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

text:
    The Manhattan Company vs. Evertson and others.
    Where a creditor of a fraudulent grantee of real estate takes from him a mortgage on such estate as a further security of the previous debt, but without notice of the fraud, such creditor isnot protected against the prior equity and legal lien of judgment creditors of the fraudulent grantor, whose judgments Were recovered subsequent to the fraudulent conveyance but prior to the mortgage.
    A party claiming protection as a bona fide purchaser or mortgagee from the fraudulent grantee of real estate, must deny notice of the fraud, although notice thereof is not charged in the complainant’s bill. "
    Where the wife joins with her husband in a fraudulent conveyance to delay and hinder creditors from collecting their debts, her right to dower in the property is extinguished, although the conveyance is declared void as to creditors.
    A judgment recovered in the district or circuit court of the United States for the northern or the southern district of the state of New-York is a lien upon lands throughout the state, for the term of ten years from the time of docketing such judgment, in conformity to the local law of the state.
    It seems that a judgment in favor of the United States, recovered in one of the federal courts out of the state of New-York, is not a lien upon lands within that state from the docketing of the judgment; although, by the law of the United States, an execution on such judgment may be issued against the defendant’s property in any state of the Union.
    1837. April 18.
    The bill in this cause was filed to foreclose a mortgage given to the complainants by G. B. Evertson and his wife in 1824. A decree of foreclosure was entered, and a part of the mortgaged premises lying in the county of Delaware in the southern district of New-York, and in the towns of Galen and Ulysses in the northern district, were sold under the decree. The lands in Delaware county sold for #100 ; those in Galen for #900 ; and those in Ulysses for #11,500; the proceeds of which sales, after paying the debt and costs of the complainants, left a surplus of about #8,000. A reference was thereupon directed, according to the provisions of the 136th rule, to ascertain and report the rights of the several defendants in this surplus fund, and the priorities of their several liens thereon; The master decided and reported that J. Emott was entitled to priority of payment out of the fund for a debt of #1500, due from the mortgagor, secured by a deed of trust, and that he was also entitled to the interest thereon; that after the payment of that debt and interest, Mary Evertson, the widow of the mortgagor, was entitled to her dower in the residue of the fund; that Corlies, Mabbett & Co. who had obtained a judgment against the mortgagor in the supreme court in May, 1827, had a lien upon the fund and were next to be paid the amount due upon their judgment, with interest; that a judgment in the name of Flagler against G. B. Evertson and W. Davis as his surety, which had been paid by Davis and assigned to F. L. Davis as a trustee for him, was the next lien upon the fund, and that the assignee was entitled to payment of the amount due, although it appeared that G. B. Evertson had made an absolute conveyance of lands to W. Davis to secure the payment of that debt; that Smith & Howland and the Dutchess County Bank had liens upon the fund for the amount of then respective judgments against the mortgagor, docketed in May, 1828, and were next in the order of priority; that G. & F. Searls, who had recovered a judgment against the mortgagor in June, 1828, in the circuit court of the United States for the southern district of New-York, had a lien upon the fund for the whole amount of their judgment, although the proceeds of the lands lying in the southern district were much less than the amount due on such judgment, and that they were next to be paid; and that J. Lockwood, who had subsequently recovered a judgment in the supreme court against G. B. Evertson and J. R. Evertson for about $5,000, was entitled to the residue of the fund.'
    G. B. Evertson, previous to the recovery of any of the judgments against him, had conveyed the mortgaged premises to J. R. Evertson, who executed a seperate declaration of trust, among other things, to sell the same and after paying the incumbrances thereon to pay J. Emott $1500. And in October, 1828, J. R. Evertson mortgaged the Ulysses lands to Lockwood to secure the payment of the judgment against himself and G. B. Evertson. The counsel for Lockwood and J. R. Evertson, therefore, claimed that Lockwood’s mortgage and judgment should be paid next after the $1,-500 to Emott; and that J. R. Evertson was entitled to the whole of the residue- of the fund. This claim, however, was disallowed by the master, on the ground that the conveyances to J. R. Evertson were fraudulent and void as to the creditors of Evertson. some of whom had commenced suits for the recovery of their debts at the time these conveyances were executed. Lockwood and J. R. Evertson thereupon excepted to so much of the report as allowed interest to Emott on his debt of $1500, and as allowed dower to the widow in the residue of the fund. They also took a distinct exception as to the allowance of the claim of each of the judgment creditors, either as a lien upon the fund or as to their respective judgments being entitled to a priority in payment over the judgment and mortgage of Lockwood. A further exception was taken to the allowance of the claim of G. & F. Searls on the ground that it was not presented to the master in time. The vice chancellor, upon the hearing of the exceptions, allowed the same so. far as related to the widow’s claim of dower in the surplus fund and the claim of Davis under the Flagler judgment. The residue of the exceptions were disallowed. From the decision of the vice chancellor disallowing their exceptions to the report, except the first relative to the interest on Emott’s claim, Lockwood and Evertson appealed to the chancellor. They afterwards, however, stipulated to abandon the appeal as to the tenth exception, which related to the time within which the claim of G. & T. Searls was presented to the master.
   The following opinion was delivered by the vice chancellor upon the exceptions.

C. H. Ruggles V. C.

Emott is entitled, as stated in the master’s report, to $1500 with interest from the 19th February, 1827, the date of the deed of trust. The first exception to the master’s report is therefore overruled.

Mrs. Evertson, the widow of G. B. Evertson, is not entitled to dower in the surplus. I am inclined to the opinion that the deeds of the 12th and 19th of February, 1827, from G. B. Evertson and wife to J. R. Evertson was, as between the parties thereto, valid; that the whole title and interest of the grantors passed to the grantee, subject only to the trusts specified and expressed in the declaration of trust executed by J. R. Evertson, and that no beneficial interest reverted or resulted to G. B. Evertson and wife, or either of them, excepting what was so expressed and specified. But if it is otherwise, and all the beneficial interest of the grantors, after the performance of the specified trusts, resulted or reverted to G. B. Evertson, as contended by counsel, still Mrs. Evertson is not entitled to dower in that trust estate. (4 Kent's Com. 46. Banks v. Sutton, 2d ed. 2 P. Wms. 700. Choplin v. Choplin, 3 id. 229. 1 Cruise’s Dig. 488.) The second exception is therefore allowed. The deeds of the 12th and 19th February, 1827, were executed at a time when G. B. Evertson, the grantor, had become embarrassed in his circumstances and the grantee was his son, and no consideration appears to have been paid. Under these circumstances, although the trusts specified in writing are fair and honest and ought to be performed, and the deed are to be deemed valid to that extent, yet in all other respects they are inoperative as against the creditors of G. B. Evertson. The judgment therefore mentioned in schedule I of the master’s report, except the Flagler judgment, held in the name of T. L. Davis as assignee, which is mentioned hereafter, are liens on the fund, and are to be satisfied in their order.

With respect to the claims of Davis on the judgment in favor of Flagler, the facts are substantially as follows : In 1821, W. Davis became surety for Evertson to Flagler, on a bond for $2800, and for his indemnity he took from Evertson a conveyance, absolute on its face, for 100 acres of land in the town of Clinton and for two village lots on Cannon street in Poughkeepsie. He gave, however, to Evert-son a written instrument reciting the circumstances, and promising to reconvey when Evertson should discharge him from the bond. The conveyance was recorded in the book of deeds and not as a mortgage—the defeasance was not recorded at all. Flagler obtained a judgment on his bond against Evertson and Davis on the 18th of February, 1828, and on the first of April of that year this judgment was paid by W. Davis, who took an assignment of it to T. L. Davis as his trustee. Lockwood’s judgment was docketed October 30th, 1828, and on the 31st of December, 1830, W. Davis conveyed to J. L. Fonda, by an absolute deed, the lots oh Cannon street for $800. What has become of the title to the farm in Clinton does not appear, nor is there ariy evidence of the value of that farm or of the village lots. There is no evidence of the value of the rents and profits of these lands while they were in the possession of Davis. Nor is there any proof, except what arises on ldose inference, that the value of the lands and their profits, even according to Davis’s own estimate of them, have been applied to the Flagler debt. Upon these facts I cannot award any part of the fund in question to be paid at present to Davis on his claim. Whether he is entitled to any relief at all is doubtful for the following reasons:

