text:
    Mowry vs. Bishop and others.
    A promissory note, payable one year after date, with interest to be paid quarter yearly, is valid.
    The making of the interest on a loan of money, payable semi-annually, 02-quarter yearly, and before the principal sum becomes due, does not render the security taken on such loan usurious.
    An agreement to pay interest upon the interest which may thereafter accrue, cannot be enforced, although it does not render the contract for the loan usurious; but an agreement to pay interest on arrears of interest which have already become due is valid. And if compound interest is voluntarily paid by the debtor, it cannot be recovered back.
    This cause came before the court upon an exception to the report of a master, allowing the first exception to the joint and several answers of the defendants, for insufficiency. The question involved in the decision was the materiality of an allegation in the complainant’s bill, which, as he insisted, was not fully answered. One object of the bill was, to obtain satIsfaction out of the, estate of I. Bishop, deceased, of the amount of a note given by him and by his brother A. Bishop, to the complainant, for a debt due from the latter. The allegation in this part of the bill was, that on the day of the giving the note, A. Bishop became indebted to the complainant in the just and full-sum of $1000; and that for securing that sum, he and his brother I. Bishop made and delivered to the complainant their joint and several promissory note for that sum, bearing date on the same day, payable one year after date, with interest thereon to be paid quarter yearly. To this allegation of the bill, the defendants, who were not charged with any personal knowledge of the transaction, answered that they did not know, but from information they believed and admitted, that on or about the time mentioned in the bill, A, Bishop became indebted to the complainant, and that to secure the payment of such debt, he and I. Bishop, his brother, executed their joint and several promissory note to the complainant for the sum of $1000, bearing date and payable as stated and set forth in the complainant’s bill. But in another part of then-answers, the defendants insisted that the reservation of the interest on the note payable quarterly rendered it usurious and void ; and they alleged that the interest was not in fact paid quarter yearly, but at the end of a year, or some other longer period of time; and that'when such interest was paid, compound interest was computed and received, from the several times when the interest became payable by the terms of the note. The complainant excepted to the answers, because the defendants had not stated or set forth in what sum A, Bishop was indebted to the complainant at the time of giving the note, or whether or not he, was indebted in the sum of $1000, as stated in the bill. A specific answer as to the actual amount of the original indebtedness of A. Bishop was deemed material by the complainant’s counsel, on account of the supposed usury appearing upon the face of the note, in making the interest payable quarterly instead of reserving interest to be paid when the principal of the note should become due.

      I Williams, for the complainant.

      Holmes, for the defendants.
   The Chancellor.

There is no pretence, on the part of .the defendants in this case, that the note for $1000 was without consideration, or that, by mistake, or otherwise, it was given for a greater amount than' was actually due. And the note itself, which is admitted by the answer, if it is not usurious upon its face, is prima facie evidence of indebtedness to the full amount of the principal sum secured thereby. A further answer as to the precise amount of the original indebtedness of A. Bishop, is therefore unnecessary and immaterial to the establishment of the rights of the complainant, unless the reservation of interest upon the note to be paid quarterly, instead of being made payable at the expiration of the year, render-s the note usurious and void. But if the note is void, the amount of the original indebtedness of A. Bishop, for the security of which the note was given, may become a legitimate subject of inquiry in the progress of the suit, in connection with subsequent transactions staled in the complainant’s bill; and the answers in this respect are insufficient. It becomes necessary, therefore, to examine the question as to the construction of the statute of usury, in determining upon the validity of the first exception to the answer.

It is insisted, on the part of the defendants, that by making the interest payable quarterly, and before the principal sum becomes due, the payee of the note receives more than seven per cent, for the use of his money for the year; and that the words after that rate for a longer or shorter time, in the statute of usury, (1 R. L. of 1813, p. 64,) refer to the whole time for which the principal sum is loaned or agreed to be forborne. If the construction contended for is the true construction of the statutes of usury, not only the community at large, but the legal profession and the courts, have long been in an error on this subject; as in most .of the loans of money upon bond and mortgage in our commercial cities, for many years past, the interest upon the loan has been made payable either semi-an„ nually or quarterly. And this court for the last twenty years has repeatedly and constantly sanctioned such investments of monies belonging to infants and others whose estates were under the protection of the court; although I am not aware that this question has ever been before presented distinctly to the consideration of the chancellor for a judicial determination thc-reon. Our statute in this respect, except as to the rate of interest allowed to be taken, is a transcript of the statute of 21st James 1st, ch. 17; although the legislators of modem times have not been guilty of the absurdity of tacitly sanctioning that as legal and proper among sinful men which they expressly declare to be unlawful in point of religion and conscience. The proviso contained in the fifth section of the statute of James, which Justice Bod ridge, in the case of Oliver v. Oliver, (2 Roll. Rep. 469,) says, was inserted in that act to quiet the consciences of the learned bench of bishops, who would not consent to the law without such a clause, has, therefore, been omitted in the more recent statutes of usury, botli in England and in this country. Many cases are found in the courts of our sister states, which have sanctioned the practice of reserving interest to be paid annually, upon loans of the principal sum for a longer time; and in several of these cases the lender lias been permitted to recover interest upon the interest from the timeit became due. (See Peirce v. Rowe, 1 N. Hamp. Rep. 179 ; Kennon v. Dickens, Cam. & Nor. Rep. 857; Greenleafe v. Kellogg, 2 Mass. Rep. 568.) In other cases it has been held that interest upon the annual interest could not be recovered by suit, founded upon the original contract. (Doe v. Warren, 7 Greenl. Rep. 48. Sparks v. Garrignes, 1 Binnefs Rep. 165. Hastings v. Wiswall, 8 Mass. Rep. 455.) And in the case of Forbes & Adams v. Canfield, (3 Ham. Ohio Rep. 17,) where there was an agreement to pay annual interest upon the principal sum due, and the parties, after the lapse of several years, computed the interest upon the annual interest from the time it became due, and included the whole amount in a new security by way of mortgage, the supreme court of Ohio decided that the security was valid under the statute of Connecticut, which is similar to ours. The supreme court of Pennsylvania also decided, in the case of Pawling v. Pawling, (4 Yeates, Rep. 229,) that an agreement to pay interest upon the annual interest which should not be punctually paid within three months after it became due, was a valid agreement. In this state it appears to be settled that an agreement to pay interest upon interest which may accrue after the making of such agreement, cannot be legally enforced; although it does not render the agreement usurious. This principle is merely adopted as a rule of public policy, to prevent an accumulation of compound interest in favor of negligent creditors, who do not call for the payment of their interest as it becomes due. And in the case of Van Benschooten v. Lawson, (6 John. Ch. Rep. 818,) where the interest was not made payable annually, but the security was in the ordinary form, for the payment of the principal sum and interest at a particular day, Chancellor Kent refused to sanction a subsequent agreement to pay interest from a previous date, as tending to usury and oppression. It is proper to remark, however, in relation to that case, that the agreement to compute the back interest was not founded upon any previous understanding or agreement of the parties, either express or implied, that the interest ás such should be punctually paid at certain fixed periods, as a consideration to the creditor for the extension of the time of payment of the principal debt. And I infer, from the language of my learned predecessor, that he would not have considered the principle adopted by him as applicable to such a case. Indeed I know of no rule of equity which can authorize this court to set aside an express agreement to pay a sum of money which is justly and conscientiously due to another, which agreement violates no rule of law, merely because the party could not, previous to such agreement, have enforced the payment of such money in a court of justice. And I agree with the judges of the supreme court of North Carolina, in the case of Kennon v. Dickens, before referred to, that when the payment of the interest at stated periods forms a part of the contract, and the payment of the principal sum is postponed tqa distant, period upon the faith of the agreement for a regular and punctual discharge of the interest at the times agreed upon, equity and good conscience at least requires that the debtor should fulfil his engagement, or render unto his creditor the usual equivalent for the non-payment of the periodical interest at the times agreed upon. I conclude, therefore, that the moral obligation of the debtor to make the usual remuneration for the loss of interest which the creditor sustains by the non-fulfilment of his contract, in such a case, is a sufficient consideration to support a subsequent agreement in writing to pay the interest on such arrears of interest; and that if it is voluntarily paid by the debtor, although such payment could not have been legally enforced independent of such subsequent agreement, it never can be recovered back. This disposes of that part of the present case which relates to the actual payment of the interest on the quarterly payments. And the case of Gladwin v. Hitchman, (2 Vera. Rep. 185,) which was decided in the court of chancery, in England, nearly one hundred and fifty years since, and subsequent to the statute of James, in connection with the general understanding on this subject at the present day, is, I think, sufficient to settle the question that the reservation of interest, payable before the expiration of the year, is not usury under our statute. In that case a-mortgage was given in 1678 for £450, payable at the end of five years, and interest thereon in the mean time, to be paid half yearly. The interest not being paid, the mortgage was assigned shortly before it became due, and when the principal and interest had amounted to £560; and the mortgagor was decreed to pay the whole of that sum, with interest thereon from the time of the assignment. It is true the question of usury does not appear to have been discussed in that case. But it shows the construction which was put upon the statute at that day; as it would have been a good defence, riot only as to the interest upon the interest, which was claimed in that case, but as to the whole suit, that the mortgage was upon its face usurious. Mr. Justice Yeates, in the case of Pawling v. Paw-ling, before referred to, says it has been doubted under the statute of Pennsylvania whether interest may be made payable at shorter periods than one year. But he says, that doubt has arisen from the omission of the words or for a longer or shorter time, in the statute of that state; clearly showing that there could not, in his opinion, be any doubt upon the subject under the statute of James, which, as I have before said, is like our own in this respect.

