text:
    Besley and Fitch vs. Lawrence and Hasbrook.
    Where the principal debtor, in a note, assigned to his sureties upon suchnote a bondahd mortgage, upon condition that they should pay such note, and on the same day assigned certain other property to trustees, in trust to sell the same and apply the proceeds to the payment of the note, and the residue, if any, to other creditors of the assignor named in the assignment, and a creditor’s hill was afterwards filed against the assignor ; Held, that the complainants in the creditor’s suit had no right to insist that the note should be paid out of the property assigned to the trustees; so as to give the complainants the benefit of the proceeds-of the bond and mortgage assigned to the sureties upon the note, and to the exclusion of the creditors who had a prior equitable claim to be paid out of the property assigned to the trustees, in case the note was paid by the sureties out of the proceeds of the bond and mortgage.

      Meld also, that as the owner of the note had two funds to which lie could resort for the payment of his dqbt, and the other creditors provided for in the assignment to the trustees had the assigned fund alone to which they could resort, the owner of the note was in equity hound to resort to the bond and mortgage first, so as to give the other creditors provided for in the assignment in'trust the benefit of the assigned fund ; the equity of the complainants in the creditor’s bill, being subsequent to that of'ihe-creditors whose debts were provided for by the assignment.
    This was an appeal, by G. Lawrence, one of the defendants, from a decree of the late vice chancellor of the seventh circuit. The complainants were judgment creditors of J. Hasbrook, and an execution upon their judgment having been returned unsatisfied, they filed an ordinary creditor’s bill against him, before the vice chancellor of the seventh circuit, on the 15th of July, 1837, and the subpoena and injunction were served on the defendant in' that suit on the 18th of the same month. To that bill J. Has-brook put in an answer, to which a replication was filed; and proofs were taken in that cause. The answer admitted the recovery of the judgment and the return of the execution unsatisfied, and that the judgment still remained in full force. It also stated that the defendant in that suit, on the first of July, 1837, made .an assignment to T. Wood and P. Hasbrook, of certain goods, chattels and other property, specified in a schedule annexed to such assignment, in trust to sell the same and apply the proceeds thereof, first, to the payment of a note of $>700 to the Bank of Salina, signed by Jaquith & Case, as the sureties of the assignor; secondly, to pay certain other debts, in the order specified in the assignment; and thirdly, to pay the residue of the debts of the assignor ratably. But whether, the defendant in that suit had any property, equitable interests, or choses in action, at the time of the filing the bill in that cause, except his supposed contingent interest in the bond and mortgage hereafter mentioned, did not appear. That suit was still pending and undetermined at 'the time of making the decree, in this cause, which was appealed from.
    The bill in this cause was filed in February, 1838, against G. Lawrence, and against T. Wood and P. Hasbrook. And after stating therein the filing of the creditor’s bill against J. Has-brook, and the putting in of his answer thereto, and the filing of a replication to such answer, the complainants in this suit stated the execution of the said assignment, and the terms thereof, and that the value of the assigned property was about $2000. They also stated that the $700 note to the Bank of Sa-lina was dated on the 6th of June, 1837, and was payable in ninety days from its date; that on the first of July, 1837, J. Hasbrook assigned to Jaquith & Case a bond and mortgage for $750, against E. C. Adams, upon condition that they should pay the $700 note to the bank; that T. Wood and P. Hasbrook refused to pay the note out of the proceeds of the property assigned to them, and requested the sureties in the note to pay the same, and to keep the bond and mortgage which had been assigned to them upon that condition; and that Jaquith <fc Case subsequently procured the note.to be paid by the defendant G. Lawrence, and in consideration thereof, sold and assigned the bond and mortgage to him, to be'collected at his own risk. But the complainants alleged that Lawrence, in making such purchase, acted as the agent of Wood, and took the assignment for his benefit, and to prevent them from obtaining such bond and mortgage, to be applied upon their judgment. This allegation in the bill, however, was fully denied by the answer of the appellant; who stated that he paid the note with his own funds, and took the assignment for himself, and without notice of the complainant’s debt, or that they had filed a creditor’s bill against J. Hasbrook. The complainants insisted, in their bill, that the $700 note should in equity have been paid out of the proceeds of the property assigned to Wood and P. Hasbrook, in order to give them the benefit of the bond and mortgage, under the creditor’s bill. They therefore prayed that the defendant Lawrence might be decreed to transfer the bond and mortgage to a receiver, that they might have the benefit thereof towards satisfying their judgment; or that the defendants Wood and P. Hasbrook might be decreed to deliver to a receiver, for the complainants’ benefit, an amount of the assigned property equal to the amount of the bond and mortgage, or for such other relief as they might be entitled to upon the case made by their bill. The cause was heard upon pleadings and proofs as to the defendants Lawrence and P. Has-brook; Wood, .the other defendant, having died before the hearing. The vice chancellor declared and decreed that the complainants were entitled, in equity, to the bond and mortgage; and that the defendants, or such of them as had the custody or control of the bond and mortgage, or of the proceeds thereof, should deliver over the same to the complainants orto their solicitor ; or if the same were in the hands of the receiver appointed in this cause,, that he deliver the same to the complainants or to their solicitor; to the end that the same might be applied towards the payment of their judgment against J. Hasbrook; and that the defendants pay to the complainants their costs.
    G. Lawrence & S. Stevens, for the appellants.
    The defendant Lawrence was a bona fide purchaser of the mortgage and bond from Jaquith & Case, without notice of the complainant’s claim, or of the manner in which the bank note was secured by the assignment. He had a right to purchase the mortgage, and cannot be required to surrender it to a junior creditor, unless he is fully paid the amount of his advances. The complainants never offered to pay Lawrence the amount of his advances, nor did they require him to give up the mortgage upon any such condition. Jaquith & Case were not compelled to resort to the assignment, nor is Lawrence. Lawrence states in his answer, that he offered, before the filing of their bill, to assign to the complainants the bond and mortgage, on receiving the amount of his advances. This allegation is responsive to the bill. ( Woodcock v. Bennett, 1 Cowen, 711.) Neither Lawrence nor Jaquith & Case would be bound to resort to the assignment for the satisfaction of their debt, unless it clearly appeared that they could have rendered it as immediately available to discharge their liability as the bond and mortgage. The rule that a creditor is compelled to resort to a security upon which a junior creditor has no lien, only applies to cases where such resort will not in any degree prejudice or injure such senior creditor. Where there are two creditors, one of whom can obtain satisfaction only from the visible property of the debtor, and the other can subject to the payment of his debt not only that but a special fund created for his indemnity; although a court of equity will compel the latter to resort to the special fund, or will subrogate the former to his right to the fund, yet the former creditor must require the latter to resort to the special fund, before he has received satisfaction from the visible property. ■ If he waits, he has no equity against a third creditor who obtains an assignment of the special fund. Where a creditor has a lien upon two funds for the payment ■Of his debt, chancery will not compel him first to exhaust f he fund which a junior creditor cannot reach, if the senior creditor will thereby be injured, or if he offers .to substitute the junior creditor in his place, on being paid the amount of his debt. (1 Paige, 185.) The mortgage was assigned to Jaquith & Case, before the complainants filed their creditor’s bill against Joseph Hasbrook; the complainants, therefore, obtained no lien upon the mortgage itself, but only upon the equity of redemption of the mortgage, and that liable to be defeated on a failure of J. Hasbrook to pay the $700 note, which would vest the title of the mortgage absolutely in Jaquith & Case. (8 John. Rep. 96. 7 Cowen, 290.)' .

