text:
    Cudney vs. Early and others.
    Where C. purchased from E. the west half of lot 8 in lot B. in the 22d allotment of Kayaderosseras patent, for which he took a warrantee deed, and C. having, as E. insisted, taken possession of more land than his deed covered, E. commenced an action of ejectment against C. to recover the land in dispute, and in his declaration inserted a count on a demise from his mother; and on the trial, E. proved the will of his father, the former owner of lot No. 8, by which it appeared that the lot was devised by him to his wife, the mother of E., during her widowhood; and the counsel for C., on the trial, called upon E. to produce his deed, or the evidence of his title to the premises conveyed by him to C., but E. declined doing so, and a recovery was had upon the count containing the demise from the mother of E. for the whole of the premises in the possession of C.; upon a bill filed by C., alleging that E. had obtained title to the whole lot subsequent to his father’s death, and praying a discovery of his title, that he might produce his title deeds, and that he and his mother might be restrained from taking possession of the premises conveyed by him to C.; and the conveyance from the mother to E. being admitted by the answer ; the mother was perpetually enjoined from taking possession of any part of the premises recovered in the ejectment suit, or from commencing any suit for the mesne profits thereof; and costs were refused to E., although it turned out that the strip of land in dispute was not included in his deed to C.
    Where one of the lines of a lot was described as running in a particular direction, a certain number of chains and links, to a stake and stones standing in the north-west corner of the east moiety of lot No. 8, and neither the stake and stones, or the place where they originally were, could be ascertained ; Held, that the next most certain call, in the deed, was for the north-west corner of the east moiety of lot No. 8 ; which call must prevail over the distance, described in the deed, if they did not agree.
    In 1825, Absalom Early, one of the defendants in this cause, claiming to be the owner of lot No. 8, in lot B. in great lot No. 1, in the 22d allotment of Kayaderosseras patent, sold to the complainant the west part thereof, and executed to him a deed for the same, containing the usual covenant of warranty. The boundaries of the premises were described in the deed as follows : “ Beginning at a hemlock stake near a large hemlock stump marked 7, 8, in the east bounds of lot A., and running thence along the same, north 17 deg. west 65 chains, to a hemlock tree marked A. B-, standing in the south bounds of the 24th allotment; thence along the same, north 61 deg. east, 20 chains and 20 links, to a stake and heap of stones standing in the north-west comer of the east moiety of lot Wb. 8; thence south 17 deg. east, 61 chains and 28 links, to a stake and heap of stones; thence south 56 deg. west, 20 chains and 84 links, to the place of beginning; containing 124 acres and £ of an acre of land.” Shortly after the purchase, Cudney, the complainant, caused the premises to be surveyed ; and the surveyor not béing able to find the stake and stones described in the deed as the termination of the second course, run 20 chains and 20 links, the distance mentioned in the conveyance, and then run the east line of the premises from that point, parallel with the west bounds of the lot. The grantor being dissatisfied with this survey, and contending that the line had been run too far east, a second survey was made, by the same person ; and there was some conversation respecting a compromise and a re-conveyance of the disputed piece of land. The parties however not being able to agree, and the grantor having subsequently contracted to sell the east half of lot No. 8 to E. Early, one of the defendants, an ejectment suit was brought against Cudney to recover back the possession of the disputed piece of land. In that suit separate demises were laid from Absalom and Elijah Early, and from Abigal Early, the other defendant in this suit. Upon the trial of the ejectment suit, the plaintiff’s counsel proved that Robert Early, the father of Absalom, was the former owner of the whole of lot No. 8, and that Cudney was in possession of the west part of the lot at the commencement of that suit. He then produced and proved the will of Robert Early, by which it appeared that the testator devised the whole of lot No. 8 to his wife, Abigal Early, during her widowhood. Cudney then produced the deed to himself from Absalom Early, and attempted to prove that it covered all that part of lot No. 8 of which he was in possession. But the court decided, that from the testimony, it appeared the widow was entitled to the whole lot, and that it could not be material to show that the defendant’s possession did not extend beyond the boundaries of bis deed, unless he could also show that the widow had conveyed her interest in the premises to Absalom Early. The counsel for Cudney thereupon called upon Absalom Early, and Ms counsel, to produce the deed, or the evidence of his title to the premises, which he had conveyed to Cudney with warranty. But they declined to do so; and the court thereupon directed a verdict to be found for the-plaintiff, on the count containing the demise from Mrs. Early, for all that part of lot No. 8 which was in possession of Cudney, and for the defendant on the other counts of the declaration.

