text:
    The Lehigh Valley Terminal Railway Company v. Ellen Currie, executrix, and Jeanette T. Imbrie et al.
    1. An ordinance changing the grade of a street was passed to enable complainant to construct a railroad bridge. Said ordinance was removed to the supreme court on certiorari by defendant landowners, and work under the ordinance was stopped. Pending the litigation it was agreed that the suit should be discontinued, that all parties should consent to said change of grade and that complainant should pay to defendants a certain sum, and an additional sum was to be deposited, to be paid to defendants if the ordinance was not set aside on any other writ of certiorari, or if, pending any certiorari, the road should be actually constructed at the grade established by said ordinance ; otherwise, the money deposited should be returned to complainant. Afterwards, and before the road was constructed, the ordinance was set aside on certiorari. After complainant had sued out a writ of error, an agreement was made whereby the grade fixed by the ordinance, except immediately under the bridge, was changed, other alterations were made, and all litigation between the parties discontinued. — Held, that as the ordinance was set aside before the road was constructed, and as the road was constructed, not under the ordinance, but by virtue of such agreement, defendants were not entitled to the additional amount deposited with said trustee.
    2. The fact that defendants were damaged to the total amount fixed in the contract, and that complainant obtained the advantages for which the money was to be paid, did not entitle defendants to the fund under the contract.
    3. As said fund was not stated, in the contract, to be compensation for damages sustained by defendants, and as the contract provided that if any assessments were made against defendants for benefits, amounting to more than the award to them, complainant should pay the excess, and as complainant had agreed to make said change in grade and all improvements at its own expense, defendants are not entitled to claim said fund as damages.
    4. After said ordinance had been set aside, complainant, fearing that it would have no right to construct, under land belonging to defendants, a sewer which it had agreed with the city to construct, in order to drain the street under said bridge, and that substantial damages would be assessed for change of grade, proposed to defendants to pay the fund in controversy in satisfaction of all damages resulting from the change of grade, and to prevent their interference with the construction of said sewer. — Held, in a suit to determine the title to said fund under the original contract, that said proposition was inadmissible as evidence of any liability on the part of complainant.
    On pleadings and proofs.

      The object of the bill is to establish the right of the complainant to, and obtain the sum of, $5,000, deposited by it with two trustees, under a written agreement and circumstances, as follows:
    Complainant is a corporation organized under the general laws of the State of New Jersey, and is formed by the consolidation of certain other railway companies with the Jersey City, Newark and Western Railway Company, and by that means is the successor to all the rights of that company, and, for present pui’poses, may be considered as identical with it. It is the proprietor of and operates a railway running from the city of Newark to the waters of New York bay, crossing Newark bay and Bergen Neck upon a course of about northwest and southeast. Bergen Neck, at that point, is crossed by a series of parallel streets, which are designated by numbers, having a course identical with that of the railway, and is traversed northeast and southwest by other streets, which are designated as Avenues A, B, C &c., within the limits of the city of Bayonne.
    For purposes of a railway .route, complainant and another railway company purchased, or acquired by condemnation, all the land between Fifty-ninth street and Sixtieth street, and prior to 1889, laid out its route parallel with those streets and between the two. The first avenue which its route crosses after leaving Newark bay is Avenue A, and its plan of crossing the bay, approved by the secretary of war, was such as required that it should cross that avenue at an elevation of a few feet above the natural level of the surface of the avenue at the point of crossing, and a little above the grade which had been adopted for Avenue A by the authorities of Bayonne. The avenue had never been worked to the city grade, and there were very few buildings in the neighborhood, although the land was laid out into building lots.
    This plan of the complainant required that the grade of the avenue, between Fifty-ninth and Sixtieth streets, and for some considerable distance northeast of Sixtieth street and southwest of Fifty-ninth street, should be altered and the grade of the street lowered so that the railway could cross on a bridge over the avenue.

      In September, 1890, the complainant caused an application to be made to the common council of the city of Bayonne for the desired change of grade, and an ordinance to that effect was adopted or passed in that month. That proceeding was removed to the supreme court by a certiorari, issued at the instance of the defendants, who owned most of the land fronting on both sides of Avenue A to the north of Sixtieth street and to the south of Fifty-ninth street, and which would be affected by the proposed change of grade. The company, being satisfied that that ordinance could not endure the test of judicial examination, induced another party interested to bring a certiorari to hasten the proceeding, so that it was set aside in November, 1890.
    A fresh application, which was supposed to be free from the objections which were urged against the first one, was made in November, 1890, with the result that the city council passed an ordinance on the 16th of December, 1890, changing the grade as requested. That ordinance was vetoed by the mayor on the 27th of December, 1890, and passed over his veto on the 13th of January, 1891.
    Upon the passing of that ordinance the complainant entered into a written contract with the common council by which it agreed to do all the grading of Avenue A in conformity with the grade established by the ordinance of December 16th, 1890, and to construct a main sewer on the centre line of West Fifty-ninth street, from Avenue A to Newark bay, for the use of the public, and to be connected with receiving basins to be constructed as designated by the city, and to pave with Belgian block or Macadam pavement, and properly curb the roadway and flag the sidewalks of Avenue A, from Fifty-ninth to Sixtieth street. It also provided for the lowering of the grade of Fifty-second, Fifty-third, Fifty-fourth, Fifty-fifth, Fifty-sixth, Fifty-seventh, Fifty-eighth, Fifty-ninth, Sixtieth, Sixty-first and Sixty-second streets, where they intersected with Avenue A. It also provided that it should carry its railway across the avenue on a bridge, giving an under clearance of at least thirteen feet, to be supported on piers one hundred feet apart, the width of the avenue being seventy feet, “ for the purpose of encouraging the laying out and constructing of a county road or boulevard at this point.” It also provided that the complainant should pay all the expenses and costs of the improvement pursuant to section 62 of the charter of the city.
    A second writ of certiorari was allowed upon the prosecution of the defendants, to remove to the supreme court this ordinance of January 16th, 1891, and the litigation under that certiorari was pending on the 2d of October, 1891, all work under the ordinance and contract between the complainant and the city being in the meantime stopped.
    On the 2d of October, 1891, the parties to this suit entered into a contract under seal, in these words :
    “Agreement made this second day of October, eighteen hundred and ninety-one, between the Executors and Trustees of the Estate of James Currie, deceased, and Jeanette Imbrie and William M. Imbrie, her husband, of the one part, and the Lehigh Valley Terminal Bailway Company of the other part.
    “ 1. The sum of thirteen thousand dollars shall be forthwith, upon the execution hereof, deposited by the company in the New Jersey Title Guarantee & Trust Company to the credit of W. D. Edwards and C. L. Corbin, Trustees, to be drawn only on their joint check.
    “ 2. A consent to discontinue the pending suit on certiorari in New Jersey Supreme Court between said executors as Pros, and the City of Bayonne to review the ordinance for change of grade of Avenue A, shall be at once procured from the Attorneys of record of the Prosecutors and a rule to discontinue obtained from the Judge and entered in the Minutes, whereupon eight thousand dollars of said fund on deposit shall be paid to said executors or their attorneys.
    “ 3. All the parties hereto assent and agree to the change of grade of Avenue A as ordained by ordinance passed January 13th, 1891, by the Council of Bayonne and to the contract made between the City of Bayonne and the Jersey City, Newark and Western Bailway Company (now merged in the Lehigh Valley Terminal Bailway Company), dated February 2d, 1891, which contract the Bailway Company will forthwith proceed to carry into effect upon the discontinuance of said suit.
    “ 4. If no further writ of certiorari shall be allowed before the first day of January, 1892, and if no application for a writ shall be then pending, said Bailway Company shall pay to said Executors the balance of five thousand dollars on deposit, with the interest earned thereon, and with a further sum sufficient to make the total interest thereon six per cent, per annum from this date. If there is then pending any writ of certiorari or application, payment shall be deferred until the determination thereof. If the ordinance for change of grade shall be set aside, then the said fund on deposit shall be returned to the said Bailway Company; should the ordinance be sustained, then the said fund shall be paid to the said Trustees and Executors, with a sufficient additional sum to make.the total interest earned thereon the sum of six per cent, per annum from the date hereof. If, however, the roadbed, pending any certiorari, shall be actually constructed and rails laid for traffic at a grade accommodated to that established by the ordinance of January 13th, 1891, and not to the prior established grade, in such case the payment of said deposit shall be made to the executors upon such construction.
    “5. The company agrees that in case any assessments for said change of grade shall be made upon the lands of the estate of James Currie or Jeanette T. Imbrie over and above the awards which may be made to them for said change of grade, the said railway company will pay such excess of assessments.
    “In witness whereof the said parties have executed these presents the day and year first above written.”
    Pursuant to that agreement the complainant forthwith deposited $13,000 to the credit of Messrs. Edwards and Corbin, and they at once paid to the defendants the sum of $8,000, and the suit of certiorari was discontinued and dismissed by order of the supreme court, entered by consent of parties, on the 3d of October, 1891. The complainant then commenced the active work of changing the grade of the street and the erection of abutments for the bridge, but were stopped before they had made much progress, by the intervention of a new litigant.
    On the 31st of October, 1891, a third writ of certiorari was allowed and issued out of the supreme court on the prosecution of the board of chosen freeholders of the county of Hudson, by which the same ordinance was removed to the supreme court and work thereunder was stopped. In fact, the board of chosen freeholders had formally adopted Avenue A as a county boulevard and made it one hundred feet wide instead of seventy feet. Litigation followed under that certiorari, and on the 18th of February, 1892, the supreme court (35 Vr. 393) set aside the ordinance, with the result that all authority for the complainant to reduce the grade of the street and build its bridge at the desired height was destroyed.
    The complainant removed the judgment of the supreme court, setting aside the ordinance in question, by writ of error to the court of errors and appeals, and then, on the 24th of March, 1892, made a settlement whereby it dismissed its writ of error and entered into an agreement with the board of chosen freeholders by which the grade fixed by the ordinance of the common council of Bayonne of January 16th, 1891, was changed. The grade immediately under the railroad crossing was left substantially the same as that fixed by the common council, but the approaches to the railway bridge from each side were made a little steeper, so that for a considerable portion of the distance on one side there was about three feet less cut, and on the other side from one to two feet less cut in front of the lands of defendants. The width of the excavation, however, was one hundred feet instead of seventy • and provision was made for some sewers to be built at the expense of the complainant, in addition to those provided for in the contract with the city. Provision was also made for supporting columns of iron under the bridge, to be placed at the edge of the sidewalks, so that the actual span, instead of being one hundred feet, was sixty feet. The paving and flagging were substantially the same as in the contract between the complainant and the city. All the work was to be doné by the complainant at its expense. The complainant also agreed to indemnify the county against all damages that it might be required to pay by reason of the adoption of the new grade and construction of the road thereon.
    Under the statutory proceedings taken by the county to ascertain the damages resulting to the landowners by such change of grade and the taking of thirty feet of land for additional width, the defendants appeared and claimed damages by reason of the alteration of the grade, and also for the additional land taken, with the result that the commissioners appointed to ascertain such damages awarded them only nominal damages.
    Thereupon the complainant demanded the sum of $5,000 standing in the name of the trustees, and the trustees not being agreed as to its right thereto this suit was instituted. The trustees were made parties defendant, but took no part in the litigation. .
    The defendants Currie, executrix, and Imbrie and wife answer and combine with their answer a cross-bill, in which they set up that the sum of $13,000 deposited was fixed upon as the amount of damages which would be actually inflicted upon the defendants’ land by the change of grade, and that $8,000 of it was paid them on that account, and that $5,000 was retained simply to insure the complainant against any further certiorari being issued by the defendants or any landowners similarly situated. It further states that at the time the agreement between the parties hereto of October 2d, 1891, was made it was understood that the authorities of Hudson county might object to the grade thereby established, and further that the complainant was not hindered by the certiorari of the board of freeholders, but continued the construction of its road without interruption, and that the agreement of October 2d, 1891, has been practically fulfilled by defendants, and that the work which the complainant was obliged to do under the contract with the county was no greater than that which it agreed to do under the previous contract with the city, and that it was not hindered and delayed in the prosecution of its work by the certiorari of the city, and has derived all the benefit under the contract of March 2d, 1892, that it ever expected to derive under that of October 2d, 1891. Hence, in equity, so they argue, the defendants’ right to the fund is clear. The defendants rest their legal right to the $5,000 under this clause of the agreement:
    “ If, however, the roadbed, pending any certiorari, shall be actually constructed and rails laid for traffic at a grade accommodated to that established by the ordinance of January 13th, 1891, and not to the prior established grade, in such case the payment of said deposit shall be made to the executors upon such construction.”