The conclusion at which I have arrived in this case, therefore, is, that the reservation of interest payable quarterly or semi-annually, upon a loan for one year or more, is not usurious ; and that the computation, in such a case, of interest upon the several payments of interest after they become due, and putting them into a new security, if done fairly and without taking any unconscientious advantage of the situation and necessities of the debtor to compel him to agree to such computation, does not invalidate the new security thus taken. The answers of the defendants are therefore sufficient. The 'exceptions to the report of the master must he allowed, with costs; and all the exceptions to the answers arc overruled, with costs to be paid to the defendants.


source: Caselaw Access Project

author: The Chancellor,

license: Public Domain

text:
    Hawley and others vs. Bennett.
    Under the recording act of January, 1794, relative to conveyances in the military tract, and the act of 1801, concerning mortgages, the bona fide purchaser of a military lot is protected against a claim under a prior unregistered mortgage, although such mortgage is afterwards registered before the recording of the deed.
    The admissions of a person in possession of land, made under a mistake of law, and which are wholly inconsistent with his written evidence of title, cannot be received for the purpose of destroying his title to the land.
    Where a statutory foreclosure of a mortgage took place previous to the passage of the act authorizing the making of affidavits to perpetuate the proof of the regularity of the proceedings, and where the attorney who made such foreclosure was dead, the entry of the attorney, in his register, of a sale pursuant to the notice, and a recital of the facts in the deed, were held sufficient evidence, prima facie, to establish the fact of such sale.
    The form of the security to be given upon an appeal from a vice chancellor being regulated by a rule of the court, and not by statute, the approval of the appeal bond by the register, instead of the clerk of the vice chancellor with whom the appeal is entered, is a mere irregularity, which will be considered as waived, if the adverse party does not apply to the chancellor to dismiss the appeal within a reasonable time after notice of such irregularity.
    This was an appeal from a decree of the vice chancellor of the seventh circuit, dismissing the complainant’s bill with costs. The original bill was filed by William James, against the deendant, Bennett, in 1831, to restrain the commission of waste ■ ..pan 100 acres of land in lot No. 32, in Marceilus, of which ..00 acres James claimed to be the owner in fee. On the 5th . f May, 1803, J. K. Beekman conveyed the whole of lot No. ."'2, in Marceilus, together with two other lots in the military :act, to Henry Corl, junior, for the consideration of $9000. On the 6th May, in the same year1, Corl and wife mortgaged to Beekman lot No. 32, in Marceilus, to secure the payment of $2000 in five years, with interest annually; but the mortgage was not registered in the county where the mortgaged premises were situated, until the 9th of September, 1805. In October, 1803, Joseph Bennett, the defendant’s father, purchased the 100 acres in question in this cause, of Corl, and took from him a bond for a deed, and went into possession under the same. On the first of September, 1805, and before the registry of Beekman’s mortgage, Corl conveyed the premises to Bennett in fee, in conformity with the condition of the bond; but the deed was not recorded until after the commencement of this suit. In August, 1807, James took an assignment of the mortgage from Beekman, and proceeded to foreclose the same by advertisement and sale, under the statute. The mortgaged premises were struck off to J. Flack, for $500, and were conveyed to him by James as the assignee of the mortgage, and Flack immediately reconveyed to James ; but neither of those deeds were recorded until after the commencement of this suit. Both Bennett and James supposed the latter had acquired the legal title to the premises under the mortgage; and Bennett remained in possession by permission of James, admitting his title, until his death, in 1831, a few days before the commencement of this suit. And at his death the present defendant went into possession, and continued such possession, claiming the land as the heir at law of his father: The vice chancellor decided that Joseph Bennett having purchased and paid for the premises, and obtained a conveyance therefor from Corl, without notice of the mortgage, and before the registry thereof, he was entitled to "hold the premises, although such mortgage was afterwards registered before the recording of the deed. He also decided that the admissions of Joseph Bennett, as to the validity of James’ title to the land, having been made under a mistake as to his own rights under the deed, could not operate to divest the legal title which was then vested in himself; and that the complainants, as the trustees under the will of James, had therefore failed in establishing their right to the premises in controversy. At the hearing of the appeal, a motion was made, upon a notice to the opposite party, to dismiss the appeal, upon the ground that the appeal bond was approved by the register, instead of being approved by the clerk with whom the appeal was entered, as required by the 116th rule of this court.

      James King, for the complainants, insisted,
    1. That the complainants had deduced a perfect title from John K. Beekman.

      2. That the proofs showed there had been no adverse possession, but a tenancy merely, by the defendant’s ancestor, under William James, the complainant.
    3. • That the act concerning mortgages, passed April 6tb, 1801, did not repeal or affect the act of 8th January, 1794, relative to the military tract.
    4. That under the act of 8th January, 1794, where a deed was given subsequent to a mortgage, if the mortgage was registered before the deed was recorded, the mortgage must have preference.
    5. That to enable James, the assignee of Beekman, to obtain a good title under a sale of the mortgaged premises, it was not necessary to record the power of sale.
    6. That the 10th section of the act of 1813, (1 R. L. 375,) was only declaratory of the common law as it existed previous to the passage of that section ; and that a deed was not necessary, under the act of 1801, where the mortgagee became himself the purchaser. The counsel cited Jackson v. Campbell, (19 Johns. Rep. 281;) Moseley v. Demattos & Slader, (1 Burr. 474;) Williams v. Pritchard, (4 Durn. & East, 2;) Bergen v. Bennett, (1 Cain. Cas. in Err. 17;) Wilson v. Troup, (2 Cowen, 195 ;) and Jackson v. Colden, (4 Id. 276.)

      L. H. Sandford &• /• Rhoades, for the defendant, contended,
    1. That the complainants had not shown a prima facie title in their testator, W. James.

      2. That Bennett being a bona fide purchaser, for a valuable consideration and without notice of the then unregistered mortgage from Corl to Beekman, he acquired a valid title to the premises, under the bond for a deed given to him in 1803, and by the deed executed on the first of September, 1805, in pursuance of the agreement contained in the bond; entirely free and discharged from the lien of the unregistered mortgage of Beekman. To which point they cited Jackson v. Campbell, (19 John. Rep. 281,) Jackson v. M'Chesney, (7 Cowen, 361,) and Berry v. The Mutual Ins. Co., (2 John. Ch. R. 603.)
    3. That the subsequent registry of the mortgage, prior to the recording of Bennett’s deed, did not restore or alter the lien of the mortgage as against Bennett. (Jackson v. Anderson, 4 Wend. Rep. 474.)

      4. That the possession of Bennett under his deed was notice of his rights to all the world ; and "therefore neither J. Flack nor W. James was a purchaser without notice. (Tuttle v. Jackson, 6 Wend. Rep. 213. Grimstone v. Carter, 3 Paige’s Rep. 421.)

      5. That J. Bennett’s possession, at the time of the alleged mortgage sale, was adverse to the mortgagee ; and the deeds executed at that date were absolutely void. (Jackson v. Newton, 18 John. Rep. 355.)

    6. That an indefeasible and perfect legal estate was vested In Bennett by his deed from Corl, which could not be divested or impaired by his paroi declarations as to his title; and that those declarations could not benefit the complainants, they being inadmissible to impeach a good title. (Jackson v. Anderson, 4 Wend. Rep. 474,482. Jackson v. Carey, 16 John. Rep. 302. Jackson v. Vosburgh, 7 Id. 186. Jackson v. Miller, 6 Cowen, 751.)
    7. That the injunction was properly dissolved, as the complainants had neither shown title nor the commission of waste, and the defendant had established a perfect title. (Storm v. Mann, 4 John. Chan. Rep. 21, Jackson v. Brownson, 7 John, Rep. 237.) .

