text:
    Crane vs. Bunnell & Boutwell.
    1843. August 15.
    The court of chancery has concurrent jurisdiction with courts of law in cases of fraud. And where the complainant files a bill for relief against a fraudulent contract and for a discovery of the fraud, the court may proceed and grant relief, and make a final decree between the parties after such discovery has been obtained.
    But the court of chancery will not, in a case of concurrent jurisdiction, grant an injunction for the mere purpose of transferring the jurisdiction from a court of law, where no discovery is necessary, or after the defendant has fully answered the complainant’s bill.
    Where notes payable in specific articles were given upon an agreement alleged to be fraudulent, Held that the maker of the notes was not obliged to come into a court of equity for relief; as the notes were not negotiable, and the maker had a perfect defence at law, to a suit upon the notes in the name of the payee.
    This case came before the chancellor upon an appeal from a decision of the vice chancellor of the fourth circuit dissolving an injunction. In 1836, the defendants sold to the complainant ten thousand acres of Texian lands for .the price or sum of $1250 ; for which the latter gave to them his promissory notes payable in building slate, in six annual instalments. At the time the notes were taken, the defendants executed a written agreement to obtain and deliver to the complainant, within twenty days, scrip of the Rio Grande and Texas Laud Company, entitling him to ten thousand acres of land of the said company. And within the time prescribed they procured and delivered to him a certificate purporting to be signed by Isaac A. Johnson as trustee, and Lemuel Sawyer as secretary of the company, and by J. C. Beals as empresario or founder of the colony or settlement, by which the complainant was declared to be entitled to one share in the estate and funds of the Rio Grande and Texas Land Company, each share of which contained ten thousand acres, besides surplus lands, and which was only transferable on the books of the company. The first note was paid by the complainant; and the other notes not being paid, suits at law were commenced thereon, against him, to recover the amount of such notes. The complainant put in a defence to the suit at law upon the notes, and after the cause was at issue and was about to be brought to trial, he filed the bill in this cause and obtained an injunction, restraining the plaintiffs in the suit at law from proceeding therein. The bill alleged that the defendants Bunnell and Boutwell falsely represented to the complainant that they were the owners in fee of 100,000 acres of Texian lands, and that they gave him an agreement to convey the same to him, by a good and valid conveyance, within twenty days; but that they afterwards improperly obtained from him the agreement, upon pretence that they were delivering to him a conveyance of the lands according to the terms of such agreement, when in fact they only gave to him the scrip purporting to be signed as above stated. The complainant also alleged, in the bill, that he had no means of proving the terms of the agreement, and the facts stated in the bill, except by the answer of the defendants. The defendants put in answers to the bill, so far as it prayed a discovery from them, and demurred to the relief, upon the ground that the complainant, if the .allegations in the bill were true, had a perfect defence at law in the suit upon the notes. By their answers they denied all the allegations of fraud in the bill, either as to the making of the original agreement and obtaining the notes for slate, or in the obtaining the possession of the agreement upon the delivery of the scrip according to the terms thereof. And they stated, in their answers, that by the terms of that agreement they were only to give to the complainant such scrip, signed by the persons who signed the scrip delivered.
    The vice chancellor dissolved the injunction with costs, for the reasons stated at length in the following opinion.
    Willard, V. C. There is nothing disclosed in the bill which should induce the court to withdraw the decision of the cause from the forum which the parties originally selected, and to which it properly belongs. The discovery sought is merely in aid of the defence interposed to the action on the note ; and it was for that purpose the injunction was allowed. The defendants having put in an answer to the discovery, which has not been excepted to, and from which it appears that the complainant has obtained no discovery, it follows, according to the settled practice of the court, that the injunction must be dissolved, and the parties be left to litigate the matter in a court of law. A different rule would lead to gross abuse. If under a pretence of discovery, any suit could be withdrawn from a common law forum to this court, the court itself would soon become an enormous grievance. (7 Paige, 451. 7 Cranch, 69. 1 Story*s Eq. § 71 to 74.)
    It is contended by the complainant’s counsel, that the defendants, by demurring to the relief, are estopped from their motion to dissolve the injunction, until the demurrer is decided in their favor. Whatever may be the rule where the answer to the discovery does not meet the equity of the bill, the position contended for cannot be supported with reference to a case like this. Even had the defendants demurred to the discovery as well as to the relief, they might have moved to dissolve the injunction on the matter of the bill. If the bill does not set forth such a case as entitles the complainant to the relief sought, the injunction should, of course, be dissolved, and the defendants be permitted to proceed with their action at law. (7 Paige, 157.)
    I will examine the case therefore upon the bill alone. The agreement, as consummated by the parties on the 13th August, 1836, was, that the defendants should, within twenty days from that day, procure a good and sufficient deed of conveyance from the Rio Grande and Texas Land Company to the complainant, in fee simple, of ten thousand acres of land situate in the tract of the said company in Texas; in consideration of which the complainant was to make and execute six promissory notes, payable in slate, at different periods, amounting in the aggregate to $1250. The bond to convey and the notes were simultaneously made and delivered on the same 13th August, 1836. The complainant obtained for his notes precisely such a contract to convey as he had agreed for, and there is, therefore, no fraud in the factum of the notes. It is not alleged that the defendants had more knowledge of the existence of the Rio Grande and Texas Land Company than the complainant. Nor is it alleged that the defendants knew or had reason to suspect there was no such company, at the time they entered into the bargain. Both parties in this stage of the transaction had equal knowledge, or the means of obtaining it; and there is no reason to doubt that the complainant was as eager to make the purchase, as the defendants were to obtain the notes.' Had the contract, as then closed, been carried out according to its terms, and had the complainant invoked the aid of this court to vacate it, and to have his notes cancelled, he must have alleged that there was no such company in being at the time of the contract, or that a deed of the company to him would convey no land, and that those facts were known to the defendants and not known to him. But the bill contains no such averments : and as the contract was after-wards varied, it is perhaps unnecessary to discuss the rights of the parties under the assumed hypothesis. Within the time limited for procuring the deed, the parties again met, and the defendants, in lieu of the deed, delivered to the complainant a scrip or certificate dated 18th August, 1836, purporting on its face to be issued by the Rio Grande and Texas Land Company, and entitling the complainant to one share (10,000 acres of land,) in the estate and funds of the said company, transferable only on the books of the company, and to be signed by certain oflicers of the company. It was an engraved certificate with a map attached, according to the custom and forms of that day. The complainant received the scrip and surrendered the bond for a deed to the defendants. It was competent for the parties to vary their contract, and, of course, for the complainant to accept stock in the company rather than a deed, if he chose. He might have received stock in a railroad, a bank, or canal company, or the cash. And his receipt of either, in lieu of the deed, operates, in the absence of fraud or mistake, as a discharge of the defendants under the original-contract. No mistake is alleged in the bill ; nor is there any fraud set up with reference to the substitution of the one contract for the other. The hurried manner in which the defendants took up the bond, and expatiated on the goodness of the scrip and the growing prospects of Texas, are not alleged to have been done -with a fraudulent design. The complainant never offered to return the scrip. Nor is there any evidence in the bill that he complained of his bargain until about three years after-wards. Although the complainant has stated in which hand he received the scrip, he is less particular when he comes to specify times. Thus he says from the hurried manner in which the transaction occurred, he was unable to tell whether the scrip was such an instrument of conveyance as was contemplated by the bond ; and that as soon thereafter as he conveniently could, he made inquiries in relation to said company and said scrip-, and became satisfied that it was not a deed, and that he had been imposed upon by the defendants, and so informed them, and requested them to give up the bond. It is to be remarked, that he did require them to give such deed as the bond contemplated ; but his object probably then was to repudiate the contract. It is fair to presume, in the absence of dates in the bill, that all this occurred in 1839, after he had paid one of the notes. It is hardly probable that he would have yielded to the advice of the defendants’ counsel, and paid a note obtained from him by fraud, as he now says, if he knew the defendants had palmed upon him an instrument which he did not intend to receive. It would require but a few moments to tell whether the certificate was a deed or something else. The complainant, in 1836, would have been satisfied with a deed from the company to himself. He held the scrip at least three years without objection. The bill is silent as to any suggestion of fraud during that period. From the history of the times, we may well conjecture that he was delighted with the exchange of Hoosic slate for an interest in the Rio Grande and Texas Land Company; that .he was proud of an association with men of such enlarged views and adventurous enterprize j that his imagination luxuriated in the boundless prospect of wealth and enjoyment in the bland atmosphere of the tropics. No doubt he often examined and pondered over the scrip and the map attached to it. He fancied the land divided into squares, and avenues and streets, adorned with perennial shrubbery and flowers, and covered with magnificent villas. The earth yielding its fruits spontaneously in unstinted abundance, the inhabitants, relieved from the curse of labor and toil, could repose on their sofas, fanned by slaves, and enjoy the contrast between their happy lot and that of the people of New-York. Such were probably the operations of his mind during the three years about which the bill is silent. He, at length, with the rest of the world, awoke from his reverie, and found his El Dorado among the marshes and fens of the Rio Grande, and in the exclusive occppancy of musquitoes, gallinippers and alligators. He then discovered fraud in the contract; began to think of not paying the notes; thought of his honest creditors; and in short, told one of the defendants, in the language of the bill, “ that he could not and would not pay the notes, that he meant to pay his honest debts, .and would make no promise to pay the said notes then or at any future time, for he had received no value for them,” &c.
    There can be no doubt that the complainant must be deemed to have accepted the scrip in lieu of a deed, and to have taken it at his own risk. His long acquiescence without objection amounted to a substitution of the latter for the former contract. It is not material, therefore, whether the defendants had title to lands in Texas or not, nor whether the company had such lands, since the scrip did not purport to convey any land, but only a share of the estate and funds of the company. Those funds may have amounted to a million of dollars for aught that appears to the contrary in the bill. Nor is it alleged that the scrip was without value at the time it was received. It is merely averred that it was so at the filing of the bill, in March, 1842, nearly six years after the transaction.
    It is true the complainant alleges his belief, on information, either that no such company ever existed as the Rio Grande and Texas Land Company, or if it did, that it was formed for the purpose of imposing upon and cheating the public. (See 7 Paige, 157.) When he was so informed, and by whom, does not appear; and which of the alternatives is to be taken as the truth, if either, is left to conjecture. The complainant was at any rate willing to become a member of the company and partake of its profits, by whatever means they were acquired. It is too late for him now to ask the aid of this court to discharge him from his contract.
    That the complainant has failed to realize from the bargain the expectations he had cherished, is probably true. That the stock of the company is valueless, may also be true. But it by no means follows that the complainant is entitled to relief either at law or in equity. In the changes and vicissitudes of this world, the value of property and the most cherished hopes of human enterprizes are constantly fluctuating. Fortunes are often made or lost by trusting to appearances, the fallaciousness of which can only be tested by the result. Each man confides in his own wisdom and sagacity when he makes a bargain. He relies upon the chances of success, which are often brilliant in prospect, and is stimulated to activity by the hopes they inspire. From the nature of things, all cannot become rich, however much they may make haste to become so. Time and chance happen to all men. No reproach should be cast upon either of these parties, from the mere fact that they were influenced by the mania of 1836. All were in a degree affected by it. It is not necessary to presume a man a fool or a rogue because he made a bargain which, seen through a different medium, indicates folly. Both may be honest. The bill does not disclose enough to taint the final contract with fraud, so as to entitle the complainant to the aid of this court. The motion to dissolve the injunction must be granted, with fifteen dollars costs.