      August 6.

      Cudney thereupon filed his bill in this cause, alleging, among other things, that Absalom was the only son and heir at law of Robert Early, and pretended to be the owner of the premises at the time of the conveyance to the complainant; that he had in fact obtained a title for the whole lot subsequent to the death of his father, but that by fraudulently concealing the evidences of his title from the complainant, and withholding them on the trial of the ejectment suit, he had enabled Mrs. Early, who had no title, to recover the whole premises which he had previously conveyed to Cudney. The complainant therefore prayed a discovery of the titles of the several defendants to the premises, and that Absalom Early might be compelled-to produce his title deeds for the inspection and use of the complainant; that the defendants respectively might be restrained from taking possession of the lands conveyed to him, or from suing out any execution in the ejectment suit; and for general relief. The defendants, by their answer, admitted that the title to the whole lot was in Absalom Early at the time of the conveyance to Cudney, and that he had subsequently contracted to sell the east half of the lot to Elijah Early, but had not conveyed the same; and they alleged that the ejectment suit was brought to recover the disputed strip of land, which they insisted was not con- ■ veyed by the deed to Cudney. They also alleged that the verdict was taken on the demise of Mrs. Early, to save the trouble of litigating the question of boundaries; but without any intention of taking possession of any of the land in the possession of Cudney, other than the narrow strip which was in dispute. Proofs were taken in the cause; and several surveyors were examined as to the location of the premises described in the complainant’s deed from Absalom Early. The cause was heard on the pleadings and proofs.
    «7. Ellsworth, for the complainant.

      W. L. F. Warren, for the defendant.
   The Chancellor.

The whole controversy in this cause relates to a question of purely legal title; and the useless expense of the litigation in this court has been produced by the refusal of the defendant Absalom Early to produce the evidences of the title which he had covenanted with Cudney to warrant and defend. If those evidences had been produced, a verdict could not have been given for the plaintiff upon the demise from Mrs. Early; and the question would then have been fairly presented, upon the demise from Absalom Early, whether Cudney was in possession of any part of lot No. S, except that which was conveyed by his deed. That question is now presented for decision here, and it must be considered, and decided, before I proceed to inquire what relief the complainant is entitled to in this cause.

The surveyor who first run out the premises for the complainant, acted upon the supposition that if there was no stake and stones, as described in the deed, at the termination of the second course, he must run the whole number of chains and links called for by the conveyance. In this, however, he mistook the proper rule of construction, in reference to this deed ; for there is another boundary called for at the termination of the second course, to which the distance as called for by the conveyance must still yield. The deed calls for a stake and stones, for a distance of 20 chains and 20 links, and for the northwest comer of the east moiety of lot No. 8, as the termination of the second course. A stake and stones being a visible and definite monument, if there was such a monument at the time the deed was given, both of the other calls, which are less certain, must yield to it, if they do not agree therewith. But if no such monument in fact existed at the time of the conveyance to Cudney, or if, by lapse of time or otherwise, it is now impossible to ascertain the original location thereof, the call must be resorted to which is the most definite and certain of those that remain. That, in the present case, is the call for the north-west corner of the east moiety of lot No. 8; and to this the distance must yield, if they do not agree. Green testifies that when he subdivided the lot, in 1814, he placed a stake and stones in the centre of the north line thereof, and run a line therefrom, parallel to the east and west lines. If the east and west lines of the lot had been of the same length, this stake and stones would have been at the north-west corner of the east moiety of the lot, and would be the termination of the second course in this deed, although no such stake and stones existed, in April, 1825, when this conveyance to Cudney was executed. It is up to this point, as I understand the witnesses, to which the defendants claim; which point is about three rods west of the complainant’s fence. But it appears by the testimony of Green, as well as from the several diagrams and from the descriptions in the deeds which are in evidence, that the west line of lot No. 8 is longer than the east line. This therefore would carry the north-west corner of the east moiety still further from the complainant’s fence, which is erected upon the line run by Lapham. And if the complainant had not been so fortunate, in this cause, as to have it established, by one of the defendants’ witnesses, that the stake and stone which were planted by Green, in 1814, were still remaining, at the same place, at the time of Cudney’s purchase, in 1825, I should have been compelled to declare that the premises described in the deed were to be located by a line which would divide lot No. 8 into two equal parts or moieties. As there is no reference in the deed to the west part of the lot, as conveyed to and occupied by Van Natter, in 1814, and as Absalom Early owned the whole lot at the time of his conveyance to Cudney, the actual survey which was made by Green, at the time of the conveyance to Van Natter, is only material in reference to the fact sworn to by Elijah Early, junior, that a part of the stake and the stones placed at the north-east corner of Van Natter’s lot, actually remained there at the time of the conveyance to Cudney. That fact being established, I must presume the conveyance had reference to that stake and stones as the termination of the second course ; and both of the other calls in the deed must give way to that. The deed, there» fore, must be located by bounding the premises conveyed, by a line, on the east, running from that stake and stones, or the place where they once were, parallel to the west line of the lot; which will correspond with the division line as run by Green in 1814. I do not think there was such an acquiescence on the part of Absalom and Elijah Early in the survey of Lapham, as to make his location of the premises conclusive upon their rights; especially when it turns out that he was clearly under a mistake as to the principles upon which the location was to be made. He was not called upon to decide a question of law, but to locate the premises according to the deed ; and Absalom and Elijah Early acted on the belief that he had done so.

