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    Dias and others vs. Bouchaud, executor, &c. and The United States.
    Where C. & H. who were copartners in trade, became insolvent, and assigned all the property of the partnership and all their individual property to an . assignee in trust to pay to himself in the first place certain debts due to him from the copartnership; and secondly, to pay two notes on which he was liable as endorser for the firm, and certain custom house bonds which he had signed with C. as surety, for duties upon goods imported for the firm, including three bonds which D. had also signed as a co-surety with the assignee; and lastly, in trust to re-assign the surplus of the assigned property, if any, to the assignors, or to hold it upon such trusts as they should appoint; and in addition to the debts provided for m the assignment, C. was indebted to the United States, at the time of such assignment, upon seventeen other bonds for duties, fourteen of which bonds were signed by C. as principal, and by T. as his surety, and three were signed by T. as principal and by C. as surety ; and C. & H. were also indebted to the United States upon three other bonds for duties, signed by.C. as principal and by F. as surety ; and D. and F. subsequently paid to the United States the moneys due on the bonds signed by them respectively as sureties; and certain of the goods, which had been placed in the public store house under a special permit, were purchased while there, by N. who gave his notes for the same to the vendors, including the duties thereon; and the collector, after having received bonds with sureties for the payment of the duties on such goods according to law sold a part of such goods for the payment of the duties; and the assignee of C. and H. died and appointed B. his executor ; and a bill was filed by D., F. and N. against the executor of the assignee, claiming a priority in payment out of the assigned property, and charging the assignee and his executor with misapplications of the fund; Held, that the assignment of C. & H. must be deemed an assignment of all the property of the assignors, so as to bring it within the acts of congress giving to the United States a preference in payment, of bonds for duties, over the general creditors of the assignors, although no debts were provided for in the assignment, except those which were due to the assignee, or debts for which the assignee was liable with others.

      Held, further, that the insolvency and the general assignment of C. &. H. gave to the United States a right to priority in payment for all the debts of the latter, out of the assigned fund ; which priority attached upon the fund at the time of the assignment, and that D. and F.'iespectively having afterwards paid to the United States the moneys due on the bonds for duties which they had signed as sureties, they were subrogated to the rights of the United States as against the assignee of the fund, and became entitled in equity to their rateable proportion of such fund.

      Held also, that neither the assignee nor his personal representative could object to the priority of the United States, upon the ground that the assignment- was fraudulent as against the other creditors of the assignors.

      Held further, that if the assignee and his executor bad notice of the several bonds to the United States, and of the parties to the same, they had legal notice of the rights of the sureties in such bonds to substitution, in case such bonds should not be paid to the United States, out of the fund as to which the preference was given.

      Held further, that N. was not entitled to a preference in payment out of the assigned fund, under the act of congress, or even to a subrogation to any rights of the United States at common law; that as soon as the collector received the bonds with sureties, as required by law, for the duties upon the goods deposited under the special permit, the lien of the United States upon such goods, for the duties thereon, ceased, and the collector had no authority to sell any part of the goods to pay such duties; and that N. acquired no lien either at law or in equity upon the assigned fund by this un. authorized act of the collector.

      Also Held, that the assignors or their representatives were necessary parties to the suit, against the executor of the assignee for an account, as they had a common or connected interest with the complainants in taking the account of the application of the assigned property; but that, as the defendant had not taken the objection that the assignors had not been made parties, either by his demurrer upon the record or ore tenus at the hearing, it could not be taken upon the appeal from the order overruling the demurrer.
    Where a bill is filed by the sureties in a custom house bond which has been paid by them, to be substituted in the place of the obligees in such bond, and to settle their rights to a priority of payment out of the estate of the principal debtor, all persons standing in the like situation with the complainants should be made parties to the suit; or the bill should be filed in behalf of the complainants and of all others who wore sureties in bonds given by the principal debtor for duties, and who had paid such bonds so as to be entitled to be subrogated to the rights and remedies of the United States against the assigned fund.
    In a demurrer to a bill for want of parties, the defendant must point out the necessary parties, either by name, in reference to some statement of their names in the bill, or by their characters, as the heirs, devisees, personal representatives, assignees, creditors, &c. of someof the persons named or referred to in such bill.
    In a suit against the personal representatives of a deceased debtor, to recover a debt due from his estate, it is only necessary for the complainant to file the bill in behalf of himself and of all other creditors standing in the same situation, when it appears upon the face of the bill that there will be a deficiency in the fund, and that there are other creditors who are entitled to a rateable proportion with the complainants.
    Such an allegation in the bill is not necessary, to enable the court to make a general decree for the benefit of all the creditors, where the answer of the defendant shows that the estate is insolvent and that there are other creditors who have an interest in the fund.
    But this principle only applies to a bill filed by a single creditor, or by several creditors for a debt due to all of them jointly. For several creditors, having distinct debts against the estate, cannot file a bill for their respective debts, without making all other creditors having a common interest with them parties to the suit, or stating in the bill that it is filed in behalf of themselves and of the other creditors having a common interest with them.
    Where a claim is made against the personal estate of the decedent, which is adverse to the rights and interests of his general creditors, it is only necessary to make the personal representative a party; and it is the duty of such representative to defend the estate in his hands against such claims.
    A person may be a necessary party, within the meaning of the rule requiring all persons interested to be made parties, although the proper decree can be made, as to the subject matter of the litigation, in his absence, in case the defendant makes no objection on that ground.
    Where the defendant neglects to make the objection, by plea, answer or demurrer, of the want of parties who are only necessary to protect him from further litigation, the court, in its discretion, friay refuse to sustain the objection, at the hearing, or to require the complainant to add new parties in that stage of the suit.
    Upon a general demurrer to a bill filed by several complainants, for want of equity, the demurrer must be allowed unless it appears that all the complainants have an interest in the subject matter of the litigation.
    The ten years’ limitation of suits in equity, where there is no concurrent remedy at law, does not begin to run against a surety until the payment of the money by him for his principal.
    1843. November 21.
    The words “ voluntary assignment” in the 65th section of the act of congress of 1799, as well as in the corresponding section of the act of March 1797, creating priorities in favor of the United States, means an assignment in trust, of all the debtor’s property, to pay debts; as contradistinguished from a mere sale of the property to a creditor in payment of his debt, or the pledge or hypothecation of the property, to a particular creditor, as a mere security for a debt, in the nature of a mortgage.
    This was an appeal by the defendant Bouchaud, executor of L. A. Brunei deceased, from a decretal order of the vice chancellor of the first circuit, overruling the demurrer to the bill of the complainants. In April, 1823, Castro & Henriques, who were copartners in trade as importing merchants in New-York, became insolvent. And in May thereafter Castro, for himself and as the attorney of Henriques, assigned all the property of the partnership, and all the individual property of himself and Henriques respectively, to Brunei, in trust to pay himself, in the first place, certain debts due to him from the copartnership ; secondly, to pay two notes on which he ivas liable as endorser for the firm, and certain custom-house bonds which he had signed with Castro, as surety, for the duties upon goods imported for the firm, including three bonds which the complainant J. L. Dias had also signed as a co-surety ; and lastly, in trust to re-assign the surplus of the assigned property, if any, to the assignors, or to hold it upon such trusts as they should appoint. In addition to the debts provided for in the assignment, $30,626 of which were for such bonds, and $6873 for the other debts, Castro was indebted to the United States, at the time of such assignment, upon seventeen other bonds, for duties, fourteen of which, amounting to $6886, •were signed by Castro as principal, and by G. Thiolliere as his surety ; and the other three were signed by Thiolliere as principal, and by Castro as surety, and amounted to $1910; all of which seventeen bonds remained due and unpaid at the time of filing the bill in this cause. Castro & Henriques were also indebted to the United States, at the time of the assignment, upon three other bonds for duties, amounting to $3459, signed by Castro as principal, and by J. Furman, one of the complainants, as surety; upon which judgments were afterwards recovered against Furman, and he was compelled to pay the same with interest and costs. In addition to these bonds, Castro, at the time of the assignment, was indebted to the United States in the sum of $1116, upon three other bonds, signed by him as principal and by Thiolliere as surety, for the duties upon one parcel of the brandies sold to E. H. Nicoll as hereafter mentioned. All the bonds provided for in the assignment, except one of $1027, signed by Castro and Brunei, and three signed by Castro as principal and by Brunei and Thiolliere as sureties, which were given for the duties upon the other parcel of the brandies hereafter mentioned, amounting to $4545, and a part of two of the bonds signed by Castro as principal and by Brunei and Dias as sureties, were after-wards paid ; probably by Brunei. And the balance due upon the two bonds upon which Dias was liable as one of the sureties, amounting to $1000, was paid by Dias to the United States, in November, 1834. Brunei died in July, 1833, and by his will appointed the defendant Bouchaud and another person executors thereof; but Bouchaud alone took out letters testamentary thereon.
    The bill in this cause was filed in January, 1841, by Dias, Furman, F. H. Nicoll and R. Smith, against Bouchaud, as executor of Brunei, and against the United States, as defendants therein. And the complainants, in addition to the facts before stated, averred and charged, upon information and belief, that the amount of the property of Castro & Henriques which came into the hands of Brunei under the assignment, was not less than $80,000; and that a large amount of such property remained in his possession at the time of his death; that Bouchaud, as his executor, received a large amount of property which was in the possession of and under the control of Brunei at the time of his death, including the property which was in BrunePs hands under the assignment, and which Bouchaud had not applied to pay the debts of Castro & Henriques according to law ; that Bouchaud, after taking possession of such estate and effects, gave out and pretended that Brunei died insolvent, notwithstanding which Bouchaud paid to several of the simple contract creditors of Brunei the amount of their demands without regard to the priority of the United States, under and by virtue of the several bonds executed by Brunei, and with the knowledge of the same, without .making any distinction between the funds and property held by Brunei as such assignee, and those held in his own right ,• and that the whole of the funds and property received by Bouchaud as executor were mingled with his individual funds. And the complainants charged and insisted that the defendant Bouchaud was personally liable, to the extent of the assets received by him of the estate and property in the possession or under the control of Brunei at his death, not only for the proper debts of the latter, but also for the debts of Castro & Henriques, which Brunei in his lifetime had neglected to pay.
    It was also stated and charged in the bill, that two parcels of brandy imported by Castro & Henriques, in March, 1823, for the duties upon which six of the before mentioned bonds were given, were placed in the public store, under a special permit, and -while there were purchased by E. H. Nicoll, who was doing business in the name or firm of Smith & Nicoll, and who gave the notes of his firm therefor, including the amount due for the duties which were secured by the six bonds ; and that after the brandy had thus been purchased and paid for, E. H. Nicoll presented the special permit at the custom house and demanded a delivery of the brandy, but the collector refused to deliver it, alleging that the permit tvas surreptitiously obtained, and that Castro & Henriques having become insolvent, the brandy could not be delivered without additional security ; that Brunei, although he had at that time in his possession and * under his control a large- amount of the property of Castro, did not pay the bonds ; and that the brandy remained id the public store until the expiration of the year from the time of importation, when the collector sold sufficient of the brandy to pay the duties. And the complainants Smith & Nicholl, who had subsequently become the general assignees of E. H. NicoII, insisted that as a part of the brandy thus purchased by him was sold to pay those duties, they were in equity to be considered as sureties, and were entitled to the same rights as if they had executed the bonds for the duties with Castro, and ought to be substituted in the place of the United States in relation to the same; and that Brunei having neglected to pay such duties to the United States, out of the assigned property, according to the priority established by law, his estate was liable for such duties.
    The complainants in their bill admitted that the debts still due to the United States, uppn the bonds signed by Castro, either as principal or surety, were in common with the said claims of the several complainants for the amounts paid by them for such duties, entitled to a priority in payment, out of the estate of Brunei, and were also entitled to priority over the other creditors out of the estate of Castro ; and that if there was not sufficient of the assigned property, in the hands of Brunei at the time of his decease.to discharge such debts and claims, then that the proper estate of Brunei" which came to the hands of the defendant Bouchaud as his executor, was answerable for the deficiency, in consequence of the misapplication of the assigned fund by Brunei; which deficiency was entitled to priority in payment over debts due to other creditors of Brunei, in case there was not enough of such estate to pay the whole. And they charged and insisted that they were respectively entitled, in common with the United States, and upon the same principles, to a priority in payment for so much of the bonds as had been paid by Dias and Furman and for the amount in the duties thus paid by Nicoll; and in case of a deficiency of the estate of Brunei to pay the full amount of debts entitled to such priority, that they were entitled to be paid pro rata with the United States. The complainants also charged in their bill that before the letters testamentary were granted to Bouchaud, he well knew the whole amount of the indebtedness of the estate of Brunei to the United States, and that Brunei had a large amount of the assigned property, and that a large amount of the custom house bonds of Castro remained unpaid. And they prayed for a full discovery as to the assigned property, and how it had been disposed of and applied, and of the property of Brunei which came to the hands of his executor, and of the application thereof; and that they might be paid the amount of their claims, with interest, from the estate of Brunei, if there should be sufficient for that purpose, and if not, then out of the proper goods and effects of the defendant Bouchaud ; and that they might have such further, or such other relief, as should be agreeable to equity.
    The defendant Bquchaud put in a general demurrer to the bill, for want of equity. And he also assigned as a special cause of demurrer that the complainants had not made all the persons, who were interested in the matters of the bill, parties thereto, and who by the showing of the complainants were necessary and proper parties. But the demurrer did not state what persons, or what description or class of persons, should have been, brought before the court as such parties. ; fi

