text:
    Schubert Lodge, No. 118, Knights of Pythias of New Jersey, v. Schubert Kranken Untersturzen Verein, Clemens Chnell and seven other individual defendants.
    [Filed August 21st, 1897.]
    1. Printed copies of the constitution and laws of a beneficial order, in the hands of the secretary of the grand lodge of the state, sent for his guidance and use by the secretary of the Supreme Lodge of the World, are presumed to be genuine and accurate.
    2. Moneys received by the subordinate lodge of a beneficial order were held in. trust, to be used for lodge expenses and dues, for sick benefits, and for burial expenses of members. A majority of the members of a subordinate lodge disbanded and surrendered their lodge charter, first, however, making a present of the funds in the treasury to a sick benefit society which they had formed independently of the order. —Held, that such a disposition constituted a wrongful diversion of the funds.
    3. The provisions of the constitution and laws of a beneficial order concerning the disposition of the funds of subordinate lodges form a contract between the members of an incorporated subordinate lodge, so that the failure to dispose of its funds in accordance with those provisions is a breach of contract.
    4. The fact that a supreme lodge of a beneficial order has brokewits contract with the members of a subordinate lodge, by refusing to allow them to use the German language for their ritual and records, is no justification for the diversion by those members of the funds of the lodge held in trust for the purposes of the order.
    Heard on bill, answer and proofs taken before a master.

      Mr. De Witt C. Bolton, for the complainant.

      Mr. William B. Gourley, for the defendants.
   Pitney, V. C.

Complainant is an incorporated benevolent association, and belongs to the order of the Knights of Pythias. That order consists of a Supreme Lodge of the World, incorporated under a statute of the United States, and of several grand lodges subordinate to it, located in different states of the Union, among which is the Grand Lodge of the State of New Jersey; and then of numerous subordinate lodges acting under a charter from one of the grand lodges. Grand Lodge, Knights of Pythias of New Jersey, v. Germania Lodge, No. 50, Knights of Pythias, ante p. 63. Complainant is a subordinate to the Grand Lodge of New Jersey.

The bill alleges and the answer admits that the complainant herein is a corporation created and existing under the laws of the State of New Jersey. In that respect the case differs from the case developed in Grand Lodge v. Germania Lodge, where Germania Lodge was an unincorporated association. The bill does not state how or when the complainant was incorporated, but, presumably, it was done under the “Act to authorize the incorporation of benevolent societies.” Gen. Stat. p. 149. In other respects the case developed herein much resembles that of Grand Lodge v. Germania Lodge.

The same volumes containing the constitution and laws of the order were put in evidence here as were admitted in the case of Grand Lodge v. Germania Lodge. Objection was made in argument to the sufficiency of the proof of the printed books of the constitution and laws of the order. They were proven to be genuine by the grand secretary of the state lodge, who received them in due course of business from the secretary of the supreme lodge for guidance and use by the grand ánd subordinate lodges of New Jersey. The presumption of their genuineness and accuracy results from their origin and custody.

The complainant was organized as a German lodge by persons; with ^ single exception, who spoke the German language; and the understanding that its work was to be done and its proceedings carried on in the German language was an inducement to all the members who joined it. Its by-laws were adopted in the German language, and so approved by the grand lodge of the state, and books of ritual were furnished to it by the grand lodge, printed in the German language.

I think it sufficiently appears that for the first two years, at least, of its existence, its use of the German language was by the permission, either express or implied, of the grand lodge of the state.

In 1892 the supreme lodge, the superior of the grand lodge, made some order directing the German lodges to discontinue the use of the German, with the result that the German ritual books which had been furnished them were demanded by the chancellor of the grand lodge, and were delivered up by the complainant. The different subordinate German lodges of the country united in an effort to reverse the action of the supreme lodge, and were finally defeated. This angered a great majority of the members of complainant lodge, and they resolved quietly to rebel, throw off the yoke of the grand lodge, dissolve the Schubert Lodge as such, and surrender its charter, but not to permit the grand lodge to obtain the funds which they had on hand, amounting to about $800. They were aware that upon the dissolution of the lodge and the surrender of its charter the grand lodge became entitled, by the constitution and laws of the order, to all their property and funds. In that view they formed (as in the case of Germania Lodge, No. 50) a society called the Schubert Kranken Untersturzen Verein (Sick Benefit Society), and, by resolution, made a present of $800 to that society, which was substantially all of their funds.

The members of the complainant lodge were not unanimous in this action, and a small number (nine) refused to vote for or to approve it. The charter was sent to the grand lodge, but, upon, investigation, the officers of the grand lodge found that there were this number of eight or nine still remaining loyal to the order, and redelivered the charter to them, and the organization, under the dominion of the grand lodge, has been kept up.

This bill was filed to recover the funds. They had been deposited in a savings bank to the credit of three or more of the individual defendants, and were there stayed by the injunction of this court, and the dispute is as to the right to those funds.

It was not disputed but that these funds were the result of the accumulation of dues paid in by members of the order, and that they became at once impressed with a trust, the terms of which are to be found in the constitution, laws and by-laws of the order, and that they cannot be applied to any use except those defined in those instruments. Those uses are, first, to pay the expenses of the lodge and dues to the grand and supreme lodges; second, to make payments to sick members; and third, payment of expenses of burial of deceased members. And all such payments are to be made only after certain formalities have been complied with.

On this simple statement, as in the case of Grand Lodge v. Germania Lodge, the breach of trust appears manifest.

Two defences are set up. First, that the gift to the Kranken Untersturzen Verein was justifiable under the decision in the case of Lady Lincoln Lodge v. Faist, 7 Dick. Ch. Rep. 510. But in that case the appropriation called in question was to a. new lodge formed of members of the old lodge, and owing andi acknowledging allegiance to the supreme lodge and subject to its constitution and laws. It was held that the appropriation so> made did not have the effect of changing or breaking the trust to which the funds were subject, and, besides, the terms of the trust in that case were not so strict and exclusive as in the present case. And it may be remarked that it is manifest that the learned vice-chancellor felt that in approving the action of the members of the lodge in that case he went to the very verge of safety.

The second ground of defence is that there.was an implied contract between the members of Schubert Lodge and the supreme lodge that the proceedings of the subordinate lodge might-be conducted in German, and that such contract was not subject to a right of variance by subsequent action of the supreme lodge, though such right of variance was expressly reserved by the constitution of the supreme lodge; that the supreme lodge had deliberately broken the contract by forbidding the Use of the German language, and hence absolved the Schubert Lodge from all allegiance to the supreme lodge and all obligations to observe the laws and constitution thereof.