1. When Davis became surety for Evertson to Flagler, he took the land for his indemnity and nothing else; he took no bond, covenant or engagement, written or verbal, that Evertson should pay the debt to Flagler, or that Evertson should indemnify him ; it would seem therefore that he relied on the land as an indemnity exclusively, and did not intend to look to Evertson personally. 2. Davis could not sustain an action at law against the representatives of Evert-son to recover the money paid by him on the Flagler judgment, because he has sold a part of the land, and thus has put himself in a situation in which he is unable to perform his agreement to reconvey the land on being paid the money. The action of assumpsit is an action governed by equitable principles, and if he is not entitled to maintain an action at law it would seem that he is not entitled to any relief at all. Fonda is a bona fide purchaser, and will be protected in his title. (Whitlock v. Kane, 1 Paige’s Rep. 202. 3 id. 438.) 3. Lockwood has doubtless a right to treat the conveyance from Evertson to Davis as a mortgage, and to redeem the Clinton farm, charging Davis with the rents and profits and with the money he received on the sale of the Cannon street lots. But it does not therefore follow that Davis, after having sold part of the land, is at liberty to do so. Certainly he camiot be permitted to fix the value of the mortgaged premises by his own estimate, and to state his own balance without judicial inquiry; there has been no such inquiry in this case. 4. It is apparent that the sale of the Cannon street lots may have prejudiced the interests of the subsequent lien-holders, and embarrassed the redemption for the use of the estate. The creditors have had no part in fixing the price between Davis and Fonda; and unless they can charge Davis beyond what the lots sold for, they may have lost the benefit of an enhanced value. They have also lost the benefit of a competition on the sale, which they would have had on a foreclosure by Davis. I do not mean, however, to decide the question definitely that Davis has no relief; but 1 have said enough to show that there are at least formidable doubts on that point. The aspect of the case may perhaps be varied on a more full investigation of the facts. In the present proceedings no sale of the Clinton farm can be directed for the purpose of testing its value, and the parties cannot litigate their rights so fairly as in a bill to foreclose. It is therefore directed that the sum of $1787,05 be retained in this court in order that W. Davis may file his bill against Lockwood and such other persons as may be interested for the satisfaction of his alleged mortgage out of that money. And in case he should file such bill within ninety days, that sum shall remain in this court until the right shall have been determined. If such bill should not be filed within that time, the clerk is directed to pay the money to Lockwood, who is entitled to that part of the fund which is not exhausted by prior liens. The fifth exception is therefore allowed.

S. Cleveland, for the appellants.

The judgment of Searls against Evertson in the second circuit of the U. States was not a lien upon the premises sold, and he is not entitled to any part of the surplus money of the sale. Judgments in the U. States courts are not liens upon land ; but if liens on any lands they are not liens upon land without the territorial limits of the circuit; the premises sold were not within the circuit where the judgment was rendered. The conveyances from G. B. Everston and wife to J. R. Evertson vested in the latter the legal estate and fee of the land subject only to the trusts declared in the deed or covenant of J. R. Everston, and those trusts being performed, the deeds to him become absolute and unconditional. Those conveyances not only passed a fee, but all the estate, whether legal or equitable, of the grantors hi the premises. Hence judgments against G. B. Evertson subsequent to the conveyances are not liens, and cannot come in for any part of the surplus monies. But in case G. B. Evertson had a residuary interest in the trust, the judgments would not be liens, as he had not the entiré interest; and what interest he had was subject to the other trusts and was uncertain and contingent.

The judgment in favor of G. and T. Searls is declared to be a lien on the fund, on the authority of the case of Konig v. Bayard, in the U. S. circuit in New-York. (1 Paine & Duer's Pr. 289.) If that decision on the construction of the process act is correct, it seems to follow that by the act of congress of the 20th May, 1820, (7 Laws U. S. 500,) the lien of judgments in the circuit court of the southern district is extended throughout the whole state.

The question of fraud in the conveyances to J. R. Evert-son cannot arise on this application for surplus monies. It was expressly admitted on the part of the judgment creditors at the hearings before the master and vice chancellor that the conveyances of the 12th and 19th February, 1827, were executed in. good faith by the parties. And parties to a decree claiming a benefit under and through it cannot controvert the facts therein contained, or which are contained in the proceedings upon which the decree is founded. The bill sets forth the conveyances as valid; and as vesting-in J. R. Evertson the whole estate in the premises, subject only to the mortgage and trusts declared; and that he thereby became the owner and took possessson of the premises. The interest in and lien upon lands contemplated by the rule of this court under which these proceedings were instituted, are legal liens and legal interests consistent with the title claimed by the person m the actual possession, and claiming title at the time of filing the bill and of the decree. If the surplus monies upon a sale are sought through an adverse title, the proceedings must be by an original bill. No fraud actually exists here. The conveyances were made for a valuable consideration. No fraud is proved, and under the circumstances it cannot be presumed. J. Lockwood by virtue of his judgment and mortgage against J. R. Evertson is entitled to receive so much of the surplus monies as will satisfy the mortgage ; and J. R. Evertson is entitled to the residue. (Cruise's Dig. 58, 64, tit. 14. 2 Inst. 18,394. 3 Co. Rep. 11,12. 2 Saund. 68, a. n. 3 Black. Com.. 418. 2 Inst. 395,6. 3 Abr. of Stat. 249, 355,6, 7. 2 Cruise, 59, &c. 62, 64, 73. 2 Black. Com. 420, 1 Inst. 420. 3 Abr. of Stat. 251. 2 Atk. 274. 1 Kent’s Com. 321, 434, 439. 3 Wheaton, 212, 223. 2 U. S. Laws, 59, c. 20, § 7. 2 Idem, 249, c. 137, § 2. 2 Idem, 62, § 13. Idem, 65, § 24, 25. Idem, 70, § 36. 1 Paine’s Pr. 289. Conckling, 314. Laws N. Y. Tows & V. ed. 113, passed 19th March, 1787. 3 U. S. Laws, 479. 4 Idem, 679. 6 Idem, 269, 270. 7 U. S. Laws, 173, 50. 1 Cond. R. 173. 7 U. S. Laws, 522. 2 Peters’ U. S. R. 422. 2 U. S. Laws, 60.)

D. D. Field, for the respondents G. & T. Searls.

C. Johnson, for the respondents, except G. & T. Searls.

The conveyances to J. R. Evertson were fraudulent and void as against creditors ; and the judgments were all liens on the premises. (1 Cruise, 485, § 62. 1 John. Ch. 575. 1 R. Laws, 72. 3 Paige, 421. 2 John. Ch. 608.) J. R. Eversion has rio beneficial interest in the fund, and the appeal as to him must therefore be dismissed. Nor has J. Lockwood any claim upon the fund except as a judgment creditor. Even if the conveyances were bonri fide, the resulting trust in favor of G. B, Evertson was liable to execution ; and the fund must be first applied to satisfy the judgments on which executions were issued. (2 Atk. 180. 1 R. S. 729, § 55, 58, 60, 61, 62. Prec. in Ch. 162. 3 P. Win. 252.) Lockwood has affimied the decree by drawing out money under it and he cannot now seek to reverse it.

The Chancellor.

