author: Bronson, J.

text:
    Leavitt, receiver, &c. vs. Palmer, &c.
    The statute prohibiting banking associations from issuing or putting in circulation any bill or note unless payable on demand without interest, (Sfai. 1840, f. 406, $ 4,) is not confined in its interpretation to bills and notes capable of circulation as money.
    Where a banking association, organized under the general law, issued negotiable promissory notes, payable in twelve months with interest, and delivered them to a mercantile house in London, on account of a previous liability of the bank; held, that the notes were illegally issued and void.
    And further held, that a trust deed executed by the bank at the same time, transferring property and effects of the association to trustees for the purpose of securing the payment of the notes, was illegal and void.
    Neither a prior debt nor any other good consideration will support a new contract which is in itself contrary to the provisions of law. Per Bronson, J.
    But where a deed or other contract contains distinct provisions, some of which are legal and some illegal, the former will in certain cases be upheld, although the latter are void. Per Bronson, J. '
    An epgagment of a hanking association in the form of a certificate of deposit, payable at a future day, is in legal effect a promissory note, and as such is vrithip the prohibition of the statute above mentioned. Per Bronson, J.

    A court of equity will not reform a deed or writing, unless it be alledged and proved that there was mistake or accident in the preparation of the instrument, so that it does not express the true intention of the parties.
    Where a banking association agreed to secure a party to whom it was under a legal liability, and for that purpose executed its promissory notes for the amount of the liability in a form prohibited by law, and at the same time executed a trust deed of a portion of its effects, which, on its face, was declared to be collateral to the notes, but contained no reference to the original liability; held, that in the absence of any allegation or proof of mistake in the deed, a court of equity could not reform it so as "to enable it to stand as security for the original liability.

      In July, 1838, The North American Trust and Banking Company, an institution organized under the general banking law of that year, was established in the city of New-York. In September, 1841, it had become insolvent, and the appellant, David Leavitt, was appointed receiver of its effects under an order of the chancellor. In April, 1842, he filed the bill in this cause against Richard M. Blatchford and James B. Murray, trustees in the deed of trust hereafter mentioned, and against John Horsley Palmer and others, constituting the firm *f Palmers, Mackillop, Dent & Co. merchants and bankers in London. There were other defendants, but they had no interest in the controversy. The case, so far as necessary to be stated, was this:
    In February, 1840, the committee of investments and finance which managed the business of the North American Trust and Banking Company, resolved to purchase 5000 shares of the capital stock of the institution, and in order to raise funds for that purpose, they authorized the president to draw, or grant •credits, on the London house above mentioned. Accordingly, on the 2d of March, 1840, the president addressed a letter of credit to the London house in favor of Thomas E. Davis of the city of New-York, stating in substance that the bank had authorized a credit in favor' of said Davis for £46,875; the bills to be drawn at 90 days’ sight, and to be covered by Davis at maturity, with an understanding that they should be renewed unless certain bonds of the company, secured by mortgages, then in the hands of the London house, should be previously cashed. On the same day Davis wrote to the London house, stating that the bank had authorized the above credit, that the transaction was designed exclusively for the benefit of the bank, but that he, Davis, held himself responsible to see that the bills were duly covered at maturity, with the privilege of renewal in the event already mentioned. The credit in question was sanctioned by F. Wilson of New-York, who was alledged in the bill of complaint to be the agent of the London house, in that city, with authority for that purpose.
    Under this arrangement Davis drew bills on Palmers, Mackillop, Dent & Co., the London house,, which were accepted by them, and the proceeds, amounting to $217,898,75, or £46,050, were paid over to the bank and used in the purchase of the aforesaid 5000 shares of its capital stock. The bill of complaint insisted that such purchase was in violation of the statute declaring it to be unlawful for any moneyed corporation to apply any portion of its funds, except surplus profits, directly or indirectly, in the purchase of shares of its own stock. (1 R. /S'. 589, § 1, sub. 5.) The circumstances attending and preceding this purchase of stock were set forth in detail, but are unnecessary to be here stated. It was also alledged that the London house, when it accepted the bills drawn by Davis, knew of the illegal purpose to which the proceeds were to be applied. This was denied in the answer.
    The bills were twice renewed, and in November, 1840, while the third set was running, it was agreed between the bank and Palmers, Mackillop, Dent & Co., by their special agents in New-York, that the bank should give to them its certificates of deposit for the amount of the bills payable in twelve months, renewable for six months longer, to be collaterally secured by an assignment to the defendants Blatchford and Murray, in trust, of certain specified securities belonging to the bank. In pursuance of this agreement, on the 30th of November, 1840, the bank executed to the London house, forty-eight notes for £1000 each. They were in the following form:
    “North American Trust and Banking Company.
    £1000 St’g. No. --•. New-York, Nov. 30, 1840.
    Twelve months after date, the North American Trust and Banking Company promise to pay to the order of Wm. R. Cooke, for value received, the sum of one thousand pounds sterling, with interest thereon, at the rate of seven per centum per annum, payable at the Banking House of Messrs. Palmers, Mackillop, Dent & Company, London.
    Tho’s G. Talmage, President.

    Walter Mead, Cashier. [Endorsed William R. Cooke.]
    This note is issued in pursuance of a deed of trust executed between the company, and Richard Milford Blatchford and James B. Murray, trustees, and the payment of the same is guarantied by the securities thereby transferred.”
    At the same time with the execution of the forty-eight notes a deed of trust was executed by the bank of the first part, the said Blatchford and Murray of the second part, and Palmers, Mackillop, Dent & Co. of the third part, which recited that the aforesaid credit had been created for the exclusive benefit of the bank; that the bank desired to assume the liability to the London house, on account of such credit, and that Davis should be discharged therefrom; also that the bank had on that day assigned certain securities to said Blatchford and Murray in trust, <fcc., and had also on that day delivered to the London house certificates-of deposite payable in twelve months, with interest, renewable for six months longer for the whole amount of the credit aforesaid» The deed then went on to provide that Blatchford and Murray should hold the securities so assigned until the whole of the said certificates of deposite, and the renewals thereof, should be paid. ' In case of default on the part of the bank in the payment, it was provided that the trustees should stand possessed of the securities so assigned for the holders of the certificates, and should proceed to realize the money on the securities, and pay the same over to the London house, or whoever should be the holders of said certificates, and after the charges and expenses of the trust should be paid, the residue of the securities assigned and of the moneys secured thereby to be held subject to the direction of the bank. Annexed to the trust deed was a schedule of the securities assigned, the estimated value of which was $273,700. Aside'from the trust deed, there were separate assignments of the securities in question to the trustees.
    The bill insisted that all’ the transactions above set forth were illegal and void; and the object of the suit was to set aside the forty-eight promissory notes, the trust deed and assignment of securities aforesaid, and to obtain a decree declaring that Palmers, Mackillop, Dent & Co. had no claim against the North American Trust and Banking Company, on account of any of those transactions. The cause was heard on pleadings and proofs at a general term of the supreme court held in New-York, and in November, 1848, that court pronounced a decree declaring the claim of Palmers, &c. under the letter of credit, and for their charges thereon, to be a valid debt against the bank, and that the trust deed and assignment of securities to the defendants Blatchford and Murray, were also valid. The decree also declared that the forty-eight notes were void by the act of May 14, 1840, (Stat. of 1840, p. 306, § 4,) and directed them to be delivered up and cancelled. The receiver appealed to this court from so much of the decree as sustained the claim of Palmers, die. and the trust deed and assignments. Palmers, <fcc. appealed from that part of the decree which declared the forty-eight notes to be void.
    S. Beardsley, for the receiver.
    I. “ The North American Trust and Banking Company” may not have been such a legal being as, by the late constitution of this state, required for its creation a two-third vote of the legislature; still, it was a corporation. (The People v. The Supervisors of Niagara, 4 Hill, 20 ; S. C. 7 id. 504 ; Matter of the Bank of Dansville, 6 id. 370; Gifford v. Livingston, 2 Denio, 380.) (1.) It was a “ moneyed corporation,” within the meaning of the revised statutes. (1 R. S. 598, § 51, 52.) (2.) As such, it was subject to the general laws of the state respecting “ moneyed corporations,” except where such laws are inconsistent with some special legislation as to this class of corporations. (Sagory v. Dubois, 3 Sand. Ch. R. 485; Leavitt v. Yates, opinion of V. Ch. McCoun, MSS.) (3.) It was within the provisions of the statute regulating the assessment and collection of taxes on “ moneyed corporations.” (1 R. S. 414, tit 4; The People v. Assessors of Watertown, 1 Hill, 607; The People v. Supervisors of Niagara, 4 id. 20; S. C. 7 id. 504.) (4.) It was subject to the “ regulations to prevent the insolvency of moneyed corporations, and to secure the rights of their creditors.” (1 R. S. 589, art. 1; Leavitt v. Tylee, 1 Sand. Ch. R. 207; Leavitt v. Yates, supra.) (5.) It was a corporation within the provisions of the “ restraining act,” so called. (1 R. S. 711, 712, tit. 20;
      The Ontario Bank v. Schermerhorn, 10 Paige, 109 ; Safford v. Wyckoff, 4 Hill, 442; Attorney General v. Life and Fire Ins. Co. 9 Paige, 470; 1 R. S. 599, § 55.) (6.) It was such within the meaning of the statute relating to the dissolution, and the appointment of receivers of the effects, of insolvent corporations. (2 R. S. 463, § 39 to 42 ; Boisgerard v. The New York Banking Co., affirmed by the Chancellor, 2 Sand. Ch. R. 23; Sagory v. Dubois, 3 Sand. 485.) (7.) It was such within the statute which prohibits corporations from exercising any corporate powers, except those expressly granted, and such as may be necessary to the exercise of the powers so granted. (1 R. S. 600, § 3.)
    II. This corporation, like other artificial legal beings, had only such powers as were expressly conferred, or were necessary to the exercise of its express powers. (1.) This is the common law rule. (2 Kent, 5th ed. 298; Angell & Ames on Corp. 2d ed. 64 to 67, 192, 193, 200; Dartmouth College v. Woodward, 4 Wheat. 636; The People v. The Utica Ins. Co. 15 John. 383; North River Ins. Co. v. Lawrence, 3 Wend. 485 ; Safford v. Wyckoff, 4 Hill, 443 ; Sharp v. Spear, id. 83 ; Hodges v. The City of Buffalo, 2 Denio, 112; N. Y. Firemen Ins. Co. v. Ely, 2 Cowen, 709; The People v. The Manhattan Co. 9 Wend. 384; Berlin v. New Britain, 9 Conn. 180.) (2.) This principle is here, also, affirmed by statute. (1 R. S. 600, § 3 ; See also Laws 1838, p. 249, § 18.) (3.) The most important powers, although not all, which are implied in the creation of a corporation, are enumerated in the revised statutes. (1 R. S. 599, §§ 1, 2, 3; Angell & Ames, 2d ed. 64 to 67; 2 Kent, 5th ed. 277, 278.)
    III. Corporations, created by or under the authority of statute law for specific purposes, are confined strictly to the powers so conferred upon them, and can only act in the prescribed manner, and for the specified purposes and objects of their creation. (2 Kent, 5th ed. 299, 290; Head & Amory v. The Prov. Ins. Co. 2 Cranch, 167, 169; Bank of the U. States v. Dandridge, 12 Wheat. 68, 69 ; Beatty v. The Lessee of Knowler, 4 Pet. 168 ; Bank of Augusta v. Earle, 13 id. 587; Run