      D. Wright, for the appellant.

      J. D. Willard, for the respondents.
   The Chancellor.

If the allegations in the complainant’s bill were true, he had a perfect defence at law in the suit upon the notes. And as they were not negotiable and could not therefore be transferred to a bona fide purchaser who would acquire any greater interest therein than the payees themselves had, there was no reason for coming into this court except for the purpose of discovery, merely. The defendants in their answer .having denied the only allegations in the bill upon which the injunction could possibly be sustained, it was a matter of course to dissolve it upon the coming in of that answer. It is true, in cases of fraud, this court has concurrent jurisdiction with courts of law. And where a party comes into this court, in the first instance, to be relieved from a fraudulent contract, especially where a discovery is necessary to establish the fraud, this court having obtained jurisdiction of the cause for one purpose, may proceed and make a final decree therein between the parties, after such discovery has been obtained.

But even in cases of that kind, this court.does not grant an injunction for the mere purpose of transferring the jurisdiction from a court of law to this court, after the commencement of a suit there, except to stay the trial in the suit at law until the defendant in this court has fully answered the complainant’s bill. In this case, every allegation in the bill charging fraud in the obtaining of the notes, either by misrepresentation or otherwise, and the alleged fraud in obtaining possession of the written agreement afterwards, and which are sworn to be in the knowledge of the complainant only, are fully and unequivocally denied in the answer. If the complainant has any defence to these notes, therefore, it is one which is equally available in the suit at law as in this court. As the only pretence for coming into this court was to obtain a discovery by an answer, on oath, from the defendants, and the complainant having obtained all the aid this court could give him in that respect, the vice chancellor very properly dissolved the injunction, and left him to defend himself as he could before the court of law and a jury.

The belief of the complainant that no such company as the Rio Grande and Texas Land Company ever existed, and that the pretended company had no title to the lands for which the scrip was issued, is not sufficient to sustain the injunction; although the defendants are not able, by their answer, to show that the complainant’s belief is contrary to the fact. For if the other part of the answer is true, the complainant himself assumed the risk of the validity as well as of the value of the scrip he contracted to purchase. Whether the persons calling themselves the Rio Grande and Texas Land Company were in fact entitled to a conditional grant of land in Texas, under the colonization laws of the congress of Coahuila and Texas authorizing the executive to receive contracts from Mexican empressarios for the settlement of vacant lands, or under the acts of 1834 and 1835, which were declared void by the constitution of Texas, adopted in March, 1836, or whether the company itself was an intended imposition upon both parties in this suit, appears to be a question of no importance in the decision of this appeal; although it may have a bearing upon the defence to the notes in the suit at law, if they were not founded upon'any consideration of benefit to the maker or of injury to the payees.

The order appealed from must be affirmed, with costs.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Knowles & Hume vs. McCamly and others.
    Where the husband and wife entered into a written contract for the sale and conveyance of a lot of land which was held in right of the wife, but such contract was not acknowledged by the wife, in the form prescribed by law to make the contract binding upon her, and the husband and wife after-wards, in attempting to carry the contract into effect, conveyed to the purchasers, by mistake, another lot in which the wife had no interest, and the wife afterwards died leaving an infant daughter her heir at law ; Held, that as the contract was not legally binding upon the wife, the court could not compel her daughter to convey to such purchasers the interest which had descended to her as heir at law to her mother.

      Held also, that the purchasers were entitled to a decree, against the husband, to reform the deed, so as to convey to such purchasers his interest, as tenant by the curtesy, in the lot which he had contracted to convey; and to a decree that he should procure a conveyance of the interest of the heir at law of his wife in such lot, or pay to the purchasers their damages by reason of such defect of title.
    To authorize the court of chancery to make a decree against a feme covert, or her heirs, for the specific performance of an agreement to convey her interest in real estate, she must not only have executed the contract with her husband, but must also have duly acknowledged the same before the proper officer, upon a private examination apart from her husband.
    The principle upon which the court of chancery enforces a charge made by a feme covert upon her separate estate, in the hands of her trustee, is that as to such separate estate she is to be considered and treated as a feme sole ; and that the charge upon such separate estate is in the nature of an appointment of her equitable interest in the trust estate.

      1843. August 15.
    But where the legal estate is in a feme covert, who is a resident of the state, her deed or contract, conveying or agreeing to convey such estate, if not acknowledged by her according to the statute, is void in equity as well as at law.
    A contract to convey lands which is signed by the husband and wife, but is not duly acknowledged by the wife, is the contract of the husband only; and is neither binding upon the wife, nor upon her heirs after her death.
    The bill in this cause was filed against J. McCamly, the surviving husband of Amy McCamly deceased, and against Frances Amy McCamly, her infant daughter, to correct an alleged error, in the description of the premises, in two deeds given to the complainants, executed by J. McCamly and his wife, in the lifetime of the latter. The facts, as stated in the bill, and as ascertained by the master’s report, were as follows :
    In 1811, David Buck the elder, became the owner in fee of lot No. 103, in West Pulteney, by virtue of a conveyance from N. Warren, and continued such owner until the time of his death. He died previous to 1832, leaving his son David, and his daughter Amy, who afterwards married the defendant J. McCamly, his only children and heirs at law. In May, 1832, J. McCamly and D. Buck the younger, entered into written contracts with D. Hume and J. Knowles, the complainants, respectively, to sell and convey to Hume the north one-fourth, and to Knowles the remaining three-fourths of the premises, by the name and description of a lot number-, in West Pulteney township, in the town of Riga, known by the name of the Buck lotat the rate or price of $25 per acre, payable at the times and in the manner in the said contracts specified. And by the terms of such contracts the vendors were to give to the purchasers, respectively, good and sufficient warranty deeds of the premises, within one year from the date of the said contracts; provided such purchasers should have paid all the purchase money due up to that time, and should make satisfactory security for the residue of such purchase money by mortgages on the premises, or otherwise. The name of Amy McCamly was signed to the contracts, but they were not acknowledged by her, as required by the statute, to make them valid and binding contracts affecting her interest in the premises agreed to be conveyed. Nor was there any proof produced before the master, to whom it was referred to take proof of the facts and circumstances stated in the bill, to show that she ever signed such contracts. In June, 1833, H. Brewster, of Riga, in the county of Monroe, who drew the original contracts, was applied to by Buck and J. McCamly, and Hume, one of the complainant's, to draw deeds for the purpose of conveying the premises to the purchasers, respectively, according to the contracts. And he drew deeds accordingly, which were executed by Buck and by J. McCamly in his presence, and were signed and acknowledged by Mrs. McCamly, afterwards, before a commissioner of deeds in Onondaga county. But these deeds, instead of conveying to Hume the. one-fourth, and to Knowles the three-fourths of the Buck farm in Riga, purported to convey the one-fourth and the three-fourths iC of lot number one hundred and twenty-three in West Pulteney township, in the town of Riga and without any description of the premises indicating that lot No. 103, which was, in fact, “ the Buck lot in West Pulteney township,” mentioned in the contracts, was the lot intended to be conveyed. This mistake in the deeds was not discovered by the complainants until March, 1837 ; previous to which time Mrs. McCamly had died, leaving an infant daughter her only child and heir at law, and J. McCamly had left the country and gone to Texas. David Buck, upon being applied to by the complainants, gave “them deeds of all his interest in the lot described in the contracts. The infant defendant put in a general answer, by her guardian ad litem, denying any knowledge of the allegations in the complainants’ bill, and submitting her rights, in the usual form, to the protection of the court; and the bill was taken as confessed by J. McCamly, the other defendant, as an absentee. The cause was heard upon the bill, and upon the answer of the infant defendant, and upon the report of the master to whom it was referred to take proof .of the facts and circumstances stated in the bill.