I think this position is untenable for reasons which do not involve an inquiry as to whether there was, in fact, such a contract and breach thereof as is alleged by the defence. In the first place, it is to be observed that the Schubert Lodge, being not only organized under the constitution and laws of the order, but also incorporated under the laws of the state, the constitution and laws of the order not only defined the terms upon which the funds of the lodge were held in trust, but also formed a contract between the different members of the lodge; and a breach of the contract between the Schubert Lodge and the supreme lodge, if there ever was such contract, could not have the effect of altering the terms of the trust and contract between the members of that lodge. Each member of the lodge was interested in those funds, and none of them could be diverted from the purposes to which they were devoted, without the consent of every individual member. Such consent was not had. And the well-settled rule in such cases is that the rights of the minority who stand by the regular organization must be respected.

In the second place, the alleged breach of contract did not justify any such action as was taken. The most that could result from it was a right on the part of the Schubert Lodge to refuse to obey the grand lodge by giving up, as it did, its German rituals and the use of that language. On the theory of the defendants the right of the members of Schubert Lodge was to continue to use the German ritual and to record their proceedings therein, and to claim and exercise the right to exist as a subordinate lodge of the grand lodge, notwithstanding the adoption of the statute which forbade the use of the German language. On the theory of the defendants that statute was void as to Schubert Lodge and need not have been observed by it.

The complainant corporation has never lost its identity and organization. The funds in question belong to it, and must be so decreed, with costs against the defendants.


source: Caselaw Access Project

author: Pitney, V. C.

license: Public Domain

text:
    Joseph C. Todd v. Charles A. Meding, Madeline (Minnie) A. Roe, Augustus C. Roe et al.
    [Filed August 27th, 1897.]
    1. A claim against insolvent, founded on notes of $10,000 of insolvent to R., and sworn to by R., which alleges that deponent has assigned an interest of $5,000 in the claim to T., and that the.claim is presented on behalf of T. as well as on deponent’s behalf, sufficiently presents the claim of T. for the $5,000, and charges the receiver with notice of the right of T., rather than R., to receive dividends thereon.
    2. One to whom a claim is assigned as collateral security is, on the claim being paid, entitled to receive the money, the debt for which the collateral was given not having been paid, even if it was not due.
    3. Though only part of a claim is assigned, the debtor, having notice of the assignment, cannot ignore it and pay the whole debt to the original creditor.
    4. Where a claim of $5,000 was presented to a receiver by T., and a claim of $10,000 by R., with a recital in the latter that half of it had been assigned to T., and that it was presented on behalf, of T. as well as of R., the receiver is not excused from liability for payment to R. of the entire dividend on the $10,000 because of the fact that when T. received a check from the receiver for $1,000, marked “20% dividend,” the amount of dividend on his individual claim of $5,000, he made no inquiry as to whether a dividend had been declared and paid on the $10,000 claim, or because of the fact that his attorney saw the dividend check of R., he not having observed that it included the dividend on the whole claim of $10,000.
    5. One for whom money is left in trust, and who, on joining with his next of kin in a release of the trustee, obtains the money to loan to his sister, to be loaned by her to a corporation for his benefit, has, on the corporation becoming insolvent, no right to a preference because the money loaned by him had been a trust fund.
    Heard on bill, answer, cross-bill and proofs.
    The complainant, Joseph C. Todd, is a creditor of the Butler Silk Manufacturing Company, an insolvent corporation, of which the defendant Meding is the receiver. The defendant Madeline A. Roe is also a creditor of the said corporation. A part of the assets has been divided and distributed by the receiver. A part remains to be divided and distributed. The allegation of the bill is that, in the distribution already made,, the defendant Meding, for some reason, paid to Madeline Roe moneys which should have been paid to the complainant, and the object of the bill is to compel Meding to make good to complainant the mispayment to Miss Roe, who is insolvent, either out of the receiver’s own pocket or out of the future dividend coming to Miss Roe.
    One Haffey, who was a trustee under a will for Augustus C-Roe, a brother of Madeline, is made a defendant because he-claims to be interested as assignee of Miss Roe of a share of her claim against the insolvent corporation. . He has not answered-Augustus C. Roe was not made defendant by the complainant’s-bill, but was admitted on his own application after the cause was at issue, and filed an answer and cross-bill after the cause had been referred to a vice-chancellor and during the hearing] The complainant has answered and traversed the new matter set up by this cross-bill.
    The facts and circumstances of the case are as follows: The insolvent corporation, in May, 1893, was indebted to Miss Roe’ in the sum of about $10,000 (witnessed, in part, by four promissory notes, one for $2,503.34, another for $4,100, another for $1,300, and another for $566.57), for money loaned and advanced by her to the company, and on that day it executed toiler a chattel mortgage to secure that indebtedness, which, however, was withheld from the record until the 31st of July, 1893,. when it was duly recorded.
    On the 1st of August, 1893, a bill was filed by J. H. Blauvelt for the appointment of a receiver of the insolvent company, and Meding was appointed such receiver on the 7th of August. At-that time the complainant, Todd, held the promissory note of the insolvent company, dated June 8th, 1893, at six months, for $5,000, endorsed by Miss Roe, and, in order to secure him, Miss Roe, on the same 7th day of August, executed to him an assignment of a one-half interest in the chattel mortgage “and the-one-half interest of the money due and to grow due thereon, with the interest.” At the same time, upon the delivery of that assignment, she entered into a written agreement with Mr. Todd by which it was agreed that in case the note for $5,000 held by Mr. Todd “is paid and discharged at maturity,” then Todd agreed to reassign the one-half interest in the mortgage to her.
    This assignment from Miss Roe to Todd was duly recorded on the same 7th day of August, 1893, in the record of assignments of Passaic county, where all the parties lived.
    On the 31st of August, 1893, Meding, as receiver, filed his bill in this court against Miss Roe and Todd, the complainant herein, setting out the chattel mortgage and the assignment of one-half to Todd, and praying that it might be set aside and declared not a lien, with the result that the mortgage was set aside and decreed to be void. The history of that litigation is found in the report thereof in 8 Dick. Ch. Rep. 350. The decree in this court was signed on the 16th of May, 1894, and it was affirmed, on appeal, on the 18th of November, 1895.
    In that suit Todd and Miss Roe set up their defence in a joint answer, and it was conducted by Mr. (now governor) Griggs. He does not appear to have been the confidential counsel of either of the parties. Certainly he was not the counsel of either one as against the other, but was employed by them jointly to defend that suit upon the understanding that the expense was to be equally divided between them.
    Pending the hearing before the vice-chancellor of the suit of Meding v. Roe, a petition was presented by the receiver in the Blauvelt insolvency suit for leave to sell the mortgaged property, free and clear of the encumbrance of the chattel mortgage, and such order was made on the 28th of December, 1893. Such sale was made in March, 1894, with the result that the chattels mortgaged realized about $6,500. In addition to that sum, the receiver had in his hands nearly $19,000, proceeds of the sale of other property, and the total amount of claims was a little over $56,000. Upon the presentation to the court of these facts he was ordered to make a dividend of twenty per cent, among the creditors, payment of which would leave in his hands sufficienfc to meet the demand of the chattel mortgage, if it should be sustained.
    In the meantime, on the 18th of September, 1893, in the usual course of business, the receiver obtained an order calling on the creditors to present their claims within three months from-that date. Neither Miss Roe nor Mr. Todd presented any claim within the time, and on the 8th of January, 1894, before the case of Meding v. Roe was argued, Governor Griggs, as solicitor of Mr. Todd and Miss Roe, gave notice of a motion to extend the time within which Miss Roe and Mr. Todd might present their claims, and an order was made accordingly, extending the time to the 20th of January, instant. Governor Griggs already had in his hands the sworn claims, ready for presentation. That of Mr. Todd was sworn to before his present solicitor, Mr. Osborne, as master in chancery, on the 6th of January, 1894 that of Miss Todd was sworn to on the same day before Governor Griggs; but both appear to have been prepared under the direction of Governor Griggs. A memorandum is made at the foot of the claim of Mr. Todd, in Governor Griggs’ handwriting, of the note and protest fees. It is based upon the promissory note before mentioned of June 8th, 1893, for $5,000, at six months, endorsed by Miss Roe. The claim of Miss Roe is based) upon the four promissary notes above mentioned. Both claims-are in typewriting, with the exception of a special clause in Miss-Roe’s claim, which is in the handwriting of Governor Griggs- and in these words:
    “ Deponent further says that an interest to the extent of §5,000 in said! claim has been assigned by her to X C. Todd as collateral security, and this-claim is presented on behalf of the said Todd as well as on her own behalf. ”
    These claims were handed by Governor Griggs to Mr. Stevenson, counsel for the receiver, and by him to the receiver,, and with the others against the insolvent corporation were entrusted by Mr. Meding to a bookkeeper and accountant — Mr. Townley — who duly arranged and tabulated them, and in so-doing entered on the list of creditors the claim of Miss Roe as being in favor of her alone, instead of in favor of her and Todd in the proportion of each one-half, as he might have done according to the terms of the special clause inserted therein above quoted. This appears by the answer of the defendant herein, and by the list of proven claims annexed to the report of the receiver presented to the court in the. insolvency suit as a basis for an order of partial distribution. The same bookkeeper prepared the checks to be paid to the creditors and to be signed by Mr. Meding as receiver, and the corresponding receipts to be signed by the creditors. They are dated June 4th, 1894. That of Mr. Todd was for $1,000.37, and that of Miss Roe was for $2,071. (This was after decree had passed in this court against Todd and Roe in Meding v. Roe, but before its affirmance on appeal.)
    It will be perceived, by the amount of these checks, that Todd received twenty per cent, on his claim of $5,000, and Miss Roe twenty per cent, on her claim of $10,000. It would be fairly inferable from the circumstances that Mr. Townley, in drawing the checks, followed thoughtlessly the list of .creditors above referred to, but upon his attention being particularly called to it on the stand, he swears that he had Miss Roe’s sworn claim before him when he drew her check, and that he observed that one-half of it belonged to Mr. Todd as collateral security. Asked whether he inquired as to whether one-half of the claim ought not to be paid to Mr. Todd, says he did not. Asked whether it did not strike him at the time that the claim was one-half of it for Miss Roe and one-half of it for Todd, answered:
    “No, sir; Todd has his proof of claim.
    “Q. Well, he had a claim, but you knew nothing about that; this claim was declared to be, as to one-half, in favor of Miss Roe, and, as to the other one-half, in favor of J. C. Todd, and this language is used : ‘ This claim is presented on behalf of the said Todd as well as on her own behalf?’