      L. H. Sandford, for the appellant.
    The bill is not exhibited by or on behalf of all the creditors of Castro & Henriques, nor of all the creditors of Brunei. This appears on the face of the bill and shows a want of proper parties. (Cunningham v. Pell, 5 Paige, 607, 613. Story's Eq. Pl. p. 99. Id. 191, 2, § 216. Willis’ Pl. 220. Hallett v. Hallett, 2 Paige, 19. Fish v. Howland, 1 Id. 20. Wakeman v. Grover, 4 Id. 22, 23. Innis v. Lansing, 7 Id. 583. Thompson v. Brown, 4 John. Ch. 619.) It appears sufficiently upon the bill itself that there are other creditors. The fact that the claims of the complainants were originally debts due to the United States, does not constitute them liens on the assigned fund. (United States v. Fisher, 2 Cranch, 358. The same v. Hove, Idem, 90. Breastin v. Farmers Bank of Delaware, 12 Peters, 102.) Nor does that circumstance, in this case, give the complainants any priority, or any right to sue without bringing in all the creditors. No case is stated showing that the United States ever acquired any right of priority in payment out of the property of Castro & Henriques. (See United States v. Shelton, 1 Brock. C. C. 507.) As against the defendant Bouchaud and the estate of Brunei, the complainants show no right to charge the former, or the estate of the latter, with the alleged devastavit; because it is not averred that Bouchaud had notice of the debts due to the United States, or rather of the equity against Brunei in respect to the property of Castro & Henriques. (United States v. Fisher, 2 Cranch, 358, 391, n. per Marshall, C. J. Aiken v. Dunlap, 16 John. 77, 85, S. P. per Platt, J. Mott v. Mairs’ assignees, 12 Wash. C. C. 196.) The complainants are not entitled to interfere in regard to the amount secured to Brunei, by the assignment of Castro & Henriques, and they are not entitled to the relief sought in the bill. The assignment was valid, and gave Brunei a lawful preference. With the exception of the small sum of $6873,83, for money paid, the assignment to Brunei was to pay United States debts; and Castro & Henriques had an undoubted right to pay which of the bonds they pleased. The priority given, in the case of an assignment coming within the 65th section of the act of congress of 1799, does not supersede or over-ride the assignment, or avoid it. (Conrad v. Atlantic Ins. Co. 1 Peters, 439. Brent v. Bank of Washington, 10 Id. 596.) The complainants Nicoll and Smith do not show any right to set up or enforce a priority of payment out of the assets of Castro & Henriques. (Cole v. Sackett, 1 Hill, 516.) The complainants’ claims are barred by the statute of limitations. (Humbert v. Trinity Church, 7 Paige, 195. Story, 416, n. 3, cites Gething v. Vigins, before the H. of L., Nov. 8, 1836.)
    J. L. Mason, for the respondents.
    The complainants are entitled, under the statements of the bill, to the discovery and relief thereby sought against the defendant. The demurrer for want of parties should be overruled, inasmuch as it does not show who ought to be added as parties to the suit. (Mitf. Pl. 181, 3d Am. ed. by Edw. Story’s Eq. Pl. 203. Robinson v. Smith, 3 Paige, 222.) The bill is not defective for want of parties. It is not a bill filed in behalf of all the creditors of Castro & Henifiques, nor for an account of the execution of the trusts of the assignment 5 but it is in behalf of a particular class of creditors who are entitled to a priority over all others, viz. sureties of Castro, on bonds to the United States. (Inger. Abridg. Laws U. S. p. 861, act of 3 March, 1797. Id. p. 157. Hunter v. United States, 5 Peters, 172.) And these creditors standing in the same situation as to their rights or claims on the fund, are the only necessary parties to the suit. (Hallet v. Hallet, 2 Paige, 19. Egbert v. Wood, 3 Id. 517, 520. Burney v. Morgan, 1 Sim. & Stu. 358.)
   The Chancellor.

The objection for the want of proper parties in this case cannot be sustained. Lord Redesdale, in his valuable treatise upon equity pleading, (Mitf. Pl. 4th Lond. ed. 180,) says, a demurrer for want of parties must show who are the proper parties. Not indeed by name, for that might be impossible ; but in such manner as to point out to the complainant the objection to his bill, and thus enable him to amend by adding the proper parties. And in this he appears to be sustained by all the standard treatises upon the subject of equity pleading. (See Coop. Eq. Pl. 187 ; Welf. Eq. Pl. 279 ; Story’s Eq. Pl. 416, § 543.) Lord Cotlenham, in the recent case of The Attorney General v. The Corporation of Poole, (4 Myl. § Craig. 32,) expressed a doubt as to the correctness of the rule as laid down by Lord Redesdale, and these other elementary writers. And he refers to what he calls the doubt suggested by Lord Eldon in Pyle v. Price, (6 Ves. 781.) Mr. Daniell has, however, as I think, taken the proper view of what was said by Lord Eldon in the case referred to. He is of opinion that the observation which is reported to have been made by Lord Eldon, in Pyle v. Price, does not at all shake the rule which has been laid down,as to the necessity of.pointing out who the necessary party is, by the demurrer. He says the remark of his lordship merely referred to an observation made by the counsel for the defendants, that there was no rule requiring the demurrer to state the parties, that is by name, as it might be out of the power of the defendant to do so ; and that the observation of Lord Eldon, that perhaps there was not a general rule either way, did not refer to the necessity of calling the complainant’s attention to the description or character of the party required, in order to enable him to amend his bill, and without putting him to the expense of bringing his demurrer to argument for the purpose of ascertaining who the defendant supposed was the necessary party. (1 Dan. Ch. Pr. 386.) I shall therefore adhere to the rule as originally laid down by Lord Redesdale, according to its spirit and intent ; and shall hold that, in a demurrer for want of parties, the defendant must point out the necessary parlies, either by name, in reference to some statement of their names in the bill, or by their characters, as the heirs, devisees, personal representatives, assignees, creditors, &c. of some of thé persons therein named or referred to.