These questions being settled, it remains to be seen whether the complainant is entitled to any, and if any, to what relief in this suit. By the verdict in the ejectment suit, Mrs. Early recovered the whole of the complainant’s farm, together with the disputed strip of land, which strip it now appears belonged to her son. Under that recovery, she has the right, at law, to take possession of both; and to recover the mesne profits of both, for the time Cudney has been in possession. And a recovery of the mesne profits of the disputed strip of land by her would not protect him from a similar claim on the part of the real owner of that land. She must therefore be perpetually enjoined from taking possession of any part of the premises recovered in the ejectment suit, and from bringing any suit to recover the mesne profits thereof. But as it now appeal's that the disputed strip of land belongs to the defendant Absalom Early, the complainant must give up. the possession thereof to him, or to Elijah Early, without the expense of further litigation relative thereto; and without prejudice to the right of Absalom Earley, or of Elijah Early, to prosecute him for the mesne profits of the disputed strip, if they shall be advised so to do. The defendant in the ejectment suit would have been obliged to pay the costs, if Absalom Early had produced his title deeds, and taken his verdict, for the disputed piece of land, on his own demise, according to his right as now established. Cudney therefore has no valid claim to recover back the costs he has paid in that suit. But if he had succeeded here in showing himself to be the owner of the land in dispute, he would have been entitled, under the covenants of warranty in the deed, to an indemnity against the whole of the costs of that suit.

As the whole of the expense of the litigation in this court has arisen from the inequitable proceedings of the defendants in the ejectment suit, whereby Cudney was deprived of the opportunity of having his rights litigated and determined in the court of law, I cannot give them costs, as against him, upon the litigation here. He also had a right to come here for the purpose of shielding himself against the recovery for that part of his possession which was covered by his deed. But as he has failed upon the main question in litigation here, I shall not give costs in his favor against any of the defendants. The evidences of the title of Absalom Early to the west part of the lot must, if the complainant requests the same, be deposited with the clerk of this court residing in the fourth circuit, for the protection of the complainant’s title.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Dickerson and others vs. Tillinghast and others.
    Where T., being the owner of a lot of land, gave a mortgage on the same to H., who neglected to have the mortgage recorded ; and afterwards, and before the mortgage was recorded, T. conveyed the mortgaged premises to A., who had no notice of the mortgage,'in payment of a precedent debt; It was hdd, that A. was not a bona fide purchaser for a valuable consideration, within the meaning of the recording act, so as to give him a preference over the prior unregistered mortgage.
    To constitute a bona fide purchase, for a valuable consideration, within the meaning of the act, the purchaser must, before he had notice of the prior equity of the holder of an unrecorded mortgage, have advanced a new condderation for the estate conveyed, or have relinquished some security for a pre-existing debt due him. The mere receiving of a conveyance in payment-of a pre-existing debt is not sufficient.
    Tins was a bill filed by the executors of Mrs. Hughes, for the foreclosure and satisfaction of a mortgage, given to their testatrix, by the defendant Catharine Tillinghast, in June, 1815, but which was not registered or recorded until May, 1818. After the giving of the mortgage, and before the registry thereof, the mortgagor conveyed a part of the mortgaged premises to the defendant Charles Tillinghast, her son, with warranty. She subsequently conveyed other parts of the mortgaged premises to some of the other defendants in this cause; but subject to the mortgage to Mrs. Hughes. In his first answer, Charles Tillinghast alleged_that his mother, for a valuable and fair consideration in money, to her in hand paid, and received by and from him, conveyed the premises to him, by a warrantee deed, in fee; and that he neither knew of or suspected the existence of the mortgage to Mrs. Hughes, at the time of such conveyance. In his second answer, he stated that the consideration money mentioned in the deed was paid and satisfied to his mother, at Geneva, on the day of the date of that deed, out of his share of the net avails of the personal estate of his father, which was then in her hands as administratrix, or which had theretofore been received by her as such administratrix of his father. The second answer being adjudged insufficient, be put in a further answer to an amended bill and to the exceptions; in which answer he stated that in 1800 his mother purchased a large tract of land at the head of Seneca Lake, including the premises in question in this cause, and paid a portion of the purchase money out of funds which had come to her hands as administratrix; that the title to the land was conveyed to her brother, A. Lamb, who paid the residue.of the purchase money; that Lamb subsequently conveyed the same to her; and that she repaid him, partly with monies which bad been produced by her speculations with the property of the estate of her husband, in her hands as administratrix, and partly by monies raised by mortgage on the premises. He further stated, in his answer, that at the execution of his deed, there was justly due to him from his mother, as such administratrix, for his share of the estate of his father, the amount of the consideration money expressed in the conveyance. He therefore insisted that he was entitled to the premises conveyed to him, as a bona fide purchaser, without notice of the unregistered mortgage to Mrs. Hughes. In the answer of Catharine Tillinghast, she stated that she had reason to believe, and did believe, that her son Charles did not knovr
      bf the existence of the mortgage at the time of her conveyance to him. The cause was brought to a hearing on the bill and the answers.