      “A. But it says there as ‘collateral security.’

      “Q. What of that? The claim is presented on behalf of each; that didn’t strike you at the time ?

      “A. No, not at all.”
    These checks were drawn on the Second National Bank of Paterson, and had stamped on their face “ twenty per cent, dividend.” Mr. Todd seems to have deposited his check in the First National Bank of Paterson, and it was paid by the Second National Bank on the 7th of June, 1894. Miss Roe drew the money for hers in person on the 9th of June, 1894. She paid one-half of the proceeds to her brother’s trustee, Mr. Haffey, and the other one-half she spent for her own purposes and is wholly insolvent.
    Before drawing the money she called upon Governor Griggs, and, as she swears, asked him whether that money was hers for her to do as she chose with, and that he'answered that it was.
    Governor Griggs recollects the circumstance of her calling, but not precisely what occurred. He says that the call was a casual one, made while his attention was occupied with some other matter of business, did not excite his serious attention, and he cannot recollect distinctly what passed, but he feels quite sure that he did not say anything to Miss Roe to indicate that she had a right to hold all of that money as against Mr. Todd.
    The facts upon which Augustus C. Roe’s right in the fund is based are substantially as follows: An aunt of Augustus and his sister died in New York, leaving some money in trust for the benefit of Augustus, and Haffey was the substituted trustee in charge of that fund. Augustus Roe was out of business and seeking employment, and sought it of the Butler Silk Manufacturing Company. His sister, Madeline, had already advanced to that corporation funds of her own, and in order to procure him a situation at a remunerative salary she agreed to increase the loan to $10,000, and for that purpose obtained of Haffey upwards of $3,000 of the trust fund to loan to the silk manufacturing company, and that money made a paid of the $10,000 owed by it.
    The language of the trust in the will is as follows :
    “To be held in trust, to pay over the interest and income thereof to my nephew, Augustus C. Roe, from time to time, for and towards his maintenance and support, and whenever, in the exercise of their discretion, she [that is, the trustee] shall be satisfied that my said nephew is in unembarrassed circumstances, and that payment thereof to him will inure to his benefit and advantage, then I authorize and empower her [the trustee] to pay oyer to him the amount of the trust fund in her hands, and his receipt thereof shall be a sufficient discharge from the trust thus created.”