      B. Davis Noxon, for the respondents.
    Jaquith & Case having two funds for their security, as signers of the $700 note, to wit, the assignment to Wood and Hasbrook, and the assignment of the bond and mortgage against Adams; and the ‘complainants having a lien on only one of these funds, to wit, the bond and mortgage; the court would h,ave compelled Jaquith & Case, had they continued the owners of the bond and mortgage and liable on the note, to obtain their relief from that fund or security which the complainants could not touch, to wit, the assignment of the goods to Wood and Hasbrook, in order to give to the -complainants the benefit of the bond and mortgage. (1 Story’s Eq. 527, 528, 530,1. Cheesborough v. Millard, 1 John. Ch. 12, 409. Hopk. Ch. Rep. 460, 468. Evertson v. Booth, 19 John. Rep. 486, 492. 1 Story’s Eq. 588, 9, 590, 1.) The assignment of the bond .and mortgage.by J. Hasbrook, to Jaquith & Case, was a mere mortgage of such bond and mortgage, for the security of Jaquith & Case. (Brockway v. Wells, 1 Paige, 617.) The defendant Lawrence did not acquire and could not acquire any greater right or interest in the bond and mortgage, by the assignment to him, than Jaquith & Case had; and Lawrence is subject to the same equities existing in behalf of the complainants that Jaquith & Case would be, had they never assigned the bond and mortgage. (2 Paige, 206. Pendleton v. Fay, 1 Id. 131, 6, 7.) Lawrence took the assignment of the bond and mortgage with notice of the complainants’ 'claim, and in fraud of their equitable and just rights. (2 Paige, 205.) If the complainants are not entitled to the bond and mortgage, they are entitled to the amount secured by such bond and mortgage, and interest, out of the avails of the property assigned to Wood and P. Has-brook, and to call $485 and interest, part of such avails, from the hands of Lawrence, and the balance from J: Hasbrook. (1 Story’s Eq. 546.) Lawrence purchased, or pretended to purchase, the bond and mortgage pendente lite; and although it may have been for a valuable consideration, he is affected in the same manner, and to the same extent, as though he had had actual notice of the complainants’ bill and claim against J. Hasbrook. (1 Story’s Eq. 393,4, and authorities there cited. Muncey v. Ballou, 1 John. Ch. 566. 1 Story’s Eq. 150.)
   The Chancellor.

Even if the complainants were right in supposing that they were entitled to have the $700 note, to the Bank of Salina, paid out of the proceeds of the property assigned to Wood and P. Hasbrook, so as to give them the benefit of the Adams bond and mortgage under the creditor’s bill, they were not entitled to any relief upon this original bill, to which their judgment debtor is not a party. If a decree had been obtained against J. Hasbrook in the creditor’s suit, an original bill, in the nature of a supplemental bill, might perhaps have been filed, setting forth such decree, without stating all the proceedings in the creditor’s suit at length. But as no decree had been obtained establishing any right in the complainants as against the defendant in that suit, a simple supplemental bill, original only as to these new parties, would have been the proper proceeding to bring this new claim before the court. And if the merits of the case were with the complainants, I should be compelled to reverse this decree, and to dismiss their bill; but without prejudice to their right to file a supplemental bill in the creditor’s suit.

Upon a careful examination of the facts, however, I am satisfied that the vice chancellor erred in supposing that these complainants had an equitable right to have the $700 note, to the bank, paid out of the proceeds of the property assigned to Wood and P. Hasbrook for the benefit of the creditors of the assignor. The complainants’ bill was filed more than a fortnight after J. Has-brook had made the conditional assignment of the bond and mortgage, to pay the $700 note, as well as the provision for it, as a preferred debt, in the assignment to Wood and P. Hasbrook for the benefit of all the creditors of the assignor. To understand, therefore, what were the rights of these complainants, which they acquired by the filing of that creditor’s bill, it is' necessary to see what were the equitable rights' of the creditors, whose debts were provided for in the assignment subsequent to. the bank debt, as between them and J. Hasbrook.

The assignment of the bond and mortgage to Jaquith & Case, although it was in form a sale of the bond and mortgage to them, ppon condition that they should pay the note of $700 which they had signed as sureties for J. Hasbrook, was in effect a security to them; as no time was specified within which they should comply with the condition of the assignment, so as to give them an absolute title to the bond and mortgage. And as the assignment of the goods, &c. to Wood and P. Hasbrook, which was executed the same day, gave Jaquith & Case a right to priority of payment out of the assigned property, they had in fact two funds to which they could resort, for payment of the note to the bank, to indemnify themselves as sureties. The rule that where one creditor has two funds of his debtor to which he can resort for payment, and another creditor has a specific or general lien upon one of those funds only for the payment of his debt, equity will compel the first creditor to resort to that fund to which the lien of the other does not extend, is unquestionably applicable to this case. But the equity of the creditors who are provided for in the assignment to Wood and Hasbrook, subsequent to the provision for the indemnity of Jaquith & Case by the priority which is given to the holders of the $700 note, is entitled to a preference, in point of time, to the equity of these complainants; whose equity arose, from the filing of their creditor’s bill, fifteen days after the' assignment. Previous to the filing of the creditor’s bill against J. Hasbrook, if he had attempted to throw the payment of the $700 note upon the fund which had been assigned for the benefit of creditors, giving certain preferences, so as to get back his bond and mortgage, which had been assigned on the first of July to secure the payment of the same note, I think a court of equity ought to have compelled Jaquith & Case to resort to the bond and mortgage in the first place; so as to relieve the fund which had been assigned for the benefit of other creditors, from this charge thereon. Or if that fund was applied to the payment of the note, the other creditors, whose debts were first provided for in the assignment for their benefit, would, in equity, have been entitled to be subrogated to the rights of Jaquith &■ Case, as the assignees of the bond and mortgage. I th ink Wood and Hasbrook acted properly, in reference to the equitable rights of the other creditors provided for in the assignment to them, who were subsequent to the holders of the $700 note, in refusing to pay that note out of the proceeds of the assigned property, and to throw the charge of that note upon the bond and mortgage, if possible. These complainants, therefore, who stood in the situation of having an equity subsequent in point of time, could not be defrauded by having the prior equity, in favor of the other creditors, worked out by the arrangement by which the bond and mortgage were applied to the payment of the $700 note; as J. Hasbrook intended it should be at the time he assigned it to Jaquith' & Case.

By the terms of that assignment, the absolute title of the bond and mortgage was vested in the assignees, in case they paid the note which they had signed as sureties. And when they subsequently caused the debt tobe paid to the bank, by the arrangement which they made with Lawrence, they performed the condition upon which the bond and mortgage were assigned to them. They therefore had both the legal and equitable right to assign and transfer the bond and mortgage to Lawrence, absolutely and unconditionally. . And these complainants are not in a situátion to inquire whether Wood and Hasbrook, the assignees, have or have not applied the assigned property to the payment of the other preferred debts, in the .manner or in the order specified in the assignment. The amount of such preferred debts, exclusive of the $700 note to the Bank of Salina which was paid by the sale of the mortgage, exceeds the whole proceeds of the assigned property. Those preferred creditors, therefore, are alone entitled to call the assignees to account for the disposition of the assigned fund, or to inquire whether Lawrence may not have obtained, from one of the assignees, portions of the assigned fund which such preferred creditors were entitled to receive.

The decree of the vice chancellor was therefore erroneous, and must be reversed, so far as it affects the rights or interests of the appellant Lawrence; and the bill, as to him, must be dismissed with costs. The proceedings must also be remitted to the vice chancellor, so that the proper directions may be given for the discharge of the receiver, and the settlement of his accounts, if he has received the bond and mortgage, or the proceeds of the samel


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    King and Swift vs. Wilcox and Sawyer.
    Where the owner of a house and lot, which was subject to two mortgages thereon, conveyed it absolutely to his brother-in-law, for the purpose of defrauding the creditors of the grantor, and the grantee subsequently went into possession, and réceived'the rents and profits, and made some improvements thereon, and paid and took an assignment of the mortgages ; Held, that a subsequent creditor of the fraudulent grantor had a right to file a bill, to set aside, the fraudulent conveyance, and to have the proceeds of the property applied to the payment of his debt, after paying the amount due upon the mortgages, and the value of the improvements made by the fraudulent grantee upon the premises.

