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    Perth Amboy Gas Light Company v. The Middlesex County Bank.
    [Submitted February 1st, 1900.
    Decided February 17th, 1900.
    Filed November 17th, 1900.]
    1. The general rule prevails in courts of equity that equality is equity.
    2. The contract arising between a bank of deposit and an ordinary depositor is one for the loan of money, and not of bailment.
    3. Where one deposits in a bank a check or draft on a third party, it is a bailment, unless the understanding be that he may at once draw against the deposit, or being indebted to the bank, that the deposit may be applied on such indebtedness.
    4. Where the relation of loaner and borrower exists between a bank and its depositor, he may reclaim his deposit, as against the general creditors of the bank, in case of insolvency, when its officers received the deposit knowing the insolvency at the time, and were guilty of actual fraud in receiving it, and he is able to trace his deposit to the assets which came into the hands of the receiver or assignee, though he need not identify the very coin or bills deposited.
    5. The fact that a cashier of a bank, who had abstracted funds therefrom, knew the bank was insolvent, is not notice of such insolvency to the other officers.
    6. Where the cashier of a bank failed to appear during business hours, and a shortage in the cash was discovered by the president, and the cashier, who for years had the perfect confidence of the bank, telephoned that the balance was in another compartment of the vault, the president was not chargeable with notice of the bank’s insolvency, and hence was not guilty of fraud in subsequently receiving deposits.
    7. Where a president of a bank heard that its cashier had made unauthorized drafts on another bank, and appropriated the proceeds, to an amount exceeding the capital and surplus of the bank, and proposed to a bank examiner to close the bank, but was advised by him to first verify his information, and while this was being done with all possible speed the bank remained open, for one hour, the president was not guilty of fraud in receiving deposits during that period.
    8. Where one deposits in a bank the check of another depositor of the bank, and is given credit therefor, the assets of the bank are not thereby increased, and hence there can be no tracing and reclaiming of the deposit on the insolvency of the bank.

      On appeal from the decision, of the receiver of the insolvent defendant.
    This matter comes before the court on divers appeals from the rulings of the receiver refusing the demand of several creditors of the insolvent defendant bank to have their claims paid in full in preference to the general creditors. At the same time application is made to the court by several creditors, who have heretofore proved their claims as such and been admitted, to amend their claims so as to ask for a preferential payment. The general ground upon which the claim is made is that the claims in question arose shortly before the bank failed and after its insolvent condition was either actually known, or, under the circumstances, ought to have been known, by the officers of the bank.
    The claims actually dealt with by the receiver are somewhat variant in their character. Some are based upon actual cash deposited shortly before the closing of the bank. Others are based on deposits of checks on other banking institutions similarly deposited. Others, and those greatest in amount, are by banks which sent to the insolvent bank for collection and remittance checks on the insolvent bank drawn by depositors therein; and, in a few instances, of checks drawn on other banks enclosed to the insolvent bank for collection.
    As to this last class of items, they were forwarded by the insolvent bank to the bank upon which they were drawn and placed to the insolvent’s credit by those banks, and, to the extent of the balance due to the insolvent bank from those correspondent banks upon which the checks were drawn, the receiver has recognized the claim as just, and has, or will, pay the same in full.
    The undisputed facts of the ease are that the insolvent, bank was systematically robbed by its cashier for several years, the extent of the thefts increasing toward the last, so that for several months before it closed its doors (which occurred on the 14th of July, 1899) it was actually insolvent; but such insolvency was not known by any officers of the bank except the cashier.

      The theft was accomplished by the following contrivance: The insolvent bank was located at Perth' Amboy and kept its account in New York with the Park Bank, and in the regular course of business had, or should have had, a large balance'to its credit in that bank; and for the purpose of drawing upon that balance kept a book of checks or drafts, with stubs, for the purpose of the entry on the stub or margin of the amount of drafts drawn, 'and the names of the 'persons in whose favor they were drawn. The cashier would draw a draft to himself for,' say, $10,000, and enter upon the margin a small'sum of, say, $20 or $30, and insert as the payee some firm in New York, who, supposedly, had drawn a draft upon some trader in Perth Amboy, and sent it to that bank for collection; the bank had collected it and remitted the proceeds in’ a draft on New York, the Park Bank being credited by the bookkeeper of the insolvent bank with the amount upon the stub, but it would be charged by the Park Bank with the true amount drawn. ' In this way the cashier succeeded in abstracting at least $110,000, so that on the day béfore the failure, while the books of the insolvent bank showed á balance' of about $80,000 to its credit with the Park Bank, in New York, the books of the'latter bank showed an overdraft of about ' $30,000. ' This difference of $110,000, together with some other bad debts, was more' than enough to absorb the whole capital and surplus — $50,000'each— $100,000 in all — and leave It hopelessly insolvent. '
    Monthly balance sheets, or, as they wére called, reconcilement sheets, were sent by the Park Bank to the. insolvent bankj together with the vouchers for the current month; and these were kept in the bank where'any of-the officers'or directors could have examined them;'bu-t, in'point of'fact, nobody did examine them, the whole of that work being left to the cashier. Fo éxaminatión was made by the president or directors, -nor any committee, of this monthly account current, or any ■ inquiry made of the-Park Bank as to how' the account stood on its books, until the day before' the bank- closed its do'ors. ' '
    A savings-bank- was' conducted in the-same banking-room with the insolvent bank, and the officers of the savings-bank and those of the insolvent bank, called the eonnty bank, were the same, that is, Mr. Yalentine, the cashier of the county bank, was also treasurer of the savings bank; Mr. TJ. B. Watson, the president of the insolvent bank, was secretary of the savings bank. They used the same vault, but had separate compartments assigned to each, as well as separate parts of the desk-room in the banking-room.
    The insolvent bank had been regularly examined by the state bank examiner from yeár to year, and the attention of the president called to certain irregularities in the management of the cashier, which were corrected, in part only, by the officers of the bank. Notwithstanding these irregularities, which were serious in their character, the officers of the bank continued to have unbounded confidence in their cashier.
    On Saturday evening, July 8th, 1899, at the close of the business of the savings bank, it had about $15,000 in cash on hand, which should have been placed by the treasurer, Mr. Yalentine, in a particular drawer in the inner safe óf the fireproof vault. On Monday morning, July 10th, the cashier, who lived at Asbury Park, distant nearly an hour by rail, did not appear. The secretary, Mr. Watson (president of the county bank), opened the vault and took out the package which was supposed to contain $15,000, and opening it found it $7,900 short. About that time he was called up over the telephone by Mr. Yalentine from New York, and told by him that he was detained and would be at the bank later in the day. Mr. Watson mentioned the shortage to Mr. Yalentine, and asked him what it meant, and received for answer that the missing $7,900' was placed in his (Yalentine’s) private drawer in the vault, giving as a reason that the drawer of the savings bank was not large enough to hold the package of money. Mr. Watson was'satisfied for the moment with this explanation, and expected Mr. Yalentine to make his appearance as promised. He did not appear, nor did he appear the next day.
    There was an informal meeting the next morning — Tuesday, the 11th — of a portion of the directors of the county bank, who were also a portion of the directors of the savings bank: and some time during the morning Mr. Watson mentioned to one of them this shortage in the savings bank funds, and it was suggested to him that if Mr. Valentine did not come in shortly he should break open his drawer and get the money out. Mr. Watson did nothing, however, during that day. But on Wednesday morning, July 12th, he succeeded in finding a key which opened Mr. Valentine’s drawer, and did open it, and found that there was no money there. He immediately wrote to the state banking commissioner, at Trenton, stating that the cashier had not appeared since Saturday night, and asking him to institute an examination of the two institutions. The commissioner of banking sent two men to the bank on the morning of Thursday, the 13th. They arrived there a little before twelve o’clock. Before they arrived, however, Mr. Convery, one of the directors of both institutions, a resident of Perth Amboy, came into the bank to make a deposit, and Mr. Watson informed him of the situation, and asked him to go to New York and ascertain, first, whether the negotiable securities — railroad bonds and the like — to a large amount, of the savings bank, which were kept in a safety deposit box in New York, were there or not; and second, to inquire of the Park Bank as to the balance due the county bank. This last was the result of a question by Mr. Convery as to whether or not the county bank was all right, and Mr. Watson said he thought it was, as they had a large balance to their credit in New York. Before Mr. Convery, however, left for New York, the bank examiners arrived, and approved of his mission.
    Mr. Convery proceeded to New York, with a note from the president to the cashier of the Park Bank, called there — whether before or after he had looked after the bonds of the savings bank does not appear — and learned from him that the account of the county bank was overdrawn $30,000. As soon as he could he reached a telephone, and communicated the result to Mr. Watson. The information reached him about two o’clock, and was at once communicated to the bank examiners. If that information was correct, Mr. Watson was aware that the bank was insolvent, as the difference between the balances of the two banks was $110,000, and that exceeded the whole capital and surplus of the county hank. He then suggested to the bank examiners that the bank should immediately be closed; but they suggested to him that it was possible there was a mistake in the books of the Park Bank, and that it would be a great injury to the bank and its creditors to close it if there really was no necessity for so doing, and suggested that they should go to New York immediately and ascertain the situation beyond all doubt. This was done. The president and one of the bank examiners went to New- York and verified the report of Mr. Convery.
    The bank continued business until its regular closing hour of three o’clock. So that it appears that it actually conducted business about one hour after the president had received the information from Mr. Convery of the true situation of affairs.
    The bank did not open its doors on Friday morning, July 14th.

      Mr. Richard V. Lindabury, for the general creditors of the bank. . .

      Mr. Edwin B. Williamson, for the Lehigh Valley railroad.