      O. L. Barbour, for the complainants.

      J. Rhoades, for the infant defendant.
   The Chancellor.

The lot intended to be conveyed was sufficiently described in the contracts by the description of the lot in West Pulteney township in the town of Riga, a known by the name of the Buck lot” although the number of the lot was left in blank. And if the deeds to the complainants had described it in the same manner as the lot in that towmship known by the name of the Buck lot, the title would undoubtedly have passed to the grantees in those deeds notwithstanding the mistake in the number of the lot. The evidence of Brewster, therefore, as to what took place at the time of the drawing of those deeds and the execution thereof by Buck and the defendant J. McCamly, is sufficient not only to show, as against the latter, that he had executed those contracts, but that the conditions of the contracts had been complied with on the part of the complainants, so as to entitle them to conveyances according to the terms of the contracts. The complainants, therefore, are entitled, as against him, to a decree correcting the mistake and requiring him to convey all his interest in the Buck lot, as tenant by the curtesy in the estate of his deceased wife. And he must also procure conveyances of the reversionary interest of his daughter in the premises, so as to perfect the titles of the complainants according to the terms of his contracts, or must pay them all damages they may respectively sustain by reason of the defect in their titles. The defendant J. McCamly, and all persons claiming title to the premises under him, must be perpetually enjoined from prosecuting any suit or suits against the complainants respectively, their heirs or assigns, to recover possession of the lands mentioned in the contracts.

But as the mother of the infant defendant did not execute and acknowledge these contracts in the manner prescribed by the 10th section of the chapter of the revised statutes relative to the proof and recording of conveyances of real estate, so as to make them binding upon her, as ex-ecutory contracts for the sale of her interest in the premises, under the 39th section of that chapter, (1 R. S. 758, 762,) there can be no decree for a conveyance against the infant defendant as her heir at law. To authorize a decree against a feme covert, or her heirs, for the specific performance of a contract to convey her lands, she must not only have signed the contract with her husband, but have also acknowledged it before the proper officer, upon a private examination apart from her husband. It is true a court of chancery sometimes enforces a charge created by a feme covert upon her separate estate in the hands of her trustee. But it is upon the principle of the court that, as to such separate estate, she is to be considered and treated as a feme sole, and the charge upon the estate is in the nature of an appointment of her equitable interest in the trust estate. (Field v. Sowle, 4 Russ. Rep. 112. Rutter v. Buckingham, 5 Day’s Rep. 496. Wright v. Rutter, 2 Ves. jun. 676.) But where the legal estate is in the wife, except in the case of a non-resident of the state, her deed or contract, conveying or agreeing to convey such estate, if not acknowledged according to the statute, is a mere nullity, in equity as well as at law. And where she joins her husband in a contract to convey such estate, if she does not acknowledge the contract in the manner specified in the statute in relation to conveyances by married women, it must be considered, in this court as well as in courts of law, the agreement of the husband only. And such was the decision of this court and of the court for the correction of errors in the case of Martin v. Dwelly, (6 Wend. Rep. 9.)

The deeds of lot No. 123, which were executed and acknowledged by Mrs. McCamly are no evidence of an agreement on her part to convey her interest in No. 103, the Buck lot mentioned in the contracts. Nor is there a particle of proof in this case that at the time she executed and acknowledged those deeds she supposed she was conveying her interest in the last mentioned lot. Neither the officer who took her acknowledgment, nor the subscribing witness to the previous contracts, have been examined to show what took place at the time of such acknowledgment, or that her name affixed to the contracts was in fact written by her. Although we may conjecture that she would have executed and acknowledged deeds of the lot she really owned, as readily as she did the deeds of lot No. 123, it is impossible that any one should know that she would have done it. Therefore if she had been competent to contract as a feme sole, there is nothing in the case that would authorize the court to make a decree against her infant daughter, upon the facts as they appear in the master’s report. And as the common law rendered her incapable of conveying, or of contracting to convey, her interest in the premises in question, except by a written instrument duly acknowledged by her, and containing a proper description of the land, no state of facts which can by any possibility be established in this case will be sufficient to entitle the complainants to a decree against the infant defendant.

The bill must therefore be dismissed, as to her, with costs to her guardian ad litem who has been appointed by the court to protect her rights in the suit. The decree is to be without prejudice, however, to any rights the complainants may have at law against Buck or J. McCamly, upon the original contracts, for the damages they may have sustained by the non-fulfilment thereof, if they shall fail to obtain satisfaction for such damages under the decree against the absentee, or his property in this state.

Decree accordingly.


text:
    Jones vs. Grant and others.
    1843. October 17.
    A decree may be made between co-defendants, according to the justice and equity of the case, founded upon the pleadings and proofs, between the complainant and such defendants-
    The court may also make a decree between co-defendants for contribution, or a decree over in favor of one defendant against another, founded upon facts stated in the complainant’s bill, and which are admitted by the defendant, who is sought tobe charged by his co-defendant, either by his suffering the bill, stating such facts, to be taken as confessed against him, or by a direct admission of such facts in his answer.
    But no such, decree can be made between co-defendants, founded upon matters not stated in the bill, nor in litigation between the complainant and the defendants or either of them.
    It seems that relief will be granted as between co-defendants, on the foot of the final decree, upon motion or petition, founded upon matters stated in the complainant’s bill and which are not in dispute between such defendants; without resorting to a supplemental bill in the nature of a cross bill against the defendant sought to be charged.
    This case came before the chancellor upon a petition of the executors of D. W. Cole deceased, for an order for summary relief, upon the foot of the decree in this cause, against Allen and Robinson, two of their co-defendants, on the following state of facts : In September, 1835, A. P. Grant, and Cole the intestate, purchased a lot of land in East Oswego, and gave back a mortgage for the purchase money, $3500 and interest, payable to G. Smith in ten annual instalments; but which bond and mortgage belonged to Smith and Jones. In December thereafter, Allen and Robinson purchased of Cole his interest in the premises, and, as the petitioner alleged, agreed to pay the one equal half of the bond and mortgage to Jones, and to save Cole harmless. Smith subsequently assigned the bond and mortgage to Jones, and guaranteed the collection thereof. In 1840 Jones filed a bill to foreclose the mortgage, and made Allen and Robinson, and the executors of Cole, as well as Grant, parties to the suit; stating in the bill that Cole had in his lifetime conveyed his interest in the mortgaged premises to Allen and Robinson, subject to the mortgage. But it was not charged in the bill that they had assumed the payment of the half of the amount due and to become due thereon, or that they had agreed to indemnify Cole against the same. Allen and Robinson suffered the bill to be taken as confessed, and the executors of Cole put in an answer setting up the alleged agreement to pay the half of the bond and mortgage. And the cause was brought to a hearing upon bill and answer as to them • and of course without any proof of such agreement. The decree directed a sale of the premises in the usual form ; and that Grant, the surviving mortgagor, pay the deficiency, with liberty to apply to the court upon the foot of the decree, against the executors of Cole for contribution, if he paid more than his proportion ; and that if the deficiency could not be collected of Grant, the executors of Cole pay such deficiency in the due course of administration j and in that case, that such executors have leave to apply to the court for an .order that Allen & Robinson repay them such sum or sums as such executors might be obliged to pay under that decree. The premises were afterwards sold by the master, and were bid in by Smith, the original mortgagee, for the sum of $100; leaving a deficiency due and to become due. of about $3500. Smith afterwards paid Jones the deficiency, and called upon the executors of Cole to pay the same according to the decree, or to take the property and pay the same, together with the amount of his bid. And they finally made an arrangement with him by which they paid him $1000, and were to have a conveyance of the premises bid in by him, upon paying the residue of the deficiency and the $100 bid, and interest, in ten equal annual payments.
    J. V. L. Pruyn, for the petitioners.

      L. H. Sandford, for the defendant Robinson.

      W. F. Allen, for himself, in person.
   The Chancellor.

It is the constant practice of the court to make a decree between co-defendants, according to the justice and equity of the case, founded upon the pleadings and proofs between the complainant and such defendants ; and such was the decision of the house of lords in the case of Chamley v. Lord Dunsany, (2 Sch. & Lef. Rep. 718,) where the decree of Lord Redesdale was affirmed, It is also competent for the court to make a decree between co-defendants for contribution, or a decree over in favor of one defendant against another, founded upon facts stated in the complainant’s bill, and which are admitted by the defendant, sought to be charged by his co-defendant, either by his suffering the bill stating such facts to be taken as confessed against him, or by a direct admission in his answer. Such was the decree in this case, between Grant and the executors of Cole; as it appeared from the bill, and which was not denied by either party, that Grant and Cole gave the bond and mortgage jointly, and were therefore prima facie liable to contribution as between themselves in payment of the deficiency, although the debt, at law, survived as against Grant. But no such decree can be properly made between co-defendants, founded upon matters not stated in the bill, nor in the litigation between the complainant and the defendants or either of them. (Elliott v. Pell, 1 Paige’s Rep. 263.) Here the answer of the executors did indeed set up the alleged agreement between their testator and their co-defendants Robinson and Allen 5 and it was properly set up for the purpose of having a provision inserted in the decree reserving their rights in relation to those co-defendants. But as Allen and Robinson knew nothing of that answer, and had only admitted the facts stated in the bill by suffering such bill to be taken as confessed, and the new matter set .up did not affect the complainant’s rights, in any way, and was not put in issue, no decree in favor of the executors could be founded upon that answer. Nor did the court profess to make any such decree in this case; but merely reserved to them the right to apply to the court upon, the footing of the decree made in the cause, for payment in such manner as they might be advised.