The case under consideration shows the necessity and propriety of such a rule. For upon the argument of the demurrer the counsel suggested four distinct classes of persons who ought to have been made parties to the suit, and yet none of them appear to be necessary parties ; and the only persons who I can suppose to be proper parties, taking all the allegations in the bill to be true, are persons who were not named or referred to by the counsel for either party, upon the argument.

The first objection was that the creditors of Castro & Henriques should have been made parties, by filing the bill in behalf of the complainants and all others of their creditors. The answer to that objection is that the assignment was not made for the benefit of the general creditors of the assignors, but only to pay the particular debts specified therein. It was then urged that Cazeaux, who appears by the schedule to have been a co-surety in some of the custom house bonds provided for in the assignment, should have been made a party. But it is fairly inferrible from the bill that his bonds have been paid. And in the absence of any suggestion in the bill to the contrary, the presumption is that they were paid out of the assigned fund, which it is averred was sufficient to pay all the bond debts. If those particular bonds were in fact paid by Cazeaux, and any part of the money thus paid was still due to him, so as to give him a common right with the complainants to be substituted in the place of the United Statesj and to be paid out of the assigned fund, the fact should have been brought before the court by plea or answer. And then it might have been necessary for the complainants to have brought him before the court, either as a defendant, or by amending their bill and stating thatit was filed in behalf of themselves and all others who were sureties in the bonds given by the assignors, or either of them, for duties, and who had paid such bonds, so as to be entitled to be subrogated to the rights and remidies of the United States, as against the assigned fund, and against the personal representative of Brunei and the estate of the decedent in his hands.

Another objection upon the argument was that Thiolliere, who was a surety in some of the custom house bonds provided for in the assignment, as well as in several which were not so provided for, should have been made a party. As the bonds signed by him, and provided for in the assignment, are not among those which are stated in the bill to be still due, the presumption is that they were paid out of the assigned fund. All the other bonds signed by him are alleged in the bill to be still due to the United States, so that he is not entitled to be subrogated in their place. And the United States being made a party, a decree in their favor, as prayed for in the bill, must necessarily protect him so far as he needs any protection, and is equivalent to an express declaration in the bill that it is filed for his benefit as well as that of the complainants. '

As to the objection that the bill should have made the other creditors of the estate of Brunei parties, it would be a sufficient answer that it does not any where appear that there are any other creditors of his who now have any claim upon the fund in the hands of his executor, or that the estate was insolvent. It is only alleged in the bill that the defendant gave out and pretended that the estate was insolvent, and yet paid the other creditors of the estate without providing for the priorities to which the United States and the complainants were entitled. And in a suit against the personal representative to recover a debt due from the estate of the decedent, it is only necessary for the complainant to file the bill in behalf of himself and all other creditors standing in the same situation, where it appears upon the face of the bill that there will be a deficiency in the fund, and also that there are other creditors who are entitled to a rateable proportion with the complainants. (Egberts v. Wood, 3 Paige’s Rep. 520.) Such an allegation in the bill is not necessary, to enable the court to make a general decree for the benefit of all the creditors, where the answer of the defendant shows that the estate is insolvent, and that there are other creditors who have an interest in the fund. (Story’s Eq. Pl. 103, note.) That principle, however, only applies to a bill filed by a single creditor, or by several creditors for a debt due to them all. For several creditors, having distinct debts against the estate, cannot file a bill for their respective debts, without making all other creditors having a common interest with them parties to the suit, or stating in the bill that it is filed in behalf of themselves and of all the other creditors who have a common interest with them.

But in the present case it would have been wholly inconsistent with the claim of the complainants, as made by the bill, to have inserted a clause declaring that the bill was filed in behalf of themselves and of all other creditors of Brunei. For their claim is adverse to the other creditors, if any there be, not only as it respects the fund in the hands of the defendant which is alleged to be a part of the assigned property, but also as to the general assets of the decedent. And the decision of Lord Hardwick, in Peacock v. Monk, (1 Ves. sen. 131,) is an authority to showthat where a special claim is made against the personal estate of the decedent, adverse to the rights and interests of his general creditors, it is only necessary to make the personal representative a party ; and that it is the duty of such representative to defend the estate in his hands against such claim.

The persons not referred to upon the argument as necessary parties, and who yet appear to me to have such a common, or rather connected interest with the complainants, in taking the account of the application of the assigned property by Brunei, and in the specific claim against the executor for that part of it which came into his hands, if it remained in specie or was in a situation to be traced and identified, as to render them proper parties, are Castro & Henriques, or their assigns or representatives. From the charges in the bill it appears that the property which came to Brunei under the assignment was at least $80,000. And the whole amount of the custom house bonds due to the United States, upon which Castro was liable either as principal or as surety, and of the duties for which he or his copartner was liable, including the bonds not provided for in the assignment, was much less than the amount of the assigned property ; after paying out of such assigned property the $6873,83 of other debts provided for in the assignment. This surplus, by the terms of the assignment, was to be re-transferred to the assignors, or to be held in trust for such purposes as they should afterwards direct. And if they have given no such direction they, or their representatives if they are dead, are the proper persons to receive such surplus and apply it to the payment of their general creditors. I think the defendant would, therefore, have had the right to insist, in relation to a part of the relief prayed for by the bill, that such persons should be made parties ; so as to make the account of the trust and of the application of the trust property conclusive upon them, and that he might not be compelled to account a second time to them in relation to the same matter. (Cocker v. Lord Egmont, 6 Sim. Rep. 311.) But a person may be a necessary party, within the meaning of the rule requiring all persons interested to be made parties, although the proper decree may be made, as to the subject matter of the litigation, in his absence if the defendant makes no objection. And in such a case, if the defendant neglects to make the objection, by plea, answer, or demurrer, of the want of parties who are only necessary to protect him from further litigation, the court, in its discretion, may refuse to sustain the objection at the hearing, or to require the cause to stand over to add new parties in that stage of the suit. As the objection that Castro & Henifiques were not made parties was neither made by the demurrer upon the record, nor by the counsel ore tenus at the hearing, it cannot authorize a reversal of the decretal order appealed from ; and that order must be affirmed, unless the demurrer can be sustained upon the equity of the case of the complainants, as made by their bill.

To sustain a bill filed by several complainants, upon a general demurrer to such bill for want of equity, it must appear that all of such complainants have an interest in the subject matter of the litigation. (King of Spain v. Machado, 4 Russ. Rep. 225. Cuff v. Platell, Idem, 242.) And if the claims of all these complainants cannot be sustained, either wholly or in part, the decretal order appealed from must be reversed, and the demurrer allowed. Independent of the question whether the United States "was entitled to a preference in payment, out of the assigned fund, as to bonds for duties not provided for in the assignment, the complainant Dias, upon the facts stated in the bill, has a claim upon the trust fund which came to the hands of the executor, for the money he has paid to the United States. For the bonds signed by him and Brunei as co-sureties, being part of the debts provided for in the second class of debts under the assignment, Brunei had no right to apply the whole fund, even if there was a deficiency, to pay the amount due upon those bonds only on which he was liable as the sole surety therein. But his co-sureties were, in equity, entitled to have a rateable portion of the fund, after paying all the debts of the first class, applied to the payment of each of the bonds and of the other debts provided for in the second class. And if the assigned fund was also liable for the payment of all the other debts to the United States not provided for in the assignment, Dias still had the right to have the whole fund applied to the payment of all the bonds rateably, as between him and the assignee. Dias was not compelled to pay the balance due upon the two bonds on which he was liable as surety, until 1834 ; and the ten years limitation, as to suits in equity where there is no concurrent remedy by action at law, did not therefore commence running, as against Dias, until such payment was made by him.

The assignment in the present casé does not, upon its face purport to convey all the property, either joint or several, of the assignors. But the averment in the bill shows that it was all assigned. And it hasbeen decided thatif there w'as in fact an assignment of all the property of the debtor of the United States, that is sufficient to bring it within the act.

The objection that the copartnership fund could not be applied to pay the bonds signed by Furman, as surety for Castro only, is not well taken. For it appears from the bill that those bonds were given for the duties upon goods imported for the copartnership. The custom house bonds signed by Castro, as principal, were therefore partnership-debts. Besides, the assignment itself shows that some of the individual property of Castro was in fact assigned.

