text:
    Chapman vs. Robertson and others.
    1837. August 1.
    Where R. a resident of the state of New-York applied toC. at his residence in England for a loan of money, upon the security of a bond and a mortgage upon lands in New-York, at the legal rate of interest in that state, and it was there agreed that upon the return of R. to New-York he should execute his bond and mortgage, and have the mortgage duly recorded in the county where the lands were situated, and that upon the receipt of the bond and mortgage by C. in England he should deposit the money loaned with the bankers of R. in London', for his use; and the bond and mortgage were executed and the money received accordingly ; Held, that the mortgage was a valid security for the loan according to the laws of New-York; and that upon a bill filed there to foreclose the mortgage, R. could not set up the usury law of England as a defence to the suit.
    The construction and the validity of a contract which is purely personal depends upon the law of the place where the contract is made, unless it is made in reference to the laws of some other place or country where it is to be performed or carried into elfect.
    But the transfer of lands or other heritable property, or the creation of any interest in or lien thereon, must be made in conformity to the local laws of the place where the property is situated. And such local laws must also be resorted to for the purpose of determining what is to be considered real or heritable property so as to give it locality at such place.
    Upon a bill to foreclose a mortgage, or to obtain satisfaction of the amount due from the defendant, the latter may offset a debt due to him from the complainant, which would be a proper subject of offset in a suit brought by the complainant, at law, to recover the amount due upon his mortgage.
    Where a mere personal security is given for the payment of money loaned, and no place of payment is specified therein, the residence of the lender at the time of giving such security must be considered as the place of payment for the purpose of deciding the question whether such security is invalid on the ground of usury.
    But it seems that a loan of money, made upon personal security, at the rate of interest allowed by the law of the place whore the loan was made and the security given, although made payable to the lender at his place of residence where the legal rate of interest was less, would not be a violation of the usury laws of the latter place, unless intended as a mere cover for usury.
    The bill in this cause was filed to foreclose a mortgage given by the defendant Robertson to the complainant, upon a lot of land in the city of Hudson. The cause was heard upon bill and answer;. and the facts as stated in the pleadings were .as follows: The defendant Robertson, a resident of this state, being in England, in the summer of 1833, where the complainant resided, applied to the latter at his residence for the loan of £800 sterling, upon the security of his (Robertson’s) bond and mortgage on his lands in this state. And the complainant then agreed to loan him that sum upon the security offered, at an interest of seven per cent per annum, the interest to be paid annually. It was further agreed between the parties, that upon the return of Robertson to this state, he should execute his bond and mortgage to the complainant and have the same duly recorded, and should transmit the same to the complainant in England, who, upon the receipt of such securities, was to deposit the £800 with Robertson’s bankers in London for his use. The securities were executed and sent to the complainant accordingly, and he deposited the money with Robertson’s bankers for his use according to the agreement. The first year’s interest upon the bond ■ and mortgage was duly paid, except the sum of $90,73 : For which sum, as the defendant Robertson alleged in his answer, he had a just claim against the complainant for advances made to his son at his request; and which sum Robertson prayed might be offset against the interest due upon the bond and mortgage. The defendant Robertson also set up the usury laws of England, in his answer, as a defence to the suit. And he insisted that inasmuch as the original agreement for the loan was made in England, and the money was received there, the contract to pay more than five per cent per annum for the interest upon the loan, rendered the bond and mortgage usurious and void.

      K. Miller, for the complainant.

      A. L. Jordan, for the defendant Robertson.
   The Chancellor.

The bank which is a judgment creditor of the mortgagor having suffered the bill to be taken as confessed, the only questions in controversy in this cause arise out of the facts set up in the answers of Robertson as matters of defence. The offset claimed by Robertson must be allowed ; as he alleges in his answer that it was money advanced to a son of the complainant and at his request. The revised statues expressly provide that in suits for the payment or recovery of money, set offs shall be allowed in this court in the same manner and with the like effect as in actions at law. (2 R. S. 174, § 40.) And this is a suit for the recovery of money, to wit, the interest money due on the bond and mortgage. The defendant Robertson therefore having a just demand against the complainant for the money advanced at his request, and which would at law be a proper subject of offset in a suit upon the bond, he has a right under this provision of the revised statutes to set off the amount thus due to himself against the interest which he owes to the complainant upon the bond and mortgage, which the latter is seeking to recover or to obtain the payment of by the present suit in this court.

I am aware that in the case of Troup v. Haight, (Hopk. Rep. 270,) Chancellor Sanford intimated an opinion that a cross bill might be necessary to enable a defendant to avail himself of a set off in a suit in this court. This, however, was before the adoption of the revised statutes, which put the set off in this court and at law upon the same footing. And I can see no necessity for a double litigation by cross suits, in such a case, in one court more than in the other. The set off may be litigated and determined upon a general replication "to the defendant’s answer in this court, as well as upon a notice annexed to the plea of the defendant in a suit at law. The statement of the set off in the answer is a substitute for the notice annexed to the plea. And, upon the general replication to the answer, the complainant may introduce any evidence which is relevant and proper for the purpose of showing that the demand claimed as a set off' is not legally or equitably due, or, that for any other reason it should not be allowed. The defendant, on the other hand, may introduce proofs to rebut any special defence to his claim of offset which the complainant may attempt to establish. This court has already decided that a debt due from the mortgagee to the mortgagor may be offset against the amount due from the latter on the mortgage. And it may be done even where the mortgage has been assigned, if the right of set off existed at the time of the assignment. (Rosevelt v. The Bank of Niagara, Hopk. Rep. 579.) The defendant in the present case is, therefore, entitled to the set off claimed in his answer; and a cross bill is not necessary to enable the court to give him the full benefit thereof upon this bill of foreclosure.

The other point in this case presents a very nice question arising out of the conflict of laws in thíspate and England relative to the legal rate of interest. ¿It is an established principle that the construction and validity of contracts which are purely personal depend upon the laws of the place where the contract is made ; unless it was made in reference to the laws of some other plade or country where such contract, in the contemplation of the parties thereto, was to be carried into effect or performed) (2 Kent's Comm. 457. Story’s Confl. of Laws, 227, § 272.) On the other hand it appears to be equally well settled by the laws of every state or country, that the transfer of lands or other heritable property, or the creation of any interest in or lien or incumbrance thereon, must be made according to the lex situs or the local law of the place where the property is situated. And it has been decided that the lex loci rei sites must also be resorted to for the purpose of determining what is or is not to be considered as real or heritable property, so as to have locality within the intent and meaning of this latter principle. (Newlands v. Chalmer’s trustees, 11 Shaw & Dunl. Sess. Cas. 65.) The case under consideration would have come clearly within the first of these principles, if the bond of Robertson had been the only security for this loan ; although he resided in this state and intended to use the money here, where the legal rate of interest is seven per cent as specified in the bond. There is nothing in the bond from which it can be inferred that the parties contemplated the payment of the money in this state. And as no place of payment is mentioned, the legal construction of the contract is that the money is to be paid where the obligee resides or wherever he may be found. His residence being in England at the execution of the bond, that must therefore be considered the place of payment, for the purpose of determining the question where that part of the contract is to be performed. I lay out of view the fact that the bond itself was signed and sealed in this country, because as a mere personal contract it would be wholly inoperative until it was received by the complainant in England, where the money was then to be deposited with the banker for the use of the borrower. To this extent the decision of the court of king’s bench in the case of Dewar v. Span, (3 Term Rep. 425,) is unquestionably a correct exposition of the law of England and also of this state. For, as I understand that case, the bond which was the subject of litigation had no other connection with the West India estate than that the consideration of the original bond was a part of the purchase money upon the sale of an estate at St, Christopher’s; which estate had been sold and conveyed many years previous to the execution of the bond in question. And it does not appear from the report of the case that the debt for which the bond was given was in any way chargeable upon the land at that time. From the plea which the defendant put in, and which must have been sustained by the proof on the trial, it is evident that the last bond, upon which that suit was brought, was given for the purpose of obtaining a further extension of credit upon a debt which was then due upon personal security in England, where all the parties to the last bond resided. It was therefore a new and distinct contract for the forbearance of a debt upon personal security merely; although the original consideration for that debt was the estate sold in the West Indies more than forty years previous to that time. There was no question of conflict of laws in the case; but merely whether the bond was a security respecting lands in the West Indies within the intent and meaning of the English statute on that subject. And the court very properly held that the statute did not extend to contracts merely personal, and not connected with a security upon the land. That case, therefore, leaves the question untouched whether, indepenent of that statute, a mortgage executed in England upon a West India estate would have been valid if interest had been reserved according to the lex rei sites.