If the payment had actually been made in this case, in conformity to the terms of the decree, after the remedy against Grant'had been exhausted by the return of án execution unsatisfied, and there had been no dispute as to the fact of the alleged guaranty, I am not prepared to say that this court could not, upon motion or petition, have given the proper relief; without the necessity of filing a supplemental bill, in the nature of a cross bill, against Allen and Robinson and against Grant. But the relief sought for in this case arises partly upon a new state of facts, founded on an agreement made between the petitioners and Smith, the purchaser at the master’s sale. And although the arrangement which they have made appears to be more beneficial to Allen and Robinson, if they were in fact bound to indemnify the executors against the whole claim of the mortgagee for the deficiency, than the actual payment of the money would have been, it does not appear to be a proper case to grant the relief prayed, upon a summary application by petition.

The petition must therefore be dismissed; but without prejudice to the rights of the petitioners to proceed either by a suit at law, or by a bill in equity, founded upon the decree in this cause and the matters stated in their petition, to recover compensation in damages, or to carry into effect the alleged agreement between their testator and Allen and Robinson. And neither party is to have costs as against the other upon this application.

       A decree will not be made between co-defendants upon matters which are entirely distinct, and have no immediate connection with the subject mat-tor of the complainant’s suit. (Morrice v. Sanford, in House of Lords, September, 1844; 8 Lond. Jur. Reports, 967.)


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    Merritt vs. Lambert.
    1843. October 17.
    Where in a suit for the specific performance of a contract for the exchange of lots, a receiver of the rents and profits of the premises in controversy had been appointed, and pending the suit the defendant sold his interest in one of his lots to'a stranger, and such purchaser employed the defendant’s solicitor to conduct the defence for him, and agreed to give such solicitor all the rents and profits of the premises pending the litigation, in addition to the taxable costs of the defendant, who still retained a part of the premises in controversy, as an extra conpensation for his services ; Held, that such rents and profits constituted a part of the subject matter of the litigation, and that the agreement to give the same to the solicitor for his professional services was void j and that the solicitor was only entitled to his taxable costs as between solicitor and client.
    Attorneys and solicitors are public officers,- and are under the control of the courts in which they practice, in regard to their behavior to their clients, and to the contracts which they make with them. And when they accept retainers • from their clients they are bound to serve them for the stated fees allowed by law for their services. But where the attorney or solicitor is also a counsellor of the court, and agrees with his client to perform the duties of counsel for him, upon the hearing or trial of the cause, or upon the argument of special motions, he may stipulate with his client to receive a reasonable reward for the services performed by him as such counsel.
    But neither an attorney or a solicitor or a counsellor of the court will be allowed to contract with his client, previous to the termination of the suit, for a part of the demand, or subject matter of the litigation, as a compensation for his services.
    Where the client makes a summary application to the court, against his attorney or solicitor, instead of instituting a suit against him, to compel such attorney or solicitor to do him justice, the latter is entitled to the benefit of using his own affidavit in resisting such application.
    This cause came before the chancellor upon an appeal by J. Wallis, one of the solicitors and counsellors of this court, from an order of the vice chancellor of the first circuit-, made upon the application of Alphonse Loubat,' who was a purchaser pendente lite of part of the property which was in litigation in this cause. The appellant was employed originally by the defendant, John Lambert, to defend this suit; which was brought against him by the complainants for the specific performance of a contract to exchange two several lots of land with them, for certain other property in Buffalo the title to which eventually failed. And the bill in this cause was thereupon dismissed without costs to either party 3 and the decree of dismissal was affirmed on appeal to the chancellor, with costs to the defendant, to be paid by the appellants on the appeal.
    During the pendency of the suit the complainants obtained the appointment of a receiver of the rents and profits of both lots | which rents and profits came into the hands of Wallis, as the solicitor, under the final decree. And the net amount of the rents and profits of the lot of Loubat which thus came into the hands of the solicitor was about $1500. After the order for the appointment of the receiver was made, Wallis wrote to Loubat, informing him that the vice chancellor had made such an order, and that it had been affirmed upon appeal to the chancellor; that as the complainants had filed a notice of the pendency of the suit, at the time it was commenced, the rent of the house subsequently sold to him by the defendant would be taken out of LoubaVs hands at once, unless the order appointing the receiver should be immediately stayed ; that the lot retained by Lambert being mortgaged to nearly the amount of its value, he felt but little interest in the matter, but was willing to join Loubat in such further proceedings as might be necessary 3 and that it would rest with Loubat to determine whether any thing further was to be done in the business. After the receipt of this letter, A. B. Anderson, a lawyer who had examined the title for Loubat on his purchase and informed him that it was good, called upon Wallis, as the agent of Loubat, and employed him to defend his title to the lot in the litigation. And the terms upon which Wallis undertook to act as solicitor for Loubat, as well as for the defendant on record in the suit, formed the subject of controversy, between the appellant and respondent. The former swore, in substance, that Anderson, as the agent of Loubat, agreed to give him all the rents and profits of the lot, pending the litigation, for his share of the expenses of the defence 3 in addition to what the solicitor should receive from Lambert, the defendant, and what might be recovered from the complainants if Lambert should succeed in the defence of the suit. And in this respect Wallis was, to some considerable extent, sustained by the affidavits of his sons and others who heard conversations on the subject between him and Anderson. On the contrary, Anderson swore positively that Wallis agreed with him to carry on the defence of the suit for Loubat, for the sum of $200; after he had communicated Wallis’ proposal to that effect to Loubat and obtained his consent to have the agreement concluded on those terms. And Loubat swore that Anderson informed him, at the time, that he had concluded the agreement on those terms. The vice chancellor directed a reference to a master to ascertain and report the amount of the rents and profits of Loubat’s lot which had been received from the receiver by Wallis as the solicitor in this suit 5 and also to ascertain and report what reasonable counsel fees should be allowed to Wallis for his services as counsel in this cause from its commencement, in addition to his costs to be taxed as between solicitor and client; and that upon the confirmation of the master’s report Wallis should pay over to Loubat the balance, if any, of such rents remaining in his hands, after deducting therefrom such taxable costs and such reasonable counsel fees as should have been allowed him by the report of the master.

      A. L. McDonald, for the appellant.
    The agreement between Lambert and Loubat as made by their respective solicitors was not void for champerty or maintenance. The question of maintenance depends on the validity of the sale by Lambert to Loubat, pendente lite. Before the adoption of the revised statutes such a sale would have been deemed void. (8 John. Rep. 479.) But the revised statutes (2 R. S. 692, § 5,) authorized the sale by Lambert, he being in possession. A man in possession of land, may now sell and convey it pending a suit concerning it. (21 Wend. 98.) As the conveyance to Loubat was a lawful conveyance and transferred the title to him, he acquired an interest in the subject matter of the suit, and might therefore lawfully maintain it. (Thalimer v. Brinckerhoof 3 Cowen, 623.) And might maintain it by an agreement to apply for that purpose the rents of the premises. Lambert should have been made a party to the petition j he has an interest in the agreement.

      M. R. Zabriskie, for the respondent.
    The agreement was void, as by it the solicitor was to receive for his professional services a part of the subject matter of the litigation. This is champerty, an offence at common law. It was made a penal offence by the statutes of this state previous to the revision of 1830. (1 R. L. of 1813, p. 172.) Although the revisors have omitted the section of the statute making it a penal offence, the offence still exists at common law. An agreement that amounts to champerty cannot be maintained either in law or equity. (5 John. Ch. R. 44.) The agreement was also an agreement on the part of the solicitor to take an improper fee or reward for his services. And the court by its supervisory power over its officers and suitors will not enforce it. No attorney can be permitted to buy in things in a course of litigation, of which litigation he has the management. (Hall v. Hallett, 1 Cox’s Ch. Cas. 139, per Ld. Hardwicke. Miles v. Eswin, 1 McCord’s Ch. Ca. 524. Key v. Vattier, 1 Hammond’s R. 132. Thurston v. Percival, 1 Pick. R. 415. Rust v. Larue, 4 Little. R. 411.)
   The Chancellor.

The weight of evidence in this case, as to the terms of the agreement concluded between the appellant and Anderson, taking the affidavit of 'the appellant into consideration, unquestionably is that Anderson agreed that Wallis should have all the rents and profits of Loubat’s lot pending the suit, for attending to the defence for his benefit. And as the respondent has thought proper to make a summary application to this court to exercise its jurisdiction over its officer, to compel him to do justice to his client, instead of bringing a suit at law for money had and received to his use, the solicitor is entitled to the benefit of his own affidavit in resisting this application. And had Anderson been authorized by Loubat to make such an agreement as is detailed in the affidavit of Wallis, and if that agreement was such an one as this court could uphold, when made between one of its solicitors and his client whose rights were in litigation here, the vice chancellor should have dismissed the petition, upon the affidavits which were before him. I think the agreement, however, is such an one as this court cannot permit one of its solicitors to make with his client; and that the vice chancellor was right in supposing that the appellant was only entitled to his taxable costs, as between solicitor and client, and his reasonable counsel fees in the cause, notwithstanding the alleged agreement. Indeed, I think the order appealed from is more liberal than it ought to have been, in charging the respondent with the whole costs and counsel fees from the commencement of the suit, which was instituted long before Loubat had any interest in the property. That part of the costs of the defence w'as more properly chargeable upon Lambert, upon whose credit and for whose sole benefit the services were performed, than upon the rents and profits of Loubat’s lot, which accrued afterwards ¿ and which rents and profits Wallis obtained from the receiver, with full knowledge that they did not belong to Lambert the defendant.

