text:
    Robert R. Freeman and others v. Peter Z. Elmendorf and others.
    In Feb. 1841, E. recovered a judgment against M. F. F., and issued a fi. fa., which was levied on a ferm and a house and lots as the property of M. F. F. B. R. F., a son of M. F. F., for himself, and as guardian oí his infant children, filed a bill, stating, that the said M. F. F., in July, 1888, “by deed of bargain and sale sold and conveyed” to the said R. B. F., his heirs Sea., the said farm; and that, in Dec. 1887, the said M. F. F., “ by a deed of bargain and sale sold and conveyed ” to the said infants, their heirs &e., the said house and lots ; both which deeds the bill states were recorded May 25,1846; and stating facts tending to support the validity of the deeds; and praying an injunction restraining E. from proceeding on his execution. The injunction was allowed. An answer was put in denying the lona fideo of the deeds, and stating facts lending to show the want thereof, and denying their validity as against the judgment for that reason; and, also, denying their validity as against the judgment by reason of their not having been recorded within fifteen days.
    The Chancellor said that both questions were properly triable at law, on ejectment by the purchaser under the execution; and that the judgment creditor should be permitted to proceed to a sale under his execution. The injunction was dissolved.
    Tlio bill, filed Feb. 1, 184.9, by Robert R. Freeman, for himself, and by Sarah B. Freeman and Matthew F. Freeman, infants, by the said Robert R. Freeman their father and next friend, states, that on the 23d Feb. 1841, Peter Z. Elmendorf recovered a judgment in the Supreme Court against Jas. S. Nevius, G. D. Wall and Matthew F. Freeman, the father of the said Robert R. Freeman, for $4,566 damages and $37 59‘costs; by virtue of which an execution in the nature of a testatum fi. fa. de bonis et terris issued to the Sheriff of Middlesex. That the Sheriff levied on a large amount of real and some personal estate of M. F. Freeman, a defendant in said judgment ; and that some time after, hut when precisely the complainant does not know, the Sheriff also levied on a farm belonging to the complainant It. It. Freeman, containing 147 71-100 acres, and also on a house and lots of land belonging to the said Sarah and Matthew,'complainants, infant children of the complainant R. ft. Freeman.
    That the said Matthew, the father of the complainants, on the 27th of July, 1833, by deed of bargain and sale sold and conveyed to the complainant R. R. F., his heirs and assigns, all the farm and premises before mentioned, and in said deed particularly described as follows, (giving the description;) as by the said deed, duly acknowledged, and now in the possession of the said R. R. F. will appear ; which deed was duly recorded onthe 9th of May, 1846.
    That the said Matthew F. Freeman, the grandfather of the said infants, on the 23d of Dec. 1837, by a deed of bargain and sale sold and conveyed to the said infants,- their heirs and assigns, all the house, lots of land and premises before mentioned and in said deed described as follows, (giving the description ;) as by the said deed, duly acknowledged, and now in the possession of complainants will appear; .which deed was recorded on the 25th May, 1846.
    The complainant Robert F. Freeman states, that although the consideration named in the said deed to him from his father is stated to be $5 and natural affection, yet that his father had in his hands of the money,of said complainant, at the time,, about f1500, which this complainant agreed should be considered as satisfied and paid by his said father by and upon the execution of said deed ; and that the balance of consideration for the said deed, and the whole consideration of the said deed made to the said infants, was the natural love and affection which the grantor bore to the complainant and the said infants his grandchildren.
    That at the time of the execution and delivery of the said two several deeds the said Matthew, the grantor, was, as the complainant is informed and believes and therefore charges, in independent circumstances, wholly unincumbered by debts, and the said property so conveyed was free and clear of all judgments, mortgages and liens.

      That tho complainant R. R. F., immediately after the said farm was conveyed to him as aforesaid, went into tho possession thereof and resided thereon, using and enjoying the same as his own, until April 1,1839, when, having previously leased the same to one Daniel S. Voorhees, the said Voorhees went into possession thereof as the tenant of this complainant; and that Voorhees continued to occupy the same as such tenant of this complainant, paying him the annual rent thereof, until last April, (April, 1848,) when this complainant rented the house to Melancthon F. Carman, and has since farmed the land himself; and the said sale by the said Matthew to this complainant, and the possession, occupancy and enjoyment of the said property, either by himself or his said tenants, has been known and notorious in the whole neighborhood from the time of the said conveyance to tho present time.
    That at the time the said Matthew conveyed the said house and lots to the said infants he resided on the same, and continued to reside there, by this complainant’s permission, until about two years ago, when this complainant took possession of it, and has ever since resided on it, his said children Sarah and Matthew living with him; and that the fact of the conveyance was generally known at the time, or soon after, in the neighborhood, and was often mentioned by both the grantor and tho complainant in public and in private.
    That, having very little knowledge of the law, he was not aware that it was necessary to have his said deed and the deed to his said children recorded, for any purpose except that of providing for the case of the loss of the title papers ; and that in consequence of that fact he failed to have the said deeds recorded sooner; and that he was first informed of its importance when, about May 1, 1846, he applied to one Melancthon Mundy to loan him a sum of money on said farm.
    That he is informed and believes that Elmendorf held, at the time he recovered said judgment, a mortgage upon a valuable mill property in Somerville as security for the same debt, given to him by John I. Gaston, who at that time held the title to said property in trust for the said Wall, Nevius and Freeman, for whose use the said money was originally borrowed.