I am aware that in Stapleton v. Conway, (3 Atk. Rep. 727,) an opinion was expressed by Lord Hardwick that a mortgage upon land in the colonies, if executed in England and connected with a bond or other personal covenant for the payment of more than five per cent interest, was usurious and void. And there are other dicta to be found in some of the cases which occurred previous to the statute 4 Geo. 3, ch. 79, which are supposed to recognize the same principle. The question, however, does not appear to have been definitely settled until the passage of that act, which was intended to remove all doubts upon the subject; and which applied to contracts theretofore made as well as to securities which should be executed subsequent to the passing of the act. Doubts might well exist as to the validity of loans made in England, upon such securities, where both parties resided there; especially if the money was not loaned for the purpose of being used in the colony where the mortgaged premises were situate, as the giving of such a security might be a very convenient mode of evading the statute of usury. No doubt, however, appear^to have been entertained as to the validity of a loan upon a bond and mortgage actually executed in Ireland or the colonies, although the loan itself was made in England and was made payable there or to a mortgagee who resided there. For that reason I presume the statute merely puts the bond and mortgage executed in England upon the same footing, as to validity, as if they had been executed in the colony; and without any reference to the place where the money loaned was received or intended to be used, or was by the agreement of the parties to be repaid. I have very little doubt, therefore, that a security like that which is now under consideration, actually executed in the country where the mortgaged premises were situate, by a person domiciled at that place, for the repayment of a loan to be made upon the faith of such foreign securities, and for the purpose of being used by the borrower in the country of his residence, would have been considered as valid by the courts of England even if this statute had not been passed. And if this was a valid mortgage by the laws of England, so that a recovery might have been had in that country upon the covenant for the repayment of the money, or upon the bond given therewith as collateral security, it is unquestionably a valid security here to give a lien upon the mortgaged premises for the payment of a rate of interest authorized by the lex situs.

The distinguished author of the recent learned and invaluable commentary on the conflict of laws appears to lean to the opinion, that the mere taking of a security upon lands in another state or country, on a loan at a higher rate of interest than is allowed by the laws of the place where such loan is made and the security given, will not so change the locality of the contract as to protect it from the operation of the Usury law of the place where such loan is made, unless there is a further agreement, either express or implied, that the money shall be repaid at a place where the rate of interest reserved upon the loan is allowed by law. (Story's Conf. of Laws, 238, § 287.) But neither he nor Chancellor Kent appear to have expressed any opinion upon the precise question presented in the present case, in which the rate of interest reserved is allowed by the law of the place wheré the mortgaged premises are situated, and where the bond and mortgage were actually executed, but is more than could be legally reserved by the law of the place where the money was received, and where by the legal construction of the contract it must be deemed to be payable. Upon a full examination of all the cases to be found upon the subject either in this country or in England, none of which however appear to have decided the precise question which arises in this cause, I have arrived at the conclusion that this mortgage executed here, and upon property in this state, being valid by the lex situs, which is also the law of the domicil of the mortgagor, it is the duty of this court to give full effect to the security; without reference to the usury laws of England, which neither party intended to evade or violate by the execution of a mortgage upon the lands here.

If no rate of interest was specified in the contract it might perhaps be necessary to inquire where the money was legally payable when it became due, for the purpose of ascertaining what interest the mortgagee was entitled to receive. (Quince v. Callender, 1 Desaus. Rep. 160. Scofield & Taylor v. Day, 20 John. Rep. 102.) But if a contract for the loan of money is made here, and upon a mortgage of lands in this state which would be valid if the money was payable to the creditor here, it cannot be a violation of the English usury laws; although the money is made payable to the creditor in that country and at a rate of interest which is greater than is allowed by the laws of England. This question was very fully and ably examined by Judge Martin in the case of Depeau v. Humphreys, in the supreme court of Louisiana, (20 Martin’s Rep. 1;) and that court came to the conclusion, in which decision I fully concur, that in a note given at New Orleans, upon a loan of money made there, the creditor might stipulate for the highest legal rate of conventional interest allowed by the laws of Louisiana, although the rate of interest thus agreed to be paid was higher than that which could be taken, upon a loan, by the laws of the state where such note was made payable. Here the verbal contract for a loan, upon the security of a mortgage upon lands in this state, was wholly inoperative until the mortgage and other written security were executed in this state, and which agreement was consummated by the deposit of the money to the order of the borrower. It was a contract partly made in this state and partly in England. And being actually made in reference to our laws, and to the rate of interest allowed here, it must be governed by them in the construction and effect of the contract as to its validity. An appeal to the courts of this state was also contemplated by the parties, if necessary, to enforce a performance of the written agreement for the repayment of the loan; although from the residence of the mortgagee in England it might be necessary to send the money there to make a legal tender of the debt. And the complainant, upon this foreclosure of his mortgage here, is only entitled to recover the amount loaned, with seven per cent interest thereon, payable to him or his soliciior here, and is not entitled to any allowance for the difference in exchange between the two countries. (See 20 John. Rep. 102.)

The usual decree for a foreclosure and sale must therefore be entered. And the interest must be computed by by the register and inserted in the decree, except the interest for the first year which is paid ; the set off being allowed in part payment of the first year's interest.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    The Eagle Fire Company vs. Lent and others.
    1837. August 1.
    Where the mortgagor claimed title to the mortgaged premises under a conveyance from four grantors, two of whom were minors at the execution of the deed, but who had done no act after they became of age to disaffirm the deed; Held, that a purchaser of the equity of redemption from the mortgagor, who had taken a conveyance from him subject in terms to the payment of the mortgage, could not, upon a bill to foreclose the mortgage, set up as a defence as to any part of the mortgaged premises a quit claim deed subsequently obtained from the minors after they became of age.
    Upon a bill to foreclose a mortgage, the mortgagee has no right to make a person whose claim is prior to the mortgage, and who claims the legal title to the premises adversely both to the mortgagor and mortgagee, a party to the suit, for the purpose of testing the validity of his legal title to the mortgaged premises.
    So upon a bill for the specific performance of a contract of sale, the vendee cannot make a person who claims title to the land adversely to the vendor, a party to the suit, for the purpose of settling the validity of his title in chancery.
    The deed of an infant purporting to be founded upon a valuable consideration is not absolutely void, but merely voidable. And to render a subsequent conveyance by the infant, after he arrives of age, an act of dissent to the prior deed, it must be so inconsistent therewith that both deeds cannot properly stand together.
    Where a purchaser from the grantee of an infant subsequently takes a quit claim deed from the infant, after he becomes of age, the latter deed only operates as a confirmation of the first, and does not overreach a mortgage given by the original grantee of the infant, subject to which the grantee in the last deed purchased the property.
    This was an appeal from a decree of the vice chancellor of the first circuit. The bill was filed to foreclose a mortgage executed by Jacob I. Maybee to the complainants. Maybee claimed title to the mortgaged premises under an ordinary deed of bargain and sale from the four children of B. Evesson, who formerly owned the same as tenants in common. At the time of the execution of the deed two of the grantors were under twenty-one ; but they had never done any act to avoid the deed after they became of age, and the grantee and his assigns had continued in the undisturbed possession of the property. In February, 1828, Maybee conveyed the premises to G, Cozine, one of the defendants, in fee, subject to the complainants’ mortgage. And Cozine subsequently obtained from H< Evesson, one of the grantors of Maybee, who was then of age, a conveyance of all his interest and claim to the prepiises. The defendant-Cozine insisted, in his answer, that by reason of the infancy of two of the grantors at the time of the conveyance to Maybee, only one half of the premises passed by that conveyance or by the mortgage to the complainants. The vice chancellor decreed a sale of the whole premises for the satisfaction of the complainants’ mortgage; but directed that the master should sell subject to the right of the other grantor, who was an infant at the time of the conveyance to Maybee, to disaffirm the conveyance, if any such right existed. From this decree the defendant Cozine appealed, (See 1 Edward’s Ch, Rep. SOI.)

      S. P. Staples & W. S. Johnson, for the appellant.
    The complainants’ mortgage covers only one undivided moiety of the mortgaged premises, as to which a foreclosure is prayed by the bill. Henry Evesson and Benjamin Eves-son, who were infants when the mortgage was made, should have been made parties to the suit. The claims of the creditors of the defendant Ferdon, as against the defendant Cozine, cannot be litigated in this stage of the suit. The defendant Cozine is not accountable to the complainants for any portion of the rents and profits of the mortgaged premises received by him,

      George Wood, for the respondent,
    A mortgage or deed in fee by infants is voidable, and is valid until it is in due form avoided. The sale of the equity of redemption being subject to the mortgage, the mortgage in equity formed a part of the consideration, and of course the payment thereof by the purchaser is a part of the contract under which he so purchased. And the purchaser holding the premises is bound in equity to pay off the mortgage and to relieve the mortgagor from his liability, on his bond. The purchaser of the equity of redemption having got from one of the infant grantors after he came of age a further conveyance of the equity of redemption of a part of the premises, such conveyance is a confirmation of his previous voidable title to such part, and not a new or distinct title. The confirmatory conveyance operates to establish not only the antecedent title but the consideration and the entire contract under which the antecedent voidable title was obtained, and of course the lien of the mortgage thereupon, and thereby to render the lien no longer voidable, but absolutely valid» None but the infant could avoid the mortgage or the assignment of the equity of redemption. The infant does not avoid it. On the contrary, he affirms the previous sale of the equity of redemption, and the terms upon which the sale was made.
   The Chancellor.