Whether the conveyances from G. B. Evertson and wife to J. R. Evertson were absolutely void as against the creditors of the grantors, or operated as a valid transfer of the legal title, subject to a resulting trust in G. B. Evertson for the surplus after paying the mortgage to the complainants, the vice chancellor was right in supposing the widow was not entitled to dower in the surplus. In either case, as between the grantors and grantee, the legal title passed to the latter; and previous to the revised statutes the widow could not be endowed of a mere equity, It is very evident, however, from the facts in the case, that although the legal title passed to J. R. Evertson by the conveyances, they must be considered as void as regards the rights of the creditors of G. B. Evertson, except so far as „ those rights were protected by the declaration of trust. I think therefore, the judgments in the supreme court in favor of the respondents against G. B. Evertson, some of which were rendered in suits actually pending at the time when these conveyances were executed for the nominal- consideration of one dollar, were valid liens upon the mortgaged premises at law as well as in equity. The decision of the vice chancellor was therefore right in declaring that such judgments were a lien upon the fund, and entitled to priority in payment over the judgment subsequently recovered against the grantor and grantee in favor of Lockwood. Neither did the giving of the mortgage to Lockwoolt by J, R. Evertson upon the Ulysses land, subsequent to the recovery of these judgments, entitle him to a preference in payment. If money or other things of value had been advanced upon the faith of this mortgage, Lockwood might have claimed a preference in payment out of the fund, upon filing an affidavit with the master that he had no notice of the fraud at the time he advanced his money or other property upon the faith of the mortgage. But a party claiming as a bona fide purchaser must deny notice although it is not charged in the bill. And in this case, as the mortgage was given merely as- a further security for antecedent debts, the prior equity and legal rights of the other judgment creditors must prevail as against one who cannot protect himself as a bona fide purchaser;

There can be no doubt as to the right of the respondents G. and T. Searls to have their judgment satisfied out of the fund to the extent of the proceeds of the Delaware lands j as the legal title to those lands was bound by the lien of their judgment several months prior to the recovery of the judgment in favor of the appellant. Their right to payment of the residue of their judgment out of the fund depends upon the question whether a judgment in the United States court for the southern district of New-York is a lien upon lands lying within the northern district; which question I will next proceed to consider.

There is no act of congress making a judgment in a court of the United States a lien upon lands either within the general territorial jurisdiction of the court or elsewhere. The existence of such a lien must, therefore depend upon the local law of the state where the land is situated upon which such a lien is claimed. By the common law a freehold estate in lands could not be reached by a judgment except in the case of an heir upon a judgment on a bond or other specialty. The statute 13 Edw. 1, ch. 18, which gave the writ of elegit by which one half of the lands of the judgment debtor might be taken in extent, did not, in terms, create a lien so as to prevent a sale by the debtor before execution. But the uniform construction of the statute has been to give such a lien from the entry of the judgment upon all lands which could be reached by this process of the court. And when the British statute, (5 Geo. 2, ch. 7,) subjected lands in the colonies to sale upon execution, the same principle was adopted in the colony of New-York, and in most of the colonies, as to the lien of the judgment upon real estate which might be thus Sold. And this lien was held to extend to all freehold lands which could be reached by an execution out of the court in which the judgment was entered. And where a judgment of an inferior court was removed into the supreme court and there affirmed, such judgment of affirmance became a lien upon all lands of the debtor throughout the state from the time of the docketing of the judgment in the supreme court. Such was the state of the law here, as to the lien of judgments, at the time of the revolution. And the act of the 17th of March, 1787, (1 Greenl. Laws, 407,) which was substituted in the place of the British statute subjecting lands to sale on execution, recognizes the existence of such lien in the form of the execution which by the statute is to be issued against the lands of the debtor; as the sheriff is to be directed, in case the personal estate is insufficient to pay the debt and costs, to levy the same of the lands and tenements whereof the judgment debtor was seized on the day when the lands became liable, or at any time afterwards. And that the judgment of a court of the United States is a lien upon real estate of the debtor in accordance with the local law of the place where the land lies, is settled by the supreme court of the United States in the case of Tayloe v. Thompson’s lessee, (5 Peters’ Rep. 358.) Upon the principle which has been adopted by congress and by the supreme court of the United States, the legal effect of a judgment as a lien upon the estate of the defendant therein, whether such judgment is recovered in the courts of the state or in a federal court where no direction on the subject has been given by the national legislature, must necessarily be governed by the local law, although the mode of proceeding to enforce such lien where it exists may not be the same in the courts of-the states as in the federal court. I have no doubt, therefore, that the lien of a judgment recovered in one of the circuit or district courts of the United States within the limits of this state is a lien upon the lands of the debtor lying within the territorial jurisdiction of such court, for the term of ten years from the docketing of such judgment, in the same manner as the judgment of a court of record in one of the state courts is a lien. And the only difficulty in the present case is in determining whether the lien, according to the true principles of the local law, extends to all lands which may be reached by the execution of the court, or only to such as are within the territorial jurisdiction to which the original process of such court extends. Upon a judgment in favor of the United States, recovered in a federal court in any part of the union, an execution may be issued to the marshal of any other district. And if the lien of the judgment is co-extensive with the right to issue execution, the recovery of a judgment in favor of the United States in the district of Louisiana, if duly docketed, would create a lien upon the lands of the debtor here ; so that no purchaser could consider himself safe in purchasing lands within this state until he had searched the records of every federal court throughout the whole extent of the union. As this right to issue execution beyond the limits of the state within which the court is held is not general, but is confined to one particular class of judgments, I am inclined to think the principle of our local law would not be considered as applicable to such a case so as to make a judgment recovered in a federal court in another state a lien upon lands here.

But the act of May, 1826, (L. U. S. 1826, p, 86,) is general in its provisions, and confines the execution to the lim its of the state within which the federal court is held. I conclude, therefore, though with some hesitation, that a judgment recovered in the circuit or district court in either of the districts is a lien upon real property lying in any part of the state within which such court is held. Although the original process of our courts of common pleas is confined to the limits of the county, if the legislature should think proper to authorize the issuing of executions upon the judgments of those courts into any county of the state, I am inclined to think the principle of our local laws would extend the liens of judgments thereafter recovered to lands in any part of the state beyond the bounds of the county in which the court was held, and to which its jurisdiction as to original process was still confined. Such appears to have been the construction given to a statute in the state of Virginia, permitting an execution upon a judgment in a local court to be issued to other counties. (See 2 Call’s Rep. 186; 4 Hen. & Munf. Rep. 77.) Although I had great doubt upon the subject of the lien of the Searls’ judgment upon the Galen and Ulysses lands at the time of the argument, subsequent examination and reflection induces me to think the decision of the vice chancellor was right on this question as well as upon other parts of the decretal order appealed from. The order or decree must therefore be affirmed, with costs. And as the respondents G. and T. Searls have been deprived of the use of their part of the fund by the appeal, if it has not been invested in the meantime so as to produce legal interest, the appellants must pay them sufficient by way of damages for the delay to make up to them their legal interest pending the appeal, upon the amount allowed by the master,


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Melick vs. Drake and others.
    1837. April 18.
    Where the complainant’s bill prays relief as well as discovery, the injunction master must direct the insertion of a provision, in an injunction allowed by him to stay proceedings at law, authorizing the plaintiff to proceed to trial and judgment notwithstanding such injunction, except where the only relief asked for by the complainant is such relief as will be necessary to aid the complainant in his defence to the suit in the court of law.
    An injunction allowed by the vice chancellor before whom the bill is filed, the order for which is entered on his fiat with the clerk, will be presumed to have been allowed by him in his character of judge of the court, if the injunction would have been irregular if allowed by him in the character of an injunction master merely.
    Where an injunction is allowed by the vice chancellor before whom the cause is pending, the certificate or fiat for the entry of an order for the issuing of the injunction should be drawn in such a manner as to enable the clerk to ascertain whether the order was to be entered as a special order made by the court, or as an order made upon the certificate of the vice chancellor in the character of injunction master.
    Tras was an appeal from an order of the vice chancellor of the first circuit, refusing to set aside an injunction for irregularity. The object of the bill was to restrain the defendants from proceeding in a suit at law commenced in the name of Drake upon a note obtained by the complainant by fraud and false pretences; and to have the note delivered up and cancelled. The bill also contained an allegation that the complainant was unable to prove the facts charged in the bill except by the oath of the defendants; and that a discoveiy was necessary to aid the defence in the suit at law. The suit was commenced before the vice chancellor, and the injunction was allowed by him without inserting a clause therein permitting the defendants to proceed to trial and judgment at law in conformity to the 33d rule of the court. But whether the injunction was allowed by the vice chancellor in his character of injunction master, or as the judge of the court before whom the suit was commenced, did not distinctly appear.