      Held further, that in taking an account of the rents and profits of the premises received by the fraudulent grantee, to be offset against the amount due to him upon the mortgages, he should not be charged with that part of the rents and profits which had arisen exclusively from his own improvements.
    Where a voluntary conveyance is made, and received, with the actual intention of defrauding existing creditors of the grantor, it is not such a conveyance as will protect the property, in the hands of the fraudulent grantee, against the claims of subsequent creditors of the grantor. But such subsequent creditors are not entitled to the benefit of improvements made upon the property by the fraudulent grantee, so far as the value of the property is actually enhanced by such improvements.
    This was an appeal, by the defendants, from a decree of the vice chancellor of the eighth circuit, setting aside a conveyance, from the defendant Wilcox to his co-defendant. Sawyer, as fraudulent and void, as against the creditors of the grantor. Previous to the fourth of July, 1828, Wilcox was the owner and in the actual possession of the premises in controversy, a house and lot in Rochester, subject to two small mortgages. On that day he executed a conveyance of the premises to Sawyer, his brother-in-law, for the alleged consideration of $1800.. The deed Wilcox acknowledged and caused to be recorded in September thereafter. Wilcox continued to occupy the premises until he removed from the state about five years after-wards, with the exception of one year, when the premises were rented by him. In January, 1829, Sawyer executed to Wilcox a power of attorney, authorizing him to mortgage or lease the premises, for any 'sum or sums of money, or for any time or term of years which he might deem fit; or to sell and convey the premises to any person, if he should think proper to do so. Under this power Wilcox mortgaged the -premises to Sibley & Field, in February, 1829, to secure a debt of his own to them, of $440. At the time of the date of the deed, in July, 1828, Wilcox owed about $1200, in addition to the two mortgages then upon the premises, and had no other visible property; which debts could not be collected.. In 1831 a judgment was entered in the supreme court, upon a bond and warrant against Wilcox, in favor of the complainants, given to secure them as his sureties upon notes which were made subsequent, to the deed of July, 1828; on which judgment there remained due to them, in March, 1836, about $740, for payments which they had been compelled to make upon two of the notes. For the amount thus due, they issued an execution to the sheriff of Monroe county; but Wilcox had no property on which the execution could be levied, except the premises specified in the deed to Sawyer. In July, 1833, Sawyer paid the amount of the mortgage given to Sibley & Field; and he paid and took an assignment of the two mortgages which were upon the premises previous to the conveyance of July, 1828. In July, 1833, he went into possession and made some improvements, and was in possession of the premises at the time of filing the bill in this cause, the latter part of March, 1836. In 1835, the complain*ants employed J. C. Swan to endeavor to obtain satisfaction of their debt, from the defendant Wilcox, who then lived at Cleveland. Swan made a conditional bargain to take certain village lots in Michigan, provided the transaction was ratified by the complainant. This transaction the defendants contended amounted to a satisfaction of the amount due upon the judgment. The cause was heard upon pleadings and proofs. The .vice chancellor decided and decreed that the deed of July, 1828, from Wilcox to Sawyer, was made to defraud the creditors of Wilcox, and was fraudulent and void as against the complainants, and should be set aside; that the interest of Sawyer in the premises was a mere mortgage interest, to the extent of the three mortgages mentioned in the pleadings,- and that having entered into possession under the fraudulent deed he was not'entitled to payment for his improvements. He directed an account, therefore, of the rents and profits and of the amount due on the mortgage; and that, upon the payment of the balance which might be found due to Sawyer upon the mortgages, the complainants should be substituted in his place as to the amount thus due, and that the premises be sold by a master for the payment of the amount thus found due, and the amount due to the complainants on their judgment; and that the defendants pay to the complainants their costs of this suit.

      J. W. Gilbert, for the appellants.
    If the conveyance in question be deemed fraudulent as to creditors, at the time of its execution, the complainants being subsequent creditors, cannot impeach it, without showing express fraud. (1 Dane’s Ah. 628, .620. 12 Ves. 14T, 155.) The defendant Sawyer is a bona fide purchaser, and entitled to be protected as such. The consideration was good. (1 R. L. 77 § 6. Jackson v. Peck, 4 Wend. 304. Seward v. Jackson, 8 Cowen 406.) If the conveyance was fraudulent in fact, the onus was upon the complainant to prove that Sawyer took with notice. (Seymour v. Strong, 1 Hill, 563.) Notice is effectually disproved by the answer. (Woodcock v. Bennett, 1 Cowen, 743. Cunningham v. Freeborn, 11 Wend. 240.) The transaction between Swan, the agent of the complainants, and Wilcox, in 1836, was an accord and satisfaction. (Chit, on Cont. 275. Hunt v. Silk, East, 448. Commonwealth v. Henderson, 15 Mass. 329.) The bill concedes that Sawyer is a bona fide mortgagee in possession. As such he is entitled to be credited in his account with interest, and all expenditures for repairs, improvements, taxes .and assessments. (3 Powell on Mortgages, 956.)

      N. Sawyer, for the respondents.
    The deed from Wilcox to Sawyer was executed to hinder, delay and defraud creditors, and is therefore void. The complainants, as subsequent creditors, have a right to impeach it. The power of attorney given by Sawyer to Wilcox, vested in Wilcox the legal interest in the pro'perty as to his creditors; no consideration having been actually paid by Sawyer for the lot. The law will imply a trust in favor of the creditors of Wilcox. If the deed is void, our judgment is a lien, and we are entitled to come here to remove the fraudulent incumbrances; even without execution. Sawyer is bound to account for the rents and profits from the date of the deed. The possession and interest of Sawyer commencing in fraud, he is not to be allowed for any advances made, or improvements put upon the premises, they being done in his own wrong and at his peril. As the complainants called upon Sawyer, before the commencement of the suit, and informed him of their rights and asked discovery, &c., he must pay the costs of suit.
    Swan had no authority to make the settlement which is set up as an accord and satisfaction. If Swan originally had power to make this settlement, such power was virtually revoked by the commencement and pendency of this suit, of which Wilcox had notice. The commencement of the suit altered the state of facts existing when the power was conferred, and this change being known' to the defendants, and unknown to Swan, the settlement made with him under such circumstances was a fraud. Wilcox, in any event, practised a gross fraud upon Swan in getting the notes. The agreement was not, by its own terms, to be binding, unless approved by the complainants; and it is, therefore, not binding, because they never have affirmed it. The appointment of a new attorney here, to issue execution and enforce the judgment, implies a revocation per se 'of the authority of any prior attorney. (6 Pick. 198.) The notes, given up by Swan, are of no validity, being merged in the judgment; and no authority was given to Swan to cancel the judgment. Such authority must have been by deed, and must be clearly proved. (1 Tenn. 209. 6 John. Rep. 51. Gary and Morgan v. Turner, 6 Ld. Ray. 331. Theobald on Principal- and Surety, and Principal and Agent, 221.)
   The Chancellor.

I have no doubt, from the evidence in this cause, that there was actual fraud in the conveyance of July, 1828; and that the whole of the transactions between the defendants in relation to the premises, were intended to hinder, delay and defraud the creditors of Wilcox, and to prevent them from collecting their debts out of the premises in question. The reasons assigned in the opinion of the vice chancellor for coming to that conclusion, are perfectly satisfactory to my mind upon that point. The vice chancellor is also right in supposing that the alleged compromise of the complainants’ debt, by the bargain made with Swan, and the conveyance of the worthless Michigan village lots, which bargain was never ratified by the complainants, did not amount to an accord and satisfaction of the amount due them upon their judgment. The whole of that transaction was a gross fraud attempted to be practised upon the complainants and their agent; and if the notes which were delivered up had been valid securities, and the transaction had taken place in this state, Wilcox would have been liable to indictment for obtaining such notes by false pretences, and false representations in relation to the nominal village of Ionia.

The only remaining questions to be considered, therefore, are whether the complainants, whose debts were contracted subsequent to the fraudulent deed of the premises, were éntitled to a decree declaring such deed fraudulent and void as to them, as well as to those who were creditors previously? And whether the provisions of the decree were right in reference to the rents and profits of the premises and the improvements made thereon by the defendant Sawyer, subsequent to July, 1833, when he took possession 7

There appears to have been much conflict of opinion among the judges of different courts, in England and in this country, whether all voluntary conveyances, without a valuable consideration were, not void, under the provisions of the statute, 13th Eliz. ch. 5, as to creditors whose debts existed at the time of the conveyance'; some holding that the existence of such indebtedness rendered the voluntary conveyance constructively fraudulent as to pre-existing debts, without reference to the amount of such debts, or the value of the debtor’s remaining property; and others holding that the existence of such debts was merely prima facie evidence of fraud, which might be rebutted by proof that there was in fact no intention to defraud. And those who held that the conveyance was absolutely void as to pre-existing debts, seeing the injustice of applying the same rigid rule of construing the statute in reference to debts subsequently contracted, necessarily made a distinction between a conveyance actually fraudulent as to creditors, and one which was constructively fraudulent as to debts previously existing. This distinction is maintained by Chancellor Kent, in the case of Reade v. Livingston, (3 John. Ch. Rep. 481,) who held a voluntary conveyance to be constructive and conclusive evidence of fraud in relation to pre-existing debts. Upon a full examination of all the cases, the legal principle appears to be established, that where a voluntary conveyance is made and received with an actual intent to defraud the then existing creditors of the grantor, it is not a bona fide conveyance, which can protect the grantee against the claims of subsequent creditors. This was clearly the opinion of Chancellor Kent in the case just referred to. And Mr..Justice Story says, “where the conveyance is intentionally made to defraud creditors, it seems perfectly reasonable that it should be held void as to all subsequent, as well as to all prior creditors; on account of ill faith.” (1 Stor. Eq. 352, § 361. See also 1 Dana’s Rep. 533; 2 Pick. Rep. 411; Palm. Rep. 415; 4 Day’s Rep. 284; Mason v. Rogers, 1 Root’s Rep. 324.) The vice chancellor was, therefore, right in setting-aside this conveyance as fraudulent, in reference to the judgment of the complainants and the two notes; which notes they signed as sureties for Wilcox, while he remained in possession of the premises and exercised acts of ownership over the same.