      That he is informed and believes that after the execution of the note on which said judgment was recovered, and which was secured by the said mortgage as aforesaid, the said Freeman sold and conveyed all his interest in the real estate to the improvement of which the said money was applied to one Robert Van Rensselaer, who assumed and undertook to pay the proportion of the said note due from the said Freeman as part consideration for said conveyance. That said Van Rensselaer failed to make such payment, and afterwards died insolvent, without having procured the said Freeman to be released from his liability on said note; and that afterwards the said Elmendorf released the said mill property to the said Gaston, and that without any consideration, and thereby gave up the security which was, as this complainant is informed and believes, intended as a protection of his father and the other parties to the said note, and that without their knowledge or consent.
    That, soon after the entry of the said judgment, Elmendorf caused an execution to be issued to the Sheriff of Somerset, who thereupon levied upon a valuable real estate of the said Matthew F. Freeman in that county; that said Matthew, some time after-wards, sold the same, and thereupon, without any consideration from the purchaser, released the same from the lien of the said execution ; and that a part of the moneys due on said judgment was raised by the Sheriff by a. sale of real estate of the said Nevius in that county, but the precise amount this complainant does not know.
    That the said Sheriff of Middlesex, by virtue of the said testatum fi. fa. placed in his hands as aforesaid, first levied on all the real and personal estate of the said Freeman, and at the time of said levy was, as this complainant is informed and believes and therefore charges, informed by the said Freeman that the said farm and house and lots were not his property, but had been sold and conveyed by him as aforesaid to the complainant and his infant children; and the said Sheriff did not at that time levy on said farm and house and lots ; and this complainant was not aware until about a year ago that any such levy. had been made; and that this complainant has not taken any steps in the matter before, under the hope that said Elmendorf would desist from Ms attempt to hold this complainant’s said property and the said house and lots liable on said judgment, or that the said execution would be satisfied from some other sources.
    That he is informed and believes, and therefore charges, that said Freeman has made several payments on account of said judgment, but the particular amount of said payments he does not know; and that about $2,000 in all have been paid to Elmendorf on account of said judgment.
    That among other property of said Freeman which was levied upon as aforesaid by the said Sheriff (of Middlesex) was a valuable real estate in Woodbridge, part of which has since been sold by said Freeman, for $4,000, as this complainant has been informed and believes, and which was more than sufficient to pay the whole balance on said execution ; and which said property, on or about April 4, 1846, and before the sale thereof as aforesaid, Elmendorf released to the said Freeman from the lien of his said judgment and execution, as this complainant is informed and hopes to be able to prove, and that without any consideration or the payment at the time of any part of the said judgment, and without the knowledge of this complainant.
    That Elmendorf resides in New Brunswick, only about five miles from this complainant’s residence; and from the fact that the sale and conveyance of the said farm to this complainant and the sale and conveyance of the said house and lots to the ssaid infants, by the said Freeman, was generally known by the public in the neighborhood, and that the possession, occupancy and enjoyment of his said farm by this complainant or his tenants as aforesaid was open and notorious, this complainant has reason to believe, and he therefore charges, that the said Elmendorf well knew, at and before the recovery of liis said judgment, and before he executed any of the before mentioned releases, that the said Freeman had sold and conveyed the said farm and the said house and lots, and that tlie same were the property of the complainants as aforesaid, and not of the said Freeman.
    But whether he had or had not such knowledge the complainant insists that, said conveyances having been made Iona fide and for a lawful consideration, long before the recovery of the said judgment, and at a time when the said Freeman was wholly unincumbered with debts and had no creditors to be affected by said conveyances, the said real estate so conveyed to this complainant and said infants are not liable to be sold to satisfy said judgment.
    That the said sheriff of Middlesex has within a few days informed this complainant’s fathe r that he had received a notice of amercement from the attorney of Elmendorf in the said suit, and that he intended to advertise the said real estate of this complainant and the said infants, so levied on as aforesaid, as the property of said Freeman,- for sale under the said execution, and that he intends to sell the same forthwith.
    The bill prays that the sheriff and Elmendorf may be injoined from selling; and that the said property may be wholly released and discharged from the operation of said suit, execution and levy ; and for such other and further relief, &c.
    The injunction was allowed.
    Elmendorf put in his separate answer. He say? he does not know the value of the property levied upon, of his own knowledge, but recollects that said Freeman told him that the property he was in possession of was worth at least $10,000; which was one inducement for this defendant to sign the release hereinafter-mentioned.
    He says that the sheriff levied upon the said farm and the said-house and lots as the property of Freeman (the elder), as the levy shows.
    That he has no knowledge or information in regard to the consideration of the said two deeds, except what is stated in said bill and what appears upon the face of the said deeds. That he doth not admit that the grantor had in his house at the date of said deed to R. R. F., or at any other time, about $1500 or any other sum, which said R. R. Freeman agreed should be considered as satisfied and paid by his father by and upon the execution of said deed; and he leaves complainant to make such proof of the consideration as he shall be advised. But says he does not believe there was any money paid by said R. R. F. to his father,, nor by the said infants or either of them, at the time of the execution of said deeds, respectively.
    That he does not know and does not believe, and therefore does not admit, that Freeman was in independent circumstances, wholly unincumbered with debts, at the time he conveyed said property to R. R. F., and at the time he conveyed to the said infants. That he has heard that about that time said Freeman was indebted, and that he had been associated or in some way connected in business, with some person at the South, or elsewhere, for whom he had incurred liability; and that he was apprehensive of losing money by him. That it may be true that at the time the said deeds were made the property therein described was free of all judgment, mortgages and liens ; but he has no knowledge or information on the subject, except that from an examination of the records, which he subsequently made or caused to be made, he believes there were no judgments or mortgages on said property at the time of the execution of said deeds ; but whether there were any other liens on the property at the time he is ignorant. That he is ignorant whether R. R. F., immediately after said farm was conveyed to him, went into the possession thereof and resided thereon, using and enjoying the same as his own until April 1, 1889 ; or whether he leased said premises to Daniel S. Voorhees ; and whether Voorhees went into possession thereof as his tenant, and whether Voorhees continued to occupy the same as his tenant, and whether Voorhees paid any annual or other rent for the same, or whether the complainant rented the house to Mr. F. Carman, and whether he-has since farmed the land himself, and whether the said sale by M. F. F. to the complainant, and the posssession, occupancy and. enjoyment of the said property either by himself or his said tenant has been known and notorious in the whole neighborhood from the time of said conveyance to the present time.
    He admits that at the time of said conveyance of said house and lots to the said infants the said M. F. F. resided on the same, and continued to reside there ; but whether it was by the permission of the complainant or not he is ignorant. And he is-ignorant whether the said complainant took possession of said house and lots about two years ago, or at any other time, and whether he has ever since resided on it; and whether the children of said R. R. F. reside with him ; and whether the fact of the said conveyance was generally known at the time or soon after, and whether the same was often mentioned by said M. F. F. and the complainant, or either of them, in public or in private.
    That it may be true that the complainant had little knowledge of the law, and was not aware that it was necessary to have said deeds recorded for any purpose except that mentioned in the bill, and that in consequence thereof he failed to have said deeds re corded until the time in the bill mentioned, and that he was first informed of its importance at the time mentioned in the bill; but that this defendant has no knowledge or information in regard to the same, and cannot therefore admit the same. And this defendant is informed and believes that the said deeds were not recorded until the said M. F. F. had become largely indebted in New York, and he became embarrassed in his affairs, and his creditors had taken strong measures against him and he became apprehensive that measures would be adopted to obtain his property in New Jersey.
    This defendant'insists that the said deeds not having been re.corded until long after his judgment against said M. F. F., and this defendant having, at the time of the entry of his judgment, no knowledge, information or belief of the said deeds of conveyance, or either of them, the said deeds are wholly void as against him or his judgment; and that, whether the omission to record said deeds proceeded from ignorance or negligence, it cannot in any way affect the rights of this defendant under his said judgment.
    He admits that when he recovered his said judgment he held a mortgage upon a valuable mill property in Somerville as secu- . rity for the same debt, given to him by J. I. Gaston and his wife, which, as he is informed and believes, the said Gaston held in trust for himself and said Wall, Nevius and M. F. F.; and which mortgage bears date July 26, 1838, and contained in it the following condition, (giving the condition, which is, that if Nevius, Wall and M. F.‘F. shall pay to Elmendorf $4,0000, •according to the tenor and condition of a note or obligation given by them to Elmendorf, dated Sept. 1, 1837, which had become due May 1, 1838, drawing interest from the date thereof, the said mortgage and note should be void ;) but which mortgage was unaccompanied by any bond from said Gaston to this defendant, and was never recorded, as by the the said mortgage, now in this defendant’s possession &c.
    He further says, that at the time when Gaston executed the said mortgage to him Gaston stipulated with him that he should not place it on record until Gaston should apprize him it was necessary to put it on record for his security. And that-he, relying on the promise of Gaston, and also having confidence in the ability of the makers of the said note, did not cause it to he recorded.
    He says he docs not know for what use the money mentioned in said note was borrowed ; but be believes it was borrowed to pay off a judgment held against said mill property by one Jan'ney Dawes, and which was an incumbrance thereon at the timo said Wall, Nevius and M.'F. F. purchased the same.
    He admits that after the execution of said note which said mortgage was intended to secure, but which, for the reason aforesaid, it did not secure, the said M. Freeman sold and conveyed all Ms interest in the real estate so purchased by said Gaston, Nevius, Wall and Freeman to Van Rensselaer, who assumed and undertook to pay the portion of said note due from Freeman as part consideration of said conveyance, and that Van Rensselaer failed to make said payment, and afterwards died insolvent without having procured said Freeman to be released from his liability on said note. But this defendant has no knowledge, information or belief that the money loaned by this defendant on the said note was applied to the improvement of the said-mill property,.and therefore he denies the same.
    lie denies that ho released the said mill property to Gaston ; and denies that he gave up the said mortgage, but says he still has said mortgage in his possession, uncancelled; but that, said mill property having been sold by said Gaston, and the said mortgage not having been recorded, this defendant considers it of no value or validity, and hereby offers, upon the payment to him of the amount due him on the said judgment, to assign and transfer the said mortgage to the complainant.
    He admits that he caused a fi. fa. to be issued to the Sheriff of Somerset; who thereupon levied on a valuable real estate of M. F. F. in that county; but what was the value of it he does not know, but he does not believe it was worth more than $1500; and he believes that the said M.' F. F. sold the same; but he has no recollection and does not believe that he ever released the same from the lien of the said execution; but if he did, it was done at the earnest solicitation of the said M. F. F-, because he was informed by the said M. F. F., and fully believed from his own examination of the records, that the residue of the property of the said M. F. F. subject to his judgment was abundantly sufficient to pay his judgment.
    He admits that a part of the money due on his judgment was raised from a sale of the real estate of Nevius, by the Sheriff of Somerset, under a decree of foreclosure; a surplus after paying said decree having been paid by the Sheriff to this defendant on his said judgment; which surplus amounted to $964 60, and was credited on the judgment Oct. 8,1842.
    ' He admits that the Sheriff of Middlesex, by virtue of said testatum Ji. fa.> levied on the real and personal estate of said M. F. F.; but whether the Sheriff, when he so levied, was informed by said M. F. F., that the said house and lots were not his property but had been sold and conveyed by him as aforesaid, this defendant is ignorant, and therefore doth not admit. But he does not believe that the said Sheriff made more than one levy on the said property ; and he grounds his belief upon the fact that the said Sheriff told him that he, the said Sheriff, did not believe that the said M. F. F., at the time the Sheriff called, on Kim to get an inventory, had given up all his property to be levied on, for that he, the said Sheriff, upon examining the records of the Clerk’s office of said county, found that said M. F. F. had not given up to the said Sheriff all his property to be levied upon. And this defendant believes that the said Sheriff did not make any levy on any real estate until after he had examined said records. And this defendant believes that said Sheriff of Middlesex made but one levy, because he has been informed by his counsel and believes that there is but one levy on the execution issued into Middlesex remaining on file.
    He does not believe that the said M. F. F. told the Sheriff of' Middlesex, at the time he made his said levy or at any time previous thereto, that he had sold the said farm and house and lots. to the complainant and his said infant children. But this defendant insists that whether said M. F. F. gave to the said Sheriff such information at the time of his said levy or not, cannot in any way affect or impair the lien of his judgment, execucution and levy.
    He says he does not know whether the said Sheriff, at the time he made his levy on the real and personal estate of said M. F. F., levied on the said farm and house and lots; but he believes that the said Sheriff, in May, 1842, by virtue of an execution issued on said judgment, did levy on said farm and house and lots, as by reference to said levy will appear.
    He says that the said Sheriff', in the execution of his duty under the said execution, acted according to his own discretion ; and examined the records of the county himself, and made such levy or levies as he thought proper, without any particular instructions from this defendant.
    He says he does not know whether the complainant was or was not aware until about a year ago that any such levy had been made; nor does he know why the complainant has not taken any steps in the matter before; and that he has no information on that subject other than what is derived from the bill; and therefore leaves the complainant &c.
    Ho admits several payments on the judgment; and that he received from M. F. F., on tho 25th Nov. 1844, $150, and on the 16th June, 1845, $75, and on the 4th April, 1846, $40 92. And ho admits that other sums have been paid on account of said judgment; and that the whole amount of money received from all sources on account of said judgment is $1,780 52.
    He admits that among the property of the said M. F. F. levied on under the said execution was a valuable real estate in the township of Woodbridge, Middlesex county, part of which, as he is informed and believes, has been sold for $4,000. And that this defendant on or about April 4, 1846, after, and not before the sale thereof by the said M. F. F., did release tho said property to the said M. F. F. from the lion of said judgment and execution, in consideration of certain payments in said release mentioned and of the sum of $1.
    He denies that the said sum of $4,000 was, at tho time of the said release, more, than sufficient to pay the balance on said execution.,
    He says it may be true that the 'complainant did not know of the said release at the time it was made; but he has no knowledge or information on the subject, except what he derives from the bill, and therefore does not admit the same.
    .He admits .that he now resides in New Brunswick, and about five .miles from the residence of the complainant; but says that when the said judgment was recovered, and for a considerable time after, and when the said levy was made, he resided in Somerset, and about twenty miles distant from the residence of the complainant.
    He says that before the entry of his judgment, and at that time and before he executed said release, he had no knowledge, information or belief, that the said M. F. F. had sold or conveyed the premises in the bill mentioned to the complainant or the said infants, or that the said farm and house and lots were the property of the complainants and not of the said M. F. F.
    He^ further says he has no knowledge, information or belief, that, at the time of the entry of his judgment the sale and conveyance of the said farm to the complainant, and of the said house and lots to the said infants was generally known to the public in the neighborhood.
    That he has no knowledge or information whether at the time of the entry of his said judgment the possession, occupancy and enjoyment of the said farm so pretended to have been conveyed to the complainant was open and notorious by the complainant or his tenants; and this defendant does .not believe the same.
    That he was induced to make the said release to the said M. F. F. by the strong solicitations of said M. F. F. and his repeated assurances that the residue of his property levied upon under his said judgment was more than sufficient to pay the balance due on his said judgment; and that the said M. F. F., at the time he solicited him to make said release, did not intimate or inform or give this defendant to understand, in any way, that he had sold the said farm to the complainant, or that he had sold the said house and lots to the children of the' complainant; but the impression received and left on the mind of this defendant at the time of executing the said release, by the conversations and solicitations of the said M. F. F., was, that the said farm and house and lots still belonged to the said M. F. F., and were subject to the said judgment, execution and levy. That this impression was confirmed by the fact that this defendant, shortly previous to the making of the said release, searched the records of the county, and did not find there recorded any deed from the said M. F. F. to the complainants, or to the said infants, for any of the land mentioned in the bill.
    He says that, though it may be true, and he believes it is, that there were no judgments against the said M. F. F. at the time the said deeds from M. F. F. to the complainant and said infants bear date, yet he does not admit that the same were made bona fide and for a lawful consideration, or at a time when the said M. F. F. was wholly unincumbered with debts and had no creditor to be affected by said conveyance. That, from the best information ho can obtain on the subject, he believes that the said M. F. F. was indebted at the time of those conveyances. And, from the fact that the said deeds were not recorded until just after the said M. F. F. became largely indebted and got into serious embarrassment in regard to some moneyed transactions, in New York, which impaired his credit and character, and might have been the means of causing legal proceedings against his property in New Jersey, when connected with the fact that the grantees were the son and grand-children of said M. F. F., who was a man well acquainted with business, this defendant has strong reason to doubt, and does doubt, whether the said conveyances were bona fide.