As the defendant Cozine went into possession of the premises as purchaser of the equity of redemption from the mortgagor, and subject to the complainants’ mortgage, he cannot set up an adverse title in a stranger for the purpose of preventing a sale of the whole mortgaged premises for the satisfaction of the mortgage. It was therefore unnecessary and would have been improper for the complainants to make the infant grantor, in whom the outstanding title to one fourth of the premises is supposed by Cozine to be, a party to this suit. And if B» Evesson had been made a party he might have demurred to the bill, upon the ground that the complainants had no right to bring him into this court to try the validity of the legal title or claim to one fourth of the mortgaged premises. So far as mere legal rights are concerned, upon a bill of foreclosure, the only proper parties to the suit are the mortgagor and the mortgagee, and those who have acquired rights or interests under them subsequent to the mortgage. And the mortgagee has no right to make one who claims adversely to the- title of, the mortgagor, and prior to the mortgage, a party defendant, for the purpose of trying the validity of his adverse claim of title in this court. The case is analogous in principle .to making one who claims adversely to the vendor, a party to a bill filed by the vendee for the specific performance of the contract of sale., In which case it is held that such adverse claimant cannot.be made a party for the purpose Of having the validity of his claim settled by a decree of this court, which shall thereafter be binding upon him in relation to his claim of title. (Lange v. Jones, 5 Leigh’s.Rep. 192.)

It appears, however, from the answer in this case, and the deed produced upon the hearing, that H. Evesson, one of the infant grantors of Maybee, has conveyed all his right and interest in the premises to Cozine since the latter has become the owner of the equity of redemption therein. It becomes necessary,therefore, to inquire whether the conveyance of the infant grantors to Maybee was absolutely void, or merely voidable by them; for the purpose of ascertaining whether the subsequent "deed-from H. Evesson-to the defendant Cozine passed an absolute title to him of one fourth of the premises discharged of the mortgage, or was a mere confirmation of the title which he had previously acquired under the deed from Maybee. And upon this point I perfectly concur in the opinion of the vice chancellor, that the deed of an infant purporting to be founded upon a valuable consideration'is not absolutely void, but merely voidable. (See 2 Kents Comm. 234; 10 Peter’s Rep. 71.) ’ As. the deed to Maybee conveyed the legal title, subject to the right of .the infant to disaffirm the contract, it is perfectly clear, from the subsequent deed to Cozine, that the latter deed was intended to operate as a mere confirmation of the former title, and not as a disaffirmance of the previous deed. To render a subsequent conveyance by an infant an act of dissent to his prior deed, it must be inconsistent therewith, so that both cannot properly stand together. . Here, if the allegations of Cozine in his answer are true, and as between him and the complainants they must be taken to be so, he was at the time of the second conveyance the legal owner of the premises, subject to the payment of the mortgage. A quit claim of all the right and title of the former grantor to him, therefore, previous to the doing of any act disaffirming the first deed was nothing more or less than a release of the right to disaffirm such former conveyance.

What will be the legal effect of the second conveyance as between Cozine and those claiming under Ferdon’s title, if it shall hereafter appear that the equity of redemption was not in Cozine but in Ferdon, must be left for the future decision of the court in settling the right to the surplus proceeds of the sale ; if there should be any surplus after paying the complainants’ debt and costs. All that is intended to be decided here is, that upon the facts as they now appear upon the bill and on the answer of the appellant, the mortgage is a lien upon the whole premises.

The decree appealed from is therefore right, and must be affirmed with costs to the complainants.


author: A. Gardner, V. C. The Chancellor.

text:
    Potter vs. Chapin and others.
    Where the inhabitants of a village, previous to the act for the organization of school districts, contributed by voluntary donations to a fund for the erection of a school house for the use of the neighborhood, and the school house was subsequently destroyed by the British troops, and congress afterwards passed an act to remunerate those Whose property was thus destroyed ; and previous to the passage of such act the village where such school house had been erected Was incorporated into a school district; Held, that the fund afterwards received under that act belonged to such school district and not to the original contributors to the fund. And the school district having been divided into two districts before the receipt of the money from the United States; Held, also, that the fund belonged to both districts in proportion to the taxable property in each at the time of the division.
    The court of chancery will sustain a gift or bequest or dedication of personal property to public or charitable uses, if the same is not inconsistent with local law or public policy, and where the object of such gift or dedication is specific and capable of being carried into effect according to the intention of the donor.

      1837. August 1.
    Whether a devise or gift of real estate for public or charitable uses is valid, where the legal title is not vested in some one capable of taking and holding real estate for the purposes of the charity according to the provisions of the revised statutes ? Qumn.

    Upon separate appeals by the different defendants, in a suit to settle their rights to a fund in court, costs cannot be awarded between the different appellants, unless they have made each other parties to their respective appeals.
    This case came before the chancellor upon appeal from the final decree of the vice chancellor of the eighth circuit, made between the defendants in an interpleading suit. The bill was filed against three different classes of claimants of the fund in the complainant’s hands. The origin of the fund and the facts upon which the rights of the several parties depended were as follows : About the year 1806, and pfe» vious to the passage of any law for the regular organization of common school districts in this state, the defendants Cha» pin and Wells and several others, who were inhabitants of that district of country which is now the city of Buffalo, and who constitute one class of claimants in the present suit, by voluntary donations of money, labor and materials, contributed to a Common fund for the erection of a school house; for the use of themselves and the other inhabitants of that neighborhood or district. The frame of the school house, before the building was completed, was by common consent removed from the lot on which it was erected to lot No. 73 in the village of Buffalo, belonging to the Holland land company; which last mentioned lot the inhabitants of the village then supposed was to be given to them, by the company, as a permanent site for a ■ school house. The building having been completed, it was occupied as such for the use of all the inhabitants of the village until December, 1813, when it was burned by the British troops. After this event, the Holland company’s agent sold lot-No. 73 on which the building had stood; and he promised to give the inhabitants of the village another lot, for their school house, in lieu thereof. At the time of the burning of the school house the town of Buffalo had not béen divided into school districts, under the general act of June, 1812; But it was so divided previous to the 4th of October; Í8Í5; m which division all the inhabitants of the district oi* territory for whose use the school house was originally designed were organized into a single school district, and designated by the school commissioners as district No. I. In 1817, H. B. Potter, the complainant in this suit, as the voluntary agent of the inhabitants of the district, but without any special authority from the trustees, presented a claim to the commissioner of the United States for claims, under the 9th section of the act of congress of April, 1816, as modified by the act of March, 1817, for the purpose of obtaining compensation for the school house which had been thus destroyed. He also introduced the necessary proofs before the commissioner to establish the claim in behalf of the inhabitants of the district under those acts. The claim, howmver, was not finally disposed of by the commissioner within the two years allowed by the act for his continuance in office. It therefore. remained dormant until the passage of the act of March, 1825; by which act the third auditor of the treasury was authorized to examine and adjust the claims which had been presented under the former acts. This claim was then re-presented under the last mentioned act, and was finally allowed and paid to the complainant as the agent of district No. 1 in Buffalo. In the meantime the town of Buffalo had been divided, and the new .town of Amherst erected therefrom, leaving, however, the village in the old town, or that part which continued to retain the former name of Buffalo. And upon the re-division of the town into school districts, in October, 1823, the village was divided and formed into two districts, numbered by the commissioners upon such re-division one and two. But lot No. 73, the former site of the school house which was burned in 1813, upon that division fell within the limits of the new district No. 1. The trustees of that district constituted the second class of claimants, and insisted that they were entitled to the whole fund. The trustees of the new school district No. 2, as erected in 1823, were the thud class of claimants, and claimed in behalf of the inhabitants of their district a rateable proportion of the fund with district No. 1; and in opposition to the claim set up by Chapin and Wells in behalf of themselves and the other contributors to the fund for the erection of the school house.
    Potter, the complainant, paid the fund into court; and the several defendants having put in their answers insisting upon their respective claims as above stated, the usual decree was made discharging the complainant from the controversy, with costs to be paid out of the fund. And the cause was referred to a master to take proof as to the rights of the several defendants as between themselves. Upon the coming in of the master’s report the vice chancellor decreed the whole fund to district No. 1, to the exclusion of district No. 2; and he directed Chapin and Wells and their associates to pay to district No. 1 the costs of the complainant which had been taken from the fund, and also the costs of that district in the defence of the suit. Chapin and Wells appealed from the whole decree *, but no notice of their appeal was served upon the solicitor of the trustees of school district No. 2. The trustees of that district also appealed from so much of the decree as adjudged and declared that they were not entitled to any part of the fund; but Chapin and Wells were not made parties to that appeal by the service of any notice of such appeal upon their solicitor within the time allowed by law.
   The following is the opinion delivered by the vice chancellor at the time of making the decree appealed from:

A. Gardner, V. C.

The first point made by the school districts is that the acts of the original builders of the school house mentioned in the pleadings amounted to a dedication of the same to the public. The dedication of property to the public must depend, like every other grant, upon the intent of the parties. The nature of the property itself, the situation of the country, the acts and declarations of the owner, the unmolested enjoyment of the public of the property, are all proper subjects of consideration as evidence in determining the intent of individuals to appropriate private property for the benefit of the public. It was accordingly said in Dunning v. Roome, (6 Wend. R. 657,) that whether the right in the public attaches after five or six years, or not till the expiration of twenty, depends upon the circumstances of each particular case ; that an act on the part of the owners may be so clear and unequivocal in its character as to constitute a dedication, if immediately followed by public use, though the time of that use should be very brief. What evidence does the present case furnish of such an intention upon the part of Chapin and his associates ? From the deposition of Kaene it appears that the witness was a resident of Buffalo before the house was built; that he was present at a meeting of the citizens when it was determined to build the house, and when a subscription was started to raise the required funds ; that there were several single men who were not residents but who subscribed ; that he subsequently worked upon the house, but he neither asked or received any thing for his services; that he supposed and believed that all that was done towards the erection of the house by others was done for the general benefit of all who wished to send to school; that the house was placed upon the lot where it was burned, because it was understood and believed that the lot was to be given as a school house lot by the Holland Land Company; that those who contributed never claimed or received, or expected to receive, rent for the use of the house; that no taxes were imposed upon the house, and that from the time of its erection in 1806 until it was burned in 1813 it was generally occupied as a school house, except that it was occasionally occupied as a meeting house. It is true that this deponent (who is one of the defendants) states that he and other of the contributors had, in his opinion, a right to dispose of their shares in any manner they thought proper. He could hardly have said less after having voluntarily became a party to this litigation. It is his mere opinion, however ■—never, so far as it appears, expressed to others; and, therefore, in no way impugning the legal effect of the facts to which he distinctly testifies. The testimony of Judge Walden, another of the defendants, confirms that of Kaene in every important particular. He does not pretend, however, that he entertained the opinion that he possessed any exclusive rights in relation to this house. So far from it, he states that when compensation was claimed from government in behalf of the district, he heard of it but made no opposition; and subsequently, when the money was received, he interposed a claim thereto in behalf of district No. 2, in which he resides. I have adverted to the depositions of the defendants in preference to those of other witnesses, and it is to be presumed that they have stated their own case as favorably as the facts will warrant. And it seems to me their statements, in connection with admitted facts, furnish as strong evidence of a dedication of this property to the public as is likely ever to occur. The purposes for which the building was designed; the formality of a public meeting evincing the general interest in its erection; the mode of raising the funds; the situation of some of the contributors, who could have, from their residence, no personal interest in the subject ; the location of the building upon a public lot; the immediate and uninterrupted use of it by the public from the time of its erection until it was destroyed by the enemy; the fact that the business of the school was managed by a committee chosen by the citizens , at large; that an application in their behalf was preferred in 1817 for compensation for its loss, to the knowledge, certainly, of one of the defendants, and probably of all of them ; that the claim was tacitly acquiesced in by all parties; was allowed by the government; that the money was paid to the district, and no claim preferred by any of these defendants for the money until June 1831, a period of eighteen years from the destruction of the building, are all of them circumstances which point to one conclusion—an unreserved dedication of this property for the public use.

It was urged that although the contributors designed to give the use to the public, they reserved the property of the building to themselves. The location of the house, it seems to me, is a satisfactory answer to this suggestion. It was placed upon a lot which the defendants supposed and believed would be granted as a school lot to the public. The house would, of course, have passed as an incident to the land. This view is certainly inconsistent with the supposed reservation. The case of Ingleby v. Dobson, (4 Russ R. 342,) is not unlike the present. A school house had there been built by subscription upon lands belonging to the lord of the manor, and it had been used by the public for a series of years. The master of the rolls upon these facts decided that the house was plainly dedicated to the purpose of a school, and that no individual could claim property in it.

Again ; by the laws of congress under which this claim was preferred, it was made the duty of the commissioners appointed according to its provisions before they proceeded to adjudicate on the claims of individuals, to prescribe and publish for eight weeks in the public newspapers rules as well in regard to the receipt of applications of claimants to compensation for losses as the species and degrees of credence to be given to evidence and the manner in which such evidence should be authenticated. The statute was equivalent to a general notice to all persons not only to prefer their claims but of the species and degrees of evidence by which they were to be supported.

The authority to adjudicate given by the act necessarily included the- power to determine the question of ownership in case of conflicting claims to compensation for the loss of the same property ; and it was the duty of Chapin and his associates to have appeared, prepared their own claim and litigated the claim before the commissioners within the period limited by the statute. Failing in this, their rights were barred by the 15th section which provides “ that no claim authorized by this act shall be allowed or paid unless the same be exhibited within two years from the passing hereof.” The subject matter of this claim may, therefore, be considered as res judicata, and the decision of the 3d auditor, who by the act of 1825 was substituted for the commissioners, awarding damages to district No. 1, is conclusive upon the right of these parties. If this be correct the complainant in this cause, upon the showing of the claimants, cannot be considered as a trustee for them, except for reasons that would apply to every solicitor who receives money for his client by virtue of a decree founded upon insufficient evidence and in a suit to which the cestui que trust was a party.

The last question to be determined is as to the right of district No. 2 to a share of this fund. School district No. 1 was organized in 1815, and At that time included the territory now embraced in districts 1 and 2. In 1817 the claim in behalf of No. 1 was preferred before the commissioners, and evidence was given to establish the same. In 1823 the district was divided,|and No. 2 set off by the school commissioners; and in 1826 the third auditor, upon the evidence received by the commissioners in 1817, determined in favor of the claim of No. 1, and assessed the damages. And this money was paid to their attorney or committee. The argument then upon the part of No. 2 is substantially this: that as the claim was preferred before a division of the district, it was in the - nature of a suit for the benefit of all the inhabitants ; that judgment was rendered upon that claim, and that; the avails should be appropriated for the benefit of both districts. The answer to this view is to be found in the fact that school districts are quasi corporations for certain purposes; that in this character the claim was preferred by No. 1 and entertained by the government; or if we are to adopt the analogy to a suit at law, district No 1 was the plaintiff upon the record at the time when the suit was instituted, and has had a continual legal existence to the present moment. The division of territory and the erection of a new corporation did not, it is conceived, abolish the old one, or in any manner affect its legal rights. And there is less foundation for the opinion that district No. 2, organized six years after this claim was preferred, has any right legal or equitable to any portion of this fund. It was conceded that if the school house had been standing at the time of the,division it would have belonged to district No. 1. (2 John. Ch. Rep. 320. 1 Hopk. 289. 2 Wendell, 125.) The damages awarded for its destruction to that district by name, in the absence of legislative provision, must, as I apprehend, follow the same rule. The provisions in our statutes for the division of town monies, and in the revised statutes in relation to property in school districts, show the sense of the legislature, that in the absence of such provisions personal property would in all cases belong to the old corporation. My conclusion therefore is that district No. 1 is entitled to the entire fund.

M. T. Reynolds, for Chapin and Wells.

This was an association formed for the purpose of establishing a school house for their common benefit, with no corporate powers to be sure, but the fund was quasi corporate property and the associates were tenants in common. The money recovered for the loss of the school house is a fund held by Potter in trust for those who contributed to build it. The question is, did the donors intend to give to the public the principal as well as the interest, or the interest only ? And if so, to whom was it given ? to all who came within the range of its benefits ? There are four or five districts who ought to have interposed their claim—or did not the original proprietors contemplate putting up a house over which they could have the control ? The trust must take effect according to the intent of the parties, or not at all. Every distinguishing feature of the association was destroyed by the destruction of the house. No lapse of time will bar the right to the trust money; and here has been no waiver or abandonment on the part of Chapin and Wells of their interest in this fund. This being an implied trust, so long as the subject of it remains in the hands of the trustee this court will lay hold of it for the benefit of the cestuis que trust.

