text:
    James H. Mason v. Alfred Somers et al.
    [Filed February 19th, 1900.]
    1. An endorser who lends his name to give credit to a note, does not thereby become a creditor of the maker in the sense required by the statute of frauds, so as to raise a presumption that the maker’s subsequent voluntary conveyance of his property is, as to such endorser, fraudulent.

      2. That the maker may not pay the note when due, that the first endorser may be duly notified and may not pay, and that the second endorser may be notified and may be compelled to pay, are all circumstances which indicate a possibility that a future debt may arise in favor of the second endorser, but until the second endorser does pay the note the maker is not actually indebted to him.
    3. The maker of a note obtained it to be endorsed by referring to his ownership of lands as evidence of his ability to pay it. Afterwards and before the maturity of the note, he conveyed to his only child all the lands on which he obtained the credit, and substantially all he owned, without any bargain as to value, and after he had opportunity to anticipate the failure of his business which subsequently occurred. For this conveyance but a nominal cash consideration was given, the rest of the consideration being the satisfaction of a debt alleged to be owed by the father to his son for services rendered during the time the son was a member of his father’s family, while a much larger admitted debt owed by the son to the father was left wholly unapplied and unsatisfied. — Held, sufficient to prove that the deed was made and accepted with intent to defraud the creditors of the maker of the note within the meaning of the statute of frauds.
    ' Ou bill, answer and proofs.
    The complainant files this bill as a judgment creditor to set aside a deed made by the defendant Alfred Somers to his son, Milton Le Roy Somers, alleged by the defendant to be without consideration, and for discovery touching the real estate belonging to the defendant, &c.
    The property is situated in Atlantic county. The deed was made July 23d, 1896, and recorded in Atlantic county clerk’s office on the same day. The complainant alleges that the deed was for a pretended consideration, made to secure to the defendant the property conveyed to his own use and benefit, and to protect it from the claim of the complainant and to prevent him from collecting his debt; that before the making of the deed the defendant was indebted to the complainant in $825, and that afterwards, July 19th, 1897, the complainant began suit which resulted in judgment on September 7th, 1897, for the sum of $882.87 damages and costs. The execution was issued to the sheriff of the county of Atlantic and returned nulla bona.

    The defendant Alfred Somers admits his seizin and conveyance of the land in question, denies that on July 23d, 1896, he was indebted to the complainant, but admits that on July 19th, 1897, the complainant began an action against him on which he recovered judgment as named in the bill. He admits the conveyance by deed dated July 23d, 1896, to the defendant Milton Le Roy Somers, but he denies that at that time any sum or debt was due to the complainant, and denies that the conveyance was made to defraud the complainant, or to secure the property conveyed to the use of the defendant, or to protect it from the claim of the complainant or to prevent him from collecting his debt. He alleges that the property was conveyed to Milton Le Roy Somers for a full bona fide consideration, and that since the conveyance the said Milton Le Roy Somers has occupied, possessed and enjoyed the premises and the rents; denies that the conveyance was in any way fraudulent or void, or made to hinder and delay and defraud the creditors of the defendant.
    The defendant Milton Le Roy Somers also answers and admits the conveyance, but alleges it to have been in good faith, without any fraudulent intent or purpose to protect the property of the defendant Alfred Somers from his creditors, or to hinder the complainant in collecting his debt; alleges that he paid full bona fide consideration for the conveyance, and has, since he received it, always possessed and enjoyed the rents and profits of the premises.
    The proofs show that in the latter part of June, 1896, the defendant Alfred Somers was the owner of three lots of land in Atlantic county, described in the bill of complaint, being the. property which the complainant seeks to charge with ■ the payment of his claim.
    Alfred Somers and William Somers were desirous of buying out a “ shoot-the-chutes ” business, and to accomplish this they desired to raise $2,600. They applied to the complainant to aid them to raise the money by lending them his name as endorser. On June 30th, 1896, Alfred Somers, who was to raise $1,300, made his note for that sum to William Somers, who endorsed it. The complainant next endorsed it and William Somers again endorsed it, and the note was then obtained to be discounted. Alfred says that William got the proceeds of the discounting of this note. Another note for. a like sum was made by "William Somers to the order of Alfred and endorsed by him and one Johnson and afterwards by Alfred. This was discounted and Alfred received the proceeds and used them to purchase stock in the “ shoot-the-chutes ” concern, of which he became president.
    The business did not turn out to be profitable, though Alfred says he did not discover it until late in the season. On July 23d, 1896, Alfred Somers made a deed conveying all the lots named in the bill (being all the lands he had except an equity of $25, in a lot at Oceanville) to his only child, Milton Le Roy Somers, a young man who had just come of age. The stated consideration of this deed was $2,000. It was recorded the same day it was made.
    Young Somers states that he did not receive the deed until after it was recorded. He did not know why the consideration was named as $2,000. As he stated it, the consideration was, in fact, $45 in cash, which he paid to his father, and $900 which he said his father owed him for labor done in great part before he came of age and while he lived in his father’s family. He also stated that at the time the deed was made he owed his father $1,700 for moneys expended by his father for his special college education as a doctor, upon an express agreement made between them; that he had a book in which the memoranda of these transactions were entered, but no such book was produced. Milton also stated that he knew about the middle of July, 1896 (the deed was made July 23d, 1896), that his father was going into the “shoot-the-chutes” business and that he had not enough money for it. It was, he says, understood between him and his father that the .deed was made to secure the debt which his father owed him, and his debt to his father was to stand.

      Mr. Clarence L. Cole, for the complainant.

      Mr. Robert II. Ingersoll and Mr. Samuel JE. Perry, for the defendants.
   Grey, V. C.

The complainant contends that the proofs in this case show that the defendant Alfred Somers made a fraudulent conveyance of his real estate to his son, for the purpose of avoiding the payment of his debts, and insists that the deed for that reason is void under the statute of frauds.

The counsel for the defendant Alfred Somers contends that in order to sustain the complainant’s claim he must have been in the position of a creditor of Alfred, at the time the latter made the conveyance to his son; that in the transaction as to the note, Alfred was merely an accommodation maker for the benefit of William Somers, who got all the money; that for this reason the complainant, who was second endorser ou the note, was not, when the deed was made, a creditor of Alfred Somers. He cites Severs v. Dodson, 8 Dick. Ch. Rep. 634, as authority for the proposition stated.

That case declares simply a rule of evidence that a conveyance will not be presumed to be void solely because it is voluntary, except in favor of debts existing when it was made; and further that an accommodation endorser of a note does not become a debtor to the holder, in the' sense prescribed by the statute of frauds, so as to raise the presumption of fraud, until the note is dishonored.

The principle decided is applicable in the present case, but not for the reason alleged by the defendant. It is not because Alfred Somers was an accommodation maker, nor because William Somers, the payee, got the proceeds of the discounting of the note, that the complainant was not a creditor of Alfred Somers. For if the complainant had himself discounted, or purchased and paid for Alfred’s note, he would have been his creditor, whether Alfred got the avails or not.

The complainant in the case now before me, at the inception of the note, had no interest in it; he gave nothing for it; he did not discount it or purchase it; all he did was to lend his name as second endorser to aid in procuring it to be discounted. Ho recovery could have been had upon it by the complainant if it had remained in his hands when he endorsed it, and had come to be due and had been dishonored. He was not, because of this note, at that time, in any sense a creditor of Alfred Somers. The note had no efficacy whatever until the bank gave it life by discounting it. Then the parties for the first time became answerable according to the order of their liability, but it was to the bank which furnished the money, and not to the complainant, who at this stage of the transaction was simply an accommodation endorser of the note held by the bank, with only a possibility that he might ever become a creditor of Alfred Somers. This status of the complainant toward Alfred’s note continued from June 30th, 1896, when the note was made, to September 30th, 1896, when it was renewed, and during all the subsequent renewals until he took up the paper. Meanwhile, the alleged fraudulent conveyance was made on July 23d, 1896, by Alfred Somers to his son.

The principle propounded in Severs v. Dodson, ubi supra, precludes the complainant from being considered in the class of creditors as against whom a voluntary conveyance by their debtor will be presumed to be void. It declares that such a presumption will not be raised with respect to a mere responsibility because it may, on the happening of some contingency, come to be an indebtedness, as in case of a warranty of title, or a suretyship on a bond. In this case the complainant, when the note was made and up to the time that he paid it, had but a possibility that he might become a creditor of Alfred Somers, in respect to the note, by paying it as second endorser to some one who was the holder. This, when done, did make the complainant an actual creditor of Alfred Somers, who made the note, and of William Somers, the prior endorser. But this situation did not arise until the note had been last renewed on December 30th, 1896, and was paid by the complainant about March 30th, 1897, more than eight months after the deed had been made by Alfred to his son.