      yan v. The Lessee of Coster, 14 id. 129 ; The People v. The Utica Ins. Co. 15 John. 383 ; Berlin v. New Britain, 9 Conn. 180; N. Y. Firemen Ins. Co. v. Ely, 2 Cowen, 699; N. Y. Firemen Ins. Co. v. Ely, 5 Conn. 568; Salem Bank v. Gloucester Bank, 17 Mass. 26; Angell & Ames, 2d ed. 167; Safford v. Wyckoff, 4 Hill, 443; Bank of Chillicothe v. Swaine, 8 Ohio, 286-8; Steele v. Harmer, 14 M. & W. 831.)
    IV. Subject to the rights of bona fide holders for value, of the negotiable paper of a corporation which has power to issue such paper, it is competent for a corporation, in every case, to impeach any contract made by directors or other agents, in its flame and professedly on its behalf, by showing that such contract was made in a business, or for a purpose, or in a manner, not authorized by its charter, or by the law of the land. (See the authorities referred to under the last point, and the following : The Penn. Del. & Mary. Steam Nav. Co. v. Dandridge, 8 Gill & John. 248 ; Hodges v. The City of Buffalo, 2 Denio, 110; Salem Bank v. Gloucester Bank, 17 Mass. 28-30; Broughton v. Salford Water Works, 3 B. & Aid. 1; Moss v. McCollough, decided by the court of errors, Dec. 1846; 2 Kent, 5th ed. 291; Angell & Ames, 2d ed. 239 ; Safford v. Wyckoff, 1 Hill, 11; S. C. 4 id. 442; Smith v. Strong, 2 id. 241; Slark v. Highgate Archway Co. 5 Taunt. 792 ; Steele v. Harmer, 14 M. & W. 831; The Auburn Academy v. Strong, 1 Hop. 284.)
    V. Every person out of as well as within the state, who deals with a corporation, is bound at his peril, to know what its powers are. To this principle there is no exception, and it is particularly just where the corporation, as in this case, was created under a public statute of the state. (Mumma v. The Potomac Co. 8 Pet. 287; Root v. Godard, 3 McLean’s R. 102; 2 Kent, 620, 621, 5th ed.; Story on Agency, 126, 127, § 19, 2d ed. ; North River Bank v. Aymar, 3 Hill, 262; Stainer v. Tysen, id. 279.)
    VI. It was illegal for this corporation to issue securities of any kind or description, to be loaned or put in circulation as money, except such as were countersigned and registered by the comptroller, as required by the general bank law. Nor was this corporation in fact, at any time, authorized to issue any bill or note, unless the same was “ made payable on demand and without interest.” Hence the issue of bills of exchange, post notes, and certificates of deposit, payable at a future day, was unauthorized. (1 R. S. 712, §§ 3,6; Laws 1829, p. 173, § 35; See also i 1 of this act ; Safford v. Wyckoff, 1 Hill, 11; S. C. 4 id. 442; Smith v. Strong, 2 id. 241; The Ontario Bank v. Schermerhorn, 10 Paige, 109 ; Att’y Gen. v. Life & Fire Ins. Co. 9 id 476.) The issue of such securities as those referred to was forbidden by the safety fund act, so called ; by the revised statutes it was a penal offence; and by an act of 1840, the issue, by such a corporation as this, of any bill or note, not made payable on demand, and without interest, is declared to be a misdemeanor. (1 R. S. 712, § 7; Laws 1840, p. 306, § 4; Act of May 14, 1840; Laws 1829, p. 167, §§ 1, 35.) The issue of certificates of deposit payable with interest, at a future day, was as much within the statutes referred to, as post notes or bills of exchange would have been. (Bank of Orleans v. Merrill, 2 Hill, 295 ; Swift v. Beers, 3 Denio, 70; Hayden v. Davis, 3 McLean’s R. 276 ; Root v. Godard, 3 id. 102 ; Craig v. The State of Missouri, 4 Pet. 433; Southern Loan Co. v. Morris, 2 Barr’s Penn. R. 175; Booth v. The Bank of England, 6 Bing. N. Ca. 415; Bank of England v. Anderson, 3 id. 589.)
    VIL The post notes issued in the name of this corporation on the 30th of November, 1840, for the amount claimed by Palmers, Mackillop, Dent & Co. were illegal and void. They were themselves illegal, being pajmble at a future day With interest: besides, they were intended to circulate as money, and so within the restraining act. ( Laws of 1840, p. 306, § 4; 1 R. S. 712; Laws of 1829, p. 167, §§ 1, 35 ; and see cases under point 6.)
    VIII. The trust deed of the 30th of November, 1840, was illegal and void. (1.) In terms it was to secure certificates of deposit to be paid, with interest, at a future time, but which were never issued, and which, if they had been, would have been illegal and void. (2.) This deed had no reference to the .post notes issued on the same day, but as they were illegal and void, the deed could not be upheld by them. (3.) It was impossible ever to execute this trust according to the terms of the deed, as, by that, the trustees were to pay over the trust moneys to “ the holders qf said certificates of deposit,” when there never could be any such holders. (4.) According to its terms, this deed was made to effect an illegal object—that is, to secure the payment of certificates of deposit, payable with interest, at a future time-^-it was therefore wholly void. (5.) It was void because made “ contrary to the provisions of law,” and for a purpose “ foreign to the lawful business and objects of such corporation.” (2 R. S. 463, § 33, sub. 7, 8; id. § 35; id. 461, § 31; id. 464, § 42; id. 465, § 46, 52; 3 id. 755 ; The Att’y Gen. v. Wilson, 1 Craig & P. 1; Mackie v. Cairns, 5 Cowen, 547; Hyslop v. Clarke, 14 John. 465 ; Austin v. Bell, 20 id. 449 ; Goodrich v. Downs, 6 Hill, 438.)
    IX. So far as respects the legal character and effect of a contract, there is no difference between malum in se and malum prohibitum; or, between a prohibition without or with, a penalty : nor does it make any difference that a penalty only is imposed, without an express prohibition : nor, whether the act is, of is not, declared to be a misdemeanor. Every contract made to effect any such object is illegal, and whatever may be done under it is, as between the parties, absolutely void. The law will aid neither: ex turpi causa non oritur actio. (Perkins v. Savage, 15 Wend. 412; Bartle v. Coleman, 4 Peters, 184 ; Craig v. The State of Missouri, id. 410; Nellis v. Clark, 4 Hill, 124; Griffith v. Wells, 3 Denio, 226 ; Bank U. S. v. Owens, 2 Pet. 527; Shackell v. Rosier, 2 Bing. N. Cas. 634; Langton v. Hughes, 1 Mees. & Welsb. 593; Ex parte Bell, id. 751; Bensley v. Bignold, 5 B. & Ald. 335; Canaan v. Bryce, 3 id. 179; De Begnis v. Armistead, 10 Bing. 107; Law v. Hodson, 11 East, 300; Forster v. Taylor, 5 B. & Adol. 887; Little v. Poole, 9 B. & C. 192; Smith’s Law of Cont. 120, et seq.; The Miami Exporting Co. v. Clarke, 13 Ohio, 18; Wheeler v. Russell, 17 Mass. 258; Cope v. Rowlands, 2

