. The complainant was also decreed to pay the costs of the defendant Hull; and all further questions and directions were reserved, The complainant appealed from the whole decree, except the part which declared that Sullivan was not entitled to any deduction from the rent, and was bound to pay rent till the end of the term. And the defendant Sullivan appealed from that part of the decree which was not appealed from by the complainant, and also from that part which directed a reference to ascertain the amount due for rent, and the amount due upon the bond and mortgage.
    After the entering of these appeals the complainant died, and the suit was revived in the name of his personal representative only, without making the heirs at law parties. At the hearing of the appeals, the chancellor decided that the suit was properly revived in the name of the personal representative of Wolcott as against the defendant Sullivan ; as the rent due at the time of the death of the original complainant belonged to the personal representative; but that under the provisions'of the revised statutes making the mortgaged premises the primary fund for the payment of mortgage debts, (1 JZ. S'. 749, § 4,) the heirs at law were the only proper parties to prosecute the suit for the redemption of the mortgage ; and that the suit was not therefore properly revived as against the defendant Hull. The counsel for the complainant thereupon stipulated that the cause should be heal’d as if the same was properly revived, and that the amount decreed to be due should be paid; and the counsel for Commodore Hull assenting to that arrangement, the cause was heard upon the merits of the appeal.

      D. D. Field, for the complainant.
    J. King, for the defendant Sullivan.
    J. Rhoades & S. Stevens, for Hull.
   The Chancellor.

I agree with the vice chancellor that this is not a case where, in equity, one debt Would necessarily compensate the other, even if the bond and mortgage had originally been in fact the property of the defendant Sullivan. And as there was no agreement, contained either in the bond and mortgage or in the lease, that the interest or principal which was to become due on the bond and mortgage should be offset against the rent, either party would have been authorized to proceed at law for the recovery of the whole of his debt; subject to the legal right of the adverse party to offset what was then legally due to himself, if he thought fit to assert that right. But when a party comes into this court as a complainant to obtain equitable relief which a court of law is incompetent to give, he must be able to satisfy the chancellor that the claim set up by him is both just and equitable, before he will be entitled to the aid of this court to enforce that claim. In the case under consideration, if Wolcott at the time this bond and mortgage were given had been aware of the fact that the money loaned belonged to another person, and that Sullivan had no right to pledge it for the security of his own debt, there could have been no pretence of an equitable claim of set-off, even if there had been an express agreement to that effect between him and Sullivan. In the absence of any such agreement, and when the fact was ascertained by the complainant that the bond and mortgage bad belonged to another from the beginning, to entitle him to equitable claim to offset the rent which has subsequently accrued upon the lease he is bound at least to show that the rent could not have been collected from Sullivan, the real debtor. The complainant had actual notice of the rights of Commodore Hull, as early as March, 1830, and was then forbidden to pay the principal or the interest of the mortgage to any other person, without a written order to that effect. And if the complainant then intended to retain a part of the mortgage money as a security for rent which might thereafter become due, either under a verbal understanding to that effect with Sullivan or otherwise, be should have apprized Hull thereof; so that the latter might have taken the proper steps to indemnify himself against future loss. In any view, therefore, which I have been able to take of this case, I cannot discover that the complainant has any equitable claim to relief against the payment of the whole of this mortgage, and the interest thereof since the first of May, 1830 ; and he must look to Sullivan for the payment of the rent which has accrued since he had notice of the assignment of the bond and mortgage to the real owner. That part of the decree which was appealed from by the complainant was not erroneous; and it must be affirmed with costs, to be paid to Hull, the respondent in that appeal.

The decision of the vice chancellor was also right as to that part of the decretal order which is appealed from by the defendant Sullivan. So far as I can understand the allegations in the very singular answer of this defendant, there is no distinct allegation of a breach of the covenant as to the repairs which were to be made upon the premises previous to the commencement of the term. He complains that he lost $150 rent, because the house was not kept in tenantable repair in the roof, according to the covenants in the lease. As the tenant had secured to himself the right to make the necessary repairs, and to deduct the expense thereof from the rent, he cannot claim any extra compensation by way of damages; especially as he does not allege in his answer that he gave notice to the lessor, or his agent, that the premises wanted repairs after the commencement of the term.' The claim made by Comfort Sands formed no excuse whatever for the non-payment of the rent, as it is not alleged by the defendant that he had any reason to believe, or did in fact believe,that such claim was well founded or could be sustained.