    He admits that ho intends to cause the Sheriff to sell under his said execution and levy, and submits that the injunction should be dissolved.
    A motion to dissolve the injunction was submitted without argument.
   The Chancellor.

Both the questions which are included in this case are proper for the law courts. The judgment creditor should be permitted to proceed to sell under his execution. On ejectment, brought by the purchaser, the bona jides of 'the deeds, and the effect of our -statute declaring deeds void ’against subsequent judgment creditors &c not having notice •thereof unless recorded within fifteen days after their delivery. Rev. Stat. 643, Sec. 18, will be proper subjects of inquiry and decision. The complainant’s are in possession; and if their -deeds -are good as against the judgment, they will,not be disturbed by the Sheriff’s making a deed to any one else.

Injunction dissolved.


source: Caselaw Access Project

author: The Chancellor.

license: Public Domain

text:
    Andrew Corrigan v. The Trenton Delaware Falls Co.

      “ The Trenton Delaware Dalis Company,” on the 2d of April, 1833, made two mortgages to the Trenton Bank, for moneys borrowed; one for $4,000, and the other for $6,700; and on the 22d May, 1834, the Bank recovered a judgment against the Company for $8,000, other money loaned by the Bank. On the 1st October, 1835, there was duo to the Bank for interest on the said mortgages and judgment $2,084 75. On that day the Company proposed to the Bank that if the Bank would make them a further loan, sufficient to pay said arrears of interest and a principal sum due to S. C., the Company would assign to the Bank, as security for the same, the rents reserved on certain perpetual leases of water made by the Company. The Bank accepted the proposition; and the Company made their note to the Bank for the $2,084 75, payable three days after date, for the said interest, and the Bank loaned to the Company the further sum of $$, 504, and took the note of the Company therefor, payable three days after date; with which sum the Company paid to*S. C. the said principal sum due him; and the Company executed to the Bank an assignment (so called by the parties,) of three perpetual leases of water power made by tho Company to certain individuals at certain stipulated rents to be paid by the lessees to the Company. The Company afterwards became insolvent; and Receivers were appointed; and in Deb. 1844, by virtue of a decree of the Court and an act of the Legislature, the R eceivers sold the property and chartered rights and privileges of the Company free and clear of all incumbrance. The Bank afterwards transferred the said leases to the petitioners, and all rents due and to grow due thereon, and assigned them the said note of $2,084 75.

      Held, first, that the rent accruing on the said leases subsequent to the sale by the Receivers belonged to the purchaser at the Receivers’ sale; that the so-called assign-7/ient of leases by the Company, the lessors, was a mere authority from the Company to the Bank to receive the rents; which ceased on the appointment of Receivers ; and that it created no incumbrance on the property of the Company in the hands of the Receivers.

      Second, that the rents accruing due after the appointment of the Receivers belonged to the Receivers, for the benefit of the creditors of the Company.