      August 6.

      D. Lord, jun. for the complainants.
    The consideration of the deed to the defendant Charles Tillinghast, was an old debt, created by a devastavit of his mother, the administratrix, and our mortgagor; no release was executed to her on giving the deed ; no money or other thing parted with on the faith of it. And the deed contained full covenants, reserving a full remedy, by covenant under seal, if the land thus conveyed was encumbered or imperfect in title; so that besides the land, Charles Tillinghast received a covenant under seal, in lieu of a mere liability or debt existing up to the date of the deed. And if his mother had died prior to 1819, when she conveyed the other lands, he would have had the preference of a specialty creditor, instead of a remedy on simple contract merely. The consideration of the deed to Charles Tillinghast being an antecedent debt, his remedy was in no degree impaired by his taking the land, if the latter was encumbered. This deed, therefore, did not constitute him a bona fide purchaser, within the registry act. To constitute such a purchaser, there must be a parting with money, or property, or the doing of some irrevocable act on the faith of the conveyance itself. (See Jackson v. Campbell, 19 John. Rep. 282, 283. Churchill v. Grove, 1 Ch. Cas. 35, 36.) Here, very plainly, no money or other thing was parted with, no debt was released. But a new remedy was substituted, higher than that on the old debt, by means of the covenants in the deed. The account was not even taken till July, 1819. What is a bona fide purchaser for valuable consideration l A man who takes by devise, or who gives a bond payable 20 years hence, or who takes a mere mortgage for a desperate debt, is in some senses a bona fide purchaser for valuable consideration. He is in all respects bona fide. The consideration is good, so as to support the conveyance. But it is not within the meaning of the registry act. The policy of the registry act is to be looked to. It is to enable a man, about to commence a transaction with another on the faith of his title, and to part with something on the faith thereof, to do so in safety, by examining the records; (19 John. Rep. 282.) A man who had already trusted another, who is to release nothing, and who might never recover his debt, does not seek for, or need this protection; His situation is not to be altered for the worse, as he is to part with nothing. The object is to make land as safely negotiable as possible. It cannot be made as much so as negotiable notes before due; yet" even as to these, the bona fide consideration must "be something more than a mere debt. (Coddington v. Bay, 20 John. Rep. 637. Jackson v. Rowe, 2 Simons & Stuart, 472.) The principle, as to the protection under a bona fide consideration, is derived wholly from eqity; and is such as will justify conveyances by trustees, partners, agents, &c. to persons acting with them without notice of the trust. Suppose a partner, or an agent or trustee, conveys goods to his own creditor, to pay or secure an old debt, would this be upheld 1 The protection also, always requires the party to deny notice at the time of payment of the money. In Charles 2d’s time, a conveyance for an old debt, unaccompanied with a parting with something, took away the character of bona fide purchaser. (1 Chan. Cas. 48.) And no case can be since found where the defence of a bona fide purchase has been set up upon an ancient indebtedness.
    Should it be alleged, that from the very purchase, in 1813, a trust by operation of law arose in favor of Charles Til"linghast, and that therefore he was entitled in equity to this land, and that equity therefore will not disturb his title; we answer, that 'his mother being legally the owner, and we having advanced our money on the faith of the land, without notice of the trust, we have the complete legal title, and are ourselves the bona fide purchasers, unless we-have lost our title by the omission to record our mortgage. Besides, until the children of Mrs. Tillinghast chose .to adopt the misapplication of the funds in question, no trust arose. It was a trust only at the election of him whose, monies were misapplied—an election which Charles Tillinghast cannot be deemed to have made till he took his deed. And the mortgagor was not trustee when she made the mortgage of the testatrix. Neither was all the money advanced, the money of the estate; so that a resulting trust did not arise.