      Mr. Charles L. Corbin, for the complainant.

      Mr. William D. Edwards, for the defendants.
   Pitney, V. C.

By the fourth paragraph of the contract made October 2d, 1891, the fund of $5,000 now in controversy was to be paid to the complainant in case the ordinance of the city changing the grade of Avenue A should be set aside on certiorari, unless, pending the certiorari, the complainant’s roadbed should be actually constructed and rails laid for traffic. It is admitted that the ordinance was set aside on certiorari at the February Term, 1892, and that the roadbed had not then been constructed across the avenue, and that no rails had been laid for traffic, and in. fact that no rails at all were laid or could be laid across Avenue A until some months afterwards, when they were laid, not under the protection of the ordinance and agreement of the city, but under a new agreement made by the complainant with the county freeholders. By the express terms of the contract between the parties,’therefore, the complainant’s right to the fund is established.

The defendants contend that they should receive this sum of $5,000 because they have actually suffered the damages and the complainant has obtained the advantages for which this $5,000 was to be paid. If this were the case it would not establish the claim of defendants or impair that of complainant to this fund. The defendants can have no claim at law or in equity upon the fund except by the contract under which it was deposited. Apart from the contract, the relation of defendants to the complainant is merely that both parties own land abutting on the same highway. The complainant applied to the chosen freeholders of the county, who controlled this highway, for a change of grade, and the chosen freeholders made the change. Defendants allege that they have been damaged by the change. If so, their remedy, if any, must be against the county unless the complainant has, by its agreement, placed itself under some liability for the damages to defendants. If such liability had been created, defendants could, of course, resort to an appropriate remedy to enforce it, but that would not establish their right to this fund. The money was put in the hands of the trustees, not in trust, to satisfy damages from change of grade, but to pay on certain contingencies. The contingency has happened which required the payment to complainant. The trustees can only pay the money strictly as the contract requires, and the court cannot divert it to other purposes, however meritorious. The trustees are mere depositaries; they hold the money on a special trust, to pay as the agreement stipulates, and, under such a special trust, the rule stated by Lewin is: The duties thus prescribed to him the trustee is bound strictly to pursue, without swerving to the right hand or to the left.” Lew. Trusts 572.

If, however, the fund were placed at the full discretion of the trustees and of the court, to dispose of according to equity, as between these parties, the result would not be different.

It seems to me that the circumstances negative the allegation of defendants that the sum deposited with the trustees represented damages which the defendants would actually suffer by the proposed change of grade. It is not so stated in the contract, and the indications are the other way, for the fifth section provides that if any assessments are made against the defendants for benefits by reason of the proposed change of grade over and above the awards to be made to them for damages, the complainant shall pay such excess. Moreover, the complainant, in its contract with the city, had undertaken to pay all the expenses of the improvement under the sixty-second section (P. L. of 1872 p. 717) of the charter of the city. I am satisfied, from all the circumstances, that the payment was made simply to buy off the defendants’ opposition. They were able to seriously embarrass and delay, if not to actually defeat, complainant’s plan to so depress the avenue at the point in question as to enable it to build its road at the grade it desired and to avoid crossing the avenue at grade. Any considerable delay was a serious matter, resulting, as it must, in loss, in the meantime, of the use of the other parts of the road. The $5,000 here in dispute was retained as a guarantee not only against any further interference by certiorari on the part of the defendants or other persons similarly situate who might be influenced by the defendants, but also against the interference of the board of chosen freeholders of Hudson county, the danger of which, I am satisfied, was present in the minds of the parties when the contract was executed.

The avenue was little more than a paper street; the amount of travel'upon it was but trifling; it had never been graded or curbed, and no buildings had been erected upon it in that neighborhood. Under these circumstances it is not surprising that the commissioners appointed under the proceedings of the board of chosen freeholders awarded defendants nominal damages. Moreover, the supposed injury to the defendants’ property was considerably less under the grade adopted by the board of freeholders than under that adopted by the city, and the defendants had the benefit of having a sewer constructed which would drain most of their land, without being subjected to assessments for the cost of it.

The act of April 7th, 1888 (P. L. of 1888 p. 397), under which the freeholders proceeded, provides, in its sixth, seventh and tenth sections, for the ascertainment and payment of all damages caused by reason of changes of grade such as were here made. The language of the tenth section is :

“Incase any grade shall he changed, compensation shall be made to the person injured, if any there shall be, by such altered grade, such injury to be ascertained in the same manner hereinbefore [sections 6 and 7] provided in the case of land taken.”

With this provision in full view, complainant stipulated in its contract of March, 1892, with the freeholders to pay all damages which might be awarded to be paid by the county to any persons injured by the change of grade therein provided for.

The evidence shows that complainant feared that substantial damages might be awarded to defendants under this proceeding: also that it was liable to be disturbed in its work of constructing the sewer it had agreed to build in Fifty-ninth street, outside the jurisdiction of the county, and which was necessary in order to drain the boulevard at the low point immediately under the proposed bridge. The land on each side of that part of Fifty-ninth street under which the sewer was to be laid belonged to defendants, and counsel for complainant feared that it had no right as against defendants to construct that sewer after the ordinances in question, which sanctioned that construction, had been set aside. To provide against these two matters, viz., the possible award in favor of defendants, and their interference with the construction of the sewer, counsel for complainant, shortly after the execution of its contract with the county, approached defendants for a new contract with them, and submitted a draft of one which its' counsel thought it would enter into. This proposition was declined by defendants, but the unexecuted and unaccepted draft was set up by defendants in their answer and relied upon at the hearing as an admission by complainant of defendants’ right to the fund in question. I do not think it is competent evidence for that or any other purpose, and admitted it subject to the objection of the complainant, and with the remark that I thought it was incompetent. But upon looking at it I find in it no more than an offer to pay the fund here in question to the defendants in full satisfaction of all damages which might be awarded to the defendants by reason of the change of grade provided for in the contract with the freeholders, provided that no further interference, by certiorari or otherwise, should be made with the work of complainant. I can find in this offer no admission of defendants’ equity. It was, as before remarked, declined by defendants, and they afterwards went before the commissioners appointed under the act last cited and claimed damages.