      Third, that the rents which had become due before the appointment of the Receivers might bo considered as appropriated to the purpose for which the Company authorized the Bank to receive them, though they remained unpaid by the lessees.
    As a general rule, the taking of a note from a mortgagor or judgment debtor for interest due oii the mortgage or judgment is not a payment of the interest if the note be not paid.
    On tho 22d Dec. 1846, “ The Trenton Water Power Company” presented their petition, stating, that on the 16th FeVy, 1881, an act of the Legislature was passed, entitled “An act to incorporate a company to create a water power at Trenton and its vicinity and for other purposes, by the name of c The Trenton Delaware Falls Company.-’ ”
    That in the progress of the work of constructing the raceway &c., the said Falls Company, being embarrassed for want of funds, applied to Samuel Comley, of Philadelphia, for a loan of $3,500, to enable them to construct an aqueduct to carry the waters of the said raceway over the Assunpink Creek, for the supply of mills south of said Creek; and that thereupon an agreement was entered into between the said Falls Company and the said Comley, that Comley should loan the said Falls Company |3,500 for that purpose; and that Comley should, from and after the completion of the said aqueduct, supply a cotton factory situated on the south side of the said Creek, called the Hoy factory, in which Comley was interested, with 250 square inches of water from their raceway, equal to $750 per annum, at the rate at which they were leasing water, as a consideration for the said loan, and in lieu of interest, until they should repay the sum so borrowed.
    That on the 2d April, 1833, the Falls Company made a mortgage to the Trenton Bank for $4,000 loaned to them by the Bank, and on the same day gave another mortgage to the said Bank for the further sum of $6,100 also loaned to them by said Bank ; and on the 22d May, 1834, the said Bank recovered a judgment against the said Falls Company for the further sum of $6,000, for other money loaned by said Bank to said Company ; which mortgages and judgment were liens upon all the real estate of the said Company, and the said judgment a lien upon the personal property also. And that, on the 1st Octorber, 1835, there was due to the said Bank for interest upon the said mortgages and judgment $2,084 15.
    That the said Falls Company, being still embarrassed for money, and unable either to pay the arrears of interest due to the said Bank and for which the Bank was pressing them, or to pay said Comley the $3,500 so procured from him and for which they were furnishing him, in lieu of interest, with water equal, at its market value, to more than 21 per cent, per annum, on the 1st Oct. 1835, applied to the said Bank for further assistance, and proposed, that if said Bank would make them a further loan sufficient to pay the arrears of interest then due the Bank and to pay the said debt due to Comley, they, the Falls Company, would assign to the Bank, as security for the same, the rents reserved upon certain perpetual leases of water held by said Falls Company, to wit, a lease to McKelway, a lease to S. & T. J. Stryker, and a lease to James Hoy, senior, the rent reserved on which last lease would become available by the payment of the said $3,500 so borrowed from Comley.
    That ths Bank, deeming the security offered sufficient, acceded to the said proposal; a&d, on the 1st Oct. 1835, loaned to the said Falls Company $2,087 ; and in consideration thereof the said Falls Company made and delivered to the Bank their note, of that date, for the said $2,087, payable to the said Bank three days after date; with which said sum of money so borrowed the said Falls Company paid to the said Bank the interest so as aforesaid due them on the said mortgages and judgment; and, on the 28th Oct. 1835, the said Bank loaned to the said Falls Company the further sum of $3,504 ; and in consideration thereof the said Falls Company made and delivered to the said Bank their note, of that date, payable to the said Bank three days after date, for the said sum of $3,504; with which sum the said Falls Company paid to the said Comley the money so borrowed of him.
    That in compliance with the terms of the proposition so made and accepted, and to secure the said debt to the Bank, in accordance therewith, the Falls Company, on the 27th Oct. 1835, executed to the said Bank, their successors and assigns, an absolute and unconditional assignment of the lease to McKelway, the rent fixed by which was $166 90, and the lease to the said Strykers, the rent fixed by which is $450 67; and, on the 11th Dec. 1835, made and executed to the said Bank, their successors and assigns, an absolute and unconditional assignment of the lease made to James Hoy, senior, the rent fixed by which is $750; which last mentioned rent had been made available by the said payment made to Comley.

      The petitioners say they have been informed and believe, that the Falls Company never gave any other security to the Bank for the repayment of the said loan of $5,591 except the said leases so assigned as aforesaid; and that it was understood by and between the said Companies, at the time of the agreement for the said loan, that the rents received from the said leases so assigned as aforesaid should be applied to the payment of the interest growing due to the said Bank upon the loans previously made, and also to the interest growing due to the Bank on the said notes, so long as the Bank should be willing to continue the said several loans; and the Bank did so apply the same ; yet that that arrangement, so far as it respected the application of a portion of the income from the said leases to the payment of the interest upon the previous loans, was only a matter of temporary accommodation to the said Falls Company, and for their exclusive benefit, and was to continue only so long as the Bank should be disposed so to apply the said rents; and was never intended to alter, vary or change the original agreement by which said, leases were assigned as security for the payment of the said notes, or to restrain the Bank, at .any time when they might deem it necessary for their own security to do so, from prosecuting their mortgage and judgment liens against said Falls Company to a recovery, and applying the income from said leases to the payment of the principal and interest due on the said notes ; and that the Bank would not have made the last mentioned loan unless they had been secured by the said assigned leases the repayment of the principal as well as the interest-of said notes.
    That, the Falls Company having become insolvent, Philemon Dickerson, J. Ewing and Samuel S. Stryker were'appointed Receivers ; and that, on or about Feb. 20, 1844, by virtue of a decree of this court made Nov. 6, 1843, and an act of the Legislature passed Feb. 15, 1844, the said Receivers sold, at public sale, all the real estate and chartered rights and privileges of the said Falls Company, free and clear of all incumbrance; and that C. S. Olden became the purchaser at’tlie said sale, for $50,000 ; and the said sale was subsequently confirmed by this court; and the said purchase money was thereupon paid to the said Receivers, and a deed duly executed and delivered by them to the sfoid Olden for the said property.
    That the said Bank was largely interested with Olden in the said purchase, and advanced, as the petitioners are informed and believe, the purchase money for the same.
    That J. M. Redmond, being desirous of becoming the owner of said property, proposed to Olden and the Bank, that upon the organizing a company under the name of “ The Trenton Water Power Company,” in conformity with the directions of the said act of the Legislature of Feb. 15, 1844, he would become the purchaser of the stock of the Company if they could agree upon the terms. That on the 1st of April, 1845, as the result of the negotiations that followed said proposition, an agreement was entered into between the said Olden, the said Bank and the said Redmond, that the said Olden and the Bank would at once proceed to organize the Company as aforesaid; that Redmond should have the stock of said Company for $55,000, a certain mill and wharf belonging to the Bank for $7,500, and should also take the note of said Falls Company, of Oct. 1, 1835, for $2,087, and $8,000 of the principal of the note of said Falls Company, of Oct. 28,1835, at the sum of $5,851 96, being the amount of the principal sum of $5,087 and arrears of interest due thereon to the said 1st April, 1845 ; and that the Bank should assign to Redmond, or to such person or persons as he should direct, the said leases held by them as security for the said notes, with all the arrears of rent due upon the same.
    That, on or about June 2, 1845, pursuant to the provisions of the said act of the Legislature, Olden and his associates organized themselves into a company under the name of u The Trenton Water Power Company,” and thereupon the stock of said Company was duly transferred to the said Redmond, the title of said mill and wharf conveyed to him, and the said two notes assigned, the first in whole, and the second to the amount of $8000, to said Redmond; in consideration of which; Redmond paid over to Olden and the Bank $25,810 59, in cash ; and the said Water Power Company executed to the Bank two mortgages, one for $13,000, the other for $30,000, on the property and works of said Company, being the whole amount hereinbefore mentioned as agreed to be paid, and $458 63, interest on the purchase of the stock accrued before payment made.
    That the said assignments of the said notes by the Bank to Redmond bear date April 1, 1845, that being the day when the agreement aforesaid was entered into ; but were in fact written on said notes, and said notes delivered to Redmond on the 2d of June, when the agreement was fully consummated; and thereupon Redmond assigned and transfered the same to cc The Trenton Water Power Company,” who still hold the same.
    That the interest was paid upon the said notes while the property of the Bank, up to Jan’y 1, 1843, and that the whole of the principal moneys mentioned in said notes, with interest thereon from that day, still remains due and unpaid, of which, all but the principal and interest of $500, reserved by the Bank, is due to the petitioners, the Trenton Water Power Company.
    That on the 27th June, 1845, in further completion and fulfillment of the agreement and sale aforesaid, the Bank granted, bargained, sold, assigned, transferred and set over to the said Water Power Company, their successors and assigns, at the request of the said Redmond, the three before mentioned leases and all rents thereby reserved and all moneys due and to grow due thereon, and all the estate, right, title, interest, claim and demand whatever of the Bank of, in, to or out of the same, in as ample manner as the same were then held by the Bank, the said Water Power Company performing and fulfilling all the covenants in the said leases on the part of the Bank to be performed.
    That at the time of the agreement of April 1, 1845, before mentioned, it was represented to Redmond by the Bank, and he believed and still does believe, there was an amount of arrears of rent due upon the said leases very nearly if not quite equal to the amount of the principal and interests of the said notes ; and that Redmond purchased said notes under the full belief that by the assignment to him, or to said Trenton Water Power Company, of the said leases and all the rents due upon the same, by the Bank, the Water Power Company would be enabled very nearly, if not wholly, to reimburse themselves to the amount of said notes, by means of the said arrears of rent. And Redmond well knew at the time that the said Falls Company were utterly insolvent and unable to pay anything on the said notes.
    The petitioners say that, soon after the assignment to them of the said leases, they had a settlement with S. S. & T. J. Stryker for arrears of rent so due on their lease, and received from them $850 in full thereof, which they have credited on the said note of $2,084; and that they were proceeding to collect the arrears of rent due on the lease to Hoy and McKelway when they were served by the receivers of the Falls Company with a copy of an interlocutory decree of this court directing the said receivers to proceed to collect from these petitioners, or from such person or persons as might be liable for the payment thereof, the rents reported by Jas. W. Wall, Esq., one of the masters of this court, to be due on said leases, so assigned, at the time of the said assignment, being for the term of three years and five months, from Jan5y 1, 1842, to June 2, 1845, and also $850 reported by the said master to have been received by these petitioners of the said Stryker, and also $500 due from Maynard and Hutchinson on said McKelway lease, without prejudice to the claims of the petitioners, Redmond, McKelway, or either of them; and that they, or either of them, be at liberty to apply to this court to have the validity of their respective claims to the said moneys settled according to the rules and practice of this court.
    The petitioners insist that the Bank, as the holders of the said two notes of the Falls Company, and as assignees of said leases, holding under assignments made to secure the payments of said notes, as aforesaid, had a lien upon the arrears of rent so due on the said leases, on the 2d June, 1845, and had a right to receive said arrears and apply them to the payment of said notes ; and that they had, therefore, a right to assign to these petitioners the said arrears of rent, with the said leases, to be applied, when collected, to the payment of said notes ; and that, by virtue of the said assignments of the said notes and leases and rents and arrears of rent due thereon, made by the bank to the petitioners, the petitioners became entitled to the said arrears of rent; and that they have a right, and ought to be permitted by this court to apply the arrears already received, and collect and apply the sums remaining due as aforesaid, to the payment of the amount due on said notes ; and that, if the said receivers have collected or shall collect any part of said arrears, the same ought by the order of this court to be directed to be paid over by them to these petitioners.
    On the reading of this petition an order was made referring it to James W. Wall, master, to ascertain the truth of the allegations of the petitioners, and whether the petitioners are entitled to have the said arrears of rent due upon the said leasés at the time of the assignment thereof to them by the Bank; reserving all further equity until the coming in of the master’s report.
    On the ITtli June, the report of Master Wall came in and ■yvas filed.
    Testimony was taken before the master; and he states that the matters referred to him were submitted by the counsel of the respective parties upon the testimony.
    Exceptions were filed to the report by “ The Trenton WaterPower Company.”