      Mr. John R. Hardin, for the Essex County National'Bank.

      Mr. Charles T. Glen, for the National Newark Banking Company.

      Mr. John W. Beekman, for J. J. Nash.

      Mr. James M. Chapman, for J. W. Fox.

      Mr. James Parker, for John Hilsdorf.

      Mr. James S. Wight, for Crosby & Hill. '
    ■ Mr. George M. Keasbey, for the Raritan Hollow and Porous Brick Company.
   Pitney, V. C.

Before considering the several claims of the appellants, with their individual characteristics, it is well to determine the principles applicable to cases of this kind. And, in the first place, it is to be borne in mind throughout that this is a contest between the different 'creditors of the bank, and not a contest with the bank itself as a corporation; or with any of its officers. It is not a question of whether the officers and directors of this bank, other than the cashier, who is now serving a term of penal punishment for his misconduct in connection therewith, are personally liable, either civilly or criminally, for their failure, through neglect, to ascertain the peculations of the cashier; but it is a question whether any one of these creditors, who are all, confessedly, honest creditors, and entitled to their pay in full if there were funds enough in the hands of the receiver to make such payment, shall, in default of sufficient funds for that purpose, have a preference over the others.

In the start we are met — as against any such preference— with the general rule prevailing in courts of equity that equality is equity.

The nature of the contract which arises between an ordinary depositor and an ordinary bank of deposit, upon the making and receiving a deposit, is perfectly well settled. It is not a contract of bailment, but it is a contract of loaning of money, and places the parties in the attitude of debtor and creditor. When the depositor hands money to the receiving officer of the bank, and it is accepted by the bank as such, the bank becomes a- debtor to the depositor for the amount thereof, provided it is not directly or indirectly made in payment of a debt due from the depositor to the bank.

There is a possible exception to this in the case of a deposit of something other than cash, or other than a cheek of another depositor, upon the same bank, drawn in favor of the party depositing it. In the last-mentioned case, as soon as accepted, the check is charged to the drawer and credited to the payee. No money’passes. It is a mere change of credit. The effect is precisely the same, however, so far as related to the character of the transaction, as if actual cash had been deposited. But where the deposit consists of checks or drafts drawn on a third part}7, whether a bank or an individual, the result may be (1) either an increase of the debt from the bank to the depositor, or (2) a mere bailment of the check or draft, with the bank as an agent to collect the same for and on account of the depositor, and credit him with the amount when collected. The actual result depends upon either what actually passes between the parties at the time, or what the custom and practice prevailing between them is, and upon the situation of the account between the dealer and banker. If a depositor deposits a check or draft on a third party with the understanding, either expressed or implied, that he is to draw against it at once as if it were cash, and the bank agrees to accept it and treat it as cash, and the depositor draws against it before the amount is realized by the bank, then it is properly treated as a deposit of cash. Or if the depositor is already indebted to the bánk, and the deposit is received in whole or partial payment, the same result follows. But in the absence of an understanding or situation of this kind it is a mere bailment.

The subject was discussed by Mr. Justice Mxon, in Balbach v. Frelinghuysen, 15 Fed. Rep. 675 (at p. 682), and I concur in his conclusions as there stated.

The language of Chancellor Zabriskie, speaking for the court of errors and appeals, in Titus and Scudder v. The Bank, 9 Vr. 588 (at pp. 592, 593), is instructive on this topic.

In cases where the result of the contract is that of lending and borrowing, the matter is closed when the deposit is made, and the depositor can, in case of insolvency, reclaim his deposit, as against the general creditors of the bank, only upon certain conditions. Eirst, he must, show that the officers of the bank who transacted the business with him knew of the insolvent' condition of the bank at the time they accepted his deposit; and were guilty of actual fraud in accepting it. Second,' he must be able to trace and follow his deposit into the assets which came' into the hands of the receiver or assignee.

The ease was likened by counsel in argument, and I think correctly likened, to that of a trader who, knowing that he is' insolvent, but whose' credit is' still good, goes into the market,' and, on the strength of that credit, buys goods for the purpose either of swelling his general'assets, or for the purpose of preferring some particular creditor, knowing at the time he makes the purchase that he will not be able to pay for the goods. In such case he commits an actual intentional fraud upon the seller of the goods, and the seller, -upon being informed of it, may rescind the contract of sale and recover the very goods, if he can find them and they have not passed into the hands of a bona fide purchaser for value.

So if the unsuspecting depositor in a bank, supposing the bank •to be solvent, makes a deposit, and it is accepted by the officers of the bank with full knowledge that they never will be'able to pay it back to him, he may rescind the contract of lending and reclaim his deposit from the assignee of the insolvent bank, provided he can follow and find it and it has not passed into the hands of a bona fide purchaser. And if it appears that his deposit was in cash and that the very money that he deposited was in the vaults of the bank at the time it closed its doors, and came, necessarily, into the hands of the assignee or receiver, he may reclaim it, although he may not be able to identify the very coin or bills which composed the deposit. This last is an extension of the rule as it formerly stood. The reason of it is that it is clearly proven that the assets .of the bank are actually increased by the amount of the deposit, and that the very cash came to the hands of the receiver or assignee.

This was held by the circuit court of the United States for the district of Indiana, in the case of Wasson v. Hawkins, reported in 59 Fed. Rep. 233. The opinion in that case is well reasoned and contains a reference to most of the authorities up to that date (1894), and was relied upon by counsel on both sides in this ease. The cause arose on demurrer, and I will stop to state the admitted facts, namely, that five minutes before the bank closed its business on the last day that it was open the plaintiff deposited in the bank a sum of money in cash and another sum in checks drawn on other banks, and that all of the checks were received as cash and credited to the depositor’s account in his pass-book; that no part of the actual cash deposited was paid out by the bank prior to its suspension, but remained in the bank until after the appointment of the receiver; and the checks so deposited were, on the following morning, collected by a clerk ■in the employ of the bank, and the proceeds held by the bank until the appointment of the defendant as receiver, when such proceeds were delivered into his hands as such receiver. The bank was known by the president to be insolvent. It was held on the statement of these facts that the case was made out against the receiver. The judge, in delivering judgment, states his conclusions as follows:

“The reception of the money and checks, under such circumstances, was a fraud upon the plaintiff, and entitled him to rescind the transaction, and recover back his deposit from the bank. The keeping of the bank open, and the conducting of its business in the usual manner, constituted a representation to its customers of the solvency of the bank, upon which they had the right to rely; and, if the bank was known to be insolvent by the officers who were charged with its management, the concealment of that fact from a person about to make a deposit would constitute a fraud upon him. The title acquired by the bank to the money and cheeks deposited under such circumstances would be voidable at the election of the depositor, who could bring suit to recover his deposit without any previous demand. The bank would become a trustee ex maleficio, and would hold the deposit for the use of the depositor and subject to his right of reclamation.” ■

In contrast, but, as I think, not inconsistent with that case, is the ease of In re North River Bank, in the New York supreme court, General Term, 14 N. Y. Sup. 261, where the deposit was made about two hours before the bank closed, and the cash became commingled with the cash of the bank, and large sums, of money were paid out upon cheeks after the deposit, so that it could not be known that the money remained there at the closing of the bank.

In disposing of the matter, Mr. Justice Van Brunt said that the ease was distinguishable from Craige v. Hadley, 99 N. Y. 131. In the latter ease the deposit was of drafts on Mew York, sent by the insolvent bank at Buffalo to Brown Brothers & Company for collection, and by them collected. To the suit against the receiver of the insolvent bank Brown Brothers were made parties defendant because they still had the money in their hands, and paid it into court in discharge of their liability to. account, so .that the money was capable of being followed and identified. While in the North River Bank Case, to use the language of the learned judge: “The amount deposited by the petitioner had gone into the general funds of the bank. There is no proof that it ever reached the hands of the receiver, and there is no proof but that it has lost its identity. There is no pretence that any particular $533.42 which came into the hands of the receiver was the $533.42 deposited by the plaintiffs, non constat, but that it may have been paid out during the one or two hours that the bank was doing its business. Unless the money can he traced, the petitioner could claim no preference."

The nature of the contract between the depositor and the bank was stated clearly by Mr. Justice Andrews in the case of Craige v. Hadley, supra.

And the similarity of the case of a banker who receives a deposit, knowing he is insolvent, and that of a trader who purchases goods under like circumstances, was stated and maintained by the court of appeals of New York in the anonymous case reported in 67 N. Y. 599.

’ It was argued by the counsel for the creditors that it. was not necessary to show that the very cash deposited came into the hands of the receiver or assignee, provided it sufficiently appear that the amount of the assents in. his hands are increased to that extent; and reference is made to the language of the late Justice Bradley, in Frelinghuysen v. Nugent, 36 Fed. Rep. 229 (at p. 239), where, in stating generally the rule in such cases, and after speaking of the right to follow property, he says: “But if it became confused with other property of the same kind, so as not to be distinguishable, without any fault on the part of the possessor, the equity was lost. Einally, however, it has been held as the better doctrine that confusion does not destroy the equity entirely, but converts it into a charge upon the entire mass, giving to the party injured by the unlawful diversion a priority of right over the other creditors of the possessor. This is as far as the rule has been carried.”

I do not understand the language of the learned judge to bear the interpretation put upon it by. the counsel of the appellant creditors. I do not think he meant to say that there could be what he calls “a charge upon the entire mass,” unless it appeared affirmatively that the identical contribution to the mass still remained a part of it. In other words, I am unable to perceive any necessary conflict between the language used by Mr. Justice Bradley and that used by Mr. Justice Yan Brunt. It is manifest from the context that what Mr. Justice Bradley said was obiter, and written without any intention to lay down an exact rule. He was there dealing with a question of the investment of the moneys of the bank in personal property, which was attempted to be reclaimed by the receiver.