An attempt was made to prove at the hearing that the defendants’ claim for damages was so framed and pressed as only to ask for damages over and above the sum named in the agreement of October 2d, 1891, and that the nominal sums awarded were, in fact, just so much over and above that sum. I think the attempt failed. Notice was given in writing to the commissioners by the defendants, that they did not waive their contract rights by their appearance, but there was no waiver by defendants of their right to damages from the county, and there is nothing on the face of the awards which are in evidence to indicate that any such matter was considered by the commissioners. Nor does it appear that this notice was brought to the attention of complainant, or that the commissioners could have taken into consideration the contract of October 2d, 1891, or that it was ever produced before them. The statute under which the commissioners were appointed prescribed their duties, and conferred.no power to pass upon this contract.

The principal reliance of defendants was upon the last clause in the fourth section of the contract, which provided as follows:

“ If, however, the roadbed, pending any certiorari, shall be actually constructed and rails laid for traffic at a grade accommodated to that established by the ordinance of January 13th, 1891, and not to the prior established grade, in such case the payment of said deposit shall be made to the executors upon such construction.”

The purpose of this clause was probably to provide for the contingency that the apprehended new writ of certiorari might be allowed without a stay or that some fresh statutory authority might be obtained, and that, therefore, the complainant might be able to construct its bridge across the street, and might venture to do so without suffering the delay apprehended from the pendency of a certiorari suit.

It is contended by defendants that the work of complainant was not seriously interfered with by the successful certiorari, and that it was able to prosecute its work with as much speed and dispatch as if the certiorari had not been brought and allowed. That is true as to some parts' of their road, but not as to the one hundred feet in length which included Avenue A, and this is the very point where the complainant apprehended the delay which its contract was made to escape. At that point it could not place its bridge without first excavating the street and reducing the grade so as to permit the travel to pass under, and it could not reduce the grade without municipal authority. It commenced the work of excavation at that point immediately after the dismissal of defendants’ certiorari on October 3d, 1891, but was stopped promptly by an injunction at the suit of the county, and then on October 31st, finally stopped by the allowance of the certiorari prosecuted by the county. At that time only a trifling amount of excavation had been effected, and the work at that point stood in that condition until after the agreement with the freeholders of March 24th, 1892, when it was pushed and progressed so rapidly that the bridge was placed on the piers '-in June. Prior to that, of course, no rails were or could be laid across Avenue A, and none were laid for some distance on either side of it. These facts, of course, exclude the idea of any literal or' substantial fulfillment of the condition of the contract now under consideration.

Defendants say that the spirit of the clause is that if there is no substantial delay caused by the certiorari then the $5,000 should be paid over. But the certiorari suit not only delayed but wholly defeated the change of grade which the contract was made to protect, and the delay caused by the certiorari would have been presumably perpetual but for the compromise with the county and the contract with it of March, 1892, by which the complainant procured a different change causing less excavation in front of the lands of defendants, and came under new obligations varying from those contained in the contract with the defendants.

The completion of the road was not, in fact, accomplished pending the certiorari and in spite of it, hence the case is not brought within the proviso in question. The contract of March, 1892, between the complainant and the county provided for the discontinuance of all suits between the parties, so that the certiorari could not be considered as still pending, even if a writ of error could be considered as reviving the ordinance during the suit after the final judgment of the supreme court, February 18th, 1892.

The result is that the evidence introduced by the defendants to show that complainant prosecuted its work after the certiorari with industry and without interruption, makes against the defendants rather than in their favor, since it shows the good faith of complainant in prosecuting its work as rapidly as possible. The difficulty in the way of defendants is that proceedings under the certiorari did not continue long enough to fulfill the terms of the clause in question; the roadbed was not actually constructed and the rails laid for traffic pending any certiorari.

I think the complainant is entitled to the fund.

The trustees have each answered and must be paid their costs. Such costs were rendered necessary by the refusal of the real defendants to consent to the payment of the fund tcf complainant. The trustees may retain their several costs out of the fund, and the defendants .Currie’s executors and Imbrie must pay complainant its costs, including the amount so retained by the trustees. I will so advise.


source: Caselaw Access Project

author: Emery, V. C.

license: Public Domain

text:
    John H. Kase v. Ernest H. Bennett et ux.
    1. An answer, setting up usury, in a suit on a bond, which fails to allege that' ' the bond was made in pursuance of any contract for the .loan of money, with corrupt intent to evade the statutes against usury, is fatally defective, even though, on the face of the bond, more than legal interest is reserved.
    2. Where a bond provided for the payment by the obligor of all taxes assessed on the loan secured thereby, it maybe shown, to avoid the imputation of usury, that the form of the bond, including such provision, was used by the obligee’s attorney without the obligee’s knowledge or consent, and that such provision was no part of the original agreement.
    3. The act of April 17th, 1876 (Rev. p. 1174 § IBS), providing that the owners of lands within certain counties and cities may agree not to apply for any deduction, by reason of any mortgage, from the taxable valuation of such lands embraced in the mortgage, and that upon claiming a deduction in violation of the agreement the mortgage shall immediately become due, does not conflict with Const, art. 4 ? 7 ¶ IS, declaring that property shall be assessed for taxes under general laws and by uniform rules, because Rev. p. 1163 ? 109 et seq., providing that debts secured by mortgage shall not be assessed for taxation unless the owner of the land applies for a deduction, is a general law, and said section 153 merely authorized the insertion in a mortgage of a particular kind of contract in certain counties, and as the legal rate of interest is not required to be uniform, does not change the law regulating the assessments for taxation.
    4. An answer which, after setting out the conditions of a bond in a suit on a bond and mortgage, alleges that said bond and mortgage are usurious, is not sufficient to sustain the defence of usury, in so far as the provisions of the mortgage differ from those of the bond.
    On bill to foreclose. On final hearing on bill, answer, replication and proofs.

      Mr. Frederic Adams, for the complainant.

      Mr. Robert H. McCarter, for the defendants.
   Emery, V. C.

The bill in this case is filed to foreclose a mortgage given by the defendants to the complainant, on lands lying in the township of East Orange, Essex county, and the defence set up at the - hearing is usury.

It is insisted that the usurious nature of the transaction arises out of the terms and conditions of the bond and mortgage, and the provisions therein relating to taxes. The condition of the bond, after the provision for payment of certain sums of money, and interest thereon at the rate of six per cent., adds:

“together with all national, state, county and municipal taxes which may be assessed upon the money now loaned and hereby secured, or upon this obligation, or the indenture of mortgage given to secure the payment of the same and bearing even date herewith.”

The mortgage is conditioned for the payment of the sums of money mentioned in the condition of the bond, with lawful interest at the rate of six per cent., according to the condition of the bond, “ without any deduction or defalcation for taxes, assessments or any other imposition whatever,” and contains a covenant by the mortgagor that he “shall not nor will apply for or claim any deduction by reason of this mortgage from the taxable value of the lands and tenements.”

No evidence other than that of the securities themselves is adduced or relied on by the defendants as bearing on the question of usury, and on the hearing before the late Vice-Chancellor Van Fleet, the defendants objected to the introduction of evidence offered by the complainant for the purpose of showing that the clause in the bond relating to taxes was inserted therein without the complainant’s knowledge or direction, and was not in accordance with the bargain between the parties to the bond and mortgage, and that the loan was, in fact, effected at legal interest only. The objection was based upon the contention that the bond and mortgage themselves were the only and conclusive evidence of the terms of the loan on this hearing, and the evidence was admitted subject to the objection. The evidence of both the complainant and the defendant, taken under this objection, shows that, previous to the execution of the papers, the bargain between them was for a loan of $9,000, at the legal rate of interest, and that there was no reference to the taxes in-the bargain for the loan. The defendant says that the exact words used by the complainant were: “You may consider the money yours at the present time, as soon as you like, at regular interest.”

It further appeared that, on concluding the bargain for the loan, the complainant directed his attorney, Mr. Adams, to make out the bond and mortgage; that he gave no direction to insert this provision as to taxes in the bond, and that his attention was not called to the fact that there was such provision until a year and a half after the execution of the bond and mortgage. Mr. Adams states that the bond and mortgage were drawn pursuant to his directions, as Mr. Ease’s attorney, and that the provision as to taxes in the bond was dictated by him from a printed form of mortgage bond, which has been in very common, though not universal, use in the county of Essex since he came to the bar, and that the mortgage was on the usual blank. Upon this evidence as to the actual bargain between the parties and their intent in making the loan, the complainant, at the hearing, which was continued before me, applied to amend the bill by adding the allegation that this clause relating to the payment of taxes was inserted in the bond by the scrivener without complainant’s knowledge or direction, and was not in accordance with the bargain between the parties, and that the loan was, in fact, effected at legal interest only, and also applied to add a prayer for reformation of the bond by striking out this clause. The application to amend was opposed by the defendant and affidavits were filed on their behalf, in opposition to the motion. Decision upon the application to amend was reserved and argument was heard upon the whole case, including the application to amend.

The preliminary question to be decided is one of pleading, and is whether usury is sufficiently set up in the answer to sustain the defence. It is settled, under our practice, that where an answer attempting to set up usury is radically defective, that defence cannot be presented to the court under it at final hearing.. Crane v. Homœopathic Insurance Co., 12 C. E. Gr. 484. and cases cited (Errors and Appeals, 1875). The defect in, this case was a failure to set out the particulars of the alleged usurious, contract, but the principle of the case reaches to any other substantial defect.'