I think, however, there is a slight error in the decree in reference to the rents and profits, and the improvements. So far as respects the mortgages, the rents and profits are unquestionably an equitable offset, after deducting for taxes and assessments, except such part of the rents and profits as have arisen exclusively from improvements made by Sawyer; who is treated as the assignee of the mortgages in possession of the mortgaged premises. The decision of Chancellor Kent, in the case of Moore v. Cable, (1 John. Ch. Rep. 385,) went to deprive the mortgagee in possession of the benefit of improvements made upon the land, without the consent of the owner of the equity of redemption, except so far as to give him the benefit of the increased rents and profits arising from such improvements. In this case, however, the complainants were not the owners of the equity of redemption in the premises, but only had a lien thereon to the extent of their judgment. And if the defendant Sawyer has made permanent improvements, which will enhance the value of the premises, and enable the complainants to obtain a greater sum, upon the sale, towards satisfying their judgment, than they could have obtained if those improvements had not been made, it is but equitable that he should be allowed therefor.

The decree appealed from must, therefore, be modified, so far as to direct the master in taking the account of the rents and profits, not to charge the defendant Sawyer with the increased rents and profits which have arisen exclusively from the improvements made upon the premises by him. The master must also be directed to inquire and report how much the actual value of the premises is increased, by reason of permanent improvements made by Sawyer, which are still remaining on the premises, beyond what such value would now have been, if .those improvements had not been made. And the decree must direct that such increased value, as reported by the master, be first paid to Sawyer out of the proceeds of the master’s sale, after deducting therefrom, by way of offset, the costs allowed to the complainants, by the decree.

With this modification, the decree of the vice chancellor is affirmed with costs.


text:
    T. and J. P. Cumming vs. The Mayor, Aldermen and Commonalty of Brooklyn.
    Where the corporation of the city of Brooklyn Contracted with the complainants, to grade and regulate one of the avenues of that city, at a specified price, to be paid for out of the moneys which were to be’ Collected for an assessment made for such improvement; Held, that the cdrporation had the power^to make such a contract, and that it was the duty of its officers to see that a proper assessment for the improvement was made, and that the money was collected thereon, and paid over to the contractors, within a reasonable time alter the /completion of the improvement.
    And the officers of the corporation having unreasonably neglected to compel a proper assessment to be made, Held, that^the complainants were entitled to payment, out of the general funds of the corporation; and that such general funds be reimbursed, out,of the proceeds of the assessment when made-^p.
    Where the defendant neglects to raise any objection to the jurisdiction of the court, until after the testimony in the cause has been taken, it is too late to raise the objection that the complainants had an adequate remedy atjlaw.
    This Was an appeal, by the defendants, from a decree of the late assistant vice chancellor of the first circuit. In August, 1836, the complainants contracted with the corporation of Brooklyn, to grade and regulate Hamilton avenue, from Cl inton-street to the GowanUs bridge, in the sixth ward of the city, to be completed by the first of March, 1837; for which the corporation was to pay them at the rate of twenty-one dollars a foot,' when the money should be collected from the assessment which! was to be made for such improvement. By a subsequent! agreement, the price was reduced $6,75 a foot; in consequence; of an alteration of the grade of the avenue. The work was! completed according to the contract, and was approved by the: corporation; and amounted to about ¡$22,000. In March, 1837, the corporation ordered the assessors to make an assessment for the improvement. The assessors accordingly made an assessment, of the expense of the improvement, upon the several persons by name who were supposed to be owners of property benefitted by the improvement. But, in their return of the assessment, they gave no description of the property which was benefitted, and which they intended to assess. In October, 1837, a warrant was issued to the collector to collect the several assessments from the owners assessed. But only about ¡$2000 was collected and paid over to the complainants; and the residue of the assessments the collector returned as uncollectable from the goods and chattels of the persons assessed. In May, 1838, the corporation advertised the property, intended to be assessed, for sale, but could not obtain bids to the amount of the respective assessments; and the corporation subsequently advertised the property again for sale, with a similar result.
    In August, 1839, the complainants filed their bill in this cause, stating the making of the contract, and the performance thereof on their part; that they had only received about ¡$2000 for the work, and that the defendants had refused payment of the residue until the money should be collected by an assessment upon the property benefitted. The bill further charged that the understanding of the parties to the agreement was, that as soon as the work was completed, the corporation would cause an assessment to be made and collected for the expense of the improvement, and paid to the complainants; but that the defendants had neglected and refused to cause an assessment to be made and collected according to law. And the complainants insisted that, by the contract, the corporation was bound to collect the amount of the expense, by assessment, as soon as the work was done, or to pay them out of its other funds. They therefore prayed that the corporation might, by a decree of this court, be ordered to proceed to collect the moneys by assessment, and to pay them the amount due, with interest and costs, or to pay them out of the general funds of the corporation, and for general relief. The defendants, by their answer, admitted the mat.erial facts stated in the bill; and they set out the assessment actually made, the issuing of the warrant to collect the same, after it had been confirmed by the common council, the return of the collector, the subsequent attempts to, sell the lands, and a similar attempt subsequent to the filing of the complainants’ bill, but alleged that no one would bid at the sale. The cause was heard upon pleadings and proofs; and the assistant vice chancellor decided and decreed, that the corporation was indebted to the complainants for so much of the sum reported to be due on the 5th of September, 1837, as had not been paid, and that the complainants were entitled to interest thereon from the last mentioned time; and that the corporation should elect within sixty days to make a new assessment, or to have the former assessment amended; and that in that case, time should be given to the defendants, for paying the amount due to the complainants, until the amount could be assessed and collected according to law; with leave to the complainants to apply for further directions, if the amount was not collected without unreasonable delay. And he also decreed, in case the corporation should not so elect, that the defendants should pay the complainants the sum of $20,670,90, which remained due to them, with interest from the date of the decree ; and that the defendants should pay the complainants’ costs.

      N. F. Waring & G. Wood, for the appellants.
    The complainants have a complete remedy at law, for any damages they have sustained. The defendants being mere trustees, for the benefit of the owners of the land to be assessed, are not liable, except for malfeasance or misfeasance. The assessors are a body independent of the common council, and the defendants are not answerable for their acts. The defendants had no authority, by their charter, to enter into a contract in this case, by which 'the general treasury of the city would be charged: The act incorporating the city ofBrooklyn is a public act, and the complainants are bound to take notice of its provisions. The contract; being construed in reference to the charter, (which, so far as it bears upon the contract, enters into and becomes part thereof,} is a contract to pay out of-the moneys raised, and paid into the treasury, from the assessments upon the. owners on the avenue; and until the moneys are so raised, there can be no liability on the part of the corporation. The .complainants have failed to show performance on their part. Under the circumstances of this case, if there can be any legal liability to the complainants, there should have been a demand before suit brought.