A. Taber, for school district No. 2.

The persons w'ho erected the school house dedicated it to the public, and cannot now be permitted to resume it. (See argument of vice chancellor in Pennock v. Dialogue, 2 Peters’ Rep. 1; Beatty et al. v. Lutheran Church, id. 566, 581; Denning v. Roome, 6 Wend. 656; Livingston v. New-York, 8 id. 85; City of Cincinnati v. White, 6 Peters. 431.) The grant by the government was a proceeding to which Chapin and his associates were a party, by means of the public notice deciding the right to be in the public, and they cannot now be permitted to shew that the money granted was intended for them. (Story’s ed. Laws U. S. vol. 3, p. 1544, § 12, 13, 14. See Jackson v. Houseman & Hart, 12 John. Rep. 77, and cases there cited) The claim was presented and preferred by H. B. Potter, for the inhabitants of the then district No. 1, and was finally proved, audited and paid to him on that claim, and he has ever since held the property as trustee for the persons then constituting that district. The division of the district in 1823 was a dissolution of the incorporation of old district No. 1, and an incorporation of two new districts, and had no effect to deprive either of the new districts of any right which they had as the inhabitants of old district No. 1, or as the original donees of the property dedicated. The dedication of the school house in question was to an association or class of the public, unincorporated, and before the existence of any school districts; as in the case cited from 2 Peters and 4 Russell; and the school house was burned while things remained in this condition. The grant of compensation by congress was in 1816, when all this class had become and was a quasi corporation, under the name of school district No. 1. The subsequent amendatory acts relate only to the remedy, not the right. In 1825 or 6, when the money was actually received and ought to have been paid over by the complainant, this quasi corporation had become two such corporations—the one comprising one half the individuals first above mentioned, claiming the whole, and the other comprising the other half of them claiming their share of the money. The right to the compensation, at law, still more in equity, arose at the date of the act of congress, not at the time of payment. The money should be divided either in proportion to the number of the inhabitants in the two districts, or in proportion to the taxable property in each district at the time the money was paid over to Mr. Potter.

S. Stevens, for district No. 1.

The erection and use of the school house was a dedication to the public and divested the contributors for its erection of all individual interest. (2 Peters’ Rep. S. C. U. S. 1, 566. 6 id. 431, 498. 6 Wend. Rep. 657. 4 Russ. Rep. 342. 4 Paige’s Rep. 511. Laws U.S. sess. 1816, 1817, 1818 and 1825, relative to persons -whose property was lost or destroyed during the war.) The adjudication by the third auditor of the treasury in favor of district number one was final and conclusive upon all parties. (See statutes abone referred to.) If these propositions are neither of them true, then we say that the payment by the government to district No. 1 was a donation to that district, and no other person or party has a right to question the application of that bounty. (12 John. Rep. 77.) District No. 2 having been set off from No. 1, after the claim had been made by No. 1 upon the general government, and no provision having been made as to the distribution of this money between the two districts, each took what real estate fell within its bounds, and the old district retained all personal property standing in its corporate name. (2 John. Ch. Rep. 336. Hopkins’ Rep. 292.) The appeals should be dismissed with costs, and the appellant Chapin should be decreed to pay interest on the amount withdrawn by Potter for his costs, and interest on the costs taxed in favor of the appellees, from the time of the appeal.

The Chancellor.

The first question for consideration in this case is as to the claim of Chapin and Wells, in behalf of themselves and other contributors for the erection of the school house. And upon this point I entirely concur in the conclusion at which the vice chancellor arrived, that these contributors as such are not entitled to any part of the fund in controversy. The facts in the case show conclusively that the fund raised for the purpose of erecting the school house was dedicated to the inhabitants of the village for that purpose, as a donation or gift to a public charity. Although some doubt was thrown upon the question of charitable donations, for the benefit of a community or body not incorporated so as to be capable of taking and conveying the legal title to property, by the decision of the supreme court of the United States in the case of The Baptist Association v. Hart’s Executors, (4 Wheat. Rep. 1,) I believe it is generally admitted that the decision in that case was wrong. And it may now be considered as an established principle of American law that the court of chancery will sustain and protect such a gift, bequest or dedication of property to public or charitable uses, provided the same is consistent with local laws and public policy, where the object of the gift or dedication is specific and capable of being carried into effect according to the intention of the donor. (2 Kent’s Com. 286. 4 Idem, 508. 2 Peters’ U. S. Rep. 566. 3 Idem 99. 7 Vermont Rep. 241.) A devise or conveyance of real estate, under the provisions of the revised statutes, may perhaps form an exception to the general principle ; as a devise of real estate can only be made to a person capable of holding the same for the purposes of the charity, and all general trusts are abolished. (2 R. S. 57, § 3. 1 Idem, 728, § 49, 729, § 62.) In the present case the object of the donation to the common fund was for the purpose of having a school house for the general benefit of the inhabitants of the village ; and not to create distinct interests in the building for the exclusive benefit of the donors, as tenants in common, which should thereafter be subject to part-age among the original contributors to the fund or their assignees or personal representatives. The school house at the time of its destruction, therefore, belonged to the inhabitants of the village in their collective capacity as such inhabitants. If the house had been sold and removed instead of being burned they would have been entitled to the interposition of the equitable powers of this court to have the proceeds of the sale appropriated for the object for which the fund was originally raised and dedicated. And when all the inhabitants of the village were incorporated into a school district for the same general purposes originally contemplated by the donors, the trustees of the district were the proper persons to receive the fund given by the government as a compensation for the building, and to appropriate, it for the original object. (6 Peters’ Rep. 431. 4 Paige’s Rep. 510.)

The appellants Chapin and Wells and their associates had therefore no interest or claim in the fund in controversy in this suit; and having rendered this litigation necessary by their improper interference, they were very properly charged with the costs. The decree of the vice chancellor, so far as their interests are concerned, must be affirmed with costs to the respondents.

I think, however, that the vice chancellor came to a wrong conclusion as to the rights of the inhabitants of school district No. 2, who were a pert of the citizens of Buffalo, for whose use the school house was intended. The school house having been destroyed before the organization of any school district under the statute, the fund had no particular locality at the time of the division of the district in 1823. It is therefore wholly immaterial to which district the former site of the school house fell in that division. The original fund was not appropriated for the purpose of erecting and continuing a school house upon that particular lot; but for the purpose of having a school house in some part of the village, for the convenient use of the inhabitants. Indeed it appears that when a portion of the fund at least was contributed, a different location was contemplated, and the frame of the building was placed there in the first instance. But it was afterwards removed and finished upon this particular site under the mistaken supposition that the lot would be given to the inhabitants of the village by the Holland land company as a permanent site for the school house. The location of the building at that place therefore was purely accidental, and did not constitute an essential part of the dedication of the fund to this charitable use.

Neither is it material to inquire whether the payment for the building was a mere gratuity on the part of the government, or an equitable compensation for property destroyed because the government had for a time appropriated it for its own use. In either event the fund belongs to the same persons as inhabitants of the village; as the grant was to those who had sustained the loss, and not to a particular corporation. The application of' Potter as the voluntary agent of the inhabitants of the district, in 1817, can be considered in no other light than as an application for those who were entitled to claim the same for the benefit of the whole of those who were beneficially interested under the acts of 1816 and 1817. The act of 1825 did not create a new right in favor of what was then district No. 1, but only revived the dormant right of all the inhabitants óf the original district under the former acts. And if the fact of the division of the district in 1823 had been stated to the third auditor, I have no doubt he would have apportioned the fund between the two districts upon equitable principles, if he had allowed any thing to either. But as a contest as to the division of the fund at that time might have endangered the whole, the trustees of district No. 2 did right in not interfering in the claim before the auditor, even if they were aware at that time that the trustees of district No. 1, claimed and would afterwards attempt to retain the whole for the use of them district, contrary to equity. .

But it is supposed that the present school district No. 1 is the same corporation, or quasi corporation, which existed at the time the right accrued in 1816; and that the trustees thereof are therefore entitled to the whole fund by right of succession. There is nothing in the case, however, that shows they have any greater claim to be considered the original corporation than the trustees of district No. 2 ; except the fact that in the re-organization and re-numbering of the school districts in that part of the original town of Buffalo, in 1823, their district got , the same number which had belonged to the original district when it embraced the whole village. "Upon that principle the trustees of the' present district No. 2 might as well have claimed all the property which at the re-division of the town into districts belonged to the -district formerly called number 2, but which in this new arrangement of the districts was designated by some other number. Upon the division of a municipal corporation, unless there is some provision made by law as to its personal property, neither part is entitled to it exclusively ; but it should be apportioned between the two corporations upon some equitable principle. Such I believe has been the uniform practice of the legislature in the division, of towns and counties for several years past; and such is now the general'law of the state, under the provisions of the revised statutes, as to the division of counties, towns and school districts. (1 R. S. 338, § 7; 365, § 6 ; and 479, § 67, 77.) The two districts are therefore entitled to participate rateably in the fund in controversy in this case; and so much of the decree of the vice chancellor as is appealed from by the trustees of school district No. 2 must be reversed with costs.