The complainant not being a creditor of Alfred Somers on July 23d, 1896, the time of the making of the challenged conveyance, it 'follows that it will not be presumed that the conveyanee in question, even if voluntary, was fraudulent as to the complainant, so as to be void under the statute of frauds. •

The result is that the complainant cannot maintain a right to relief by simply showing that there was a conveyance which was voluntary, or for a grossly inadequate consideration, and then invoke the presumption that it was fraudulent as to him as a creditor. He must go beyond this and prove that when the defendant made the questioned conveyance it was with a fraudulent purpose to defeat or hinder his creditors. If he is able to show such a condition of-affairs, the same case (Severs v. Dodson, 8 Dick. Ch. Rep. 637) declares that a contingent liability as that of an accommodation creditor will lay a ground for a proceeding under the statute to set aside any transfer of property made in fraud of the holder of the claim.” The complainant asserts that this purpose is shown by the evidence.

It appears that while the negotiations for the loan were pending, the defendants Alfred Somers and. William Somers were anxious that the proposed note of Alfred Somers should be so accredited that it could readily be discounted. They wanted the complainant, for a consideration, to lend his name as endorser, and, to induce him to do this, the complainant testifies, and William Somers supports him, that the defendant Alfred Somers stated to the complainant his ownership of the very lands which he afterwards conveyed to his son, as an inducement to the complainant to give him credit by endorsing his note. Alfred Somers made a gwasi-denial of this testimony by attempting to show that he had no conversation with the complainant in June, when the note was first made; that it was in September that he first saw the complainant, and that he then had none of the real estate referred to in the conversation.

The denial of the defendant was not given in such a way as to be impressive of its truth. The conversation narrated would naturally, under the circumstances, have taken place at the inception of the credit. It is proven, by both the complainant and by William Somers, to have then taken place. The testimony of either is as disinterested and as credible as is that of the defendant Alfred Somers. It is established by the weight of the evidence. The defendant Alfred Somers thus obtained from the complainant the loan of his name upon a representation that his ownership of the lands now in question entitled him to that credit. He thus knew that the complainant would look, and had a right to look, to those lands in case, because of the loan of his name, he should be obliged to pay the note.

The defendant, in the early part of July, 1896, became president of the “ shoot-the-chutes ” company, and entered upon the conduct of the business of the company, whose stock was purchased by the money borrowed on this note, and on another one which the defendant Alfred Somers had endorsed. His only child, Milton Le Roy Somers, a young man of twenty-two years of age, was that summer employed as a ticket taker of another amusement affair immediately in front of his father’s shoot-the-chutes” place. The son testifies that' he could not remember the date when he first learned of the note made by his father to William Somers and endorsed by the complainant, but it was somewhere during the month of July, 1896. The proceeds of this note, and of another endorsed by him, enabled the father to secure the presidency of a company doing a business of the most public kind directly alongside and of the same general character as that in which the son was employed. The son then lived in his father’s family, and it is extremely unlikely that he was unacquainted with this marked change in his father’s employment, or that at his age, and with his financial relations to his father, he did not know of the note which the complainant had endorsed at the time it was due, or immediately that the moneys raised on it enabled the new scheme to be perfected. The son does not say he did not know, and all the circumstances indicate that he did know when he received his deed that his father had made the note in question'which the complainant had endorsed.

This deed, the son says, conveyed all the lands his father owned. The father says he yet owns an equity of redemption (possibly worth $25) in another'lot. Practically it was a conveyance of all the lands the father had. The consideration named in the deed is $2,000. No attempt was made to claim that this stated sum was in any way true. The son says that the actual consideration paid was $45 cash, and the rest was the payment of a claim which he had against his father for work and labor done by him while in his minority, and a member of his father’s family, to the amount of $900. Neither writing nor book entry was produced to show this indebtedness. The son said he had such a book, but none was put in evidence. No mention of such a consideration appears in the deed. No receipt or discharge of any such debt was shown to have been given by the son to the father. There was neither any statement of the accounts between them, nor any bargaining fixing the valuation of the land. In short, the satisfaction of the $900 debt of the father to the son remained after the deed, so far as any evidence in the cause showed, precisely as the debt itself had existed before the deed, a matter resting solely in the contemplation of the mind, and without physical evidence of any sort.

The defendant Alfred Somers swears that he paid sums aggregating $1,459.50 for the lots conveyed to his son and that they were subject to a mortgage for $400. The mortgagee testifies that the father continued to pay the interest on the mortgage since the conveyance by h,is check and to accept receipts given to him for the interest in his name. There was a sort of denial that it was the father’s money which made these payments. It appeared that the defendants had these interest receipts in their possession. If they had been produced the)' would have shown how the parties dealt. They were not produced. The taxes were receipted for in the son’s name. After the conveyance these receipts were produced.

The most extraordinary incident attending this remarkable sale, when but $45 of real consideration is claimed to have been paid, is exhibited in the testimony of the son and not denied by the father. The son testifies that at the time the deed was made he owed to his father money which he had borrowed from him on which to go to college, and from time to time since, amounting in all to about $1,700. When asked, “ How do you account for it, if you owed your father about $1,700 at the time this deed was made and your father owed you $900 and he was in your debt, that he ought to give you a deed for this property ? ” he answered, “ That was understood between my father and I, that the college debt was to stand until I could pay it.”

It thus appears that the son owed to the father nearly double the amount which the father is claimed to have owed the son and which made the consideration of the deed, so that if the amounts had been set off the son would yet owe the father about $800 and the father would have kept the lands conveyed by the deed, and they could have been applied in payment of his debts.

The business of “shoot-the-chutes” continued to run during the summer of 1896, but did not pay and was a failure. The defendant Alfred Somers, though admitting that he went into it with a purpose to shirk the losses and stand to take the profits, says he did not discover that it was going to fail until the latter part of the season, but his testimony is not very credible on the point. The business was begun early in July, when the summer attendance at Atlantic City is quite sufficient to indicate whether the popular patronage will support such a business. The defendant had plenty of opportunity to foresee the impending disaster, and his conveyance to his son of all the lands which he had that were of any value, for a nominal consideration, without any bargaining as to values, allowing his own large claim against the son to stand uncollected and unapplied, indicates that the father was forefending the wrath to come and seeking to retain the property in a control which would favor him, so that if the worst came to the worst it could not be applied to make good the assurances which he gave to the complainant when he induced him to endorse the note.

The only consideration for the deed which had any element of good faith in it was the $45. But this sum and the whole of the residue of the alleged consideration were far less than the debt which the son admits he owed his father. The natural and reasonable manner of dealing with the two acknowledged debts would have been to have offset the one against the other, leaving the son still indebted to the father in about $800. Instead of this the father’s debt- to the son was kept separate, so that its settlement might serve as the consideration in the deed, leaving wholly unpaid the very much larger debt of the son to the father. No reason for such a transaction is suggested, and none appears, except that one which accords with the other incidents of proof, a purpose to prevent the complainant from having that benefit of the defendants’ property which the latter held out to the cornplaiuaut as an inducement to endorse the paper. The complainant has shown by the weight of the evidence that the deed to the defendant Milton Le Roy Somers was made an,d accepted in fraud of the creditors of Alfred Somers.

No injury will be done to the son by declaring the deed made to him to be void. He admits that he owed his father a sum largely in excess of the amount which his father owed him, which he says was the real consideration of the deed. Neither debt is evidenced in a way to be negotiable. The son may at any time set oif the sum his father owes him against the much larger sum he owes his father, and thus allow the father’s lands to be applied in payment of his debt.

I will advise a decree in accordance with the views above expressed.


source: Caselaw Access Project

author: GREY, V. C.

license: Public Domain

text:
    Roland Larter v. Frederick W. Canfield et al.
    [Filed February 23d, 1900.]
    1. Specification of the cause of demurrer is not required'where the lack of equity in the bill, in the essentials of the main case presented, is so manifest that it can readily be discovered upon mere perusal.
    2. Equity will reform a declaration of trust which the trustee obtained to be accepted by a misrepresentation to the parties interested, whereby his own proportionate share in the trust was increased, so that it shall conform to the true agreement between the parties.
    3. A cause of demurrer, based upon a misstatement of the effect of the bill, will be overruled.
    4. A demurrer to several parts of a bill will not be sustained, if upon any of the parts to which the demurrer is addressed, the complainant is entitled to relief.