      B. F. Butler & D. B. Ogden, for the respondents.
    The contract between the complainants and the defendants, binds the latter to pay, ultimately and absolutely, the fpll amount of the work done by the complainants in pursuance of the contract; and the reference to the assessment in the contract merely postponed the time of payment until an assessment, to be imposed and proceeded in with due diligence, should be concluded; when the rnoney due to the complainants, (whether collected from the assessment or not,) was to be fully paid to them. The contract, as so construed, was within the scope of the powers of the defendants, and is binding upon them. Even if the contract makes the amount due to the complainants specifically and exclusively payable out of the money to be collected by assessment, still the decree appealed from is right, and should be affirmed. The defendants, by postponing the collection of the assessment, or enlarging the time, within which the assessments were to have been paid, assumed the immediate payment of the debt. So the collection of the assessments, or some of them, having been prevented by the laches and neglect of the defendants, they became bound to pay the complainants immediately. The possibility of the complainants being never paid, by the assessment to be imposed by the corporation, was unforeseen by both parties, and the assessment having failed to produce sufficient to satisfy the amount due to the .complainants, this court •Will compel the defendants to collect the balance within a reasonable time, by a new assessment, or to pay the amount, out of the general funds of the corporation.
   The Chancellor.

The appellants having the general powers of a corporation, were competent to enter into a general contract with the complainants to grade the Hamilton avenue, between the two points indicated, and to pay them for so doing. The fortieth section of the city chartei gives a general authority to the common council, to cause the streets and avenues and squares, in the first seven wards of the city, and the'fire and watch district, to be graded, levelled, gravelled, paved or macad-amised, and to cause cross-walks to be made, and' drains and sewers to be constructed. And there is nothing in the charter which prohibits the corporation from entering into general contracts for the making such improvements. It is true, the same section of the charter which authorizes these improvements to be made, directs the expense thereof to be assessed upon the owners and occupants of the lands and premises benefitted thereby, in proportion to the amount of. such benefit. And as the amount of funds which the corporation is annually authorized to raise, for general purposes, is limited by law, it is a prudent precaution in making contracts for grading and improving streets, &c. to regulate the mode of payment in such a manner as to give a reasonable time to assess and collect the amount from the owners of the property benefitted, before the payments for the labor shall be demandable from the corporation. The assessment of the expense, as a local tax, is not' however a restriction upon the power of the corporation so as to require it to contract only for payments out of that particular fund. But this local tax is a fund which has been provided by the legislature to reimburse the corporation for the expenses of an improvement which it lias either paid or become liable to payly And if the corporation, voluntarily, or by compulsion, pays such expensei~out of its general funds, any citizen who pays taxes may apply to the proper tribunal to compel the corporation to cause the general fund to be reimbursed, byArTassessment and collection of the expense of such improvement from the owners of the property benefitted# or out of the property -itself, as authorized and directed by the charter. The legislature never contemplated the contingency, that the expense of an' improvement would be more than the whole value of the property which was to be benefited by such improvement; and therefore have not provided for such a case. And as the expense is all to be assessed upon the owners of property benefited by the improvement, in proportion to the amount of such benefit, whether the benefit is more or less than the amount of the assessment, it is hardly possible to conceive a case in which rational men would attempt an improvement, of the character specified, where the whole property of the city which was in any degree benefited by the supposed improvement was not sufficient to pay the expense. The case is different where valuable property is taken for the opening or widening a street; which property is to be paid for by the owners of adjacent lands within certain specified limits, in addition to the expense of grading and paving such street.

In the present case, there is no evidence that the lands benefited by the local improvement are not in fact worth enough to pay the expense. For the assessment has not been made in such a way as to make the attempts to sell any test of the value of the lands which the assessors supposed to be benefited. The statute makes the assessment a charge upon the personal estate of the owner of the lands benefited; and if the amount cannot be collected of him, the land itself is to be put up and sold to pay the amount. But to enable the corporation to resort to the lands for payment, it is absolutely necessary that the assessors should specify, in their assessment, the particular lands on which the assessment is made, either by the numbers of the lots, or by some other known designation; so that the purchasers at the corporation sale may know, from the description contained in the return of the assessors, the extent and boundaries of the property which was intended to be assessed. In other words, the property must be so described, in the return of the assessors, that the purchaser will be enabled to locate the premises, without the necessity of inquiring of the assessors what property they intended to tax. Here, a certain number of feet and inches is given, on the avenue, as the property of an individual named, but without specifying the boundaries on either side thereof, or stating how far it extends back from the avenue. The vice chancellor was therefore right in supposing that the common council had neglected their duty, in not causing a proper assessment to be made; and that this imperfect assessment ought not to have been confirmed, as it could not constitute a valid lien upon the lands intended to be assessed, for want of a sufficient description. It is not necessary, therefore, to determine what would have been the legal effect of the contract with the complainants, if it had, at the time when the assessment ought to have been made and collected, been impossible to make a proper assessment, and to collect the same from lands benefited by the improvement, or from the owners of such lands.

The fair construction of the contract is that the complainants shall be paid for their labor when the assessment shall be made and collected, and that the corporation will cause such assessment to be made and collected without any unreasonable delay, after the work is done. And as the defendants had violated their contract, by not having a proper assessment made without, unreasonable delay, I think the complainants were entitled to a general decree, against the corporation, for the payment of the amount due, with interest and costs. The defendants, therefore, had no right to complain that the decree gave them a further time to collect the money, by a new or amended assessment, instead of directing the corporation to pay immediately.

Although the common council may not have a control over the assessors, directly, they were bound by their contract, to have the assessment made; and if the assessors refused to do their duty, the corporation should have applied to the supreme court for a mandamus, to compel them to make a proper assessment, instead of confirming an invalid one. The order of the common council was all the evidence necessary to show the performance of the contract on the part of the complainants; and the corporation is bound by the acts of its officers in the discharge of official acts within the scope of their powers. I am inclined to think, the complainants could have recovered at law upon this contract, and that if that objection had been taken at the proper time it would have been fatal. It was too late, however, to ask the court to turn them around to a new suit, at the hearing, after the defendants had suffered them to go to the expense of taking proofs, without objection. The decree appealed from must, therefore, be affirmed, with costs.


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    Hosack and Blunt, executors, &c. vs. Rogers and others.
    Since the passage of the act to abolish imprisonment for debt, and to punish fraudulent debtors, a final decree against an executor, for the payment of a debt due from the testator, cannot be enforced by attachment or sequestration. But the remedy of the complainant, where there are no funds of the testator, in the hands of the executor, which can be reached, is by an execution against the individual property of the executor, if he has wasted the funds of the estate which came to his hands.
    Where an executor or trustee admits he has funds in his hands which are properly applicable to the payment of the debt or demand of the complainant, and an interlocutory order or decree has been made for the payment of such funds into court, it seems such order or decree may be enforced by an attachment for contempt, if it is not complied with.
    Process of sequestration, against the real and personal estate of a defendant, may be issued to enforce the performance of decrees, other than for the payment of money, where an attachment cannot be served upon the defendant, or where he continues to disobey the decree of the court, after his commitment for a contempt of court.
    Choses in action, as well as property which is liable to sale upqn execution, may be seized by the sequestrators upon process of sequestration.
    The surrogate’s court is the appropriate tribunal for the removal of an executor who is irresponsible, and to appoint another person in his place, when any of the property of the decedent remains in his hands unadministered.
    This was an appeal, by the complainants, from a decision of the vice chancellor of the first circuit, denying an application for an attachment and sequestration against the defendant N. Rogers, to compel the performance of the decree in this cause. The bill was filed by the representatives of a creditor of A. Gracie deceased, against N. Rogers, as his executor, to recover a debt due to them from his testator. Upon the coming in of the report of a master, to whom it was referred to take and state the account of Rogers as such executor, there was found due from him a balance of about $16,000, for the assets of the estate which had come io his hands, beyond his payments and disoursements and what he was entitled to retain as a creditor. And the decree thereupon directed him to bring the amount thus found due, with the interest thereon, into court, after deducting his costs; to be distributed by the clerk among the creditors of Gracie, in proportion to the amounts of their several debts. The decree having been affirmed upon appeal, and remitted to the vice chancellor, an execution was issued upon the decree, against the property of Rogers, and was returned by the sheriff unsatisfied. It appeared upon the application, that the defendant Rogers still had in his hands some of the securities taken for the assets of his testator, which could be traced and identified.