      R. J. Hilton, for the defendants.
    Charles Tillinghast is a bona fide purchaser and grantee for a valuable consideration, and without notice of the mortgage. The monies obtained on the mortgage to Mrs. Hughes were not applied in payment of the purchase monies of the premises conveyed to Charles Tillinghast.
    Where a person executes a mortgage which is not recorded, and afterwards executes a deed for the same premises to a bona fide purchaser for a valuable consideration, without notice, such bona fide purchaser is protected by the statute concerning mortgages. (1 R. L. 372, sess. 36, ch. 33. Jackson v. Campbell, 19 John. Rep. 281.) And by the act concerning deeds, (1 R. L. 369,) the deed first recorded takes preference. (Berry v. Mutual Ins. Co., 2 John. Ch. Rep. 603.) Equity does not lend its aid against a purchaser for a valuable consideration. (Frost v. Beckman, 1 John. Ch. Rep. 288.) Catharine Tillinghast being seised, and holding the lands in trust for herself and children, had no right to mortgage the trust estate to raise funds for her private individual benefit, without the knowledge and approbation of the cestui que trusts. In this view of the case, Charles Tillinghast would be entitled to relief, as against the mortgage. The consideration expressed in his deed was his share and proportion of his father’s estate; and the bare fact that he omitted to execute a final release to his mother for the same, cannot be urged as a ground why he should not stand in the situation of a bona fide purchaser. The representatives of Mrs. Hughes have no right to inquire into the fact whether or not a release was executed by Charles to his mother. It was not absolutely necessary, as between Charles and his mother. Charles does state, in his answer, that he accepted a deed of certain lands, in satisfaction of his share of the estate. The defendants, Martha Tillinghast, Mary Tillinghast, Isaac Q. Leake and Catharine his wife, although they are subsequent grantees in a deed which included part of the mortgaged premises, were unnecessarily made parties to the bill, for the foreclosure of the mortgage, inasmuch á¡$ they have never directly or indirectly set up a title or claim hostile to, or in opposition to the complainant. And they' were unnecessarily required to answer the complainants’ bill. The complainants should therefore be decreed to pay them the extra costs, to which they have been improperly subjected. (Bank of Plattsburgh v. Platt, 1 Paige’s Ch. Rep. 464. Id. 557.)
   The Chancellor.

From the answers in this case, it must be taken as true, that when Mrs. Tillinghast conveyed to her eon, she concealed from him the fact that she had given a previous mortgage on the premises, which was then an existing lien thereon. If she knew the mortgage was not recorded, the fraud was probably intended to be committed upon Mrs. Hughes. But if she supposed it was recorded, it was a fraud upon her son to convey to him property which she had already mortgaged to another, without disclosing to him that fact. The legal title to the land was in Catharine Tilling-hast at the time of the execution of the mortgage; and there is no pretence that Mrs. Hughes had any information as to the manner in which she had paid for the land, at the time the loan was made and the mortgage given to secure the same. If this had been otherwise, I am inclined to think there might have been a prior equity in favor of the defendant, Charles Tillinghast, to the extent of his share of the assets of the estate of his father which were applied to the payment of the first instalment of the purchase money of this particular portion of the Seneca lands. This, however, would be but a very small portion of the value of the premises; as the mother was the owner of one third of the assets in her own right, and the brothers and sisters of Charles were entitled to share with him in the residue. The complainants’ mortgage is. a valid lien upon that part of the premises conveyed to Charles Tilling- • hast, unless, upon the facts disclosed, he is to be considered a bona fide purchaser without notice, within the meaning of the recording act. '