I think the rule is stated with accuracy by Mr. Justice Baker, in Wasson v. Hawkins, supra (at p. 236), thus: “It is charged in the bill, and admitted by the demurrer, that the identical coins and bank notes deposited by the plaintiff remained in the bank when it stopped business, and came into the hands of the receiver, who now has them in his possession as a part of the general mass of coins and notes held by him as such receiver. In such a ease the identification is sufficient to entitle the depositor to follow and reclaim the deposit made by him. Although the identical coins and bank notes cannot be ascertained, yet, as it is admitted that so much in coins and bank notes belonging to the plaintiff is in the common mass, he is entitled, in equity and good conscience, to take so much out. If he does not withdraw from the common mass the very coins and bank notes deposited by himself, no injustice is done, for he leaves an equitable amount of his own in place of every coin of bank note deposited by another.”

The rule so stated is supported by what was decided in the Matter of Cavan v. Gleason, 105 N.Y. 258 (at pp. 262, 263), and also in Atkinson v. Rochester Printing Co., 114 N. Y. 168. At p. 175 the court says: “The fact that the defendant became a creditor of the insolvent bank through the fraud of its officers, and the bank a trustee ex maleficio, gave the defendant no right to a preference over other creditors, unless it could trace and recover its property.”

Against this general result the appellants rely particularly upon the ease of Somerville v. Beal, decided by the circuit court of the United States for the district of Massachusetts, and reported in 49 Fed. Rep. 790, and again, on appeal, in the circuit court of appeals, in 50 Fed. Rep. 648. That case was referred to by Mr. Justice Baker in Wasson v. Hawkins. It was a suit by the city of Somerville to recover from the receiver of the Maverick National Bank the proceeds of certain checks, and, like Wasson v. Hawkins, was heard on demurrer. The checks were deposited just before the failure of the bank, and were drawn on other banks, but finally collected by the bank examiner who took possession of the bank, and the proceeds held by him and turned over to the receiver, and were kept by him separate and distinct from the other funds of the bank. And it was held that, as the bank was irretrievably insolvent at the time the deposit was made, and known to be so by the officers of the bank who received the deposit, the demurrer to the bill should be overruled. The principal question argued was whether or not the checks became the property of the bank by reason of their having been endorsed for deposit and accepted by the officers of the bank as a deposit and credited outright to the city on its bank-book.

Then, returning to the case in hand, with .regard to the knowledge of insolvency by the president of the bank, who was momentarily in its management at the time when these deposits were received, the evidence is quite plain that he, nor any of the other officers of the bank, except the cashier, did not know or suspect, or in anywise realize the true situation of the bank.

Against that result two suggestions were made. Eirst, that the fact of shortage in the package of the savings bank money on Monday morning, coupled with the failure of the cashier to appear, was so strong an indication of a default and direct theft that the officers should have acted upon it immediately. But it is impossible to believe that the president of the bank did not act in perfect good faith in. honestly supposing that the story of the cashier was true. He was of highly respectable family; his father lived in the neighborhood, was a man of wealth and respectability, and bondsman for his son to a large amount. Besides, it is to be observed that the suspicions of the officers were directed more particularly toward the theft from the savings bank than toward any from the county bank; and an inspection by Convery of the state of the account of the county bank with the Park Bank was a mere incident to the investigation of the affairs of the savings bank and the safety of their bonds deposited for safe keeping in Yew York City.

But, in the second place, the counsel for the appellants take the broad ground that the officers of the bank were so negligent in their management as to have almost shut their eyes to the actual truth, and they must be chargeable with knowledge of such facts as they could have easily learned by a slight examination.

It must be admitted that the habitual neglect of the officers of the bank to regularly and periodically examine and verify the account of the county bank with the Park Bank, in Yew York, which they could have done very easily by looking into the reconcilement sheets and examining the vouchers, which were not concealed from them, shows great neglect on their part,, and furnishes a strong argument in favor of their personal' liability to make good to the receiver the losses which have been incurred. But that is not the question here. That question is simply whether the president of the bank was guilty of actual fraud in accepting the deposits in question. A careful examination of the evidence satisfies me that there is no ground for any such position. He was deeply interested in the welfare of both banks. Yot the least connection is shown between him and the dishonest cashier in any of the latter’s transactions. And I am of the opinion that it is actual, as distinguished from constructive, fraud, and culpable negligence, that is necessary in order to maintain the appellants’ eases.

Of course, it almost goes without saying that the fact that the cashier knew for months that the bank was insolvent is not notice to the other officers of the bank. It might as well be argued that an owner of a chattel which has been stealthily stolen from him by his employe is chargeable with notice of such theft and estopped from asserting his title to the stolen chattel when found. The authorities are. all against the appellants in this respect. It is not necessary to cite them. And if that contention should prevail, and the officers of the bank be charged with knowledge of what they might and ought to have known, then they are chargeable with the knowledge of the insolvency of the bank for several months before it failed, and all the depositors who made deposits after it became insolvent would be entitled to a preference — a result which would, probably and almost certainly, bring in all upon an equal footing.

But, it is argued that, granting that the conduct of the president, between Monday morning, July 10th, and Thursday at two o’clock of July 13th, is excusable and consistent with honest intentions, yet that when he received, at about two o’clock on the day last named, the phonetic Communication from Mr. Con-very giving the state of the account of the county bank with the Park Bank, he must be chargeable with actual knowledge that the county bank was insolvent, and that his conduct in allowing it to remain open for one hour cannot be justified; and further stress is laid on the fact that after the regular .closing of the bank for business with its regular dealers at three o’clock, the .-accounts were made up and checks on foreign banks were for-warded for credit, especially with the Park Bank.

The circumstances which occurred on the receipt of the infor-mation from Mr. Convery by the president and the two bank ■ examiners have already been stated. The president proposed immediately to close the bank. . The examiners advised against it, and suggested the possibility of a mistake and the propriety • of immediately proceeding to New York to verify Mr. Convery’s information. The only train that would carry them thence in time to make such verification on that day left in a very few moments. There was no time for much consideration, and the president yielded to the suggestion of the bank examiners.

Now, just here, I cannot refrain from mentioning what I think was a serious oversight by the three parties — the president and' the two bank examiners — and that was this: they should "have simply given directions to the receiving teller to segregate -each deposit which was received from that time on, and keep it : separate from the funds of the bank, and if checks on the bank -were deposited, to hold them without charging them up to the vdra^vers of the checks, so that, in case it turned out that the '¡bank was insolvent, they could be protested for non-payment by reason of the failure of the bank. That course, as I am well ■informed, has been adopted under like circumstances; and it is to be regretted that it was not adopted in this case. But so far .as appears from the evidence developed before me, it makes little difference in this case, for, as will appear hereafter, most of the claims are founded on credits made earlier in the day. Then, .also, the clerk should have been instructed not to send off any foreign collections for the day until further advice from the president.

But I cannot find, as a matter of fact, that the failure to think ■of this plan, in the confusion and excitement of the few moments given for consideration, amounted to actual fraud.

The question of the effect of sending off checks to other banks after the bank closed, and after the president, on arrival at blew York, became thoroughly satisfied of the situation .of the bank, is, as to at least two of the claimants, a serious one.

Another question, which affects quite a large sum of money, is as to whether if any of "the appellants are entitled to relief under the law as above laid down, and supposing the president to have been guilty of fraud, they can have such relief where the deposit was made in cheeks drawn on the insolvent bank; and that question must depend, it seems to me, upon the question whether or not it is possible for the depositor to bring his case within the rule above stated, which requires a tracing of the •deposit. When a depositor deposits a cheek of another party on the bank in which he deposits, no money actually passes. The transaction is a mere transfer of credit. The bank owed the drawer of the check a certain sum of money; the drawer, by his •check, ordered that money paid to the depositor; the depositor presents the check, and, instead of asking for the money, he asks for credit on his account for it. The result is that the bank, by .accepting the check, charged it to the drawer and reduced its indebtedness to him just so much, and by crediting it to the •depositor increased its indebtedness to him just so much. The assets of the bank are not thereby increased; and it would seem impossible to hold that there can be any tracing of the deposit. 'There is no money or coin mingled with that of the bank, and the depositor cannot say, "I have handed you money; hand it back to me.” Among the numerous authorities cited by the-counsel and referred to by the judges in their opinions, I can • find none for the position that any such case can be brought within the rule as above stated.

With these general statements, I come to the consideration of each particular claim by itself.

NEWARK BANKING COMPANY AND ESSEX COUNTY NATIONAL BANK.

The two several claims of the Newark Banking Company and the Essex County National Bank, after eliminating from the latter the items consisting of checks on other banks forwarded to-the county bank, which have been adjusted between the parties,, stand on substantially the same footing. They consist entirely, as I understand the case and the proofs, of items of checks-drawn on the county bank, or of notes playable there. The practice between the appellant banks and the insolvent bank was,on the afternoon of each day, after the close of the appellant banks, to make up a list or package of checks of the character' just stated, and mail them to the county bank. They were received by the county bank in the regular course of mail,, early the next morning, and were immediately dealt with by charging them up to the accounts of the drawers of the checks,, and crediting them to the appellant banks severally. The arrangement between them was that, at stated times, the county bank was to pay, and did pay, the appellant banks the balance then due, by draft on New York. The items which reached the county bank on the morning of the 13th of July- — the-last day it was open — were duly credited to the appellant banks, and there is no proof, or ground for inference, that any actual cash was received on any of them or that any of them were credited to the appellant banks after the morning hour. Unless I have misapprehended the details of the several claims an¿ the evidence of the witnesses with regard to them, they can have no preference for any part of their claims other than what has already been given to the Essex County Bank.