      J. Blunt, for the appellants.

      A. G. Rogers & A. Taber, for the respondent.
   The Chancellor.

The vice chancellor was right in supposing that an attachment and sequestration were not proper remedies to enforce the performance of the decree in this cause. This court originally had no power to issue an ordinary execution against the property of a party, to enforce the performance of a decree for the payment of money; but the mode of enforcing the performance of such a decree was, the same as in other cases, by process of attachment against the defendant. The legislature of this state, however, at an early day, authorized the court to enforce obedience to its decrees by execution, either against the bodies of the persons who were bound to perform such decrees, or against their goods and chattels, and in default of goods and chattels, against their lands and tenements. (Sess. Laws of 1802, p. 28, § 9. 2 R. S. 183, § 110.) But as the statute did not take away the right of the court to enforce its decrees in the manner in which they had previously been enforced, the party obtaining the decree had the right to proceed as formerly, by attachment; and by sequestration of the property of the adverse party; where he could not be reached by an attachment. The sequestration, however, was only resorted to against natural persons, after an attempt to reach the defendant by attachment had been found impracticable, or the party had been .committed upon the attachment, and still refused or neglected to pay the amount decreed.

The act to abolish imprisonment for debt and to punish fraudulent debtors, has, however, prohibited the arrest or imprisonment of any person, on any execution issuing out of this court, in a suit or proceeding instituted forthe recovery of money due upon any judgment or decree founded upon contract, or due on any contract, express or implied, or for the recovery of damages due upon a contract. (1 R. S. 2d ed. 807.) And it would be improper for this court to evade the object and intent of that statute, so far as relates to imprisonment in this court, by resorting to an attachment for a contempt, or to a precept to commit the defendant to prison, upon a decree for the payment of money only, in a case where the legislature has prohibited his imprisonment by execution upon such decree; although the same act exempts proceedings for contempts to enforce civil remedies from the operation of the provisions of the first section. The decree in this case was made in a suit instituted for the recovery of money due upon a contract; and it is a mere decree directing the payment of money, in satisfaction of the amounts due to the complainants and other creditors of the respondent’s testator, and of the costs of the.suit. It is also a final decree; upon which decree the ordinary course, previous to this non-imprisonment act, would have been to issue an execution, in the nature of a capias ad satisfaciendum, to compel the defendant to perform the decree, after an execution against his property had been found ineffectual. I think, therefore, that the complainants are not entitled to the aid of this court to imprison the respondent, for the mere non-payment of the money which he is decreed to pay in this cause, by any form of execution upon the decree. The case might have been different had it been a mere interlocutory order of the court, directing a trustee, who admitted the trust funds to be actually in his possession, or under his control, to bring the same into court for safe keeping. The reservation, in the second section of the non-imprisonment act, would probably extend to such a case ;• as a proceeding to compel a compliance with such an order, would be strictly a proceeding for a contempt, to enforce a civil remedy. And the case of a trustee, who wilfully retained the possession of a fund which was still in his hands and actually under his control, in contempt of the authority of the court, would not be within the mischief which the first section of the non-imprisonment act was intended to remedy.

Here the papers show that the greater portion of the indebtedness of the respondent, for which he has been made liable by this decree, arose from án improvident investment of the trust fund, without the authority of the court, during the pendency of this suit; which investment, by the showing of the appellants themselves, is probably irrecoverably gone. But the respondent denies that the liability which he incurred by such improvident investment was fraudulently incurred, or that he knowingly took insufficient security for the loan of the fund.

The process of sequestration, although it has gone almost out of use, since the statute allowing an ordinary execution against the real as well as the personal estate of a party, to enforce the payment of money decreed by this court, may be properly resorted to as a means of enforcing the performance of other decrees, where an attachment cannot be served, or where the defendant chooses to remain in prison, after his commitment for contempt of the court. The better opinion also is, that choses in action, finder certain circumstances, may be effectually reached by sequestrators; although they cannot be seized and sold by the sheriff, upon execution. (See 2 Dan. Ch. Pr. 712.) The appellants, however, were not in a situation to ask for a sequestration in this case, as they had not taken the preliminary steps to entitle them tp the appointment of sequestrators. And it is doubtful whether a sequestration can be granted where, by the non-imprisonment act, a party cannot be committed upon execution, or by attachment, for "not paying the money due upon a decree in a suit founded upon contract. The vice chancellor was therefore right in refusing to grant either an attachment, or a sequestration of the defendant’s property. And the surrogate’s court appears to be the appropriate tribunal, under the provisions of the revised statutes, to remove the executor and appoint another in his place, where he has become irresponsible; and where any of the fund remains in his hands unadministered, which will be liable to loss on account of such pecuniary irresponsibility. I think, therefore, this court ought not to interfere to take the administration out of the respondent’s hands, on a summary application,'founded upon petition and affidavits.

The'order appealed from is therefore affirmed, with costs; but the appellants are to be at liberty to offset such costs, against the amount due them upon the decree, if they shall elect to do so within sixty days after notice that such costs have been taxed, and of the amount thereof.


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    Strong and Gordon, Chiefs of the Seneca Nation of Indians, vs. Waterman.
    The indians in this state have an unquestionable right to the use, possession and occupancy of the lands of their respective reservations, which they have not voluntarily ceded to the state, nor granted to individuals by its-permission. And the ultimate fee of such reservations is vested in the state, or in its grantees, subject to such right of use and occupancy, by the indians, until they shall voluntarily relinquish the same.
    The right of the Seneca nation of indians, to the use ^nd possession of the Cattarau-gus reservation, is in all the individuals composing the nation, residing on such reservation, in their collective capacity; and they having no corporate name, no provision is made by law for bringing an ejectment suit to recover the possession of such lands for their benefit.
    Nor can such indians sustain an action at law, in the name of their tribe, to recover the damages sustained by them, by reason of trespasses committed upon their reservations, or to recover a compensation for the use of their lands which have been intruded upon by others without authority. But a bill may be filed by one or more of them, in behalf of themselves and the other indians interested, to protect their rights and to obtain compensation for the damages sustained by the numerous persons composing the nation.
    Where an individual, not belonging to the Seneca nation of indians, had intruded himself into the possession of lands belonging to the Cattaraugus reservation, without the consent of the nation, or of its chiefs, and was in the habit of cutting wood and timber thereon, the court of chancery, upon a bill filed by two of the chiefs, in. behalf of themselves and others, granted an injunction restraining the defendant from committing waste or trespass on such lands, and from interfering with the possession of the indians residing on the reservation.
    This was an application to dissolve an injunction granted by the vice chancellor of the eighth circuit, restraining the defendant from committing trespasses and waste upon the indian lands of the Cattaraugus reservation, or interfering with the possession of the indians residing on such reservation. The bill was filed by the complainants, who were two chiefs of the Seneca nation of indians, and who had been appointed by the general council of chiefs for that purpose, in behalf of themselves and the other individuals of the Seneca nation, residing on their several reservations. And the bill, after setting forth the original title of the Seneca nation of indians to the lands of the reservations, not only by occupancy but also by the recognition of their rights by the state, alleged that the said nation of indians, and the people thereof residing on their reservations, had, under the law of the state of New-York and the treaties with the United States, the sole and exclusive right to the possession, use and occupancy of their reservations, until they should be voluntarily surrendered up or relinquished by the nation, in the manner provided by law. It also set out the immemorial custom of the nation, to permit individuals, and heads of families, belonging to the nation, and residing upon the different reservations, to appropriate specific portions of the lands of the reservations for their separate use, improvement, cultivation and enjoyment ; subject to the direction and control of the chiefs of the nation assembled in council; that the indians residing on the said reservations had become agriculturalists; and that individuals and heads of families had, with the assent of their chiefs and head men, and by consent of the nation, appropriated to their separate use, portions of such reservations, and had cultivated and improved the same and permanently resided thereon. The bill then charged that the defendant Waterman,, who resided near the Cattaraugus reservation, had intruded himself upon the indian lands of that reservation, and had cleared and cultivated and occupied parts of the same for several years; and that he was also in the habit, and had been for six years or more) of cutting from the lands of the reservation large quantities of lumber, saw logs and fire wood, not only for his own use but also for sale, without the consent and against the will of the indians, and without right; whereby the lands of the nation'and the possession and use thereof were rendered much less valuable; that the chiefs of the nation 'had frequently remonstrated with the defendant, and -requested him to relinquish his possession of the lands belonging to the reservation, and to refrain from trespassing or committing waste upon other parts of such lands ; but that he had, notwithstanding) continued his encroachments until he claimed the possession and use of 1000 acres of the Cattaraugus reservation as against the nation; that, at the time of the filing of the bill in this cause, he continued to hold and claim the possession and use of the lands into which he had so obtruded himself, and threatened to maintain his possession thereof by force, and threatened to continue to commit further trespasses and waste upon other portions of the Cattaraugus reservation ; and that it was impossible for the indians to enforce their rights to the possession or use of the lands thus occupied by the defendant, or to recover compensation for the injury sustained, or to protect the lands of the reservation from further injury by the defendant, by any proceedings in the common law courts. Various other facts were stated in the bill, showing the necessity of the interference of the court of chancery, to ascertain and settle the rights of the indians to the lands claimed and possessed by the defendant, and to prevent the occupation of other portions of the reservation by him, and the cutting of the wood and timber thereon. And the complainants prayed that the defendant might be decreed to account for the wood, timber, saw logs and other property by him cut upon or carried away from the lands of the reservation, and for the use and occupation of such portions of the lands as had been used or occupied by him, and to pay over the amount found due upon such accounting, for the benefit of the Seneca nation of indians; and that the defendant and his servants, agents and workmen might be perpetually restrained by the injunction and decree af the court, from entering upon, using, or in any manner interfering with, settling upon, or controlling the possession of any portion of the Cattaraugus reservation, or any improvements or fields thereon; and from cutting wood, timber, or saw logs, on the premises, or carrying the same away, or committing waste, &c., and from hindering, molesting or disturbing the indians, or individuals of the nation, in the possession of any of the lands of the reservation. And that the complainants, for themselves, and in behalf of the Seneca nation of indians, might have such further or other relief in the premises, as might be agreeable to equity.