      S. G. Potts and P. JD. Vroorn, in support of the exceptions.

      W. Hoisted contra.
   The Chancellor.

The rent accruing subsequently to the-sale by the receivers belongs to the purchaser.

The statute and the appointment of receivers under it is a conveyance or transfer of all the property of the insolvent company to the receivers, for the benefit of the creditors of the company, to be distributed in the mode pointed out by the statute y that is, proportionally to the amount of their respective claims,, except mortgage and judgment creditors, who have preference.

What is called the assignment of léases by the Falls Company, the lessors, to the Trenton Bank, was a mere authority or power of Attorney from the Company to the Bank to receive rent. It ceased on the appointment of receivers. It created no incumbrance on the property of the Falls Company in the hands of the receivers.

The rents accruing due after the appointment of the receivers belonged to the receivers, for the benefit of the creditors.

The Bank mortgages and judgment were liens for both principal and interest, and the property sold for more than sufficient to pay the mortgages and judgment, principal and interest.

The ground not covered by the foregoing propositions is this : At the time of the appointment of the receivers five quarters rent had become payable on these leases.

So far as the rents had become due before the appointment of the receivers, they may be considered as appropriated to the purposes for which the Falls Company had authorized the Bank to receive them, though they remained unpaid.

The question arises, to what extent should the purposes for which the Bank were authorized to receive the rents require the application of the rents which had become payable before the appointment of the receivers I

If the Bank were authorized to apply these rents towards the payment of the principal of the two notes, then the whole amount of the five quarters rent which had become payable before the appointment of the receivers is absorbed by application to such payment.

If those rents are applicable only to the payment of the interest on those two notes, and the interest on those two notes had been paid up to Jan’y 1,1842, then, only so much of those rents would be payable to the Bank as would pay the interest on those two notes from Jan’y 1, 1842, to the time of the appointment of the receivers, which, I think, was in May, 1843.

This would raise the question, whether the rents on those leases were, by the agreement between the Falls Company and the Bank when the leases were assigned to the Bank, applicable to the payment of the principal as well as of the interest of these notes.

But, passing this question for the present? another view presents itself. The note of $2,084 was given by the Falls Company to the Bank for interest accrued due to the Bank on their mortgages and judgment. Was the amount of that note credited by the Bank on their mortgages and judgment1? and did the Bank, receive from the receivers, in payment of their mortgages and judgment, only the amount thereof less the amount of this note of $>2,084'? If the amount of this note for $2,084 was deducted from the amount due the Bank on their mortgages and judgment, and if, as I suppose, the interest due and in arrear on their mortgages and judgment was more than the amount of that note, then, the question will be, did the Bank taking this note for the interest on their mortgage and judgment and giving credit for the amount thereof on the mortgages and judgment pay that interest in such way that if the note was not paid the security which the mortgages and judgment afforded for that interest was lost 1

As a general rule, the taking of a note from a mortgagor or. judgment debtor for interest due on a mortgage or judgment is not a payment of the interest if the note be not paid. The note, in this instance, not being paid, if the Bank received from the receivers only the amount of their mortgages and judgment after deducting therefrom the amount of this note, then, the Bank have not received the amount of interest which had become payable on their mortgages and judgment, but $2,084 short of it; and the note for this sum remaining unpaid, the Bank should still receive the full amount of the interest upon their mortgages and judgment, unless there is something in the shape which the Bank gave to the transaction in reference to this note for interest which should deprive them of the right they would otherwise have had. The shape the transaction took was this : The Bank took a note for the interest; and instead of crediting, or saying by way of credit on their mortgages and judgment, that they had received a note for the interest, they entered the note on their Bank books as discounted, and gave credit to the Falls Company on their Bank books for the proceeds of the note, and, I presume, charged the Falls Company with the amount of interest due on their mortgages and judgment. Whether any credit was entered on the mortgages and judgment of interest received, and how that credit was made, does not, I think, appear from the papers before me. Should the fact that this shape was given to the transaction put the Bank in any worse condition than if they had simply taken a note for the interest, and held it, without passing it through their Bank books in the form of a discount 1 If it should not, then the Bank may still be entitled to the amount of rents on those leases which were due and unpaid at the time of the appointment of the receivers, on account of the interest due on their mortgages and judgment at the time they took the note of $2,084; and if they are, it will absorb the whole amount of such rents.

I desire to be informed whether, in the settlement between the Bank and the receivers as to the amount due the Bank on theirmortgagcs and judgment the Bank, credited this note of $2,084, or the amount thereof, as paid on their mortgages and judgment, and received, in full, so much less.

It is said that Redmond or The Water Power Company paid these notes; and that therefore the rents pledged were released. I do not see it in this light. The Falls Company did not pay them. The Bank could assign them, and with them whatever security they had for their payment.

For the present it will be ordered, that so much of the rents on these leases as accrued between the time of the appointment of the receivers and the time of the sale by the receivers be paid to the receivers.

If the Bank received from the receivers the whole amount of their mortgages and judgment, principal and interest, giving no credit for the $2,084 note, then, this note has been paid; for it was given for interest on the mortgages and judgment; and the question will be, whether the rents due at the time of tho appointment of the receivers are applicable to the payment of the principal and interest of the note for $3,590, or only the interest of that note.