Upon an examination of the opinion of Judge Story, in the recent case of The United States v. McLellan, (3 Sum. Rep. 345,) I was inclined to doubt whether the assignment in the present case was within the acts of congress giving preferences. For upon referring to the assignment it will be seen that it provides for the payment of no debts except those which are due to the assignee, or for wffiich he was personally liable as a surety. And instead of applying the residue of the assigned fund to the payment of the other debts of these insolvent assignors, the assignment declares that it is to be re-assigned to them, or to be holden for such uses and trusts as they shall thereafter direct. Such an assignment, if the assigned property was in fact worth nearly double the amount of the debts provided for therein, as appears by this bill, would undoubtedly be fraudulent as against the other creditors. But as such creditors did not attempt to assert their rights to set aside the assignment on the ground of fraud, neither the assignee nor his personal representative, can object to the priority of the United States on that ground alone ¡ as fraud only makes the assignment voidable, but not void. I think it is pretty evident, in this case, that the object of Castro, in making this assignment, was solely to protect the assignee, and not to provide for the general application of the property for the benefit of any other creditors ; except so far as they must necessarily be benefitted by indemnifying Brunei. The words 65 voluntary assignment” in the 65 th section of the act of 1799, to regulate the collection of duties upon imports and tonnage, (1 Story's ed. of Laws of U. S. 630,) as well as in the corresponding section of the act of March, 1797, (Idem, 465, § 5,) unquestionably mean an assignment of all the debtor’s property, in trust, to pay debts j as contradistinguished from a mere sale thereof to a creditor in payment of his debt, or the pledge or hypothecation of the property to a particular creditor, as a mere security, in the nature of a mortgage. The case of the United States v. McLellan, arose upon a transfer of the latter description, and was rightly decided. But in the case under consideration there was a technical assignment, in trust, of all the property of the debtors, and it was in fact for the benefit of all the creditors named therein ; whatever might have been the secret objects of the assignors and of the assignee. And although, if the amount of the assigned property was' as large as is stated in the bill of the complainants, it was not all directed to be applied to the payment of the debts of the insolvent debtors, it was such a divesting themselves of the property as to bring it within the spirit and intent of the statutes creating priorities in favor of the United States. Furman, therefore, upon payment of the bonds signed by him as surety, was entitled to be substituted in the place of the United States, in relation to their claim upon the fund by virtue of those bonds.

No question can arise upon the statute of limitations as to Furman ; as the time when he paid the bonds to the United States is not stated in the copy of the bill with which I have been furnished, the time being left in blank. It may perhaps be inferred, however, from the amount of interest paid upon the bonds, as stated in schedule F., that they were in fact paid in the fall of 1824. That inference, however, is not sufficient to sustain the demurrer; but the defendant, if the right of suit of this complainant was in fact barred at the time of filing the bill, should have raised the objection by a plea, or by insisting upon it in an answer.

The right of the complainants Dias and Furman to substitution, in the place of the United States, is expressly given to them by the 65th section of the revenue act of 1799, before referred to, as to the bonds in which Castro was the principal debtor. For his insolvency and assignment gave to the United States a priority as to the assigned fund, which priority attached upon that fund at the time of the assignment to Brunei. Dias and Furman, as the sureties in those bonds respectively, afterwards paid the debts to the United States, and thereby became subrogated to the rights of the United States as against the assigned fund. And if the assignee and his executor had notice of the several bonds to the United States, and of the parties to the same, they had legal notice of the rights of the sureties in such bonds to substitution, in case such bonds should not be paid to the United States out of the fund as to which the preference was given. Brunei had actual notice of the bonds signed by Dias as one of the sureties, not only by the schedule annexed to the assignment, but also by signing those bonds with him as a co-surety. But I have not been able to find ^ny allegation in the bill that he had notice of the existence of the bonds signed by Furman, as surety for Castro, or of the facts upon which the claim of Smith & Nicoll is founded. Nor is the averment in the bill, that before the letters testamentary were granted to the defendant, Bouchaud, he well knew the whole amount of indebtedness of the estate of Brunei to the United' States, and that Brunei had a large amount of assigned property, and that a large amount of custom house bonds of Castro remained unpaid, sufficient to charge the executor with notice of the claim of Smith sfeNicoll, wh'ich claim clearly was not a debt due to the United States at the death of Brunei, nor of the claim of Furman, if, as I suppose, the bonds of the latter had been paid to the United States long before that time. The bill therefore is wholly insufficient, in this respect, to charge either Brunei or his executor with a misapplication of the funds upon which these complainants claim to have had a preference.

Again; I think Smith & Nicoll have wholly failed, in this bill to show that they were entitled to a preference under the statute, or to be subrogated to any rights of the United States at the common law ; even if their claim, which arose in March, 1824, was not barred by the lapse of time. It appears by the complainants’ bill that the duties upon both parcels of brandies were in fact secured, by the bonds of Castro as principal and of Thiolliere as surety as to one parcel, and the bond of Castró as principal and of Brunei as surety as to the other parcel. From this it would appear that the lien of the United States upon the brandies no longer existed. For as soon as the duties are paid, or are secured by the importer, by a bond with sureties, as required by law, the lien which previously existed upon the goods is at an end. And the goverment cannot hold the sureties liable upon the bonds, and at the same time retain the goods as an additional security. The act of April, 1818, providing for the deposit of wines and distilled spirits in public warehouses, and for other purposes, to which I was referred by the complainants’ counsel on the argument, (3 Story’s Laws of U. S. 1714,) does not give a lien upon the goods, in addition to the bonds with security. The provisions of the act referred to, merely authorized the importer, at his option, at the time of entering these brandies, to secure the duties thereon, upon the same terms, and stipulations as on other goods; that is, by three bonds with sureties, payable in eight, ten and twelve months, as directed by the 62d section of the act of March, 1799, (1 Story’s Laws U. S. 627,) or to give his own bond, without security, payable in twelve months, accompanied by a deposit of the brandies in the public warehouse; with the privilege of taking them out upon giving the bonds with sureties, on the same terms of credit as he might have had originally. And the collector was only authorized to sell the brandies in case the duties had neither been paid nor secured to be paid in the manner directed by that act. When these duties had been secured, therefore, by the six bonds with sureties, and the special permit given for the delivery of the brandies, the lien upon them was at an end. It is true, if the bonds had not been given to the collector, as it is stated in the bill that they were, and if the pretence was true that the permit had been surreptitiously obtained, the lien .of the United States would not have been lost. But the failure of the principal in the bonds, or even of Brunei and Thiolliere the sureties, after the duties had been secured as directed by the statute, would not restore the lien and authorize the collector to sell the brandies for the duties. And in this case, there is nothing in the bill to show that the complainants even believed that the duties had not in fact been secured, or that the allegation of the collector that the permit had been surreptitiously obtained was true. Nicoll, therefore, acquired no lien, either at Jaw or in equity, upon the assigned fund, by this unauthorized act of the collector. Another objection to this claim of Smith & Nicoll is, that it does not appear from whom E. H. Nicoll purchased the brandies, or that the notes given by him weré ever paid to Castro & Henriques or to their assignee.

Two of the complainants, therefore, have wholly failed to show any right to join with the other complainants in filing this bill. And this being a fatal objection, upon demurrer to the whole bill, the decretal order overruling the demurrer must be reversed with costs, and the demurrer must be allowed. The complainants are to be permitted to amend their bill, by striking out the names of Smith & Nicoll as complainants, and in such other manner and upon such terms as the vice chancellor, upon application to him, and on due notice to the defendant, may think proper to direct. The proceedings are to be remitted to the vice chancellor, with directions to dismiss the bill with costs unless the complainants shall amend the same, in such manner as may be permitted by him, and pay the costs, within sixty days from the time when their solicitor shall receive notice of the decretal order to be entered on this appeal.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    King vs. Whitely.
    1843. November 21.
    Where the grantee of the equity of redemption in mortgaged premises, who was neither legally nor equitably interested in the payment of the bond and mortgage, except so far as the same was a charge upon his interest in the premises, conveyed the mortgaged premises subject to the mortgage, and the conveyance recited that the grantees therein assumed the payment of the mortgage, and were to pay off the same as a part of the consideration of such conveyance; Held, that as the grantor in that conveyance was not personally liable to the holder of the mortgage to pay the same, the grantees were not liable to the holder of such mortgage for the deficiency, upon a foreclosure and sale of the mortgaged premises.