      W. Silliman, for the appellant.
    H. S. Mackay, for the respondent.
   The Chancellor.

This is clearly a case in which an injunction master, or a vice chancellor acting in the character of injunction master, would not be authorized to give a. certificate that an injunction ought to issue to stay the suit at law, without directing a provision to be inserted in the injunction that the defendant should be permitted to proceed to trial and judgment according to the provisions of the 33d rule. But it is such a case as is contemplated by the last clause of that rule, in which the court itself may, in its discretion, grant a general injunction to stay the trial. To authorize an injunction master to grant an injunction to stay the trial of a suit, or other proceedings therein, when no issue has yet been joined so as to entitle the defendants to security under the statute, the complainant’s bill must be either a simple bill of discoveiy without any prayer for relief, or the only relief prayed for must be such as is merely intended to aid him in his defence on the trial in the suit at law ; such as the production of books or papers that are essential to the defence in the suit at law, and which the court where such suit is pending may not have the power to compel the production of under the provisions of the revised statutes authorizing the supreme court to compel the production of books and papers in certain cases. In all other cases, where a general stay of proceedings in a suit at law before issue joined therein is necessary or proper, which cases will very seldom occur, the application must be made directly to the chancellor, or to the vice chancellor before whom the bill is filed in his character of judge having jurisdiction of the proceedings in that particular suit. And as the court of chancery is always open, the application for an order of the court for such general injunction may be made to him ex parte, and at any place within his jurisdiction, as well as at a general or special term, if the defendant has not entered his appearance so as to be entitled to notice of the application. In such cases, however, the order for the allowance of the general injunction is not founded upon the certificate of the vice chancellor that an injunction ought to issue according to the prayer of the bill, which the clerk may disregard if it is irregular; but upon his absolute fiat for the ea-try of the order, which fiat the clerk is bound to obey. To prevent any misapprehension as to the character in which the vice chancellor before whom the bill is filed is acting,upon the allowance of an injunction, the form of his certificate when acting in the character of injunction master should be different from his fiat for the entry of an absolute order when made by him in the character of judge' having jurisdiction of the cause, In the one case it should be a certificate that an injunction ought to issue according to the prayer of the bill, with a provision therein that the defendant be at liberty to proceed to judgment in his suit at law, without prejudice to the equitable rights of the complainant. In the other it should be a fiat for the entry of an order for a general injunction, or for an injunction with such restrictions and limitations as the court thinks proper to direct to be inserted in such order.

In this case I think, from the fiat of the vice chancellor endorsed upon the bill, that he considered himself as acting in his character of judge, having jurisdiction of the cause, and with power to exercise his discretion as to the extent of the injunction, and not as acting in the character of an injunction master merely. He recites the fact that it appears to him that a discovery is necessary to aid the defence in the suit at law, and then concludes with a fiat for ail injunction to restrain all proceedings in the suit at law. And as he had jurisdiction and authority to make such an order in the present case, according to the course and practice of the court, it was the duty of the clerk to enter the order and issue the injunction accordingly. The injunction was therefore regular, and the order appealed from was correct and must be affirmed with costs.


text:
    Lyon and others vs. Merritt & Dyckman.
    1837. April 18.
    The chancellor has no power to rehear or modify an order or decree which! has been affirmed upon an appeal to the court for the correction of errors, upon the same point as to which the rehearing or modification is sought; unless such right to alter or modify waá reserved in the original order oí decree, or in the decree of affirmance;
    After the making of the decretal order in this case, as reported in 5 Paige’s Rep. 125, the defendants L. Merritt and J. G. Dyckman appealed to the court for the correction of errors, where the decree of the chancellor was affirmed. The defendants afterwards applied to the chancellor, upon hew affidavits, to alter or modify that part of the decretal order which directed the note in question to be delivered up' and cancelled,

      M. T. Reynolds, for the motion.

      W. Silliman, in opposition thereto.
   The Chancellor.

The question as to the delivery up' of the note is res adjudicatur between these parties; that part of the decretal order having been appealed from and affirmed by the court of dernier resort. Where an order or decree which is appealed from does not reserve the right to apply for a modification thereof upon a new state of facts, in the nature of a rehearing, the appellant upon an affirmance of the order or decree must, if he wishes the question reheard in the court below upon a new state of facts, ask of the appellate court that the affirmance may be without prejudice to his right to apply to the court below for a rehearing and modification of the decree or order so affirmed.

The application of the defendants must therefore be denied, with costs.


text:
    Paton vs. Murray and wife.
    1837. May 2.

    The wife having joined with her husband in a mortgage of his real estate, to secure a partnership debt due from him and his co-partner, upon a written stipulation given by the co-partners to her that the mortgage should be paid out of the partnership funds ; and the firm having afterwards failed and assigned all their property and effects to the mortgagee and another person to pay other debts of the firm ; Held, that the mortgage was not a specific equitable lien upon the partnership funds as against the other debts due from the firm, and that the wife’s contingent right of dower in the mortgaged premises was liable to be sold if her husband’s interest in the premises were not sufficient to satisfy the mortgage.
    Where a mortgagor assigned all his property, including his equity of redemption in the mortgaged premises, to the mortgagee and another person-as trustees for the benefit of creditors; Held, that the proper way for the mortgagee to enforce his specific lien upon the mortgaged premises was by a bill of foreclosure, and' that his co-trustee was a necessary party to such bill; and that the wife of the mortgagor having joined in the mortgage, the husband and wife were proper parties to the suit for the purpose of extinguishing her contingent right of dower in the mortgaged premises.
    This was an appeal from a decree of the vice chancellor of the second circuit. The bill was filed for the foreclosure of a mortgage upon the land of the defendant John R. Murray, executed by him and his wife to the complainant in January, 1834, conditioned for the payment of #1200 and interest. This mortgage was given to secure the complainant for certain endorsements for J. R. Murray & J_)„ Dickey, which the complainant was compelled to pay. At the time of the execution of the mortgage and the acknowledgment thereof by the wife of Murray, a paper was delivered to her by the complainant’s agent, signed by Dickey & Murray, by which they promised to pay the mortgage and to return it to her when paid ; which paper her husband assured her would protect her rights. In March, 1834, Murray & Dickey failed and made an assignment to the complainant and J. Horspool, and to the survivor of them, of all the real and personal estate of Murray & Dickey and of each of them, in trust to sell and convert the same into cash, and after paying the expenses of the execution of the trust, to pay the complainant $3000, Horspool $2500, and J. Dickey $1000 ; and to divide the residue of the proceeds of the assigned property equally among the other creditors of Murray & Dickey. It appeared by the proofs in the cause that the debt of $3000 to the complainant mentioned in the assignment was for a debt of the firm entirely distinct from that secured by the mortgage ; and that the proceeds of the assigned property, other than the mortgaged premises which had not been sold, was only sufficient to pay forty-four per cent of the debts of the preferred creditors. Upon hearing the cause upon pleadings and proofs, the vice chancellor directed a reference to compute the amount due upon the mortgage ; and directed a sale upon the coming in and confirmation of the master's report. From this decree the defendants appealed.

      S. A. Foot, for the complainant.

      R. Lockwood, for the defendants.
   The Chancellor.

I am satisfied from the testimony that, as between Mrs. Murray and the firm of Murray & Dickey, this mortgage should have been paid by the latter, so as to prevent the sale of her contingent right of dower in the mortgaged premises. It appears, however, that her husband and Dickey have assigned all the co-partnership property, and also their individual estates, to satisfy other debts due from the firm ; so that there is nothing except the mortgaged premises to satisfy this debt. Although this may have been a breach of good faith on the part of Murray & Dickey, the mortgaged premises are still liable for the amount of this specific lien thereon; and the wife’s contingent right of dower must be sold, if her husband’s interest in the property, subject to such dower, is not sufficient to pay the mortgage money and interest.

The objection for the want of proper parties is properly taken however; as the equity of redemption, except as to the contingent right of dower of Mrs. Murray, is not in the defendants but in the complainant and Horspool, as trustees under the assignment of March, 1834. The statement in the answer might perhaps leave it doubtful whether that assignment embraced any thing more than the partnership effects. But as the complainant himself was a party to the assignment and had acted under it in conjunction with Horspool, he could not have been misled by this vague statement in the answer. And from the assignment itself, which was produced and made an exhibit before the examiner, it is very clear that all the interest of Murray in the mortgaged premises passed to the trustees under that assignment. The complainant was therefore bound to see that the persons to whom this equity of redemption had passed were made parties to the suit; as it is impossible to foreclose it upon the present bill. As the assignment is to fhe complainant and Horspool or to the survivor of them, it is evident that if the latter survives the complainant he will have a perfect right to redeem notwithstanding the foreclosure and sale under the present decree.