      5. In order that a plea of a former action pending may be sustained, it is necessary that all of the relief to which the complainant may be entitled in the second suit should be attainable in the first, and the remedy there afforded must be equally as beneficial to the complainant as that which he may secure in the second suit.
    On demurrer and plea to bill.

      Mr. Frederick Ward, for the complainant.

      Mr. Edward M. Colie, for the demurrant.
   GREY, V. C.

This bill is filed by the complainant as one of the cestuis que trust under a declaration made by the defendant Frederick W. Canfield to the effect that he held the title to certain lands in Essex county, in trust for the use of the complainant, and of Scarlett & Scarlett, incorporated, and of himself in the proportions in which they had contributed to pay the consideration money for the purchase of the lands, which the declaration admitted was $500 by the complainant, $1,500 by the defendant Canfield, and $5,000 by the defendants Scarlett & Scarlett, incorporated ; and that the trustee would account for his disposition or sales of the trust lands, and after payment of the expenses and mortgages, would turn over the balance to the several parties interested in the proportions in which they had contributed the purchase-money. There is another provision in the declaration of trust, by which the trustee declares to the contributors

“ that after the mortgage debts are fully paid and satisfied, I will upon their written request convey to them respectively at their expense * * * their respective undivided interests in whatever lands may remain unsold or uncontracted for.”

The bill alleges that the complainant paid the $500, his share of the purchase-money, and that Scarlett & Scarlett paid $5,000, their share; that Canfield, for his own share, put in $1,500, which he represented was his own money, but that in fact, as the complainant has recently discovered, Canfield paid but $500 of his own money, and that the other $1,000 of the money he put in was money proceeding from sales or mortgages of the joint purchase, which Canfield had collected, and which he fraudulently put into the venture as his own, so that he might secure the larger proportion upon which he could receive future dividends, and that the declaration of trust was accepted by complainant in ignorance of defendant’s conduct.

The bill prays that the declaration of trust may be reformed, so that it may declare that Canfield contributed but $500 of said purcháse-money, making the total cash investment $6,000; that Canfield’s interest in the scheme may be correspondingly reduced; that he may discover the proceeds of sales received by him, and the portions paid out, and that he may be decreed to pay over to the complainant his proper share; that Canfield may be decreed to convey to complainant his undivided interest in the residue of the lands; that a partition be made, or a sale, if partition be impracticable, and a division of the proceeds.

To that part of the bill which prays a reformation of the declaration of trust to make it declare that Canfield contributed but $500, and that his interest in the scheme may be accordingly reduced, and to the part which seeks conveyance of the undivided interest, and a partition or sale of the residue of the lands, the defendant Canfield demurs, and alleges as causes of demurrer— first, that there is no equity in the bill; second, that the bill shows that Canfield did contribute $1,500 of the. purchase-money, and that $7,000 in all was paid into the venture; third, that it appears by the bill that the lots were to be held under the terms of .the trust until Scarlett & Scarlett and the complainant should, after the mortgages were paid, request in writing a conveyance of their undivided interests in the residue of the lands.

To the portion of the bill which seeks a discovery and accounting for the money received by the defendant from the sales of' the trust lands, the defendant pleads the pendency of another suit in this court, wherein Scarlett & Scarlett, limited, is complainant, and the trustee Canfield and the complainant in this suit (Larter) are defendants, which suit, the defendant Canfield states in his plea, is for the same matters and to the same effect and for the like relief as the complainant demands; and sets forth by that portion of his present bill to which the plea is interposed.

The first cause of demurrer is that no such case is stated as entitles the complainant to any of the relief prayed for, &c. Objection is taken by the complainant to the framing of this cause, for the reason that it in no way specifies any defect in the bill, and that it amounts to no more than a general challenge of the whole case stated in the bill for want of equity. Specification of cause of demurrer is not required where the lack of equity in the bill is so manifest that it can readily be discerned upon mere perusal (Essex Paper Co. v. Greacen, 18 Stew. Eq. 504), unless the defect is collateral to the main case as when laches is the ground of demurrer. Van Houten v. Van Winkle, 1 Dick. Ch. Rep. 386. This cause of demurrer would therefore seem to be well expressed so far as a manifest want of equity in the bill is challenged by it.

The substance of the complainant’s well-pleaded charge which the demurrer must be held to admit to be true, is that Canfield falsely represented that he had put $1,500 of his own money into the scheme, whereas he had in fact put in but $500 of his own, and the other $1,000 was money already realized by him from the joint venture, and by him used to increase his proportionate share; that this condition of things was unknown to the complainant until shortly before the filing of the bill. The defendant is therefore shown to have represented that he had paid $1,500 of his own money into the scheme ,in which his fellows each had a proportionate interest (that of Scarlett & Scarlett many times exceeding his own), when in fact he had paid in only $500, but having in his hands another $1,000 which belonged to all the parties in the venture, he, without their knowledge, used this to inflate his actual contribution of $500 up to the apparent sum of $1,500, so that he might claim larger proportionate profits in the output of the plan. The rest of the bill addresses itself to the ultimate relief to be attained by partition,.&c.

It is hardly necessary to say that the misuse of trust moneys by a trustee for the increase of his own profit and the reduction of the profits of his eestuis que trust, and the obtaining of the acceptance of a false declaration of a trust, are wrongs which are remediable in equity by the reformation of the trust agreement in accordance with the true relations of the parties. The first ground of demurrer should be overruled.

The second ground of demurrer is that the bill on its face shows that Canfield did contribute $1,500, his full share of the purchase-money, and that the total sum paid in was $7,000. It is true that the bill alleges that Canfield paid in $1,500, but it does not stop with that allegation as does the second ground of demurrer. The bill goes further and shows that of the $1,500 which Canfield paid in, $1,000 belonged to the complainant and his fellows in the scheme, and that Canfield fraudulently used this $1,000 of trust money, falsely representing that the whole of his contribution was of his own funds. He deceived them into the acceptance of the declaration of trust upon a false basis of proportionate profits. The second cause of demurrer does not candidly state the effect of the bill in the particular in question and should be overruled.

The third cause of demurrer addresses itself to a showing that the complainant has no right to demand a conveyance of his proportionate share in the venture; that the terms of the trust agreement provide for a division after the mortgages had been paid, but only upon the joint request of Scarlett & Scarlett and the complainant. The bill does not aver such joint request to have been made.

An examination of the trust agreement shows that the scheme contemplated the improvement of the land by opening streets, laying it out in lots and sales of the lots by the defendant. He covenants and agrees with Scarlett & Scarlett and the complainant as follows:

“After the mortgage debts are fully paid and satisfied, I will, upon their written request, convey to them respectively at their expense, by good and sufficient deeds, their respective undivided interests in whatever lands may remain unsold or uncontracted for,” &c.

The defendant insists that the plan partakes of the nature of partnership property, and that a partition would arrest and break up the whole scheme. On this hearing it is unnecessary to discuss the broader effect of the trust agreement. Its express terms require that, as a preliminary to a partition, two things must happen — the mortgage debt must be paid, and both Scarlett & Scarlett and the complainant must in writing request that a conveyance of their undivided proportionate interests be made to them respectively. The bill states that the mortgage debts are paid, but makes no mention of any written request by either the complainant or by Scarlett & Scarlett, or by both of them, for the conveyance of the residue. There are excellent reasons why such a conveyance (which would probably put an end to the further development of the plan) should be made upon the joint request of two at least of the parties, rather than at the individual choice of one. It is unnecessary to discuss these reasons, however, as the terms of the contract definitely express what the parties agreed to do. The court of appeals, in the case of Scarlett v. Linckels, 11 Dick. Ch. Rep. 782, interpreted the clause now under consideration with relation to the power of Canfield to continue to make sales after the mortgage debts were paid, and held that the power continued until not only the mortgage debts were paid, but until there was a written request of the parties interested to convey to them.

The complainant contends that the defendant’s criticism of the bill in this particular has no force because, he says, the fraud of the defendant must be corrected, the true proportions of the parties declared and the agreement be reformed accordingly before there can be' any conveyance. But this is not the frame of his bill. There is no allegation whatever that he and Scarlett & Scarlett have in writing requested conveyances to be made either according to their proportion as now expressed or by the trust agreement' or after the true proportions shall have been declared by the reformation of the trust agreement. He prays a decree for a conveyance to him of his undivided interest in the residue without any definition of the proportion which shall be the basis of the proposed conveyance.