      Held also, that if the grantor in the conveyance had been personally liable to the holder of the mortgage, for the payment of the mortgage debt, the holder of such mortgage would in equity have been entitled to the benefit of the agreement recited in such conveyance to pay off the mortgage; and would, in that case, have been entitled to a decree over against such grantees, for the deficiency.
    Courts will give effect to stipulations in marriage settlements, and in other contracts of a similar nature, in favor of third persons for whose special use and benefit such stipulations were intended, although such third persons were not parties to the contracts. But in all such cases the decision of the court is placed upon the ground that the person who obtained the stipulation, and from whom the consideration of the stipulation or promise of the other party to the contract proceeded, intended it as a gift or gratuity to the person in whose favor the stipulation was to be performed, and who was particularly named or referred to in the agreement as the person intended to be benefitted by such stipulation.
    \ This was an appeal by the complainant from so much of the decision and decree of the late assistant vice chancellor of the first circuit, as related to the liability of the respondents, Whitely and Close, for the deficiency of a mortgage debt, after exhausting the proceeds of the sale of the mortgaged premises. The premises were mortgaged by the defendant Wadsworth, on the 10th of June, 1835, to J. G. Pearson, to secure the payment of $2600 in two years, with semi-annual interest, at the rate of six per cent per annum. And the bond and mortgage were assigned by Pearson to J. G. King, the appellant. In July, 1836, E.'Wilkes conveyed the mortgaged premises to Whitely and Close, together with other real estate, subject to the mortgages thereon ; and the conveyance to them recited that the grantees assumed the payment of such mortgages, and were to pay them off, as a part of the consideration of the conveyance. But it was not charged in the bill in this case, nor did it appear from the proofs, how or from whom Wilkes obtained his title to the mortgaged premises, or that he was under any obligation to pay off and discharge the .complainant’s mortgage, if the proceeds of the sale of the premises under the decree of foreclosure should prove insufficient for that purpose. ( The complainant alleged in his bill that by an agreement made between him and Whitely, one of the respondents, and endorsed upon the mortgage, the time of payment was extended one year, and that the interest was to be paid at the rate of seven per cent. And Whitely, in his answer, admitted that he agreed with the complainant that if he would refrain from exercising his right to foreclose the mortgage for one year, he would pay him seven per cent interest upon the mortgage money during that period ; and that he paid it accordingly. But both of the respondents denied that the equity of redemption was conveyed to them by Wadsworth, the mortgagor, or by any other person who was personally liable for the payment of the bond and mortgage; or that they ever agreed with the complainant, or Pearson, to become personally liablé for the payment of the mortgage debt, or that the provision in the conveyance from Wilkes was inserted therein for the benefit of the mortgagee or his assignee. The alleged agreement endorsed upon the mortgage and signed by the complainant and Whitely was as follows: " The term of payment on this mortgage is extended to 10th June, 1838, upon seven per cent interest from lOth June, 1837.”
    ¡i The assistant vice chancellor decided that the respondents were not personally liable to the complainant for the deficiency, if any there should be, upon the sale of the mortgaged premises) Whitely having paid the seven per cent interest upon the mortgage, for the year, according to his agreement with the complainant.

      J. Blunt, for the appellant.

      John Wallis, for the respondents.
   The Chancellor.

The agreement between the complainant and Whitely, endorsed upon the mortgage, could only render the latter liable for the payment of the interest, at the rate of seven per cent, during the time of the extension agreed upon. Í The only question in this case, therefore, is whether the complainant is entitled to the benefit of an agreement made between the respondents and Wilkes, who does not appear to have been liable for the payment of the mortgage debt, or to have had any interest in discharging the mortgage, except so far as it was an incumbrance upon the premises which he conveyed to them.; Indeed the answer expressly denied the personal liability of Wilkes; and no proof whatever was introduced to show that he was under an obligation to any one to pay off and discharge the mortgage, or to satisfy any deficiency which might exist upon the foreclosure and sale under the mortgage.

¡ In Halsey v. Meed, (9 Paige's Rep. 446,),! came to the conclusion that the acceptance, by the grantee, of a conveyance which contained a recital that he was to pay off and discharge an existing incumbrance upon the premises conveyed, as in this case, was evidence of such an agreement between him and the grantor ; although the grantee had not himself executed the conveyance. It was also decided in that case, as well as ih,the previous case of Curtis v. Tyler Allen, (Idem, 432,) that where the grantor in such a conveyance "was personally liable for the payment of the incumbrance, the grantee became the principal debtor, by such an agreement; and that the grantor stood in the situation of a mere surety for him, as to the payment of such incumbrance, so as to give the holder of the incumbrance a right in equity to resort to the grantee for payment, if the premises upon which it'was a lien should prove insufficient'for that purpose.^ But the principle upon which the decisions in those cases,"and in others of the same class, are founded, does not apply to a promise made to a third person who is not personally liable, either at law or in equity, to the holder of the incumbrance; and who is under no obligation to any one for its payment.^ The principle of all those cases is that in equity the creditor is entitled to the benefit of all collateral obligations, for the payment of the debt, which a person standing in the situation of a surety for others has received for his indemnity, and to relieve him or his property from liability for such payment. ¡(See 9 Paige’s Rep. 435, and the cases there referred to.)

There is another class of cases in which the courts give effect to stipulations in marriage settlements, and in other contracts of a similar nature, in favor of third persons for whose particular and special benefit the stipulations were intended; although such persons were not parties to the contracts. (Bleeker v. Bingham, 3 Paige’s Rep. 246.) And in the case of Dutton and wife v. Poole, (1 Vent. Rep. 318, 332,) the court of king’s bench permitted the daughter to maintain an action of assumpsit, upon a promise made to her father, to pay a sum of money to such daughter, upon a consideration between the promissor and the father. The court in that case, however, put its decision upon the ground of the relationship between the father and his child ; and said the decision might have been otherwise if the payment had been required to be made to a stranger. A similar decision was made by the supreme court of this state, in Schermerhorn v. Vanderheyden, (1 John. Rep. 139,) where a promise was made to the father, to deliver a desk to his daughter, upon a consideration paid by the father to the promissor. (See also Starkey v. Mill, Style’s Rep. 296.) These cases, however, all rest upon the ground that the person obtaining the promise, and from whom the consideration proceeded, intended it as a gift to the person in whose favor the stipulation was to be performed ; and who was particularly named or referred to in the agreement 3 as the person intended to be benefitted thereby. :

In the case under consideration, there was no promise to pay the bond and mortgage to the complainant, for his benefit. Hor was there any agreement in writing, signed by the respondents, to render them liable for the deficiency ; which deficiency,from the papers before the assistant vice chancellor, appears to have been the personal debt of the mortgagor only. - As there is nothing to show that Wilkes was under any obligation to pay off the mortgage, or that he intended to benefit either the mortgagor or the mortgagee, by the agreement with the respondents, recited in the conveyance to them, that agreement must be construed as a mere declaration that the property was conveyed to them subject to the lien of the mortgages thereon; and that the general covenants of seizin and warranty, in the conveyance, were not intended to extend to these particular incumbrances, of which the grantees assumed the payment in case they should wish to retain the title to the lands conveyed to them, j

For these reasons I think the complainant failed in showing that the respondents Whitely and Close were personally liable to him for the deficiency, if any there should be, upon the sale of the mortgaged premises. ["The part of the decree appealed from must therefore be affirmed with costs. (


text:
    Smith vs. Smith.
    1843. November 21.
    Partition between tenants in common of real property is a matter of right, by the common law as well as by the statute, where both parties cannot, or either of them will not, consent to hold and use such property in eommoii
    Where the sale as well as the actual partition of the premises held in common, will be greatly prejudicial to the owners of such premises, as compared with the use thereof in common, an actual partition thereof must be made; unless the injury to the interests of the owners collectively, in reference to the rights of each in the common property will be much greater by an actual partition than by a sale.
    The words “ great prejudice,” as used in the revised statutes, in relation to partition, will not justify a decree of sale of the property held in common, where the aggregate amount of the benefits to the parties from a sale, instead of an actual partition of the premises, will be small in reference to the value of the property of which a partition or sale is sought.
    Where the real estate of which partition is sought consists of a mill dam and the lands overflowed by the mill pond, constituting the water power which is n ecessary for the use of various mills which belong in severalty to the respective tenants in common of such dam and pond, an actual partition of the water power should be made, instead of a sale thereof, if the whole water power, in connection with the mill property held in severalty by either party, would not be worth more than the same water power equally divided, by a proper partition thereof, the one half to b| used with the mills of each, in the hands of different proprietors.
    The commissioners appointed to make partition of real property, consisting of a mill dam‘and mill pond, creating the water power which supplies the mills held in severalty by the tenants in common of such mill and mill pond, may divide the mill dam, and the lands under the same and under the waters of the pond, and may make such provision for keeping the different portions of the dam and of the water gates and flumes in repair, and such regulations for the use of the water power, which is not capable of actual partition without a destruction of its value, as the parties themselves might make by a partition deed of the same property.
    In making partition of real property, the commissioners may assign a portion of the premises, held in common, to one of the parties, charged with a servitude, or easement, for the benefit of another party, to whom a distinct portion of the premises is assigned in severalty.
    Various modes stated by the chancellor, in which a partition of a mill dam and mill pond and waterpower, held by tenants in common, may be legally made, without a sale.
    This was an appeal by the defendant from so much of the decree of the late assistant vice chancellor of the first circuit, in a partition suit, as adjudged that the premises were so circumstanced that a partition thereof could not be made, without great prejudice to the owners of the same, and directed that a decree be entered for the sale thereof, without further notice to the defendant, upon the coming in of the master’s report as to liens ; and from so much of the decree as directed that neither party should have any costs as against the other, in regard to other matters litigated in the cause, including the costs of all the testimony taken in the suit. The undisputed facts in the case, so far as related to the question of partition, were as follows : Previous to the 10th of October, 1833, M. Smith, the father of both parties, was the owner of the dam and pond and of the land under the same, of which a partition and sale was sought by the complainant’s bill. And he owned also a grist mill, a fulling mill with two carding machines and a picker, and a saw mill with a bark mill attached to it, situated upon other parts of his land immediately below the dam | all which mills and machinery were propelled by water power from the waters of the pond above the dam, by means of three flumes which passed through different places in the dam 5 one of which flumes conveyed the water to the grist mill, another to the fulling mill, carding machines and picker, and the third to the saw mill and bark mill. On the day before stated, M. Smith the father, in pursuance of an agreement with his two sons to that effect, conveyed to his son Parmenus, the complainant, by metes and bounds, the lands upon which the grist mill was situated, and other lands, adjoining and bounded by the dam; together with the equal undivided half part of the dam and the stream, pond, and pondage grounds, adjacent to the lands conveyed in severalty ; describing the same by metes and bounds. And at the same time, and for a consideration of the same amount, he conveyed to his son Samuel L., the defendant, in severalty, and by metes and bounds, the lands on which the other mills and machinery were situated, and which conveyance included the lands, below the dam, through which the two flumes supplying such mills and machinery were constructed, and other lands adjacent; and also the other equal undivided half part of the dam, and the stream, pond and pondage ground, describing the same in the same words as in the other deed. After these conveyances were given, the complainant rebuilt his grist mill ; and, as the defendant insisted, so constructed it as to draw off more water from the pond, in dry seasons, than was drawn off by the old mill. And the defendant took down his fulling mill, &c. and erected in the place of it another building, which was used alternately as a grist mill with one run of stones, and as a fulling mill and carding machine ; but which, as the defendant insisted, did not require more water power than the old mill, in the place of which it was erected. The bill and the answer charged various acts of injustice, against the defendant and the complainant, respectively, in relation to the use of the water power, and as to the quantity of water used to propel the mills of each party ; which questions were put in issue by the pleadings, and as to which issues testimony was taken on both sides. The defendant also averred and insisted, in his answer, that neither the mills of the defendant, nor the grist mill of the complainant, could be worked or used without the waters of the pond, and that such pond was not susceptible of a division into two parts; and that it could not be sold, so as to deprive either of the use of the water, without great prejudice. And he set up in his answer an alleged agreement, between himself and the complainant, at the time of the purchase, that so long as their respective mills should be holden in severalty, the pond should continue and be owned in common ; and that a particular mode of using the water should be adopted, so that neither should draw it down below a specified point. But no evidence of such an agreement was produced at the hearing,