text:
    William G. Williams and others v. Martin Mabee and others.
    Bill filed July 11.1848, stating that J. S. died in March, 1812, having devised a tract of land to P. S. in trust for the daughter of J. S., a married woman, and her children, free from the control of her husband. The daughter died, leaving six children. On the 4th November, 1819, the daughter and her husband and the children made a deed of the land to G. M., some of the children beiDg under age; and P. S., the trustee, subscribed a writing under seal at the foot of the deed in the words following: " X do hereby agree to the above conveyance in manner and form therein set forth.” The consideration of this deed was a deed from G. M. for certain lands in Ohio. The bill stated that P. S. bad removed from the State; and prayed that a trustee be appointedjn his stead, to carry the trust into effect. It appeared that after the minor children came of age they joined in a sale and conveyance of the land in Ohio. The Court refused to appoint a new trustee.
    A sale and conveyance made by persons of full age of lauds which had been conveyed to them while under age in exchange for lands conveyed by them while under age was held to be a confirmation of tbe deed made by them while under age.
    Bill filed July 11,1843, by Win G. Williams and Margaret bis wife, Sanford F. Madden and Mary bis wife, John Knoff, John Fisb-and Sally bis wife, Hezekiah Oliver Cantwell and Mary Ann bis wife, Margaret Randall and Lydia Randall of tbe county of Coshocton, in tbe State of Ohio, stating that John. Simmons died in March, 1812, leaving a will and codicil, by wbicb be devised to bis son Peter Simmons, and to bis heirs and assigns forever, a tract of land in Sussex, with a saw mill thereon, “ to tbe use of and in trust for bis daughter Lydia, wife of John Knoff, and all her children wbicb she then had or might thereafter have by tbe said Knoff, so that tbe said Knoff should have no power or control over tbe same, but that tbe same should go to the sole and separate use and benefit of bis said daughter and her children.” That tbe said Lydia has since died, leaving six children by tbe said Knoff, namely, Susan, who intermarried with Oliver Randall, and wbo bas since died leaving the complainant Mary Ann, wife of tbe complainant Cantwell, and tbe complainants Margaret Randall and Lydia Randall her children, lie complainant Margaret, who intermarried with the complainant Williams, Elizabeth, who intermarried with John Davids, and who is now dead, the complainant Mary, wife of the complainant Madden, the complainant Sally, wife of the complainant Fish, and the complainant John Knoff, who was the only son.
    That the said will was duly proved by John Simmons and John Linn, the executors therein named, on the 18th March, 1812.
    That the said Peter Simmons took upon himself the said trust imposed upon him by the said will.
    That a deed of bargain and sale was drawn, purporting to bo made between the said John Knoff and Lydia his wife, Oliver Randall and Susan his wife, Margaret Knoff, Elizabeth Knoff, Mary Knoff, Sally Knoff and John Knoff, of Sussex county, New Jersey, of the one part, and George Mabee, of the said county, of the other part, dated November 4,1819, whereby, for the consideration of $500 expressed in said deed as paid to the said parties of the first part, the said parties of the first part conveyed to the said Mabee, in fee, “ all that piece of land which by a codicil to the will of John Simmons was left to Peter Simmons in trust for his daughter Lydia and her children.” That the said deed was, on the day of the date thereof, as the complainants have been informed, executed by the said John Knoff and Lydia his wife, Oliver Randall and Susan his wife, Margaret Williams and Elizabeth, children of the said Elizabeth Knoff That the execution of the said deed by the said Susan Randall was by compulsion and restraint, and not of her own free will and consent. That neither the said Elizabeth Knoff nor Margaret Knoff was of legal ago when the said deed was so executed. That the complainant Margaret Williams was of the age of 19 years and 15 days, and the said Elizabeth of the age of 18 years, 7 months and 22 days, and that the said John, Mary and Sally were still younger.
    That the said sum of $500 was not the real consideration for for said deed, and that no money or value whatever was received for the said land by the said John Knoff and Lydia his wife, Oliver Randall and Susan his wife, Mary and Elizabeth, or any of them, or any person for them; but that the real consideration was a certain tract of land in Ohio to which said Mabee pretended to have title, which he pretended to convey to the said John Knoif and Oliver Randall, or one of them, or some other or all the said parties named in said deed of bargain and sale; and that the said John Knoif and Oliver Randall, nor either of them, nor any one of the parties named in said deed to Mabee, ever obtained the possession of the said land, or derived any benefit from the pretended title of said Mabee to the same so by him conveyed; but that the said title was defective and void, and of no value to them or any or either of them, although the said John Knoif and Lydia his wife, and Oliver Randall and Susan his wife, removed from this State to Ohio with the expectation of occupying and realizing the benefit of the said land, the consideration of the said deed.
    That the complainants have been informed, and believe and charge, that the said George Mabee and his wife, on the 1st March, 1825, by deed duly executed and delivered, for the consideration of $300 therein expressed, did convey to John Mabee, of said county of Sussex, the said lot of land in Sussex, which said lot is in said deed described as the lot of land which said George Mabee purchased of John Knoif and his wife and their children ; which deed was recorded &c.
    That the complainants are informed and believe that the said John Mabee died in possession of said land, on or about March 1, 1836, leaving a will, which was duly proved by Sarah Mabee, his widow, and Martin Mabee and Jacob Mabee, his sons; by which will the said John .Mabee devised all his real estate to his children, except the above named premises mentioned as devised by said John Simmons to the said Peter Simmons, trustee as aforesaid.
    That the said John Mab'ee, deceased, left George, John, Jacob, Robert and Martin Mabee, and Ann, wife of Schooley Da rius, Jane, wife of Ephraim Kimball, and Hannah, wife of John Struble, his children and heirs at law.
    That the complainants are informed and believe that, after-wards, on the lYth of March, 1838, the said George Mabee and his wife, Jacob Mabee, Robert Mabee and his wife, Schooley Darius and Aim his wife, Ephraim Kimbal and Jane his wife, and John Struble and Hannah his wife, by a deed of release and quitclaim, did bargain, sell, release and convey to Martin Mabee the lands in question; to have and to hold to the said Martin Mabee, his heirs and assigns forever.
    That the complainants have been informed and believe, that the said Peter Simmons, the said trustee, after the execution of the said deed from John Knoff and wife and Oliver Randall and wife and Margaret Williams and Elizabeth Davids to the said George Mabee, removed from this State to the western part of Pennsylvania, not less than 15 years ago, to the best of the complainants’ information. That the complainants are unable to say whether or not he is still living.
    That the said John Knoff died in May, 1844, and that the said Lydia, his widow, died August 10, 1838, leaving the complainants Margaret Williams, Mary Madden, Sally Fish and John Knoff, her children, and the complainants Mary Ann Cant-well, Margaret Randall and Lydia Randall, her grandchildren, children of Susan Randall, her heirs at law; the said Susan having died before the death of said Lydia Knoff, and the said Elizabeth Davids being also then dead without leaving any children.
    That the said John Mabee the younger and the said Martin Mabee, since the death of the said John Mabee the elder, or one of them, have or has occupied and enjoyed the premises in question, and received the rents, issues and profits thereof, and still receive the same.
    That since the death of the said Lydia Knoff the complainants have frequently and in a friendly manner applied to the said John Mabee and Martin Mabee to yield up to the complainants the possession &c.; and to account for the said rents and profits, or to make a proper compensation to the complainants and receive a perfect title from the complainants.
    The bill prays that a trustee be appointed, instead of the said Peter Simmons, to carry into effect the trust contained in the said will of John Simmons in relation to the premises in question ; and that an account may be taken of the rents and profits which have come to the hands of the defendants, or either of them, and that they may be made to account therefor to the trustee so to be appointed, to be appropriated in discharge of the said trust; and that the premises may be sold under the direction of this court, and that all proper parties be decreed to join in the said sale; and for such other and further relief as &c.
    Process is prayed against Martin Mabee and his wife, John Mabee and his wife and Peter Simmons.
    The answer of Martin Mabee was filed June 14, 1847. He admits the will of John Simmons as stated in the bill. Admits that John Knoff and Lydia his wife, Oliver Randall and Susan his wife, Margaret Knoff and Elizabeth Knoff executed to Geo. Mabee a deed for the premises in question, for the consideration of $500, dated Nov. 4, 1819 ; but that said deed was not, nor was any other deed for said land executed by Mary, John and Sarah, children of said Lydia, or either of them, to said George Mabee, to his knowledge or belief.
    He denies that the said deed was executed by Susan Randall upon any compulsion and restraint, but, as he is informed and believes, of her own free will, without any fear, threats or compulsionof her husband or of any other person. He says he has no knowledge of the age of Margaret and Elizabeth Knoff when they executed the said deed.
    He denies that the said deed was without adequate consideration ; but says he is informed and believes that it was made in consideration of $212 in money, paid by said George Mabee, and the conveyance to the use of the wife and children of said John Knoff of a tract of land of 112 acres in Coshocton, Ohio, for whjch the said George Mabee had paid $800 ; which consideration was more than the value of the lands conveyed by the said deed to the said George Mabee.
    • He denies that the title to said lands in Ohio was defective; but says he is informed and believes that the title was good, valid and subsisting at the time of the said conveyance thereof; and that if Knoff and his wife did not have possession thereof it must have been by reason of their own neglect and misconduct.
    He states that the contract for the conveyance of the said land to the said Geo. Mabee was upon adequate and full consideration, and for the benefit and advantage of the said Lydia Knoff and her children, who were poor and needed more land for their comfortable support, and believed it would be better for thorn to move to Ohio, where they would have a farm of 112 acres and more means of subsistence; and that the said conveyance by the said George Mabee to them was made in good faith, and truly to the interest and advantage of the said family.
    He says that Peter Simmons, the said trustee, agreed with the said family in the belief that the said contract would he to their advantage; and that he united with them in the said contract, and also in the said deed, and expressed his concurrence therein by his writing, under his hand and seal, subjoined to the said deed, as follows ; “ I do hereby agree to the above conveyance in manner and form therein sot forth. Given under my hand and seal the date above.”
    He says that the said George Mabee, soon after the said conveyance to him, took possession of the premises in question claiming to be the owner thereof, and occupied the same until about May 1, 1825, when he sold and conveyed the same to John Maheo, for $300, which was then estimated to be the full value thereof. That John M abee continued in possession of said land until about February 11, 1836, when he died, leaving a will by which ho directed the said land, together with other lands, to he sold to pay debts and legacies, as by said will appears. That the executors of the will of said John Mabee, and all the children of the said John Maheo except his son John, united in the conveyance of the land in question, with others, to this defendant, by their deed dated March 11,1838. That the land in question, after the death of said John Mabee, up to the time of the conveyance in question, was occupied by the heirs and executors of the said John Mabee; and since the conveyance thereof to this defendant has been occupied by them to this time. And he submits that the land in question having been in the possession of him, this defendant, and those under whom ho holds, since 1819, more than twenty-three years before the commencement of this suit, he ought not now to he disturbed in the enjoyment thereof; but should be protected by the Statute of limitations; and he prays the benefit thereof as fully as if he had formally pleaded the same.