      8. That the decree was right in dismissing the bill with costs. (Camp v. The Receivers of the Niagara Bank, 2 Paige's Rep. 283.)
   The Chancellor,

The security to be given upon an appeal from a vice chancellor to the chancellor, is regulated by a rule of this court, and not by statute; although the rule refers to the statutory provisions on the subject of appeals to the court' for the correction of errors, to ascertain the nature of the security to be given, and the terms upon which the decree or order appealed from shall be suspended or affected by the appeal. This court therefore, upon such an appeal, may dispense with the strict letter of the rule, and may permit the bond to be approved by the proper officer, even where the respondent applies to dismiss the appeal immediately after the irregularity is discovered.' (4 Paige's Rep. 459. 2 Idem, 391.) In this case, the approval of the bond by the register, instead of the clerk with whom the appeal was entered, was a mere matter of form ; and must be considered as waived by the respondent, by reason of his neglect to apply to dismiss the appeal for more than six months after he had notice that the bond was approved by the wrong officer. I shall therefore deny the motion to dismiss the appeal, and proceed to "examine the case on its merits.

- . It was insisted, by the counsel for the respondents, on the hearing, that the evidence was not sufficient to establish the fact as to the regularity of the statute foreclosure. In deciding this question, it must be borne in mind that this foreclosure took place before the passage of the act of April, 1808, which made the affidavits of the printer, and of the persons ' who posted up the notice and made the sale, prima facie evidence of the publication and posting of the notice, and of the circumstances respecting the sale. As there was, at the time of the sale, no legal mode of perpetuating the evidence of these facts, and as the attorney who conducted the proceedings and his clerk who made the entries in his register are both dead, I am satisfied with the evidence adduced. And after the lapse of twenty-five years, I think the entry in the register of Mr. Henry, of the sale on the day mentioned in the notice, and the recitals in the deed of the same date, are sufficient, prima facie, to establish the fact of the sale on that day, at public auction, and that the premises were struck off to Flack, as recited in the deed to him.

In tire case of Jackson, ex dem. Center, v. Campbell, (19 John. Rep. 281,) the supreme court decided, in a case arising in one of the recording counties, that a bona fide purchaser from the mortgagor was protected against a claim under a previous unregistered mortgage; although the deed to such purchaser was not recorded until after the registry of such prior mortgage. I am not aware that the correctness of that decision has ever been questioned. But it is insisted, in behalf of the appellants in the present case, that the act of the 6th of April, 1801, concerning mortgages, (1 R. L. of 1801, p. 480,) when taken in connection with the act of January, 1784, for registering deeds and conveyances relating to the military bounty lands, (2 R. L. of 1801, p. 262,) must receive a different construction in relation to lands lying within the military tract.

The last clause of the first section of the act of 1801, concerning mortgages, and which was retained in the same words in the revision of 1813, contained no new principle. It was but a re-enactment of the previous law on that subject, which was embraced within the ninth section of the act of the 26th of February, 1788. (2 Greenl. Laws, 102.) And there is no material difference between the recording act of 1794, requiring deeds and conveyances for lands in the military tract to be recorded, and the act of April, 1798, which required deeds and conveyances for lands in the county of Ontario, and certain other counties, to be recorded in the like manner. This last act took effect on the first of February, 1799, and formed the basis of similar provisions in the revised acts of 1801 and 1813, as to the then recording counties; and of the general act of april, 1823, making all the counties of the state recording counties. The exception, of mortgages duly registered according to law, which is contained in the act of 1794, appears to have been introduced for greater caution—to exclude an erroneous conclusion that the legislature intended to require the recording of mortgages which had been duly re-, gistered As to other mortgages, no special legislation was necessary in reference to the military tract; the general act of 1788, which was then in force, rendering mortgages not registered void as against subsequent bona fide purchasers, wherever the mortgaged premises were situated. Although this exception is not contained in the act of 1798, requiring deeds in Ontario and other counties to be recorded, and in the subsequent recording acts, such an exception is necessarily implied. The principle of requiring mortgages to be registered, and of giving a preference to the mortgagee whose mortgage should be first registered, was adopted as early as 1753, in the act for preventing frauds by mortgages. (1 Van Schaack's Laws of N. Y. 324.) From the preamble to that act, it appears to have been the intention of the colonial legislature to protect subsequent bona fide purchasers against the lien of unregistered mortgages, as well as to settle questions of priority as between different mortgagees of the same premises. The act, however, does not appear to have contained the necessary clause to carry that intention into effect; as it afterwards became necessary to pass a law, declaring in express terms that an unregistered mortgage should not defeat, prejudice, or affect the title or interest of any bona fide purchaser of the mortgaged premises. This provision, as I have before stated, was incorporated into the revised act of February, 1788; and was continued in the several subsequent revisions, until a different principle was adopted in the revised statutes now in force. In giving a construction to this provision, in connection with the recording act of 1794, and the acts which were subsequently passed as to the recording of deeds and conveyances in various counties of the state usually called recording counties, it must be recollected that when this principle was adopted, in 1774, and at the revision in 1788, there was no county in the state in which it was necessary to record a deed, or any other absolute conveyance, in order to protect the title of the purchaser against a subsequent grantee or mortgagée of the same premises. When the legislature, therefore, passed the recording acts of 1794 and 1798, they did not deem it necessary to change the law then in force, which declared an unregistered mortgage void as against a subsequent bona fide grantee of the same premises ; but only to declare the effect of an unrecorded deed, or other absolute conveyance, as against a subsequent grantee or mortgagee; And I can see no reason for giving a different construction to the act of 1794, in this respect, from that which was given by the supreme court to the recording act of 1798, as incorporated in the revised acts of 1801 and 1813. The judgment of the supreme court in Jackson v. Campbell must therefore be considered as decisive of this case. It may also be proper to notice the fact, that it appears, from a note of the revisors to the first section of the chapter relative to the proof and recording of conveyances of real estate, that this difference between the effect of a prior unrecorded deed and a prior unregistered mortgage, upon the rights of subsequent purchasers and mortgagees, under the several acts then in force, was recognized as existing. And the revisors thereupon proposed to change the law for the future, so as to give a preference in all cases to the deed or mortgage first recorded. This recommendation of the re-visors was adopted by the legislature; so that hereafter the principles of the recording act will be the same, whether the unrecorded conveyance or instrument is an absolute deed, or is only intended to be a security by way of mortgage. (Rev. Rep. ch. 3, pt. 2, p. 5. 1 R. S. 756, § 1, 762, § 38.)

The vice chancellor, therefore, arrived at the correct conclusion, that the legal title to the premises in question, which was vested in the defendant’s father by the deed of the first of September, 1805, was not divested or in any way affected by the subsequent registry of the mortgage to Beekman. And neither the conveyance to Flack, nor the reconveyance of the same premises to James, on the statute foreclosure, while Bennett was in possession of the premises as absolute owner under his deed, could constitute either Flack or James a subsequent bona fide purchaser of the premises ; so as to overreach the previous deed to Bennett, even if those conveyances had been recorded together with the mortgage, prior to the commencement of this suit. The decision of the vice chancellor, that the admissions of Bennett while he remained in possession under his deed, and which were wholly inconsistent with the written evidences of his title, could not be received in evidence to destroy such legal title, was also correct; as those admissions were unquestionably made under a mistake of the law as applicable to the case.

The decree of the vice chancellor must be affirmed, with costs to be paid by the complainants, out of the estate of W. James in their hands as executors and trustees. And in accordance with the understanding of the counsel for the respective parties on the argument, the costs and expenses due to the solicitor of the complainants, upon the proceedings for a breach of the injunction, must be offset against the costs which the complainants are liable to pay. As it is now ascertained that the premises belonged to the defendant, as heir to Joseph Bennett his father, so much of the fine as was imposed upon him for the value of the wood and timber cut upon the premise^ in violation of the injunction, which was to be secured or paid to the register, must be remitted; or if already paid, it must be restored to the defendant, and he must be discharged from the custody of the sheriff.


author: The Chancellor.

text:
    Wakeman and others vs. Gillespy and others.
    A chamber order, under the 125th rule, allowing further time to file exceptions to an answer, does not extend the time within which exceptions must be filed to prevent an application to'dissolve an injunction.
    An extension of the time, required by the 38th rule, within which exceptions must be filed to prevent an application for the dissolution of an injunction, can only be obtained upon a-special application to the court,-and on due notice to the adverse party.
    It is always a good answer tó .an application to dissolve an injunction, that the equity of the bill upon which the injunction rests is not denied by the defendant, although no exceptions have been filed.
    It is not a valid objection to an application to dissolve an injunction upon bill and answer, that the personal representatives of a deceased co-defendant, who was jointly implicated in the fraud charged in the bill, have not yet put in their answer; unless they are charged with knowledge of the. fraud of their testator cr intestate.
    This was an appeal from a decision of the vice chancellor of the fourth circuit, dissolving an injunction. The motion was founded upon bill and answer; but as the time for excepting to the answer of some of the defendants had been extended by a chamber order, the decision of the vice chancellor was put upon the want of equity in the complainants’ bill.