      M. & W. 149 ; Broom’s Legal Max. 349,354; Chit, on Con,. 5th Am. ed. p. 657, ch. 4.)
    X. The several instruments which have been referred to were void no less as to Palmers, Mackillop, Dent& Co., although aliens residing in England, than as to citizens residing in New-York. A court will not lend its aid to any transaction in violation of the law of the country, whoever the violator may be, or wherever he may reside; nor is it of any consequence in such cases, that the contract was made in, or to be performed in, a foreign country. (2 Kent, 5th ed. 458; Story’s Confl. of L. 2d ed. § 244, et seq.; LeRoy v. Crowninshield, 2 Mason, 157; Greenwood v. Curtis, 6 Mass. 358; Varnum v. Camp, 1 Green’s R. 331; Andrews v. Pond, 14 Pet. 78; The Executors of Cambioso v. The Assigns of Maffit, 2 Wash. C. C. R. 98; Bank U. S. v. Owens, 2 Pet. 538; Hanna v. Eve, 3 Cranch, 242; Morck v. Abel, 3 B. & P. 38; Biggs v. Lawrence, 3 D. & E. 454; Clugas v. Penaluna, 4 id. 466; Bank of Augusta v. Earle, 13 Pet. 588, 9; Root v. Godard, 3 McLean’s R. 103 ; Forbes v. Cochrane, 2 B. & C. 448.)
    XI. The contracts to which reference has been made, that is, the bills of exchange, certificates of deposit and post notes, as well as the trust deed, being in their nature illegal, could not in any way be authorized by, or be the act of, the corporation. The individuals who assumed, in these respects, to act for and bind the corporation, violated the law, but their illegal acts can not be imputed to the corporation, which in no way authorized or concurred in them. As to the corporation and the receiver, these illegal and wholly unauthorized acts were absolutely void. (2 R. S. 463, § 33, sub. 7, and § 35 ; id. 464, § 42; id. 465, § 52 ; id. 469, § 67; Robinson v. Smith, 3 Paige, 222; The Char. Corp. v. Sutton, 2 Atk. 406; Att’y Gen. v. Wilson, 9 Sim. 53; 1 Craig & Phil. 1, S. C.; Wyman v. Hallowell & Augusta Bank, 12 Mass. R. 62; Salem Bank v. Gloucester Bank, 17 id. 1, 29, 30 ; Hartford & New-Haven Rail-Road Co. v. Croswell, 5 Hill, 386; The President, &c. v. Hart, 3 Day, 491; National Bank v. Norton, 1 Hill, 572; The Life & Fire Ins. Co. v. Mech. Fire Ins Co. 7 Wend. 31;
      Minor v. Mech. Bank of Alexandria, 1 Pet. 70, 71; Commercial Bank v. Cunningham, 24 Pick. 276.)
    XII. The trust deed, by its terms, was made to secure certi ficates of deposit, but which were not issued, post notes being substituted in lieu of such certificates. The post notes were illegal and void, as certificates, if issued, would also have been. If it were conceded that the corporation was honestly indebted to Palmers, Mackillop, Dent & Co. in the full amount, for which said post notes were issued, still, a court of equity could not extend and uphold this trust deed, so as thereby to secure the amount of such bona fide indebtedness, for it could not change what had been agreed upon between the parties so as thereby to make a new and different security. (Hunt v. Rousmanier, 2 Mason, 342 ; 8 Wheat. 174, S. C.; 3 Mason, 294, S. C.; 1 Peters, 1, S. C.)

    XIII. The post notes and trust deed should be declared void and be delivered up to the receiver to be cancelled, and the trustees Blatchford and Murray should account for and transfer and pay over to the receiver every thing which has come to, their hands under the trust.

      C. O'Conor, for Palmers, Mackillop, Dent & Co.
    I. The company had authority to grant a mortgage upon its assets, to secure a creditor; and the trust deed in question is effectual in form and substance. (Commercial Bank v. Cunningham, 24 Pick. 275; De Ruyter v. St. Peter's Church, 3 Barb. Ch. Rep. 126, and cases cited; 7 Paige, 570.)
    II. The company having agreed with Palmers, Mackillop, Dent & Co. for a new and valuable consideration, to pledge to them the securities in question, and having actually assigned and delivered the securities, equity will reform any defects arising from mistake or accident in the written instruments. (1 Story's Eq. Jur. §§ 115, 136, 152, 158, 159, 160, 165; id. §§ 94, 170, 172, 99 b. 4th ed.; Watkins v. Maule, 2 Jac. & Walk. 242.) The granting of further time to the company, and the release of T. E. Davis, the guarantor of the credit, are sufficient considerations to uphold this equity. (Wilmot v. Carp, of

      Coventry, 1 Younge & Coll. (Excheq.) 522; Mestaer v. Gillespie, 11 Ves. 620; Pye v. Danbuz, 3 Bro. P. C. 596.) There is nothing in the terras of the original agreement, or in the language of the trust deed importing that the certificates are to be negotiable, and ut res magis valeat quam pereat, the court will not infer an unlawful intention. (2 Barr's Pa. Rep. 175, 177; Hobart's Rep. 277; 10 Paige, 114; 1 Hill, 292 ; 3 Cowen, 284.)
    III. Palmers, Mackillop, Dent & Co. have a right to stand upon the separate transfers and assignments of the securities; referring to the original agreement for a declaration of the purposes ; and, at least in a court of equity, may sustain their lien either upon the separate assignments, or upon the trust deed, without producing the certificates of deposit; especially as it is admitted in the pleadings that though agreed for, and intended, such certificates were never delivered by reason of some accident or inadvertence. (Edgell v. Stanford, 3 Verm. Rep. 205; Bates v. Bank of Alabama, 2 Alab. N. S. 487, 488; United States v. Bradley, 10 Peters, 344; 1 Watts, 388.)
    IV. The provisions of 1 R. S. 591, § 9, declaring void all assignments, &c. by any moneyed corporation “ when insolvent or in contemplation of insolvency, with the intent of giving a preference to any particular creditor over other creditors of the company,” and of the same statute, p. 589, § 1, subd. 5, forbidding directors “to apply any portion of the funds of their corporation, except surplus profits, directly or indirectly to the purchase of shares of its own stock,” do not, nor do either of them, apply to companies incorporated under the general banking law. (1.) Although these companies are necessarily corporations, in judgment of law, and could not, by any legislative act, be divested of that character; yet the legislature had power to divest them of any legal quality not inseparably incident to their existence. (2.) Although an accurate knowledge of the common law, or capacity to judge of the construction of previous statutes, may not be imputable to the legislature; yet that department has power to declare, in reference to the future, that a word or phrase in prior legislation, legally descriptive of a class, shall not embrace particular members of that class. (3.) The legislature has, by plain and manifest implication, equally forcible and binding with an express declaration, manifested its will, that the statutory provisions concerning “ moneyed corporations,” above referred to, shall not be deemed applicable to associations under the general banking law. (1 R. S. 589; Laws of 1838, p. 250; id. 1841, p. 308, § 2; id. 1839, p. 328; id. 1840, p. 154; id. 1841, p. 33, §§ 2, 3, and p. 106; In re Bank of Dansville, 6 Hill, 370.)
    V. The forty-eight bills or notes are not void, by the act of May 14, 1840, section four; but, on the contrary, are valid and effectual obligations against the company. The statute prohibits the issuing or putting in circulation bills and notes unless payable on demand with interest. The word issue has; a technical meaning, and does not apply to instruments such as those in question. (See the following statutes: 1 Jones & Varick, 79; id. 162; id. 183; id. 291, § 24; id. 293, §§ 32, 33, 34, 37; id. 249 ; 2 id. 212, § 2; 1 Kent & Radc. 251, § 3 ; 1 R. L. 405, §§ 1, 3; id. 407, §§ 10, 11; id. 412.) The section in the act of 1840, applies only to the bills and notes countersigned by the comptroller; or, at least, is limited to instruments; capable of circulating as money within this state. (1 R. S. 612, 2d ed.; 10 Paige, 114: Bouvier’s Dict. tit. “Bill,” “Simplex,” “ Single.”) The forty-eight bills or notes were not intended to circulate as money, nor are they capable of such circulation. If the forty-eight bills or notes are prohibited by the statute, they are not, on that account void as against the bank; especially as they were to be delivered to an English creditor, as. security for an English debt, and were made payable in England. (4 Hill, 460, 464; 3 Metc. 581; 15 Wend. 415, and cases cited ; Ferguson v. Norman, 5 Bingh. N.C.76; 9 Paige, 477, per Walworth, Chancellor; 3 Rand. 101.)
   Bronson, J.

delivered the opinion of the court. I shall assume, but without intending to express any opinion on the subject, that the purchase of the five thousand shares of the capital stock of the bank, and all the acts of the bank, its officers and agents, relating to that transaction, down to the time of executing the trust deed and the accompanying securities, were legal in their nature, and within the legitimate powers of the corporation. The case then, so far as it will come under consideration, and speaking of it from the face of the papers, is shortly this: The bank on the second of March, 1840, gave Thomas E. Davis a letter of credit on Messrs. Palmers, Mackillop, Dent & Co. of London—of whom, for the sake of brevity, I shall hereafter speak as the Palmers, or Palmers &- Co.—for forty six thousand eight hundred and seventy-five pounds sterling ; for which sum Davis was to draw bills on the Palmers at ninety days’ sight, which were to be covered by him at maturity; with the right of renewal in a certain event. Davis drew the bills, and they were accepted by the Palmers: they were twice renewed, and the third set was running at the time the trust deed was executed. The bank was not then a debtor to Palmers & Co. on account of this transaction; but was under a contingent liability which would make it a debtor in case the bills should not be provided for by Davis at maturity. In this state of things, the bank, on • the thirtieth day of November, 1840, made forty-eight negotiable promissory notes, amounting in the aggregate to forty-nine thousand five hundred and seventy-five pounds sterling, payable twelve months after date, with interest, to the order of William R. Cooke, a teller in the bank, who indorsed the notes, and they were then delivered to the Palmers on account of the liability which has been mentioned. The bank at the same time, and as part of the same transaction, executed the trust deed, and assigned 'the stocks, bonds and mortgages mentioned in the schedule to the deed, for the purpose of securing the payment of the forty-eight promissory notes. These undertakings and securities the complainant seeks to set aside as illegal and void.