As the bond and mortgage which the complainant sought to redeem were given to the defendant Sullivan, and the suit, if any, upon the bond, must be brought in his name, I am not prepared to say, under the circumstances of this case, that the complainant had not a right to make him a party to a bill to redeem, although he was not such a necessary party as to have authorized the defendant Hull to demur to the bill on that ground if he had not been made a party to the same. The objection, that the complainant had a perfect remedy at law against Sullivan for the recovery of his rent, is not made in the answer of this defendant in such a form as to enable him to take advantage of it at the hearing. The only allusion to a legal remedy is in the impertinent part of the answer, in which the defendant has very improperly attempted to bring his private misunderstandings and controversies with the complainant’s counsel before the court. And it is not there insisted on as a defence to the suit, but merely as a reason for believing that the counsel was influenced by malice in the filing of this bill. It was therefore too late to make the objection for the first time at the hearing, that this court had not jurisdiction of this case as to the relief asked for against the defendant Sullivan. And the question as to the complainant’s right to the rent having been fully litigated by both parties in this suit, it would have been improper to turn the complainant around to a suit at law for the recovery of such rent. So much of the decretal order of the vice chancellor as is appealed from by the defendant Sullivan must therefore be affirmed, with costs to be paid by him to the respondent, the. personal representative of O. Wolcott, deceased.


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    Gram vs. Stebbins & Stebbins.
    1836. August 2.
    The vendor or purchaser of stock sold on time, where the vendor did not own the stock at the time of the pretended sale thereof, may recover back the money paid for the difference in the market price of stock between the time of sale and the time appointed for the delivery of the stock. And he may also compel the adverse party to answer on oath a bill filed in the court of chancery to ascertain the facts in the case.
    A contract made through the medium of a broker for the sale of stock on time, where the person for whom such sale is made is not the owner of the stock at the time of sale, is illegal, although the broker does not disclose the name of the person for whom he makes the sale. And if the broker receives a premium for the difference in the market value of the stock thus sold the money may be recovered back from him, unless he had paid it over to his principal before he had any notice that the pretended sale was illegal on the ground that the vendor did not own the stock he pretended to sell.
    This was an appeal from a decision of the vice chancellor of the first circuit, overruling exceptions to a master’s report upon exceptions to the defendants’ answer for insufficiency.

      T. Fessenden, for the complainant.

      F. B. Cutting, for the defendants.
   The Chancellor.

The object of the bill in this cause is to recover back from the defendants a sum of money which, as he alleges, was placed by him in their hands, as brokers, for the purpose of gambling in stock for his benefit ; or in other words, to indemnify them for any losses which might accrue upon the sale of stock which they were to make for him on time, when he was not in fact the owner of any stock; in violation of the statute against stock-jobbing or gambling in stock. (1 R. S. 710, § 6.) There is no doubt as to the right of a party who has either bought or sold stock on time, when the vendor was not the owner of the stock at the time of such contract of sale, and who has advanced or paid any money as the premium or difference between the contract price of the stock and the nominal value thereof at the time when it was to be delivered, to recover back the money thus advanced or paid. And he may, if necessary, file a bill in this court and compel a discovery of the facts, to enable him to obtain a repayment of the money thus advanced or paid. A contract for the sale of stock on time, made through the medium of a broker, where the name of the seller is not disclosed, is equally within the mischief of the statute ; and any advance made to the broker for the purpose of paying any loss which may accrue upon such a sale on time may be recovered back from the broker, if the same had not been actually paid by him in pursuance of the' illegal contract before he had notice not to pay, or was informed of such illegality. The defendants, therefore, were bound to answer every material allegation in this bill; as the recovering back of monies advanced or paid for premiums upon such an illegal contract is neither a forfeiture, nor a penalty in the nature of a forfeiture, which can excuse them from answering on oath. If the matters embraced in the first and second exceptions had therefore been charged in the bill in the usual way, instead of being introduced by a whereas as a recital merely, or if there had been special interrogatories calling upon the defendants to answer as to the matters thus recited, this answer would have been insufficient. But from the manner in which this bill is framed, I think the defendants were not called upon to admit or deny the truth of those recitals. The case of The Mechanics’ Bank v. Levy, (3 Paige’s Rep. 606,) is an authority to sustain the decision of the master in overruling those two exceptions.