There is no subsisting equity of redemption in either of the present defendants. Nothing, therefore, could be reached under the present decree except the wife’s contingent right of dower. And the complainant is not entitled to a decree for the sale of that, or to a decree over against the husband for a deficiency, until the equity of redemption which has passed to the assignees has been foreclosed and sold. Under the circumstances of this case it is very evident that the wife’s contingent right of dower is mortgaged merely as a security for the debt of Murray & Dickey 3 and that it should not be sold unless the husband’s interest in the property which has been transferred to the assignees «hall ultimately be found insufficient to satisfy the debt and costs. And although Murray and his wife would be proper parties to a bill filed against Horspool on account of the ultimate liability of her contingent right of dower, there can be no decree against that contingent interest which shall make it primarily liable for the payment of the complainant’s debt. The vice chancellor should therefore have directed the cause to stand over for the want of proper parties, and without costs; giving leave to the complainant to bring Horspool before the court, as one of the assignees of the husband’s equity of redemption, by supplemental bill.

The objection for want of parties was not raised by the answer of the defendants ; and from its not being alluded to in the opinion of the vice chancellor, I presume it was not made upon the hearing before him. This, however, cannot aid the respondent except as to the question of costs upon the appeal. It is not an objection of form merely, but of substance, as there can be no decree of foreclosure without having the owners of the equity of redemption be. fore the court as parties.

The objection that no bill for a foreclosure will lie in this case, even with the proper parties, is not well taken. The complainant has a specific lien upon the mortgaged premises for the payment of the mortgage debt; and the equity of redemption is assigned to him and another as trustees for the benefit of himself and other creditors for distinct and independent debts. I know of no way therefore in which he could protect his rights and enforce his specific lien under this mortgage, except by a bill of foreclosure against his co-trustee to obtain a sale of the equity of redemption. He had also a right to make the original mortgagor a party with his wife for the purpose of reaching her contingent right of dower, if it should be necessary to sell that also to satisfy the debt, and of having a decree over against Murray upon his bond for any deficiency which might ultimately be found to exist.

The decree of the vice chancellor must be reversed without costs to either party. And the case must stand over, with liberty to the complainant to bring Horspool before the court, as one of the assignees of Murray’s equity of redemption, by a supplemental bill against Horspool alone. And if such supplemental bill is not filed in sixty days, and prosecuted with due diligence so as to put the cause in a situation to be heard without any unnecessary delay, the present defendants may apply to dismiss the original bill with costs,


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    Wood v. Keyes and others.
    1837. May 2.
    Where the husband in his life time sold several lots of land, in which his wife hada contingent right of dower, to various individuals, and conveyed such lots with warranty, and afterwards died seized and possessed of alargereal ' and personal estate, which he devised to the complainant in trust for his daughter; and the trustee after the death of the testator offered to assign to the widow her dower out of the estate of which the husband died seized, as well for that estate as for the lands sold and conveyed by her husband with warranty, which offer she refused and commenced ejectment suits against the several purchasers for the purpose of recovering her dower in eachlo| separately ; Held, that the widow was in equity bound to accept an assignment of the whole dower out of the estate of which her husband died seized, and which was ultimately liable to sustain the whole charge of her dower right in the lands conveyed with warranty.
    The cestui que trust of the complainant having died after argument and before the decision of the cause, by which the suit was determined, the court ordered the decree to be entered mine pro tunc as of the time of the argument.
    The object of the bill in this cause was to restrain the defendant L. Keyes, the widow of Parley Keyes deceased, from prosecuting numerous ejectment suits against the grantees of her late husband; and to compel her to take an assignment of her whole dower out of the estate of which he died seized. Her husband had in his life time conveyed divers village lots and other portions of his estate with warranty; in which conveyances the wife had not joined. And upon his death a large real and personal estate of which he was then seized and possessed was devised to the complainant upon a valid trust for the testator’s daughter. As the widow was entitled to dower in the lands thus devised as well as in the lands conveyed, the complainant proposed to her to set off sufficient of the real estate devised to satisfy her claim of dower in the whole lands and village lots in which she had a right of dower ; but this proposition was declined, and numerous suits were thereupon commenced by her against the grantees of her late husband.

      B. R. Wood, for the complainant.

      J. Butterfield, for the defendant L. Keyes.
   The Chancellor.

This is a case that clearly calls for the interposition of this court, to prevent the gross injustice of permitting the whole estate of which the husband died seized from being destroyed by the costs of a useless litigation respecting the separate claims of dower in the various lots conveyed by the husband, when the trustee is willing to have the whole dower assigned at once out of the estate which must ultimately bear the loss. It is at least doubtful whether this could be done in a court of law without the assent of the widow. But, as it can be of no possible benefit to the widow, this court will not allow her to be guilty of the unnatural act of destroying the whole property of her deaf and dumb daughter, either to gratify her own caprice or the improper ^¡elings of those under whose advice she is acting. • A decree must, therefore, be entered for the appointment of admeasurers to assign to her out of the real estate devised to the complainant, which in equity is liable to sustain the whole charge, so much thereof as will be equal to the whole dower to which she is entitled in all the lands conveyed by her husband with warranty during coverture, together with her dower in the lands devised to the complainant in trust; and there must be a perpetual injunction against further proceedings at law.

The proofs in the cause, however, show that the offer to the widow to assign her whole dower out of the estate devised was not made until the suits were commenced at law, and that she then offered to receive a pecuniary satisfaction for her dower in the lands conveyed in the life time of her husband. The costs of those suits up to the time ofissuing the injunction in this suit must therefore be paid out of the trust estate in the hands of the complainant. The widow must also be compensated out of the rents and profits of the real estate held by the complainant in trust for the value of her dower, from the death of her husband, in the estate of which he died seized, and from the filing of this bill in the other property* And if the parties cantiot agree upon the amount, it must be referred to a master to ascertain the same.

It being understood by the court that the complainant’s cestui que trust has died since the hearing of this cause, the decree must be entered as of the 20th of April, 1836. And, in case the trust is at a i end, the suit must be properly revived in the name of the person who has succeeded to the complainant’s rights, if further proceedings in the cause shall be found necessary.-


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    Robinson vs. Cropsey and others.
    1837. May 2.
    A sale by one tenant in common to his co-tenant of his undivided share of the property in consideration of the discharge of previous debts, with an agreement that the vendee shall convey to the veneer the whole property held in common upon his paying a specified sum at the end of,one year, together with the value of the improvements made in the meantime; Held a valid agreement of sale and repurchase, and not a mere mortgage.
    As a general rule, where there is an application for a loan of money, the court for the purpose of preventing usury and extortion will construe an' agreement for a sale and repurchase of property to be a' mortgage,- in case the person to whom the application for the loan is made agrees to receive back his money and interest or a larger sum within a specified time, and to reconvey the property, whatever form the writing may be put in, if the' real object of the transaction was a loan- of money. And the relative value of the property and of the price actually advanced or paid are taken' into consideration in determining the nature of the transaction.
    This was an appeal from a decree of the vice chancellor of the first circuit; and the only question was whether the agreement mentioned in the bill constituted a- mortgage or a conditional sale. The facts appear from the report of the case before the vice chancellor, (2 Edw. Ch. Rep. 138.)
   The Chancellor.

There is frequently great diificulty in ascertaining whether a contract was intended by the parties as a mortgage or a conditional sale; and as a general rule, where the agreement is made upon an application for the loan; of money, the court,- for the purpose of preventing usury and extortion, will construe the agreement to be a mortgage in case the person to whom the application for the loan is made agrees to receive back his money and interest, or a larger sum, and to reconvey the property within a specified time thereafter, whatever form the writings may be put in, if the real object appears to have been a loan of money. In such case, also, the relative value of the property and the price actually advanced or paid are to be taken into consideration to determine the intent of the parties.