      W. L. F. Warren, for the complainants.

      J. Ellsworth, for the defendants.
   The Chancellor.

A chamber order, allowing the complainant further time to file exceptions, made by an injunctian master or vice chancellor out of the court, under the authority given to those officers by the 125th rule of this court, does not operate so as to enlarge the time within which exceptions must be filed to prevent an application for the dissolution of an injunction upon bill and answer. If the complainant finds it necessary to extend the time for excepting, beyond the ten days limited by the 38th rule, he must make a special application to the court, upon due notice to the adverse party. An extension of the time in such case can seldom be necessary; as it is always a good answer to an application to dissolve an injunction, that the equity of the bill upon which the injunction rests is not denied by the defendant, although no exceptions have been filed. And in the present case, it formed no valid objection to the application to dissolve the injunction, that the answer of the personal representatives of Ranger had not been put in. Even if there had been a charge of fraud and collusion between Ranger and the other defendants, it was a matter with which his personal representatives had nothing to do, and as to which it is not to be presumed he knew any thing which would benefit the complainant, so as to enable him to retain the injunction upon any admissions in such answer. The case was therefore properly before the vice chancellor on bill and answer.

I agree with the vice chancellor that the assignment mentioned in the bill is not, upon its face, an assignment of the property of Ranger in trust for the benefit of his creditors, and to pay their debts. It purports to be a sale of the property to Gillespy. In consideration of which sale he covenants to pay all the store debts absolutely, whether the value of the assigned property is sufficient for that purpose or otherwisej and without any agreement, either express or implied, in the assignment, that any part of the assigned property should be applied for that purpose. If we look into the answer of Gillespy, for the purpose of ascertaining the real nature of the transaction and the intention of the parties, it is evident that the complainants have no equitable claim to deprive the other defendants of the priorities they have secured under the subsequent assignment by Gillespy.

The injunction was therefore properly dissolved; and the orders appealed from must be affirmed, with costs.


text:
    Leggett vs. Dubois and others.
    Where an alien, for the purpose of evading the law of the state prohibiting him from taking and holding real property, purchases land and takes a conveyance thereof in the name of a third person without any written declaration of trust, a resulting trust will not arise in favor of the purchaser; as-equity will never raise a resulting trust in fraud,of the rights of the state or of the laws of the land.
    A resulting trust is the mere creature of equity; and it cannot, therefore, arise where the parties have declared an express trust, which is evidenced by a written declaration of such express trust.
    The law never casts either a legal or an equitable estate upon a person who has no right to hold it; although such estate may, for the benefit of the state, be vested in an alien, until office found by an express contract or conveyance.
    Where an alien purchases land and takes a conveyance of the same in the name of a trustee upon certain express trusts, with authority to sell the land to satisfy such trusts, the surplus proceeds, if any, belong to the state byescheat, and may be reached by a bill in equity.
    So where an alien purchases real estate in fraud of the law of escheat, and takes a conveyance in the name of a third person, either upon an express and declared, or a secret trust to permit the alien to receive the rents and profits thereof, the interest, in such trust belongs to the state, and may. he enforced in its favor and for its benefit, in a court of equity.
    The original bill in this cause was filed in 1828, against Bishop Dubois, and Lynch, Lasala and Wilcox, trustees for the Catholic church in Ann street, in the city of New-York, and against H. Walton, and the Rev. J. Sellon of the Episcopal church, for the specific performance of an alleged agreernení made by Sellen, through ov by the trustees of “ Christ’s -church, in Ann street,” for the sale or exchange of a small •strip of land in rear of the church. It appeared hy the pleadings and proofs in the cause, that the premises in controversy, together with the residue of the three lots upon Ann street on which the church was erected, belonged previous to the 7th of •January, 1823, to a religious incorporation, called “ Christ’s Protestant Episcopal Church, in Ann street.” That the congregation worshipping in that church, or the majority of them, having concluded to remove to Anthony street, they conveyed the three lots fronting on Ann street, with the church thereon, to H. Walton, by an absolute conveyance, hearing ‘date on the 7th of January, 1823 ; which deed was duly re•corded. It also appeared that this purchase was made by the Rev. J. Sellon, from the corporation, for $17,500, and the purchase money.was paid as follows : $6000 in a mortgage to 4he Union Insurance Company, then upon the premises, which -was to be paid by the grantee ; $4100 advanced by Walton, •the grantee, at the time of the purchase; and $7400 advanced by Baker John Sellon, the father of J. Sellon, and by William •Richard Baker Smyth. It also appeared by the answer of Walton, which both parties agreed should be read in evidence upon the hearing so far as it related to the rights of the complainant and his co-defendants, and was responsive to the bill, that this deed, although absolute in its terms, was in fact given to him as a trustee; because J, Sellon was an alien, and incapable of holding real estate ; and that the premises were conveyed to Walton in trust, to let J. Sellon receive the pew rents and other profits of the premises, and pay the same over to Walton, who was to' pay out of the same the expenses of all necessary repairs, and the assessments, taxes and charges upon the premises, the interest on the $6000 mortgage to the Union Insurance Company, the interest on the sum of $4100 advanced by Walton, and the interest on the $7400, advanced hy B. J. Sellon and W. R. B. Smyth, and to pay the residue, if any, to J. Sellon; and upon a sale of the premises, to pay these several sums out of the proceeds of such sale, and to pay the residue of such proceeds, if any, to J. Sellon. Shortly after this purchase, a declaration of trust was executed by Walton, in conformity to this trust, except that by mistake $3100 was mentioned therein as payable to him, instead of $4100. In June, 1823, further advances having been made by B. J. Sellon and W. R B. Smyth, a new declaration of trust was substituted, at the request of J. Sellon, in which the amount due to Walton was corrected, and the amount due to B. J. Sellon and W. R B. Smyth was increased to the sum of $9768; making the amount to be paid on the sale of the premises $19,868, besides interest. Shortly after the execution of this last declaration of trust, the residue of the congregation which remained, caused themselves to be incorporated ; and in 1826, J. Sellon and a committee of this new corporation made the agreement with the complainant, of which he sought a specific performance by his bill. This, however, was done without the consent of Walton, who, in May, 1827, sold and conveyed the whole of the three lots fronting on Ann street to Bishop Dubois, for the sum of $19,000 ; which was much less than the amount of encumbrances on the premises, provided for in the declaration of trust., and leaving a balance, including interest, of more than $4000. Upon this purchase by Bishop Dubois, J. Sellon also executed to him a quit claim of all his interest in the premises ; and the Bishop afterwards conveyed to Lynch, Lasala and Wilcox, as trustees for the Catholic congregation. Upon the filing of the bill, an injunction was granted to stay proceedings r>t law against the complainant to recover possession of the disputed piece of land. J. Sellon having died before perfecting his answer, a bill of revivor and supplement ■was filed, to which his heirs were made parties. But upon demurrer the bill was dismissed as to them, they having taken no interest in the premises by descent. (See Leggett v. Sellon, 3 Paige's Rep. 84.) The cause was thereupon heard upon pleadings and proofs, as against the surviving defendants.

      T, Fessenden, for the complainant.

      J. Lynch, for the defendants.
   The Chancellor.

It is not necessary that I should go into a full examination of the question whether there was a valid paroi agreement between the complainant and J. Sellon, partially performed, so as to render it binding in equity as between those parties, notwithstanding the provisions of the statute of frauds; as I am satisfied Walton never assented to any such agreement. And I have arrived at the conclusion that J. Sellon had npt such an interest in the premises as could make his contracts in relation thereto binding on Walton or his grantee. If the trust on which the property was held by Walton, could be enforced in favor of J. Sellon in his lifetime, as an alien, it could only have been done by a sale of the premises for the purpose of giving him the surplus, after paying the charges thereon. And it is evident from the pleadings and proofs that the value at the time of the sale to Bishop Dubois, in the spring of 1827, was less than the amount of encumbrances then existing.