      He says he is informed and believes that, after the said John Knoff and his family had moved to Ohio, the said George Mabee offered to the said John Knoff and Peter Simmons that, if they would re-convey to him the said land in Ohio and pay back the money paid by him as part of the consideration of the premises in question, he would re-convey the premises in question to them; but they refused to do so.
    That since the commencement of this suit a proposition was made to him to arrange the matter in controversy; and with a view to such arrangemement he made various propositions, and, among others, he proposed to said Peter Simmons that, if he would procure a conveyance to this defendant of the said Ohio land by the same or as good a title as that which said George Mabee’s deed gave, he would pay and allow to him, the said Peter Simmons, or to the heirs of the said John Knoff and wife, the full value of the said tract of land in Sussex, [the premises in question,] deducting what had been paid by the said George Mabee thereon; but that said Peter declined the said proposition, saying he had no authority or power to procure such conveyance.
    He says that the claim of the complainants has been in treaty for arrangement almost ever since the filing of the bill of complainant ; and that in July, 1846, as he is informed and believes, a copy of an order to file an answer to the bill was served on this defendant, and that this defendant, through his solicitor, then renewed the said treaty of arrangement, and the same was continued until September then next, at which time the said Peter Simmons, who resided somewhere in the western part of Pennsylvania, visited Sussex, and called on this defendant in relation to the said claim, and this defendant proposed further terms which he, the said Peter Simmons, said he was not authorized to accept in the absence of the childi’en and heirs of the said John Knoff and wife, who resided in Ohio, but it was proposed that the solicitor of the complainants and the said Peter should communicate by letter to the said children and heirs the terms of the proposition, and that proceedings in the suit should be suspended until an answer should be obtained. And he says he was informed and believes, that the solicitor of the complainants did communicate by letter to the complainants, or some of them, the said proposition ; and he has several times since inquired for, but has received no reply thereto; and that by reason of the said understanding he has omitted to file his answer until this time; and that the omission to file his answer has not been for the purpose of delay, but with the desire and expectation of having some amicable arrangement of the same.
    Testimony was taken on both sides.

      W. Hoisted for the complainants.

      H. Haines for the defendants.
    He cited 1 Bro. Ch. 72; 18 Ves. 395, 418; 2 Ch. Ca. 63; 1 Cruise’s Dig. 493, 5, 524; Ambl. 545; 1 Coxe’s Ch. 199; 3 Cruise’s Dig. 375; 6 Ib. 29; Selwyn on Trusts, 138; 3 Burr, 1794.
   The Chancellor.

If the concurrence of Peter Simmons, the trustee, in the conveyance made to Mabee in 1819, expressed at the foot of that deed, amounted to a conveyance by him of the legal estate, the consequences of such conveyance would be the same against a new trustee as against Simmons. If, by reason of such concurrence, Simmons could not maintain ejectment, a new trustee could not; and in this view the appointment of a new trustee would be useless.

If there is any equity, at this late day, in any of the cestuis, it must arise from Mabee’s having knowledge of the trust when he took the conveyance of 1819. But by this knowledge Mabee became trustee; and the trust would follow to his grantees, as far as they, respectively, had notice of the trust, or are chargeable with notice; and no further. In this view, also, I see no good reason for the appointment of a new trustee.

If the said concurrence of Simmons, the trustee, expressed as aforesaid, did not convey the legal estate out of him, yet Mabee is protected so far as respects the cestuis que trust who were of age and joined in the said conveyance to him.

In reference to the rest of the cestuis que trust, or all of them but one, a fact appears in the testimony of a witness residing in Ohio, taken under a commission, which does not appear in the pleadings, not being known, as I suppose, to the defendants until the return of the commission, and which should have an influence in favor of the defendants. It is, that the cestuis que trust after they were all of age, or their representatives, sold and conveyed their interest in the Ohio farm which was conveyed by Mabee in exchange for the lands in question in this suit. This testimony speaks as to all but one; and the defendants think they can show that that one also joined in the conveyance of the Ohio farm.

I thi-nk that this act should, after so great a lapse of time, under a proper state of pleadings, be considered a confirmation of the deed to Mabee by all the cestuis que trust who joined in the conveyance of the Ohio farm. And I am willing, under the circumstances, that such course be taken in the cause, on the part of the defendants, as will give them the benefit of this fact.

If, under these views, it is thought, on the part of the complainants, that either of the cestuis que trust is in a position to call for an execution of the trust so far as his or her interest is concerned, I have no objection to retain the bill. But these suggestions are made without prejudice, and without intending to give any decided conviction in favor of any cestui que trust though he or she may not have joined in the conveyance of the Ohio farm.

A new trustee will not now be appointed.


text:
    Thomas Black and John Black v. Asher Morse, Aaron R. Combs and others.
    T. gave two mortgages, one to M. and the other to R. of a tract of land of 18 acres; and afterwards convoyed to A. half of the tract, and thereupon A. gave to T. an obligation that ho would pay, as part of the purchase money for the said nine acres, the said two mortgages to JI. and R. A. afterwards gave to B. a bond, and, to secure it, a mortgage on the nine acres he had bought of T., as additional security for money for which B. held A/s mortgage on other lands. T. afterwards conveyed the residue of the tract to C., with full covenants of warranty, and at the same time asssigned to C. the said obligation of A. to pay the two mortgages held by M. and R. JI. filed a bill for the foreclosure of his mortgage ; making R. a party defendant. B, was not made a defendant, he not having got his mortgage from A. when the bill was filed. A decree was obtained in that suit for the sale of the whole tract, to satisfy the mortgages of M. and R.; and a fi. fa* for sale was issued to the Sheriff. B« then filed ids bill, stating, that the half remaining in T. after he had sold half to A. was sufficient to pay the mortgages to JI. and R., and submitting’ that the half so remaining in T., and which was afterwards conveyed bf T. to 0., should be first sold; and prayed an injunction stayingproeeedings on the fi. fa. which had been issued. The injunction was allowed.
    On answer and motion to dissolve the injunction, it was held that, as between C. and A., the half so convoyed to A. ought to be first said, to pay the mortgages held by M. and R.; and that the equity was the same between C. and B., the mortgagee from A.

      Jleld, that A. was not a competent witness to prove payment of his said obligation to T., though B. had released him from personal liability on his said bond to B. and agreed to rely only on the said motgage given by A. to B.

      Jleld, that T., on being released by C. from his covenants in his deed to 0., was a competent witness to prove that B. had notice, before he took his mortgage from A., that* A. had given his obligation to T. to pay the mortgages held by M. and R.
    Joseph. I. Thompson executed, with his wife, two mortgages .on a tract of land of 18 16-100 acres ; one to Asher Morse for $400, dated June 1,1881; the other to Richard Davis and Jos. Murphy for $500, dated May 19, 1838, which was afterwards assigned to Jos. F. Randolph; and afterwards, by deed dated May 28, 1842, executed. by him and his wife, conveyed nine acres of the said tract to Simon Abrams. On this conveyance to Abrams he executed and delivered to Thompson a bond, dated Jnne 1, 1842, in the penal sum of $1,800, conditioned iC that he, Abrams, his heirs &c., should pay the said two mortgages on the whole tract.