The state of the pleadings in- the cause in reference to the. question now at issue is as follows :

The -bill alleges the indebtedness of the defendant Ernest H. Bennett to the complainant, in .the sum of $9,000 (not stating,, however, the origin or source of this indebtedness — whether a loan or pre-existing debt), and that, being so indebted, Ernest H. Bennett made, executed and delivered his bond.in the penal sum of $18,000 with the condition above set out, and the bill sets out in full the clause of the bond relating to taxes. It then alleges that the mortgage in question was given by Bennett and wife to secure this bond, with the proviso or, condition above set out, which is also recited in full. No allegation is made of any default by defendants in the agreement in the bond and mortgage in reference to taxes, nor is any relief prayed as based thereon., The answer of the defendants admits the execution of, the bond for the sum and the condition set out in the bill, and also the execution of the mortgage upon the conditions stated in the bill. It then proceeds as follows,:

“And these defendants further answering say, that by the terms and conditions of the said bond for which said mortgage, here sought to be foreclosed, was given to secure as hereinabove set out, it is provided, and the said complainant did.’require .this defendant, Ernest H. Bennett, to obligate and bind himself that he ‘ shall and will truly pay §9,000 lawful money aforesaid, to wit, §500 in one year from date, §500 in two years from date, §500 in three years from date, §500 in four years from date, §7,000 in five years from date, with interest at six per cent.,payable semi-annually on the principal sum remaining unpaid, together with all national, state, county and municipal taxes which may b$ assessed upon the money now loaned and hereby secured to be paid; provided, if the said Bennett shall omit to pay any installment of either principal or interest at the time herein specified for the payment thereof, and said installment shall remain unpaid thirty days, and if said Bennett shall omit to pay the annual tax due in any year, and the same shall remain unpaid and iij arrear for the space of three months after it shall be legally payable, then the principal and interest remaining due at tlie option of the said' John Kase, shall become and be immediately due and payable, anything to the contrary notwithstanding.’
“And these defendants are advised and allege that the said complainant'in and by the said bond and obligation of this defendant, Ernest H. Bennett, did charge and exact and require this defendant, Ernest H. Bennett,' to agree to pay upon the loan or forbearance of one hundred dollars, a higher rate than the value of six dollars, and these defendants insist and claim that the said bond and mortgage given to secure the same are usurious, 'and that in them a higher rate of interest is reserved than was or is allowed by the laws of the State of New Jersey, wherein the said contract was made and executed, and that the said complainant is not entitled to .recover any interest upon said mortgage, and that no interest thereon can therefore be said to have become forfeited or due and unpaid, and'that the said complainant has no right therefore to anticipate the payment of the principal sum so borrowed and agreed to be repaid on said bond and mortgage prior to the time when the same became and is due and payable, and these defendants deny that any part of said sum of §7,000 is now due or payable.upon said bond until five years from the date of said mortgage, and being the second day of February, eighteen hundred and ninety-two.”

It will be observed that the answer fails to set up either that the bond was made upon a contract for the loan of money, or that the contract for the loan of'money was made between the parties with the intent to violate or evade the statute against usury, or that the bond and mortgage in question was given in pursuance of this corrupt intention. At common law, in a plea of usury to a debt on a bond, all three of these elements are considered essential. 1 Wm. Saund. (5th ed.) 295 note 1, 295 b; 3 Chit. Pl. 966, and cases cited in notes; and in addition, the particulars of the usurious contract must be set out. A'specialty cannot be avoided by usury appearing merely on the face of''the condition, but the fact must be pleaded specially and the defendant cannot demur. 1 Chit. Pl. 484.''

As to the defence of usury, the answer in equity must, in substantial matters, be as certain and definite as the plea-at law (Taylor v. Morris, 7 C. E. Gr. 606, 611 &c. (Errors and Appeals, 1872); New Jersey Patent Tanning Co. v. Turner, 1 McCart. 326, 329; New Orleans Gas &c. Co. v. Dudley, 8 Paige 452, 458), and in equity'the rule of pleading as to this (defence,'may be somewhat stricter than at law, for-while at law a general plea of usury without particulars may be bad only on special demurrer, and may be cured by the plaintiff pleading over, our rule in equity is settled that the failure to particularize in the answer will be fatal, even on final hearing. Crane v. Insurance Co., supra.

The answer in this case, which merely sets out the condition of the bond and alleges that it is usurious, seems to be based upon the theory that if, on the face of the bond, the interest reserved is greater than the legal rate, the bond is ipso facto usurious, and a plea or answer need only set up that it is usurious on its face, without further allegations showing that the contract comes within the reach of the statute.

But this is not the rule of pleading either at law or in equity. If it were, then a demurrer to the declaration or bill would be well taken, if any bond, on the face of it, reserved more than legal interest. But the law is settled that as to usury, the terms of the security are not conclusive as to the terms of the loan, and that the- lender may show that although usurious upon its face, .there was no usurious intent, and the contract of loan was not in fact usurious. The bond itself on this issue is only prima facie evidence of the corrupt agreement which is the foundation of usury. Archibald v. Thomas, 3 Cow. 284; Griffin v. New Jersey Oil Co., 3 Stock. 49 ; Varick’s Executors v. Crane, 3 Gr. Ch. 128, 134.

And unless it appear on the face of the bond that it was given to secure a loan or forbearance of money, it would not, as it seems to me, be even prima facie evidence of usury, for, as a bond for the payment of money is valid without consideration if so intended by the parties (Aller v. Aller, 11 Vr. 446), it is manifest, I think, that an agreement thereon to pay more than legal interest on any sum of money is not even prima facie evidence of illegality, unless the bond itself also shows that the agreement for interest was made upon a contract for the loan or forbearance of money.

The replication to a plea of usury at law is sufficient if it simply deny the corrupt intent (Bly. Us. 112; 3 Chit. Pl. 1172; Waterman v. Haskin, 7 Johns. *283), showing that the material issue on the plea of usury must be' the corrupt intent of the parties. This corrupt intent being, then, the real question at issue, if a plea or answer setting up usury is to be good at all, it certainly must allege this corrupt intention as a fact upon which evidence may be taken. The defendants in this case object to any evidence upon the question of intent in making the bond, and it is obvious, I think, that if this evidence as to intention is not admissible under the pleadings, it must be because usury is not properly pleaded. If it were properly pleaded, evidence as to the intention would be admissible under the replication to the answer without any amendment of the bill.

In my opinion the defence of usury in this case cannot be heard upon the answer filed, for the reason that the answer upon this point is radically defective in not setting out that the bond and mortgage in question were made in pursuance of any contract for the loan of money with the corrupt intent to evade the. statute against usury.

In the second place, I am of opinion that, taking the answer to be sufficient, the proofs show that the contract of loan was, in its inception, a legal contract between the parties, and that it was no part of the contract for the loan of the money that the defendant should pay the taxes or that the bond should so provide. Taking the answers to be sufficient, the evidence in relation to the intention of the parties is admissible without any amendment of the bill. The use by complaiuant’s attorney, without complainant’s direction or knowledge, of a form of bond which included such provision, could not, in my judgment, invalidate or defeat the original lawful agreement for the loan, which both the parties intended to have executed. In this respect, I think the case is similar to those where by mistake of the scrivener, or other mistake, a security apparently unlawful has been taken on a lawful contract of loan. Griffin v. New Jersey Oil Co., supra; Gillette v. Ballard, 12 C. E. Gr. 489 (Errors and Appeals, 1875); Archibald v. Thomas, 3 Cow. 284, 289.

The form of bond taken in this case probably originated under the act of March 15th, 1866, a supplement to the charter of Newark (P. L. of 1866 p. 451), and it has been in common use in Essex county since shortly after that time. At the time of passage of this law, the general tax laws in force provided that the debt secured by the bond should be assessed directly , upon the lender. "With the changes in the method of taxation made by, the general law of 1876 (Rev. p. 1168), providing that no mortgage, or debt secured thereby, should be assessed for taxation unless a deduction was claimed, and in view of the supplement to the Mortgage act (Rev. p. 1174), allowing mortgagors of lands in Essex and certain other counties to agree not to apply for deduction, the old form "of bond, as to taxes, has become inapplicable to the tax laws as they now exist, and the retention of the form in common use is probably based upon the idea that, having no practical application to existing laws, the retention of it cannot invalidate the bond. Whether the bond providing for the payment 'of taxes would be invalid if an agreement to pay taxes was one of the terms upon which the loan was actually made and the bond was made in pursuance, of such agreement, I do not decide, but I do hold that where it is expressly proved that this agreement as to taxes was no part of the contract of loan, and that it was inserted without the knowledge of the ■ lender, the defence of usury based merely upon the insertion of .the clause in the bond is not maintained.

So far as the mortgage is concerned, it will be noticed that in the answer the special terms or conditions of the mortgage, to •which objection is made or attention is called, are not at all set out, but the answer, after setting out the terms of the bond, and that, by the bond, the complainant charged and exacted from ¡defendant unlawful interest, then says :

“ and these defendants insist that the said bond and mortgage given to secure the same are usurious, and that on them a higher rate of interest is reserved than was allowed by the law.”

So far as the terms of the mortgage differ' from those of the bond, this bare allegation that the mortgage is usurious, without further specification, is not sufficient to sustain the defence of usury as to the mortgage in so far as relates to any provisions in the mortgage which .differ from those of the bond. Taylor v Morris, 7 C. E. Gr. 606, 612 (Errors and Appeals, 1872).

The special objection to the provisions of the mortgage is that the clause in the mortgage agreeing not to apply for deduction of the debt from the taxable value of the lands renders the mortgage usurious, although it does not, like the bond, contain an express agreement for the payment of the taxes assessed upon the bond or debt. It is admitted that this agreement is made -under the express authority of the supplement to the act con.cerning mortgages, approved April 17th, 1876. Rev. p. 1174. But it is contended that this act is unconstitutional, and therefore does not relieve the mortgage from the .taint of usury which inheres in. it by virtue of the agreement. The constitutional defect charged is that this act of 1876 applies only to five counties of the state (including Essex), and that, in effect, it establishes as to these .counties a special method of taxation, and is therefore invalid as conflicting with the constitutional provi.sion (article 4, section 7, paragraph 12) that “ property shall be assessed for taxes under general laws and by uniform rules.”