As this fund was raised for a school house, and not the purpose of paying for instruction, the proper mode of apportioning it between the two districts, if it were now practicable, would be according to the taxable property in each, which by the laws in force at the time of the division was liable to be taxed for the purpose of building school houses ; and not according to the number of children between the ages of five and fifteen. And the apportionment should be made with reference to the situation of the districts at the time of the division in 1823, instead of the time when the money was actually received in 1826. A division upon that principle is now impracticable, or at least would be productive of great and unnecessary expense to the parties. It appears, however, that in 1825 the number of children in each district was precisely the same; that is, 223 in each. In the absence of other proof, therefore, it may be fairly presumed that their relative proportions were the same at the time of the division of the original district eighteen months previous to that time. The fund remaining in court must then be divided between the trustees of the two districts equally. And if the costs of the complainant which were paid out of the original fund are recovered of Chapin and Wells, under the decree in favor of the respondents against them, one half thereof must be paid over to the trustees of the other district; so as to make their share in the whole fund equal. As the appellants have not made each other parties to their respective appeals, I cannot give the costs upon the appeal or in the court below to the trustees of school district No. 2 as against Chapin and Wells. Indeed, they could have no claim against Chapin and Wells for the costs upon the appeal; as their only contest here was with the trustees of the other district, who had made an inequitable claim to the whole fund when they were only entitled to a moiety thereof. The respondents are, therefore, probably chargeable with the costs of the appeal which has been rendered necessary by that improper claim.

The subdivision of both districts since this controversy arosecannot alter the rights of the present parties in this suit. If the new districts which have been since set off have any claims which cannot be adjusted by the commissioners of common schools under the provisions of the revised statutes, they may have their remedies against these two districts respectively if the whole fund has not been exhausted in the costs of this litigation. But that will not disturb or alter the distribution between these parties as now established. (Attorney General v. Rochester, Ca. Temp. Finch, 193. 6 Sim. Rep. 273, S. C.)


author: The Chancellor

text:
    New-York Chemical Company vs. Flowers and wife.
    1837. August 1.
    A joint answer of the husband and wife must be sworn to by both, unless the complainant consents to receive such answer upon the oath ofthehusband only.
    This was a bill of forelosure and the defendant Martin Flowers put in an answer sworn to by himself only and not by his wife.

      J. Rhoades, for the complainants,
    moved to take the answer off the files for irregularity, and that the bill be taken as confessed for want of a regular answer.

      G. C. Goddard, for the defendant,
    opposed the application; and asked for leave to put in anew answer if the one already filed was irregular.
   The Chancellor

decided that a joint answer of the husband and wife must be sworn to by both, unless the complainant consents to receive the answer of both upon the oath of the husband only. And that in this case, as the answer was probably put in merely for delay, the husband not pretending that he had any valid defence, the answer must be taken off the files, and an order to take the bill as confessed must be entered.


text:
    Cunningham vs. Pell.
    1837. August 15.
    Where a demurrer is allowed dn account of a mere formal defect in the bill, it is a matter of course, except in the case of a sworn bill, to permit the complainant to amend, upon payment of costs, where he asks for that privilege upon the argument of the demurrer.
    After a defendant has been brought into court upon an attachment for not answering an amended bill, and has been examined on interrogatories as to the alleged contempt, it is too late for him to object to the regularity of the orders for leave to amend and requiring him to answer the amended bill.
    Where a complainant amends his bill by inserting an allegation that it is filed in behalf of himself and all others standing in the same situation, a third person as to whom the right to sue was barred at the time of such amendment so that he could not have filed a bill himself, cannot come in and claim relief against the defendant upon the decree made upon such amended bill.
    No new subpoena is necessary to compel the original defendants in the suit to answer an amended bill. The proper course is to enter an order of course for the defendant to answer the amended bill within the usual time after service of a copy of the amendments and of a notice of the order to answer. But the practice is otherwise as to supplemental bills.
    In pursuance of the permission given to the complainant in the order overruling the demurrer in this case, (see 5 Paige’s Rep. 613, S. C.) he amended his bill by stating therein that it was filed in behalf of himself and all other creditors of the Jersey Bank who should come in, &c., and by making the corporation of the bank a party defendant. Some other trifling amendments in matter of form merely were made. And a copy of the amended bill, with a notice of the order which had been entered to answer the same were duly served on the solicitor of the defendant Ferris Pell, who neglected to answer the bill within the time required by the rules of the court. He was subsequently arrested on an attachment for not answering; and having been examined on interrogatories, the case came before the court upon the question whether the defendant was in contempt

      J. P. Hall, for the complainant.

      D. Selden, for the defendant.
   The Chancellor.

The question as to the propriety of allowing the amendments is not properly before me at this time. If the amendments, and the order to answer the amended bill, were irregular, the defendant should have applied to the court to take the amendments from off the files and to set aside the order for such irregularity. The defendant cannot be permitted to question the right to amend in this collateral way, by which the complainant would be deprived of the power of answering the objections as to the alleged irregularity in the usual manner.

There is no doubt, however, as to the regularity of the complainant’s proceedings, and that the defendant Pell is in contempt for not answering the amended bill. The demurrer was allowed on account of formal objections, and not upon grounds which went to the equity of the whole bill. It would, therefore, have been a matter of course to have allowed the complainant to amend his bill as he should think proper, by a common order entered with the register under the 44th rule, at any time before the demurrer was noticed for argument. And in such a case if the court, upon the hearing of the cause upon the demurrer, allows the same on account of a mere formal defect—such as the want of proper parties—the uniform practice, except in the case of sworn bills, is to allow the complainant to amend on payment of costs, if he has asked for such a privilege on the argument of the demurrer. None of the amendments in this case are of such a nature that they would not have been allowed as a matter of course, in accordance with this practice.

The objection that the complainant makes it an original bill as to himself, by the suggestion contained therein that it is filed in behalf of himself and all others standing in the same situation, would have been wholly untenable if made at the proper time and in the usual way. He is the only real complainant in the suit; and if the other creditors who may hereafter attempt to come in as parties, under the decree which may be made, could not have filed a similar bill at the time this amendment was made, the same objection may be then made to their claims by this defendant as he could have made if they had filed a bill in their own names at the time these amendments were made. In other words, their rights will be the same as if the complainant had amended by maldng the other creditors of the bank parties defendants in the suit.

The practice in England is to issue a subpoena for the purpose of compelling an answer to amendments, if such amendments are made after an answer has been put in to the original bill, or after the allowance of a plea or demurrer with leave to amend. But the settled practice of this court for many years has been to compel an answer to an amended bill, in all cases, except as to the new defendants brought before the court by the amendment, by a simple order to answer served upon the solicitor for the defendant who appeared to the original bill. The practice is otherwise as to supplemental bills and bills of revivor. No new appearance to the amended bill was necessary, therefore, and the defendant was bound to answer the same within the time allowed for that purpose by the order of the court, after the service made upon his solicitor in the cause.

The interrogatories were sufficient to give the defendant an opportunity to purge his contempt, so far as any facts were in his own knowledge. They were founded upon the original affidavit upon which the attachment was obtained; which showed that the notice was served upon the solicitor, and not upon the defendant personally. It was impossible for the defendant, upon any interrogatories which could have been framed, to contradict by his own oath the fact stated in the affidavit. His proper course, therefore, if the attachment was irregular, was to apply to set it aside for such irregularity, upon affidavits or other evidence of the facts. Or he might, in answer to the interrogatory whether he had put in his answer to the amended bill within the time limited for that purpose, have stated upon his information and belief any facts which contradicted the affidavit of the complainant's solicitor, and then have corroborated his answer by the affidavit of his solicitor, as authorized by the statute.