The first question which I shall consider is upon the validity of the notes. And I feel no difficulty in agreeing with the supreme court, that the notes are illegal and void. They were issued in direct violation of a statute, which provides, that no banking association” shall issue or put in circulation any bill or note of said association,” unless the same shall be made payable on demand, and without interest;” and every violation of the section by any officer or member of a banking association is made a misdemeanor, punishable by fine or imprisonment, or both, in the discretion of the court. (Statutes of 1840, p. 306, § 4.) The notes were not made payable “ on demand,” nor “ without interest:” but had a year to run, and were then payable with interest. It is said on the part of the defendants, that the prohibition only applies to bills and notes which are . capable of circulating as money. But the statute contains no such qualification. In terms, it extends alike to all bills and notes issued by a banking association; and there is no reason to suppose that the legislature intended it should have a more restricted application. And besides, negotiable promissory notes and bills of exchange payable at a future day, when issued by a bank in good credit, may perform, to a great extent, the office of a circulating medium. This has never been doubted by those who have considered the subject. (Safford v. Wyckoff, 1 Hill, 11; Smith v. Strong, 2 id. 241; Bank of Orleans v. Merrill, id. 295 ; Atty General v. Life and Fire Ins. Co., 9 Paige, 470; Ontario Bank v. Schermerhorn, 10 id. 109; Bank of England v. Anderson, 3 Bing. N. C. 589; Booth v. Bank of England, 6 id. 415.) Indeed, the fact that such paper may enter into the currency of the country is matter of history. Witness the post notes of the late Bank of the United States, and the negotiable notes and bills of some of our own banks, which followed, though on a more humble scale, both the frauds and the bankruptcy of the national institution. The issuing of such paper belongs to mercantile and commercial transactions ; and not to the business of banking. Experience has shown that the banks which engage in such enterprises are rotten, and sooner or later will end in defrauding the community. In addition to the North American Trust and Banking Company, several others of the general law banks had been engaged in issuing such paper before the act of 1840 was passed; and such of those institutions as had not already failed, were soon afterwards in a state of bankruptcy. Great frauds upon the public had been committed. The legislature saw the evil: and evidently intended to cover the whole ground, by using the most general and comprehensive terms :—" No banking association shall issue or put in circulation any bill or note,” unless, &c. There had long been a similar statute in relation to the safety fund banks; (Slat. 1829, p. 178, § 35;) and the act of 1840 was passed to extend the express prohibition to the general law banks, which had come into existence at a later period. That these statutes, extend to negotiable promissory notes and bills of exchange payable at a future day has been decided, both here and elsewhere. (Swift v. Beers, 3 Denio, 70; Tylee v. Yates, 3 Barb. 222; Root v. Godard, 3 McLean, 102; Hayden v. Davis, id. 276. And see Ontario Bank v. Schermerhorn, 10 Paige, 113.) No judge has, I think, ever expressed a different opinion. Although the judgment of the supreme court in the case of Safford v. Wyckoff, (1 Hill, 11,) which was upon a bill of exchange drawn in 1839, was reversed by the court of errors, no one seems to have doubted that the future issue of such paper was prohibited by the act of 1840. (4 Hill, 442, 454, 460, 461.) And it probably never would have "been doubted, had it not been for the bold and reckless manner in which the officers of the N. A, Trust & Banking Company continued to issue such paper after the statute was passed, and the impunity which they have since enjoyed.

As the issuing of the notes was expressly prohibited by law, it is impossible to maintain that they are valid securities. To hold that they can be enforced against the bank, would be going very far towards defeating the end which the legislature had in view. That they are void has been adjudged in several of the cases already cited ; and l am not aware of any authority to the contrary. The legal liability on account of which the notes were issued still remains; but the notes themselves are void.

The trust deed does not speak of promissory notes eo nomine; but recites that the company had on that day executed and delivered to Palmers & Co. their certificates of deposit, payable in twelve months from date, with interest. Such instruments, whatever names the parties may give them, are promissory notes. They are engagements to pay certain sums of money to the persons therein named, at a specified time, and at all events. A promissory note imports a consideration, and none need be mentioned. But though a consideration be mentioned in a written promise to pay money, whether it be done in general terms, as by the words “ for value received,” or by specifying the kind of value, as a deposit of money, it is still a promissory note. And if certificates of deposit, payable to the Palmers at a future day, had been issued in lieu of the notes which were actually delivered, they would have been promissory notes, coming equally within the prohibition of the statute, and being equally void. (Bank of Orleans v. Merrill, 2 Hill, 295 ; Southern Loan Co. v. Morris, 2 Barr. 175. And see Craig v. State of Missouri, 4 Pet, 433.) Indeed, I did not understand the defendants’ counsel to deny, that certificates of deposit payable at a future day are promissory notes: but it was said not to ap pear, that the certificates were to be made negotiable. I will not stop to inquire whether the statute extends to notes which are not negotiable ; (see Ontario Bank v. Schermerhorn, 10 Paige, 113, 114;) for I think it quite evident that the certificates were to be negotiable. The notes actually issued with the trust deed were negotiable and the statement at the foot of the notes that they were issued in pursuance of a trust deed, and that the payment of them was guarantied by the assigned securities, shows that it was intended they should pass beyond the hands of the Palmers. And although the fact does not expressly appear, it is plainly inferable that all the various written engagements to pay money which the bank had before made and sent abroad for sale in foreign markets were in a form to pass from hand to hand by mere delivery. In a letter of the president of the bank to the Palmers, dated the 22d of October, 1838, he speaks of the certificates of deposit issued by the company as a part of its “ course of banking”—as “representatives of money” issued “ upon the credit of the companyand several of those instruments, amounting in the aggregate to £22,-500 sterling, were sent to the Palmers, with the letter, “ to be sold” to other persons than the payees named in them, with an assurance that the capital of the bank would “ afford an abundant indemnity to the holders.” There are many other things in the case going to show, that all of the engagements of the bank to pay money which were sent abroad were in a negotiable form. But without looking into other transactions, it sufficiently appears from the trust deed, that the obligations which were to accompany it, by whatever name they might be called, were to be made negotiable. The trust was not created for the security of the Palmers alone, to whom the certificates were to be executed and delivered; but after a default in payment, the trustees were to stand possessed of the assigned securities in trust for the “ holders” of the certificates ; and were to proceed to the realization of the securities, by sale or otherwise, and pay over the moneys “ unto the said Palmers, Mackillop, Dent & Co., or any other parties who may then be the holders of said certificates, until the amount owing to the holders of the said certificates of deposit shall be fully paid.” A subsequent clause in the deed is in nearly the same words; and other parts of the instrument show that the certificates were to pass beyond the hands of the payees. It is impossible not to see that the parties intended the certificates should be negotiable instruments. If, therefore, certificates of deposit, instead of post notes, had been issued, they would, as negotiable promissory notes, have been open to the same objection which overturns the instruments which were actually issued.

The next question is upon the validity of the trust deed; and I am unable to separate that instrument from the fate of the notes or certificates of deposit. Both were executed at the same time, and as parts of one and the same transaction. The deed was made to give the greater credit and circulation, and secure the ultimate payment of the illegal notes or certificates of deposit ; and I do not see how the deed can stand, when the other instruments must fall. It is true that both had a good consideration, in the existing liability of the bank to indemnify the Palmers against the bills which had been drawn and accepted under the letter of credit. But neither a prior debt, nor any other good consideration, will support a new contract which is in itself contrary to the provisions of law. And although it is true in this case that the payment of the notes would have the effect of discharging the prior liability of the bank to the Palmers, yet the deed was made to secure the performance of the new contract. The recitals in the deed show an intention to indemnify the Palmers, as acceptors, against the bills which Davis had drawn udder the credit: but the parties intended to effect the object in an illegal manner ; to wit, by issuing prohibited certificates of deposit, and assigning certain property to secure the payment of the certificates. A legal purpose must be carried into effect by legal means. When we get beyond the recitals, and come to the covenants and stipulations in the deed, there is not a single word about the prior liability of the bank ; but the whole is about the certificates of deposit. The trustees are to hold the assigned securities until the certificates of deposit shall be paid: to hold the securities in trust for the bank until default shall be made in the payment of the certificates of deposit; and after default, in trust for the holders of the certificates of deposit. And the trustees, are thereupon to proceed to the realization of the assigned securities, and to pay over the moneys to Palmers & Co., or to the other holders of the certificates of deposit. And so the parties proceed to the end of the instrument, at every step making stipulations concerning the certificates of deposit, without any covenant, grant, or even allusion to or concerning any other liability on the part of the bank. The transaction amounted to this—neither more nor less—there was a promise, which, though founded on a good consideration, was forbidden by law, and therefore void ; and an assignment of property in trust to secure the performance of the illegal promise. Such a trust cannot be supported.

It is undoubtedly true, that where a deed or other contract contains distinct undertakings, some of which are legal, and some illegal, the former will in certain cases be upheld, though the latter are void: and if there had been an additional provision in this deed, that the assigned property should be held as a security for the original liability of the bank, that part of the deed might be allowed to stand, though the trust for the payment of the certificates should fail. But there is no agreement or stipulation in the deed for securing the original liability of the bank—nothing of the kind.

Again; although it appears from the recitals in the deed, that one object of the arrangement of the 30th of November, 1840, was to secure the performance of the original undertaking of the bank, it was, as I have already remarked, to be done in an illegal manner; to wit, by issuing prohibited notes or certificates, and assigning property to secure the performance of the new and vicious contract. A legal end can not be attained by illegal means.

The ground on which the counsel for the defendants seemed mainly to rely was, that the deed should be reformed, so as to make it a security for the original liability of the bank. His printed point touching the question is as follows—“ the company having agreed with Palmers, Mackillop, Dent & Co. for a new and valuable consideration, to pledge to them the securities in question, and having actually assigned and delivered the securities, equity will reform any defects, arising from mistake or accident, in the written instruments.” There are several difficulties standing in the way of this argument. So far as relates to the notes or .certificates of deposit, it was of no practical importance, as we have already seen, which should be issued; for both would be alike void. As to reforming the deed, there is no bill or application for that purpose: not even an allegation in the answers, that there was any mistake or accident in preparing the instrument, or that it does not express the real intention of the parties. If we could see that there had been a mistake in drawing up the deed, it Could not be reformed without filing a bill for that purpose; nor could we read and enforce the instrument as though it had been properly drawn. We should be obliged to follow the deed as it is. But what is, if possible, still more conclusive, there is not a particle of evidence to show that there was any mistake or accident in preparing the deed, or that it is not just what the parties intended it should be; and it could not be reformed in equity, if a bill had been filed fot that purpose. It is true that the parties intended to secure the original liability of the bank; but so far as appears, they intended to do it in the very way it has been done; and that way is illegal. If they mistook the law, we can not grant relief by making a new contract for them. This question was very fully considered in the case of Hunt v. Rousmaniere, (2 Mason, 342, 8 Wheat. 174, 3 Mason, 294, 1 Pet. 1; and see 1 Story’s Eq. §§ 114, 115 ;) which underwent a great deal of discussion, and is directly in point.