. The evidence which was taken in relation to the insertion in the bond of the clause relating to taxes, by mistake, does not apply to this clause of the mortgage, and the case, upon this point, was argued by both counsel upon the validity of the clause as it stood and upon the basis that it was, by the agreement of the parties, to be inserted in the mortgage. For the reasons.above stated, I do not consider the defence of usury in the mortgage sufficiently pleaded, but should I be in.error on :this point, I reach the conclusion, also, that the objections to the validity of the law which is attacked are not well-founded and that the mortgage is not usurious by reasom-of the agreement included in it under the authority of this law. My reasons, briefly stated, are:

First. That so far as relates to the assessment for taxation of debts secured by mortgages on lands, the act of April 17th, 1876 (Rev. p. 1163), a-supplement to the Tax act, provides a general law for such method of assessments applicable to all debts secured by mortgage on any land situated anywhere within the state.

This general law relating to the assessment of debts secured by mortgage provides that the debt so secured shall not be assessed for taxation except upon the condition that the owner of land applies for the deduction. It is within the legislative authority to make the assessment of such debts depend upon such condition, and the condition being universally applicable, the assessment of this class of property is made'under a general law and by a uniform rule, within the meaning of the constitution. In Newark v. Merchants’ Insurance Co., 25 Vr. 138, 143 the constitutionality of this law of 1876 was affirmed, and, on writ of error, the law was construed and applied as constitutional. Newark v. Merchants’ Insurance Co., 26 Vr. 143.

Second. The supplement to the “Act concerning mortgages,” approved April 17th, 1876 (Rev. p. 1174), providing that the owners of lands within certain counties and cities might agree not to apply for any deduction, by reason of any mortgage, from the taxable valuation of such lands embraced in the mortgage, and that upon claiming a deduction in violation of such agreement, the mortgage should become immediately due and payable, together with the tax paid by the mortgagee, did not in any respect change the law regulating the assessment for taxation. Its effect was to authorize, in the counties and cities named, a particular kind of contract to be inserted by owners of lands therein, in their mortgages on such lands given to secure debts for which a deduction might be claimed by the debtor, and to provide that the violation of such contract should be attended with certain consequences upon the contract itself. If the result and practical effect of such special authority as to mortgages, within these cities and counties, might be that, in them, the rate of interest is different from that which applies to other parts of the state, this does not invalidate the law, for, as to the rate of interest, there is no constitutional provision which requires that it shall be uniform throughout the state. Laws providing for special rates of interest for different counties (e. g., act of March 10th, 1875, Rev. p. 530, as to Monmouth), and as to certain classes of corporations (railroads &c., Rev. p. 931 § 20), are undoubtedly within the legislative power. Nor does' the fact that the tax on the mortgage debt, if deducted by the owner of the lands and paid by the mortgagee, is to be added to the amount of the mortgage debt and recovered on foreclosure, bring the mortgage law within the reason of the constitutional inhibition now invoked. ' The main object of this provision was the public one of securing uniformity and generality of rules on assessments for taxation of all property which was selected for taxation.

It did not interfere with a proper legislative control of the designation of the person who should ultimately pay the assessment for taxation so made, and where, as in the law now in question, the only objection to the legislative control authorized is that it has resulted in producing a contract which violates the laws against usury, I think it is apparent that the validity of the law must ultimately depend upon the power of the legislature over the question of usury and the. rate of interest. And, as this is not restricted by the constitution, my opinion is that the law is valid.

The evidence shows, and it is not disputed, that the mortgagor has defaulted in the payments of interest as specified in the bond, and that by reason of the default, the complainant has exercised the option reserved in the bond of requiring the whole principal to be immediately due and payable. There will therefore be a decree for the complainant for the whole amount of the principal money, with interest and costs, and upon the bill as it stands, without amendment.

The application to amend is denied, without costs.


author: Emery, Y. G.

text:
    Carrie Lippincott et al. v. Edward H. Wikoff et al.
    1." Under Sev. p. 878 % 5, making the husband or wife of any party interested in a suit a competent witness, and compelling them to give evidence on behalf of any party to the suit, a husband may subscribe as witness a will under which his wife takes as devisee.

      2. An appointment of the husband of a devisee as executor does not disqualify him to attest the will as subscribing witness, under Bev. p. 1244 § 4, disqualifying as a subscribing witness a devisee, or one beneficially interested under the will.
    3. On the disqualification of one of several executors, on whom, in their official capacity, and not as individuals, is conferred a joint power of sale, those.remaining may execute the power.
    4. The appointment of the wife as executrix does not, ipso facto, ifiake her husband a co-executor, so that his disqualification to act as such will disqualify her to act alone.
    5. Where a husband and wife are appointed joint executors with power of sale of realty, and the husband is disqualified from acting by being a subscribing witness to the will appointing them, the wife may execute the power of sale alone by deed in which her husband joins.
    6. In an action for specific performance of a contract for the purchase of land from the executors, the defence of unmerchantableness of title in that, under the statute, the will was void, and no power 'of sale conferred on ’ the executors, cannot prevail where the statute is so'clear as to leave no doubt of its construction in favor of the validity of the will and of. the power.
    On bill for specific performance.

      Mr. George Berdine, for the complainants.

      Mr. John S. Voorhees, for the defendant Wikoff.
   Emery, Y. G.

This is a bill for the specific performance of a contract for the sale of real estate, and the question to be solved is whether the title of the vendors tendered under the contract is suck a title as the court will compel the purchaser to accept. The bill is filed by the vendors, Frank P. Lippincott, as executor, and Carrie Lippincott, his wife, as executrix of Margaret Runyon, and they have, as such executors, made a contract in writing with the defendant Wikoff for the sale of lands of which the testatrix died seized, acting under a power of sale conferred or supposed to be conferred upon them by the will.

The purchaser raises questions as to the legal execution off the will and also as to the existence in the complainants, as executors, of any power of sale under the will, and insists that, as. to one or both of these questions, such doubt exists that the title is, not such a good aud merchantable title as should be forced upon, him. The questions as to the validity of. the will must be first considered, and they arise as follows:. ■

The complainant Carrie Lippincott, who is one of the two, children .and heirs-at-law of the testatrix, besides being appointed executrix, is one of the devisees and legatees under the will, and. her husband, Frank P. Lippincott, the other executor, is one of the two witnesses to the will. He alone proved the will before the surrogate, and on this probate letters testamentary were issued to him aud his wife. The defendant contends that Frank, P. Lippincott was an incompetent, witness to the execution of the will, and that there not being two competent .witnesses, the, instrument was invalid as conveying any title to the real estate of the testatrix. The objection to his competency as a witness is that he is the husband.of Carrie Lippincott, who is one of the devisees and legatees under the will. At the common law, and in the absence of express statute, he could not be a competent witness to a will in which his wife was so interested, and the question is whether, by section 5 of the “Act concerning evidence,” (Rev. p. 378), this objection is removed.

This section relating to evidence reads:

In any trial or inquiry in any suit, action or proceeding in any court or before any person having, by law or consent of parties, authority to examine witnesses or hear. evidence, the husband or wife of any person interested therein as.a party or otherwise shall be competent and compellable to give evidence the same as other witnesses, on behalf of any party to such suit, action or proceeding” &c.,

with certain exceptions relating to criminal action and proceedings for divorce and confidential communications. This broad and comprehensive statute was passed March 17th, 1870, after the decisions of our courts under previous statutes, refusing to extend the competency of husband and wife beyond the express letter of these statutes (Bird v. Davis, 1 McCart. 467; Handlong v. Barnes, 1 Vr. 69; Cross v. Cross, 2 C. E. Gr. 238), holding. that the act relieving the incompetency of parties did not apply, and Van Houten’s Executors v. Post, 6 C. E. Gr. 355. holding that the act of 1868, providing for competency in a suit against her, did not apply to a suit by her. The present act of 1870 was then passed, and, in its broad and comprehensive form, this section seems' to me clearly to reach a proceeding in the orphans court or before the surrogate for the probate of this will, and to make the husband a competent witness in any proceeding in any court to prove this will, notwithstanding the fact that his wife is interested as a devisee or legatee under the will. So far as this objection goes, my opinion is in favor of the title.

The next question is whether, if the will be a valid will, the executors have a power of sale thereunder. The purchaser’s contention on this point is, first, that by the express provision of section 4 of the Wills act, the appointment as executor is made null and void by his becoming a witness; and, second, that where a married woman is appointed executrix, the husband becomes, ipso facto, an executor with her; and if his appointment as executor is expressly made void by statute, the wife’s appointment as executrix must also fall with that of the husband, and neither of them can be executors of the will or execute the power of sale.

First, as to the effect of the fourth section of the statute relating to wills. Rev. p. 1244. This section provides

that if any beneficial devise, legacy, estate, interest, gift or appointment of or affecting any real or personal estate, other than charges on lands for the payment of debts is given by the will, the devise, legacy, estate, interest, gift or appointment shall be void, so far only as concerns the subscribing witness, but the person to whom the devise or appointment is made shall be admissible as a witness.”