The principles upon which the court proceeds, in cases of this kind, are stated with great clearness by Lord Hard-wick in the case of Walmesley v. Booth, as reported by Sergeant Barnardiston. (Barn. Ch. Rep. 478.) He there says, attorneys and solicitors are to be considered as public officers and ministers of justice. Upon this ground it is that in courts both of law' and equity they have stated fees allowed them for their services, and are under the government of the several courts in regard to their behavior to their clients. The courts exercise a much larger authority over them, and interfere much more in contracts which they make with their clients, than they do in "other cases. For which reason it is that courts, both of law and equity, and especially the courts of law, have certain rules in order to regulate the behavior of these persons, both with regard to their method of proceeding and to the satisfaction which they are to receive from their clients. Attorneys and solicitors, when they have accepted retainers from their clients, are bound to serve them for the stated fees which are allowed by the several courts. And if an attorney extorts more money from his client than the courts allow of, or makes a contract with his client to have more money, the courts will give relief. These principles were acted upon by Lord Hardwick in the subsequent cases of The Drapers Company v. Davis, (2 Atk. Rep. 295,) and Saunderson v. Glass, (Idem, 298.) Sayer also refers to a manuscript case in the king’s bench, in Hilary term, 32 George 2d, where an attorney had agreed with his client to be paid for his time at a certain rate by the day, and to be allowed the expenses of a post chaise. And the question was, whether the client should be bound by the agreement. The court decided that he should not; and referred the attorney’s bill for his services to be taxed. (Sayer’s Law of Costs, 321. See also Hob. Rep. 117.) Such continues to be the settled principles upon which all the courts in England proceed, in regard to contracts between attorneys and solicitors and their clients relative to their compensation for professional services previous to the termination of the litigation in which the client is engaged. (Middleton v. Wells, 1 Cox’s Ch. Cas. 112. 4 Bro. P. C. Toml. ed. 245, S. C. Newman v. Payne, 4 Bro. C. C. 350. Aubrey v. Popkin, 1 Dick. Rep. 403. Kenny v. Brown, 3 Ridg. P. C. 472. Crossley v. Parker, 1 Jac. & Walk. Rep. 440.)

The same principles are recognized by our courts, so far as they are applicable to the situation of the profession in this country. In England, the duties of attorney, or solicitor, and counsel are always performed by different persons ; and of course the attorney or solicitor cannot be permitted to stipulate for any greater compensation for his services than such as are allowed by the practice of the courts, of by the tariff of fees fixed by law. The same rule prevails here, so far as relates to the mere services of an attorney or solicitor. But as most members of the profession practice in the capacity of counsel, as well as in that of solicitor or attorney, if the client agrees with his solicitor or attorney to perform the duty of counsel also, upon the hearing or trial of the cause, or upon the argument of motions or petitions, the latter, in his character of counsel, may stipulate for a reasonable reward for his services as such counsel. And he is not limited to the counsel fees specified in the fee bill, and which are allowed as between party and party. (Adams v. Stevens & Cagger, 26 Wend. Rep. 451.) But he is not permitted, either as attorney or solicitor, or as counsel, to contract with his client, previous to the termination of the suit, for a part of the demand, or subject matter of the litigation, as a compensation for his services. (Thurston v. Percival, 1 Pick. Rep. 415. Livingston v. Cornell, 2 Mart. Louis. Rep. 281. Key v. Vattier, 1 Ham. Rep. 132. Rust v. Larue, 4 Littel. Rep. 411. Caldwell’s adm. v. Shepherd’s heirs, 6 Mon. Rep. 389. In Re Beakley, 5 Paige’s Rep. 311.) Here the contract which the solicitor says he made with his client, pending the litigation, (for Loubat having purchased pendente lite, with or without actual notice of the suit, must for the purposes of this application be considered a real party to the litigation,) was in effect that he should have all the rents and profits of Loubat’s lot, for his professional services, if he succeeded in the defence of the suit. And the right to those rents and profits was a substantial part of the litigation.

Again ; the alleged agreementwas void as being contrary to public policy, as it placed the interest of the solicitor directly in conflict with his paramount duty to his client. For the longer the decision of the suit was delayed, the greater would be his compensation in case he finally succeeded in the defence. His interest, therefore, was to use all the means in his power to prevent the cause from being put in readiness for a hearing and brought to a speedy termination ; while his duty to his client required that the final decision in the cause should be obtained with the least possible delay. And no court which has a due regard for the rights and interests of its suitors can sanction an agreement which puts the interest and the duty of an attorney or solicitor in opposition to each other.

The order appealed from must be affirmed with costs.


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    The Bank of Rochester vs. Emerson and wife.
    1843. October 17.
    Where there is a decree over against the mortgagor for the deficiency, in a foreclosure suit, upon the coming in and confirmation of the master’s report of the sale, and of the amount of such deficiency, no proceedings can be had upon such decree, to compel the payment of the deficiency, until the report has been filed and duly confirmed. And where an execution has been irregularly issued upon such a decree, before the report was confirmed, the court will not allow the report to be filed and confirmed nunc pro tunc, to the prejudice of other creditors who have obtained lions on or interests in the defendant’s property in the mean time.
    The court of chancery is authorized to correct the errors, and to supply the omissions, of its registers, clerks and other officers, when it can be done without detriment to the rights of third persons, and where substantial justice requires it to be done.
    Where a solicitor is not entitled by law to a credit, by the register or clerk, for services to be performed for such solicitor, the solicitor must pay the fees allowed by law for such services, before the register or clerk is authorized to perform such services. And the solicitor has no right to presume that the register will violate the law by performing the service when the fees are not paid, although requested to do so.
    The enrolled decree must be signed by the chancellor, or vice chancellor, and also by the register, or clerk, before it can be filed so as to authorize the issuing of an execution thereon; and it is irregular to file it without such signatures.
    It is a settled principle of the court of chancery, that equality among creditors is equity. And although a vigilant creditor will not be deprived of a preference over other creditors which he has obtained by his superior diligence, yet the court will not correct the mistakes of his solicitor for the mere purpose of securing to him such a preference at the expense of other creditors who have acquired rights in consequence of such mistakes.
    This was an-appeal by the defendants from an order of the vice chancellor of the eighth circuit, directing the master’s report of the sale of the mortgaged premises, and of the deficiency, to be filed as of the day when it was left in the clerk’s office by the complainant’s solicitor ; and that the order to confirm the report be entered, nunc pro tunc, as of that time. The complainant’s solicitor resided in Rochester, where the clerk’s office was kept, and he had been informed by the clerks in the office that his papers could not be filed, nor could other servicesbe performed for him, unless the fees therefor were first paid. On the 18th of December, 1841, he carried the master’s report to the clerk’s office to be filed, together with the draft of an order of confirmation, and laid them on the clerk’s table, to be filed and entered. But as the fees were not paid, the report was not filed, nor was the order to confirm the report entered until the 15th of January thereafter, when such fees were paid. In the mean time, the solicitor, supposing that the report of the master had been filed and confirmed, issued an execution for the deficiency, returnable the 14th of January ; which execution was returned unsatisfied. The complainants thereupon filed a creditor’s bill, against the defendant Emerson, to obtain satisfaction of such deficiency. An application was then made to the vice chancellor to set aside the execution for irregularity, upon an affidavit of these facts, and of the further fact that the enrolled decree on file had neither been signed by the vice chancellor nor by the clerk. The vice chancellor denied the motion, and his decision was submitted to by the defendants. Emerson afterwards pleaded in bar of the creditor’s bill, that the report of sale and of the deficiency was neither filed nor confirmed when the execution was issued ; which plea was allowed by the vice chancellor, and his decision was affirmed upon appeal to the chancellor. The complainants thereupon filed a replication to the plea, denying the truth thereof; and then made the application in this cause, to have the report filed and the order of confirmation entered nunc pro tunc, to enable them to show that the plea of the defendant in the creditor’s suit was false. In the mean time Emerson had made a conditional assignment of his furniture and other personal property, and of a claim which he held against the state, for the purpose of paying debts due to other creditors j which assignment was to take effect in case the creditor’s bill should be dismissed. He had also offered to the complainants to have such assigned property applied, rateably, to the payment of the deficiency in this cause and of the debts for the payment of which it had been conditionally assigned.
    The following opinion was delivered by the vice chancellor :
    Whittlesey, V. C. It would seem proper that any court should have power to supply omissions and cure defects in its proceedings and process, when they are merely clerical, and when the party was ignorant of their existence, and has gone on in good faith in the belief that no such omission or defect existed. This would seem to be more strikingly proper, when the omission or defect was the act of the officers of the court in which it occurred. Courts of law have gone a great way to cure such defects, even when they might in some measure affect the rights of third persons. (3 John. Rep. 526. 3 Cowen, 39, 42.) Courts of chancery, too, very frequently correct such clerical mistakes in proceedings before them ; as is every day’s practice in relation to master’s reports and even final decrees.
    The solicitor for the complainants has evidently acted in good faith, in the belief that the master’s report was filed on the 18th of December, 1841, when he left the papers at the clerk’s office; and as no objection was then made to the reception, I am inclined to think that he had a right to suppose that they were received. By the terms of the decree of sale in this cause, an execution could not properly issue until the report of sale was filed and confirmed. By the statute, (2 R. S. 191, ^ 152,) the court has power, on the coming in of the report of sale, to make a personal decree for the deficiency, and issue execution therefor. It would seem- that the decree of sale in this case was made upon a bill taken as confessed, in which case the clerk was entitled to no fees for filing the report, though he would be for entering the order to confirm. The withholding of the fees should therefore have been no objection to the filing of the report, and as that paper was laid on the table before the clerk, it was without doubt such a coming in of the report as would satisfy the statute, so that the granting of the order asked is not contravening the provisions of any statute. If the clerk declined to receive the papers because the fees were not paid,, he should have made that objection at the time; and as it is assumed it was not made, the solicitor might reasonably believe that the papers were received. This belief would materially be strengthened by the subsequent sealing of the execution by the clerk, as he is not to suffer any such process to pass the seal without it is authorized. And this execution would not be authorized unless the report had been previously filed and an order entered for its confirmation.
    It does not appear that any third person is to be injured by the amendment. If the injunction issued upon the creditor’s bill does not hold, the defendant can make a more satisfactory disposition of his assets, both as to himself and to some of his creditors, who may thus be benefitted. But this is not an injury which the law can take notice of, nor have such preferred creditors as yet acquired any rights which can be affected. The defendant may possibly be affected as to the costs by having the plea, upon which issue is joined, proved against him, by reason of this amendment. But if it does not affect the question of costs, a proper provision can then be made as to them.
    The only question with me is, as to the delay in making application for this amendment. It would seem that it should have been applied for early after the necessity was discovered. (Rogers v. Rogers, 1 Paige, 188.) This however may be deemed to be excused by the fact that the complainants, though knowing the fact's, did not admit the necessity of amendment, and believed it was sufficient as it stood. This erroneous impression has been corrected by the recent decision of the chancellor, on an appeal involving that question ; and they make this application immediately after such decision.
    Upon the whole, I think the complainants are entitled to have the defect cured as asked by their notice. And it is ordered that the master’s report of sale, and the order of confirmation, actually filed and entered January 5, 1842, be deemed to be filed and entered as of December 18, 1841, upon payment to the defendant of the costs of opposing this motion.