The object of the registry and recording acts was to protect those who should part with their money, property, securities, *r other valuable rights, upon the faith of a conveyance or mortgage of real estate, supposing that they were getting a good title thereto, or a legal and specific lien thereon; and without notice, or having any reason to believe, that there was any previous mortgage or conveyance which could defeat such title or lien. The English registry acts made the unregistered •deed or encumbrance at law wholly inoperative and void, as •against a subsequent grantee or encumbrancer. But the court of chancery, in accordance with the manifest spirit and intention of the statute, at an early day adopted the principle of considering the prior deed or encumbrance as an equitable title or lien. It therefore applied to such cases the equitable principies which had previously been adopted, by that court, in relation to other contests between the holder of an equitable •title, or lien, and a subsequent grantee or mortgagee of the ■legal tide. In accordance with those principles, if the subsequent purchaser, or mortgagee, was a bona fide purchaser; that is, if he had actually parted with his property on the credit of the estate, so as to give him an equitable claim or specific lien thereon, without notice of the prior equity, and had also clothed that equitable lien with the legal title, by talcing a deed or mortgage, the court would not divest him of that legal title, or lien, in favor of the prior equity. But if he had notice of the prior equity, at any time before he had parted with his property on the credit of the estate, and before he had united the subsequent equity with the legal title, he was not considered as entitled to protection, against the prior equity, as a bona fide purchaser. The words bona fide purchaser, therefore, when introduced into our recording and registry acts, were intended to be used in conformity with this established meaning thereof; and they must, in the present case, receive the same construction which they had previously received, in the court of chancery, in reference to that principle of equity¡ If a person has an equitable title to, or an equitable lien upon real estate, a subsequent purchaser who obtains a conveyance of the legal estate, with notice of that equity, cannot in conscience retain such legal title ; as he has no equity united with it. So if he merely takes the legal ] estate in payment of, or as security for a previous debt, without /giving up any security, or divesting himself of any right, of placing himself in a worse situation than he would have been if 1 ° he had received notice of the prior equitable title, or hen, prevjoug to purchase, this court will not permit him to retain the legal title he has thus obtained, to the injury of another. -These principles are so familiar to every chancery lawyer, that it is not necessary to refer to the numerous decisions and elementary treatises in which they are to be found. The case of Coddington v. Bay, in the court of errors in this state, (20 John. Rep. 637,) is a leading case upon the question as to what is necessary to constitute a bona fide purchaser of a negotiable security for a valuable consideration, without notice of a prior equity ; and is analogous to the case now under consideration. It was there held that the receiving of a negotiable note in payment of, or security for a pre-existing debt, without any new consideration, or other change of rights on the part of the persons receiving it, did not constitute them bona fide purchasers for a valuable consideration ; although they supposed that the person from whom they received the note had a perfect right to dispose of it in that manner.

In this case Charles Tillinghast took the conveyance of the property under a belief that his mother had a right to dispose of it in that manner, and without any suspicion that she was either committing a fraud upon him or upon any other person. But he only received it towards a pre-existing claim that he had against his mother, for a share of his father’s estate which she had appropriated to her own use; and it is not alleged that he parted with any security, relinquished any right, or made any valuable improvement on the property, upon the faith of the title thus conveyed, and before he had notice of Mrs. Hughes’ mortgage. I must therefore declare that this mortgage is a valid and subsisting lien upon the lands conveyed to him. It must be referred to a master to compute the principal and interest due. And upon the coming in of the report, the master must proceed and sell the mortgaged premises, or so much thereof as is necessary to pay the amount reported due, with interest and costs. The decree, however, must direct that part of the mortgaged premises, if any there is, which belongs to Catharine Tillinghast, to be sold first, and then such parts of the premises as have been conveyed by her subject to the mortgage, in the inverse order of alienation ; so that the lands conveyed to her son Charles shall not be sold, if there is sufficient raised to pay the complainants without resorting to his part of the mortgaged premises.