      'On the 1st of April, 1843, Abrams executed to Thomas Black •and John Black a bond conditioned for the payment of $865 28 ; and on the 20th July, 1843, executed to the said Blacks a mortgage on the nine acres so conveyed to him by Thompson, to se■cure the payment of the said bond; which last mentioned mortgage was recorded July 21, 1843.
    On the 3d of August, 1843, Thompson, with his wife, by deed of that date, conveyed the residue of the said tract of 18 16-100 acres to Aaron R. Combs, with full covenants of warranty; and on the same day assigned to Aaron R. Combs the said bond of Abrams conditioned for the payment of the said two mortgages held-by Morse and Randolph.
    At the time this bond was assigned to Combs there was an indorsement on it, signed by Thompson, dated July 18, 1848, of the receipt of $130 on the said bond.
    Morse filed his bill in this court for the foreclosure of his mortgage; making .Randolph a party defendant. The subpenas on this bill were returned to the July term, 1843. The Blacks were not made defendants in that suit. They did not get their mortgage till July 20, 1843 ; probably after the subpenas were issued in the cause.
    In January term, 1844, a decree in that suit was obtained for the sale of the whole tract of 18 16-100th acres, to satisfy 1 Morse $442 62 and costs, and to satisfy Randolph $550 62 and costs. And a fi. fa. for sale was issued to the sheriff.
    In’this state of things the Messrs. Black exhibited their bill, filed May 15, 1844, stating that they had no knowledge of the proceedings in the before mentioned suit until the premises were advertised for sale ; that they are satisfied that that part of the premises covered by the Morse and Randolph mortgages which Thompson retained, after the conveyance of the nine acres to Abrams, are sufficient to satisfy the Morse and Randolph mortgages; and submit that the said residue of the said premises remaining in Thompson should be first sold ;. that they are informed and believe that Thompson intends to direct the sheriff to sell first the nine acres so sold bydfim to Abrams, and by Abrams mortgaged as aforesaid to them ; and that in such case they must lose their debt, as Abrams, since the execution and delivery of the said mortgage to them, has become insolvent, and has no other property out of which they can realize the amount due them on their said mortgage.
    The bill prays an injunction restraining the sale of the said nine acres; and for such other and further relief &c.
    The injunction was allowed.
    Answers wore put in and proofs taken; and the cause was submitted on the pleadings and proofs and written briefs.
    .7. L. JY. Stratton for complainants.

      P. Vredenhergh for Combs.
   The Chancellor.

On the purchase by Abrams of the nine -acres of the tract covered by the Morse and Randolph mortgages, if he had paid the consideration in full, an equity would have arisen in his favor requiring that the residue of the tract remaining in Thompson should be first sold for or towards the satisfaction of those mortgages:

He did not pay the consideration in full; $900 of it, an amount equal to what was then due on the said two mortgages, was retained by him; and he gave Thompson his bond conditioned that ho would pay that sum by paying those mortgages. No equity, heretofore, arose in his favor, either against Thompson or his grantee, to have the land which remained in Thompson first sold.

An effort has been made on the part of the complainants to show that Abrams afterwards paid to Thompson the $900. From the proofs in the cause in reference to this matter, even if Abrams’s testimony were competent, I am satisfied that, with the exception the $130 indorsed in the said bond, it never was paid.

Have the Blacks, the complainants in this case, any better equity against Thompson than Abrams had? It is said that the bond given by Abrams to Thompson is no lien on the nine acres. The question is not whether this bond is a lien on the nine acres 5 but whether Abrams’s giving a mortgage to the Messrs. Black on the nine acres gave them any better equity than Abrams had; whether it gives them the equity which Abrams would have had if he had paid to Thompson the whole consideration money. Had the Messrs. Black a right to presume that Abrams had paid the full consideration money, and to repose on the equity which in that case would have arisen in favor of Abrams. The Messrs. Black are chargeable with knowledge of the Morse and Randolph mortgages, covering the whole tract. They were recorded. Was the fact that Thompson had given a deed for nine acres of it to Abrams sufficient ground for them to assume that Abrams had paid Thompson the full consideration for the nine acres, knowing, as he, Abrams, did, [for he too was chargeable with that knowledge,] that there were two mortgages covering the whole tract 1 Had they a right to assume, from the mere fact of a deed for the nine acres, that Abrams had paid the full consideration, and to omit inquire of Abrams or Thompson how it was 1 If they inquired, and ascertained how it was, and acted,, in taking their mortgage, on the idea that the bond given by Abrams to Thompson was not a lien, they acted on mistaken ground; for the question is not, whether the bond was a lien, but. whether Abrams, having assumed the payment of the Morse and Randolph mortgages, had any equity to have the land retained by Thompson first sold.

The only ground the Messrs- Black can take is that, seeing that Thompson had made a deed to Abrams for the nine acres, they were deceived into the belief that Abrams had paid the full consideration money; and that, therefore, though Abrams had not paid the full consideration, and had, himself, no equity against Thompson, yet that they have. This will not do. With the knowledge of the existence of the mortgages to Morse and Randolph of the whole property, and the knowledge which every man must be presumed to have of the different modes of dealing when land which is subject to mortgage is conveyed by the mortgagor, they had no right to omit inquiry and rely on the face of the deed from Thompson to Abrams as proving payment of the consideration. No man would have advanced money on a mortgage from Abrams on the nine acres under such circumstances. And they did not advance money. They merely took this mortgage from Abrams as additional security for money to secure which they had a mortgage on Abrams’s mill property. I am of opinion that, even without the evidence of notice of the bond given by Abrams to Thompson, the complainants have no bettor equity against Thompson than Abrams had.

But Thompson swears, that he informed one of the Blacks, before they took their mortgage from Abrams, that he had a bond against Abrams by which the part he had sold to Abrams was bound to pay the mortgages that were against the whole property ; that he named the mortgages, and who held them, and the amount of them. It was said in argument, on the part of the complainants, that this was not a true description of the bond— that the bond did not bind the land conveyed to Abrams, but bound Abrams to pay the mortgages. There is nothing in this. The effect is the same. Abrams was bound by the bond to pay the mortgages; the mortgages were existing in the hands of third persons, and were liens on the whole tract. Abrams, by his bond to Thompson, became bound to pay them. As between him and Thompson he had no equity that the land retained by Thompson should pay them; but the lien thereof, as between him and the mortgages, remained on the whole tract; and as between him and Thompson was, in equity, wholly on the part he had bought.

I see no objection to Thompson’s competency, if his evidence was necessary. He was released from his covenants in his deed to Combs before he was sworn. He has, then, conveyed to Combs without covenants, and assigned to Combs the bond of Abrams by which Abrams agreed to pay the mortgages, and by the effect of which Abrams’s nine acres would in equity be directed to be first sold. As between Abrams and Combs, I do not see that Thompson has any interest. The fact that his bonds accompany the mortgages to Morse and Randolph makes no difference in this respect. The lands are all still bound by those mortgages : the question is, simply, which land shall be sold first, the land conveyed to Abrams or that conveyed to Combs.

Is Abrams a competent witness on this question 1 The complainants have released him from personal liability on the bond he gave them, and have agreed to rely on the land only, that is, •the nine acres mortgaged by Abrams to them. Is not Abrams still interested in having Combs’s land first sold to pay the Morse •and Randolph mortgages 1 If those mortgages are satisfied out •of Combs’s land, Abrams has the nine acres to pay his own debt to the complainants 'and to relieve, to the extent of their value, the mortgage on his mills. It is said his interest is balanced: that if Combs’s land is sold to pay the Morse and Randolph mortgages, he would be liable to Combs on the bond he gave Thompson and which Thompson assigned to Combs. But this is a suit' between the Messrs. Black, as assignees of Abrams, against Combs, for the purpose of deciding the. question whether the part conveyed to Abrams or the part conveyed to Combs shall be first sold; and this depends on the question whether Abrams paid to Thompson the amount of that bond. If this court, in a suit in which Combs is a party, decide that Abrams paid to Thompson the amount of that bond, and thereupon decree Comsb’s that land be first sold, could Combs maintain an action on the bond % Again, if it be decreed here that the land conveyed to Abrams be first sold, it will be liable for the costs of the foreclosure, and for interest upon the interest of the two mortgages and on the costs, from the time of the decree; whereas if it be decreed that the land conveyed to Combs be first sold, he has but to pay the amount due on the bond assigned to Combs, and avoid costs, or be subject to a much less amount of cósts if he suffers a prosecution on that bond. It seems to me that it cannot be said that his interest is balanced; and I am inclined to think he is not a competent witness. But, if he is, the payment of the bond, as I have said before, is not established.

As to the $130 indorsed on the bond as received by Thompson from Abrams, it was paid, and the payment thereof was indorsed on the bond, before the assignment of the bond by Thompson to Combs. If Thompson, notwithstanding the condition of Abrams’s bond to him required Abrams to pay the mortgages, had received from Abrams the $900 mentioned in the condition of the bond, and thus received, himself, the full consideration for the nine acres, an equity would have arisen, between Abrams and Thompson, in favor of Abrams, to have the lands remaining in Thompson first sold for the satisfaction of the two mortgages. His receiving part of it raises an equity to that extent. Thompson, on receiving part of the money, should have applied that part towards the payment of the mortgages. If he did not do so, the land retained by him should be first liable for it. And Combs, having notice of that payment, by the indorsement on the bond, is subject to the same equity.

It will be decreed that the nine acres be first sold, to raise a sum equal to the amount due on the bond given by Abrams to Thompson ; and that for the residue the land of Combs is first liable.

Order accordingly.