In this case I am satisfied that the price paid was the full value of the property, which property was taken at the risk of the purchaser as to its being worth more or less at a future time. The liability of the original mortgagor was entirely discharged, and there was no understanding, either express or implied, that he was to be legally or equitably liable to pay any thing to the other party in any event, although he had the right to repurchase, if he thought proper so to do, by paying a certain sum within the prescribed period. I think, therefore, that in this case both parties intended that the equity of redemption should be released in that part of the premises which was mortgaged, so as to give to the mortgagee the whole property which was before held in common, as an equivalent for the discharge of the debts for which the mortgagor was before personally liable ; but giving to the latter the privilege of taking the whole property held in common, within the prescribed period, upon paying the mortgage money and the purchase money of the other half within that time. It was a fair offer, to save the necessity of a foreclosure or a partition; and if the property had fallen instead of rising in value, neither party would have supposed the purchaser was not to sustain the loss. Neither is this a case of forfeiture, against which this court ought to relieve. Here the party did not ask to be relieved while the property was worth only what has been paid for it; but when, by events which neither party could have anticipated, the property has become very much enhanced in price, the representatives of the seller ask to deprive the purchaser of the benefit of such increased value. This is neither equitable nor honest, as neither they nor those under whom they claim ran any risk from the loss which might have been sustained by a depreciation in the value of the property.

The decree of the vice chancellor is clearly right, and must be affirmed with costs.


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    Lowene vs. The American Fire Insurance Company and others.
    1837. May 25.
    A creditor of an insurance company, whose loss accrued previous to the calamity which rendered the corporation insolvent, is not entitled to a preference in payment, out of the funds of the company in the hands of the receivers, over other creditors whose claims arose at the time when the insolvency happened, unless a specific appropriation of some part of the corporate property had been previously made for the satisfaction of such prior loss.
    Where a dividend is declared in favor of the stockholders of a monied corporation, if the company becomes insolvent before the payment of the dividend or a specific appropriation of a portion of the corporate property for that purpose, the stockholders arc not entitled to a preference in payment out of the general funds of the company, but must come in rateably with other creditors.
    Creditors of an insolvent corporation, upon a proceeding in equity to close up the concerns of the company, are to be paid rateably, without reference to the times when their several debts accrued.
    The bill in this cause was filed before the vice chancellor of the first circuit against The American Fire Insurance Company of the city of New-York, which was rendered insolvent by the great fire of December, 1835, and against the receivers of the company appointed under the act of the 18th of January, 1836, (3 R. S. 2d ed. 394,) to obtain a preference in payment out of the property and effects of the corporation in the hands of the receivers. It appeared by the bill and answer that previous to the fire which rendered the company insolvent, the complainant had sustained a loss of his property insured by the company to the amount of $3000, which loss had not been adjusted at the time of the fire, though in making a statement of the affairs of the company preparatory to a dividend which had been declared a few days previous to the great fire, this loss had been set down as one which the company would probably be obliged to pay. A suit was afterwards commenced against the company for the loss, and subsequent to the appointment of the receivers a judgment was recovered for the amount underwritten with interest and costs, on which judgment an execution was issued and returned unsatisfied. The case was heard upon bill and answer as to the receivers and upon the bill taken as confessed against the corporation. The vice chancellor decided that the complainant was not entitled to any preference in payment over other creditors of the company ; and he dismissed the bill as to the receivers with costs. From this decree the complainant appealed.
    J. Anthon, for the appellant.
    The capital is a trust fund pledged for the payment of the debts of the company. It is pledged pro tanto as soon as any contract of insurance is made by the company; or at least as soon as the adventurer by the course of events has, by the occurrence of the contingency insured against, acquired a right against the company. When the dealings of the company exceed tire amount of the fund pledged, such excess is unprotected from the nature of the case, the fund being duly exhausted by prior liens. The trusts, therefore, necessarily attach in the order of their dates until the capital fund is exhausted, when the trusts cease to have any aliment. The capital being sound when this loss accrued, the complainant’s lien fully attached, and could not be divested by matters ex post facto. The acts attending the declaring of the dividend were also an express appropriation of so much of the trust fund as was necessary to meet this demand. The complainant also having by judgment and execution matured his rights against the capital fund, is entitled on this ground also to the fruits of his diligence, a payment in full. The assets of the company in the hands of trustees were not protected, either in law or equity, from the operation of the judgment and execution. The excessive dealings of the company beyond its capital created no equity in the subsequent adventurers in opposition to the lien of the complainant. The complainant at all events is entitled to a decree for a rateable dividend, the defendants admitting in their answer their readiness to pay the same.
    J. I. Rosevelt, for the respondents.
    The relation which subsisted between the company and the complainant was that of debtor and creditor, and not of trustee and cestui que trust. Even if there had been a right of election, it was determined by the commencement and prosecution to judgment of the suit at law. And there was nothing in the circumstances of the complainant’s claim to entitle it to a preference over the claims of the other creditors. The bill cannot be sustained as a creditor’s bill: 1. Because the corporation not being in existence, the judgment entered up against it was void : 2. Because if valid, the defendants in the judgment had previously parted with all their estate and effects to the receivers, pursuant to the act of January, 1836, to be distributed equally among the claimants; and 3. Because a creditor’s bill will not lie in any case against a corporation.
   The Chancellor.

There had not been any specific appropriation of any part of the funds of the company to pay the complainant’s loss previous to the insolvency of the company or the appointment of the receivers, and the vice chancellor was therefore right in supposing that a priority of loss did not entitle the claimant to a preference in payment over other creditors. Even if the loss had been actually adjusted at the time a statement of the situation of the company was made with a view to the declaring of a dividend among the stockholders of the surplus profits, the preference claimed could not be allowed unless there had been a specific lien created upon some particular fund for the payment thereof. The decision of the vice chancellor in the case of Le Roy v. The Globe Insurance Company, (2 Edw. Rep, 657,) proceeds upon the ground that the declaring of the dividend and the setting apart of the surplus fund in the bank, and drawing the checks upon that fund, was a specific appropriation of so much of that fund for the payment of the dividends, and gave to the several stockholders an equitable lien thereon pro tanto. The case would have been entirely different if the directors had merely declared a dividend without appropriating any specific fund for the payment thereof. In that case the unpaid dividends would have been mere debts against the company in favor of the stockholders, who must have come in rateably with other creditors in case of insolvency. In the present case the fact that the complainant’s loss occurred before that of the other creditors, who had paid their premiums for the risk while the company was solvent, gave him no legal or equitable claim to a preference after other losses had occurred, which rendered it impossible for the company to pay the whole. The provisions of the revised statutes relative to proceedings against corporations in equity, contemplate an equal distribution among all the creditors, without reference to the time in which their respective debts accrued ; although the creditor upon whose application the receiver is appointed has actually proceeded to judgment and execution against the company. (2 R. S. 2d ed. 378, § 36, 37.)

The bill is not properly framed for a rateable dividend of the fund in the hands of the receivers, as none of the other creditors are parties to the suit. Neither is the bill filed by the complainant in behalf of himself and other creditors. Besides, the statute under which the receivers were appointed contemplates a different mode of proceeding to ascertain the rights of the parties and to distribute the assets of the company among the creditors.

The decree of the vice chancellor is therefore affirmed, with costs.


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    De Peyster vs. The American Fire Insurance Company and others.
    1837. May 25.
    A creditor of an insolvent corporation, whose debt accrued by reason of a loan to the company to pay a loss which had occurred previous to the calamity which rendered the company insolvent, is not entitled toa preference in payment out of the funds which the company held beyond their capital stock at the time of such calamity.
    No creditor of an insolvent corporation is entitled to a preference in payment, unless he has a prior legal or equitable lien on or a specific appropriation of some particular part of the corporate property or funds.
    The creditors of an insolvent insurance company are not limited in their claims against the company to the amount of the capital stock of the corporation at the time when their several losses occurred ; but they are entitled to he paid out of any funds of the company not otherwise specifically appropriated.
    The capital stock of an insurance company is not the primary fund for the payment of losses which may accrue upon property insured. The premiums received for insurance, and the interest on the capital stock, constitute the primary and natural fund for the payment of the debts and losses of the company; and the capital stock can only be resorted to when this primary fund is found tobe insufficient.
    The unearned premiums received by an insurance company on which the risks are still running are not surplus profits of the company, out of which dividends can be legally made among the stockholders, without leaving a sufficient surplus on hand to meet the probable losses upon risks then assumed and not yet terminated, independent of the capital stock of the corporation.
    Tins was an appeal from a decree of the vice chancellor of the first circuit dismissing the complainant’s bill. Previous to the great fire in New-York, by which the American Fire Insurance Company lost its whole capital and was rendered insolvent, the complainant loaned to the company, for the purpose of paying a loss which had occurred, $2000, which amount the company agreed to repay to the complainant with interest, on demand. And as the company had a surplus on hand, in addition to its capital, of about $6000 at the time of the fire, the complainant claimed a preference in payment to the full amount of his debt out of this surplus fund. He therefore brought his action against the company, and having obtained judgment for the amount and issued an execution thereon, which was returned unsatisfied, he filed his bill in this cause against the corporation and the receivers appointed under the act of January, 1836, for the purpose of obtaining such preference in payment out of the assets of the company in the hands of the receivers. The vice chancellor decided against the claim; from which decree the complainant appealed.