      Upon the payment of that money, Augustus C. Roe, his mother, Eliza Roe, and his sister, Madeline, executed a release to Haffey, the trustee, in these words;
    “Whereas, on the 11th day of January, 1893, John Haffey was duly appointed by an order of the New York superior court, city and county of New York, the substituted trustee of Augustus C. Roe under the last will and testament of Caroline A. Roe, deceased; and whereas, as such trustee he has received from the executors of the last will and testament of the said Caroline Roe, deceased, the sum of twenty-seven hundred and ninety-three 34/100 dollars ; and whereas, it is the desire of Augustus C. Roe, the beneficiary of such trustee, to loan said sum of money to his sister, Minnie A. Roe, one of the parties hereto, to be by her invested in the Butler Silk Manufacturing. Company, in which company the said Augustus C. Roe is interested, the said Augustus C. Roe hereby stating that the said company is responsible and is solvent and the said Minnie A. Roe having security for the said loan:
    “ Now, therefore, this agreement, made by Augustus C. Roe, the said beneficiary, Minnie A. Roe, his sister, and Eliza Roe, his mother, with the said John Haffey, trustee, witnesseth as follows:

      “First. The said Augustus C. Roe hereby requests and directs the said John Haffey, after payment of the expenses incurred for attorneys’ fees, &c., in the proceedingspraying for the appointment of a trustee, &c., in the matter above mentioned, to loan the balance of the said trust fund to the said Minnie A. Roe, who is to invest said moneys with the Butler Silk Manufacturing Company, on interest; and upon such investment being made, the said parties hereto forever release and discharge the said John Haffey from any claim, demand, action or proceeding that may arise or grow out of or by reason of the loss of the said moneys or any part thereof; said parties further agree that they will take no steps to make any claim against said John Haffey, trustee, at any time, it being their desire that said moneys shall remain so invested as above mentioned, they having full control thereof; and it is further understood and agreed that this agreement shall be a bar, estoppel and defence to any proceedings in actions brought by the said Roes or either of them, arising out of the matters herein mentioned, unless the said moneys should be returned to the said John Haffey, trustee; but in no event shall the sureties of the said John Haffey, trustee, given by him on the 3d day of February, 1893, be liable for any cause or reason whatever, we, the said Roes, if any liability occurs, looking only to said trustee.
    “ It is further understood, that this agreement shall bind our heirs, executors, administrators and assigns.
    “ In witness hereof, we have hereunto set our hands and seals this 9 th day of February, 1893.”
    The exact amount of the Augustus C. Roe fund included in the $10,000 mortgage was $3,070.01, and is witnessed by two of the notes secured by the mortgage, in these words:

      “12,503.34/100. Paterson, New Jersey, February 9 th, 1893.
    “ One year after date we promise to pay to the order of John Haffey, trustee for Augustus C. Roe, at the First National Bank of Paterson, two. thousand five hundred and three dollars and 34/100. Value Received.
    “The Butler Silk Manufacturing Co.
    “ R. V. Butler, President.”

    “1566.67. Paterson, New Jersey, April 22d, 1893.
    “ One year after date we promise to pay to the order of John Haffey, substituted trustee for Augustus O. Boe, at the First National Bank of Paterson, -dollars. Value Beceived.
    “Butler Silk Manufacturing Co.
    “R. V. Butler, President.”

    In January, 1894, about the time of verifying her claim against the insolvent company, Miss Roe made and executed an assignment of the remaining one-half of her claim to John Haffey, her brother’s trustee.
    The claim set up by Augustus C. Roe’s cross-bill is that he is entitled to be paid the $3,070.01 trust funds out of the dividends on the whole $10,000, in preference to the complainant herein.

      Mr. Joseph P. Osborne, for complainant.

      Mr. Eugene Stevenson, for Meding.

      Mr. John S. Barkalow, for Augustus C. Roe.
   Pitney, V. C.

-The first question raised at the argument was to whom was-the dividend upon the claim of $10,000, verified by Miss Roe, properly due and payable. It was argued that it was due and payable to Miss Roe because the debt was originally due to her; that the affidavit was made by her, and the receiver was not bound to notice or act upon any partial assignment of the debt, or, at least, that the notice of the assignment contained in the sworn claim amounted to no more than a mere declaration of trust by Miss Roe which reserved to her the right to receive the dividend as trustee for Mr. Todd and pay it over to him.

The point is thus put in the remarkably able brief of defendant’s counsel: “First. Treating this as a case of notice from the assignee of a debt to the debtor, Meding is not charged under the circumstances with notice of Todd’s right to receive the money instead of Miss Roe.”

I am unable to adopt that view. The claim was, on its face, plainly made in favor of Todd to the extent of $5,000 — -just one-half — and in favor of Miss Roe for the remainder. The language used — “ this claim is presented on behalf of the said Todd as well as on her own behalf” — will admit of no other interpretation. The express declaration “that an interest in the said claim has been assigned by her to J. C. Todd as collateral,” is in and of itself an assignment of so much of the debt, quite independent of the previous formal deed of assignment duly made and executed by her, of which Meding and his counsel had full notice.

An ingenious argument was made to the effect than an assignment as collateral did not vest in the assignee any right to the immediate receipt of the money, and that Todd’s right to receive the money from the receiver depended upon the question whether or not the state of the indebtedness, as collateral to which the assignment was made, was such as to entitle him to receive the money as between him and Miss Roe.

But I do not understand such to be the law. Take a simple illustration. If A wishes to borrow money from B, and holds a bond and mortgage of C, which is due, but upon which he cannot immediately realize, and gives his promissory note to B for a sum of money payable at a future day, and assigns the mortgage of C to B as collateral to that note, and before the maturity of the note, G wishes to pay his mortgage, and has notice of the assignment to B as collateral, he cannot; with safety, pay the money to A, the mortgagee. B is entitled. to receive the money, although the debt which it is assigned to secure is not yet due. The assignment vests the title to the money in the assignee. The mere fact that it is assigned as collateral, does not alter the situation of the parties. Any other rule would destroy the value of such an assignment. The fact that the assignment is merely as collateral to a certain debt, does not affect the intrinsic character of the transaction or disentitle the assignee to demand the money, so long as the debt which it is assigned to secure still exists.

The circumstance that only a part of the claim was assigned, does not affect the result. It is too late to dispute the proposition that a part of a debt may be effectually assigned in equity. The qualifying rule that such an assignment cannot be enforced by action at law without the acceptance or assent of the debtor does not vary the result. The qualifying rule avails the debtor only to the extent that if he wishes to dispute the existence of the debt, he is entitled to make his defence in a single suit, and cannot be subjected to several suits at law. But it does not justify him in ignoring the partial assignment, after he has notice of it, and in paying the whole sum to the original creditor. To so hold would be to nullify the doctrine which sanctions partial assignments. The rule is well settled that the payment of the whole debt to the original creditor, after notice of an assignment of part of it, will not avail the debtor when sued in equity by the assignee. If the debtor is in any doubt as to the right of the person claiming to be an assignee, as against the assignor, he has an easy remedy. He can inquire of the original creditor and alleged assignor, and if he denies the assignment the debtor may file his bill of interpleader.

I can find no solid basis for the notion that Miss Roe occupied the position of trustee of a part of this fund for Mr. Todd, with power, as such, to receive the money without his consent. In one sense no doubt she was a trustee, but not in the sense which would give her a legal right to handle the money for his use and benefit and without his consent.

By the old common-law practice the assignee of a negotiable chose in action was obliged to bring suit thereon in the name of the original contractee as nominal plaintiff to his use. But the necessity to use the name of the original contractee as nominal plaintiff did not authorize the payment by the debtor of the amount due to such plaintiff in person, after notice of the assignment.

The next question is, was the receiver excusable for the mistake he made of paying the whole dividend to Miss Roe ?