      S. Matthews, for the appellants.

      E. F. Smith, for the defendant.
   The Chancellor.

There is no doubt as to the right of this court to correct or supply the errors or omissions of its clerks and other officers, whenever it can be done without detriment to the rights of third persons, and where substantial justice requires it. As no fee was chargeable by the clerk upon filing the master’s report in a foreclosure suit where the bill had been taken as confessed, it would have been the clerk’s fault, that the report was not filed 'at the time it was left in his office, if the solicitor had informed him of that fact. But the .clerk had no right to enter the order to confirm such report, until the fee allowed by law for that service was paid ; unless he chose to pay the fee himself which belonged to the state. And as the solicitor had previously been told that services could not be performed for him in the office until the fees for such services were paid, he had no right to presume that the clerk would violate the law, by entering the order of confirmation, unless the fee for entering it was previously paid; or that the clerk would pay such fee for him. Nor was it necessary for the subordinate clerks in the office to inform him, every time he came there to have any thing done, that the fees must first be paid ; when they knew he was already aware of that fact. It was an error of the clerk, however, to seal the execution without examining the minutes of proceedings in the cause, for the purpose of seeing whether the report of the master had been duly confirmed. It was also his mistake that the enrolment of the decree was filed without having been previously signed by himself and by the vice chancellor.

Although the solicitor swears that he supposed the report was confirmed at the time he issued the execution, and that all the proceedings in this suit, after the 18th of December, 1841, were had in good faith, and in confidence that the clerk had filed the report and entered the order for confirmation on that day, it appears that he afterwards learned that such was not the fact. And he does not state that he was not aware of the fact, that the order of confirmation was entered after the return day of the execution, at the time the proceedings in another suit were instituted, by the filing of a creditor’s bill. On the contrary, I think it is fairly inferrible from his own affidavit, and from that of Murdock which was read in opposition to this motion, that the complainants’ solicitor learned that the report had not been filed and confirmed, at the time he paid the fees, on the 15th of January ; and that he paid the fees at that time because he was then informed that it was necessary that the same should be paid before the report could be filed and the order for confirmation entered. If the complainants had not notice of the irregularity at the time of filing the creditor’s bill, it must therefore have been the fault of the solicitor in .this suit, in neglecting to inform the officers of the bank, or the new solicitor who filed that bill, of the true state of facts. The new solicitor, however, does not state in his affidavit that, at the time that bill was filed, he was ignorant of the fact that the order to confirm the report was entered after the return day of the execution. And from my recollection of the language of that bill, which was before me in February last upon the appeal, I am induced to believe that the person who drew it was aware of the fact that the report had not been confirmed when the execution for the deficiency issued. For there was no distinct averment that the report was filed, and an order entered for its confirmation, on the 18th of December, 1841, (which was stated in the bill as the time when the master made his report showing the amount of the deficiency on that day,) although the bill was so carefully drawn as to leave it to be inferred that such was the fact.

But if no injury would result to any one by the order to file the report and enter the order of confirmation nunc pro tunc, so as to overreach the issuing of the execution, the court perhaps should not permit the complainants to be prejudiced by the neglect of the solicitor. The necessary effect of the order appealed from, however, will be not only to subject the defendant to the costs of having his plea overruled as false, when such plea was in fact true at the time it was put in issue by the replication, but also to give these complainants a preference over other creditors, who are now entitled to payment of their debts, out of the assigned property, if the creditor’s bill which had been prematurely filed should be dismissed.

It is a settled principle of the court of chancery that equality among creditors is equity. And although this court will not deprive a vigilant creditor of any preference he may have obtained, over other creditors, by his superior diligence, it would be a violation of that principle of equity, to correct the .mistakes of his own solicitor, for the sole purpose of giving him a preference in payment j at the expense of other creditors, for whose benefit the debtor has made such a contingent assignment of his property as is mentioned in the affidavit of the appellants.

The order appealed from must therefore be modified, so as to make the permission to file the report, and to enter the order of confirmation nunc pro tunc, depend upon the condition that the complainants, within ten days after service of notice of the order, shall stipulate that the appellant may withdraw his plea to the creditor’s bill, without costs; and that the contingent assignment for the benefit of other creditors, referred to in the affidavit of Emerson, shall in no way be prejudiced by the creditor’s bill referred to, but shall have the same effect, so far as the interests of those creditors are concerned, as if that bill had been dismissed. And that if such stipulation is not given, within the time required, the application of the respondents must be denied with costs, including the costs of the appellant on this appeal.


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    Baker, executrix, vs. Kingsland.
    1843. October 17.
    The copy of the docket of a judgment is not legal evidence to prove the existence of such judgment, except in special cases provided for by statute; but the record of the judgment, or a sworn or exemplified copy thereof, must be produced.
    Previous to the act of April, 1843, which made a judgment recovered against the personal representatives of the decedent, upon a trial on the merits, prima facie evidence of the existence of the debt, before the surrogate, upon an application for an order to sell or mortgage the real estate for the payment of debts, such a judgment was no evidence whatever of the existence of the debt, as against the real estate of the decedent in the hands of his heirs or devisees.
    And even since the statute of 1843, the record of the judgment against the personal representatives of the decedent, or an authenticated copy thereof, must be produced before the surrogate, in order that he may see, by the inspection thereof, that the existence of the debt of the decedent was put in issue by the pleadings, and was passed upon by the jury, so as to constitute a trial of the case upon the merits, within the intent and meaning of the statute.
    Before a surrogate is authorized to make an order, for the sale or mortgaging of the estate of the decedent, for the payment of debts, he must be satisfied by legal proof that the debts, for the payment of which the application is made, are justly due and owing, as against the owners of such real estate.
    This was an appeal from a decision of the surrogate of New-York, directing that the real estate of. W. S. Baker deceased should be mortgaged for the payment of his debts; and that his executor and executrix should give security, according to the statute, on or before the 24th of February, 1843, or in case of their neglect, that a disinterested freeholder be appointed to discharge the duty. The proceedings were instituted by the respondent Kingsland, who claimed to be a creditor of the decedent. The indebtedness was denied by the appellants. And the only evidence which Kingsland produced before the surrogate, to prove the existence of his debt, was a copy, from the supreme court clerk’s office, of the docket of a judgment against the executor and executrix of the decedent. The appellants insisted, before "the surrogate, that if any such judgment had been entered, it was irregular, and in violation of an order of the supreme court, which directed all proceedings in the suit against the executor and executrix to be stayed. The appellants also insisted, before the surrogate, that the respondent was bound to establish the debt, irrespective of any judgment he might have obtained against the personal representatives of the decedent.
    The respondent neglected to answer the petition of appeal, after it had been served upon the solicitor, who had appeared for him before the surrogate, with a notice of the order to answer the same, as directed by the 118th rule of the court of chancery. And an order was thereupon entered that the appeal be heard ex parte, as against the respondent.