LEHIGH TALLEY RAILROAD.

The same is true of the Lehigh Valley railroad. So far as .appears, its claim consists entirely of deposits made from day to day with the county bank in the usual course of business. There is no proof, or ground for inference, that any of the items deposited are exceptional in their character.

JAMES J. NASH.

The claim of James J.- Hash is exceptional in its character. It is based upon divers drafts on third parties living at a ■distance from Perth Amboy, deposited with the county bank, so that the drafts were to be collected through correspondent banks, ■and the claimant has already attempted to intercept the payment of the proceeds of those drafts by those banks to the receiver. If he shall fail in that, and the amount due from the correspondent banks of the county bank is sufficient to cover it, it may be that his case will finally be placed on the same footing as the same sort of items in the claim of the Essex County Bank. It is proper to say that Mr. Hash is not an appellant, but an ■applicant directly to the court.

j. w. EOX.

The claim of J. W. Eox consists simply of a balance due him L,as a daily depositor in the bank. It stands on the same footing as that of the Lehigh Valley railroad. It cannot be admitted except as a general claim.

COLEMAN & BOYNTON.

The claim of Coleman & Boynton, by Horace C. Coleman, for '$766.81, stands on the same footing as that of the Lehigh Valley railroad and that of Eox. He makes a statement in detail of the whole and a special reference to the fact that $227.71 was deposited in the hank on the day it failed — July 13th. But it does not appear at what time it whs deposited, nor of what the-deposit was composed.

GEORGE C. BROWN AND THE RARITAN HOLLOW AND POROUS BRICK COMPANY.

The several claims of George C. Brown and the Raritan Hollow and Porous Brick Company stand on the same footing, as I understand them, as to part of each. The claim of Brown is' based, in part, upon a draft for $1,000, drawn by R. M. Monroe-on Henry S. Hovey, of Boston, payable to the order of Brown & Sons, and endorsed by them to him and by him, and deposited in the county bank on the 12th of July. On the 14th of July, as alleged in the claim (but probably on the evening of the 13th), it was sent by the county bank to the Park Bank, with other items, to be credited to the county bank. The drawee(Hovey) declined to pay (probably because payment was stopped), and the Park Bank is about to bring an action to recover the amount due on the draft.

The claim of the Raritan Hollow and Porous Brick Company is based, in part, upon a check of $2,500, drawn by the brick company on the Manufacturers Fational Bank of Fewark, to-the order of the county bank, and deposited with that bank on the 13th of July, and by the county bank forwarded, on the-evening of the 13th — the last day it was open — to the Park Bank for collection. Payment on that check was stopped at the manufacturers bank, and the Park Bank has brought suit upon it against the brick company.

The brick company and Mr. Brown claim a preference in case-they are obliged to pay the draft and check in question.

Fow, if instead of there being an indebtedness from the insolvent bank to the Park Bank, there was an indebtedness-from the Park Bank to- the insolvent bank, sufficient in amount to cover these items, and other items like them, then I should say that those claims come within the principle which induced the receiver, under the advice of counsel, to accede to the claim-of the- Essex County Bank for preference of like items. They were sent to the Park Bank after it was finally known that the county hank was insolvent; and. had the president or the examiner who remained at Perth Amboy been sufficiently thoughtful and alert, they should have prevented the forwarding of the draft and cheek to the Park Bank. As it is, there is danger, under the rule that prevails in that state, as illustrated by the case of Bank v. Lloyd, 90 N. Y. 530, that they may be .obliged to pay them. Be that as it may, I am unable to see how, under the principles which I have found to be established as governing-cases of this kind, these claims now in question can be allowed, and for the simple reason that the fund cannot be followed. It is swallowed up and lost in the general indebtedness of the county bank to the Park Bank.

I think Terhune v. Bank of Bergen County, 7 Stew. Eq. 367, supports that view.

JOHN HILSDOBF.

I next deal with the ease of John Hilsdorf for $1,887.93. On this a special claim for preference is made for $1,469.93, which was deposited with the hank, on the 13th of July, under these peculiar circumstances: Hilsdorf had negotiated a loan from the savings bank, to be secured by a bond and mortgage for $1,500. The loan had been passed and the mortgage duly recorded, and he was entitled to the money, less the expenses, which, being deducted, left the precise sum of $1,469.93. He called at the bank early on the morning of the 13th to get his money. He kept a pass-book account with the county hank. He saw Mr. Watson, the president, and told him he wanted his money. Mr. Watson handed him a draft drawn by the Perth Amboy Savings Institution to his- (Hilsdorf’s) order, on the county bank, which Hilsdorf endorsed and handed it back, with his pass-book, to Mr. Watson, who gave him credit for it, and handed him back his pass-book. This occurred between ten and eleven o’clock in the morning.

- I cannot differentiate this case from the others which have been dealt with. A very strong argument was made before me in behalf of this man, in which the hardship of the ease was dwelt upon; but the argument tended more to show that Mr. TIilsdorf has a claim against the savings bank, than to show that he has any right to a preference over other creditors as against the receiver of the county bank.

CROSBY & HILL.

The next and last claim is that of the firm of Crosby & Hill. It is for $3,965.49, composed of deposits made from day to day for several days before the failure, that of the 13th of July, amounting to $150.75, being made a few minutes before the bank closed at three o’clock. It was composed partly of check and partly of cash, and the check was sent without being endorsed, so that the messenger was obliged to return to get it endorsed. The proofs do not show just how much of that sum was cash and how much was check, nor upon what bank the check was drawn.

Under the peculiar circumstances, I think that so much of this deposit as was in cash may be fairly inferred was not paid out by the teller and came to the hands of the receiver.

This, I believe, disposes of all the appeals and claims that were presented, and I will advise a decree in accordance with these views.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Patrick White and Sarah Daly and husband v. John P. White et ux.
    [Submitted February 17th, 1900.
    Decided February 23d, 1900.
    Filed November 17th, 1900.]
    A voluntary conveyance by an illiterate man, unaccustomed to business transactions, of substantially all his property, in making which he did not have the benefit of independent, competent and disinterested counsel, to make him fully understand, realize and appreciate the full practical effect and consequence of the deed during his lifetime, though he was told gener •ally that it conveyed the property, and which contains no provisions to -effect the understanding of the parties that he was to retain the use and benefit of the property during his life, will be set aside.
    On final hearing on bill, answer, replication and proofs taken in open court.

      Mr. Alan E. Strong, for the complainants.

      Mr. Silas D. Orimsiead, for the defendants.
   Pitney, V. C.

The object of this bill is to enjoin an action of ejectment .brought by the defendant John P. White against the complain.ant Sarah Daly to recover possession of a house and lot situate on the northerly side of Bishop street, near the corner of George .street, in the city of blew Brunswick, and to set aside a deed of conveyance which is the foundation of' the defendant’s title, made and executed by the complainant Patrick to the defend.ant John P. White, bearing date May 8th, 1888, conveying the premises in question, which constitute the homestead of Patrick WTiite, where he had lived for many years and reared his family, .and still lives with Mrs. Daly.

The ground of relief set forth in the bill is that the complain,ant Patrick, at the time of the execution of the deed was advanced in years — being seventy-four years old — nearly or quite blind, entirely illiterate, so that he could neither read nor write, ■quite unaccustomed to business transactions, and was not con.seious of having executed any such deed; that no demand had ever been, made for the possession of the premises for the eleven years that intervened between its date and the commencement •of the action of ejectment; that the same was procured from him by some sort of undue influence or fraudulent imposition, and •that its existence was concealed from all members of the family ■of Patrick White. The bill further alleges that the deed, though entirely without consideration, was absolute in its térms and in the nature of a testamentary disposition, and should have con-tained a power of revocation on the part of the grantor.

The answer denies any and all fraudulent practice or imposition, and alleges that the deed was the free, voluntary and in■telligent act of the complainant, and that the reason why no-claim was made under it and its existence concealed by defendant was that his father desired and expressly requested that the- ' defendant John should not mention it while Patrick lived, and that he, John, allowed his father to remain in possession of the house and premises “as had teen arranged and agreed upon at the time of the execution of the said deed.”

This admission in the answer was in accordance with the-actual facts as they appeared at the hearing,, and upon it, in addition to the allegation of imposition upon the complainant,, counsel based an attack upon tire deed because it did not at all< reserve a life estate to the grantor.

The complainants Sarah Daly and husband are joined as parties complainant because in the year 1898 the complainant Patrick White, and his wife, since deceased, conveyed the premises in question to a third party, who re-conveyed them to Patrick, and his wife and Sarah Daly, to hold as joint tenants.

Patrick purchased the premises in question from Isaac Fisher by deed dated December 26th, 1848. Later on, by deed dated April 3d, 1866, he purchased a lot of land called the Commercial avenue property, from certain persons of the name of Coffee, the conveyance of which was made to him and his wife, Ann, 'as tenants of the entirety. Later on — in 1884 — a conveyance-'was made by one Stubelbein to Ann White, the wife of Patrick, of a lot of land situate on the corner of Bishop and George-streets, immediately adjoining the homestead, which he purchased of Fisher.

Some time about that date — 1884—the old gentleman became-totally blind from cataracts covering both eyes. Of this blindness he was partially relieved by an operation made on the 12th-of April, 1887, which gave him partial sight in one eye. so that he could recognize large objects, and move about and feel his way by the use of a cane, and was able for a while to go out and' walk about the streets. But the covering over the eye soon returnéd, and within a year or two he became again almost totally' blind.