The particular defence developed in the brief of counsel, which applies to this part of the case, is this:

“Second. This is not an ordinary case between a debtor and the assignee of the debt. The receiver was an officer of the court of chancery administering a fund in an official capacity and bound to distribute that fund according to the orders of the court among a certain definite class of creditors who should pursue certain specified legal proceedings to lay their claims before the receiver. Todd never complied with the law and the orders of the court of chancery in respect of any interest he had in the $10,000 claim. He did make himself a party to the insolvency proceedings before the receiver in respect of his $5,000 claim. It follows that the receiver never had any right to pay one dollar of the dividend on the $10,000 claim to anybody but Miss Roe, who presented and proved it.”

This proposition, like the other, seems to me entirely untenable. The claim, in my judgment, was properly and artistically made out and verified. I am unable to see in what respect it could have been improved. It was plainly presented on behalf of both Todd and Roe. On its face Todd was the payee of one-half of the amount. The verification of all such claims should always be make by the party who has personal knowledge of it— such a person as would be competent to prove the facts to sustain the claim if called as a witness in a court of justice. How Mr. Todd, personally, knew nothing about the foundation or merits of that claim. He could not properly swear that Miss Roe ever loaned $10,000 to the Butler Silk Manufacturing Company. Miss Roe was the proper person to make the affidavit, precisely as her agent would have been if she had not made the loan herself in person, but had entrusted it to an agent. So the claim was properly framed and vérifíed, and it was properly stated to be a debt originally due to Miss Roe, and assigned, as to one-half, to Todd; and to my mind there was not the least perplexity or difficulty in dealing with it as such.

The argument of counsel goes so far as to hold that as the claim was sworn to by Miss Roe as a debt originally due to her, and the court made a decree that the receiver pay a dividend of twenty per cent, to the several creditors who had proven their claims, the result was tantamount to a specific decree that he should pay to Miss Roe, and to nobody else, a dividend on the sum of $10,000 mentioned in her claim, simply because she had verified it. But I do not understand such to be the effect of the proceedings. The order is to make the dividend among such persons — not naming them — as shall be found to be creditors. The language of the order — “ to distribute to the creditors who have duly proved'their claims to his satisfaction” — does not mean to distribute to such persons only as have personally verified their claims, but to such as have caused or procured proof to be made, &c. Todd comes within that-description. Through his counsel he had caused proof to be made by Miss Roe.

The duty of the receiver is to receive the claims, and see that they are properly verified and substantiated. In that he acts as a judge. If he sees anything suspicious about them he may, and should, except to them. In all this he is expected to act with a fair degree of intelligence and sound judgment, and if he is at a loss at any time, to resort to his counsel or to the court.

In this case, Governor Griggs, who prepared this claim, had a right to rely upon the fact that Mr. Meding’s counsel, Mr. Stevenson, was perfectly familiar, as shown by the pleadings in the suit of Meding v. Todd and Roe, with all the. facts and circumstances attending these two claims — the one of $5,000, on the part of Todd, and the other of $10,000, on the part of Miss Roe. The whole debt was $15,000. Todd had not only the standing of an individual unsecured creditor on his $5,000 note, but he also held, as was well known by Mr. Stevenson, an assignment to the extent of one-half of Miss Roe’s claim of $10,000 — claimed to be secured by mortgage — as security for his $5,000 unsecured debt; and the several rights of the parties were perfectly clear, simple and well defined.

The two sworn claims of Mr. Todd and Miss Roe were handed in person by Governor Griggs to Mr. Stevenson and by him handed to Mr. Meding. Then if either Mr. Meding or his counsel were in doubt as to the duty of the receiver, it was open to them to apply to the court for directions in the premises, upon notice to both Todd and Miss Roe. It is quite impossible to believe that Mr. Stevenson would have advised or permitted the payment to Miss Roe had he been consulted about it.

It is here to be remarked that a receiver is not a mere unthinking machine, performing a routine duty in a perfunctory manner, but is expected to be an alert and cautious man of business, possessed of ordinary intelligence and common sense, which he is to exercise and apply in the details of the affairs entrusted to him. The familiar rule is that he is to exercise the same care and caution that an ordinarily prudent and cautious person would exercise in his own affairs.

Now it was clearly the duty of the receiver in this case to scrutinize each one of these claims submitted to him, and to ascertain their validity and freedom from suspicion, and to ascertain to whom they were severally payable. In all this work he was, as before remarked, entitled to counsel and, if necessary, to the aid of the court. The evidence shows that being himself a busy man of affairs, he left this work to an expert accountant, who erroneously supposed that the fact that the assignment to Todd was merely as collateral, left the payment properly to be made to Miss Roe. This was, in my judgment, an inexcusable blunder, for which the receiver must be held liable. A low degree of prudence and caution would, as it seems to me, have induced him to pause when he opened and read the Roe claim and to consult his principal, the receiver, or his counsel, before drawing a check to and a receipt from Miss Roe for the whole dividend.

The next point for the defence set up in argument is this:

If Meding made a legal error in paying money to Miss Eoe which he was legally bound to pay to Todd, Todd, by his conduct of omission and commission, has barred himself from any recovery against Meding by an equitable estoppel.”

It was argued that when Todd received his check for $1,000, which had plainly stamped upon its face twenty per cent. dividend,” he ought at once to have observed that it covered only a dividend on his $5,000 note, and that a corresponding dividend was due upon the Roe claim, of which one-half should have been paid to him; that he should have at once reasoned and concluded that a mistake had been made and should at once have inquired of the receiver, who would thus have been notified of his mistake and in turn might have stopped payment of the check to Miss Roe; or, if too late for that, he had the chance of recovering the overpayment from her while it was still in her hands, unexpended.

In support of this position he relies upon the rule of implied notice, and charges Todd, contrary to the fact, with knowledge that the Roe claim had been duly presented to and allowed by the receiver, because it had been prepared and presented by Governor Griggs, who was acting as solicitor and of counsel for both Todd and Roe.

But I do not think the doctrine of implied notice can be invoked for the purpose of charging Mr. Todd with actual negligence in not acting on such knowledge. As we have seen, Meding, the receiver, made the first blunder, and was guilty of negligence in paying money belonging to Todd to a person not entitled to it, and seeks to be relieved of his negligence by charging the person injured thereby with negligence in not notifying him.