There were separate assignments of the several securities mentioned in the schedule to the trust deed; but they were all made to Blatchford and Murray as trustees; were executed and delivered simultaneously with the execution and delivery of the deed; and were made for the purposes expressed in that instrument. Those purposes were to secure the payment of the certificates of deposit. The reason for making separate assignments probably was, greater convenience in recording in the proper counties, and in making subsequent transfers and discharges. But however that may be, the assignments are but a part of one entire act; and can not be separated from the fate of the deed and promissory notes which were executed at the same time, and as parts of the same transaction.

I have purposely avoided the expression of any opinion on the several important questions which were so ably discussed at the bar, touching the purchase of the five thousand shares of the capital stock of the bank, and the means which were used to raise the necessary funds for that purpose. I have done so, because in the view which has been taken of the case, it was not necessary to consider those questions: and for the further reason, that after this bill was filed, an order of the court of chancery was made, by the consent of these parties, in the suit of Tracy against the bank, referring it to a master to take proofs, and report upon the claim of the Palmers to be creditors of the bank. The master was also to ascertain what part of their claims, if any, was secured by trusts, and what preferences they claimed under the trusts ; but he was not to report on the validity of the trusts, or the right to a preference under them. Those questions were to be settled in other suits then pending. This is one of those suits ; and the view which has been taken of the case, disposes of this trust, and the preference claimed by Palmers <fc Co. under it. If it has not already been done, it will be settled in the Tracy suit, whether the Palmers are creditors of the bank ; and if they are, they will come in with other creditors, and share in a ratable distribution of the assets of the bank; or will receive the whole of their debt, if the assets are sufficient to satisfy all of the creditors. The opinion which I have expressed does not, in its consequences, go beyond denying to Palmers & Co. the preference which they claim over other creditors.

I am of opinion that so much of the decree of the supreme court as declares the forty-eight notes illegal and void, and directs them to be delivered up to be cancelled, should be affirmed, and that the residue of the decree [—unless the clauses which relate to the special receivers, John J. Palmer and Fisher Howe should be excepted—] should be reversed; and that a decree should be made declaring the trust deed, the further agreement following the deed, and the several separate assignments of the securities mentioned in the schedule to the deed, illegal and void, and requiring them to be delivered up to be cancelled. The trustees must assign and deliver to the receiver all the securities which yet remain in their hands; and render an account, and pay over to the receiver all the moneys and other things which have come to their hands under the trust, except what they may have paid over to the Palmers. If any thing has been received by the Palmers under the trust, they must account, and pay over the same to the receiver.

The decree must be so drawn up as not in any manner to affect the question whether Palmers & Co. are creditors of the bank.

Such are my views of the case, and such is the judgment of the court.

Ordered accordingly.


source: Caselaw Access Project

author: Jewett, Ch. J.

license: Public Domain

text:
    Staples vs. Fairchild.
    In the proceeding by attachment against a debtor who is a non-resident of the state under 3 R. S. 3, § l, &c. the application must show, either that the creditor resides within the state, or that the debt arose upon a contract made within the state. Otherwise, the officer does not acquire jurisdiction to grant the attachment.
    And it is not enough to satisfy the statute, that a place of residence within the state, is mentioned in the application immediately after the applicant’s name, by way of recital or description merely. Nor is it enough that the affidavit of the creditor annexed to the application names him by way of recital as a resident of the state.
    Although the statute (§ 63) declares that the appointment of trustees shall be conclusive evidence of the regularitAj of the previous proceedings, yet the jurisdiction of the officer to grant the attachment may be contested.
    Where the witnesses whose affidavits are used to prove “ the facts and circumstances to establish the grounds on which the application is made,” do not appear to have any interest in the debt sworn to by the creditor, they will be presumed to be disinterested. Per Jewett, C. J.
    It is not necessary that the debt due to the attaching creditor should be proved by the affidavits of the witnesses. It is enough if they show the non-residence of the debtor, where he is proceeded against as a non-resident. Per Jewett, C. J.
    Where certain facts are to be proved before a court or officer of special and limited jurisdiction as a ground for issuing process, and there is a total defect of evidence, the process will be void. Per Jewett, G. J.
    But where the proof has a legal tendency to make out a proper case in all its parts for the jurisdiction of the court or officer, although such proof may be slight and inconclusive, the process will be valid until set aside on a direct proceeding for that purpose. Per Jewett, C. J.
    Ejectment, brought by Staples against Fairchild, in the supremec ourt, for lands in Erie county, tried before Sill, J. hi February, 1848.
    The plaintiff claimed title as a purchaser at a sale made by trustees, appointed in a proceeding by attachment against one Bradley, as a non-resident debtor. The attaching creditor was Giles Sanford, on whose petition a supreme court commissioner residing in the county of Albany, in February, 1843, issued the attachment in question. On the trial, the plaintiff gave in evidence the attachment and proceedings thereunder, the appointment of trustees, and the sale and conveyance, by them to the plaintiff, of the premises in question. He then gave evidence tending to prove that the defendant, at the commencement of the action, was in possession under Bradley, the debtor, and rested.
    The defendants moved for a nonsuit, which was granted. A bill of exceptions was made by the plaintiff, on which the supreme court refused a new trial, and after judgment the plaintiff appealed to this court. The questions made on the trial and the particular facts on which they arose, will appear in the opinion of the court.

      J. L. Talcott, for appellant.
    I. It was not necessary that the residence of the creditor should be stated either in the application for the attachment or in the affidavits of the witnesses. (2 R. S. 3, § 4, 5; 1 R. L. 157, § 1, 23; 21 Wend. 316.) Even if this is necessary, the residence of the creditor is sufficiently stated in his application and affidavit. (See the cases cited, 1 Petersd. 254, 255, and in 1 Harr. Dig. 60.) Moreover, the appointment of trustees was conclusive evidence of the regulartiy of the previous proceedings; (2 R. S. 13, § 62.)
    II. No evidence was required that the witnesses were disinterested ; that being a legal presumption. But if it were necessary, the proofs in the case before the officer did, prima facie, establish their disinterestedness. It was shown that the debt was due from Bradley to Sanford, and if so, prima facie at least the witness had no interest in it.
    S. G. Havens, for respondent.
   Jewett, Ch. J.

The revised statutes (2 R. S. p. 3, §§ 1, 2, 3, 4, 5, 6,) provide for attaching the real and personal property of a debtor for the payment of his debts, in the following cases: 1. Whenever such debtor, being an inhabitant of this state shall secretly depart therefrom, with intent to defraud his creditors, or to avoid the service of civil process, or shall keep himself concealed therein, with the like intent. 2. Whenever any person not being a resident of this state, shall be indebted on a contract made within this state, or to a creditor residing within this state, although upon a contract made elsewhere. The first point made in this cause involves the question, whether Judge Wilson, who issued the attachment upon the application of Giles Sanford, by virtue of which the premises in question were seized and subsequently sold, and under which the plaintiff claims title, had jurisdiction. Section four of the statute provides that the application to the judge for such attachment shall be in writing, verified by the affidavit of the creditor, or of the person making the same, in his behalf, in which shall be specified the sum in which the debtor is indebted, over and above all discounts, to the person in whose behalf such application is made, and the grounds upon which the application is founded.

The application for an attachment against the property of Bradley was probably intended to be predicated upon the facts that the creditor was a resident of this state, or that the contract upon which the indebtedness arose was made within this state, and that the debtor was a resident of the state of Connecticut. Sub. 2 of § 1 of the statute gives jurisdiction to the judge to issue the attachment only in cases where the debtor is not a resident of this state, and is indebted upon contract to some person residing within this state, or to some person upon contract made within this state. These facts the statute requires to be stated in the application, and to be verified before the judge to whom the application is made, by the affidavit of the creditor, or of the person making the application in his behalf, as the ground for issuing the attachment or warrant. Although the application of Sanford; the creditor, was in writing and verified by his affidavit; and in it was specified the sum in which Bradley was indebted to him, over and above all discounts, and that such demand arose upon Contract, and that Bradley was not a resident of this state, but a resident of the state of Connecticut ; it does not state, as the grounds upon which the application was founded, either that Sanford resided within this state, or that the indebtedness of Bradley to him arose upon a contract made within this state. It was first said on the argument that it was not necessary that the residence of the creditor should be stated in the application. That would be true in a case where the residence of the creditor was not the ground relied on, to give jurisdiction to the officer to issue his warrant or attachment. Where the application omits to state that the residence of the creditor is within this state, to show jurisdiction in the officer, it must state that the contract upon which the indebtedness arose, was made, within this state. It is not enough to specify the sum of the indebtedness, that it arose upon contract, and that the debtor was a non-resident of this state. But to give jurisdiction to the officer, it must be also stated in the application, either that the creditor resides within this state, or that the indebtedness arose upon a contract made within this state.

It was next said that if it was necessary that the residence of the creditor should be stated in the application, it was sufficiently stated in the application made by Sanford. In describing the applicant in the application presented to Judge Wilson for the attachment or warrant, it was stated, “ the petition of Giles Sanford, of the city of Albany, respectfully sheweth,” <fcc. and the affidavit verifying it stated that “ Giles Sanford, of the city of Albany, being duly sworn says, that he has a demand against Scudder Bradley of $866 personally, arising upon contract, over and above all discounts; and that the said Scudder Bradley resides at Westport, in the county of Fairfield, in the state of Connecticut, or elsewhere out of the state of New-York, and further this deponent says not.” It is obvious that the application contains no statement or averment in express terms that Giles Sanford resided at Albany. But if the recital, contained in the application, of his being “of the city of Albany,” could be held to amount to a positive or express statement of the residence of Sanford; that fact is not verified by his affidavit, there is no oath to the fact of his residence. The affidavit merely verifies the fact of the indebtedness of Bradley to Sanford; that it arose upon contract, and that Bradley was a non-resident of this state, and resided in the stale of Connecticut. (Ex parte Bank of Monroe, 7 Hill, 177.) The requirements of the statute are not complied with, unless the grounds upon which the application is founded are expressly stated and verified by the affidavit prescribed by the statute; and whether residence of Sanford in this state, or that the contract upon which the indebtedness arose was made in this state, was one of the grounds, is not stated in the application in terms, or in any form verified by the affidavit.