It is insisted, on the part of the complainant, that J. Sellon had the equitable right to the property, as a resulting trust, subject to the encumbrances, which were only in the nature of mortgages; and that the complainant has an equitable right to redeem, and to have the benefit of the present value of the Ann street property. It may, therefore, be necessary that I should examine the question as to the nature of J. Sellon’s interest, for the purpose of ascertaining whether any such right of redemption exists in this case. He undoubtedly made the bargain for the premises. And if he had not been an alien and incapable of taking and holding real estate, the deed would probably have been given to him directly, and he would have secured those who advanced the purchase money, by mortgages on the premises. But to evade the law by which aliens are dis-enabled to take real property and hold it against the claims of the state, the deed was given to a third person 'as a trustee. A resulting trust is the mere creature of equity, as a resulting use is of law; and it cannot, therefore, arise where there is an express trust declared by the parties, and evidenced by a written declaration of such express trust. And equity will never raise a resulting trust in fraud of the laws of the land. It could not, therefore, in a case like the present, be raised in favor of an alien, in fraud of the rights of the state. The law will .never , . . . ,. , , cast the legal or equitable estate upon a person who has no right to hold it; although an estate may, by an express contract or conveyance, be vested in an alien, until office found, for the benefit of the people of the state. Where an alien, therefore, purchases land and takes an absolute conveyance in the name of a citizen, without any agreement or declaration of a trust, the law will not raise a trust in favor of the alien purchaser, who cannot hold the land; any more than it would cast it by descent upon an alien heir, who cannot hold it against the state. The result in such a case must be, either that the nominal grantee takes the land, discharged of any trust by mere implication of law, or that there is a resulting trust in behalf of the people of the state, which they alone can -enforce against the grantee in the deed. It is not necessary in this case, however, to discuss the question of resulting trust, as there was no such trust here. It is very evident that the trust, whatever it was intended to be, was an express trust from the beginning; although the writing, which was the evidence of that trust, was not executed until sometime afterwards. This trust was, among other things, to sell the premises when necessary to pay off the encumbrances thereon; which trust has been executed by the trustee according to the terms of the trust. And J. Sellon could do no act which would destroy or in any way impair that right, without the assent of the trustee and the cestuis que trust. Bishop Dubois, therefore, obtained by his purchase from Walton the legal title to the premises in controversy, discharged of any claim in favor of the complainant. And in this view of the subject, it is perfectly immaterial whether he had or had not notice of the particular trusts upon which the property was held, or of the arrangements made between the complainant and J. Sellon. So far as concerned any surplus which might be raised upon the sale by the trustee, Dubois, as the purchaser was not bound to see to its application. If there had been any surplus, which I am satisfied there was not, it would have belonged to the state by escheat; and the same might have been reached in the hands of the trustee by a bill in equity. Upon this subject, it is only necessary that I should refer to the very able and luminous opinion of the distinguished president of the court of appeals in Virginia, as reported in Hubbard v. Goodwin, (S Leighs Rep. 514.) The conclusion at which he arrived in that case, and in which opinion I fully concur, was, that where, for the purpose of evading the law- which prohibits an alien to hold lands, he purchases real estate in the name of a trustee, upon an express and declared or a secret trust, to be permitted to take and receive the rents and profits, this is such a trust as in reason and upon the well received principles of equity, as well as upon authority, will pass to the state, to be enforced at its instance and in its favor.

In the present case, if the complainant inquired as to J. Sellon’s pretended interest in the premises, he must have known that Walton had the right, as trustee, to sell the premises for the payment of the encumbrances thereon, and that no agreement which J. Sellon could make would defeat the rights of the purchaser. And if he neglected to make such inquiries, or to get the assent of Walton to the proposed arrangement, his loss is the result of his own carelessness, and he has no equitable claim to relief, either as against Walton or his grantees. And as I have before shown, J. Sellon had no equitable interest which could pass to Bishop Dubois under his release, charged with a trust in favor of this complainant. The .Ml must therefore be dismissed, with costs.


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    In the matter of Ann Lynch.
    The court of chancery has the custody and control of the person as well as of the estate of an habitual drunkard, and can exercise that control by means of a committee, as in the case of a lunatic.
    The committee of an habitual drunkard has the right, subject only to the superintending control of the court, to decide as to the proper residence of the drunkard ; and he is responsible for the consequences of his neglect to take proper care of the person of such drunkard. And it is the duty of the court to aid and protect the committee in the proper exercise of this right, and to give him directions on the subject when necessary.
    Where a third person, without the consent and against the wishes of the committee, has the custody of, or harbors the habitual drunkard, the committee should apply to the court ex parte for an order that such person deliver the drunkard up to the committee, or cease from harboring him ; and if such order is disobeyed, the party will be punished for a contempt of court. ' .
    This was an appeal from a decision of the vice chancellor of the first circuit, denying an application made on the part of the committee of the person and estate of Ann Lynch, to obtain the custody of her person; and to prevent J. Kinsey, at whose house she was, from harboring her against the wishes of the committee.

      H. S. Mackay, for the committee.

      T. Phoenix, for Kinsey and Ann Lynch.
   The Chancellor.

The appeal in this case presents an important question as to the rights and duties of the committee of an habitual drunkard ; and as to the power and control which this court has over the persons of that unfortunate class of our fellow citizens whose unnatural appetite for intoxicating liquors has rendered them incompetent to manage their property, or to regulate their own conduct. Ann Lynch, a widow lady about sixty-five years of age, who by the death of her husband came into the possession of a very considerable personal property in addition to her dower in his real estate, was, upon the execution of a commission issued by the vice chancellor, found to be incapable of conducting her own affairs, by reason of habitual drunkenness. And upon a subsequent application to the vice chancellor in her behalf, he confirmed the finding of the jury, and' refused to award a feigned issue; being satisfied, no doubt, that the case was so clear as to make the trial of the issue a useless expense to this unfortunate woman and her estate. From that decision there has been no appeal. I must therefore, for the purposes of this application, reject the attempt which is now made to traverse She finding of the jury, by affidavits. Whenever the court is satisfied she has so far reformed that there is no danger of a relapse, the committee will be discharged, and her estate will be restored to her. But until such an order is made, she is considered in law as wholly incapable of doing any act by which her estate can be in any manner affected, or of even contracting debts for the necessaries of life. The committee has obtained an order, by which a very liberal allowance is made for the support of herself and her two infant grand-children—the only persons who appear to have any claims for support out of her estate. He has also provided a suitable place for her residence, or one which would have been suitable if she had been willing to go there to reside. She refuses, however, to submit to the control of the committee• and J. Kinsey, who has very improperly undertaken to interfere in this matter, is harboring her and locking up her property from ihe committee, contrary to his wishes, and in defiance of the legitimate control which this court has over her person and estate through its officer.

It appears, from the opinion of the vice chancellor, that he refused the application of the committee, because he doubted the power of the court to interfere and compel Mrs. Lynch to reside at the place selected for her by the committee. In this $ think he erred. Previous to the revised statutes, the court had no control over the person of an habitual drunkard, but only over his estate; the power of the chancellor, by the original act of 1821, (Laws of 1821, p. 99, § 1,) being confined, in terms, to the estate. But by the recent revision of the statutes, the powers of this court in relation to the persons, as well as the estates of habitual drunkards, are put precisely upon the same ground as its powers over the persons and estates of idiots and lunatics. This change in the statute was undoubtedly founded in wisdom, and in a spirit of kindness to this unfortunate portion of the community ; as the protection of property is of but little consequence in comparison with the salvation of its deluded owners, who may properly be considered as morally deranged. It is therefore of the utmost importance to them, that the powerful shield of this court should be interposed, not only for the protection of their property against those who would knowingly destroy both soul and body for the purpose of rioting upon the spoils of the victims of their cupidity, but also to remove them, if possible, from the thousand temptations which others, either intentionally or thoughtlessly, may place in their way. That the statute gives to the court a perfect control over the person of an habitual drunkard, which it can exercise through the medium of a committee, I think there is no reasonable ground to doubt. It declares, in the first place, that the chancellor shall have the care and custody of all ideots, lunatics, persons of unsound mind, and persons who shall be incapable of conducting their own affairs in consequence of habitual drunkenness, and of their real and personal estates; and he is then directed to provide for their safe-keeping and maintenance, out of their real and personal estates. (2 R. S. 52, § 1.) Thus putting the persons of the habitual drunkard and of the lunatic, both as to custody and safe-keeping, upon the same footing in every respect.