      D. Bowen, for the complainants.

      G. P. Barker, for the defendant.
   The Chancellor.

The rights of the indians in this state to the use, possession, and occupancy of the lands of their respective reservations, which have not been by them voluntarily ceded to the people of the state, or granted to individuals with the assent of the state, do not, at this time, admit of doubt. The ultimate fee of the land is undoubtedly in the state, or its grantees ; but the right of the indians to the beneficial use and occupancy thereof, until they think proper voluntarily to relinquish and abandon that right, has been too long recognized in this state to be now called in question. No provision, however, has been made by law for the bringing an ejectment to recover the possession of indian lands in the Cattaraugus reservation. For the right to the possession is in several thousand individuals, in their collective capacity; which individuals, as a body, have no corporate name by which they can institute an ejectment suit. It is true, the act of the 31st of March, 1821, respecting intrusions upon indian lands, provides a mode in which settlers upon indian lands may be removed, by a summary application of the district attorney to a county judge. And the 1st, 2d and 5th sections of that act appear to be in force; as they were neither repealed, nor embraced in any of the provisions of the revised statutes. If the word settler is sufficient to reach this case, where the defendant does not reside upon the reservation, but upon lands adjacent, and cultivates certain portions of the indian lands by intrusion, the complainants appear to have an ample remedy to recover the possession of the land, by the removal of the defendant therefrom. The bill, however, shows that the defendant interferes with the rights of the indians who attempt to occupy the lands claimed by him; which appears to be sufficient to entitle them to an injunction to protect them in the possession and enjoyment of their lands. And so far as the restraining of the cutting of timber, saw logs, and fuel is concerned, the laws have made no provision for the protection of the rights of the indians. The act of April, 1813, to prevent trespasses on indian lands, provided a sufficient penalty to protect the rights of the indians, and directed the penalty, when recovered, to be paid to them. (1 R. L. of 1813, p. 554.) The 5th section of the act of the 31st of March, 1821, before referred to, (Laws of 1821, p. 184,) directed one-half of the penalty to be paid to the county treasurer, and the other half to the indians. But in the revised statutes, although the penalty is retained, it affords no protection whatever for the injury which the indians sustain by the cutting of timber from their lands; as the statute directs the whole of the penalty, after payment of the costs and expenses of the prosecution, to be paid into the treasury of the county. (1 R. S. 209, §§ 87, 88.) And I have not been able to find any provision which authorizes the bringing of a suit, in a common law court, for the actual damages which the indians may sustain by trespasses upon their lands, or for the use of lands intruded upon; though it is possible there may be some statutory provision on the.subject which the counsel, as well as the court, have overlooked.

The right of the indians to the undisturbed possession and enjoyment of their lands being established, by the humane principles and policy of the state, if the common law furnishes no sufficient remedy for the protection of those rights, it is a part of the acknowledged jurisdiction of this court to interpose for their relief. And I think, upon the case made by the complainants’ bill, that this court is bound to decree an account for the injury which the indians have sustained by the trespasses upon their lands which have already taken place; and also to protect them, by injunction, against the further threatened injuries from the defendant and those in his employ.

The laws of this state do not recognize the different tribes of, indians, within our bounds, as independent nations, but as citizens merely; owing allegiance to the state government; subject to its laws, and entitled to its protection as such citizens. (Jackson v. Goodell, 20 John. Rep. 188.) The indians cannot therefore institute a suit in the name of the tribe; but they must sue in the same manner as other citizens would be required or authorized to sue, for the protection of similar rights. And as the individuals composing the Seneca nation of Indians, and residing on, and entitled to, their several reservations, are too numerous to join in this suit byname, the bill is properly filed by these complainants in behalf of themselves and the residue of the nation residing upon their reservations. The bill also shows that the two persons named as complainants have been duly authorized by the council of chiefs; who have the right to direct in all matters relating to the general interests and business of the nation. The parties are therefore properly before the court, and the complainants are entitled to retain this preliminary injunction.

Application denied, with costs.


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    Dykers and Van Alstyne vs. The Leather Manufacturers' Bank.
    The insertion of the word mem.., in a cheek upon a bank m New-York, does not affect its negotiability, or alter the right of the holder thereof to present it to the bank and demand payment immediately. And where the bank pays such check, whereby the funds of the drawer in the bank are exhausted, the holders of other checks, not so endorsed, and which are presented for payment during banking hours on the same day, have no legal claim against the bank, if their checks are not paid.

      Where a customer of a bank had given checks, to different individuals, for a much larger amount than his funds in the bank, and finding he could not make them all good during hanking hours, went to the hank and directed the officers not to pay any of his checks until further orders from him, and finally drew out the whole of his funds for the purpose of making a rateable distribution thereof among the holders of all the checks, Held, that the owner of one of the checks, who had demanded payment thereof from the bank after the direction of the drawer not to pay it, and before the fund was drawn out, was not entitled to claim the amount thereof against the bank.
    The mere priority in the drawing of a check upon a bank, is not sufficient to give to the holder of such check a legal right to preference in payment, out of the funds of the drawer, over the holders of checks subsequently drawn. And where different checks are presented to the bank at the same time, for sums which in the aggregate exceed the amount of the funds of the drawer, the officers of the bank are not bound to settle the conflicting claims of the holders of the different checks to priority of payment.
    This case came before the chancellor upon appeal from a decree dismissing the bill of the complainants. The facts of the case, as established by the pleadings and proofs, are stated in the opinion of the chancellor.