There are several criticisms to which the complainant’s bill is open on this phase of the case, which are not r.ecited as causes of demurrer. The prayer for conveyance asks that a deed be made to the complainant for his share of all the property unconveyed, while the trust agreement only provides for conveyance of the lands unsold or uncontracted for. The complainant also asks for a conveyance of his interest to himself without recognizing the right of Scarlett & Scarlett to a conveyance of their proportion at the same time, while the agreement contemplates a conveyance not only to him but to Scarlett & Scarlett as well, leaving the defendant the holder of his individual interest, thus effectually taking all the property out of the trust and enabling each to deal with his share as he likes, without regard to the trust plan.

The complainant’s bill does not show that the joint request in writing, which the trust agreement requires as a preliminary to a conveyance of the undivided shares in the residue of the lots, has ever been made,-and the third cause of demurrer is a just criticism of that element in the bill which seeks a decree for the conveyance to the complainant of his undivided interest in the residue of the lands and a consequent partition.

But the defendant’s demurrer is not single to this element in the bill. It addresses itself as well to the allegations and prayer for the reformation of the trust agreement because of the fraudulent action of the defendant, as to which the complainant, upon the stated facts, is entitled to relief. This element in the bill being included within the demurrer, it is too broad and must be overruled. Metler v. Metler, 3 C. E. Gr. 274. A demurrer that is too extensive or bad in part must be wholly overruled. Story Eq. Pl. ¶¶ 443, 692; 1 Dan. Ch. Pl. & Pr. (6th Am. ed.) *584-

The defendant, to that part of the bill which seeks a discovery and accounting, filep his plea alleging that another suit is pending in this court, in which both the complainant and the defendant are parties, presenting the same matters, to' the same effect and for the like relief as the complainant presents in this suit. The plea is framed as a bar to all that part of complainant’s bill to which the defendant has not demurred.

To sustain such a plea the 'whole of the relief sought in the second suit must be attainable ■ in the first, and the remedy afforded in the first suit must be equally as beneficial to the complainant as that which he may secure in the second. Way v. Bragaw, 1 C. E. Gr. 217, 218. The former suit brought by Scarlett & Scarlett against Canfield, and making Larter defendant, is pending in this court. In that suit there is no allegation of Canfield’s fraudulent contrivance whereby he obtained the acceptance of the declaration of trust recognizing him as the holder of a larger interest than he contributed. Nor is there any asking for a reformation of the declaration of trust accordingly, nor for a re-adjustment of the proportions in which, the moneys should be divided, nor for an accounting on the corrected basis. In these particulars none of the relief sought in this case is attainable in the former suit. At the hearing, the counsel for the defendant was asked whether the Scarlett bill sought relief on the ground of the alleged fraud of Canfield in the original contribution to the purchase. He admitted that it did not set up the fraudulent action alleged in this suit, but claimed that as it asked an accounting according to the rights of the parties, it necessarily involved the matters upon which relief is here asked.

The difference between the' two cases is clear. Canfield’s fraudulent action not being alleged in the Scarlett suit, could not be proved, nor could any relief be granted upon it in that suit. . That action asks an accounting and a settlement upon the basis of the trust agreement as it is expressed, without change. This suit seeks to show Canfield’s fraudulent contrivance whereby he induced the other parties to accept him as interested to a larger amount than he paid, and thus obtained their acceptance of the declaration that he held a larger proportion in the venture than he was in fact entitled to have. It also asks a decree that the trust agreement be reformed so that the defendant’s interest shall be reduced to its true proportion, and for an accounting on that basis. The plea in setting up the Scarlett suit as a bar, is not true in its averment that it is prosecuted for the same matters, to the same effect and for the like relief for which this suit is brought, and should be overruled.

I will advise a decree accordingly, with costs to the complainant.


author: Grey, V. C.

text:
    John P. Ashmead et al. v. Mary C. Baylor et al.
    [Filed February 24th, 1900.]
    Prior advances and services by grantee, not considered by the parties as creating any debt till the grantor was threatened with financial troubles, will not furnish a consideration for a deed so as to render it other than voluntary as against the grantor’s creditors.
    Gn bill, answer and proofs.
    The defendant was, for some years prior to June 1st, 1897, the owner of an improved tract of land on Pacific avenue, Atlantic City, for which she had been offered and had refused $5,500. This property was subject to a mortgage of $3,000. She also owned more than one hundred building lots in Egg Harbor township,” worth from $10 to $50 per lot. She had been indebted to the complainants for some maps and surveying work done at her request, and had been urged to pay their claim, but disputed her liability. By two separate deeds dated June 1st, 1896, but shown to have been made June 5th, 1897, she conveyed all these lands — being all she had — to her sister, Mrs. Chandler. The consideration of each deed was expressed to be $1, and in that conveying the Pacific avenue property, Mrs. Chandler assumed to pay the $3,000 mortgage. Both deeds were acknowledged on June 5th, 1897. On the same day Mrs. Chandler reconveyed both properties to Mrs. Baylor, as trustee for her minor sous, Norman R. and Tunstall P. Baylor, to receive the profits thereof during their minority and to apply thern to the maintenance of said minors, but with full power to sell and convey and to receive the purchase price, with no liability of purchasers for the proper application of the purchase-money. All the deeds were acknowledged June 5th, 1897, and were subsequently-recorded. The deed from Mrs. Chandler to Mrs. Baylor for the Pacific avenue property was made subject to the $3,000 mortgage, which Mrs. Baylor agreed to pay.
    The complainants’ bill attacks all these conveyances, because made to hinder and defeat Mrs. Baylor’s creditors in the collection of their debts. The defendant Mrs. Baylor alleges that all of the deeds were made in good faith and for full consideration, and denies that the complainants were creditors of Mrs. Baylor, and by cross-bill alleges that they fraudulently obtaiued a judgment against her for their claim which she prays they may be restrained from enforcing, &c. Mrs. Chandler also answers and alleges the good faith of the transaction. Issue was joined on these allegations, and the cause came on for hearing.

      Mr. William M. Clevenger, for the complainants.

      Mr. Charles A. Baahe, for the defendants.
   Grey, V. C.

The first question to be disposed of should be the charge by way of cross-bill, that the complainants’ judgment was fraudulently obtained, for if the complainants’ judgment is a fraud, they have not shown that they are creditors of the defendant Mrs. Baylor, nor have they so established their debt that they have any status in equity to question her right to dispose of her property.

There seems to be but little dispute that Mrs. Baylor, before she made these conveyances, had been informed of the complainants’ claim against her, and that she sought to induce them to look to others for its payment. She asserted that they accepted other parties as their debtors and exonerated her. They insisted that they had not so released her, and that she should pay their claim. While this dispute was open and unsettled, the conveyances in question were made on June 5th, 1897, though those in which Mrs. Baylor was grantor were dated back to June 1st, 1896.

The complainant began suit on July 22d, 1897. Mrs. Baylor personally appeared and was sworn as a witness in her own behalf. The justice continued the cause to a later day for judgment, and on that day gave judgment against her. She alleges that this judgment was obtained by the complainants’ fraudulent collusion with the justice, and that her subsequent effort to appeal was defeated by the complainants’ fraudulent interference. There is nothing in the proofs which sustains this claim. The allegations of the cross-bill are wholly unsupported, and it must be dismissed.

The next question is, were the deeds in question made in fraud of creditors? The evidence shows, notwithstanding Mrs. Baylor’s denial, that the complainants had been creditors of Mrs. Baylor for some years before 1897; that their debt came to be due, and that she sought to avoid its payment. The deeds in question are challenged because it is alleged they were- without any valuable consideration-and were made with an intent to defraud creditors.

The supposed consideration for Mrs. Baylor’s deed, conveying all the lands she had to her sister, Mrs. Chandler, was claimed to be the loan of uncertain amounts of money by Mrs. Chandler to Mrs. Baylor, at remote periods, beginning so far back as 1866, for which no evidence of debt had been given or asked, and for nursing and other family services of good will and affection. No statement could be made by either of these ladies by which the amount due for loans could be stated separately from that due for family services, nor could the supposed loans be itemized or dated, nor was there any exhibition that there really was any certain sum due from Mrs. Baylor to Mrs. Chandler. Neither party seems to have regarded the advances as a debt until Mrs. Baylor was threatened with financial trouble, and then these matters of kindness were converted into legal obligations. The creation of the supposed obligation appears to have depended upon the urgency of Mrs. Baylor’s creditors; if they had not moved there would have been no debt. Schmidt v. Opie, 6 Stew. Eq. 142.