The control, therefore, which this court may by its committee exercise over the person of one who is found incapable of conducting his own affairs in consequence of habitual drunkenness, is the same which it may exercise over an infant, or an ideot, or a lunatic. The guardian or committe is alone to decide, subject however to the superintending control of the court, as to the proper place in which the infant, non compos, or habitual drunkard, shall reside ; as he is liable for the consequences of a neglect to take proper care of the person committed to his care and custody. And it is the duty of the court to lend its aid to protect him in the proper exercise of ■¿hat right; and to give him directions on the subject when •necessary. In Hall v. Hall, (3 Atk. Rep. 721,) Lord Hard-wicke compelled a young gentleman, who had left Eton school contrary to the directions of his guardian, to return thither. So in Freeman’s case, (1 Strange, 168,) Lord Chancellor Macclesfield, upon the application of the guardian, who had directed his ward to go to Cambridge University, but who in disobedience of his orders went, to Oxford, sent a messenger to compel him to go to Cambridge. And the ward having again returned to Oxford, another messenger of the court was sent to take him to Cambridge, and to keep him there. And in the case of Cranmer, a lunatic, (12 Ves. Rep. 455,) upon a complaint to Lord Chancellor Erskine, that the morning after the execution of tire commission, the lunatic had been conveyed from his house in Essex to London by Margaret Winton, who was probably his housekeeper, and that he could not be found, an order was made directing her, or any other person in whose custody Cranmer might be, to deliver him to the committee of his person. The Lord Chancellor said a habeas corpus was not necessary; and that if the order was not obeyed, he should commit the party. And in Lord Wenman’s case, (1 P. Wms. 702,) where the wife, after the making of an order for producing the husband on the execution of a commission, had been with him and assisted in his removal from place to place, she was committed to the ñeet for a contempt of the court; Lord Macclesfield observing, that where there was such a presumption of lunacy, the wife, though otherwise under the power cf the husband, might well he supposed to have him under her power. It is also a contempt of the court to marry a person the custody of whom the court of chancery has granted to a committee ; for which the parties concerned in it may be committed. (See Ash’s case, Prec, in Ch. 203. Smart v. Taylor, 9 Mod. Rep. 98.)

The proper course of proceeding, however, in a case like the present appears to be to apply to the court, in the first instance, for an ex parte order that the person in whose custody the non compos or habitual drunkard is, or who harbors her against the wishes of the committee, to deliver her up to the .committee, or to cease from harboring her; and to desist from interfering with the committee in the exercise of his power and control over her person. And if that order is disobeyed the parties so disobeying may be punished as for a contempt. In this case, therefore, although Kinsey was clearly wrong in harboring Mrs. Lynch, against the wishes of the committee, yet, as he has probably acted under a mistake as to the rights of Mrs. Lynch and the duty of the committee, in consequence of this preliminary order not having been obtained and served upon him, I do not think it would be proper to charge him with the costs of these proceedings, if he is now willing to deliver up this unfortunate lady to the cave and custody of her legal guardian.

Although the power of this court over the persons of habitual drunkards is thus complete, it ought not to be exercised in such a manner as to deprive them of their freedom unnecessarily. xThe power should be used only to protect them from injuring themselves, or from being injured by others; to remove them from temptation, and from the society of vicious companions, and if possible effect a reformation; and to restore them to their friends, and to the possession and control of their property, as good and virtuous members of the community. Such a reformation can only be effected by kind and humane treatment. And whenever the committee deems coercive measures necessary, the safer course is for him to apply to the court for its advice and direction.

In the present case, I am not satisfied that it would conduce to the reformation or the happiness of this old lady, or be useful to her relatives, to place her under the cavé of those against whom she entertains a hostility, for doing that which it was their duty to do under the circumstances of this case. And as her property is sufficiently large to bear the expense of placing her in a situation where she can be entirely removed from temptation and will at the same time be treated with the utmost humanity and kindness, I shall direct that she be delivered up to her committee, and that he immediately place her under the care of Dr. White, at his institution at Hudson, and provide for her comfortable support at that place, until the further order of the vice chancellor of the first circuit in the premises. If Doctor White is unable to take her at his institutioü, she must be placed by the committee in the Lunatic Asylum at New-York; where she must be kept from all liquors which can intoxicate,

The order appealed from must be reversed ; and the committee is to be permitted to retain his costs on this appeal, and the costs of the application to the court below, out of the estate in his hands. An order must be entered in conformity to this decision; subject however to be modified by the vice chancellor from time to time, as he may judge expedient, as to the place where Mrs. Lynch shall be kept, and as to the mode of her treatment, and as to the discharge of the committee and the restoration of her property, whenever he shall think her so far reformed that there will be no danger of a relapse. The order must also direct the proceedings to be remitted to the vice chancellor, so that this decision may be carried into effect under his direction.


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    In the matter of Merritt & Lyon.
    The court by whom a receiver is appointed has jurisdiction to restrain him from prosecuting an unjust and vexatious suit at law, in the name of a third person, without his consent, although the persons applying for such relief are not parties to the suit in which the receiver was appointed.
    If a person institutes a suit in the name of another without his consent, and without any legal or equitable right to do so, the person in whose name the suit is thus instituted is entitled to have the proceedings stayed, upon application to the appropriate tribunal.
    Where the court of chancery directs a receiver to institute a suit at law in the name of a third person, the nominal plaintiff may be enjoined from discontinuing or releasing the action, or from applying to the court of law to stay the proceedings therein; but the receiver will not be permitted to bring an action in the name of a third person, against his consent, without giving security to indemnify him against the costs of the suit.
    The court of chancery has jurisdiction to protect its officers in the discharge of their duties, by restraining proceedings at law against them for acts done by them under the direction of the court; although such proceedings at law are instituted against them by persons who are not parties to the suit in chancery. It has also jurisdiction to protect such third persons against an abuse of power, on the part of its officer, attempted to be exercised under pretence of an authority derived from the court.
    This was an appeal from the decretal order of a vice chaneellor, dismissing a petition with costs. The petition stated that, in 1818, g. Townsend now deceased, and the petA ^oner Lyon as his surety, gave to the petitioner, D. Merritt, a sealed note for about $800, payable in twelve months; that in 1820, tire note being unpaid, J. Peck received it for the purpose of collection merely, and gave his receipt therefor, specifying that it wras so received ; and at his request, and as evidence of his authority to collect the same, D. Merritt endorsed his name on the back of the sealed note, but without any intention of giving Peck any interest therein ; that, as the petitioners believed, Peck afterwards collected the money from Townsend, the principal debtor; but having neglected to pay it over, that D. Merritt sued him, and upon proof of that fact, recovered a verdict for the amount of the note, on which a judgment was afterwards entered against Peck; that D. Merritt afterwards compromised with Peck, by relinquishing the costs of suit and $400 of the debt, with an understanding that the note, if any thing was due thereon, was thereafter to be the property of D. Merritt; but as the note was then in the hands of Peck’s attorney, it was not delivered up ; that D. Merritt afterwards received a small sum from Lyon, and gave him a release and discharge from all liability on account of the note; that a creditor’s bill was afterwards filed before the vice chancellor against Peck and C. Bouton, in favor of Lott Merritt; and in October, 1834, a decree was agreed upon by the solicitors of the parties in that suit, appointing a receiver of the property and effects of Peck; and that such receiver, a few days after-wards, brought a suit upon the note in the supreme court, in the name of D. Merritt as plaintiff against Lyon; which suit was brought without the consent and against the will of D. Merritt, and at the instigation of Lott Merritt, the complainant in the chancery suit, the receiver claiming the note as belonging to Peck by virtue of the endorsement on the back thereof. The petitioners alleged that the suit was thus brought for the purpose of unjustly harrassing and oppressing Lyon, and of ultimately injuring D. Merritt by subjecting him to costs. They therefore prayed for an order restraining the receiver and Lott Merritt from proceeding further in the suit, in the name of D. Merritt; or for such other relief as was proper. Upon the hearing of the petition before the vice chancellor, the solicitor of Lott Merritt and attorney of the receiver, upon whom notice of the application was served, appeared, and counsel was heard in opposition to the petition; but no evidence or affidavit was produced to contradict or explain any of the allegations contained therein. The application, however, was denied, and the petition was dismissed. And the petitioners were ordered to pay to Lott Merritt or his solicitor the costs of opposing the same.
    J. V. L. Pruyn, for the appellants.
    This court will interpose, and direct and control its receiver in regard to his trust, as to the bringing of actions, distraining for rent, &c„ See the cases collected in Chitty’s Equity Digest, 1134. Among the cases there referred to, is that of Dacie v. John, (1 M’Clel Rep. 575.) In that case it is said the court will not empower a receiver to sue for debts due to the estate, where the proceeding would be oppressive to creditors, or where it is not probable that any advantage will be derived from it. In Wynne v. Lord Newborough, (1 Ves. jun. 164,) a motion was made by a remote remainder-man, and the tenants, to restrain the receiver from ejecting the tenants; which motion was refused, with costs, upon the ground that their interest was not sufficient to authorize them to make the motion. But the refusal was not put upon the ground that such an application was not proper, if the interest of the applicants had been sufficient. The receiver is not ordinarily authorized to bring suits, or to distrain, without the sanction of the court; and although a receiver appointed upon a creditor’s bill, under the 192d rule of this court, is allowed a larger discretion, yet the cases not coming within that rule, shew botja the right and the propriety of a strict supervision of the receiver by the court. In the present case, the court, by its officer the receiver, is prosecuting a groundless and vexatious suit, between two other parties not before this court, to the certain loss and injury of both. The court should interfere and prevent such oppression.
    A question has arisen as to the entitling.of the petition. This is a technical objection, which ought not to turn the petitioners out of court. The object of entitling the peti= tian is, to give such a character to the proceeding, that, if the statements therein should be wilfully false, the party who has sworn to it may be indicted for perjury; and that the petition may not be presented to the court without any responsibility. These are the principal and almost the sole objects of the title. (2 Glyn & Jameson, 44.) An indictment for perjury may be sustained on any petition presented to a court of chancery in relation to matters within its jurisdiction, if wilfully false. It is not necessary, for this purpose, that the petition be entitled. In many cases the title is a matter of indifference— as in proceedings on attachments, where the papers are sometimes in the name of the people, and sometimes in the name of the parties. (1 Hoffman's Pr. 449.) It was not proper here to entitle the papers in any suit. The petitioners were not parties to the suit in this court, and therefore had no right to act in the suit. The supreme court has decided, that on a motion for a mandamus to a court of common pleas, in regard to a suit pending there, the papers must not be entitled. (Haight v. Turner, 2 John. Rep. 371.)