Upon the question whether the appointment as executor comes within the terms of the section which relates to “a beneficial devise, legacy, estate, interest, gift or appointment of or affecting any real or personal estate,” I think that it does not. My reason is that the “appointment” contemplated by this section seems to be an appointment which is expressly made by the will to affect some real or personal estate which the testator devises or bequeaths, or over which he has a power of appointment which he proposes to exercise by will. It must be noted that this section 4 was a part of the Wills act of November 16th, 1795 (Pat. L. p. 189 ; Rev. L. p. 338), by the twelfth section of which it was provided that personal estate might be disposed of by last will in writing, in the same manner as before the passage of the act. Now, at the time of the passage of this act, only wills of real estate, by the statute then in force (act of March 17th, 1713 — 14), were required to be attested by witnesses, and wills of personal estate were valid as at common law, without witnesses. It was not until the act of March 12th, 1851 (Rev. p. 1247í), that witnesses were required to wills of personal as well as of real estate. In view of this subsequent section of the‘act of 1795, and of the state of the law then existing, it seems highly improbable that by the appointment referred to in the fourth section should be intended an appointment as executor who, as such, administered solely on the personal estate.

At common law, an executor, who was not a residuary legatee and had no beneficial interest in the estate, might be a witness to prove the execution of the will and the sanity of the testator, being considered a mere trustee and nominal party, having no real interest in the contest (Sears v. Dillingham, 13 Mass. 358), and that this was the common law is declared in Snedekers v. Allen, 1 Penn. 33. Mr. Justice Pennington says that an executor may be a witness to establish a will, unless he takes an interest under it, and that the practice in this state of allowing a reasonable compensation for services did not alter the case.

These considerations lead me to the conclusion that this appointment as executor was not the beneficial appointment of or affecting any real or personal estate” intended by this statute to be made void. But even admitting that there is a doubt upon this point, and conceding that the appointment of the husband as executor comes within this section and was invalid, the effect of this was to leave the wife the sole executrix. I am satisfied, from an examination of the authorities, that the effect of her appointment as sole legal executrix was not, as defendant’s counsel contend, to make the husband, ipso facto, executor with her of the estate. If this were the result, then the wife’s appointment, it seems to me, would also be invalid, as otherwise, the statute expressly declaring the invalidity of the husband’s appointment, and which, is applicable to all cases, would be circumvented and’nullified as to this case.

As to the precise status of the husband of a woman who is appointed executrix, the authorities show that a married woman may be appointed executrix, but cannot accept the office against the consent of the husband, for the reason that the wife, at common law, can do no act which may prejudice the. husband; without his consent (1 Wms. Ex. 233), and, as the husband of the executrix, the law also gave him the power of disposition over the personal estate and required him to join with her in the bringing of suits. 2 Wms. Ex. 966, 967. But his power and rights throughout were those of a husbaud and not those of an executor in his own right, and on his decease the wife’s power as executrix continued. As to his liabilities as husband, Sir John Romilly, in Smith v. Smith, 21 Beav. 386, 387, says : It is settled that a husband is liable for all the assets received or devastavits committed either by himself or his wife during the coverture, in respect of an estate of which his wife was personal legal representative; ” and Lord Turner, in Soady v. Turnbull, L. R. 1 Ch. App. 493, 498, adopting the language of Sir E. Vaughan Williams, says : “ That the wife having become executrix was her own act; that the legal consequence of that act was to confer authority upon her husband to deal with all the assets of the testator, and that it follows that all his acts under them must- be regarded as done under her authority, and that she is consequently responsible' for them as executrix.” It is evident from these authorities that the wife still continues in law as the sole executrix, and. that the husband’s dealings with the estate are considered not those of an executor in his own right, but as,the acts of the executrix. The expressions to the effect that, by the marriage, the husband becomes, ipso fado, executor in his own right, made in the cases relied on by counsel, were made in cases in which only the questions of the husband’s liability for the acts of himself or his wife were involved. As to this liability there was no doubt, but the question as to whether the liability arose as executor or as husband of an executrix was not involved or considered in either of the cases.

And considering also that the right of the husband of the executrix, as husband, to deal with the assets extended only to the personal estate, I think it is clear that a power to sell real estate, given to a married woman as executrix, cannot be considered as, ipso facto, conferring a power of sale on him as co-executor with her. It may be necessary for him to join in the execution of the deed executing her power, as well as in the agreement of sale, under our statute relating to conveyances by married women (Rev. p. 154 § 9), but, independent of statute, the concurrence of the husband was not necessary for the execution of a power by a married woman. 1 Sug. Pow. 188.

The further objection is made that the power of sale was given jointly to the executors, and that it cannot be exercised by the wife as sole executrix, but must be exercised by both together as executors. The clause directing the sale and appointing the executors, is as follows:

“Third. After the above directions are carried out, I request that my executors whenever they may deem proper to sell my Eeal and Personal property and divide the same between my son George J. Eunyon and my daughter, Carrie Lippincott. I direct that if there remains anything that it shall be given to Lewis Lippincott. It being my desire however, that the Executors shall have full power to determine when the Eeal Estate shall be sold.
“Fourth. I hereby appoint Prank P. Lippincott Executor and Carrie Lippincott Executrix of this my last will.”

The power of sale having been given to the executors iú their official capacity, and not by name, as individuals, the invalidity of the subsequent appointment of one of the executors named brings the case within the rule laid down in Weimer v. Fath, 14 Vr. 1 (Supreme Court), approved in Denton v. Clark, 9 Stew. Eq. 534 (Errors and Appeals, 1883). Those eases decided that on the removal of one of two or more joint executors, the power can be executed by the remaining executor. It is true that in both these cases the provisions of the Orphans Court act, section 129, relate to the powers of the successor of an executor who has been removed; but the law, independent of these statutes, was collated and examined at length by Chief-Justice Beasley, in Weimer v. Fath, supra, and the principle deduced from all of the authorities, that where the power is given to executors in their official capacity, and not as individuals, by name, it may be executed by the remaining executors in case of the death, ¡removal or refusal to act of the other.

If, therefore, the husband’s appointment as executor be void under the fourth section of the statute of wills, the effect of this, I conclude, would be to leave the wife the sole executrix, who could execute the power by a deed in which her husband joined, as required by our statute of conveyances. And, if the husband’s appointment be not void under the act, then both husband and wife together may execute the power. There can be no objection, I think, to the execution of the deed by both husband and wife, for this purpose, and upon this question, also, my opinion is in favor of the title.

The important question remains whether, notwithstanding my opinion is in favor of the title, on both the points, there has been such doubt raised as will make it inequitable to require the purchaser to take the title. The general rule relating to the subject is expressed in the terms that the title which a court of equity will compel a purchaser to take must be a merchantable title. Doubts as to a title evidently may arise under different circumstances and involve different classes of questions. The doubt may arise by reason of the existence or non-existence of facts involved in the title, or may involve, as here, a question of general law, or the construction of a statute or of the terms of a will or other instrument, and I think an examination of the decisions in our own courts and elsewhere will show that there is no invariable rule which can be applied to all classes of cases. In cases where the doubt in relation to title is one of fact, which the court is called on to consider, the general rule has been declared to be that the court will never compel a purchaser to take a title where the point on which it depends is too doubtful to be settled without litigation, or where the purchase would expose him to the hazard of such proceedings. Dobbs v. Norcross, 9 C. E. Gr. 327 (Chancellor Runyon, 1874)‘, Tillottson v. Gesner, 6 Stew. Eq. 313, 327 (Errors and Appeals, 1880), and Cornell v. Andrews, 8 Stew. Eq. 7 (Chancellor Runyon, 1882), were cases in which the validity of the title depended on whether certain facts existed, and the court held that there was sufficient doubt to put the purchaser in hazard of litigation and he would not be compelled to take the title. On the other hand, where the doubt raised involves a question of general law, as to which the courts of equity often or specially have direct jurisdiction— e. g., the power of executors or trustees to sell — our courts of equity, both below and on appeal, have in some cases adopted the practice of settling in the suit for specific performance the question of the power and of directing the title to be taken if the decision be in favor of the power. In Clark v. Denton, 9 Stew. Eq. 419 (affirmed on appeal, 9 Stew. Eq. 584), the question of the existence of the power and of the validity of its execution were both involved, and were decided, and specific performance was decreed without discussion of the question as to whether any doubt existed sufficient to prevent this relief. In Cruikshank v. Parker, 6 Dick. Ch. Rep. 21 (1893), on a bill for specific performance which involved the question of the power of a trustee to sell, Chancellor McGill decided against the validity of the power, and, on this question of doubt as to the title, said that the objection was a serious one, which rose above mere speculation, theory and possibility, and hence fairly stood in the way of free alienation of the land in question, and the title, therefore, should not be forced on the defendant, especially in the absence of parties to be bound by the decree. On appeal, however, the court of errors and appeals took a different view as to the existence of the power in the trustee, declaring that the power to sell was clear, and compelling the purchaser to take the title. Cruikshank v. Parker, 7 Dick. Ch. Rep. 310 (1894). Nor did the court of appeals discuss at all the question as to imposing a doubtful title on the purchaser. Where, therefore, a question of the power of executors or trustees to sell under a will is involved, the cases as decided by the court of errors and appeals establish the rule that, where the power to sell seems clear, the 'Court should decide the question of power and should direct the title to be taken over this objection. A distinction in reference to this class of cases may arise from the fact that the construction of wills, in reference to the powers of executors or trustees, is a settled branch of equity jurisdiction, and although such construction is usually made on bill filed for that special purpose, bringing all parties interested before the court, yet the question of the power may often be as well and-thoroughly examined and settled in a suit involving directly, as here, the interests in favor of and against the exercise of the power. In Chambers v. Tulane, 1 Stock. 146 (1852), the opinion of Chancellor Williamson was against the existence of the power and specific performance was denied.