Now, for the purpose of charging negligence in such a case, actual, as distinguished from implied, notice is, in my judgment, necessary. Such notice is lacking in this case. Mr. Todd left the management of the whole affair to Governor Griggs. And while, of course, he knew of the presentation of his own claim— for he not only swore to it in person, but received a dividend upon it — there is nothing in the case to indicate that he actually knew that a claim had been presented for the money secured by the Roe mortgage; and if he had known and kept in mind such presentation, it does not follow that he was bound to infer and take affirmative notice that a dividend had been declared and would be paid on it. The contention was that the claim was secured by a first lien on the plant of the insolvent corporation ; and though at the time the dividend was paid that claim of lien had been disallowed by this court, yet an appeal from that decree had been made, and the result was, of course, uncertain. And' it must be observed that if the lien was finally established the claimants, Todd and Roe, would not be'entitled to a dividend on the whole debt of $10,000, but only upon the balance remaining due after applying the proceeds of the sale of the plant. Altogether the situation was such as that Mr. Todd, even if he had known that the Roe claim had been presented and allowed, might well have failed to infer that a dividend upon it had been actually paid to Miss Roe instead of to her or himself jointly or in halves. He swears, in substance, that he did not suppose or expect that any dividend would be declared on it at that time.

And it is further to be observed that he cannot be charged with negligence in not being alert and quick to suspect that Mr. Meding had made a blunder of the kind we have seen, resulting to his (Todd’s) prejudice. He was entitled to rely upon Mr. Meding, aided as he was by competent counsel, taking care to do this duty properly and legally.

But reliance in this part of the defence is principally had upon what occurred between Miss Roe and Governor Griggs. Taking into consideration the evidence of both persons, the fair inference is that Miss Roe did show Governor Griggs her check for $2,000, and did, in substance, ask whether the money was hers, but that Governor Griggs did not give the matter sufficient serious attention to lead him to perceive that a mistake had been made. He did hot observe that a dividend on the whole $10,000 was covered by the cheek shown him. Undoubtedly if he had given the affair closer attention, he would have perceived that it required a dividend on the whele claim of $10,000 to make the-amount of the check. But he did not so observe, and the question is whether the failure to detect the error amounted, under the circumstances, to such negligence as will avail the defendant as a defence to this action.

Here, again, I can find no foundation for the position that Governor Griggs was under the least obligation to Mr. Meding to be on the alert to suspect and discover mistakes on his (Meding’s) part affecting the governor’s clients. He undoubtedly knew and had in mind just how the Roe claim was framed and that it passed through the hands of Meding’s counsel, and he no doubt relied upon Mr. Meding’s well-known character as a business man and the undoubted competency of his counsel. And I doubt if he would readily have believed the evidence of his own senses if he had observed that the whole dividend upon it had actually been included in a single check to Miss Roe’s order and delivered to her. It may be unfortunate for Mr. Meding that Governor Griggs did not discover the mistake and stop it right there, as he no doubt would have done, but the fact is that he did not discover it, and I think his failure so to do cannot help Mr. Meding.

Counsel for defendant relies on this part of the case on a line of decided cases in which admissions have been made contrary to the truth, but no positive action has been taken upon the strength of them, and yet the party making them has been held bound because they had the effect of preventing the other party from taking certain remedial measures within his reach. But in each of those cases there was a positive admission brought to the other party’s notice, who rested upon it. Here there was no such admission of the correctness of the payment in question, nor was it brought to the notice of Mr. Meding, nor did he at all rest upon it.

The leader of this line of cases is Knights v. Wiffen, L. R. 5 Q. B. 660. In that case the plaintiff had purchased and paid for a quantity of barley in store with the defendant, a warehouseman, from a party — Maris—who had a contract to purchase, the same from the defendant, but was not entitled to the delivery because he had not paid for it. Upon presentation, after such payment, by plaintiff to defendant of a delivery order for the barley, defendant admitted that the amount was in store with him to the credit of Maris, but afterwards refused to deliver because Maris had not paid him and had failed. It was held that he was estopped from setting up that defence because, by reason of his previous admission, plaintiff had lost the opportunity to recoup himself from Maris, the insolvent dealer. Mr. Justice Blackburn (at p. 665) says: “In the present case the money had been paid before the presentation of the delivery order, but I think, nevertheless, that the position of the plaintiff was altered through the defendant’s conduct. The defendant knew that, when he assented to the delivery order, the plaintiff, as a reasonable man, would rest satisfied. If the plaintiff had been met by a refusal on the part of the defendant he could have gone to Maris and have demanded back his money. "Very likely he might not have derived much benefit if he had done so, but he had a right to do it. The plaintiff did rest satisfied in the belief, as a reasonable man, that the property had been passsd to him.”

This case was followed in the New York courts in Voorhees v. Olmstead, 3 Hun 744, 6 N. Y. 113, a case on all-fours with Knights v. Wiffen.

In the same line are Casco Bank v. Keene, 53 Me. 103; Fall River National Bank v. Buffinton, 97 Mass. 498; Union Bank v. Middlebrook, 33 Conn. 95, and Continental Bank v. National Bank of Commonwealth, 50 N. Y. 575.

In these eases (which were followed by our supreme court in the unreported case of Manasquan Bank v. Hendrickson, about 1886), the bank had discounted notes purporting to be endorsed by the defendant, and after such discount had shown the endorsement to the defendant, who had, contrary to the fact, admitted his signature to be genuine, thereby lulling the bank into fancied security and preventing prosecution or any effort to recover the money from the forger until too late, and it was held that the defendant was estopped to deny his signature.

In each of the eases just cited, except Continental Bank v. Bank of Commonwealth, the admission was untrue to the knowledge of the party making it.

In the latter case the circumstances were these: Cronise & Company, dealers in gold — then at a premium — contracted to sell $50,000 in gold to one Ross, who, in payment, presented a currency check on the Continental Bank (where he kept a currency account) purporting to be certified by the teller of that bank. Cronise & Company kept their gold account in the Bank of New York and drew a check on that bank, to the order of Ross, for the gold, but before delivering the check to Ross sent their-clerk to the Continental Bank with Ross’ check, who asked the teller if it was all right. The teller, not observing or suspecting a forgery, answered that it was; but before the clerk returned with Ross’ check to Cronise & Company they had delivered the gold check to Ross and he had left their office. He promptly drew the gold and got out of the country with it. Cronise & Company deposited Ross’ check in their currency account with the Commonwealth Bank and it was returned to that bank by the Continental Bank, through the clearing-house, as not good and the teller’s certificate as forged. It was held that the loss must fall on the Continental Bank.

It is to be observed that it was the duty of the teller of the Continental Bank, when Ross’ check was presented to him, to scrutinize it and satisfy himself both as to whether Ross’ account was good for it and as to the genuineness of the certificate, and the existence of that duty on the part of the teller in that case distinguishes it from the case now under consideration.

There is another line of cases between banks and their depositors arising out of payment by the bank upon two classes of forged paper — one, where the depositor’s name has been forged and the bank has paid the check and another where the name of the payee in the check has been forged and the bank has paid upon such forged endorsement. The cases are numerous and present some apparent contrariety of decision. The general ground on which the banks have attempted to sustain such payments is that the depositor’s bank-book has been written up and the forged vouchers returned to him, and he has kept them such a length of time without discovering and notifying the bank of the forgery as to charge him with the loss.