      L. Hoyt, for Lott Merritt and the receiver.
    Neither of the petitioners are parties to the suit in chancery, in which they ask relief, nor are they in any way connected with it. They have no interest or claim upon monies which the receiver may collect. The court may undoubtedly interfere and restrain a receiver from prosecuting a suit; but it must be a case where the prosecution would injure the fund, and upon the complaint of some person who has an interest in the fund.
    The only complaint which D. Merritt makes, is, that the suit against Lyon is prosecuted in his name, without his consent and against his wish. He does not pretend that he has sustained any injury, or that L. Merritt and the receiver are not abundantly able to respond for any damages he may hereafter sustain. Again, he has a full and perfect remedy by an application to the supreme court; which court has the power to direct the suit to be discontinued, or to direct security to be given to indemnify him against any damage he may sustain by his name being used. But this court ought not and will not, upon petition, direct a perpetual injunction.

      iLyon does not pretend that he has paid the note, orany part of it; but. he insists that the suit ought not to be prosecuted against him because Townsend paid the note to Peck; and that he paid B. Merritt a valuable consideration, and received -a release from his liability on the note. If the note had actually been paid by Townsend, then Lyon did not want a release ; or, if he wished one for his protection, he Was entitled to it without paying for it. By paying a valuable consideration for the release, he negated the pretence of payment by Townsend, and admitted his liability on the note. If the release was given after the judgment against Peck, B. Merritt had no right to release the note ; and the release, being intended as a fraud upon the rights of Peck, is void. Lyon has also a complete defence at law in relation to all the matters of which he complains. He has set up that defence in the suit brought against him in the name of B. Merritt; and this court will not, upon petition, try and decide a matter which properly belongs to a jury to pass upon.
   The Chancellor.

From the facts stated in this petition, it is evident that the receiver, at the instigation of Lott Merritt, is prosecuting an unjust, vexatious and oppressive suit, in the supreme court, in the name of one of these petitioners against the other, without the least shadow or pretence of right to commence such a suit in the name of B. Merritt. And when these facts are taken in connection with the very singular decree which appears to have been agreed upon by the parties in the chancery suit, I think there is some reason to apprehend that the suit in the supreme court is the result of an improper combination, between the parties in the chancery suit, to prosecute an action at law against Lyon in such a way as to deprive him of the testimony of B. Merritt, the .only witness, not interested, who could explain the endorsement on the back of the sealed note; and thereby to shut out the defence. I presume, therefore, that this petition must have been dismissed on the sole ground that the vice chancellor supposed he had not jurisdiction to interfere, in such a case, in .behalf of persons who were not parties to the suit in this court. The objection that the petition was not entitled in the suit in which the receiver was appointed, was very properly waived by the counsel for (he respondents, on the argument, as that suit is sufficiently referred to in the body of the petition.

It is not necessary to refer to any authority, to show that one person has no right to institute a suit in the name of another, without his consent, either express or implied ; or that, the person in whose name such suit is instituted, is entitled to have the proceedings stayed, upon an application to the appropriate tribunal. And even where the bringing such a suit is proper, as where this court directs a receiver to bring a suit at law in the name of another person, the uniform practice of the court is, to require the party who brings such suit, to give security to indemnify the nominal plaintiff against the costs. (Green v. Winter, 1 John. Ch. Rep. 60. Ex parte Little, 3 Moll. Ch. Rep. 67.) Where the person bringing the suit in the name of another has no legal or equitable light to institute such suit, the person in whose name it is brought is not bound to lie by and suffer it to proceed, even upon the tender of an adequate indemnity. On the contrary, if he is satisfied his name is improperly used for the purpose of harrassing or oppressing the defendant, it is his duty, as an honest man, to interfere, where he lias a right to do so. In ordinary cases, where a suit is instituted in the name of another without his consent and without authority, the remedy of the party in whose name it is brought, is by an application to the court in which the suit is instituted, to stay the proceedings, and to punish the person, by whom it is instituted, for an abuse of the process of the court. And the remedy of the defendant against whom such a suit is commenced is by indictment, or by a suit for the penalty given by the statute in such cases. (2 R. S. 550, § 1.) In this case, if the court of chancery should not interfere to restrain the petitioners from proceeding in that manner against the receiver who is its officer and is supposed to act under its authority and by its direction, these remedies would be open to them. It does not follow, however, that the cóurt is to lose all jurisdiction over its officer, or over its suitors, because those who may be injured or oppressed by the proceedings of a receiver, may possibly have a remedy by an application to another tribunal. Where this court directs a receiver to bring a suit at law in the name of another person, upon giving the usual indemnity, it will interfere by injunction to restrain the nominal plaintiff from discontinuing or releasing the action, or from applying to the court of law to stay the proceedings. The court will also, in its discretion, restrain third persons from instituting proceedings at law against its officers, acting under its direction, although the persons by whom such proceedings are instituted are not parties to the suit in this court. (Ex parte Clarke, 1 Russ. & My. 563. Batchelor v. Blake, Hogan’s Rep. 98. Nugent v. Nu-gent, Smith’s Office of Receiver, 104, note; 2 Molloy’s Rep. 372, S. C. Aston v. Heron, 8 Legal Obs. 218. Wardle v. Lloyd, 3 Moll. R. 388.) If this court can interfere in this summary manner, against persons who are not parties to the suit, to protect a receiver or other officer acting under its direction, it may also interfere in the same manner to protect third persons against an abuse of power, attempted to be exercised by another under pretence of an authority derived from this court as an officer thereof. The possession of a receiver or a sequestrator is considered as the possession of the court by whom he is appointed. And if a third person claims adversely, he must apply here for leave to bring a suit at lavv to try his title; or he may ask to come in and be examined pro inleresse suo to establish his title in this court. For the same reason, a suit brought by a receiver is to be considered as brought under the authority of this court; and if brought in the name of a third person, without his authority and without any foundation or pretence of right, as in the present case, the parties to such suit may apply here for protection against the unjust and unauthorized proceedings of the receiver.