The third exception was properly overruled, as the matter of that exception was fully answered. This exception is not, as was supposed by the complainant’s counsel, that the defendants have not answered as to the advance of the $1500 for the specific purpose charged in the bill, but the exception is that they have not answered the allegation as to the advance of the money.

The matter of the fourth exception appears to be wholly immaterial, as it can make no difference whether the call upon the defendants for the return of the $1500 was upon the precise day mentioned in the bill, or at another time. It is not alleged that the complainant gave them notice, at that time or any other, that he pever had any stock to sell, and that he intended for that reason to take advantage of the illegality of the contract which they had made for him as his brokers. The time, therefore, appears to be immaterial for any purpose.

The matter of the seventh exception is fully answered, as it is distinctly admitted that the defendants gave to the complaint a receipt, at the bottom of the account of the sale of the stock, in the words and figures set forth by him in his bill, a true copy of which is also annexed to the answer. They would not, therefore, be permitted to deny the fact that the paper writing and receipt which they afterwards obtained from the complainant and fraudulently detained, was the same account of sales and receipt set forth at length in the bill and in the schedule annexed to their answer.

The order appealed from was not erroneous; and it must be affirmed, with costs.


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    Tyler vs. Simmons and Miller.
    1836. August 2.
    A party cannot bring on the hearing of exceptions to a master’s report upon the merits at the same time when applies to set aside the report for irregularity, or to refer it back to the master to take further testimony and review his report.
    Where the report is irregularly made, the party who wishes to take advantage of the irregularity should not except to the report until the question of irregularity is determined. And if he excepts to the report after he has notice of the irregularity in the proceedings before the master, it is a waiver of such irregularity.
    The proper course, where a party wishes to apply to set aside a report for irregularity, is to obtain an order to enlarge the time for filing his exceptions ; for the purpose of giving him an opportunity to apply to the court, and have the question of regularity disposed of before he excepts.
    Exceptions to a master’s report are only proper in those cases in which he hag come to a wrong conclusion upon the matters which were referred to him to ascertain or decide. Where he proceeds irregularly, or neglects to report upon the matters referred to him, the proper course for the party aggrieved thereby is to apply to the court to set aside the report, or to refer it back to the master to perfect the same.
    A master’s report cannot be excepted to fór irrelevancy or impertinence. The proper course in such a case is to apply to the court by motion to expunge the impertinent matter, if either party is aggrieved by the introduction of such matter into the report.
    Where two distinct orders are made in the same cause they may be both included in one notice of appeal and in the same appeal bond; provided the penalty of the bond is sufficiently large, and the condition of the bond is broad enough, to secure the payment of the whole amount required to be secured on both appeals.
    if a party in whose favor an interlocutory order or decree is made wishes to limit his adversary’s right of appeal, he must serve a copy of the order or decree, as entered, or give to him a written notice of the entry thereof.