The defendant therefore must be declared to be in contempt for not answering, and a fine must be imposed upon him sufficient to pay the costs of this proceeding, and he must be committed until he answers the amended bill and pays such fine. (The People v. Rogers, 2 Paige’s Rep. 103.) The defendant however is to be allowed twenty days to put in his answer and pay the costs, before the order for commitment is enforced; at the expiration of which time, upon filing an affidavit of the service of a copy of this order and that the defendant has not put in his answer and paid the costs or fine imposed, process of commitment may issue of course.


text:
    Alderman vs. Potter.
    1837. August 15.
    Where it is necessary to put in a further answer to exceptions for insufficiency, if the defendant discovers that parts of the bill to which the exceptions are not taken are not fully answered, he may, in his further answer to the exceptions, answer those parts of the bill which are not covered by the exceptions or by his former answer.
    It seems also that the defendant in his further answer to exceptions for insufficiency may set up any new matter of defence which has arisen since the filing of his original answer.
    This case came before the chancellor upon an exception: to the master’s report allowing an exception to the defendant’s further answer for impertinence. The bill was filed by a judgment creditor whose execution had been returned unsatisfied, for a discovery of the defendant’s property, equitable interests, and things in action, which the complainant alleged exceeded $100 beyond all just claims thereon, and for a satisfaction of the judgment out of the same. And the bill contained a special interrogatory calling upon the defendant for a discovery of the incumbrances, if any, upon his property, how the same accrued, by whom held, the amount and origin thereof, whether the same had been, paid or otherwise secured, and how much was actually due thereon. The defendant put in an answer stating an incumbrance to N. Doane upon part of his real estate, consisting of an interest in a grist mill and appurtenances ; but without fully answering the special interrogatory as to that incumbrance, and without saying whether there were any other incumbrances. The complainant took several exceptions to the answer for insufficiency ; the first of which was that the defendant had not answered the special interrogatory in this respect, that he had not stated whether the incumbrance to Doane upon the grist mill or part of it had been paid or otherwise secured; and had not stated how much was due on that incumbrance. The defendant in his further answer, in addition to the further discovery called for by this particular exception, stated that in addition to the incumbrance to Doane mentioned in his original answer, his estate at the time of filing the bill, and at the time of putting in such further answer, was subject to the lien and incumbrance of several judgments ; the nature and particulars of which incumbrances were set forth, as required by the special interrogatory. And the master decided that this part of the further answer was impertinent.

      I. W. Thompson, for the complainant.

      Martin Lee, for the defendant.
   The Chancellor.

The only ground upon which the master could have supposed this part of the answer impertinent must have been that the defendant could not insert any matter of defence, or even of discovery, in his further answer, except such as was actully called for by the exceptions, although it was strictly responsive to the bill. Even upon that ground the matter was not impertinent; as it was, in connection with other facts alleged in the answer and further answer, responsive to that part of the bill which stated that the defendant had property to the amount of $100 and more over and above all prior just claims thereon, a further answer to which allegation was called for by the ninth exception. As the defendant had stated what his property was, it was proper to set out all the incumbrances thereon, in connection with the general denial in answer to that exception, that its value exceeded $100 exclusive of these just claims and liens thereon. And although the part of the answer complained of does not profess to be an answer-to the ninth exception, but to the first, it cannot be impertinent if it was proper under either of the exceptions.

I think, however, the master was wrong in the principle upon which he proceeded. And that when a further answer is called for by exceptions, if the defendant finds he has neglected to answer any thing that he was called upon by the bill to discover, he may, in answering the exceptions, make his answer perfect; although the exceptions do not cover the whole ground upon which the original answer might have been objected to for insufficiency. I am also inclined to think he may in such further answer set up any new matter of defence, although not responsive to the bill, which has arisen since the filing of the original answer. The exception to the report is therefore allowed with costs ; and the exception to the further answer must be overruled with costs.


text:
    The North American Coal Company vs. Dyett and others.
    The acceptor of a bill of exchange, which is accepted for value received, and not merely for the accommodation of the drawer, is the principal debtor to ' the holder, and the drawer is only liable in .the character of a guarantor or surety; and giving further time of payment to the drawer without the consent of the acceptor in such a case, does not discharge the liability of the latter. '
    A feme covert is as to her separate estate considered as a feme sole, and she may, either in person or by her legally authorized agent, bind such separate estate with the' payment of debts contracted for the benefit of the estate, or contracted for her own benefit upon the credit of the separate estate. And the assent or concurrence of her trustee is not necessary for that purpose, where no restriction upon her power over the trust fund is contained in the deed or instrument under which such separate estate is held.
    The separate estate of a feme covert is in equity chargeable with her debts contracted upon the credit of that estate, to the same extent that the estate of a feme sole is chargeable with the debts of such feme sole by the common law. x
    Where an estate is vested in a trustee, in trust for a feme covert for life, with reipainder to her children, she cannot, without the assent of the trustee contract any debt which will be a lien or charge upon the remainder to the children, even for expenditures which are beneficial to the whole estate.
    oThis case came before the chancellor upon an appeal from a decree of the vice chancellor of the first circuit, dismissing the complainants’ bill, with costs. In September, 1821, Joshua Dyett and Jesse Ann his wife, in pursuance of an ante-nuptial agreement, conveyed a house and lot in New-York belonging to the wife to W. Hammersley and M. Dyett, as trustees, upon the following trusts: First, to sell and convey the premises, with the written consent of the husband and wife, and to invest the proceeds of the sale in other real estate or upon securities; and with power to change the investments from time to time, with the like written consent, so as to produce the best annual income, without lessening the principal of the estate. Secondly, to permit the husband to receive the rents and profits or income of the trust estate during coverture, for the use of himself and wife; and if he survived her, to receive the same to his own use during life, to enable him to educate and maintain the children of the marriage, if there should be any; and if there were no children, then to his own use forever. Thirdly, in case of the husband’s death, leaving his wife surviving, then to permit her to receive the rents, profits and income for her own use for life, and to enable her to maintain the children of the marriage; and if no children, then to her own use forever; but if there should be children or the issue of such children of the marriage living at the death of the wife, then to their use forever. A further provision was contained in the deed of settlement, that the husband should not alien- or dispose of the rents or income, but should apply the same to the common use of himself and wife ; and that the same should not be made liable for the payment of his debts ; and in case of his making any sale or other disposition of such rents or income, or of his becoming insolvent, that the rents, issues, interest and profits of the estate should be paid over by the trustees to the wife, to her sole and separate use, in like manner as if she were a feme sole. In March, 1822, M. Dyett retired from the trust, and in pursuance of a provision contained in the deed of settlement, W. Chapman was appointed trustee in his place. In May, 1823, Hammersley and Chapman, the trustees, with the written consent of Dyett and wife, purchased a manufacturing establishment in Dutchess county, on account and for the benefit of the trust estate, and gave a mortgage on the house and lot in New-York to raise a part-of the purchase money ; and the factory was also encumbered with mortgages. In the purchase of the factoiy, it was agreed that Chapman should be interested to the amount of one half, upon the performance of certain conditions; one of which conditions was, that he should keep the trust estate indemnified against loss on account of the purchase of the factory, or the giving of the-mortgage, &c. In September, 1825, Chapman made some arrangement with Dyett to sell out his equitable interest in the manufacturing establishment. And from that time Dyett had the whole management thereof as agent for the trust estate, until he was enjoined from interfering, by an injunction, at the suit of Chapman, in September, 1826 ; previous to which Dyett and wife had discharged Chapman from the trust, in pursuance of a power for that purpose contained- in the deed of settlement. After Dyett was enjoined, C. M. Livingston was regularly appointed the agent of the factory by Dyett and wife and the remaining trustee ; and he continued to act as such until the sale of the factory in 1830; but Dyett continued in the meantime to reside near the factory, and assumed a sort of management or control over the affairs thereof, with the knowledge of the agent and without objection. In 1827, Dyett being insolvent, was discharged under the act, and made a general assignment of all his property ; by reason of which the wife, according to the terms of the deed of settlement, became entitled to the whole rents and profits of the trust estate, for life, to her sole and separate use. And from that time, the rents and profits of the factory, as well as of the other parts of the trust estate, were received by her, or by her husband with her assent. In July, 1828, the factory being in want of coal, Dyett wrote to his correspondent in Philadelphia to purchase a cargo of coal for the use of the same, who agreed with the agent of the complainants for the coal, to be paid for in cash or in a draft at 60 days. The coal was accordingly forwarded to the factory, consigned to the care of Dyett; and the same was received and used for the purpose of the establishment. Dyett gave to the complainants a draft, for the amount of the coal, upon Livingston, the agent; which draft upon its face stated the consideration thereof to be for value received at the factory; and the same was duly accepted by Livingston, as the agent of the factory, but was never paid. The bill in this cause was filed for the purpose of subjecting the trust estate to the payment of this debt, and the debts of all other persons, having similar claims thereon, who might think proper to come in under the decree. [See 2 Edw. Gh. Rep. 115, S. CL]

      1837. August 28.

      J. Blunt, for the appellant.

      M. Hoffman, for the respondent.
   The Chancellor.

The vice chancellor arrived at correct conclusions as to most of the questions in this case ; but I think he erred in supposing that the Dutchess Cotton Factory was a separate and distinct trust estate, and was alone chargeable with the supplies purchased for the use of that part of the trust property. The house and lot in New-York and the factory were but different parts of one entire estate ; the rents and profits of the whole of which belonged to the wife, as her separate estate, after the insolvency of her husband in 1827. If this debt, therefore, was properly chargeable upon the income of the factory, it is chargeable on the entire income of the whole estate. The trust deed having authorized the trustees, with the written consent of the cestuis que trust, to change the investments from time to time, as they should think proper, every new investment of any part of the trust property was a mere change, and not a severance of the trust estate ; the newly acquired property and what remained of the original investment still constituting but one trust estate, the net income of the whole of which, after paying all proper charges and claims thereon, belonged to the wife, for her separate use.