It was, however, contended on the argument that the appointment of trustees in that proceeding, was conclusive evidence of the regularity of the previous proceedings, and 2 R. S. 13, § 62 was cited to sustain that point. It is as follows: “ Such appointment of trustees, the record thereof, and the transcript of such record duly certified, shall in all cases, except on hearing of a petition referred to any court as hereinbefore provided, be conclusive evidence that the debtor therein named was a concealed, absconding or non-resident debtor, within the meaning of the foregoing provisions, and that the said appointment and all the proceedings previous thereto, were regular.” This section is a copy of a part of the 26th section of the former act, (1 R. L. 163,) which declared that the appointment of trustees should be conclusive proof in all courts that the debtor was at the time absconding, concealed or absent, within the meaning of the act, and that the appointment and proceedings previous thereto were regular. I think that a correct construction was given to this section by the supreme court, (in the Matter of Hard, 9 Wend. 465,) where it was said, that its effect was to preclude all inquiry into the regularity of the proceedings, and to estop the party from denying that lie was an absconding, concealed or absent debtor; but that it did not debar him from contesting the jurisdiction of the officer, or insisting that his case is not within the statute.

Section five of the statute makes it necessary that the facts and circumstances to establish the grounds on which such application is made, shall also be verified by the affidavit of two disinterested witnesses. It was contended that the witnesses must be proved to be disinterested, and that it could not be presumed, to sustain the jurisdiction of the officer. The case made by the proof of the applicant showed that the debt was due from Bradley to him, and nothing appeared that the two witnesses had any interest in the debt; but on the contrary, it appeared affirmatively that neither of them had any interest in it. Having no interest in the debt, the law will presume them disinterested prima facie at least. The fact of the non-residence of Bradley was verified by the affidavits of the two witnesses, and that was the only part of the case which by the true construction of section five is required to be verified by the affidavits of two disinterest-, ed witnesses. (In the matter of Brown, 21 Wend. 316.)

There was a total defect of evidence as to one fact, essential to give the judge jurisdiction; that is, that the residence of Sanford was within this state, or that the contract, upon which the indebtedness of Bradley to Sanford arose, was made in this state. There was conferred upon Judge Wilson a special and limited jurisdiction. It is well settled that when certain facts are to be proved to a court having only such a jurisdiction, as a ground for issuing process, if there be a total defect of evidence as to any essential fact, the process will be declared void, in whatever form the question may arise. But when the proof has a legal tendency to make out a proper case, in all its parts, for issuing the process, then, although the proof may be slight and inconclusive, the process will be valid until it is set aside by a direct proceeding for that purpose. In one case, the court acts without authority; in the other, it only errs in judgment upon a question properly before it for adjudication. (Miller v. Brinkerhoff, 4 Denio, 119, and the cases there cited; Den v. Turner, 9 Wheat. 541.) In one case, there is a defect of jurisdiction; in the other, there is only an error of judgment. Want of jurisdiction makes the act void; but a mistake concerning the just weight of evidence, only makes the act erroneous, and it will stand good until reversed.

The attachment or warrant issued by Judge Wilson, having been issued without jurisdiction, was void. The subsequent proceedings fall with it, and therefore the plaintiff failed to show any title to the premises in question. The judgment of the supreme court must be affirmed.

Judgment affirmed.


text:
    Daniels vs. Patterson and others.
    An irregularity in the commencement of a guit, e. g. where a suit is commenced by declaration in a court of common pleag, when one of the defendants resides without the county, can not be taken adraptage of on the trial. The remedy is by motion or plea in abatement.
    Under the act of 1844 (Slat, p. 315, $ 5,) declaring that acfipns in courts of common pleas may be commenced by declaration “ in alj cases in which such actions may now be commenced by capias,” joint debtors may be sued by declaration in a court of common pleas, although one of them resides out of the county and is not served.
    The sureties in a bond given by a plaintiff on the commencemept of an action of ' replevin are not discharged by delay in the prosecution of the suit without their knowledge, although such delay be assented to by the defendant, where it does not appear that the delay was unreasonable apd improper.
    Where the delay is unreasonable and improper, and is by consent of the defendant in the suit, he can not have an action on tire bond for want of prosecution merely.
    But mere delay, however long, and although assented to by the defendant without any special reason, is no defence in favor of the sureties to an action on the bond, where the breach complained of is the non-payment of the snm of money recovered by the defendant in the replevin spit.
    To make an exception on account of the rejection of evidence available, the party should make his offer in such plain terrgs as to leave no'room for doubt as to what was intended. If the offer is open to two constructions, he can not in a court of review insist upon that construction which is most favorable to himself, unless it appear that it was so understood by the court which rejected the evidence.
    Appeal from the supreme court. The case was this: In 1839, Mann, one of the defendants, brought a replevin suit against the plaintiff Daniels, The bond on commencing the suit was executed by himself and by the defendants Stickney and Patterson as his sureties. In October, 1845, Daniels recovered judgment in the replevin suit, and in 1847, brought this action on the bond in the common pleas of Niagara county, by the filing and service of declaration. The defendant Mann resided out of the state and was not served. The sureties, Stickney and Patterson, appeared and pleaded; and on the trial they moved for a nonsuit, insisting that Mann being a non-resident of the county, the suit could not be commenced by declaration, and therefore the court had no jurisdiction. The motion was denied and an exception taken. They then offered to show that the replevin suit was by “ agreement and stipulation by and between the parties or their attorneys, for the accommodation of one or the other or both parties, put over and delayed from time to time for several years, without the knowledge or approbation of the sureties Stickney and Patterson, and also-that at the time .of the. commencement of that suit Mann was responsible, but during its progress and before its final termination became insolvent, took the benefit of the bankrupt law, and left the state.” This proof was objected to by the counsel for the plaintiff, the objection was sustained, and the defendants’ counsel excepted. The plaintiff had a verdict and judgment thereon. The defendants Stickney and Patterson brought error to the supreme court, where the judgment was reversed. The plaintiff appealed to -this court.

      E. I. Chase, for appellant,
    I. The court of common pleas decided right in not nonsuiting the plaintiff on the ground that the suit had been commenced by declaration. This was not in issue. The objection could not be made on the trial; and furthermore, when the action was commenced, a suit could be commenced by declaration in the common pleas where one of the parties resided out of the state. (Laws of 1844, ch. 148, § 5.)
    II. The court of common pleas was right in excluding the proof- offered by the defendant below. (1.) It does not appear from the offer that the replevin suit was put over or delayed by the stipulation or agreement of the parties, or their attorneys, any further or longer than the court would have put over or delayed it, if the party asking the delay had made application for the purpose. (2.) If the delay or putting over had been by the order of the court, for the accommodation of either of the parties, it will not be contended that the sureties, in the replevin bond, could have taken advantage of it. And it will not be presumed that the defendant in the replevin suit, (a large amount of whose property, as the event proves, had been unjustly taken from him by the replevin) would ask for, or grant any “ unnecessary and unreasonable delay,” or any further delay than was necessary for the purpose of having the suit fairly argued and tried. (3.) The offer does not show that the parties to the replevin suit, or either of them, were restrained by any stipulation or agreement between them, from proceeding with the suit. (4.) The sureties (so called) in a replevin bond, do not stand in the same relation to the defendant in replevin, as ordinary sureties do, to the creditor or obligee. (Clarke v. Niblo, 6 Wend. 236.) (5.) The English cases cited on the other side, (Moore v. Bowmaker, 6 Taunt. 379, S. C. 7 id. 97 ; Archer v. Hale, 3 Price, 214; 4 Bing. 464,) present cases very different from the one under consideration. (2 R. S. 533 §§ 64, 65, 66.)

      J. L. Curtenius, for respondents.
    I. The judgment of the supreme court should be affirmed: the agreements and stipulations offered in evidence, to put over and delay the suit, without the knowledge or assent of the sureties to the replevin bond, discharged their liability thereon, and the evidence therefore should have been received. (Bangs v. Strong, 10 Paige, 11; S. C. in court of errors, 7 Hill, 250 ; Fellows v. Prentiss, 3 Denio, 512; Rathbone v. Warren, 10 John. 588; Clark v. Niblo, 6 Wend. 236; West v. Ashdown, 1 Bing. 164; People v. Green, 5 Hill, 647 ; Archer v. Hale, 4 Bing. 464.)
    II. The Niagara common pleas never had jurisdiction of this cause; the suit having been commenced by the filing and service of a copy of declaration on Patterson and Stickney; Geo. Mann, jun. the other of the joint defendants, not residing, ol at any time during suit being in the county of Niagara; and neither served with a copy of declaration, nor consenting to appear in the cause, the judgment of the common pleas was void. (2 R. S. 347, §§ 1, 2; Laws of 1833, p. 394; Pardee v. Haynes, 10 Wend. 630; Morrison v. Shelley, 25 id. 407; Ex parte Green v. Oneida Common Pleas, 10 id. 592; Laws of 1844, p. 215.)
   Bronson, J.

The motion for a nonsuit was properly over ruled. Where Mann resided, and how the suit was, or should have been commenced, were matters which did not belong to the issue to be tried by the jury. If the suit was not regularly commenced, the remedy was by motion, or plea in abatement.

But I see no reason to doubt that the proceedings were regular, although the suit was commenced in the common pleas by filing a declaration and serving it on Stickney and Patterson, without serving it on Mann, who was not a resident of the county, and did not appear. The act of 1844 provides, that actions in the common pleas may be commenced by- service of a declaration, in all cases in which such actions may now be commenced by capias.” (Stat, 1844, p. 215, § 5.) And clearly suits might then be commenced in the common pleas by capias against several joint debtors, although one of them resided out of the county, and was not served with process.