The weight of the evidence indicates that there was no legal obligation whatever upon Mrs. Baylor to pay Mrs. Chandler anything, and that the transactions between these sisters, either of giving money or of service, were the outcome of affectionate relationship, and not the result of contract. Mrs. Chandler did, by a clause in the deeds, assume to pay the $3,000 mortgage, but this was less in amount than the value of Mrs. Baylor’s interest in the Pacific avenue property, and could not relieve the transaction from its voluntary character. Randall v. Vroom, 3 Stew. Eq. 353. Besides, Mrs. Chandler was coincidently relieved of her covenant, so far as Mrs. Baylor was concerned, by the latter’s acceptance of the deed to her, whereby she agreed to pay the $3,000 mortgage herself. Crowell v. Currier, 12 C. E. Gr. 153.

The consideration of the trust deed made by Mrs. Chandler to Mrs. Baylor was admittedly purely voluntary. The terms of this deed allow to' Mrs. Baylor the disposal of the property, and her conduct since the transaction shows that the deed was a mere pretence. This is proven by her own testimony. She swore that after the deed of trust was made to her, she continued to sell the Egg Harbor lots in payment of her. own precedent debts incurred for work done for her, such as repairing her house, loans previously made to her, &c., her debts owed for commission on sales made for her, though she absurdly insisted that those were her children’s debts.

These deeds having been shown to have been made without valuable consideration, will be presumed to be fraudulent as against the complainants, creditors of Mrs. Baylor at the time the deeds were made, holding an unpaid debt which had come to be due. Severs v. Dodson, 8 Dick. Ch. Rep. 634.

It is not, however, necessary in this case to rely upon the presumption of fraud which attends upon the exposure that a voluntary conveyance has been made which hinders an existing creditor in collecting his debt. There is affirmative proof that these'deeds were made with the definite object of defeating the complainants’ demand.

Both Mrs. Baylor and Mrs. Chandler say that they were together present in their lawyer’s office when these deeds were executed, on June 5th, 1897. Mrs. Baylor claims to have been ignorant that the complainants had any claim against her. It has been proven that she had previously been dunned for the complainants’ bill, and had sought to avoid its payment. She was asked on cross-examination :

‘ ‘ Q. When your sister made conveyance to you as trustee for your sons, did you pay her any money for consideration ?
“A. I could not remember that.
“Q. Why was that conveyance made?
“A. Simply this case was started against me, and she absolutely refused to have the trouble and responsibility; she told me that I was the proper person to fight the case,” &c.

Mrs. Baylor here proves that these conveyances which were executed at the same time were made with knowledge of both herself and her sister that the complainants were insisting upon payment; that a lawsuit was probable; that trouble and responsibility would attend upon its defence, and that it was her business and duty, rather than her sister’s, to fight the case.

Upon the whole case the proof is sufficient to show that the deeds in question were made and accepted without valuable consideration, and with a purpose to defeat and hinder the collection of the complainants’ debt.

The complainants are entitled to a decree that the deeds in question are, as against their judgment, fraudulent and void.


text:
    Martha Ann Blakeman v. Emma Bourgeois et al.
    [Filed February 24th, 1900.]
    1. In order to have a right to file a bill to quiet title, &c., under Gen. Stat. p. 3486, it is not necessary that the possession of the complainant shall be shown to be adverse in the sense required of a -party who claims title by adverse possession against a proven documentary title. The complainant’s possession is sufficient to meet the jurisdictional requirements if it is peaceable, and-under a claim to the ownership of the premises.

      2. Where the acts of possession are proven to have been done without dispute, under a belief and claim on the part of the complainant that she owned the premises, and show an occupation and use of the property for all of the purposes for which its nature enabled it to be used, it is a sufficient exhibition of the peaceable possession under claim of ownership required by the statute.
    On bill, answer and proofs.
    The bill in this cause is filed under the statute to compel the determination of claims and to quiet titles, &c. Gen. Stat. p. 3486. The complainant asserts that she has the peaceable possession of a tract of land lying in Upper township, Cape May county, almost or quite an island, situate between Main, Beach and Middle thoroughfares and Carson’s sound, containing about three hundred and forty acres; that the defendant makes a false claim to the ownership of the tract, and prays that the defendant’s claim may be declared to be void, and her own title to be perfect.
    The defendant denies the complainant’s possession and sets out her own title, alleging its validity.
    A motion was made by the defendant that an issue be awarded for the trial of the title at law by a jury. It was opened to the court that the complainant claimed under a legal title, i. e., possession for more than twenty years, &c., and following the course of procedure prescribed in Beale v. Blake, 18 Stew. Eq. 669, the cause proceeded to a hearing, to determine only the preliminary jurisdictional question, the peaceable possession of the complainant at the time when the bill was filed.
    The land in question is an island, or nearly an island, and is designated by the witnesses as “ the island.” It was used for cutting hay and litter in large quantities, generally by the scow load, to rent for a club-house and for gunning and fishing purposes, and somewhat for oystering. There are several gullies which ran into a pond or basin, comprising several acres situated at the inner portion of the island, and in this basin oysters were planted some years ago by the complainant.
    The hay which grows on the property is partly salt grass and partly sedge. The land is not fit for farming purposes. The defendants insist that the complainant had not such peaceable possession of the premises in question; that she is entitled to file a bill to quiet the title. The complainant produced a number of witnesses, and examined them to show the character of the land and of her possession of it. The defendants rested their case without calling any witnesses.

      Mr. Henry M. Snyder, for the complainant.

      Mr. George A. Bourgeois and Mr. Samuel W. Beldon, for the defendants.
   Grey, V. C.

The only question considered on this hearing was whether the complainant had such peaceable possession of the premises in dispute that she was entitled to file a bill to quiet title under the statute. Gen. Stat. p. 34-86.

That the acts of possession done by the complainant were peaceable — that is, free from all dispute or contention by any one — is undenied. Nothing in the case indicates that the defendants or those under whom they claim have ever had the possession of the premises themselves or that they have ever disputed the complainant’s possession in any way.

The defendants insist that the complainant has failed to show such action towards the premises in question as satisfies the statutory requirement that she have the peaceable possession of the lands. They contend that she must prove adverse possession of the whole premises beyond a reasonable doubt, and they cite the case of Rowland v. Updike, 4 Dutch. 101, as sustaining this proposition.

The case was an action of ejectment in which the complainant had proved a clear documentary title, and the defence rested solely on a claim by adverse possession. The learned Chief-Justice Green declared that in such a situation it was incumbent on the defendants to establish the fact of adverse possession beyond a reasonable doubt. But the rule so laid down is not applicable to the proceeding in this court to show the peaceable possession which satisfies the statute in cases of this character. In the law court there had beén an exhibition of a clear record title, on which final judgment was about to be passed. The refutation of such a showing by proof of'possession, the chief-justice declared, must show as a fact that it was adverse beyond a reasonable doubt. The statute under which this cause is presented does not require proof that the possession of the complainant is adverse or notorious or that it has the qualities which are necessary to establish a possessary title against a proven paper title. To require a complainant to prove such an adverse possession as the chief-justice had in view in Rowland v. TJpdike would be to force him to prove such a possession as would amount to a title. All that the statute requires is that the complainant shall have peaceable — that is, an uncontested— possession of the premises, claiming to own the same.

What constitutes such a possession of lands must be indicated by the acts of the party claiming to own them. These acts will naturally adapt themselves to the nature of the lands and the uses which may be made of them. In this case the property was incapable of being farmed. It was almost, if not quite, an island, on which grew salt grass and sedge, valuable for hay or litter. Part of it was usable as oyster grounds, on which oysters might be planted for future use. Ducks and other game made it attractive for gunning, and its nearness to the thoroughfare, for fishing, so that it was rentable to city people for a clubhouse, for those uses. There was no other purpose for which this property could be used. If a person went there to look at it, to see whether any one was claiming ownership in it, he would naturally examine it with relation to those incidents for which it might be used by the claimant. The law implies notice to. parties interested in such cases in much the same way, the acts of possession varying according to the nature of the land.

In this case there is no dispute that the complainant claimed the ownership of the lands. She testifies that she entered into possession of the island in 1860, under an assignment of a mortgage upon it, made to her by Robert K. Matlock, attorney for the mortgage holder, for which she paid a full money consideration. There is no contradiction that such a mortgage was actually delivered to her, and that she paid a substantial pecuniary consideration for it. Whether she bought the debt which the mortgage secured is not clearly shown, but that she took possession of the island under the mortgage, and claimed and believed she owned it by virtue thereof, does not seem to be disputed. After her entry on the island, some time about 1860, she appears to have dealt with it as her own property. She afterwards, about 1870, disposed of the mortgage to one Campbell, who held it for a time, but whether in pledge or as an attempted transmission of title, is not very clear. She received the. mortgage again, however, and, for some years before bringing this suit, had retained it.