      J. Dikeman & J. Rhoades, for the appellant.

      W. Silliman, for the respondent.
   The Chancellor.

As neither party has appealed from that part of the decree which declares the rights of the complainant and defendant, as tenants in common, in equal proportions, of the mill dam, stream, pond and pondage lands, and premises described in the first clause of the decree, the question cannot arise here, whether each party took his conveyance of the undivided half of the dam and the land under the waters of the pond, subject to the right of the other to use the water, for the mill or mills conveyed to him in severalty, to the same extent and in the same manner as it had been before used. For this declaration of the equal rights of the parties, in the part of the decree not appealed from, necessarily supposes that each is entitled to an absolute equality of right in the use of the water, as well as of every other beneficial use of which the property held in common is susceptible. And I am inclined to think that this was the legal effect of the conveyances to these parties respectively, as far as the terms of those conveyances can be ascertained from the pleadings in this case. For it appears from the pleadings, that each deed was a simple conveyance, of a portion of the grantor’s land in severalty, by metes and bounds, without reference to the mills thereon, or the uses to which it was then applied, or to any easement, or other appurtenant; and of an equal undivided half of the dam and pond, &c. If such was the language of those conveyances, the parties had a perfect equality of right in the premises conveyed to them in common. The questions then are, Had the complainant a right to a partition of this common property 1 And if so, how should that partition be made 1

Upon the first question I think that partition between tenants in common of real property, in this state, is a matter of right, by the common law as well as by the statute, where both parties cannot, or either of them will not, consent to hold and use such property in common. I think the cases referred to by the assistant vice chancellor fully sustain his decision upon that question, as to the common law right. (Baring v. Nash, 1 Ves. & Beame, 554. Parker v. Gerard, Amb. 236. Harrison v. Willard, 3 Fairf. Rep. 146. Allnat on Part. 4, 78, 87. Turner v. Morgan, 8 Ves. 143.) The case referred to by the counsel for, the appellant, from the state of Massachusetts, (Miller v. Miller, 13 Pick. Rep. 236,) is notin conflict with the authorities above cited. There a saw mill and the ground on which it stood, together with the stream, dam, logways and appurtenances, had been conveyed to two persons as tenants in common ; and the mill having gone to decay, the use of the water of the dam and pond had been rented to the owners of a furnace below. One of the tenants in common afterwards applied for the partition of the dam and water only 5 which dam and water the court said was a mere incident to the mill privilege belonging to the tenants in common below, and that one could not be partitioned without the other to which it was appurtenant. The cases of Conant v. Smith, (1 Aiken's Rep. 67,) and of Brown v. Turner, (Idem, 350,) appear to have been decided upon a local statute, which probably gave some discretionary power to the court upon a petition for partition ; and without reference to the common law right of the parties to apply to the law side of the court by a writ of partition. The provisions of our own statute, however, are strictly in accordance with the common law right in this respect. The first section authorizes a person holding property in common with others to apply to the court for partition. And after prescribing the form of the proceedings, and the manner of ascertaining the rights of the parties, the statute is imperative, that the court shall determine the rights of the parties in the lands, tenements, or hereditaments, of which partition is sought, and shall give judgment that partition be made &c. (2 R. S. 321, § 23. Idem, 329, § 80.)

I think the assistant vice chancellor erred, however, in supposing that the proofs in this case required, or authorized, a decree for the sale of the water power of which partition was sought. The statute only authorizes a sale of the property where it appears to this court, by the report of a master or otherwise, that the premises are so circumstanced that a partition thereof cannot be made without great prejudice to the owners. (2 R. S. 330, § 81.) I do not think that the testimony which was before the court brought this case even within the literal reading of the statute. For, from the peculiar situation of this property, I am inclined to think a proper partition thereof would be beneficial to both parties; rather than to permit it to remain in common, as it now does, without any provision for the exercise of their common rights in such a manner as to prevent difficulties between them. The statute, however, refers to comparative prejudice, to the owners,"between an actual partition and a sale of the property. So that if either a partition or a sale will be greatly prejudicial to the owners, compared with the use of the property in common, still an actual partition must be made; unless the injury to the interests of the owners collectively, in reference to the rights of each in the common property, will be much greater by an actual partition than by a sale. For the words great prejudice as used in the statute will not justify a decree of sale, where the aggregate amount of the benefits to the parties from a sale, instead of an actual partition, will be small, in reference to the value of the property of which a partition or sale is sought.

Here the proof shows that the property is of little or no value except in connection with the mill property of one or both of these partieg. Of course no one but the parties would bid upon it, if it was sold under the direction of a master, except with a view to sell it again to one or both of them, or to connect it with the mills of one or both, by a purchase of the mills from them. And if the whole water power, in connection with - the mill property held in severalty by either of these parties, will not be worth more than the same water power equally divided by a proper partition thereof, the one half to be used with the mills of each in the hands of different persons, no benefit will result from a sale instead of such a partition. The father of the parties, I believe, is the only witness who has stated the comparative values of each part of the mill property, with the use of one half of the water power, or with the whole or none of it. He thinks the mills of each of the parties, with the lands conveyed therewith, are worth $1500, with the one half of the water power, and that without any of it they would not be worth more than $500 ; and that if the whole water power, instead of the half, is given to either party, his property will be increased $1000. According to this testimony, which is the most favorable to the respondent, either party could afford to bid $2000 for the water power. For the one who became the purchaser at that price would be entitled to one half of the purchase money ; so that by adding one thousand dollars to the whole property held under the deed from his father he would have the whole water power, and would increase the value of his mill site and water power to $2500. ' In other words, he would be just as well off in point of property as if the use of one half the water had been apportioned to him by a proper partition. And the one who lost the water power would, in addition to his mill site without water, which his father values at $500, have one thousand dollars for his half of the bid. But Clark estimates both the value of the mills, and the difference in their value by the loss of the water power, as being much greater. He says he would give for the complainant’s mill with the use of the water $3000, and without such use not more than a quarter of that amount; and so of the defendant’s mills. And DeMott, who appears to be an experienced as well as an intelligent mill owner, thinks that neither of the mills, that is the mill site and the buildings of neither of the parties, would be worth a quarter as much without the use of the water as with it. From all this testimony, therefore, I infer that it would diminish the property of both parties, in the aggregate, to have a sale instead of an actual partition. For no one could afford to give double the amount for the whole water power, which the one half of it would be worth to each of these parties; unless he should be able to sell it immediately back again to the parties respectively jn severalty.