The principal question in the case, is upon an offer of evidence by the defendants, which was rejected by the court. Whether the facts offered to be proved would discharge the sureties, may depend on how the offer is understood. The point of it was, that the replevin suit was, by the agreement of the parties or their attorneys, “ put o\%r and delayed, from time to time for several years,” without the knowledge or consent of the sureties. There was no offer, in terms, to show that there had been unnecessary or -unreasonable delay—more delay than sometimes happens in other cases; nor more than the court of common pleas would have approved, had the matter been brought to its notice. Nor does the offer state under what circumstances the delay happened, so that we can see that it was unnecessary or unreasonable. Delay for several years,” is not necessarily improper; whether improper or not depends on the obstacles which the parties found in prosecuting and defending the suit. A cause may very.properly be put over and delayed,” in consequence of the absence or sickness of witnesses; the non-return, or mistaken return of a commission; the sickness of a party, or his counsel; and the like. Such difficulties may happen, and. lead to delay, from time to time,” and for several years,” without the fault of either party. If the delays were such as the court would have allowed on the application of one party against the other—arid there was no offer to prove the contraiy—it is of no consequence that they were had “ by agreement and stipulation by and between the parties, or their attorneys.” It is quite proper for the parties and their attorneys to arrange such matters by consent, in the way they would probably be disposed of by the court upon motion. We all know that offers of evidence are- usually made in as broad and strong terms as the facts will warrant; and as the defendants, neither offered, in terms, to show that there had been improper delay, nor stated facts from which the court can see that such must have been the case, I am unable to say that the common pleas erred in rejecting the evidence. Before a party excepts on account of the rejection of evidence, he should make the offer in such plain and unequivocal terms as to leave no room for debate about what was intended. If he fail to do so, and leave the offer fairly open to two constructions, he has no right to insist, in a court of review, upon that construction which is most favorable to himself, unless it appear that it was so understood by the court which rejected the evidence. And if the meaning of the offer depends upon argument and inference, he must have much the best of the argument, before a court of review should reverse the judgment.

But the case may be put upon still broader ground. The condition of the bond was, that Mann would prosecute the replevin suit to effect, and without delay; and that if Daniels should recover judgment against him, he would return the property, if return thereof should be adjudged, and would, pay Daniels all such sums of money as he might recover in the action. The breach assigned is, that Daniels recovered judgment in ,the action for a large sum of money, which has not been paid. Now, let it be granted that Mann delayed for years, and without necessity, to prosecute the suit, and that Daniels consented to the delay; the only consequence would be that Daniels could not have an action cnthe bond for the want of prosecution. He could not complain of that which took place with his consent. If the delay had been without his approval, he might have had an action on the bond for that cause alone, and although the replevin suit was still pending. (Axford v. Per rett, 4. Bing. 586; Harrison v. Wardle, 5 B. & Ad. 146.) But although the consent has precluded Daniels from having such an action,.it, can have no effect-upon the breach which, he has -assigned, - to wit, the non-payment of the sum of money which he recovered against Mann in the replevin suit. Mere delay of.-the creditor to sue, however long - it may continue, never discharges the surety, unless it be after a request from the surety to proceed. And Daniels was under no obligation to hasten Mann in-the prosecution of Iris, suit,- unless the sureties requested him to do so; and that is not pretended.. Daniels might consent to a postponement from term to term, and without any special reason- for so doing, providing he did nothing -to prevent Mann from going on with-the suit whenever he pleased; and made .no agreement which would preclude him from quickening the proceedings of Mann, should the sureties request him to do so. ■ In this view of. the case, the _ offer falls far short of making out a defence. . . .

. The cases to-which we have been referred do not support the defence. In Moor v. Bowmaker, ( 6 Taunt. 379, and 7 id. 97,) the sureties twice failed at law ; but afterwards had relief on the equity side of the court of exchequer, (Bowmakerv. Moor, 3 Price, 214,) on the ground' that-there had-been an agreement between the parties to the replevin suit by which the plaintiff in that suit was- “ precluded from proceeding according to the condition” of the bond—-an agreement staying the proceedings, “ so that the tenant [plaintiff] is restrained, by the act of the landlord, [defendant,] from doing that which his surety has engaged he shall do.” The case of Archer v. Hale, (4 Bing. 464,) went upon substántially the same ground. And see Aldridge v. Harper, (10 id. 118.) There was no offer in this case to prove an agreement between the parties to the replevin suit, by which Mann was “ precluded from proceeding according to the condition” of the bond; or “ from doing that which his sureties have agreed, he shall do.” Every thing contained in the offer might have been proved, without showing that there had been a moment’s delay, except at the request of Mann ; or that Daniels ever did any thing more than consent to such delay as Mann desired to have. In short, Daniels did not compel Mann to prosecute his suit “ without delaybut allowed the proceedings to linger for several years.” That is no answer to an action on the bond for the non-payment of the sum which Daniels recovered in the replevin suit.

The other cases to which we were referred are not enough like the one at bar to call for a remark.

I am of opinion that the judgment of the supreme court should be reversed, and that of the common pleas should be affirmed.

Ordered accordingly.


author: Strong, J.

text:
    Bostwick and others vs. Atkins and others.
    Where an application is made to the court of chancery to confirm a sale of real estate, made under the order of a surrogate who had jurisdiction of the matter,
    . the investigation must be limited to the fairness and good faith of the sale; and it is not competent to inquire into the regularity and propriety of the previous proceedings before the surrogate.
    Whether upon such an application the jurisdiction of the surrogate to make the order of sale is open to inquiry, quere.

    If upon such an application a decree is made favorable to the applicant, it should confirm the sale only in respect to the defect or irregularity to cure which the proceeding is had; and the parties interested adversely to the sale should not be precluded by the decree from contesting it on other grounds.
    Under the statute of 1801, authorizing the sale of a decedent’s real estate to pay debts, the surrogate acquires jurisdiction of the subject matter of the proceedings by the presentation of an account of the personal estate and debts, accompanied by a request for his aid in the premises.

    A testamentary guardian of an infant devisee has no right to purchase the real estate of the testator at a sale under a surrogate’s order. The sale, however, is not absolutely void, but its validity is at the election of the ward.
    And where a sale was made beneficial to the ward at which he was present, and who, instead of repudiating it, suffered eighteen years to elapse after he became of age without impeaching the conveyance, during which time the title had. passed into the hands of innocent parties; held, that he must be deemed to have waived the objection and to have affirmed the sale.
    Appeal from the supreme court. The case is sufficiently stated in the opinion of Strong, J.

      B. D. Noxon, for appellants.

      A. Gibbs, for respondents.

         The surrogate must also have jurisdiction of the parties. (See Schneider v. McFarland, 2 Const. 459.)

   Strong, J.

The defendants, John L. Tunison and Jane, the wife of James Atkins, are the devisees and sole heirs at law of James Tunison, who died in the state of New-Jersey in March, 1807, seized at the time of a lot of land in the town of Ovid, in the county of Seneca, in this state, which is the subject of the controversy in' this case. The original plaintiffs, David Kinnan and Andrew Bostwick, both of whom are now dead, and whose representatives are the present plaintiffs, claimed to hold the land mediately under a conveyance made to Philip Tunison by the executor of the will of James Tunison, pursuant to an order for the sale of such land for the payment of his debts made by the surrogate of the county of Seneca. Atkins and his wife and John L. Tunison instituted actions of ejectment for the land in controversy against Kinnan and Bostwick, alledging that the conveyance from the executor was insufficient to pass the title, inasmuch as it did not set forth at large the order of the surrogate directing the sale. Those cases came before the supreme court, (20 Wend. 241,) when it was decided that the conveyance was inoperative by reason of the omission. Kinnan and Bostwick then commenced this suit in the late court of chancery, asking for injunctions against the further prosecution of the actions of ejectment, and that the irregularity in the executor’s conveyance might be- rectified, and the sale under the surrogate’s order confirmed, pursuant to the statute. (2 R. S. 111, § 61.) The vice chancellor of the sixth circuit, before whom the suit .in chancery was instituted, made an order referring it to a master to make the examination and report required by the statute; and on the reception and consideration of the report decreed perpetual injunctions against the further prosecution of the suits at law, and ordered that the sale and conveyance under the surrogate’s order should be confirmed. The defendants in this suit appealed to the supreme court, where the vice chancellor’s decree was reversed, and the matter now comes before us on an appeal from the judgment of the supreme court.'

The statute directs that if upon the hearing, if the application to rectify the irregularity and confirm the sale under such circumstances, it shall satisfactorily appear that the sale was made fairly and in good faith, an order shall be made confirming the sale and conveyance. (§ 65.) The defendants resist the application for a confirmation of the sale not only on the ground that it was made unfairly and in bad faith, but on the additional allegation that the surrogate who directed it had no jurisdiction in the matter. Although the statute makes no mention of the latter objection, yet it is competent for the defendants to raise it, and to avail themselves of it if well founded, as the want of jurisdiction would render the whole proceeding, sale as well as conveyance, void, and it is impossible to confirm a nullity.

The objection to the jurisdiction of the surrogate of Seneca county is based on the grounds, first, that James Tunison was an inhabitant of New-Jersey and not of this state at the time of his death; and second, that the executor had not made and. filed the inventory of the personal estate of the deceased required by the statute, when the application for the sale was made.

The statute under which the surrogate proceeded (1 R. L. of 1801, p. 319, § 3) authorizes the surrogate to take the proof of the last wills and testaments of all persons who may have been inhabitants of the same county at the time of their decease, and expressly excepts persons who may not at the time of their deaths have been inhabitants of this state, and directs (§ 20) that the application to sell the real estate of the deceased for the payment of his debts shall be made to the surrogate of the county in which probate of the will was had. In this case the will was proved before the surrogate of Seneca county, and application for a sale of the testator’s real estate was made to the same officer. If the deceased was, at the time of his death, an inhabitant of this state, he was clearly an inhabitant of Seneca county, as that was his only place of residence while in this state. [The learned judge here discussed the question of residence upon the testimony,- and stated his conclusion to be that the decedent, at the time of his death, was an inhabitant of Seneca county, in this state, and consequently, that the surrogate, so far as related to that point, had the requisite jurisdiction. He then proceeded.]