He had three children — Michael, the oldest, the defendant John, about forty-five years of age, and the complainant Sarah. John was and is a rather intelligent and pretty well educated ' person, so that he maintained the position of clerk in the post-office for many years. He lived at home and paid a small sum —$3 per week — for board, until his marriage in June, 1887, after which he left home and kept house seven blocks away, on • George street. At that time there was ill-feeling between him and his mother and sister, which continued for a year or more.

The daughter, Sarah, had for years before that time worked out as a dressmaker, receiving wages at the rate of $1.50 a day,, as often as she got work, all of which she turned into her parents.

The mother' was the more active and efficient manager, and, after her husband was disabled, engaged in some small pursuits-which brought in something.

The daughter married in September, 1887, and lived with her husband in a part of the homestead, paying a small rent therefor, and assisting her mother, as she became disabled by age, in the-cares of her household, and also in caring for her father; and finally, for several years prior to the commencement of the suit in question, she was obliged to take care of both of them, the-father having arrived at the age of over eighty, with many infirmities; the same being true of the mother, who died in 1898.'

The father was sworn, de bene esse, at his house, before the day sot for the hearing, and was unable to attend as a witness at the hearing to explain any matters that were advanced against him. He swears that he went with John to a house in New Brunswick,, there met two other men, and executed a will, and that he subsequently executed a codicil; that he never executed any deed; that John made him execute the will. He did, in fact, execute both the deed in question and a will, both at one sitting, in the-presence of his son John, Mr. Grimstead, who prepared the-documents, and Captain Hoffman, a resident of New Brunswick.

The account of the transaction given by the defendant John' P. White, Captain Hoffman and Mr. Grimstead is as follows:

John swears that his father told him that he had been induced by his mother to make a will that did not suit him, and that he-wished to assure to him (John) the homestead so that it would, always be occupied by a White, and requested him (John) to-procure a lawyer to prepare the papers, and that he wished to keep it very quiet; that he was not aware at that time what kind -of papers his father wished to execute; that in' pursuance of his request he visited Mr. Grimstead in the evening at his house ' in Rahway, twelve miles away, but did not tell him that a deed •was contemplated, and made an appointment for him and 'Captain Hoffman to meet at the house of Mrs. Ryan, a near neighbor of J ohn’s, at a certain hour on the 8th of May, 1888. This, it will be perceived, was less than a year after John was married and left home, while the bad feeling existed between him and his mother and sister. Neither Grimstead nor Hoffman ■were friends or acquaintances of Patrick. Hoffman was on rather intimate terms with John. That they met at Mrs. 'Ryan’s according to appointment; that his father came to his (John’s) house, and brought with him the Eisher deed of the .homestead, but no other deed; that they went from there to Mrs. Ryan’s, and there met Mr. Grimstead and Captain Hoffman; that there the father produced the deed and took the 'initiative; told Mr. Grimstead what he wished — that he wished to. fix the title to the homestead in John, so that it could not be taken away from him. Mr. Grimstead asked him if he wanted to make a deed for it, and that he said he did. Mr. Grimstead ■had with him a blank deed, and a supply of legal cap paper; that he drew the deed from the old deed brought by his father, .explained it fully to the old gentleman, and that the latter • executed it by his mark and acknowledged.it in his presence, .and in the presence of Mr. Hoffman. The deed is produced, and is so executed. The pen work of Patrick’s signature to both deed and will was done by Grimstead in the usual way, namely, ■the old gentleman touched the top of the pen while Grimstead -made the mark.

Mr. Grimstead swears that after the deed was executed the -old gentleman said that he had other property that he wanted to dispose of, and he asked him if he wished it to be done by deed; ■that he said, “No,” a will would do; that he then stated what -other property he had, and that he then and there prepared a ■will, which is produced. It was executed in the presence of thé -same witnesses, and witnessed by them. By that will he gives the property purchased of Stubelbein, on the corner of George and Bishop streets, to his wife, Ann. (It will be observed that-the title to this was vested already in Ann White, and never had-been vested in the testator.) He then gave to his daughter, Sarah, the complainant, the lot of land on Commercial avenuepurchased by him of the Coffees. (This property, it will be borne in mind, belonged at that time to him, the testator, and his wife, as tenants of the entirety, and his power to dispose of it depended upon his surviving his wife.) He then gave to his-son Michael $85, declaring that he had advanced to him money to an amount equal to the property given to his daughter, Sarah.Then the will recites that he had this day given his son John a deed for the lot of land on Bishop street which he bought of' Isaac Fisher, and declared that he intended that to be in lieu of any interest which he, said John, should have in any estate of which he might die seized. Then all the rest and residue of his .estate, both real ‘and personal, and there was no proof that there was any other property, of which he might die seized, he gave to his executors to be divided into three parts, one-third to-■his wife, one-third to his daughter, Sarah, and one-third to his-son John; and declared that the bequest to his wife was intended to be in lieu of dower.

The deed and will were left with John. John had the deed' recorded on that day. He kept the will and deed together in a safe place until a codicil appointing a new executor was executed in 1894, before the same witnesses. Ho member of the family ever heard of the deed until after the death of the mother, in 1898, when a contest arose over her will. The father had, however, told his wife and daughter that he had executed a will by compulsion of John.

The account of the three witnesses — John, Mr. Grimstead and' Captain Hoffman- — of what occurred at Mrs. Ryan’s does not agree. Mr. Hoffman, examined by Mr. Grimstead, gave the following evidence:

“Q. What occurred first when we all came together?
“A. You asked Mr. White as to what he wished to have done with this property, which way he wanted to have it disposed of, and he dictated the entire deed of what he wanted done, giving his son John P. White so ancf •so, and his daughter Sarah so and so; also designating certain lands and property to his wife — in fact, he dictated the whole thing all the way through, as you asked him questions what he would want next, and so' .forth.
“Q. You say he produced a deed there from which this deed was drawn?
“A. Yes, sir.”

And, on cross-examination, he states:

“Q. And Mr. Grimstead asked him what he wanted to do with his •property?
“A. Yes, sir; he asked him what he wanted; he wanted to give so and so to his son John P. White, and so and so, his other piece of property •■on Commercial street, I think, to his daughter; and giving the whole thing what he wanted ; the whole thing: and the deed was drew up accordingly.
“Q. That conversation took place, which you have stated, before any papers were drawn; is that so?
“A. Yes, sir; he stated first what he wanted to do, and then the papers were drawn ; that is it exactly.”

Mr. Grimstead and John swear that the old gentleman first stated that he wanted the homestead property to be assured to . J ohn, and that the deed was then drawn, and after that was done the disposition of his property was first spoken of. They clearly separate the two transactions, both as to the instructions given by the old gentleman and the preparation and execution of the papers, while Mr. Hoffman, whom I consider to he the more reliable witness, swears that the instructions were all given at •once, but the deed was drawn first and executed, and then the will was drawn and executed afterwards. They all swear that he produced the deed of the homestead made by Fisher to him; ■that the deed from him to J ohn was copied from it. • They also ■swear that he himself mentioned the Stubelbein property on the corner of George and Bishop streets, and the Coffee prop■erty on Commercial avenue. Mr. Grimstead denied most emphatically that he went beforehand to the clerk’s office to get .any memoranda from these deeds, or obtained any information from any other source except from the single Eisher deed produced, and the information which the old gentleman gave him.

It is to be observed, upon a careful reading of the evidence, that no one of the witnesses, not even Mr. Grimstead himself, ■ventures to say that the old gentleman first suggested a deed, but they seem to have taken it for granted that he wished to .assure the homestead to John by means of a deed rather than a will, and making a deed was suggested by Grimstead. They all .swear that Mr. G-rimstead read the deed over to him and asked him if that was the way he wanted it, and that he said “Yes.” The same with regard' to the will. But all the evidence and the circumstances negative the idea that any explanation was made to him of the effect of the deed, or that he was in anywise made to realize and comprehend that the result of it would be that John could turn him out of doors the next day, and that ■even if he were willing to trust his son, still that son might die in his father’s lifetime, leaving infant heirs who would be under no moral obligation to respect the verbal understanding between the father and son as to the possession of the homestead during the remainder of the father’s life. And further, that if John .-should be unfortunate in business, and become indebted, his creditors might seize it to satisfy their debts. Nor was it suggested to him that his own and his wife’s infirmities might make it necessary for them to sell or mortgage it for their necessary .-support in their old age.

But I am not at all satisfied from the evidence that the old gentleman was ever conscious that he had executed a deed, as contra-distinguished' from a will, and I think that the weight of the evidence is that what he swears to is true, viz., that he supposed he had executed a will and was not conscious of having executed a deed.

I have already alluded to the circumstance that although the son disavows having been told by his father that he intended to make him a dqpd, and denies that he instructed Mr. Grimstead that a deed was to be drawn, yet Mr. Grimstead, nevertheless, swears that he was instructed by John that a deed was to be drawn, and brought a blank to the house for that purpose. I 'have already alluded to the discrepancy between the evidencé ■of Captain-Hoffman and that of Mr. Grimstead and John.