The order of the vice chancellor, dismissing the petition, with costs, must therefore be reversed, with costs to be paid by the respondents. The receiver must also be directed to •discontinue the suit at law, and to pay to Lyon his costs therein, so as to indemnify D. Merritt against such costs j and'' the note must be delivered up to be cancelled,¡and the receiver is to be perpetually enjoined from instituting or prosecuting any süit thereon.


text:
    Stiles and others vs. Burch.
    KTporr an appeal from the decision of a vice chancellor, if the appellant makes’ default at the hearing, the decree or order appealed from will be affirmed, with costs. But if the respondent makes default, the cause must be heard ex parte; and- the decree or order will not be reversed, or modified, until’ it is shown to be erroneous. . .
    The only effect of the respondent’s default at the hearing.of the appeal'Is-to deprive him of costs, if the decision of the vice chancellor is affirmed j or to preclude him from the right of appealing to the court of dernier resort,, if such decision is reversed,
    A surrogate, upon the accounting of an administrator Before him, has jurisdiction to declare the sale of a chattel"interest in land, which has Been bid in by the administrator for his own benefit, void; and to .charge him with the full value.of the premises at the time of such sale, with interest, or ■with the present value and the net income of the property from the time of the sale.
    The sentence or decree of a surrogate, upon the final accounting of'an admistrator before him, is, unless appealed from, conclusive as to tile amount of the personal estate with which such administrator is chargeable ; and it cannot be reviewed in a collateral suit.
    A bill in chancery may be'filed by the distributees, to compel the executor or administrator to distribute the estate of the decedent according to the sentence or decree of the surrogate, made upon a final- accounting before him.
    This- was- an appeal from a decretal order, made in the late equity court of the third circuit. The case was noticed for hearing by the appellant only; and when it was reached in its order, upon the calendar, the respondent did not appear. The appellants’ comise,1 therefore asked for an order, reversing the decree appealed from, by default. The Chancellor, however, decided that the counsel for the appellant must proceed ex parte to show that the decree appealed from was erroneous ; and what was the proper decree to be made in this court, if upon examination it should be found that the decision in the court below was wrong; that where the appellant did not appear at the hearing of the appeal, (his court. would presume the decision of the court below was correct; and would affirm (lie same, with costs, without any argument upon the merits ; that where the respondent made default, the decree of the court below would not be reversed, or modified, unless the appellant ivas able to satisfy the chancellor that the same was erroneous, either wholly or in part; that the only effect of the respondent’s neglect to appear, was to deprive him of his costs on the appeal, if the decree of the court below was affirmed; and to preclude his right to appeal to the court for the correction of errors, if the decision of the chancellor was against him. [See S. C. in note to 96th rule, in edition of 1834.] The appeal was then heard upon the merits, ex parte.

      C. Bushnell, for the appellant.
   The Chancellor.

The object of the bill in this case appears to have been to obtain an account and' distribution of the esiale of Z. Burch, deceased, in the hands of the defendant as (he surviving administrator of his estate ; and to charge the defendant with the amount of certain leasehold premises, which were purchased or pretended to be purchased by him at an auction sale thereof. And the defendant was particularly called upon by the bill to set forth, in his answer, a full inventory of the personal estate, rights and cred- . its of the decedent as to items, value, dates, sums and persons ; and an account of the income of the real estate by him received, and of the rents and profits of the leasehold premises. By the bill, it also appears that the defendant was cited by the complainants to account before the surrogate; who, upon a hearing of the parties, found a balance due from the defendant, as administrator, of $420,20; which sum, with the costs of accounting, he was sentenced to pay. From the opinion of the circuit judge, which is before me, he seems to have supposed that the plea of the defendant was a plea to the relief sought by the bill. Upon examination, however, I am satisfied it is not a plea to any part of the relief, but is only a plea to so much of the bill as calls upon the defendant in his answer to set forth an account of the estate and of the administration thereof, and an account of the rents and profits of the leasehold premises. And the defendant has fully answered as to the relief sought by the bill. The court below also erred in supposing that the complainants had waived their replication, by bringing the cause to hearing without entering a rule to produce proofs. 8uch, undoubtedly, would have been the effect of such a proceeding in this court, according to the decision in the case of Wiser v. Blachley, referred to in the opinion of the circuit judge. (1 John. Ch. Rep. 607.) But the 43d rule of the late equity courts expressly declared, that no rules to produce witnesses, or to pass publication, should be required; and that the testimony of all witnesses taken in open court, except witnesses examined de bene esse, should be taken at the hearing of the cause. Either party, therefore, had a right, at the. hearing of the cause, to examine witnesses as to any facts which they wished to establish. And if neither party took any testimony at the hearing, the cause was heard on bill, answer and replication, in the same manner as a cause would be heard in this court after a regular order to close the proofs, where neither party had taken testimony. The answer, therefore, was evidence in favor of the defendant, so far as it was responsive to the bill, and no farther. And the plea being put in issue by the replication, and no evidence being adduced in support of the truth thereof, it should have been overruled, of course. 'But so far as its truth was admitted, by the statement in the bill of the proceedings before the surrogate, the defendant is entitled to the benefit of that statement on the hearing. As the plea went to the discovery merely, its being overruled at the hearing will be no injury to the defendant, if the court should come- to the conclusion that he was not liable to account anew.

There is no doubt, in this case, that the surrogate should have considered the sale by the defendant, of the leasehold premises to himself, as inoperative and void. And he should ■have charged the defendant the full value of the premises, with interest from the time of the sale; or he should have charged him with the present value, and with the rents and profits received, over and above the ground rents, taxes, &c. I think the circuit judge was wrong, in supposing the surragate had not full power over this subject, to compel the administrator to account' according to equity, notwithstanding the pretended sálelo himself. From the bill and answer, it appears that the leasehold estate was only an agreement for a lease for two lives; of which the life of the decedent was one. It would therefore, if the lease had been actually executed, have been, upon his death, an esta te pur auier vie, or an estate by occupancy; which, under the statute then in force, would go to the administrator, to be applied and distributed as a part of the personal estate of the intestate (1 R. L. of 1801, p. 178, § 4.) It was an equitable chattel interest, in land, which the surrogate might compel the administrator to account for, in the same manner as if he had attempted to sell a horse belonging to the estate, and had become'himself the purchaser thereof. I think, therefore, the complainants were bound, in their proceedings before the surrogate, to call upon the defendant., for the proper account in relation to" the leasehold premises. And if the surrogate erred in not charging him with what was equitable and just, they should have sought their remedy by appeal. The sentence and decree of the surrogate is conclusive upon the rights of both parties, so far as the personal estate, including the leasehold premises, is in controversy here. Andas the defendant has established no valid excuse for not complying with the decree of the surrogate, a decree must be made here for carrying the same into effect. Tills is the more necessary, since the surrogate has no power to issue an execution against either the real or personal est ate of the defendant; and as it is alleged that there are creditors of the estate who still have claims thereon. It is hardly probable that any claims of that kind can exist, which are valid against the estate after a lapse of twenty-five years. The administrator, after the decree of the surrogate, could not make a promise or agreement to pay a debt barred by the statute of limitations, so as to affect the interest of those who had cited him to account. The proper decree, however, is to refer it to a master, to give the usual notice to creditors to come in and establish their debts before him. And if any are thus established, they can be provided for in the decree; to be paid either by the administrator or out of the estate^ as may be equitable as between him and the complainants. The balance of the fund may then be distributed, without security ; as the defendant will be protected against the claims of creditors who do not come in under the decree.

The decree was wrong, in giving liberty to the complainants to introduce proofs in relation to the sale of the freehold estate to the mother, with a view to establish a collusive and fraudulent sale. The fact that 45 acres of land, in the county of Dutchess, were sold by the administrators, under a surrogate’s order, for the very small sum of $35, and that the same land ,was shortly afterwards conveyed by the purchaser to the defendant, was certainly calculated to excite suspicion. But no charge is contained in the bill which could justify any decree whatever in this cause, relative to the freehold estate. And I do not find it even alleged that the defendant was ever in possession thereof; although the defendant is called upon by the prayer of the bill to give an account of the rents and profits. If the testimony to be taken should establish fraud and collusion, it could not benefit the complainants in the present suit. If there was any thing improper in relation to the sale of the freehold estate, they must seek their remedy in a new suit, and the decree in this case must be made without prejudice to their right to institute such a suit.

The decree of the court below must be reversed. And a new decree must he entered here, declaring that the sentence and decree of the surrogate, referred to in the pleadings in this cause, is binding and conclusive, between the parties to this suit, as to the balance due from the defendant, as the surviving administrator of the estate of Z. Burch, deceased; and directing the defendant to pay that amount, with interest thereon, from the time when the surrogate’s decree was entered, to the register of this court, to abide the further order of the court. The decree must also direct a reference to a master to take proof of the debts, if any, which exist against the estate, in favor of such creditors as shall come in and establish their claims before him ; the master giving the usual notices for íhe creditors to come in, as directed by the statute; And he Is to report, specially, as to any matter he may deem proper for the consideration of the court. All questions of costs, and •all other questions and directions, are reserved until the coming in and confirmation of the report.