      J. W. Gerard, for the appellants.

      T. R. Lee, for the respondents.
   The Chancellor.

This is an appeal from a decree of the late assistant vice chancellor of the first circuit. The object of the bill was to compel The Leather Manufacturers’ Bank to pay a check drawn upon it by E. Sprague, who kept an account in the bank. There is some conflict of testimony as to the times where certain transactions took place, and particularly whether Sprague had instructed the officers of the bank not to pay his checks, at the time the check of the complainants was presented and payment thereof was refused. Upon that question I have no doubt that the assistant vice chancellor came to the correct conclusion. The facts of the case then, are substantially these: Sprague had borrowed money of Peck, and owed him considerable sums for balances upon the purchase and sale of stocks, amounting to $4500; for which amount he gave him a check upon The Leather Manufacturers’ Bank. But Sprague not then having funds in the bank to pay the check, requested Peek not to present it immediately. Without its being noticed by Peck, Sprague had written mem. in one corner of the check, which mark was' not noticed when it was afterwards paid by the receiving teller of the bank, by crediting it to Peck as a deposit. Sprague had, from time to time, for several weeks, requested Peck to delay presenting the check to the bank for payment; promising to make the check good in the course of the week. On Saturday, the 29th of June, Peck called at the bank for the purpose of having the check paid, if Sprague had funds to meet it; and being informed by the receiving teller that Sprague had not yet made his deposit, he left his bank book and the check with the receiving teller, and a note for Sprague, to be delivered to him if he came into the bank in his absence. Peck was gone a short time, and then returned to make his own deposit; and in the meantime Sprague came in and deposited, on his own account, $12631. The receiving teller, thereupon, passed the $4500 check to the credit of Peck, and notified the paying teller, that the check had been paid; so that Sprague’s account might not be overdrawn. It further appears that, on the-same day, Sprague bought stock of the complainants, to the amount of $3600, for which he gave his check on the same bank; promising them to make the check good on that day. He had also drawn checks, on the same day, on the bank, in favor of F. D. Robinson, and several other persons, the aggregate amount of which checks, including one for about $250 drawn a few days before, exceeded the whole amount of his deposit, exclusive of the $4500 check of Peck. Shortly after Sprague made the deposit, he was informed that the $4500 check had been presented and paid; and he then directed the paying teller to pay no more of his checks that day, without further orders from him. In consequence of that direction the check of the complainants, and the checks in favor of Robinson and others, which were afterwards presented, were not paid. But towards the close of the banking hours on that day, being pressed by Robinson for the payment of his check, Sprague concluded to draw out the balance standing to his credit in the bank, and to distribute it rateably among all the holders of his checks which had not been paid. He drew it out accordingly, for that purpose ; but Robinson and other holders of checks who were present with him in the bank, refused to let the complainants be sent for to receive their share of the fund, and compelled him to pay over the whole to the checkholders who were present. Whether the money was actually taken from him by force, or was given up by him voluntarily, upon their persuasion, is a question upon which the testimony of Sprague and some of the other witnesses examined on the part of the complainants are in conflict. But I think it is not material to the decision of this case to determine which of them is right. For I do not believe the money was taken from him by actual robbery; although it is very probable that pretty strong moral force was used, to induce him to give up the whole of the money to the disappointed checkholders who were present, instead of allowing him to retain a share thereof for the complainants.

There was nothing in the situation of the check of $4500 which rendered it improper for the bank to pay it. But as the holder of that check had waited so long, it is very probable that Sprague hoped he would wait still longer. Sprague might therefore have been disappointed at its being presented for payment on that day. But he does not pretend that there was any agreement between him and Peck that it was not to be presented for payment. And Peck swears to a state of facts which shows that Sprague had no right to presume on his further forbearance. The alleged custom of Wall-street, that an ordinary check, upon a bank, is to be converted into something contrary to its legal effect, by writing mem. in one corner thereof, certainly amounts to nothing. Indeed the weight of the testimony is, that this memorandum amounts to nothing more than an indication of an understanding that the check is not to be presented immediately for payment, so as to destroy the drawer’s credit with the bank when he has not provided funds to meet the draft. Even if there was an express agreement, between Peck and Sprague, that this check should never be presented for payment, the officers of the bank- were not chargeable with any fault in paying it. For the testimony conclusively shows that the check was paid in the usual course of business, and without even noticing the three letters which are supposed to have changed its whole legal effect. There is nothing in the case to show that the legal and equitable claim of Peck, upon the funds deposited in the bank by Sprague, was not as good as the claims of any of the other parties in whose favor checks were drawn on the day the deposit was made; even if the officers of the bank had known all the facts, as they now appear upon the pleadings and proofs.

This check having been paid, and properly paid, by the officers of the bank, the fund remaining was insufficient to pay all the other checks which were presented that day, by several thousand dollars. And I know of no principle which gave the complainants a specific lien upon the funds of the drawer of their check} so as to entitle them to a preference, in payment, to the holders of other checks. It therefore became, between the holders of the several unpaid checks, a mere struggle for preference; as all could not be paid. And if Sprague intended to distribute the remaining funds in the bank, rateably among the several holders of the checks, instead of letting some be paid to the exclusion of others, he did right to forbid the payment of any of them, until such an arrangement could be made. All the witnesses agree, too, that it would have been contrary to the usages of banks to have accepted and paid any of the checks, after Sprague had directed the teller not to pay them. I have no doubt, either, from the testimony of the paying, teller, when taken in connection with that of Sprague, that he directed a general suspense of the payment of all his checks, before any were presented for payment, subsequent to the making of the deposit, except the check of $4500, belonging to Peck.

It also appears, by the testimony of Sprague, that the whole amount which was subsequently drawn out, on the check presented by himself, was applied in payment of checks which had been presented for payment on that day. The holders of those checks, therefore, were equally entitled with these complainants to the fund. To entitle the complainants to recover, they must show that they were entitled to a preference in payment over the other checkholders, who subsequently obtained the money. But there is nothing in this case showing them entitled to such a preference, or to show whose checks were first drawn; if that circumstance alone could give a preference. If the complainants suffered any injustice from the- manner in which the fund remaining in the bank was appropriated, it was from the acts of Robinson and others, who appropriated the whole to themselves, contrary to the equitable principle upon which Sprague wished to distribute the money. The assistant vice chancellor was right, however, in supposing that the drawing a check upon a bank is not a specific appropriation of the funds of the borrower, to the payment of that particular debt, in preference to the holders of checks subsequently drawn. The drawer, therefore, might countermand the payment at any time before his draft was actually paid, or accepted by the bank. It would be utterly impossible for banks in New-York to do business, if they were obliged, at their peril, to settle the conflicting claims of the holders of checks, as to rights of priority arising from the time of drawing such checks. The cases referred to, of equitable assignment of particular funds, cannot therefore be applied here. The receiving of the money by Sprague, and the appropriation of the same to the payment of the holders of other checks, drawn by him upon the same fund, who had equal claims thereon with these complainants, gave no equitable claim upon the bank, which could entitle these appellants to call upon * it to pay the money a second time.

The decision of the assistant vice chancellor was right; and the decree appealed from, must be affirmed, with costs.


text:
    Jewett and others vs. C. & G. Belden.
    It is no objection to an application to dissolve an injunction, upon a bill of discovery in aid of a defence at law, that the complainant has excepted to the defendant’s answer for impertinence merely; where the bill has been fully answered.
    The complainant, in a bill of discovery, is not entitled to the discovery of a mere insulated fact, in aid of his defence at law, and to deprive his adversary of the benefit of a full answer showing that in reality the alleged defence in the action at law does nop exist.
    A bill of discovery, in aid of a defence at law, must state the nature and substance of the alleged defence. And nothing contained in the answer to such a bill can be deemed impertinent, which tends to disprove the existence of the alleged defence in the action at law.
    This was an appeal, from an order of the vice chancellor of the first circuit, refusing to dissolve an injunction restraining the defendants from proceeding in a suit at law brought by them against the complainants. The injunction was granted upon a mere bill of discovery to aid the complainants in their defence in the suit at law; and the application to dissolve the injunction was denied, upon the ground that exceptions to the answer, for impertinence, had been filed.
    S. P. Nash, for the appellants.

      B. W. Bonney, for the respondents.
   The Chancellor.

In the case of Livingston v. Livingston, (4 Paige's Rep. 111,) this court decided that exceptions to an answer for impertinence merely, or for scandal and impertinence, were not sufficient to prevent the dissolution of an injunction, where the bill was fully answered. And I can see no good reason for applying a different rule to the case of a bill of discovery, in aid of a defence at law. It is true, the answer must be used together, as an entirety, if it is read as evidence in the action at law, before the exceptions are disposed of and the impertinent matter, if any, has been expunged. But the complainant, in a bill of discovery, is not entitled to call for the discovery of a mere insulated fact, in aid of his defence, and to deprive bds adversary of the benefit of a full answer, showing that in reality no valid defence to the action at law exists.

The complainant, therefore, must state in his bill the nature and substance of his defence to the action at law. And nothing contained in the answer can be deemed impertinent which tends to disprove the existence of such a defence as is stated in the bill of discovery. The complainant therefore must show that some actual injustice or injury will result to him, from impertinent matter inserted in the answer to his bill of discovery, to entitle him to retain the injunction until his exceptions to the answer have been disposed of by this court.

It is difficult to ascertain from the bill, in this case, what is the precise nature of the defence which the complainants expect to establish by the particular discovery called for by the bill; upon the necessity of which discovery their claim to an injunction was based. I think, therefore, that an injunction should not have been granted upon this bill, originally. The refusal to dissolve it, after a full answer, and when no technical rule of the court required its continuance until these exceptions for impertinence were disposed of, was of course erroneous. The order appealed from must, for these reasons, be reversed, with costs; and the injunction must be dissolved.