      S. F. Clarkson, for the appellants.
   The Chancellor.

If the judgment against the personal representatives of the decedent had been even prima facie proof of the original indebtedness, the copy of the docket of the judgment, in the supreme court, was not legal evidence that any such judgment had been recovered. Since the act of 1840 took effect, no docket of a judgment subsequently recovered in the supreme court, is valid for any purpose, unless it is entered in the county clerk’s office. And the copy of the docket never was legal evidence to prove the existence of a judgment, except in some special cases provided for by statute. The record of the judgment, or a sworn or exemplified copy thereof, must be produced. Even since the act of April last, (Laws of 1843, p. 228,) which make a judgment recovered against the personal representatives of the decedent, upon a trial on the merits, prima facie evidence of the debt, before the surrogate, upon an application for an order to sell or mortgage the real estate for the payment of debts, the record of the judgment, or an exemplified or sworn copy thereof, must be produced; in order that the surrogate, from an inspection thereof, may see that the existence of the debt was put in issue by the pleadings, and was passed upon by the jury, so as to constitute a trial of the cause upon the merits, within the meaning of the statute.

The appellant’s counsel is also right in supposing that, as the law stood when this case was before the surrogate, a judgment against the executors was no evidence whatever to establish the existence of the debt, for the purposes of the application which was then pending. The object of the proceeding is to establish a debt, for the purpose of divesting the heirs or devisees of "the decedent of their interest in his real estate, by a sale. Independent of the express provision of the act of 1837, (Laws of 1837, p. 536, § 72,) that upon such an application the debt is to be established in the. same manner as if the judgment against the executor or administrator had not been recovered, it was previously well settled that as there was no privity between the personal representatives of the decedent, and his heirs or devisees, in respect to his real estate. Neither an admission of the former, on oath, nor the recovery of a judgment against them, was therefore admissible as evdence of a debt due from the decedent, as against the owners of the real estate either by descent or devise. (See Mason's devisees v. Peters' ex'rs, 1 Munf. Rep. 437 ; and Osgood v. The Manhattan Company, 3 Cowen's Rep. 612.) And before the surrogate is authorized to make any order for the mortgaging, leasing or sale of the real property of the decedent, he must be satisfied, by legal proof, that the debts, for the purpose of satisfying which the application is made, are justly due and owing from the testator, or intestate, as against the owners of the real estate.

The order appealed from was therefore erroneous, and must be reversed with costs. And the respondent’s application to sell or mortgage the real estate must be dismissed; but without prejudice to his right to institute new proceedings for that purpose, upon due proof of his debt, according to the provisions of the law now in force.


text:
    Gay and others vs. Gay.
    Where one of the copartners in a mercantile film filed a bill against his co-partner for an account and settlement of the copartnership transactions, and to obtain his share of the profits of the firm in the hands of the defendant, and the defendant at the time of the commencement of the suit was an endorser, for the complainant, upon notes on which the holders after-wards recovered judgments, against such complainant, and the defendant who was liable as such endorser paid the judgments, and took an assignment thereof, for his protection and indemnity, before the termination of the suit for an account; Held that the endorser had an equitable claim to offset such judgments against the balance which might be found due to the complainant, who was insolvent; notwithstanding the complainant had assigned all his interest in the suit to a third person, pending the suit, but after the judgments had been assigned to the endorser.

      Held also, that the proper mode to obtain such set-off, by the defendant in the suit for the account, was by filing a cross bill; and not by a summary application to the court, previous to a final decree for the balance found due to the complainant, by the report of the master to whom it was referred to take an account of the copartnership transactions.

      Held further, that as the assignees, to whom the complainant had assigned his interest in the suit, after the balance due to him had been liquidated by the master, had filed a bill in the nature of a bill of revivor and supplement, to have the benefit of the former proceedings and to obtain a decree for the payment of the amount reported due, the defendant was authorized to claim the right of set-off in his answer to such bill; so as to obtain the benefit thereof at the hearing in such supplementary suit.
    The assignee of a chose in action, the assignment of which is available to him in equity only, takes it subject to all the equities which existed against it in the hands of the assignor; including the equitable right of set-off, if any such right existed against the assignor.
    Where the defendant, by mistake, obtained a separate order for a set-off to which he was entitled, instead of having it made a part of the decree in the cause, and the adverse party by a similar slip had lost his opportunity to obtain a reversal of such erroneous order, upon appeal, the court refused to open the default of the latter to enable him to obtain such reversal.
    Where the proceedings of a party in a suit, in obtaining the default of his adversary, are strictly regular, and the substantial justice and equity of the case is with him, the court will not open the default; for the mere purpose of enabling the adverse party to raise technical objections, and thus to entangle justice in the net of form.
    1843. October 17.
    Where there are cross demands, between two parties, of such a nature that if both were recoverable at law they would be the proper subjects of legal offset, if either of such demands is recoverable in equity only, and a suit is brought upon it in the court of chancery, the defendant may offset his demand against it; in the same manner as if both wore recoverable at law, and the suit had been brought against him in a court of law.
    Where the appellant himself draws up and enters an interlocutory order, or decree, he has fifteen days after the entry thereof to appeal from the same. And the order or decree will be considered as entered at the time it is left with the register or clerk to be copied into the minutes of decrees, after it is settled and allowed by him.
    But where the order or decree is drawn up and entered by the respondent’s solicitor, the appellant has fifteen days, to appeal from the same, after he is served with a copy of such order or decree, or with a written notice that the order or decree is entered. A mere constructive notice of such entry, or a notice thereof by parol, is not sufficient to limit the right of appeal in such a case.
    The right to set off one judgment or decree against another, upon motion in the court of chancery, or by a summary application to the equitable powers of a court of law, exists only in those cases where the debts on both sides have been finally liquidated, by judgment or decree, before the assignment of either of them to a third party for his own benefit.
    Upon a bill filed in the court of chancery for an equitable set-off, the right to have such set-off does not always depend upon the statutes of set-off; nor upon the question whether both demands have been liquidated, by judgment or decree.
    Where an equitable right of set-off exists while the parties have mutual demands against each other, as in the case where the demand due to the party claiming such set-off is so situated that it is impossible for him to obtain satisfaction of such debt by an ordinary suit to recover the same, the court of chancery, upon a bill filed for that purpose, will compel an equitable set-off of one debt against the other. And the insolvency of the party against whom the set-off is claimed is a sufficient ground to authorize the court of chancery to grant relief, in such a case.
    This case came before the chancellor upon the application of E. A. Jee, A. W. Jee, and P. R. Morrison, three of the complainants, to vacate an order, taken by default, dismissing their appeal in this suit; and also to open a decree, obtained upon an ex parte argument, in the cross appeal of the defendant John S. Gay, and to dismiss that appeal.

      In September, 1837, the complainant James P. Gay filed his original bill in this cause against the defendant John S. Gay, for an account and settlement of a copartnership, which had existed between the parties, and- for the specific performance of an agreement for the conveyance of the undivided half of an oil mill free from incumbrances. And in July, 1838, a decree was made by the vice chancellor of the seventh circuit for the specific performance of the contract, and also to refer it to a master to take and state an account of the partnership transactions between the parties. Previous to the filing of such bill, the defendant J. S. Gay had become endorser, for the complainant J. P. Gay, of two promissory notes, to Wolf & Co., upon which notes a judgment was recovered against the complainant, on the 7th of May, 1838, for $518,65. And on the 14th of the same month the defendant in this suit, as the endorser of such notes, paid to Wolf 8c Co. the amount of the judgment and took an assignment thereof. In July, 1836, the defendant also became the accommodation endorser of another note to Pruyn & Co. for the complainant J. P. Gay, on which a judgment was recovered for $491,41, on the 7th of May, 1838, against such complainant; and the defendant J. S. Gay as such endorser, paid the amount of the last mentioned judgment, and took an assignment thereof on the 10th of May, 1838.
    The master reported a balance due from the defendant to the complainant, upon the copartnership accounts, and the complainant had then become insolvent, so that the judgments could not be collected from him. The defendant J. S. Gay, instead of filing a cross bill for the purpose of having the assigned judgments offset against the balance for which the complainant would be entitled to a decree, made an affidavit of the above facts, and annexed copies of the docket of the judgments, and served them upon the complainant’s solicitor, with notice of an application to have the same offset against the balance which might be found due to the complainant, and be decreed to him, upon the final hearing of this cause on the equity reserved. Upon the hearing, a a motion was made accordingly 3 and the same was decided by the vice chancellor in the same manner as he afterwards decided at the time of making the final decree and order upon the supplemental bill. But as it then appeared that J. P. Gay, the complainant had, on the 1st of April, 1839, subsequent to the master’s report, assigned all his interest in the balance due upon the partnership account, to the appellants E. A. Jee, A. W. Jee, and P. R. Morrison, in part payment of a judgment which they held against him, no decree or order could then be made, nor until the proceedings were revived, and such assignees were made parties to the suit.
    The original complainant, together with such assignees, thereupon filed their bill in this cause, in the nature of a bill of revivor and supplement, to make such assignees parties, and to have the benefit of the proceedings in the cause which had been had at the time of the assignment to them. The defendant put in his answer to that bill, setting up the assignment to him of the two judgments against the original complainant, long before the assignment of the demand of such complainant to the Jees and Morrison 3 and stating the proceedings which had previously taken place in the cause, and insisting upon his right of set-off. He also annexed to his answer, as a part thereof, copies of the original affidavits, assignments, and dockets of judgments, on which his motion for a set-off had been founded 3 averring that the facts stated therein were true.
    Upon the final hearing of the. cause upon this bill of revivor and supplement," and upon the motion for set-off, the vice chancellor made a decree that there was due to the complainant J. P. Gay, upon the copartnership account, $1068,50 3 which sum he decreed to be paid to the other complainants, as assignees of J. P. Gay, and that neither party should have costs, as against the other. And he directed a separate order to be entered, at the same time, that the complainant’s solicitor should be entitled to retain from the sum decreed to be paid by the defendant, the costs due him from his clients, and that the balance of such moneys be set off against the judgments due from ,the complainant J. P. Gay, which had been assigned to the defendant.
    On the 8th of May, 1843, the solicitor for the complainants drew up both the decree and order, and left them upon the clerk’s table to be entered ; and the clerk entered them accordingly. But no copy of the decree or order, or notice thereof, was served on the defendant, or on his solicitor. Nineteen days after the entry of the order, the complainants, E. A. Jee, A. W. Jee, and P. R. Morrison appealed from so much thereof as allowed any part of the offset claimed. And on the 7th of June thereafter, the defendant entered an appeal from so much of the order as allowed the complainants’ solicitor to retain his costs out of the balance due upon the copartnership account, as against the defendant’s claim of offset. On the 12th of June, notice of the last mentioned appeal, and notice of hearing of the same for the first Tuesday in July, was served upon the complainants’ solicitor, by leaving the same with his partner or clerk, in his office; the solicitor being absent from home. And on the same day, notice of a motion to dismiss the first appeal, as not being made in time, was served in the. same manner. D. Cady, of Albany, was employed to argue the appeals, and to resist the defendant’s motion to dismiss the first appeal. But he supposing that the chancellor was engaged in the court for the correction of errors, in New-York, and that the motion term would not be held at Saratoga Springs on the first Tuesday of July, did not attend. The motion to dismiss the first appeal was therefore granted, by default, and the second appeal was argued by the appellant’s counsel ex parte. And so much of the decree as was appealed from by the defendant was reversed.