It is insisted that the assignment of the mortgage to the complainant was without assignment of the bond, and that this was void and an absolute nullity, and Montgomery v. Bruere, 1 South. *265, is cited as authority for the contention. The learned Chief-Justice Kirkpatrick, at the part of his opinion referred to, was reciting the argument of counsel who contended that such an assignment of a mortgage was void. On the-next page (*266) the learned chief-justice gives his own opinion on the matter, and there declares that even if the form and manner of assignment were defective, yet if the assignee purchased up the debt and paid his money for it, the answer is'conclusive.- He further held that the fact that the writings were delivered to the assignee and that the mortgage (which was the only security) was assigned over to him, were abundant evidence of such a purchase, and that whether the assignment carried the legal estate of the mortgagee or not, is immaterial, for wherever the legal estate may be, it is but a trust for him who hath a right to the money. Clark v. Smith, Sax. 133, is also cited by the defendant to sustain the proposition, but in that case there was a release and not an assignment of the mortgage. In Devlin v. Collier, 24 Vr. 422, it was held that a mortgagee cannot convey to a third person the premises as mortgaged,- himself retaining the debt intended to be secured. This does not fit the proofs in this case, for there is no evidence that the former holders of the mortgage debt, whose attorney received the money which the complainant paid for the assignment, retained the debt, nor that after the assignment to the complainant they ever asserted any ownership in the mortgage debt, or were recognized as having retained any interest in it. If any inference were to be drawn from the meagre proofs on the point, it would be that there was a purchase and transfer to the complainant of the whole claim held by the mortgagees. That a mortgagee cannot convey any title in the mortgaged premises separately from the debt, is indisputable, but it is equally well settled that the mortgagee, or holder of the debt secured by the mortgage, may, when that debt has become due and remains unpaid, enter under the mortgage into possession of the mortgaged premises, and hold them until the mortgage debt is paid, either from the rents and profits or otherwise. Further, the statute of limitations expressly declares that if a mortgagee and those under him remain in possession of the mortgaged premises for twenty years after default, the equity of redemption is barred. Gen. Sstat. p. 1978 § 25.

This reference to the holding of the mortgage by the complainant is not for the purpose of justifying that holding as an efficient step in the title (which question is not involved in this inquiry), but simply to show that the possession of the complainant was that of one claiming to be an owner within the terms of the statute, which is satisfied if the complainant holds peaceable possession, claiming to be owner. Whether rightfully or wrongfully, is a matter to be settled in another forum.

The complainant at, and for many years before, the time of filing her bill in this cause, was dealing with the island as one might do in possession of her own property.

She received rents for a club-house on it, and for the hunting privileges. She cut hay for her own use and sold the privilege of cutting to others, and gave permission to yet others. She planted oysters in the low place on the island which she called the basin, and in short, used it for all the purposes above named, either by herself or by her tenants or licensees. She is supported in this proof by all the other witnesses who testify on the point, save that the witness Campbell, who is quite an old man, appears to contradict himself several times as to dates. There was nothing appropriate to the lands which could have been done to indicate its actual possession and use that the complainant did not do. The club-house was a large and substantial building. The lessees used it at various seasons through the year without dispute of their right. The hunting privilege covered the whole island. The hay cutting was proven to have been done at those places on the island where in the particular season the grass was growing. That is, they cut the crop wherever it grew, and this varied over different parts of the island at different seasons. It was necessary to “scow” it all off the island, so that the cutting was usually done for several rods inland from the edges of the stream, and in great quantity.

The contehtion of the defendant that the hay cutting, as evidence of possession, must be limited to the extent of the stroke of the scythe, does not recognize the true criterion by which the statute tests the possession of the party claiming to be owner. If the acts of possession are such as an owner would exercise on land of the character in question they are sufficient. Cutting on the premises for hay, not in one place, as if the right were limited to that place, but wherever on the tract the grass happens to grow, is the manner in which one claiming to be owner of the whole tract might be expected to cut. The place of cutting may vary because the crop does. It is shown by the proofs that the cutting followed the crop wherever it was growing on the island. This was the situation of affairs at the time the complainant filed her bill of complaint in this cause.

The evidence submitted sufficiently shows a peaceable possession under a claim of ownership by the complainant, and that being the only question now under consideration, a decree will be advised that the complainant has established that jurisdictional fact, and is therefore entitled to bring this suit to compel the determination of the defendant’s claim.


text:
    Elizabeth S. Biddle et al. v. J. Howard Pugh et al.
    [Filed March 5th, 1900.]
    1. When lands have been conveyed to successive grantees (subject to a debt secured by bond and mortgage), each of whom by covenant in his deed assumes to pay the mortgage debt as part of the consideration of his purchase, the payments of interest made on that debt by the successive grantees are referable to the bond held by the mortgagee, and operate to satisfy the interest due on that bond, and thereby to stay the running of the statute of limitations against an action on the bond.
    2. Equity will enforce their undertakings against such successive grantees whose covenants form a chain of liabilities to pay the mortgage debt by decreeing payment of a deficiency in the proceeds of the sale of the mortgaged premises to satisfy the mortgage debt.
    3. It is not necessary that all of the succeeding covenantors shall be parties to the bill, though all are proper parties.
    On bill, answer and stipulation as to the facts.
    This cause was heard on bill, answer and stipulation that a narration of facts submitted should be taken to be true as if proven.
    The bill is filed by the holders of a bond made by one Jesse S. Adams on October 7th, 1872, conditioned for the payment of $3,000, with interest, in one year from date, the payment of which was secured by a mortgage of like date, also made by Adams upon lands in the city of Burlington. The mortgage was duly recorded on October 7th, 1872. On February 28th, 1876, Adams delivered a deed conveying the mortgaged premises to the defendant J. Howard Pugli for the consideration of $6,000. Pugh paid $3,000 and accepted the deed, which contained this covenant: “Subject to a mortgage of three thousand dollars, which sum forms part of the consideration above mentioned, and the said J. Howard Pugh assumes and agrees to pay.”

      The defendant Pugh afterwards conveyed the premises to one Hannah Dill, and following this were several successive conveyances. By these deeds each succeeding grantee in turn assumed the said debt in like manner as did the defendant Pugh.
    On February 12th, 1898, the mortgaged premises were sold on foreclosure of the complainant’s mortgage, and on the purchase-price there was a deficiency of $1,248.84 to pay the mortgage debt.
    The complainants allege that the defendant J. Howard Pugh is bound in equity, under his above-quoted covenant, to pay to them the above stated deficiency and pray a decree accordingly.
    The defendant admits the covenant, but contends that it was only an agreement to indemnify Adams, the obligor in the bond accompanying the mortgage, against payment of the debt, in case he (Adams) should be compelled to pay the same • that for more than twenty years next preceding the filing of the bill neither he nor Adams have paid anything on account of either the principal or interest secured to be paid by the mortgage; that by the statute and by the law of the land, neither of them is now indebted on the bond, and neither ought to be compelled to pay the sum claimed to be due, and that the defendant is not indebted to the complainant on his said covenant of indemnity.

      Messrs. Gilbert & Atkinson, for the complainants.

      Mr. Howard Flanders and Mr. Mark JR. Sooy, for the defendants.
   Grey, V. C.

The equity which supports the recovery by a mortgagee of a deficiency after sale of the mortgaged premises, from a subsequent purchaser, who has covenánted with the mortgagor to pay the mortgage debt, does not arise because of any right, originally, in the mortgagee. He is allowed to go directly as a creditor against the person ultimately liable, in order to avoid circuity of action, whereby the mortgagor, if himself compelled to pay, would be forced to seek relief against the person who had indemnified him. The equity upon which his relief depends is the right of the mortgagor against his vendee, to which the mortgagee is permitted to succeed by substituting himself in the place of the mortgagor. Crowell v. St. Barnabas, 12 C. E. Gr. 656. The mortgagee is only entitled to such remedy as the mortgagor himself has against the purchaser when the bill is filed, and his right is subject to such action as the mortgagor and purchaser may have taken to modify or rescind the contract. Crowell v. St. Barnabas, supra. In this case there is no pretence that there has been any action by the mortgagor.and the defendant which has in any way released or rescinded the contract between them. All that is claimed is that neither the mortgagor nor his grantee, the defendant, has made any payment of interest for sixteen years.

The nature of the complainant’s right having thus been defined by the court of appeals, it only remains to ascertain whether the mortgagor had, when the bill in this cause was filed, a right to enforce against the defendant the covenant to pay the mortgage debt, into which he entered by the acceptance of the deed. If he had such a right, then the complainants, as mortgage holders, may enforce it in equity though not at law. Klapworth v. Dressler, 2 Beas. 66.