The master who sells the property is also to ascertain whether any part of the premises are encumbered by a mortgage to the state; and if so, to ascertain the amount due; and either to sell that part subject to such mortgage, or to pay the amount, thus ascertained to be due, out of the proceeds of the sale of that part of the premises, as he shall deem most advantageous to the parties in this suit. The master who makes the sale is also to be authorized to cause such surveys to be made as he may deem necessary, and to compel the production of such deeds and papers as he may think proper for the purpose of ascertaining the separate interest of the defendants, and their several rights, by priority or otherwise. Upon the coming in of the master’s report of sale, the defendant Charles Tillinghast is to be at liberty to apply to the court for such decree as he may be entitled to against his mother, or any other of the defendants in this cause, either upon the covenant in her deed, or for the costs of his defence in this suit, or for contribution, or otherwise,


text:
    The Attorney General vs. The Life and Fire Insurance Company.
    It is the duty of receivers of corporations, appointed under the 41st section of tit. 4, of ch. 8, of p. 3, of the revised statutes, to allow all claims against tho corporation which they shall be satisfied are legal and just. But no claim should be allowed by them which could not have been recovered against the corporation, either at law, or in equity.
    If the receivers disallow a claim, and referees are appointed in the manner , prescribed by the statute, to determine as to the validity of such claim, the receivers may permit those, for whose benefit the defence against the claim is made, to manage the defence; but it must be made under the direction of the receivers.
    August 20.
    This was a petition of the receivers appointed in this cause, under the 41st section of the title of the revised statutes, relative to proceedings against corporations in equity. (2 R. S. 464.) The petitioners stated that they had advertised, pursuant to the statute, for all the creditors and claimants upon the funds of the corporation, to come in and exhibit their demands. That two persons having claims against the company, as annuitants, had exhibited such claims, which had been allowed. That certain other persons claiming as bond holders had presented their claims to the receivers, as creditors of the corporation. That such claims were objected to by the annuitants, and by certain of the stockholders, on the ground that the bonds issued by the Life and Fire Insurance Company were illegal and void, and that the holders thereof had no claim upon the corporate funds for their payment. That in order to settle and determine such claims, it became necessary to inquire as to certain facts, and to take testimony relative to the nature, origin and consideration of the bonds. That the claimants and receivers having agreed upon referees, in the manner prescribed by the 19th section of the article of the revised statutes, relative to the powers, duties and obligations of trustees and assignees, under the title relative to the assignment of the estates of nonresident, absconding, insolvent or imprisoned debtors, (2 R. S.

      45, § 19,) upon a petition to the chancellor, for that purpose, an order was entered appointing such referees to determine the controversy between the trustees and such claimants. That upon the proceeding before the referees, B. Robinson in behalf of certain of the stockholders, attended one of the meetings, but did not afterwards appear ; and that D. B. Ogden attended all the meetings, in behalf of the annuitants, and examined the witnesses and conducted the proceedings in opposition to the bond-holders; and one of the receivers also attended most of the meetings. That at the last meeting before the referees, it was agreed between the counsel for the claimants, the counsel for the annuitants, and the counsel for certain of the stockholders of the company, that the annuitants and the bond-holders should be paid out of the funds of the corporation pari passu. But inasmuch as there were other stockholders of the company who had not consented to such arrangement, some of whom desired that the question as to the validity of the bonds should be brought before the court for a decision, and as other bond-holders who were not parlies to the reference had also exhibited similar claims, the receivers prayed the direction of the court in the premises.