Nor does there appear from the testimony to be any difficulty in making an actual and equitable partition of the water power in controversey, so as to be mutually beneficial to each. For it is not necessary to divide the waters of the pond by horizontal lines. The land under the water and the dam may be thus divided, by metes and bounds ; and one part thereof may be assigned to each party, subject to the servitude and charge of keeping up and repairing the dam on that part, by the one to whom it is assigned, for the use of the other, as well as for his own benefit; and the right to the use of the half, or of any other portion, of the waters of the pond, which are thus preserved, may be assigned to the parties respectively, to be used in such a manner as the commissioners, in their report of the partition, may direct. And if the present situation of the flumes, and of the gates, cannot be altered without injury to the mills, so as to prevent one party from obtaining or using more than his equal half of the water, the statute has wisely provided that a sum may be decreed to the other party for owelty of partition. (2 R. S. 330, § 83.) So an equitable partition of the water may be made, by allowing the complainant at all times to have sufficient water, to be drawn through his present gateway, or through such other gateway as may be hereafter constructed in lieu of it of the same capacity and depth, to work his present machinery for so long a time as may be necessary whenever he may have any grinding to do, and by requiring the defendant to shut down his gates whenever the water gets down to a particular mark, to be designated in Jhe report for that purpose, and keeping them shut until it rises to a certain other point; and awarding to the defendant a compensation in money, as an equivalent for such a special privilege in the use of the water. Or the commissioners may give a similar privilege to the defendant, as to both or either of his mills, and may award a compensation to be paid by him to the complainant, as an equivalent, to equalize the partition. So they may direct the water to be used in the way suggested by the witnesses, by fixing a monument or mark in the pond in a permanent situation, and allowing both parties to draw the water from the pond, for the use of their mills, through the present gateways, or through others of the same depth'and construction, until the water is drawn down to a specified mark or point upon the monument; and directing that both parties shall then shut down their gates until the water has risen in the pond to another specified point or mark upon suchmonument. And if one party will, in the ordinary use of his mills and his present gateways, in the manner suggested, get more than his fair proportion of the water, either in quantity or in value, taking one portion of the year with another, the commissioners may, in their report, direct such alterations to be made in the depth or capacities of such gateways as will render the use of the water of the pond, in that manner, equal between the parties. Or if such alterations cannot be made without diminishing the head and quantity of water required for the propelling of the machinery of the mill or mills of either party, they may award a sum of money to be paid by one party to the other for owelty of partition. In short, the commissioners who are to make the partition may divide the dam and the lands under the water, and may make such provisions for keeping the different portions of the dam, and the waste gates and flumes in the same in repair, and such regulations for the use of the waterpower which is not capable of actual partition without a destruction of its value, as the parties might make by a partition deed between themselves, and by agreeing for a compensation to be paid by one party to the other if necessary, so as to make that partition perfectly equal; so far as human judgment is capable of producing equality in such a case.

That such is the law, in connection with the provision of the revised statutes authorizing this court, where an equal partition of the property cannot be made without prejudice to the rights and interests of some of the parties, to decree compensation to be made by the one to the other to produce such equality, it is. only necessary to refer to a few of the leading cases on this subject.

In the case of Hill v. Dey, (14 Wend. Rep. 204,) it appeared that the commissioners in partition had set off to one of the parties one part of the premises, by metes and bounds, and another part of the premises to the other in the same way i the whole embracing two mills upon the same stream, the one below the other. But in their report, in addition to the land itself on which the lower mill was situated, they had given to the party to whom that part of the land was set off, the easement or right to flow back the water upon the land assigned to the other, in the same manner and to the same extent that such water had been flowed back previous to the partition. It is true the question there arose upon the construction of the report itself. But the decision of the court recognized the principle that the commissioners in partition might assign one part of the premises to a party, charged with a servitude or easement for the benefit of another party, to whom a distinct portion of the land was assigned by metes and bounds. And in the case of Morrill v. Morrill, (5 New Hamp. Rep. 134,) the committee appointed by the court to make partition of a mill site and mill privileges, assigned to some of the parties distinct portions of the premises by metes and bounds, with the right of taking from the river within the limits of the lands assigned to them respectively, so much water as-would flow through a gateway of certain prescribed dimensions, together with a passage way or water course through other portions of the premises not assigned to them. And the court sustained the report of the committee; distinctly placing their decision upon the principles of the common law upon the subject.

Warren v. Baynes, (2 Blunt's Amb. 589,) decided by Lord Hardwick in 1750, is another case, in which such a mode of making partition of property, the principal value of which consisted in the use of water, was adopted. An easement in the land was leased to the New River Company, at an annual rent for the quantity conveyed in each pipe, laid down by the company; with the privilege of laying down other pipes at the same rent. And there were also two water conduits belonging to the parties in the partition suit, one of which was used for a cold hath establishment, and the water in the other conduit was running to waste. And in decreeing a partition of the property between the owners of the water conduits and of the lands through which the pipes of the New River Company were laid, &c., and directing the mode of enjoyment of the parts set off to the owners of the premises in severalty, Lord Hardwick directed that the rents payable in respect of the water pipes then laid by the company should be put into one lot, and the other part of the estate of equal value be put into another lot, and that in case the company should lay any new pipes which should run partly through the land which should be allotted to the plaintiff and partly through that allotted to the defendant, the rent for such new pipes should be apportioned between^ the parties according to their respective quantities of the land through which the same should run. And that the conduit in which the water run to waste should be allotted to one party, and the other conduit with the cold bath to the other; and that the party to whom the first conduit was allotted should not convert that conduit into a cold bath, so as to come in competition with the cold bath allotted to the other party. (See also Clarendon v. Hornby, 1 Peer Wms. Rep. 446 ; Lister v. Lister, 3 Younge & Coll. Exc. Rep. 540.)

I see no good grounds for questioning the decision of the assistant vice chancellor in respect to costs. The complainant in his bill claimed a small piece of land which did not belong to the parties in common ; and he made an unfounded charge against the defendant, as to his having agreed not to erect any mill, on the part of the premises conveyed to him, which should interfere or come in competition with the business of the complainant. But the defendant on the other hand set up, in his answer, an agreement that the dam and pond should be forever held in common for the use of the mills of both parties, so long as such mills should be holden in severalty, and as to a particular mode of using the water. Which allegation in the answer is equally unsustained by proof. There was no impropriety, therefore, in leaving both parties to bear their own costs in relation to those matters, and as to the proofs, which related to matters in controversy between them not affecting the right to partition. Again; as the rights of the parties in the property are equal, and each must bear an equal share of the costs necessary to effect a severance of the property which they cannot agree to divide amicably between themselves, it could make very little difference whether the particular portion of the costs thus disposed of by the decree of the assistant vice chancellor should be left to be paid by the respective parties, in this stage of the cause, or should be ordered to abide the event of the suit as a part of the general costs therein. That part of the decree must therefore be affirmed. But the residue of the decree which is appealed from must be reversed, without costs to either party on the appeal. And a decree must be entered for the appointment of commissioners, with directions to them to proceed to a partition of the property, between the parties, upon some equitable principles, as above suggested, and in such manner as to do as little injury as practicable to either party. But before such a decree can be settled and entered, the counsel for the respective parties must either agree upon some respectable and intelligent freeholders, residing in the county of Queens, to be appointed commissioners ; or each must serve upon the other a list of the names and residences of proper persons to be named in the decree as commissioners, so that objections may be made to them if any such objections exist.

Decree accordingly.


text:
    The People’s Bank vs. The Hamilton Manufacturing Company.
    A judgment creditor of the mortgagor, whose judgment was recovered pending the foreclosure suit and after the filing of the notice of the pendency and object of the suit, is not entitled to come in, by petition, and make a defence in such suit, under the provisions of the act to reduce the expense of the foreclosure of mortgages in the court of chancery. The statute only applies to persons who had a lien upon the mortgaged premises by judgment or decree, or some interest therein under such judgment or decree, at the time of the commencement of the foreclosure suit.

      1843. November 23.
    Purchasers pendente lite, and creditors obtaining liens upon the mortgaged premises subsequent to the commencement of a foreclosure suit and to the filing of the notice of lis pendens, can only make themselves parties to the suit by filing a bill to protect their rights.
    A judgment creditor of the mortgagor who applies to the court after a decree in the cause, for leave to come in and make a defence in a foreclosure suit, under the act of 1840, must show upon oath that he has a defence, and state what it is. And it is not sufficient for him to state that he is informed and believes he has a good defence; without procuring the affidavit of the person who gave him the information.
    This was an appeal by H. F. Sewall from a decision of the vice chancellor of the fifth circuit, denying the appellant’s application to become a party to this suit, and for permission to come in and make a defence to the same. The bill was filed in April, 1842, to foreclose a mortgage given to the complainant in July, 1839, by the Hamilton Manufacturing Company, the only defendant in the suit. A notice of the pendency of the suit, and of the object thereof, was duly filed in the clerk’s office of the county where the mortgaged premises were situated. The defendant appeared and answered the bill, and a replication was filed and proofs taken. The cause was brought to a hearing, on the 7th of March, 1843, and the usual decree was entered for a reference to a master to compute the amount due, and for a sale of the premises upon the confirmation of the master’s report. About a week after this decree was entered the appellant caused an execution to be issued, upon a judgment recovered, in the names of Phelps & Brickford, in November, 1842, against the defendant in this suit; under which execution the sheriff sold the interest of the defendant in the mortgaged premises, in June, 1843, and the same was bid in by the appellant, H. F. Sewall. The purchaser thereupon presented a petition to the vice chancellor setting forth the above facts, substantially, and also stating in general terms, upon his information and belief merely, that the mortgage to the complainant never was legally executed so as to be binding in law upon the defendant, as the deed of the company; and that if it was ever executed by the company it was given upon an usurious, void, and unlawful contract, and was therefore invalid as against the defendant, and as against the petitioner, as purchaser of the mortgaged premises, under the judgment.

      W. Tracy, for the appellant.

      C. P. Kirkland, for the respondent.
   The Chancellor.

The order of the vice chancellor denying the appellant’s application in this case was right, for various reasons. Independent of the fact that the contract or loan, upon which the defendant’s bond and mortgage were given, was made in Massachusetts, and therefore not affected by the usury laws of this state, there is no specification of the nature of the alleged usury in the petition, so as to give the officers of the bank an opportunity to deny what is only stated in general terms, upon information and belief. And they have in fact denied the charge of usury, so far as it was possible to deny such a general allegation, by showing that the mortgage was given upon a contract which appears to have been legal, and not tainted with usury.