My opinion as to the validity of the power of sale under the will being clear, for the reasons above stated, I should, on the authority of the above cases, and so far as this objection is concerned, feel justified in requiring the purchaser to take the title.

When the doubt as to the title is claimed to arise by reason of the questions raised as to the validity of the will itself, as an instrument divesting the title of heirs, the question must be solved without the aid of direct authority of our own courts. The two heirs-at-law are both made parties to this suit, one of them being the complainant Carrie Lippineott and the other her brother., George J. Runyon, but the latter has been brought in as an absent defendant; and, inasmuch as the right to compel him to settle his title as heir-at-law in this suit for the specific performance of a contract to which he was not a party is very doubtful, I should feel obliged to consider the question as if he were not made a party to the suit. The question as to the kind of doubt upon a question of general law which will make a title unmerchantable has been, of late, much discussed in English cases, and a statement of these will throw much light upon the question. The leading case is that of Pyrke v. Waddingham, 10 Hare 1 (44 Eng. Ch.), in which Vice-Chancellor Turner, stating that it has been for a long time the settled rule of the courts of equity not to compel a purchaser to accept a doubtful title, examined the question as to what titles are to be considered as doubtful within the rule, and whether the rule applies only in cases in which the court itself entertains doubts upon the title, or whether it extended to cases in which, although the court itself may entertain an opinion in favor of the title, it is satisfied that ■that opinion may fairly and reasonably be questioned by other competent persons. He concludes that the cases show that it is the duty of the court not to have regard to its own opinion only, but to take into account what the opinion of other competent persons may be. As to the scale by which the courts are to .be guided in measuring their doubts under this rule, he says, also (at p. 8), that the cases throw some light upon this question that if the doubts were upon a question connected with the general law, the court is to judge whether the general law upon the point is or is not settled, enforcing specific performance in the one case and refusing to enforce it in the other. If the ■doubts arise upon the construction of particular instruments, and the court is itself doubtful upon the points, specific performance must be refused, and even though the court may lean in favor of the title, its duty is either to consider whether it would •trust its own money upon the title or, at least, to weigh whether the doubt is so reasonable and fair that the property would be left in the purchaser’s hands not marketable. If the doubts which arise may be affected by extrinsic circumstances, which •neither the purchaser nor the court has the means of satisfactorily investigating, specific performance is to be refused. He also says (at p. 10 &c.) that,- although the court’s opinion is in favor of the title, a purchaser is not necessarily to be- compelled to accept it, and that he thought each case must depend on the nature of the objection and the weight which the court •might be disposed to attach to it; that it must be borne in mind that the exercise of the -jurisdiction by specific performance is •discretionary, and that the court has no means of binding the question as against adverse claimants, or of indemnifying the purchaser, if its own opinion should ultimately turn out not to be well founded. Applying these principles to the case in hand, in which the question of title depended upon the construction of a particular will, and not upon any general principle of law, he declared his own opinion to be in favor of the title, but, being unable to base that opinion upon any general rule of law, or upon ■any reasoning so conclusive as to fully satisfy his mind that other competent persons might, not entertain a different opinion, or that the purchaser, if compelled to take the title, might not be exposed, to substantial and not merely idle litigation, or even that he would be free from all possible hazard, he declined to order a specific performance. So far' as relates to doubtful questions of general law, the doctrine of this case has, I think, been undoubtedly qualified by the later case of Alexander v. Mills, L. R. 6 Ch. App. 124 (1870), in which Sir William James, lord-.justice, delivering the opinion of the court of appeal upon a disputed title involving a question of general law, said (at p. .131), “that as a general and almost universal rule the court is bound as much between vendor and purchaser, as in every other case, to ascertain and determine as it best may, what the law is, and- to take that to be the law which it has so ascertained and determined, and-that, the exceptions to this rule will probably be found to consist, not in pure questions of legal principle, but in cases where the difficulty and the doubt arise in ascertaining the true construction and legal operation of some ill-expressed and inartificial instrument.” The court considered the question 'of law involved, and reached a conclusion different from that of the master of the rolls, and directed the title to be taken.

As to this decision in Alexander v. Mills, and its effect upon the previous decision of Pyrke v. Waddingham, Lord Selbourne, in Palmer v. Locke, 18 Ch. Div. 381 (Court of Appeals, 1881), says .(at p. 388), that there are many cases in which it is necessary and proper to say positively and finally (in a suit for specific performance) that the law is one way or the other on the point argued; but when you have a question raised upon the construction of a general statute, if there is any reasonable ground for saying that that question is not determined by previous authorities, or that the previous authorities are conflicting, then, in the terms of Lord-Justice Turner’s judgment in Pyrke v. Waddingham, that cannot be treated as a question of general law'so settled as to exclude that kind of question which'the court has paid regard to when it sees there is a doubtful question of title which cannot be forced upon a purchaser. He further said it is not at all necessary to inquire whether the case of Alexander v. Mills did or did not overrule some previous decisions which might have intended to draw a line as to what was or was not a title to be forced upon a purchaser more strictly than it was drawn in Alexander v. Mills, but that he did not understand that the general doctrine, as laid down by a long series of decisions of judges of the greatest eminence, and determined before Pyrke v. Waddingham, and which was explained in that case, has been displaced by subsequent authorities. When the court finds, he added, according to the principles explained in that case, that there is a question open to doubts of the kind there mentioned, and that a title ought not to be forced upon the purchaser, it is neither necessary nor generally convenient or desirable that the court, whatever may be the opinion it has formed upon the question and on the materials presented on a suit for specific performance, should think that that should conclude all questions as against persons who are not before it. The case then in hand involved at least one doubtful question of fact, viz., whether a certain notice had been received, and the court of appeal held that the doubt was so serious that they would not compel the purchaser to take title.

In Re Thackeray and Young (contract), the latest case I have found (40 Ch. Div. 34 (1888), the question was whether a certain transaction between landowner and a. railway company was an absolute sale and disposition of the lands, within the meaning of the Lands Clauses Consolidation act. After stating this to be the question, Mr. Justice Chitty says: “ I take it as a general principle of law, with regard to specific performance, that the court does decide in general matters of law-about which there cannot be fairly said to be any judicial doubt. In regard to this question, which of late has undergone a good deal of consideration as to titles which the court will or will not force upon a purchaser, it has been laid down by Lord-Justice James, in Alexander v. Mills, that with regard to general matters of law, including the construction of a general act of parliament, the right course for the court is to decide the question. But, then, I think it must appear, to the judge who decides it, that there were no decisions or dicta of weight which show that another judge or another court having the question before it might come to a different conclusion. The court, I take it, must feel such confidence in its own opinion as to be satisfied that another court would not adopt another conclusion.” In this case, Mr. Justice Chitty held that the question of the construction of the statute was, by reason of the dicta of Sir George Jessel and Sir James Hanner, in the decision of previous cases, left in such a state of doubt, that, although it was the question of the construction of a general act of parliament, he could not say with the certainty which was required of him to say that no other court would come to a different conclusion.

These decisions of Lord Selbourne and Mr. Justice Chitty qualify, to some extent, the broad doctrine laid down in Alexander v. Mills, that, with regard to general principles of law, including the construction of a general statute, it is the duty of the court to decide it on a suit for specific performanre, and the doctrine as thus qualified is that specific performance'should not be decreed if there is reasonable ground for saying that the question is not settled by previous authorities, or if there, are decisions or dicta of weight which show that another judge or another court having the question before it might come to a different conclusion. This rule is, as it seems to me, sufficiently favorable for the protection of the purchaser, and it is equitable to apply it in the present ease. In this case the question of the validity of the will must be fairly considered as so settled a question as to justify the court in directing the title to be taken. There is no decision, it is true, settling the construction of the .statute, but' its language is so clear that I do not consider that a doubt has been thrown upon its application. It is a question purely of statutory construction,- and the decisions of other courts, cited by counsel in his brief, are based either on the common-law status of husband and wife or on statutes which expressly exclude the husband from attesting a will in which his wife is interested. The doubt as to the title must, as was said by Vice-Chancellor Dodd, in Vreeland v. Blauvelt, 8 C. E. Gr. 483, be put upon some debatable grounds. They do not seem to exist in reference to the construction of this statute; and I therefore advise that specific performance be decreed.


author: Reed, V. C..

text:
    James A. Bannister v. Edward A. Miller et al.
    1. A loan of money to a person upon his own credit, for the purpose of enabling him to contribute his share of the capital in a firm, is not a partnership debt.
    2. An insolvent firm cannot devote any of its assets to the payment of individual debts of its members.
    3. An insolvent firm made a chattel mortgage on all its property to a trustee, to sell the same and pay, first, three creditors of the individual members of the firm. On bill filed by firm creditors — Held, that this provision was void.
    4. The discharge of an arrested debtor under the provisions of the Insolvent Debtors’ act only confers immunity from any arrest on account of any debt provable under these proceedings; it does not bar a subsequent suit for such a debt.
    5. A defendant who sets up certain facts in his answer and states that the consequence of such facts is to exhibit a particular defence, cannot, on final hearing, use the same facts to support a different ground of defence, to which the attention of the complainant is not called.
    The bill is filed by four judgment creditors, on behalf of themselves and such other creditors as may choose to come in, against a partnership, for the purpose of setting aside, in part, a mortgage executed by the partnership.
    The facts are these: Edward A. Miller and Theodore S. Miller entered into a copartnership on March 7th, 1891, the partnership to continue for four years from May 1st, 1891.
    By the terms of the articles of copartnership, each partner agreed to contribute as capital the sum of $4,000.
    Mr. E. A. Miller, of the $4,000 which he invested, borrowed $2,800 from Catharine Barkhorn and $1,200 from Amelia B. Miller.
    Mr. T. S. Miller borrowed his $4,000 from John Rilly.
    The sum of $8,000 was deposited to the credit of the firm on April 1st, 1891.