The defendant agreed with Adams that he would pay the complainant’s mortgage as part of the consideration for the conveyance of the mortgaged premises to him. That he has not paid it is beyond dispute.

It is entirely settled in this state that the purchaser of lands subject to mortgage, who agrees to pay the mortgage debt, becomes, in the consideration of a court of equity, as between himself and the vendor, the principal debtor, and the liability of the vendor, as between the parties, is that of surety. Klapworth v. Dressler, 2 Beas. 62. The securities which a surety holds for his own' indemnity will be applied in equity for the benefit of the creditor to whom the debt'is owing. For this reason decrees for deficiency in foreclosure suits have been made against subsequent purchasers, who, by assuming payment of the mortgage debt, have become principal debtors as between themselves and their grantors. Klapworth v. Dressler, 2 Beas. 64. Klapworth v. Dressler has been approved whenever since cited. Hoy v. Bramhall, 4 C. E. Gr. 563; Pruden v. Williams, 11 C. E. Gr. 211; Crowell v. St. Barnabas, supra.

The mortgagor being liable to the mortgagee on the bond, an equity arises that the mortgagee may substitute himself in the place of the mortgagor, to enforce against the subsequent purchaser the covenant which the mortgagor has taken for his indemnity. To support the claim of the mortgagee, two conditions must exist at the time he files his bill — -first, he must at that time have a right to collect the deficiency from the mortgagor; and second, the mortgagor must have the right to reimburse himself by enforcing against the subsequent purchaser the covenant which he had given for the payments of the mortgage debt.

In this case the defendant insists that the mortgagor is not liable to the mortgagee for any deficiency on the bond, because he says that for more than sixteen years before thS bill was filed neither he nor the mortgagor has paid anything on the principal or interest of the bond; that the mortgagee cannot recover from the mortgagor on the bond, for the reason that the statute of limitations may be enforced against any claim on the bond, and that consequently the defendant’s collateral contract of indemnity by his covenant has no further efficacy, as there can be no loss which it undertakes to make good.

The stipulation as to the facts shows that it is true that neither the defendant nor the mortgagor have made any payments of either principal or interest on the bond for more than sixteen years next before the filing of the bill. But the additional stipulation also shows that each of the successive owners of the mortgaged premises made, in the deed which he accepted, the same covenant to pay the mortgage debt for himself, which the defendant had made for himself, and it also appears that each successively paid the interest on the mortgage up to the 1st day of April, 1898, which is within two years of the filing of the bill in this cause.

That the non-payment of either principal or interest on a sealed bond for a period of sixteen years may be set up at law’ in an action on the bond as a complete bar, is plainly declared upon the face of the statute of limitations, section 6. Though the statutes of limitations do not by their terms apply to courts of equity, yet equity will follow the law if the question arises on a legal demand, and this not so much by way of analogy as' positively in obedience to the statute. Story Eq. Jur. § 549-

It being shown that neither the mortgagor nor the defendant have made any payment on the bond within sixteen years before the bill was filed, is that a bar to any suit on the bond against the mortgagor, and thus a discharge of the defendant’s covenant of indemnity? Can the payments of interest by the successive grantees and covenantees be so imputed to the mortgage debt that they have kept alive the complainant’s right to^ recover against the mortgagor on the bond for the deficiency, and consequently the mortgagor’s right to enforce the defendant’s covenant to pay the mortgage debt?

The question whether payments made by persons liable to pay a mortgage debt other than the mortgagor himself will take a case out of the statute of limitations, has been exhaustively considered in England. The fortieth section of 3 and 4 W. & M. ch. 27, requires the payment in order to stay the statute to be made “ by the person by whom the same shall be payable or his agent.” In Chinnery v. Evans, 11 H. L. Cas. 129, the payment which it was claimed prevented the running of the statute was made by a receiver in charge of the mortgaged premises. Lord Westbury held that the receiver was a person who was liable to-pay the principal or interest in behalf of the mortgagor, and that payments of interest by him took the case out of the statute. The principle involved was held to be the same when the question arose under the statute of 1 Vict. ch. 28, which does not contain the above-quoted words, specifying by whom payment should be made. But notwithstanding the absence of the words, it has always been held that no stranger to the parties and to the contract could, by paying, prevent the operation of the statute. The party paying must be some person who is bound to pay the principal or interest of the mortgage money. Harlock v. Ash berry, 19 Ch. Div. 546. In re Hollingshead, 37 Ch. Div. 651, payment of interest on the testator’s contract debt by a devisee for life was lmld sufficient to keep that debt alive against all parties interested in remainder. In re Frisby, 43 Ch. Div. 117, Lord-Justice Fry considers the question whether a payment by a principal takes the case out of the statute as against the surety. He holds that a payment satisfying the statute is made whenever there is “ a render of money to a person entitled to receive it by a person liable to pay it.” It is usual for the principal to pay interest, and it is contrary to good sense and common understanding that while he was doing so the statute should run in favor of the surety. In this state, as above shown, equity regards each grantee who makes such a covenant as is above quoted as the principal debtor, and the,grantor becomes a surety only. Klapworth v. Dressler, 3 Beas. 63.

In re England, L. R. 2 Ch. 100 (1895); S. C. on appeal, 826, a settlor, who covenanted to pay a principal sum and interest, charged lands with the payment. The lands afterwards came into the hands of one who was under no liability to pay the interest, and did not pay it. The trustees of the fund sought to enforce the charge not only against the lands, but against the personal estate of the covenantor. The statute, of limitations was set up as a bar, and it was held by Mr. Justice Kekewich, below, and by all the lord-justices on the appeal (citing In re Frisby, 43 ch. Div. 106), that where there was no liability on the part of the holder of the lands to pay the interest reserved by the covenant, the statute would run to prevent recourse to the covenantor’s personal estate. The trend of all the opinions was that where there was such a liability, and payments of interest in accordance with it, the running of the statute to protect the personal estate would be stayed. In Lewin v. Wilson, 11 App. Cas. 639, a mortgage was given by W. to secure the debt of H., H. bfeing bou d to pay both the debt and interest. He did pay the interest, and it was held that though he was neither a party nor the agent of a party, his payments were sufficient to stay the statute, since they were made by a person who, under the terms of the contract, was entitled to pay, and from whom the mortgagee was bound to accept payment.

In England, 'the same rule as to payment of interest by one liable to. pay it, though not the original obligor, is applied when the statute of limitations is set up in an action on the bond or other original contract of debt for the recovery of a deficiency. In Forsyth v. Bristowe, 8 Welsby, H. & G. *716, an action Ayas begun in 1852 on a covenant made in 1830. The very question was presented which is now under consideration, whether a payment of interest by an assignee of the equity of redemption, who had covenanted to pay it, was such a payment as would take the ease out of the statute of limitations. It was argued that the payment of interest by the assignee of the equity of redemption was not sufficient to take the case out of the statute; that the payment must be made either by the mortgagor or by his agent. Baron Parke held that tiie section of the statute of limitations invoked did not in express terms require the payment to be made by the party liable, or by his agent, but if the statute implied that, then the assignee of the equity of redemption, who covenanted to pay, is sufficiently an agent of the party liable for that purpose.

In Dibbs v. Walker, L. R. 2 Ch. 429 (1893), a suit for a deficiency was begun, in 1893, on a covenant made in 1831, by which the settlor, Avho was the owner of an equity of redemption, covenanted to pay the mortgage debt. He then made a settlement in favor of a tenant for life, under which she covenanted to pay the interest. She did pay it for over sixteen years. On her death the mortgaged premises were sold, but did not satisfy the mortgage debt. Suit was begun, in 1893, on the covenants made by the settlor, in 1831, to recover the deficiency. The statute of limitations was set up as a bar, it being contended that the payments of the life tenant should be referred solely to her own covenant. But Mr. Justice Chitty refused to accept the proposition, aud held that her payment kept the right of action alive on the covenant of the settlor, made in 1831, declaring that Forsyth v. Bristowe was an authority upon the point which had never been questioned.