The disposition of the courts seems to be to hold that where the name of the payee of the check has been forged, no duty of scrutiny, when the forged voucher is returned, falls upon the depositor; -but where the name of the depositor has been forged to a check, the duty is cast upon him of discovering it and immediately notifying the bank.

The subject is discussed in 2 Dan. Neg. Inst. §§ 1370, 1654 et seq., and in Rand. Com. Pap. § 1468 et seq. From among the numerous cases, I cite Belknap v. National Bank, 100 Mass. 376; National Bank of Commerce v. National Mechanics’ Banking Association, 55 N. Y. 211; Frank v. Chemical Bank, 84 N. Y. 209; Leather Manufacturers’ Bank v. Morgan, 117 U. S. 96; Dana v. National Bank of the Republic, 132 Mass. 156, and Shipman v. Bank of the State of New York, 126 N. Y. 318. In several of these cases the forgeries consisted in an alteration of the checks, and in others, forgeries of the signatures of the payees, and were perpetrated by the confidential clerks of the depositors; and yet the banks were held liable, and not the depositors.

Mr. Justice Harlan, speaking for the supreme court of the United States, in Leather Manufacturers’ Bank v. Morgan, supra (at p. 117), quotes, with approval, from the court of appeals of New York, in Frank v. Chemical Bank, supra, the following language, which has some application here: “ Banks are bound to know the signatures of their customers, and they pay the checks purporting to be drawn by them at their peril. If the bank pays forged checks it commits the first fault. It cannot visit the consequences upon the innocent depositor who, after the fact, is also deceived by the simulated paper. So, if the depositor in the ordinary course of business commits the examination of the bank account and vouchers to clerks or agents, and they fail to discover checks which were forged, the duty of the depositor to the bank is discharged, although probably if he had made the examination personally he would have detected them. The alleged duty, at most, requires the depositor to use ordinary care, and if this is exercised, whether by himself or his agents, the bank cannot justly complain, although the forgeries are not discovered until it is too late to retrieve its position, or make reclamation from the forger.”

The point of this extract is that it recognizes the doctrine above stated, that the party who commits the first fault or blunder has no right to anything more than ordinary care on the part of other parties to assist in correcting the mistake.

'' An examination of the numerous authorities cited by counsel for defendant fails to disclose any which covers the ease in hand. And I am unable to find any ground upon which the receiver in this case can be relieved and credited with the overpayment to Miss Roe..' And as Miss Roe assigned the other one-half of her claim to her brother’s trustee before this mistake was made, the receiver cannot retain out of what would have been her share of the next dividend anything to indemnify him in the premises.

I am unable to find any solid foundation for granting relief to Augustus C. Roe on his cross-bill. He deliberately joined with his next of kin in a release to the trustee for this fund, and loaned it to the insolvent corporation, and it was advanced for his own individual interest. The mere fact that it was trust funds cannot help him under these circumstances. The fund lost its quality as a trust fund; and it does not lie in the mouth of Mr. Roe to claim preference on that ground. If Miss Roe had not assigned to his trustee the one-half bf her claim, I should have been of the opinion that he would have been entitled to only a dividend on the $3,070.01.

I will advise a decree accordingly.


text:
    Oliver M. Arkenburgh, executor of Robert H. Arkenburgh, v. The Lakeside Residence Association and Eliza J. Arkenburgh.
    [Filed September 9th 1897.]
    1. Where a mortgage, due in a specified time, provides that in case any tax remains unpaid for ninety days after it becomes due and payable, the principal sum shall become due, the unexcused failure to pay taxes within ninety days after becoming due matures the mortgage.
    2. Where a mortgage is held by two executors, and one of them refuses to join in a suit for its foreclosure, the other executor may file a bill for foreclosure, making the one refusing to join a defendant.

      On bill to foreclose. Heard on pleadings and proofs.
    The bill is in the ordinary form to foreclose a mortgage made by one Dunn to the complainant, Oliver M. Arkenburgh, and the defendant Eliza J. Arkenburgh, as executor and executrix of the last will of Robert H. Arkenburgh, deceased. The mortgage, with the accompanying bond, was given to secure part of the consideration money of a conveyance by the executor and executrix to Dunn, the mortgagor, of land of which the testator died seized, the conveyance being made by virtue of power for that purpose found in his will.
    The allegation and proof are that the defendant Eliza J. Arkenburgh refused to join with the complainant in the suit for foreclosure.
    Besides the ordinary prayer to foreclose, there is a prayer to reform the mortgage, which was drawn by a New York conveyancer and was made to the two executors and “ their successors and assigns.” The prayer for reformation is that it may be declared to be payable to their heirs and assigns. The proof is clear on this subject, and no question is made but that it should be so reformed.
    The defence to the action is that the amount secured by the mortgage was not, by its terms, due when the bill was filed, to wit, February 25th, 1897.
    The mortgage was dated the 16th of July, 1894, to secure the sum of $22,500, with interest at five per cent., payable semiannually, on the 16th day of January and July in each year, with installments on account of the principal as follows: $2,500 in one year, $2,500 in two years, $2,500 in three years, $2,500 in four years and $12,500 in five years from the date of the bond. The mortgage contains a clause to the effect that .
    “ should any default be made in the payment of the said interest or said principal sum, or of any part thereof, on any day whereon the same is made payable, as above expressed, or should any tax, assessment, water rent or other municipal or governmental rate, charge, imposition or lien be hereafter imposed or acquired upon the premises described in this mortgage, and become due and payable, and should the said interest or said principal sum or any part thereof remain unpaid and in arrear for the space of thirty days, or said tax, assessment, water rent or other municipal or governmental rate, charge, imposition or lien, or any or either of them, remain unpaid and in arrear for the space of ninety days, then and from thenceforth, that is to say, after the lapse or expiration of the said periods, as the case may be, the aforesaid principal sum of §22,500 shall become due.”
    The allegation of the bill is that on the- 15th of October, 1896, the taxes assessed against said property by the mayor and common council of the city of Rahway, where the same is situate, for the year 1896, became a lien thereon and have remained unpaid and in arrear for the space of ninety days before the. filing of the bill, and that on the 16th of January, 1897, there became due and payable six months’ interest upon said bond and mortgage, and that the same remain in arrear and unpaid for the space of thirty days.
    It is proper to say that this clause in the mortgage was intended to be, but appears not to have been, set out in the bill. No point was made about that omission, either in the answer or at the hearing, and the cause was tried precisely as if that clause had been inserted in the bill, which has since been amended accordingly.
    The property was conveyed by Dunn, the mortgagor, immediately after the giving of the mortgage to the defendant the Lakeside Residence Association. In fact, Dunn was a mere figure-head for the corporation defendant.
    The corporation and Mrs. Arkenburgh have separately answered and by different solicitors, but the solicitor of Mrs. Arkenburgh is a mere clerk in the office of the solicitor of the corporation.
    The defence manifested by the answer of the corporation is that all the payments of interest were duly made that the installment of interest due on the 16th of January, 1897, was paid, before it was due, to the defendant Eliza J. Arkenburgh by a check drawn to the order of both executors, Eliza and the complainant. The precise allegation of the answer in that respect is that the mortgage had previously been in the hands of the complainant as the acting executor, and that payments of interest having been theretofore made to the complainant, the defendant Eliza, before the 16th of January, 1897, notified the corporation, in writing, not to pay any more interest to the complainant; that the defendant corporation made an offer to the complainant to pay him and his co-executor, Eliza, jointly, which the complainant refused to accept, whereupon the defendant corporation paid the installment of interest to Eliza and took a receipt from her for the amount. The further allegation is that there is no tax due or unpaid upon the premises, and that all taxes have been paid, and that no covenant or condition of the said mortgage which the defendant corporation is obligated to keep or perform has been broken or unfulfilled.
    The answer further sets up that the co-mortgagee, Eliza, does not wish the mortgage to be declared to be due and payable, and that she is willing and ready to accept and receipt for the installments of interest and principal as they severally fall due. In effect it is a statement that she waives the breach, if any, of the conditions.
    The answer of Eliza denies that the complainant has been the managing executor of the estate, or that he has any special right or authority to hold the possession of the bond and mortgage, but that such bond and mortgage, together with the other assets of the estate, are and of right should be held jointly by the defendant and the complainant. It further 'sets up that all the installments of interest have been duly paid, and that Oliver was, by order of a court of competent jurisdiction, ordered to pay over and deposit in a trust company designated in the order the interest and installments of principal so received by him, and that he has failed and neglected so to do. It then sets out that she caused a written notice to be served on the corporation, directing it to pay to her the installment of interest then to become due. She then says that she does not desire that the, bond and principal should become due and payable at once by reason of the non-payment of the interest if it was not paid, or the taxes if they were not paid, but, on the contrary, elects that as long as said installments of interest and principal are paid according to the conditions of said bond, and the taxes assessed or to be assessed against the premises are promptly paid, to continue said bond and mortgage according to its terms and conditions.
    It appeared in proof that the bond and mortgage had always been in the possession of the complainant as acting executor, and that he received the payments of interest.
    It appears that the taxes were duly assessed upon the premises for the year 1896, and became due and payable on the 15th of October, and that they were not paid within two months, and in fact, were not paid until the last of May or 1st of June, 1897, and after the filing of the bill.
    It further appears that on the 11th of January, 1897, five days before the last installment of interest became due, Mrs. Arkenburgh served upon Mr. Savage, the president of the corporation defendant, a notice reciting that the payments of interest had been previously made to the complainant, and