- There is no evidence in this case to prove that the usual inventory had or had not been filed, previous to the application for a sale. It does not appear that the filing of such inventory was necessaty to confer jurisdiction upon the surrogate. All that the statute requires in the first instance is that when the executor shall 'discover or suspect that the personal estate of the testator is insufficient to pay his debts, that he shall thereupon make a just and true account of such personal estate and debts, and deliver it to the surrogate and request his aid in the premises. All these prerequisites existed in this case. The restriction by reason of the omission to file an inventory, applies only to the order for a sale, not to the acquisition of jurisdiction over the application. That is acquired upon the completion of the preliminaries prescribed by the statute. When the inferior officer has thus obtained jurisdiction of the case, and that appears upon his record, the presumption is in favor of the regularity and validity of his subsequent proceedings, and it is not necessary to state in his record that he has done every thing, or had all the evidence, which might have been essential to render his determination proper. If he has violated any provisions of the statute, or any rule of common law, which if shown would render his acts invalid, that should have been corrected on a direct appeal; or, if available on a collateral proceeding, should have been averred in the pleadings, and proved. In this case t) e objection is nowhere alluded to in the answer. Nor, if it had been, is it supported by proof. I am satisfied it cannot prevail.

The chancellor was required by the statute to make such order for confirming the sale and conveyance as he should deem equitable, if it should appear to his satisfaction that the sale was made fairly and in good faith. (§ 65.) The learned judge who gave the opinion of the supreme court seems to suppose that on the investigation it is competent and proper to go into the inquiry as to the propriety of the surrogate’s order for a sale, and whether that was warranted by the facts of the case. And he is supported by what was said by the late chancellor in the case of Hemiup, (3 Paige, 305.) But with great deference, I do not so understand the statute. That says nothing about the proceedings before the surrogate anterior to the sale, and it can scarcely be presumed that the legislature intended to overrule in these cases the principle that where an inferior judicial officer has jurisdiction over the subject matter all shall be considered as rightly done, except on a direct appeal from his decision to a tribunal which has the power to review and correct it. Ordinarily purchasers have nothing to do with those proceedings ; they have no opportunity to ascertain whether they have been warranted by the facts existing, or proved; they can refer only to the record and learn from that whether such proceedings have been regular and within the jurisdiction of the tribunal before and by which they were conducted. There can be no propriety in requiring an innocent purchaser on an application by him for the correction of the mistakes of another to his prejudice, to go into an investigation of facts with which he had no connection, and of which ordinarily he had no knowledge, or to support by evidence the regularity and validity of proceedings over which he had no control. Such a rule could not be supported on the ground that the equities of the heirs or devisees, and innocent purchasers are equal. They are not equal. The heir or devisee must be made to some extent a party to the proceedings; or he must at least have notice of them. If he chooses he can appear and oppose the application. Should he be injured by the misconduct of the executor or administrator, he has a direct remedy by an appeal, or he can rely in the case of an executor upon the responsibility of one selected by his ancestor, and if such responsibility is doubtful, security may in many instances be obtained upon his application; and in the case of an administrator, upon his responsibility, and that of his sureties approved by a public officer; whereas the remedy of the purchaser against either (except in the case of covenants, which are seldom given) would be circuitous, if there should be any. The purchaser parts with his money, which is applied to the relief of the estate, if not of the existing holder, at least of the person from whom he acquires his title. The provisions of the statute refer therefore with great propriety and justice expressly.' and exclusively to the sale, and there can be no reason why they should be extended, but the contrary. The remedy which that act furnishes was probably designed as a substitute for the usual bill to reform a deed, and it was not intended to extend the investigation beyond what is customary in such cases.

The inquiry enjoined by the statute relates to the conduct of the executor of administrator at the time of the sale, with which it may be reasonably supposed the purchaser may be acquainted. It cannot be extended to their previous acts, which are unknown to the purchaser, except so far as they appear upon the record, which by a legal fiction, and it is nothing but a fiction, is supposed to be known to the world. The fraudulent conduct of an executor or administrator at any time, so far as it may be known to the purchaser at the time of the sale, and of course his own acts, which had any thing to do with it, are fit subjects for investigation: As Philip Tunison the purchaser was the testamentary guardian of one of the devisees of the land in dispute, it was his duty to ascertain the facts, and he may well be supposed to have been acquainted with them, and it was therefore proper to go into the inquiry as to the fairness of the conduct of the executor in the proceedings before the surrogate. If those proceedings were regular and warranted by the statute, so far as they are represented by the record, (as they were,) it was incumbent upon the party alledging unfairness to prove it affirmatively; and the case so far as it relates to any alledged misconduct previous to the sale must be examined upon that principle. [The judge here considered upon the evidence the proceedings, previous to the sale, and stated as his conclusion that up to the time of the sale he saw nothing indicating fraud or unfairness. He then proceeded.]

Then as to the sale itself. It is alledged generally in the bill that the executors sold the land in question to Philip Tunison, and the answer admits that the sale was made to him as in the bill stated, without stating any objection to the manner in which it was made. No fraud or any thing improper in the actual sale is any where alledged or proved. On the contrary it is stated in the master’s report (to which no exception was taken) that the land was sold for its full value.

It is objected that the avails of the sale were not properly applied. That is a matter which has nothing to do with the fairness of the sale and certainly could not vitiate it. But there was nothing fraudulent in the appropriations, although they may not have been wholly correct. It was right to pay the balance of the debts, although it may have been due to the purchaser. It was also proper for the guardian of one of the devisees to pay his part of the balance, after satisfying the defendants, towards his support and education. There was undoubtedly a misapplication of that part of the purchase money which belonged to the other devisee, and for that she had a claim against the executor, and possibly under the circumstances against the purchaser.

The strongest objection to the purchase in this case is that it was made by the testamentary guardian of one of the devisees. That however is applicable solely to the estate of the ward, not to that of his sister to whom the purchaser did not stand in any fiduciary relation. It is no answer to this objec tion to say that the ward had another guardian appointed by the surrogate for the express purpose of representing his inter ests in that particular transaction. That did not relieve the general guardian from his duty to attend to the interests of his ward, which had been solemnly confided to him by the will of the father. The law, for obvious reasons, discourages any transaction of a trustee by which he puts his own interest in competition with those of his cestui que trust. (Davoue v. Fanning, 2 John. Ch. 252, and the cases cited.) If a guardian purchases the land of his ward, however clear from actual fraud the sale may be, its validity is at the election of the ward. It is not, however, ab origine, absolutely void. The ward may sanction it and thereby render it effectual, if he elects to do so. His sanction may be expressed by him in direct terms, or it may be inferred from his conduct. In this case the master reports that John L. Tunison the ward was present when both of the lots sold by the executor were run out in pursuance of the sale, and at that time and on other occasions approved of it. He knew too that a large part of the avails had been expended in his support and education, and, as but for those means his education must' have been neglected, that the transaction had proved highly beneficial to him. If under those circumstances he had intended to repudiate the sale he should have done so promptly. Instead of adopting that course he suffered the deed to remain unimpeached, and the persons claiming under it to retain peaceable possession of the land which it purported to convey, from 1818, when he came of age, until 1836, when the action of ejectment to which he was a party was instituted. During this period the original purchaser died, the land was then sold and conveyed, extensive and valuable improvements had been made, and the last purchaser was no doubt ignorant of the circumstances attending the executor’s sale, and had every reason to. suppose that it was valid. So long an acquiescence by the ward under such circumstances clearly raises the inference that he had waived any objection to the sale arising from the confidential relation existing between himself and the purchaser, and there is no just principle which sanctions his attempt at this late day to revive it;

We all think that the investigation under the statute (independently of the question of jurisdiction) should be limited to the fairness and good faith of the sale, and that the case of Hemiup, so far as it goes to sanction an inquiry into the regularity and propriety of the proceedings before the surrogate, anterior to the order for a sale, and whether such order was warranted by the facts, can not be sustained. Upon the point whether the question as to the jurisdiction of the surrogate can be involved in the proceedings under this act, we are so far di vided in opinion that our determination of this case can not be considered as an authority either way.

The act authorizes the court to make such order for the confirmation of the sale and conveyance as may be deemed equitable. The main object is to remedy a defect (the omission to insert the order for a sale) in the deed, and as the inquiry is limited to the fairness and good faith of the sale, the parties should not be precluded by the decree from subsequently contesting other matters. The decree, if favorable to the plaintiff, should therefore confirm the sale and conveyance with the like effect as if the surrogate’s order had been inserted in the deed.

As we think that the sale in question was made fairly and in good faith, the decree of the supreme court must be reversed. The vice chancellor also erred in awarding injunctions to restrain the defendants from the further prosecution of the actions of ejectment, and in not restricting the effect of his decree to the relief which was principally designed by the act, and which alone can be equitably granted. Both decrees must therefore be reversed, and a new decree must be entered confirming the sale and conveyance in the manner and with the effect which I have indicated.

And thereupon the following decree was entered:

This cause having been argued by Mr. B. Davis Noxon, counsel for appellants, and by Mr. A. Gibbs, counsel for respondents, and due deliberation having been thereupon had, It is ordered, adjudged and decreed, that the decrees made in this cause by the vice chancellor of the sixth circuit and by the supreme court be in all things reversed and annulled; and it is further ordered, adjudged and decreed, that the sale and conveyance to Philip Tunison under the order of the surrogate of the county of Seneca, mentioned in the pleadings in this cause, be, and the same are hereby ratified and confirmed so far, and so far only, as to make the said sale and conveyance of the like force and effect as they would have been had the order of the surrogate directing the sale been set forth at large in the conveyance. All other questions concerning the proceedings, sale and conveyance are left to be settled according to the rights of the parties as they may be adjudged by the courts of law.

It is also ordered that the record and proceedings be remitted to the supreme court, there to be proceeded upon according to law.