But there are two other matters which I think are of quite a ■convincing character. They all agree that Patrick White brought .a single deed- — -the-deed of the homestead property from Fisher— •called the Fisher deed. The voluntary act of the old gentleman in bringing that particular deed to the rendezvous is naturally" relied upon as strong proof that he intended to convey the property it covered to his son. If he did not in fact bring that deed,, the principal support of the defendants’ case in that behalf is destroyed, and the defendants’ witnesses shown to be unreliable. Now that deed is produced at the hearing, as well as the two-deeds for the properties disposed of by the will. The daughter-swears that those three deeds were kept together in an envelope in a locked drawer of a bureau in the house, of which her mother carried the key, and that she always knew them to be there whenever there was occasion to see them. That in 1895, when a conveyance of the property in question was made by Patrick to a third party, and by the third party to him and his wife, as tenants of the entirety, and again in 1898, when the conveyance-already mentioned was made by Patrick and his wife to a third party, and by him to .Patrick and wife and Sarah, as joint tenants, those deeds were taken from the bureau by her and handed to the solicitor who prepared the conveyances, and then put back-again; that she never knew her father to go to the drawer and take them away; that he sould not have done so without asking her mother for the key; and further, undoubtedly, in May, 1888, he was so blind, even if he had not been entirely illiterate and unable to read or write and so distinguish one deed from another, that he could not have picked out the Eisher deed from the two others, and carried that alone to the rendezvous; and that it would have been difficult for him to have done so without she- or her mother knowing it, and the circumstance would at once have excited the attention and alarm of the family.

The next circumstance is this: the description in the old Eisher deed, which Patrick is stated to have produced, is as-follows:

“All that certain lot of ground lying on the northerly side of Bishop-street in the city aforesaid, and adjoining lot this day conveyed by said Isaac Fisher to Archibald Foster, beginning at the southwesterly corner of the said lot of said Foster, running thence on line of said street westerly fifty feet; thence northerly at a right angle one hundred feet; thence easterly at a right angle fifty feet: thence to place of beginning.”

It will be observed that in the nature of things there could not have been any reference in that deed to the record of the conveyance of the adjoining property from Eisher to Archibald Poster.

This deed from Eisher to White was recorded on December 30th, 1848, in book 48, page 396.

Now in the deed here in question prepared by Mr. Grimstead, from Patrick to John, the property is described as follows:

“All that certain lot of land and premises situate, lying and being on the northerly side of Bishop street in the city of New Brunswick, Oounty of Middlesex and State of New Jersey, adjoimng lot of land conveyed by deed of :Isaac Fisher and wife to Archibald Foster, bearing date the tioenty-sixth of December, eighteen hundred and forty-eight, recorded in Middlesex Oounty Olerk’s Office in Book 48 of Deeds, at page 395. Beginning at the southwesterly corner of the said lot of said Foster and running thence on the line of said street westerly fifty feet;. thence northerly at a right angle one hundred feet; thence easterly at a right angle fifty feet; thence to the place of beginning. Being the same premises conveyed to said Patrick White by deed of Isaac Fisher and wife bearing date the twenty-sixth day of December, eighteen hundred and forty-eight, and recorded in Middlesex County Clerk’s Office in Book 4S of deeds, on page 395.”

Now if neither.Mr. Grimstead nor John P. White ever went or sent to the clerk’s office to obtain a description of the homestead, or to get a reference to the other properties which the old gentleman or his wife owned, how came it that Mr. Grimstead was able to insert in the description of his deed, what is not found in the description of the deed from Eisher to Patrick, these words: “Recorded in the Middlesex County Clerk’s Office in Book 48 of Deeds, at page 895?” There can be but one answer to this — either John or Mr. Grimstead or somebody in behalf of them, had been to the clerk’s office and found the record of the deed from Eisher to Poster referred to in'the deed from Eisher to White and recorded just one' page before it in the record.

The attention of counsel for defendant was called to this circumstance after the oral' argument and before his written argument was submitted, and he was asked to explain it. The only explanation he could give was that possibly he had left' the number of tlie book and the page blank at the time he prepared the deed, and filled them in after he arrived at the clerk’s office. But a careful examination of the deed itself discloses to my eye no indication that the figures in question were written subsequent to the Test of the script. The ink is precisely the same, and appears to have been written at the same time, and is quite different in shade from that used by the clerk in making the usual endorsement on the deed.

These circumstances, namely, the improbability that the old gentleman could have been able either to get access to the Fisher deed without the assistance and knowledge of his wife, or, if he had obtained access, to select it from the other two, and take it to the house of Mrs. Ryan and afterwards replace it in its proper envelope, and the fact that either John White or Mr. Grim-stead procured the description of the deed in question from the clerk’s office, and then positively denied it on the stand, the result of which is that no reliance can be placed upon their evidence, taken in connection with other circumstances already alluded to, lead to the conclusion that the old Fisher deed was not before Mr. Grimstead when he drew the deed to John, and that' the old gentleman’s version is true — that he was not conscious of ever having executed a deed. No doubt some paper resembling a deed was produced, which at this late day Captain Hoffman thinks he recollects was a deed, and the old deed of the premises, and no doubt the deed then executed was read over to the old gentleman before he touched the pen which made his mark, and that he said it was all right. But it does not follow that he understood it was a deed as distinguished from a will. The burden of proving this is, under the circumstances, cast upon the grantee. The presumption is against him, and in my judgment he has not overcome it.

But if I am mistaken in this conclusion, the other grounds taken by counsel for the complainants, and mainly relied upon by him, must resolve the case in the complainants’ favor. These grounds are two; either of which is in itself sufficient to invalidate the deed, and they support each other.

First. The conveyance was purely voluntary, and disposed of substantially all the grantor’s property, and in making it he did not have the benefit of the advice of independent, competent and disinterested counsel to make him fully understand, realize and appreciate the full effect and consequence of the deed, during his lifetime. It is not enough that it was read to him, and that he was told generally that it conveyed the property to John, and that he so understood it. Such an “understanding” is not sufficient in the case of an illiterate man unaccustomed to business transactions. The word “understand,” so much used by lawyers and jurists in connection with the execution of deeds, wills and such instruments, includes the realization of the practical effects and consequences in every direction of the proposed act, be it deed or will.

In the second place, the understanding between the father and son-was that the grantor was to retain the use and benefit of the property during his lifetime, and a clause of reservation to effect that understanding was not inserted in the deed. This, also, is a fatal defect.

The authorities in support of this position in this state are Garnsey v. Mundy, 9 C. E. Gr. 243; Mulock v. Mulock, 4 Stew. Eq. 594; Martling v. Martling, 2 Dick. Ch. Rep. 122; Hall v. Otterson, 7. Dick. Ch. Rep. 522, and Lovett v. Taylor, 9 Dick. Ch. Rep. 311. The older authorities are collected in Garnsey v. Mundy and Mulock v. Mulock. The latter ease is peculiarly applicable here. The principles upon which the courts act in such cases are there luminously set forth, and I deem it not ■worth while to repeat them here.

I will advise a decree that the injunction be made perpetual, the deed from the father to the son be declared and decreed to be void, and the son and wife directed to re-convey to the father.


text:
    Nicholas W. Bindseil, trustee in bankruptcy, v. John Cashion and Edwin F. Smith.
    [Submitted February 10th, 1900.
    Decided February 27th, 1900.
    Filed November 17th, 1900.]
    1. A state court has jurisdiction of a suit by a trustee in bankruptcy to set aside a transfer by the bankrupt, made within four months before the petition in bankruptcy was filed, giving a preference, though it is void only under the Bankruptcy act.
    2. A suit in a state court by a trustee in bankruptcy to set aside a transfer of chattels by the bankrupt, giving a preference, is not barred by the fact that after the petition in bankruptcy was filed, and before, the adjudication in bankruptcy, the creditors filed a petition to the United States district court, praying that the transferee be enjoined from disposing of the property, on which injunction issued, but nothing further was done; this not showing pendency of another suit, as the creditors could not further prosecute it.
    The case comes before the court on motion to overrule a plea.
    The bill is filed by a trustee in bankruptcy against John Cashion and Edwin E. Smith, the latter alleged to be a transferee of Cashion’s property. Cashion was adjudged a bankrupt, and, by due proceedings in the district court of the United States,for the district of New Jersey, his estate was vested in the complainant, who was appointed trustee; and the object of the bill is to set aside a transfer made by Cashion within four months before the petition in bankruptcy was filed, giving a preference to the defendant Smith, contrary to the provisions of the act.
    The facts set forth in the bill show clearly enough that the transfer is void under the Bankrupt act, but is valid under state laws, as against any person not clothed with title under the Bankrupt act.
    After the petition was filed, and before the adjudication of bankruptcy, the same creditors who had filed that petition presented a second petition to the same district court, setting forth that since the filing of the first petition they had obtained a judgment against Cashion and taken supplemental proceedings under it, and that in those proceedings the character of the transfer in question was developed and the nature of the property — choses in action — in the hands of Smith was shown, and praying that Smith may be enjoined and restrained from assigning, transferring or in any way disposing of the chattels in question, and for other relief. An injunction was granted pursuant to the prayer of this petition, but no further proceedings were had under it.
    The plea sets up this second petition as a bar to the complainant’s suit in this court.

      Mr. Joseph D. Gallagher, for the complainant.

      Mr. Robert II. McCarter, for the defendants.
   Pitney, V. C.

Three questions were argued. First. Has this court jurisdiction of the cause of action set forth in the bill ?. Second. Has the district court of the United States for the district of New Jersey jurisdiction of the cause of action? If both these questions are answered in the affirmative, then, Third. Was the filing of the petition for restraint of Smith such a commencement of a suit in the federal court to set aside the transfer as will prevent proceedings in this court ? *

As to the first question, I think it must be answered in the affirmative. There can be no doubt that the trustee in bankruptcy was vested with. the title to the whole property of every nature of the bankrupt, precisely as a receiver of this court would be if proceedings had been taken against the insolvent or the defaulting debtor under the eighty-eighth and subsequent sections of our Chancery Practice act, and with that goes the right to enforce that title in the courts of this state.