    This case came before the chancellor upon an appeal by the defendants from two separate decisions and orders of the vice chancellor of the fourth circuit, The complainant filed his bill as a judgment creditor of D« Simmons, one of the defendants, to obtain satisfaction of his debts out of the equitable interests, choses in action or other property of Simmons which he had not been able to reach by execution at law, and particularly the interest of Simmons in an axe manufacturing establishment, which was carried on in the name of Miller, the other defendant, as the ostensible owner. Upon the hearing of the cause before the vice chancellor, a reference was directed to a master to state an account of the property, credits and effects which belonged to Simmons at the time of the filing of the bill. And the master was directed to take and state an account of the axe manufacturing establishment carried on in the name of the defendant Miller, and to ascertain and report the nature and amount of the interest of Simmons therein; and the amount and situation of the property, debts, credits and effects of that establishment. And all other questions and directions in the cause were in the meantime reserved. The proceedings before the master were very informal, the parties having appeared before the master from time to time by consent, and without any formal summons; and the master was finally left to make up the draft of his report without any argument of the case before him preparatory thereto. Upon the return of the summons to settle the draft of the report, the counsel for the defendant insisted that certain books of the axe manufacturing establishment, upon which the master had in part relied in support of the conclusions at which he had arrived, were not in evidence on the reference ; and after one or two adjournments the defendants’ counsel made a formal application to the master for permission to go into further testimony in explanation of such books. The master finally decided against the application to hear further testimony, and made up and filed his report in which he stated that the books were produced and given in evidence before him. The master reported that Simmons owned and was entitled to the whole property and effects of the axe manufacturing establishment, as the sole and exclusive proprietor thereof, at the time of the commencement of this suit, consisting of debts and effects to the amount of $16,693,53, without reference to the liabilities of the establishment ; and that Simmons had continued to be such owner ever since, although there had been a nominal transfer of the' establishment from Miller to the father of Simmons pending the suit. The defendants filed twelve exceptions to the report. Most of these exceptions related to the regularity of the proceedings before the master; and one of Which denied the fact stated by the master that the books Were produced in evidence befóte him and sought to have that allegation in the report expunged. The defendants afterwards noticed their exceptions for hearing before the vice chancellor. They at the same time moved, upon affidavits and other papers, to strike out the statement in the report that the books were produced in evidence, and also to set aside the whole report for irregularity ; or to refer the whole matter in controversy in the suit back to the same or to some other master, with such instructions and directions as should be necessary to carry into effect the original order of reference. The vice chancellor refused to hear the argument of the motion and of the exceptions together, as the decision thereof depended upon different papers which could not be used or read upon both applications. The motion to amend the report, or to refer it back to the master, or to set it aside for irregularity, was denied. And as the defendants, upon the hearing of the exceptions, did not produce the books which were a part of the evidence upon which the decision of the master upon the subject of the reference was founded, the exceptions were overruled. From both decisions of the vice chancellor the defendants appealed ; embracing both in the same notice of appeal and in the same bond. An application was afterwards made to dismiss the appeal for irregularity. But upon an intimation of the chancellor that the appellants might embrace both appeals in the same notice provided the penalty of the bond was in double the usual amount, and the condition was sufficiently extensive to cover the damages and costs upon both appeals, and that the appeal bond which was correct except as to the amount of the penalty might be amended, the objection to the regularity of the appeal was waived.
    A. Taber & J. Holmes, for the appellants.