      John Anthon, for the appellant.

      J. I. Rosevelt, for the respondents.
   The Chancellor.

There is no legal or equitable foundation for the claim of preference in payment which the complainant is attempting to establish in this case. Although the assets of the company are in the nature of a trust fund for the payment of the debts due to the creditors of the corporation, no one of those creditors is entitled to any preference in payment over another, unless he has obtained a specific appropriation of or prior equitable lien upon some particular part of the fund. In this case it is not pretended that the identical $2000 which the complainant loaned to the company did in fact constitute any part of the assets of the company which remained on hand at the time the insolvency occurred, and which have gone into the hands of the receivers. On the contrary it appears that the money was loaned to pay off a loss which had previously taken place ; and was undoubtedly applied for that object. The complainant, therefore, was a mere creditor at large-at the time of the appointment of the receivers, without any specific lien whatever. His claim then appears to be based entirely upon the erroneous supposition that the creditors who became such by reason of the destruction of their property by the fire have no claim upon the assets of the company beyond the amount of the capital stock ; and that as the money loaned went to pay off a previous loss which must otherwise have been paid out of the surplus on hand at the time of the fire, the lender is entitled to a preference in payment out of such surplus. The capital stock, however, is not the primary or natural fund for the payment of losses which may happen by the destruction of property insured by. the company. The charters of all these companies contemplate the capital stock merely as a collatteral security for the payment of extraordinary losses, and only to be resorted to when the primary fund for the payment of the debts of the company shall prove insufficient. The premiums received, and the interest of the capital stock, which constitute what is called the surplus fund of the company, is the primary and natural fund out of which losses should be paid ; and the residue only of such premiums and interest, after providing for the payment of all such losses and debts, should be divided among the stockholders. The directors are only authorized to declare dividends of the surplus profits. And unearned premiums on which the risks assumed by the company are still running, although they are surplus funds beyond the capital, are not surplus profits which can be legally divided among the stockholders, without leaving a sufficient surplus on hand to meet the probable losses which may accrue, instead of breaking in upon the capital ■of the company. The corporation should, therefore, at all times keep on hand, or properly invested, a surplus fund ■sufficient to meet the probable losses upon risks then assumed. by the company and which have not yet terminated. And upon that fund, which I presume is the only one which ■existed in this case beyond the capital, the assured.whose premiums have helped to constitute the fund have certainly -an equal claim with, any other creditors of the corporation.

The decision of the vice chancellor was unquestionably right, and it must be affirmed with costs.


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    Ray vs. Oliver and others.
    1837. June 20.
    There is no law and no rule of the court of chancery rendering it absolutely necessary that the title of the cause should be inserted in the master’s notice of sale under a decree; but it is proper that such title should be briefly stated in the notice for the purpose of attrafcting the notice of parties who may be interested in the premises.
   Upon an application for the re-sale of mortgaged premises in this case, the Chancellor decided, that as there was no law and no rule of the court rendering it absolutely necessary that the title of the cause should be inserted in the master’s notice of sale under a decree, the sale was not irregular, although no part of the title of the cause was inserted in the notice upon which such sale was made. He said, however, that it was proper to insert the title of the suit briefly in the notice of sale, by stating the name of the first complainant and of the first defendant at length, and by adding the words and others” where there were several complainants or defendants, for the purpose of attracting the attention of those who were interested in the premises, to such notice of sale.


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    Brayton vs. Smith and others.
    The sheriff is answerable for the sufficiency of the sureties which he takes upon a writ of ne exeat. But where he has taken bail upon the writ, it the defendant leaves the state, the court wilt allow the sheriff a reasonable time to produce the defendant; or, in case he cannot be produced, will allow a reasonable time to the sheriff to prosecute the bond and to recover the amount which the sheriff is ordered to pay.
    Where the defendant in a ne exeat cannot procure such security as will satisfy the sheriff, or if he wishes to leave the state before the termination of the suit, his proper course is to apply to the court to discharge the writ of ne exeat, upon his giving sufficient security to answer the complainant’s hill and to render himself amenable to the process of the court during the progress of the suit, and such as may be issued to compel the performance of the final decree. And upon such application, the court will take such security as it may deem sufficient, and will discharge the sheriff from liability.

      1837. June 20.
    A writ of ne exeat was issued in this case against H. M. F. Smith, one of the defendants, in which the sheriff was directed to hold him to bail in the sum of $1,000 ; upon which writ the sheriff returned that he had executed the same by taking bail from the defendant as therein commanded, and that such bail were J. M. Bull and J. Simpson. A final decree having been rendered against the defendant Smith for the payment of $831,19 and interest from December 30th, 1836, and an execution against the body of the defendant. for the collection thereof having been returned non est, the complainant’s solicitor, upon an affidavit that the defendant had left the state pending the suit and was now residing with his family in the state of Michigan, applied for an order that the sheriff pay the amount of the decree and the costs of the application, or for such other order in the premises as the court should see fit to grant. On the part of the sheriff the affidavit of the executor of one of the sureties was produced showing that the sheriff had taken a bond in the usual form, and that the defendant Smith could be brought within the jurisdiction of the court and surrendered to the sheriff by the first Tuesday of July thereafter. He therefore asked liberty and for time to produce the body of the defendant in discharge of himself and the bail. The counsel for the sheriff also insisted that having taken security as required by the writ of ne exeat, the sheriff could not be proceeded against in this summary way. On the part of the complainant it was urged that the sheriff was bound at his peril to take of the defendant sufficient security to enforce obedience to the writ; and that having suffered him to leave the state so that he could not be arrested upon the execution issued upon the decree, the sheriff was-bound to pay the debt, ,

      J. Ellsworth, for the complainant.
    S. M. Woodruff, for the sheriff.
   The Chancellor.

It appears to be settled that the sheriff must at his peril take sufficient security upon a writ of ne exeat for his own indemnity if the defendant leaves the state so that he cannot be made amenable to the process of the court pending the suit or compelled to perform the final decree. (Boehm v. Wood, Turn. & Russ. Rep. 332.) If the defendant, therefore, cannot obtain such security as will satisfy the sheriff, or if he wishes to leave the state upon business or otherwise pending the suit, his proper course is to apply to the court to discharge the ne exeat upon his giving sufficient surety to answer the bill and to render himself amenable to the process of the court during the progress of the cause and such as may be issued to compel a performance of the final decree. Upon such an application the court will take such security as may be deemed sufficient, and will discharge the liability of the sheriff. From the case of Collinridge v. Mount, (2 Dicken's Rep. 688,) it appears that the English court of chancery has no authority even to make an order for the prosecution of the bond taken by the sheriff upon a ne exeat. And the authority of that case appears to have been recognized by Lord Eldon in Boehm v. Wood, although he had granted leave to prosecute such a bond, in the case of Musgrave v. Medex, a few years before, (1 Meriv. Rep. 49.)

It is not the practice of this court, however, to compel the sheriff who has taken bail upon the ne exeat to pay the debt absolutely, without giving him time to produce the defendant, so that he may be rendered amenable to the process of the court for the performance of its order or decree. And even where the sheriff is unable to produce the body of the defendant, it would be unreasonable to compel him to pay the money, where he has done his duty by taking sufficient security, without giving him a reasonable time to collect the amount upon his bond. In the present case, it appears by the affidavit on the part of the sheriff, that the defendant can be produced by the first motion day in July; which is not an unreasonable time after the sheriff had notice of this application and of the decree and the return of the execution against the defendant, such execution having been issued to his successor in office.

An order must therefore be entered that D. Sherrill, the late sheriff of Washington county, produce the body of the defendant H. M. F. Smith before the chancellor on the ^rst Tuesday of July next, and pay to the complainant the costs of this application, or in default thereof that he pay to complainant the amount of the decree against Smith, including interest, together with the costs of this application. And that if the same is not paid within six months thereafter, the complainant haye liberty to issue process for the collection thereof; unless the court, upon a proper application, shall give further time to the sheriff to collect the same upon his bond.