It is urged, however, that, according to the state law, the assignment in question to Smith was perfectly valid. Grant that to be so, still it became invalid, by virtue of the provisions of the Bankrupt act (which, as I understand the law, are of universal application), whenever attacked by a party properly authorized by the act. This court will not hold a transaction— when so attacked — valid which is declared to be invalid by the laws of the United States covering such subjects as the constitution places within the province of congress. In whatever court the trustee in bankruptcy comes to enforce his claim, the law of congress must be respected; and the ease must be viewed precisely as if there had been a state law declaring void all assignments with preference made four months before application to the court for relief under the sections of the Chancery Practice act.

The next question is, Had the district court of the United States for the district of New Jersey jurisdiction of this same cause of action?

That jurisdiction is found in the second section of the Bankrupt act, in which the jurisdiction in bankruptcy is confided to the district courts of the United States, the supreme court of the District of Columbia and 'the district courts of the territories; and they are invested with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings, in vacation in chambers and during their respective terms; (1) to adjudge persons bankrupt; (2) to allow or disallow claims against the bankrupt’s estate; (3) to appoint receivers or the marshals, upon application of parties in interest, in case the courts shall find it absolutely necessary, for the preservation of estates, to take charge of the property of bankrupts after the filing of' the petition and until it is dismissed or the trustee is qualified (the petition upon which the plea now in question is based was filed under that clause); (4) to try and punish bankrupts, officers and other persons; (5) to permit temporary prosecution of business; (6) to bring in and substitute additional persons or parties in proceedings; (7) to cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided; (8) to close estates; (9) to confirm or reject compositions; (10) to consider and confirm, modify or overrule, or return, with instructions for further proceedings; (11) to determine claims of bankrupts to exemptions; (12) to discharge bankrupts; (13) to enforce obedience by bankrupts, officers and other persons to lawful orders; (14) to extradite bankrupts; (15) to make such orders, issue such process, and enter such judgments, in addition to those specifically provided for, as may be necessary for the enforcement of the provisions of this act; (16) to punish persons for contempt committed before referees; (17) to appoint trustees; (18) to tax costs, and (19) to transfer cases to other courts of bankruptcy.

The jurisdiction of the circuit courts of the United States in bankruptcy eases is found in section 23 of the Bankrupt act, as follows:

“a. The United States circuit courts shall have jurisdiction of all controversies at law or in equity, as distinguished from proceedings in bankruptcy, between trustees as such and adverse claimants concerning the property acquired or claimed by the trustees, in the same manner and to the same extent only as though bankruptcy proceedings had not been instituted, and such controversies had been between the bankrupts and such adverse claimants..
“6. Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant.
“c. The United States circuit court shall have concurrent jurisdiction with the courts of bankruptcy, within their respective territorial limits, of the offences enumerated in this act.”

These provisions vary materially from those found in the-Bankrupt act of 1867.

Naturally enough, it has been held that the district court may, before the adjudication of bankruptcy and before a trustee is ippointed, by summary process, take possession of, or preserve by injunction, the property of the bankrupt until the trustee is appointed. Davis v. Bohle, 92 Fed. Rep. 325; 34. C. C. App. 372, is such a case. And to the same effect is In re Gutwillig, 92 Fed. Rep. 337; 34 C. C. App. 377. But those cases do not go any further, and do not reach the present case.

The question now under cohsideration was elaborately discussed in a learned opinion by Circuit Court Judge McCormick, in the fifth circuit court of appeals, in Bernheimer v. Bryan, 98 Fed. Rep. 767; 35 C. C. App. 592 (April 25th, 1899), and it was there held that the district court had no jurisdiction to proceed and try the title to chattels alleged to be the property of the bankrupt, but claimed by a third person under conveyance from the bankrupt, in a summary manner upon a petition by the creditors, such as was presented to the district court in the present case. And that ruling was followed by the same circuit court of appeals in the case of Camp v. Zellars, 94 Fed. Rep. 799; 36 C. C. App. 501 (June 1st, 1899). That case goes further than Bernheimer v. Bryan, in that there the petition was filed in the district court by the trustee after his appointment, and prayed for the' cancellation of a conveyance of land made by the bankrupt to his wife alleged to have been fraudulent as to creditors, and for the recovery of the land for the benefit of the estate; and it was held that the district court had no jurisdiction to entertain such a suit. The decision appears to have gone upon the ground that a suit by a trustee to acquire title and possession of property of the bankrupt in the hands of a third party, who claimed the same by title from the bankrupt, was a new and independent proceeding or suit by the trustee, and not a part of the bankruptcy proceedings proper, and hence the district court, sitting as a court of bankruptcy, had no jurisdiction, and the trustee must seek his remedy in either- the state or the federal court. It would seem that, if he sought the aid of the federal court, he must go into the circuit court of the United States under the twenty-third section of the Bankrupt act.

Subsequent to the decision of the case of Camp v. Zellars, supra, it was held by the district court of the'western district of Michigan, in the case of In re Newberry, 97 Fed. Rep. 24 (October 4th, 1899), that the district court had -jurisdiction of a case precisely like the present. The decision is directly in the teeth of that of Camp v. Zellars, which was not cited before the Michigan judge.

Later, the question received careful consideration by the district court for Utah in the case of Murray v. Beal, 97 Fed. Rep. 567 (November 13th, 1899), in which most of the previous cases, including Camp v. Zellars, were cited. A great conflict of view of the various district courts is shown, and a result different from that in Bernheimer v. Bryan and Camp v. Zellars is arrived at, and the jurisdiction of the district court over that class of causes is sustained.

In this conflict of authority T should feel bound) if necessary for the decision of this cause, to follow that of the appellate court. But I do not find it necessary so to do.

The petition here set up in bar does not show any other action pending. It was presented by the creditors of the bankrupt to protect the property of the bankrupt until the adjudication of bankruptcy and appointment of the trustee. This object having been accomplished, the office of the petition is fulfilled, and it becomes functus officio. The petitioning creditors have no right in their capacity as creditors to further prosecute it. That right vested in the trustee. Whether the trustee might have been permitted by the district court to be substituted as petitioner therein, and to proceed with the suit, is not a matter which now concerns us. The fact is that he has not done so, but has sought relief in this court, where he is entitled to be heard.

I will advise that the plea be overruled, with costs; and that the defendants have leave to answer within twenty days or the bill be taken as confessed.


text:
    Newark City National Bank et al. v. Augustus Crane, individually, and as surviving executor of the last will and testament of Nathan Bolles, deceased, et al.
    [Submitted March 13th, 1900.
    Decided March 21st, 1900.
    Filed November 17th, 1900.]
    Where, in a suit to construe a will, it was decreed that the will passed a vested estate to the children of the testator, subject to be devested, in favor of grandchildren, as to any of the real estate not actually sold 'and conveyed prior to the-death of the first taker, such decree was res judicata as against judgment creditors of one of the children; and hence such creditors were not entitled to their judgment debtor’s share of the proceeds of land belonging to the estate sold after his death, though they were not parties to the suit to construe the will.
    On final hearing on bill, answer, replication and proofs.

      Mr. Joseph P. Osborne and Mr. William H. Osborne, for the complainants.

      Mr. John II. Meeker, for the defendants.
   Pitney, V. C.

The contest in this cause is over a sum of thirty thousand dollars and more in the hands of the defendant Crane as surviving executor of, and trustee under, the will of Nathan Bolles, deceased. It is so much of the proceeds of a sale of real estate of the testator, made by Crane as surviving executor, as repre- ' sents the ’ share of Thomas N. Bolles, deceased, a son of the testator, under said will. Thomas N. was co-executor and trustee with the defendant Crane, but died before the sale of the lands which produced the fund.

The contestants on either side are the complainant, the Newark City National Bank and other judgment creditors, and a mortgagee of Thomas N. Bolles (who will hereafter be spoken of as the hank), on the one side, and the children of-Thomas N. Bolles, on the other side, who are parties defendant.

The bank claims as a judgment creditor of Thomas N. Bolles, and asserts that its judgment was declared and decreed by this court, on February 3d, 1892, in the lifetime of the judgment debtor, to be a lien upon the lands which were sold to produce the fund in court. That decree was made in a contested, hut unreported suit of Crane, executor, against Bolles, which was commenced on the 1st of November, 1890, and is the second of that name.

, The children of the judgment debtor, on the other hand, claim by virtue of the twelfth clause in the will of Nathan Bolles, which is in these words: “It is my will that the issue of any child who may hereafter decease shall receive the share or portion to which their parents would be entitled to if living.” And they assert that the true construction of that clause, as applied to the case in hand, has been determined by this court in a contested suit of Crane v. Bolles (No. 1), commenced in April, 1889, in an opinion of the chancellor, reported in 4 Dick. Ch. Rep. 373 (where the will is set forth at length), and that a decree was made therein in accordance therewith on the 17th of May, 1892.

The counsel for the bank, on the other side, assert, and truly, that their client was not a party to that suit of Crane v. Bolles, which was the first of that name, and hence is not bound by any decree made therein. The children of the judgment debtor, on the other hand, assert truly that they were not parties to the second suit of Crane v. Bolles, and therefore are not bound by the decree relied upon by the bank to establish its lien; and they further set up and show that the suit ISTo. 1 was commenced and was pending before the accrual of the encumbrances under which the bank and others claim herein. So that there was no intentional omission to make them parties to that suit.

It is plain, therefore, that neither party is bound by the decree proper in either cause which is relied upon, unless the failure of the bank to make itself a party to the first suit had that effect.

But there is a clear distinction between a decree and the law declared by the court which produces the decree, and though a party may not be bound by a decree, as such, he may be bound, so to speak, by the law which produces that decree. That is to say, his rights are affected, as all other citizen’s rights are affected, by the declaration of the law made by the courts in the due administration of justice.