In Blue v. Everett, 11 Dick. Ch. Rep. 457, a very recent case in this state, there was an attempted foreclosure of a mortgage when neither the obligor in the bond nor anyone claiming under him had in any way recognized the mortgage debt for over twenty years before the filing of the bill. The defendant set up the statute of limitations. In the entire absence of any recognition of the mortgage debt, the case-differs radically from that now in hand, where the successive grantees each covenanted with his grantor to pay the mortgage debt, and have paid interest on it up to within two years of the filing of the bill. But upon one point, the application of interest payments, it throws some light upon the matters here under consideration. In the case cited, the learned. Mr. Justice Dixon, who delivered the opinion of the court of appeals, discusses the nature of payments on account of the debt, made by a mortgagor, and declares that at law payments on account of a debt secured by bond and mortgage are not to “ be deemed rent or in any sense the price of possession, but would be referred solely to the personal obligation held by the mortgagee.” It is in the law courts that action, on the bond would be enforced as between the holder and the mortgagor who gave it. Under this ruling, payments of interest even at law are deemed not to be a satisfaction for the enjoyment of the mortgaged premises, but are referred solely to the personal obligation — the bond — held by the mortgagee. When so referred they must operate to postpone the expiration of the statute of limitations as a bar to an action on the bond. To what-other obligation can they rightfully be related ? They are not payments on the covenants of the grantees, for those covenants, are not original undertakings, but are agreements to pay an already existing debt. . They have none of the qualities of a rent or a compensation for the use of the mortgaged premises, because, as is shown in Blue v. Everett, the grantee does not hold the land under the mortgage.

That the attitude of the mortgagor, obligor in the bond, was that of assent to and acceptance of the payments of interest made by the subsequent grantees, as applicable on account of the mortgage debt, may be shown by an illustration. The contentiou of the defendant is that the payments by subsequent grantees, after the last the defendant made in 1879, cannot be held to have been made on the bond, and therefore the obligor must be held to be discharged by the sixteen-year statute of limitations.

Suppose, in 1889, after the subsequent grantees had for ten years paid the interest, the holder of the bond had sued the, obligor and claimed the principal of the bond and the ten years’ interest from him, would not the obligor, while admitting that he owed the principal, have refused to pay the ten years’ interest and have replied, and successfully, too, that the interest for those ten years had already been paid by the subsequent grantees?

Suppose the grantees, who succeeded Dr. Pugh in the ownership of the land, had tendered to the bondholder payment of the debt secured by the bond, would it not have been a good tender and have stopped the interest? Suppose the holder of the bond and mortgage had recovered the amount of the mortgage debt from any of the subsequent grantees, on 1ns covenant to pay it, would not the payment by such a covenanting grantee have discharged the obligation of the bond?

In this'very case the mortgaged lands have been sold and the proceeds applied in part satisfaction of the debt created by the obligor in the bond. Irrespective of the statute of limitations, can there be a question that these proceeds were well applied and reduced the amount of the obligor’s debt due upon the lands?

If the payments by the subsequent grantees were efficient to reduce the amount of interest which came to be due on the bond or to satisfy the principal debt, after Dr. Pugh had conveyed away the mortgaged premises, it is hard to see why they should fail, after that time, to stay the operation of the statute of limitations. The last of these interest payments by subsequent grantees, who covenanted to pay the debt, was made, as stated, within two years before the filing of the bill.

The crediting upon the bond of payments of interest made by subsequent grantees on account of the mortgage debt was in accordance with their several covenants and with the invariable practice followed by all who receive such payments. It would introduce a new mode of doing business and disturb many established investments were it held that interest payments made by subsequent purchasers, who had contracted to pay the mortgage debt, had no application to it, and thn* all the while that the yearly interest was being annually paid m recognition of the debt and received and credited on the bond, the statutes of limitations were insidiously cutting off the right to collect the principal. The subsequent purchaser, who agreed with the mortgagor or with his grantee-to pay the mortgage debt, received an estate in and possession of the mortgage lands as a consideration for such agreement. Each grantee was, by his covenant, put in privity of obligation as to payment of that debt with every other person who was in anywise bound to pay it. The grantee’s payments of the interest on that debt satisfied it to the extent of those payments, in accordance with his covenant to pay it and to the benefit of the parties who also were obligated to pay it. The payments were “renders of money to a person entitled to receive it by a person -liable to pay it” and operated as payments on account of the debt and to keep it alive. Equity will recognize and enforce obligations of persons ultimately liable, so kept alive, although they may not, as between each other, be immediate contractors.

By taking the covenant from Dr. Pugh, Adams agreed that Pugh should pay the debt, and each payment-of interest made by the latter operated as a payment to postpone for sixteen years thereafter the operation of the statute of limitations as a defence to the bond. Each successive grantee became in the same way personally liable in equity for the payment of the debt by his covenant in the deed which he accepted. When in turn he became a grantor he exacted from his grantee a like covenant, and the new party undertook the payment of the debt as a primary duty, and thus became in equity the principal debtor, the preceding covenantors becoming sureties. Each of these principal debtors had a right to make the payments of interest on the debt as they fell due, and the running out of the statute of limitations mus,t be computed from the date of the last of them, which is admitted to have been within two years before the filing of the bill in this cause.

Against the successive grantees whose covenants form the chain of liabilities to pay the mortgage debt, it is the province of a court of equity to enforce those covenants in order to-avoid circuity of action, and the party who satisfies the debt may, if necessary, have his remedy over against those who are liable to him. The grantee covenantors, beyond the defendant Pugh, have not been brought in as parties, but this has not been made the subject of criticism either in the pleadings or the arguments. For the relief which the complainant seeks-from the defendant they are not necessary parties. In Pruden v. Williams, 11 C. E. Gr. 212, the obligor in the bond was not a. party, but only the succeeding covenantors, in a bill to recover a deficiency, which was sustained. Burr v. Beers, 24 N. Y. 178.

The authorities above quoted justify the staying of the operation of the statute by payments of interest made by those other than the original contractor, who have undertaken to pay the same debt, upon principles analogous to those declared in the-celebrated case of Whitcomb v. Whiting, Doug. 652, to the effect that one joint debtor may, by acknowledgment of the debt, postpone the operation of the statute of limitations. This case was-followed in many of the .states, notably New York, for many years, but has in most of them been overruled. It has been accepted in this state for reasons fully stated in Merritt v. Day, 9 Vr. 32, and unanimously supported by the court of errors in Casebolt v. Ackerman, 17 Vr. 172.

The only direct authority, contrary to the views above stated,, is Trustees, &c., v. Smith, 52 Conn. 434, where Chief-Justice Park, in á suit against the original obligor, where grantees had assumed payment of the mortgage debt, and had paid the inter-, est, sustained a plea of the statute of limitations, upon the ground that the payments of interest by the successive grantees were on their own account to keep alive the equity of redemption, and not on account of the mortgage debt. In this the learned chief-justice is in opposition to the above-quoted declaration of our court of appeals in Blue v. Everett, ubi supra, as to the relation of such payments. He further states that the assumption of the mortgage debt did not increase the remedies of the holder of the mortgage. This view conflicts with Klapworth v. Dressler, ubi supra, which declares that the assumption of the mortgage debt entitles the mortgagee to sue the assuming grantee in equity for the recovery of that debt. The learned chief-justice cites but one authority, and that does not appear to be applicable to the case he was considering. His decision is also very diflicult to reconcile with another which he made in Tuttle v. Armstead, 53 Conn. 175, where an agreement by a subsequent grantee to pay a mortgage debt was enforced against the bar of the statute of limitations on payments of interest by him, though the mortgage itself was void. In the first of these decisions it was held that interest payments by subsequent grantees were made solely to keep alive the equity of redemption, and that they could not save the debt secured by the mortgage from the operation of the statute of limitations. In the latter case, interest payments by a grantee who acquired the property subsequently to the mortgage, and who covenanted to pay the mortgage debt, were held to be made on the indebtedness which he had assumed to pay, and not on his own private account to prevent a foreclosure of the land, and, by so applying the payments, the indebtedness which he assumed to pay was saved from the operation of the statute.

Princeton Savings Bank v. Martin, 8 Dick. Ch. Rep. 463, is also cited as sustaining the proposition that payments by subsequent owners of the mortgaged premises cannot be imputed to the mortgagor so as to bar the statute. But the learned vice-chancellor who heard that cause in this court declared as to the facts of the case that it “ nowhere appears that the grantees or any of them assumed the payment of the money secured by this mortgage, consequently the only person liable, if anyone be, on the bond in question, is the defendant,” the obligor. It was not a case, therefore, where the assumption of the payment of the mortgage debt by the grantee had put him under such an obligation as to relate his payments of interest to that mortgage debt which he had agreed to pay, and postpone the running of the statute. Whatever force the case cited might otherwise have is somewhat lesseued by the fact that it was reversed on appeal (9 Dick. Ch. Rep. 437), though the reversal was put upon the ground that the complainant had a full remedy at law, and without discussion of the views expressed in this court.

I will advise a decree that the complainants are entitled to recover from the defendant the amount of the deficiency, with costs.