I agree with the vice chancellor that there is no doubt in this case that the coal was purchased for, and applied to the use of the factory as a part of the trust estate. And although Dyett, as the drawer of the bill, which was after-wards protested for non-payment, may be legally liable as such drawer, he is merely in the situation of a surety for the trust estate; the acceptance being for value received by the trust estate, and not by Dyett personally. Livingston as the agent being legally authorized to contract for supplies for the factory, his acceptance was the acceptance of the trust estate, and Dyett was merely the medium of purchase. Even if Dyett had purchased upon his own account solely, yet'as the coal was received by the trust estate, the acceptance of his draft in favor of the orignal vendor, for value received by the acceptor, was sufficient to make the - trust estate primarily liable for the payment of the draft. And if Dyett had been obliged to pay it in his character of drawer, he would be entitled to repayment out of the income of the estate. It is perfectly well settled that the ácceptor of a bill of exchange, which is accepted for value, and not merely for the accommodation of the drawer, is the principal debtor to the holder ; and that the drawer is only liable in the character of a mere guarantor or surety. The taking of the subsequent note from Dyett and giving further time to him, could not therefore discharge the trust estate as the principal debtor. And it was expressly agreed that the giving of the note should not discharge the liability upon the acceptance, if the note was not paid. The rights of the parties in this case are, therefore, precisely the same as if Livingston had himself purchased the coal, and had given his note for the same in his character of agent for the factory.

For the purpose of ascertaining how far the trust estate is liable for the payment of this debt, it is necessary to see what was the nature of the several interests therein at the time the debt was contracted, and who was to be benefitted by the purchase of the coal for the úse of the factory. Dyett had at that time become insolvent; and all his interest in the trust estate which remained was his chance of survivorship and of dying without issue after the death of his wife. For, by the express terms of the trust deed, the wife was entitled to the whole income of the trust estate for life, for her separate use, in the .event which had occurred. And this coal was purchased for the purpose of carrying on the factory, and thereby increasing the rent or income of the trust estate which then belonged solely to the wife. The contingent interests of the husband and of the children in the income, or in the principal of the estate after the death of the wife, were not intended to be benefitted by the purchase. I can, therefore, discover no principle, either legal or equitable, which should charge those interests with the payment of this acceptance. The feme covert is as to her separate estate considered as a feme sole, and may, in person or by her legally authorized agent, bind such separate estate with the payment of debts contracted for the benefit of that estate, or for her own benefit upon the credit of the separate estate. And even the assent or concurrence of the trustee is not necessary, where no restriction upon her power is contained in the deed or instrument under which such separate estate is held. (Dowling v. Maguire, 1 Lloyd & Goold’s Rep. Temp. Plunkett, 19. Cater v. Eveleigh, 4 Desau. Rep. 19. Montgomery v. Eveleigh, 1 McCord’s Ch. Rep. 267.)

But certainly she cannot exercise a greater control over the trust estate, or charge it to a greater extent than if she was in fact a feme sole. Where different es-x tates, therefore, are limited in the same trust property, as in this case, the cestui que trust of one estate cannot charge the whole trust property with debts contracted for his benefit or for the benefit of his particular estate or interest therein. Thus, in the present case, the husband was entitled to the rents and profits of the estate until he became insolvent, in 1827. And debts which were contracted for the purpose of carrying on the factory, and thus increasing the income for the use of himself and wife during that period, were a proper charge upon the rents and profits and income of the whole trust estate during the same time, notwithstanding the prohibition in the deed of settlement against making the trust estate liable for his debts. But as his interest in the trust estate terminated when he was discharged under the insolvent act in 1827, at least during the life of his wife, and her separate estate for life then became vested, the debts which had been previously contracted for the benefit of the income only of the estate, and. not for the preservation or benefit of the capital of the property, were not properly chargeable upon her separate estate for life in the property. Nor can the debts contracted during the continuance of her separate estate and for her particular benefit, be charged upon the remainder which is limited to others after her death. And neither Dyett or his wife, or their agent could, without the authority of the trustees, contract any debt or create any lien upon the remainder, which was limited to the children of the marriage, even for expenditures which were for the benefit of the whole estate. These principles are very fully illustrated by Chancellor Harper in the recent case of Maywood & Patterson v. Johnson, (1 Hill’s Ch. Rep. 228,) and the decree which he made in that case in conformity to these principles was affirmed by' the court of appeals in South Carolina.

Some conflicting decisions have taken place in England as to the power of a feme covert to render her separate estate liable for debts contracted by her, on the credit of such estate, but which were not for the benefit thereof. And Mr. Prater thinks this difficulty has arisen by confounding the rights and privileges of the wife, at common law, with her equitable rights and liabilities in regard to her separate estate, which estate has been secured to her by this court upon principles derived from the civil law. And he holds, that upon those principles, her separate estate in equity should be chargeable with her debts to the same extent that the estate of a feme sole would be chargeable by the principles of the common law. In other words, that her equitable estate should be liable for the payment of all her equitable debts, to the same extent as though such debts were contracted by a feme sole. (Prater’s Law of Husb. & Wife, 109.) Such, indeed, was the opinion of the court of dernier resort in this state, in the case of Jaques v. The Methodist Church, (17 John. Rep. 548;) and such appears to be the spirit of some of the earliest as well as of one of the most recent decisions in England on this subject. (See Hulme v. Tenant, 1 Bro. C. C. 19. Pybus v. Smith, 3 Idem, 340. Murry v. Barlee, 4 Sim. Rep. 82.)

In the present case, the wife as well as the trustee had ■ the right to contract this debt, for the benefit of her interest in the income of the trust property, and to charge that interest with the payment thereof, by this acceptance of her agent. - And if she has used the whole income of this part of the trust property for the support of herself or her family, instead of paying the debts out of the same, or if she or her trustee or agent has permitted the husband or any one else to misapply the income which should have been appropriated to the payment of this and other debts of the same character, the future rents and profits of her separate estate in the trust property must be applied to satisfy such debts. But the interest on the mortgage, which was a prior specific lien upon the trust estate at the time of filing the complainants’ bill, must be kept down by such rents and profits.

The decree of the vice chancellor dismissing the complainants’ bill must be reversed, with costs. And there -must be a reference to ascertain the amount due to the complainants, and to the other creditors whose debts have been contracted for the benefit of the wife’s separate interest in the trust estate since the insolvency of the husband, in 1827. This is the only class of the creditors who have a common interest with the complainant in charging her separate estate in the trust property, and are therefore the only ones who can come in under the present bill. And Dyett’s contingent interest in the trust estate, after the death of his wife, even if it has not gone to his assignees under the insolvent act, cannot be reached in this suit in consequence of his personal responsibility as the drawer of the draft given for the coal, because the complainants had not exhausted their remedy at law against him personally at the time of filing the bill, and their debt was not contracted on the credit or for the benefit of his contingent interest in the trust property. If there are. any creditors whose debts are chargeable upon the trust property generally, capital as well as income, they must make their claim by a distinct bill. To such a bill the children of Mrs. Dyett, if there are any in existence, should be made parties; to the end, that a proper apportionment of those debts may be made upon the future as well as upon the present estates or interests in the trust property.

Upon the coming in and confirmation of the master’s report, the complainant’s costs in the original suit and upon this appeal, and the costs of the trustee, must be paid out of the income of the trust fund which has accrued and is now in the hands of the trustees, or which may hereafter accrue during the life of Mr. Dyett; after deducting the interest on the mortgages and the necessary expenses for repairs, insurance, &c. And the amount due to the complainants, and to the other creditors, if any, having like claims who shall come in and establish the same before the master in the usual form, are then, in like manner, to be paid rateably out of the income of the estate. The master is to take an account of the income of the trust fund in the hands of the trustees, and report the same at the same time with the the other matters of reference. And the trustees are thereafter to account annually for the income of the trust estate, after keeping down the accruing interest and paying other just charges as aforesaid, and pay over the balances which shall from time to time be reported due ; until the costs, together with the debts reported due to the complainants and such other creditors, and the interest thereon, are fully paid, or until the death of Mrs. Dyett. In the meantime the defendants Dyett and wife are to be restrained by injunction from changing or removing the present trustees, except by the sanction of this court on due notice to the complainants and such other creditors ; or from assenting to any change of the investment without the like sanction, or from intermeddling, in any way, with the trust estate, or the use, or income, or profits thereof,

         This decision was afterwards affirmed on appeal to the court for the correction of errors.