Again ; as to the supposed defence upon the ground that the bond and mortgage were not duly executed by the defendant as a corporation, the cause having proceeded to a decree, the court is bound to presume that the bond and mortgage upon which such decree was based were duly executed, until the contrary is shown. And a party in interest who applies to come in and defend, in this stage of the suit, is bound at least to show a probable defence on his part. Here the complainant is not in possession of the corporate books of the defendant, and is not in a situation to be supposed to know, and to be able to state in an affidavit all the facts, as to the authority of the officer of the corporation who affixed its seal to the bond and mortgage. In such a case it is not sufficient for the party making an application to come in and defend a suit, in the place of the defendant therein, to swear to his information and belief merely, that the bond and mortgage were not legally executed by the defendant, and then leave the complainant to show the contrary. But he should, in his petition, state specifically that the corporate seal was affixed to the bond and mortgage without authority, or surreptitiously. And if the petitioner is not personally acquainted with the facts, but has derived his information from others, he should annex to his petition their affidavits, showing that the information which they gave him was true.

I think the vice chancellor was also right in supposing that this was not a case coming within the act of May, 1840, which allows a judgment creditor who has not been made a party to a bill of foreclosure, or any other person claiming any right or equity of redemption under'a judgment, to apply and be made a party to the suit. The object of that provision was to protect the rights of creditors by judgment or decree, subsequent to the mortgage, and persons claiming under them, who must have been made parties to the foreclosure suit, previous to the act of 1840, in order to bar their rights of redemption. Before the passage of that act a purchaser, pendente lite, from a defendant in the suit, after the filing of the notice of lis pendens, and creditors by judgment or decree, against such defendant, who had obtained their liens upon the mortgaged premises during the pendency of the foreclosure suit, were bound by the proceedings and decree, although they were not ac-' tual parties. And if they wished to interpose a defence, they could only do it in the name of the defendant. Or if he colluded with the complainant, or refused to permit those who had acquired interests under him, subsequent to the commencement of the suit, to make a proper defence in his name, their only remedy was to make themselves parties to the suit, by a bill to protect their rights. (Mitf. Pl. 73. Story’s Eq. Pl. 286, § 351. Foster v. Deacon, 6 Mad. Rep. 59.)

The order appealed from is therefore affirmed with costs.


author: The Chancellor

text:
    Parker & Parker vs. Wakeman.
    1843. November 24.
    Where the defendant in a creditor’s suit, after the service of the ordinary injunction upon him, proceeds to judgment in a suit which he had previously commenced against a third party, it is not such a breach of the injunction as will authorize the complainant to proceed against him for a contempt.
    This was an application for an attachment against the defendant for the breach of an injunction. The suit was upon a creditor’s bill, and after the service of the ordinary injunction in such suit, the defendant proceeded to a hearing before referees, in a suit which he had previously commenced against a third person, and obtained a report and entered judgment thereon.

      J. Rhoades, for the complainants.

      M. T. Reynolds, for the defendant.
   The Chancellor

denied the application, upon the ground that the act complained of was not such a breach of the injunction as would authorize the complainants to proceed against the defendant for a contempt. He said it could not possibly injure them in the collection of their debt, and was apparently for their benefit; and that it was not an inter-meddling with the defendant’s property within the spirit and intent of the injunction.


text:
    Scott vs. W. & C. Grant.
    Where a defendant in a suit, upon a contract, has been discharged under the bankrupt act after answer, or subsequent to the taking of the bill as confessed against him, it is a matter of course to permit him to put in an answer, setting up that defence, unless the complainant will stipulate to take no personal decree against him or his subsequently acquired property; or unless it is alleged that the discharge has been obtained by fraud.
    But where the complainant swears to his belief that the discharge was frau. dulent, and that he intends to contest its validity on that ground, the court will require the defendant to bring forward such new defence to the suit by a cross bill; to enable the complainant in the orignal suit to set up the alleged fraud, by his answer to such cross bill.
    1843. November 24.
    This was an application by W. Grant, one of the defendants who had already answered the bill, for leave to put in a new answer, setting up a discharge which he had subsequently obtained under the bankrupt act. An affidavit of the complainant was read, in opposition to the motion, stating that the discharge had been obtained by fraud, and that he intended to contest the validity of the discharge on that ground.

      A. Taber, for the complainant.

      A. Sheldon, for the defendant.
   The Chancellor

said, that it was a matter of course to permit a defendant who had been discharged from the debt after the bill had been taken as confessed against him, or subsequent to the putting in of his answer, to put in an answer in the nature of a plea puis darrein continuance, setting up that defence, unless the complainant would stipulate to take no personal decree against the bankrupt or his subsequently acquired property, or consent to dismiss his bill without costs; or unless there was an allegation that the discharge was obtained by fraud.

But he said that where the complainant, as in this case, swore to his belief that the discharge was fraudulent, and that he intended to contest its validity on that ground, the proper course was to authorize the defendant to bring forward such defence by a cross bill; and thereby to give the complainant in the original bill an opportunity to set up the fraud, by the answer to such cross bill. He therefore gave to the defendant forty days to file his cross bill, setting up such defence, and Ordered the proceeding in the suit to be stayed in the mean time.


text:
    Billington vs. Forbes and Marsh.
    1843. December 5.
    Where a co-defendant of the mortgagor, in a foreclosure suit, took an unconecicntious advantage of the illness of the latter which prevented him from attending the sale under the decree, in interfering to prevent a postponement of the sale, and himself became the purchaser of the mortgaged prem'ises at less than one third of their real value, the court ordered a resale; making provision in such order for the repayment to the purchaser of the full amount of his bid, with interest thereon.
    This was an appeal by the defendant Marsh, from an order of the vice chancellor of the fifth circuit, directing a resale of mortgaged premises which belonged to Forbes the other defendant; and which had been purchased by Marsh at a master’s sale under a decree of foreclosure.

      J. Ruger, for the appellant.
    R. W. Peckham, for the respondent.
   The Chancellor.

I think the vice chancellor was right in ordering a resale under the peculiar circumstances of this case. Very little reliance can be placed upon the recollections of Billington ; as his affidavits, which the appellant and the respondents repectively have obtained from him, are in direct conflict in some very important particulars. I think the following facts may be considered, however, as established. First, that Marsh, the purchaser, was a mere nominal defendant, who had no interest in the mortgaged premises, nor in the proceeds of the sale, which justified him in interfering to persuade the complainant to withdraw his consent to the postponement of the sale for a week, upon the terms proposed. And I think, from the interview which took place between him and the complainant, the day previous to the sale, that he must then have been apprised of the fact of the sickness of the defendant Forbes; although he is careful to say, in his affidavit, that he heard nothing of his sickness on the day of sale, and did not hear it urged as a reason for the postponement. This denial that he heard of Forbes’ sickness on that day was no answer to the affidavit on the other side, which had been served on his solicitor, that when Marsh interfered to prevent the postponement of the sale he had been fully informed of the sickness of Forbes. Secondly, that a sudden and severe illness had prevented Forbes from raising the money to pay the decree, or from attending the sale to see that the property was sold for something near its real value $ which value, from the affidavits, must have been from one thousand to fifteen hundred dollars, to any one who wished to purchase such a farm. Thirdly, that Billington was willing and would have consented to a postponement, upon the terms proposed by Near and Sweet, who had been sent by Forbes to ask for an adjournment for a week, if Marsh and others had not interfered to prevent the exercise of the natural feelings of humanity which had induced Billington to consent to such postponement, before such interference took place. Fourthly, that Marsh, after he had thus improperly interfered and had succeeded in preventing an adjournment of the sale, himself became the purchaser of this sick man’s property at about one-third or one-fourth of its real Value. And he insisted upon retaining it, although the whole amount of his bid, and something extra for his trouble, was raised and tendered to him the second day after the sale ; the sabbath only having intervened.

Upon this state of facts I think the appellant took an unconscientious advantage of the situation in which the respondent was placed, by a dispensation of Providence, to obtain this property much below its real cash value. The decision of the vice chancellor, therefore, is not in conflict with the general rule of the court, that mere inadequacy of price is not of itself sufficient to deprive a bona fide purchaser at a master’s sale of the benefit of his purchase. (Livingston v. Byrne, 11 John. Rep. 555. Duncan v. Dodd, 2 Paige’s Rep. 101.) And on the grounds upon which the decision in this case was placed by the vice chancellor the appellant was not entitled to costs for opposing the application.

The order for a resale, however, should have contained some further provisions to ensure the re-payment to the appellant, of the money which he had paid to the complainant upon the former sale, in case the respondent should neglect to pay that amount, with the interest thereon, within a limited time after the entering of such order. Such a provision would have been inserted in the order as a matter of course, upon the mere suggestion of its propriety, to the vice chancellor, by the counsel of Marsh. A modification of the order in this respect, therefore, will afford no ground for refusing costs to the respondent upon this appeal i as it does not affect the merits of the case brought before me for a decision.

The order appealed from must be affirmed with costs, with the following modification : The order must contain a provision that if the respondent does not pay or tender to the appellant, or to his solicitor, the #360 and interest thereon from the 24th of June, 1843, within ten days after the service of a copy of the order to be entered on this appeal, the master shall immediately proceed to a resale of the premises, upon a three weeks’ notice; that he put up the premises at the sum of $360, and interest as aforesaid, and the master’s fees and expenses; and that if no one bids to that amount, and pays the purchase money to that extent in cash, at the time the premises are so put up and offered for sale by the master, then that the former sale to the appellant be ratified and confirmed.

Order accordingly.