      O. Meads & M. T. Reynolds, for the respondent.
   The Chancellor.

The vice chancellor was right hi supposing that it was not proper that the argument of the exceptions, and of the special motion to set aside the report for irregularity or to refer it back to the master, should be heard together. The two proceedings were incompatible and entirely inconsistent with each other. The filing of exceptions to a report necessarily presupposes that the report is regularly made, but that the master has dome to a wrong conclusion as to the whole or some of the matters referred to him for his decision. And if exceptions are filed after notice of any irregularity in the proceedings before the master, it is a waiver of the irregularity. If the party against Whom a report is irregularly made wishes to set it aside and send it back to the master to correct the irregularity, he should, instead of excepting to the report, get an order to enlarge the time for excepting; and in the mean time apply to the court to set aside the report for the irregularity, or to have the report referred back again to the master to hear' further testimony where a proper foundation is laid for such a proceeding. Irregularities in the proceedings before the master are not the proper subjects of exception to his re. port. The affidavits and papers which were read in opposition to the motion before the vice chancellor established the fact, beyond all doubt, that the books were properly in evidence before the master ; 'though from the informal manner in which the reference was conducted, the defendant’s counsel undoubtedly acted under the erroneous impression that the adverse party did not intend to use the books as evidence. The master therefore would have been justified in allowing the defendant’s counsel to produce further evidence in explanation of the entries in the books, although as a general rule the master ought not to hear further testimony after, the parties have seen the draft of his report.The 67th of Lord Lyndhurst’s new orders, in the English court of chancery, absolutely prohibits the master from receiving any further evidence in that stage of the proceedings. (1 Smith’s Ch. Pr, 567.) But as the defendant did not furnish the master with his own affidavit, showing what witnesses he wished to examine, and the particular facts which he wished and expected to establish by them, I cannot say that the master erred in refusing to go into further testimony. And the vice chancellor was right in refusing to interfere and send the case back to the master, after the defendant had taken so important a step in the cause as filing exceptions to the report and setting them down for hearing. The decision of the vice chancellor upon the motion, was therefore correct and should be affirmed.

Most of the exceptions to the report are improperly taken, as they do not relate to the correctness of the conclusions at which the master arrived upon the several matters referred to him to ascertain and report upon, but merely to the regularity of the proceedings before the master. The filing of exceptions to the report, as I have before stated, is not the proper form of correcting irregularities in the proceedings before the master. If the proceedings have been irregular, or the master has neglected to decide and report as to any matter which he was by the order of reference directed to ascertain and report upon, the proper course for the party aggrieved is, to make a special application to the court to set aside the report for the irregularity in the proceedings, or to refer the case back to the master for a further report upon the matters originally referred to him for his examination and decision. Exceptions to the report are only proper where the master has come to an erroneous conclusion upon some matter referred to him to ascertain and decide, and to report upon, as the immediate subject of the reference. Even where the master has introduced into his report matters which are wholly irrelevant to the accounts .and inquiries directed by the order of reference, exceptions do not lie to his report on that account. (Rufford v. Bishop, 5 Russ. Rep. 346.) The proper course for the party aggrieved by the introduction of such irrelevant or impertinent matter, is to apply to the court directly, by motion, to expunge the impertinent matter ; as it would be improper to refer it to one master to review the report of another in this respect. This disposes of all the exceptions but those which relate to the correctness of the master’s decision upon the nature of the interest of the defendant Simmons in the axe manufactory establishment at the time of the commencement of this suit, and the amount of such interest, and the situation and disposition of the property thereof.

The direction to "ascertain the nature and amount of the interest of Simmons in the manufacturing establishment carried on in the name of Miller, necessarily involved the inquiry whether Miller had any interest therein at the time of filing the bill, or whether it was then carried on in his name for the sole use of Simmons. If the decretal order directing that inquiry was not authorized by the pleadings and proofs which were before the vice chancellor upon the hearing, the proper mode of correcting the decretal order was by an appeal from the order itself, instead of an exception to the decision of the master. Whether the master was right in the conclusion at which he arrived, upon the question submitted to him by the court, could only be determined by an examination of all the evidence which was before him on the reference. And as the books were not produced before the vice chancellor upon the argument of the exceptions, it was impossible for him to say that the master’s decision was erroneous. The exceptions were therefore properly over-= ruled. And both of the orders appealed from must be affirmed, with costs.

Upon a subsequent appeal from an interlocutory order made by the vice chancellor, an application was made to dismiss the appeal upon the ground that such appeal had not been entered until the expiration of more than fifteen days after the appellant had actual knowledge of the entry of the order appealed from.

The Chancellor held, in conformity with the decision of the court for the correction of errors in the case of Jenkins v, Wilde, (14 Wend. Rep. 539,) that where the order appealed from is not entered by the appellant, the adverse party must serve a copy of that order, or a formal notice of the entering of such an order, if he wishes to limit the time for appealing from the same. And that information of the fact by parol merely, where neither the order nor a notice of the entering thereof, has been served upon the appellant or his solicitor, is no ground for dismissing the appeal.