This rule is illustrated in New Jersey by the line of cases which seem to have fairly established the rule that, in a suit for specific performance of a contract for the conveyance of land, where the defendant sets up as a defence a defect in the title of the complainant, and its validity depends upon the construction of a written instrument — deed or will — the court may construe the deed or will, and the construction so adopted, so far at least as is necessary for the determination of the question then before the court, will be binding, subject always to the right of appeal, on all persons interested in the question, whether parties to the suit or not. Such determination is the determination of a question of law. Clark v. Denton, 9 Stew. Eq. 419, and, on appeal, Ibid. 534; Cruikshank v. Parker, 6 Dick. Ch. Rep. 21, and, on appeal, 7 Dick. Ch. Rep. 310; Lippincott v. Wikoff, 9 Dick. Ch. Rep. 107 (at p. 115); Fahy v. Cavanagh, 44 Atl. Rep. 154.

It is quite impossible to entertain the notion that after the court of errors and appeals has determined that a particular estate has passed and become vested by virtue of a particular clause in a deed or will, and compelled the purchaser to accept and pay for the property on the strength of such determination, it will afterwards permit a person not a party to the record’ in which that 'determination was made, to procure from it a contrary determination. It is on the very ground that the court will in such cases stand by its determination that it undertakes to construe deeds and wills in debatable cases for the purposes of specific performance. The case of ’ Cruikshank v. Parker, above cited, is an illustration of the power of the court to determine and finally settle a debatable question of that kind.

Let us, then, inquire what was the issue involved in Crane v. Bolles (No. 1); If Dick. Ch. Rep. 372. There one of'the children of the testator, and who stood under the will in precisely the situation that Thomas N. Bolles stood here, had intermarried with Henry C. Howell, and borne him one child, Elizabeth Howell, and had then died. After her death, the bulk of the real estate still being undisposed of, dividends were accumulating in the hands of the executors, which were claimed by Henry C. Howell in the double capacity of administrator of his deceased wife and as tenant by the curtesy of her real estate, and the executors filed a bill for the construction of the will in general, and in particular to determine the rights to those rents and profits as between Henry C. Howell and his daughter Elizabeth. In that manner the construction of the twelfth clause of the will was brought directly in question before the chancellor and carefully considered by him.

He determined, in the first place, that the effect of the will was to convert the real estate into personalty. The result of that would ho to give Howell a greater.right, as administrator, in the estate than as though not converted. But he. decided, in the second place, that the effect of the twelfth clause was to give a vested estate to the children of the testator, subject, however, to be devested in favor of their children as to any of the real estate not actually sold and conveyed prior to the death of the first taker. The result was that Elizabeth Howell was decreed to be entitled to take all rents and interest which accrued on the share of her mother after her mother’s death, and the proceeds of any sale of such share made thereafter, free from any claim on the part of her father.

This seems to me to cover the very point involved in this cause, and to declare and determine that the share given by. the will to Thomas NT. Bolles vested in him, but that it was subject to be devested in. favor of his children as to any of the property which had not, in due course of administration, been sold at the date of his decease. That precise situation is here presented, and hence the children are entitled to the proceeds of the sales made and of rent which accrued since their father’s death.

How let us examine the decree that was made in the suit of ■ Crane v. Bolles (No. 2), upon which the complainants rely.

Thomas H. Bolles was a non-resident of New Jersey, and was engaged in business, became unfortunate, and made a mortgage on his interest in. the premises in question to one Eaber, and gave him an order, in writing, on Crane for his share of the income of the estate. Subsequent to the making and recording of that mortgage divers foreign attachments were taken out against him in. the. New Jersey courts and executed upon the premises in question. An auditor was appointed and judgments entered for large amounts in favor of the several attaching creditors, of which the Newark City Bank was the leading one. The auditor in attachment claimed that Faber’s mortgage was invalid, and claimed the rents and profits. Faber claimed the' contrary. Thereupon the executor Crane filed a bill in the nature of an interpleader against his co-executor Bolles, the attaching creditors, and Faber. To that bill the complainant bank answered, and filed a cross-bill. All parties asserted their claims by due pleadings, the matter was litigated, and Faber’s mortgage was established as a valid and prior lien over that of the judgment creditors, and their respective rights were set forth in the decree of February 3d, 1892, as follows: That Faber’s mortgage was made for a good and valuable consideration, in good faith, and that it was from the execution and recording thereof a vaiid lien upon the interest of the said Thomas Bolles in the lands and real estate of which Nathan Bolles, late of the city of Newark, county of Essex, died seized, subject to the provisions of the last will of said Nathan Bolles, and still is a lien, upon the interest of said Thomas Bolles in so much of said lands as have not been sold according to the provisions of said will; and that said mortgage and the order given by said Bolles on said executors to pay to said Faber all moneys which might thereafter become due on account of his interest in the estate of Bolles until the amount due Faber on his mortgage should be paid, operated as a valid transfer and assignment from Bolles to Faber of all his interest in said estate for the purpose set forth in said mortgage and said order, and that said mortgage and said assignment constitute a lien and claim upon said interest of said Bolles in said estate and the lands and real estate belonging to the same, prior to the lien of the defendants the Newark City National Bank and the other defendants, attaching and applying creditors. The amount due on the mortgage was then ascertained and stated, and it was directed that “out of the moneys arising from the interest which was devised and bequeathed to said Thomas Bolles in said estate, and now accumulated in the hands of the .executors, and which shall hereafter come into the hands of the executors and become due and payable on the interest of said Bolles, and whether arising from the rents of real estate or from the proceeds of the sale thereof, the said executors pay, in the first place, to Faber the amount adjudged to be due to him, and, next, to the auditor in attachment the sums of money which are or shall be due for damages and costs, respectively, to the attaching and applying creditors.”

. It is thus seen that there was no distinct declaration of lien in favor of any of the parties to the suit, except that in favor of Faber on his mortgage, and that was declared to be subject to the provisions of the will of Nathan. The decree, so far as it is a decree in favor of the judgment creditors, was a mere direction to pay out of the rents and profits and the proceeds of sales the amount of their 'claims, after paying Faber. This is, undoubtedly, in effect, a declaration that they have a lien upon the estate, but it must be subject to the same proviso as is contained in the declaration of lien in favor of Faber; and the direction to pay the auditor for the attaching creditors out of the rents and profits and proceeds of sales, if any, must have the same limitation. The direction was to pay the money of Bolles, and not the money of his children.

In short, the decree, on its face, shows no indication that a consideration of the question involved and decided in the first suit of Crane v. Bolles entered into its construction; and a careful examination of the pleadings in the second suit of Crane v. Bolles fails to show that such question was presented or raised by them. All I find is an allegation in the cross-bill of the complainant bank, which is in these words:

“Pursuant to said writ of attachment and levy thereunder by said sheriff, said attachment became, was and still is a first- valid lien on all the right, title and interest, property and estate of said Thomas N. Bolles, which was vested in him at the date of issue, execution and levy of said attachment of, in and to all the estate real of which-Nathan Bolles died seized as aforesaid, entitled to priority over the rights claimed by John Eberhard Faber, pursuant to the instrument in the bill of complaint herein described and purporting to have been executed by said Thomas N. Bolles to said Faber.”

If the bank and other attaching creditors desired or intended to raise and procure a decision of the court upon the construction of the twelfth clause of the will, it should have distinctly stated the same in its pleadings, and made the children of Thomas Bolles parties defendant.

The result is that I am unable to find any evidence that the chancellor, in making the decree of February 3d, 1892, in the second suit, at all considered the question which he, no doubt, at that time had under consideration and shortly afterwards decided in the first suit, namely, the nature of the title of the children of the testator. I am quite sure that the determination of that question was not necessary for the decree which he made in the second suit; and the conclusion that he did so is negatived by the clause above cited declaring that the lien was subject to the provision cf the will of Nathan Bolles.

The defendant Crane sets up an estoppel as to part of the complainant’s claim. He states and proves that all of the proceeds of sales and rents which accrued up to March 8th, 1893 — • the date of Thomas Bolles’ death — were accounted for, either to Bolles, before the making of the mortgage and the levy of the attachment, or afterwards to Eaber, in pursuance of the decree of February 3d, 1893; and he proves that from the date of the death of Bolles he acted upon the strength of the.opinion of the chancellor and his decree of May 17th, 1893, in the first suit, and paid one-eighth of the incoming rents and profits of the estate to the children of Thomas Bolles from that time to the fall of 1897, including therein the proceeds of the sale of one piece of real estate, made during the last days of 1896, and that no claim thereto was ever made by Faber or any of the attaching creditors; that they all acquiesced in such payments — with the knowledge that he withheld them after the death of Thomas Bolles by virtue of the decree of May 17th, 1893 — till about the fall of 1897, when he was about completing the sale of the most valuable part of the real estate to the government of the Hnited States, one-eighth of the proceeds of which are awaiting the decision of this suit; and then he received notice from the Newark City Bank that it claimed Thomas Bolles’ share, under the decree of February 3d, 1893, when he immediately set aside the share of Thomas, and holds it subject to such decision.

There is no allegation in the bill herein that either of these sales which have taken place since the death of Thomas Bolles was delayed or held back for the purpose of preventing the proceeds from coming to the hands of his creditors, and the case, as presented, shows no feature from which any such inference can possibly be drawn.

For .these reasons I feel bound to treat the questions raised in this case as res judicata in this court, and to advise a decree that the bill be dismissed, without going into the elaborate and exhaustive argument made by the counsel of complainant to show that the opinion and decision of the chancellor in Crane, v. Bolles (No. 1) was erroneous. The complainant’s remedy, if it has .one, is by appeal, . . . .