      On February 26th, 1892, Edward A. Miller and Theodore S. Miller executed a chattel mortgage covering all the tangible, and practically all the available, property belonging to the firm. The mortgage was made to John C. Miller, as trustee, and by it the trustee was authorized to sell the property assigned to him, and after paying all expenses incurred in selling the property, to pay a list of creditors in an order mentioned. He was to pay John Rilly the sum of $4,000, Catharine Barkhorn $2,800 and Amelia B. Miller $1,200. These three were to be first paid pro rata. After paying these three creditors he was to pay, consecutively, a list of creditors, the last name upon which was that of one of the complainants, Lounsbury, Matthews & Company. This was the only one of • the complainants named in the list.
    The trustee proceeded to sell and realized nearly $14,000. He paid Rilly, Barkhorn and Amelia B. Miller in full. He also paid all of the creditors named in the list, in full, except Lounsbury, Matthews & Company, the sum still remaining in the hands of the trustee being insufficient to pay to the last creditor more than the sum of $1,385.71, which payment was received by said creditor.
    Subsequently, four creditors of the firm commenced actions, and obtained judgments against the firm. Samuel T. Laird obtained a judgment of $3,900.95, George E. Lounsbury and others a judgment of $4,088.92, James A. Bannister a judgment of $4,345.06, and the James A. Bannister Company a judgment for $348.44. Executions were issued upon those judgments and returned unsatisfied on February 7th, 1893.
    The bill charges that the first three creditors paid by the trustee were not firm creditors, but were creditors of the individual members of the firm; that there being, insufficient from assets to pay the firm creditors, a diversion of $8,000 from the receipts of the sale of the firm property, to the payment of individual creditors, was a fraud upon the former class, and inasmuch "as the property of the firm cannot be traced in specie, the complainants ask "that these individual creditors, who received these amounts of money, shall be decreed to repay them.

      Mr. Robert H. McCarter, for the complainant.

      Mr. Philemon Woodruff and Mr. Frederic W. Stevens, for the defendants.
   Reed, V. C..

It is entirely clear that the first three named in the schedule •of creditors, to whom money realized from the sale of the firm property- was paid, were not creditors of the partnership, Exit were creditors of the members of the firm individually. The amounts which make up those three debts were borrowed by the respective partners upon their own credit, and, although the money so borrowed constituted the capital with which the firm commenced its business, and was presumably used in the business, yet the obligation for its repayment rested entirely upon the individual by whom it was borrowed.

The doctrine seems to be entirely established, to use the language of Mr. Justice Lindley, “that if several persons agree to become partners, and to contribute each a certain quantity of money or goods for the joint benefit of all, each one is solely responsible to those who may have supplied him with the money or goods agreed to be contributed by him.” Lind. Part. 202.

The English cases in support of this rule are to be found in the notes to-the text just mentioned, and the cases in the American courts holding the same doctrine are collected by Mr. Bates in his work on Partnerships § 446.

An analysis of those cases would be profitless. They all rest upon the obvious absence of any agency, express or implied, in the person borrowing to bind other persons for what is understood tp be a personal transaction, entirely apart from the business of the firm. Therefore, I find that the debts in question were the debts of the two Millers respectively.

I also regard it as entirely clear that, at the time of the execution of the chattel mortgage, the firm was insolvent. It had arrived at a stage in its business when it was confronted with an array of debts which rendered its continuance practicálly impossible. The sale of all its property was made openly and apparently under favorable conditions. It did not realize enough to pay the partnership debts, and, after deducting the $8,000 which was paid to the first three on the list of creditors, the deficit between the assets remaining and the partnership debts is marked. The question remains whether, in this posture of affairs, the firm possessed the ability to apply any.of its assets to the payment of those three debts.

A firm can do as it pleases with its property so long as it retains enough to pay its creditors. When, however, it is so placed that any devotion of its assets to a purpose other than its own business, or the liquidation of its own debts, wrongs its own creditors, its power to so divert ceases. And the payment of the individual debts, of its members is, under these conditions, a diversion of its assets.

In dealing with the estate of an insolvent firm, or an insolvent member of the firm, the courts of equity in England draw a sharp line between the two classes of creditors. The joint property is devoted to the payment of the joint debts, and separate debts are paid out of the separate estate of each partner. Lind. Part. 693.

This principle was recognized and applied in this state by Chancellor Green in Matlock v. James, 2 Beas. 126, and in the court of appeals by Mr. Justice Depue in Clements v. Jessup, 9 Stew. Eq. 569, and by Mr. Justice Dixon in Arnold v. Hagerman, 18 Stew. Eq. 186.

It is indeed insisted by counsel for the defendants that the equity of partnership creditors in the partnership assets is a derivative one, resting upon their right to be subrogated to the right of each partner to have the joint assets applied to the liquidation of the joint liabilities; and it is argued that as the partners have parted with their rights by the execution of this chattel mortgage, therefore the equity of the firm creditors is extinct. But, as is pointed out in the last-mentioned case, the right of firm creditors to follow firm assets may subsist by force of the statute of frauds, after the ownership has passed from the firm to others. As an instance where this rule came into operation, the case of Matlock v. James, supra, was mentioned, in which case two members of a firm consisting of four conveyed their individual half interest in land held for partnership purposes to an outsider, to pay their individual debts. The opinion also cites with approval the language of Mr. Justice Depue in Clements v. Jessup, supra. “Partnership creditors, in equity, have an inherent priority of claim upon partnership property over individual creditors, and a transfer of partnership- property by one partner, with the consent of the other partners, or by all the partners, to pay individual debts, is fraudulent and void as to firm creditors, unless the firm was then solvent and had sufficient ■property remaining to pay the partnership debts.”

I conclude, therefore, that those provisions contained in the chattel mortgage which provided for the diversion from the firm assets of a sum sufficient to pay the three individual debts already mentioned, was a fraud upon the partnership creditors. The firm creditors have a footing in a court of equity to follow and reclaim such assets, so far as it is essential to the liquidation of their claims. Vandoren v. Stickle, 9 C. E. Gr. 331; affirmed, 12 C. E. Gr. 498.

Aside from the general absence of equity, the defendant interposed other objections to the right of the complainant to a decree. One of these appertains to one of the complainants alone. It is objected that Lounsbury, Matthews & Company, who received a part payment upon their claim from the money arising from the sale under the chattel mortgage, by the reception of such money elected to stand upon thé validity of the mortgage, and so estopped themselves from joining in this bill to avoid any part of that instrument. Without respect to the other answers made to this contention, it is sufficient to say that it nowhere appears that at the time he accepted this money he was aware of the fact that any of those to whom the money was to be paid were not firm creditors.

In respect to the retention of the money so received, it is sufficient to say that the recipient tendered himself willing to come in with the other creditors, waiving any preference by reason of the sum already received. So that in the distribution of the money received in this suit he will altogether receive no more than any other creditor. ,

The defendants' claim immunity from liability upon another ground. This matter of defence rests upon the following facts appearing in the case. It appears that the actions brought by the complainants, in which the judgments already mentioned were recovered, were commenced by capias ad respondendum, and after the return of execution capias ad satisfaciendum were issued, upon which the sheriff took the bodies of the two Millers into custody. They were discharged from arrest, pursuant to ■the provisions of the Insolvent Debtors’ act, having made and delivered an inventory of their property and given bond.

The defendants insist that the complainants, having elected to procéed against the bodies of the Millers, are barred from proceeding in any other- method, and that as to the complainants, their debts must be regarded as satisfied.

There is no substance in this contention. The fact of a discharge under the Insolvent act, by the express terms of section 28, is. to relieve the debtor’s person from liability to imprisonment for any provable debts against him at the time of the assignment made by him under the act, subject to this restriction only — the creditor is free to pursue his remedy against the discharged debtor or his property for any debt

The counsel for the defendant, at the close of his brief, suggests another point, which, it is claimed, shuts out the present complainant from pursuing this property. It is that the assignment under the Insolvent act carried to the assignee the right to recover all the property of the Millers then existing, and so included the claim which is now the subject-matter of this suit. This defence should have been interposed by a plea, but it is neither well pleaded by plea nor in the answer. In the answer, the fact of an assignment is not stated at all, but is only to be inferred from the fact of the discharge, which is stated. But if it is a legitimate inference, from the facts stated, that an assignment was made, yet an inspection of the answer will show that the statement of the arrest and discharge is made as the ground for a specific defence, viz., that the debt was, by such arrest, discharged.

Now, that a defendant is only bound to state facts and not conclusions of law, is a fundamental rule of pleading; but an equally well-established rule is, that if the pleader sets up facts to establish a particular line of defence which he represents to be the consequence of these facts, he will not be permitted to use them for the purpose of establishing a different defence from that to which, by his answer, he has drawn the complainant’s attention. 1 Dan. Pl. 713.

I will advise a decree that the individual creditors of the members of the firm be declared to hold the property they had received from the trustee, under the chattel mortgage, in trust for the creditors of the firm; that a receiver be appointed to receive and disburse such money, and that the said Catharine Barkhorn, Amelia B. Miller and John Rilly be decreed to pay to the receiver the moneys that they have received from the trustee under the chattel mortgage.