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

text:
    Van Cortlandt vs. Beekman and others.
    1837. June 20.
    As it is the duty of the complainant in a partition suit to state in his bill the rights and interests of all the parties in the premises, so far as they are known to him, according to his information and belief, if the rights of the defendants, as between themselves, depend upon the validity of a will under which an undivided part of the premises are claimed, or where the ownership of an undivided share of the premises is contingent or doubtful and depends upon the construction of such will, it is proper forthe complainant to stats in his bill the fact of the making of the will and the substance thereof so far as is necessary to enable the court to understand the rights of the parties.
    Where the rights of the defendants, as between themselves, are stated in 5 bill for pari ition, a defendant who puts in an answer thereto is bound to answer as to such rights; either by a general admission that the rights of the several parties are as stated in the bill, or in some other manner.
    Whatever a complainant is bound to state in his bill, the defendant may bo required to admit or deny by his answer to the same.
    The bill in this cause was filed for partition, The prem-? ises of which partition was sought originally belonged to the complainant and Catharine Van Wyck and two others, in-equal proportions. The bill alleged that C. Van Wyck died in September, 1829, and that previous to her death she made an instrument in writing purporting to be her last will and testament, dated the 8th of May, 1827, whereby she Revised the one half of her interest in the premises tó her son Philip G. in fee, and the use of the other half part thereof to her son Theodoras for life, with remainder to the children pf Philip G. ’whd "should then be living, as by the said will, a copy whereof was to the bill annexed, would more fully appear. The bill then stated the names of the present children of Philip G. Van Wyck, and averred that by virtue of the said will he was entitled to one half of the share of his mother in the premises, and that Theodoras was entitled to an estate for life in the other half, and the children of Philip to the reversion thereof in fee. The de» fendant Theodorus Van Wyck admitted the complainant’s title as stated in the bill, but did not answer that part which related to the will of his mother, and the rights of himself and other defendants under such will. The complainant therefore excepted to his answer as insufficient in these respects, and the master allowed the exceptions. The de» fendant excepted to the report as to the allowance of the first exception, which related to the making of the will and the contents of the same. And upon a hearing before the vice chancellor, the report was confirmed. From this decision of the vice chancellor the defendant appealed.
   The following opinion was delivered by the vice chan» cellor:

C. H. Ruggles, V. C.

There is nothing in the 174th general rule to render it improper for the complainant in this cause to set forth the will of Catharine Van Wyck. In many instances it is the best and cheapest mode of bringing to a speedy decision any doubtful or disputed question, to set forth the instrument in writing on which the doubt arises, and to call for the defendant’s admission or denial thereof. This brings the matter directly before the court in the first instance for a decision, whether in a matter of fact or of law, and disposes of the difficulty. If an issue of fact be joined, a reference to a master as to the title may become unnecessary by the production of the proper evidences before the examiner. (2 Paige’s Rep. 28.) The 5th section of the act for the partition of lands, (2 R. S. 318,) requires that the petition of partition shall set forth the right and title of all persons interested therein, so far as the same are known to the petitioner; and the bill ought to contain these requisites. In this instance there may perhaps be doubts entertained in relation to the construction of the will of Mrs. Van Wyck as to the precise rights of the children of Philip G. Van Wyck, and as to the effect which the death of some and the birth of others may produce. At any rate, there is no safer way, in many instances, of setting forth truly the rights and titles of persons interested under a will, than by setting forth the instrument itself; and it would be a rigid and ungracious construction of the 174th rule, and a construction which puts it at variance with the statute, to say it was intended to prevent that from being done in all cases. The complainant has not in this case drawn that part of the bill with any culpable prolixity, and the defendant ought to have answered it. It is true the questions that may arise out of the will of Mrs. Van Wyck are questions in which the interest of the defendant Theodoras Van Wyck is not hostile to the interest of the complainant, and in regard to which the complainant would not be bound to litigate. But it is the business of the complainant to satisfy himself that he has made the proper persons parties to his bill, and that depends in this case in part on the existence of this will. The complainant, it seems to me, has therefore a right to the defendants’ answer with respect to it. A defendant, in his answer to a bill in partition, is not permitted to confine himself in his answer to an admission or denial of the plaintiff’s interest and his own. He is bound to answer also according to his knowledge as to the interests of the other parties. It is a proceeding in which, to a certain extent, all concerned are or may become actors.

But it is said on the part of the defendant that the complainant had not in fact alleged in his bill that Mrs. Van Wyck’s will was duly executed to pass real estate, but that having only set it forth as an instrument in writing purporting to be her last will and testament and not as a valid will, the defendant was not bound to answer in relation to it. But on looking at the bill carefully, it appears to be stated that Mrs. Van Wyck made an instrument in writing purporting to be her last will and testament, dated, &c. whereby she devised the one equal half of her interest in the lands in question to her son Philip G. in fee, and the use of the other half to her son Theodoras, (the defendant who excepts,) during his natural life, and afterwards to the children of the said Philip G. that shall be then living, in fee. And a copy of the will is annexed and referred to, appearing on its face to be duly executed to pass real estate. And the bill proceeds to state that Philip G. Van Wyck is entitled, by virtue of said will, to one equal undivided half part of the share of the said Catharine, and that the said Theodoras Van Wyck is entitled to an estate for life in the other half, &c. Taking these allegations together, it appears to be set forth in substance, although not in the usual and most appropriate terms, that Catharine Van Wyck devised her interest in the lands as stated in the paper annexed to the bill. I am therefore of opinion that the master decided correctly.

James Smith, for the complainant.

W. Silliman, for the appellant.

The Chancellor.

The decision of the vice chancellor' and of the master in allowing the first exception to the answer was clearly right. The 174th rule makes it the duty of the complainant to state the rights and interests of the parties in the premises as far as they are known to him ; and even where the rights of any of the defendants are not fully known, it is his duty to state them according to his information and belief. In this case, as the rights of those who represented the share of Catharine Van Wyck depended upon the validity of her will and the construction thereof, the complainant has very properly stated the making of such will and given the names of the parties who are presumptively entitled to the ultimate fee in that part of the estate which is devised to the appellant for life. The appellant’s counsel is clearly wrong in supposing that the complainant had no right to set forth the interests of the defendants as between themselves, and that such defendants are not bound to answer as to those rights and interests, le statute is imperative that the rights and interests of all parties, so far as they are known, shall be set forth. And if the share or interest of any party is uncertain or contingent, or if the ownership of the inheritance in any part of the premises depends upon an executory devise, or the remainder is contingent, so that the parties who may be ultimately entitled to the same cannot be named, the complainant should set forth the nature of such contingent interest, so that the court may ascertain and protect the rights of such unknown or contingent owners. And whatever the complainant is bound to state in his bill, the defendants may be required to admit or deny by their answers.

In the case under consideration it was very proper for the complainant to set out the will of Mrs. Van Wyck, not only for the purpose of showing that the ultimate remainder in one half of her share was contingent, but also that her executor held a power in trust to sell the same ; and also to give the appellant, who was one of her heirs at law, an opportunity to contest the will if it was not duly executed. If he admits the execution of the will as alleged in the complainant’s bill, the complainant will be entitled to a reference of course under the 177th rule. But if the due execution of the will is denied or contested, it may be proper for the court to direct an issue to try the validity of the devise, in conformity to the provisions of the statute in such cases. (2 R. S. 244, § 19, 2d ed.)

There is no foundation for the objection that the bill does not allege or show that the will was duly executed to pass real estate. It is alleged that the testatrix made an instrument in writing purporting to be her last will and testament, whereby she devised, &c. And a copy of the will itself is given, by which it appears to have been executed in the presence of three witnesses and in due form of law to pass real estate. This is also followed by an allegation that by virtue of the will the appellant is entitled to an estate for life in the one half of her share, and that the children of his brother will be entitled to the remainder thereof in fee. The decree of the vice chancellor must therefore be affirmed with costs. And the appellant must pay those costs and the Cdfets upon the exceptions to the answer which are allowed, and must answer those exceptions, within the twenty days allowed by the master for that purpose, or the bill must be taken as confessed against him.