      D. Cady, for the appellants in the first appeal.

      J. Rhoades, for the defendant John S. Gay.
   The Chancellor.

The excuse for not attending the special term is unquestionably sufficient, as the court for the correction of errors was in session until the first Tuesday in July. The counsel employed to argue the appeals and to resist the defendant’s motion, had therefore very strong reasons for believing that the chancellor would not be able to return in time to hold his special term, at Saratoga Springs, on that day, and that cases noticed for that term must stand over until the third Tuesday in July, under the general rule of the court. It would therefore be a matter of course to let these appellants in to resist the defendant’s motion to dismiss the appeal, and to open the decree made upon the cross appeal ex parte, upon the usual terms, if the substantial equity and justice of the case was with them. But where the proceedings of the other party have been technically regular, and he has obtained a decree or order which is in conformity with the real equity of the case, this court will not open a default, as a matter of favor, to enable these applicants to insist upon mere technical objections; and thus to give them an opportunity to entangle justice in the net of form. I therefore permitted the parties, on the argument of this motion, to go into the merits of the case, not only as to the regularity of the appeals, but also as to the equity of the defendant’s claim to offset the judgments due to him from James P. Gay, against the balance of the copartnership account which was assigned by the latter to the appellants E. A. Jee, A. W. Jee, and P. E. Morrison, pending the suit brought for the settlement of the copartnership transactions.

In relation to the regularity of the first appeal, although the appellant’s solicitor acted under a misapprehension as to the practice, I think the defendant’s counsel is right in supposing that it was not made within the time limited by the statute for appealing from an interlocutory order. The appeal from such an order must be entered, and notice thereof served on the adverse party or his solicitor, within fifteen days from the time that the appellant has notice of such order. And this court, in the case of The New-York Coal Company v. Dyett, (4 Paige's Rep. 274.) decided that where the appellant draws up and enters the order appealed from, he has notice in fact of the order at the time he enters the same. And an order is considered as entered from the time it is drawn up, or settled, and left with the register or clerk to be copied into the records of the court. In this case, the solicitor for the complainants actually drew up the order, as well as the decree, and left them with the clerk; or rather, he laid them before him on his table, to be entered, after showing his draft to the solicitor of the defendant; and without any direction to the clerk to consult such solicitor before entering the same in the records of the court. The order and decree must therefore be deemed to have been entered by the complainant’s solicitor, and at that time ; and the first appeal which was entered on the 27th of May, nineteen days afterwards, was too late. The time for appealing in this case, being fixed by statute, and not by a mere rule of the court, the appeal must therefore have been dismissed, even if the counsel had appeared to oppose the application on the first Tuesday of July ; as the court has no power to extend the time for appealing, in such cases. (1 Barbour's Chan. Prac. 400.)

When the party appealing does not himself enter the order or decree appealed from, he has fifteen days to appeal, after he has notice of the entry of such order or decree, either by the service of a formal written notice on him or his solicitor, or by the service of a copy of the order or decree itself. A mere constructive notice, or even a parol notice of the order, is not sufficient to limit the right of appeal in such a case. (Idem, 399. Wilde v. Jenkins, 14 Wend. 539.) The application to dismiss the defendant’s appeal must therefore be denied, even if the decree entered upon the ex parte argument should be opened.

Again ; I think the whole equity of the caséis with the defendant, in relation to the subject matter of both appeals; although there are some technical difficulties existing as to the manner in which the defendant has proceeded to enforce his equitable right of set off. The right to set-off one judgment or decree against another, by a motion to this court, or by a summary application to the equitable powers of a court of law, only exists in those cases where the debts on both sides had been finally liquidated, by judgment or decree, before the assignment of either to a third party. (Graves v. Woodbury, 4 Hill’s Rep. 559.) Where one debt, therefore, as in this case, is absolutely assigned to a stranger, pending the litigation, and before it is liquidated by a final judgment or decree, the same cannot be set off against the other, on motion, even in this court; where the two debts have no connection with each other. Upon a bill filed in this court for a set-off, the right of set-off does not always depend upon the statute, nor upon the question whether both demands are liquidated by judgment or decree. But if an equitable right of set-off exists, while the parties have mutual demands against each other, because the debt due to the party claiming the set-off is so situated that it is impossible for him to obtain satisfaction of such debt by an ordinary suit at law, or in equity, to recover the same, this court, upon a bill filed, will compel an equitable set-off of one debt against the other. And the insolvency of the party against whom the set-off is claimed is a sufficient ground for the exercise of the jurisdiction of the court of chancery, in allowing a set-off in cases not provided for by the statute, although the demands on both sides are not liquidated by judgment, or decree, so as to authorize’a set-off upon a summary application, by motion. (See Lindsay v. Jackson, 2 Paige's Rep. 581, and cases there referred to.) And where there are cross demands, between two parties, of such a nature that if both were recoverable at law they would be the subjects of legal offset, then if either of the demands is matter of equitable jurisdiction only, the set-off may be enforced in equity. (Clark v. Coit, 1 Craig & Phil. Rep. 154.)

In this case, it appears by the defendant’s affidavit, on which the motion for set-off was founded, and which by the admission of the complainant’s solicitor was served on him on the 1st of February, 1839, that J. P. Gay, the complainant, was then insolvent; that executions against him to a large amount had been returned unsatisfied $ and that the payment of the two assigned judgménts could not then have been enforced by executions thereon. This was two months previous to the assignment of his claim against the defendant in this suit j which assignment was not made until the 1st of April, 1839. Previous to that assignment, therefore, an equitable right existed in favor of this defendant, to have his two judgments set-off and applied^in satisfaction of the balance which should be decreed to be due from him, to the complainant J. P. Gay, on account of the copartnership transactious. And if John S. Gay-had adopted the proper technical proceedings to obtain such set-off, by filing a cross bill, instead of resorting to the informal mode of giving notice of a summary application for a set-off upon the final hearing of the cause upon the master’s report, it would have been a matter of course, upon these facts, to have made it a part of the decree that the amount due upon the two assigned judgments should be offset, against the balance found due from him by the report of the master. The assignees of the subject matter of this suit, therefore, took it subject to this prior equitable right of set-off which existed against it in favor of the defendant in this suit. For the assignee of a chose in action, the assignment of which is available only in equity, takes subject to all the equities which then exist against the assignor. (Ord v. White, 3 Beavan's Rep. 357.)

When the assignees of the original complainant, therefore, were obliged to file their bill in the nature of a bill of revivor and supplement, to revive and have the benefit of the former proceedings, it was competent and proper for the defendant, as he has done, to set up this equitable right of set-off, in his answer, and to claim the benefit thereof at the hearing. Here again, however, the defendant’s solicitor, by a technical slip, relied upon a summary application at the hearing, to obtain his set-off, by a separate order, founded upon aEdavits and documentary evidence of the facts, instead of proving those facts in the usual way, and having the set-off made a part of the decree in the cause. But as there is no doubt as to the facts in the case, and as the defendant has obtained such an allowance of the set-off as he was equitably entitled to, by a slip of the adverse party, it would be inequitable to open the decree upon the appeal, and to grant a rehearing, for the mere purpose of enabling the assignees to insist upon these technical objections to his right of set-off; even if the first appeal had been entered within the time prescribed by the statute. And as no costs were awarded to either party as against the other, in the suit to settle the copartnership account, no equity existed in favor of the complainant’s solicitor to have the costs, due to him from his own clients only, paid out of the balance found due upon the copartnership account •, to the exclusion of a part of the defendant’s right of set-off.

The motion must be denied, with ten dollars costs.