      M. Hoffman, for the petitioners.
   The Chancellor.

The forty-second section of the title of the revised statutes, under which these receivers have been appointed, gives to them all the powers and authority conferred, and subjects them to the same obligations and duties which are imposed upon receivers who are appointed upon the voluntary dissolution of a corporation upon the petition of its directors or trustees. (2 R. S. 464, § 42.) And to ascertain the powers, obligations and duties of receivers upon a voluntary dissolution of a corporation, we are, by the 68th, 70th, 72d, 73d and 74th sections of the same title, (2 R. S. 469, 470,) referred to the powers, authority, duties and obligations by law possessed by, or imposed upon, trustees or assignees of insolvent debtors, &c. The receivers in this case have therefore the right to settle all claims against the corporation; and to enable them so to do, they are authorized to examine any Person on oath *n relation to such claims. (2 R. S. 42, § 7, sub. 8.) It is their duty, acting, under the oath of office which, by these several provisions, every such assignee, trustee or receiver is required to take, (2 R. S. 41, § 5,) to allow all claims against the corporation, in behalf of persons claiming to be debtors thereof, which they shall be satisfied are justly due. But they should not allow any claim which the .claimant could not have recovered against the corporation, either at law or in equity, if he had sued for the recovery of the same. In this respect, the receivers act as guardians; of the rights of all parties interested in the fund ; and they have no right to allow a claim, which is riot a proper charge upon that fund, without the consent of all who are interested in having such claim rejected. If the receivers disallow the claim, and referees are appointed, although the receivers may permit those for whose benefit the defence against the claim is made to manage that defence, this must be done under the direction of the receivers; and there cannot be a compromise without their consent. In this case, referees were appointed to decide the question between the claimants and the receivers, whether those bond-claims were due from the corporation, so as to form legal or equitable debts. If they are not legally or equitably due, the stockholders who have not consented to the compromise have a right to object to the same; though it may probably be binding upon the parties thereto, so far as it can be carried into effect without interfering with the rights of others. As the receivers do not state, in their petition, that any evidence has been elicited, on the hearing before the referees, to satisfy them that these claims could have been recovered against the corporation if it had not become insolvent, their duty to the stockholders who have not consented that their funds should be used to. pay these bonds, requires of the receivers that .they should continue the defence against the claims of these bond-holders, before the referees, so long as that defence can in their opinion be rendered effectual.

The receivers must therefore be directed to.proceed .to"a final decision, before the referees, upon the validity of these claims; leaving the question for future decision, as to the effeet of the compromise upon the rights of the parties thereto, if it shall turn out that the bonds were not legally due from the corporation,


text:
    Burras vs. Looker.
    After the defendant has put in his answer on oath to a bill in the usual form, the complainant cannot amend his bill, and include in such amendments a waiver of the answer of the defendant on oath ; so as to deprive him of the benefit of his answer to the amendments, so far as it may be responsive to the bill.
    Where the defendant has answered the bill on oath before any waiver, if the complainant is unwilling to rely upon an answer on oath to the amendments, his only remedy is to dismiss his bill, and commence a new suit, in Which suit he can waive an answer on oath.
    This Was on appeal from the decretal order of the vice chancellor of the first circuit, allowing certain amendments to the complainant’s bill. The amendments were allowed after an answer had been put in to the original bill; and among the amendments was one by which the complainant waived an answer on oath to the amended bill.
    August 20.

      W. Sillman, for the complainant.

      H. Brewster, for the defendants.
   The Chancellor.

I think the complainant, under the peculiar state of facts disclosed in the affidavits, should be permitted to amend his bill, so far as the new allegations extend. But he ought not to have been allowed to insert that part of the amendment by which an answer on oath was waived. The statute authorizing the complainant to waive the necessity of an answer on oath from the defendant, (2 R. S. 175, § 44,) has introduced a new principle into the system of equity pleading. This provision was incorporated into the revised statutes upon my suggestion; and was intended to leave it optional, with the complainant, to compel a discovery from the defendant in aid of the suit, or to waive the oath of- the defendant if the complainant was unwilling to rely upon his honesty, and chose to establish his claim by other evidence alone. He has no right, therefore, to call upon the defendant for a discovery as to a part of the matters of his bill, and to deprive the defendant oC the benefit of his answer on oath, as responsive to other matters stated in the bill. He must Waive an answer on oath as to every portion of the bill, or to no part thereof. And after the defendant has put in an answer on oath as to the whole or any part of the bill, it is too late for the complainant to get rid of the consequences of a denial upon oath of all or any of the matters of the bill. An amendment, in that stage of the suit, waiving an answer on oath, is irregular, and cannot be allowed. If the complainant can establish his case without a discovery from the defendant, and he is unwilling to rely upon the answer, as made upon oath, hi s' only remedy is to dismiss his bill and commence a new suit; in which suit he will have the right to waive the necessity of an answer on oath. In this case, the defendant has already put in a very long answer to the original bill, upon' oath, as he was compelled to do; and yet, by the order appealed from, the complainant is permitted to waive an answer on oath as to a part of the amendments, and to' claim a discovery as to others. This would be extending a principle of law adopted by the legislature for the furtherance of justice, in such a manner as to make it an instrument of injustice, in the hands of a complainant.

So much of the order of the vice chancellor as allows the complainant to insert, in the second amendment, the waiver of an answer on oath, must be reversed. The residue of the order appealed from must be affirmed; and neither party is to recover costs as against the other on this appeal.