      “ that hereafter no payments for or on account of the principal or interest of said bond will be due satisfaction thereof except such payment be by check to the joint order of said executor and myself as such executrix.”
    That previous to that time, to wit, on the 21st of December, 1896, the complainant had notified Mr. Savage, in writing, of the semi-annual interest, amounting to $437.50, coming due on the 16th of January, 1897, at which time payment would be expected; that the check for same must be made payable to the order of the estate of R. H. Arkenburgh, and sent to him at his address, Great Barrington, Massachusetts.
    Subsequently and before the 16th of January, Mr. Arkenburgh called upon Mr. Savage at his place of business, and, not finding him in, wrote him a note informing him that any payment of interest made to Mr. Souther (the New York attorney of Mrs. Arkenburgh) would not be acknowledged, as he had no authority whatever to collect any money due the estate of R. H. Arkenburgh.
    Notwithstanding that notice, Mr. Savage, on the 13th of February — -just three days before the interest fell due — drew a check of the defendant corporation in favor of Eliza J. Arkenburgh, executrix, and Oliver M. Arkenburgh, executor, of Robert H. Arkenburgh, for the sum of $437.50, and delivered it to Mr. Souther, who signed a receipt for it as attorney of Mrs. Arkenburgh. Some difficulty occurred in negotiating the check without the endorsement of Oliver M. Arkenburgh, but it seems finally to have been cashed upon the endorsement alone of Mrs. Arkenburgh, and deposited to the credit of the estate of Arkenburgh in the trust company on the 2d of March, 1897. Complainant had no notice of this payment until after that day.
    The will of Arkenburgh was put in evidence, showing how his estate was divided, and that the complainant was only entitled to one-eighth of it; and an attempt was made to prove that all the other persons beneficially interested in the estate were desirous that the mortgage should not be collected, but that the so-called forfeiture for non-payment of interest and taxes should be waived, and the loan permitted to stand.
    In answer to that the complainant asserted that only a small portion of the bond and mortgage in question belonged to the estate of Arkenburgh, and that in point of fact the deceased held the premises conveyed by the mortgage in trust for himself and other persons, known as the Kinseys, and that that trust had been followed and fastened upon the mortgage by a decree of the supreme court of New York, made on the 29th of October, 1895, and that the complainant, Oliver M. Arkenburgh, and his solicitor in this matter, represent those cestuis que trust, and were instructed by them to enforce the mortgage. In support of that allegation, they produced a printed copy (certification and exemplification being waived) of the pleadings and decree in a suit in the supreme court of New York, brought by Jeannette A. Allen, against Oliver M. Arkenburgh and Eliza J. Arkenburgh, individually, and as executor and executrix of the will of Robert H. Arkenburgh, in which the trust was set up and enforced. To that suit Eliza J. Arkenburgh alone made defence, by Mr. Souther, as her attorney. The complainant, Oliver, answered separately, and substantially admitted the trust. The decree was in favor of the cestuis que trust, and by it it was ordered, adjudged and^ decreed that the defendants therein hold the bond • and mortgage sought to be foreclosed as trustees for the benefit of Thomas H. Kinsey, Robert H. Kinsey, Jeannette A. Allen and Robert H. A. Adams, and the estate of Robert H. Arkenburgh. An appeal was taken from that decree to the appellate division of the supreme court, and it was affirmed for the reasons given in the opinion. A further appeal has been taken to, and is now pending in, the court of appeals.
    There was further put in evidence a decree of the surrogate’s court of the county of Rockland, State of New York, dated the 12th of December, a short time after the decree of the supreme court above referred to, in which the accounts of the executors' were settled and the amount due each legatee fixed and immediate payment ordered. Schedules are referred to in the decree, which are not annexed, but the inference from the whole document is that the bond and mortgage was not considered as part of the estate.
    No proof was produced in support of the allegation that complainant had been restrained by any court in the exercise of his rights and duties as executor.
    The bill was filed February 25th, 1897, before the deposit of the interest in the trust company.

      Mr. Benjamin A. Vail, for the complainant.

      Mr. Edward S. Savage, for the defendant association.

      Mr. Leroy A. Gibby, for Mrs. Arkenburgh.
   Pitney, V. C.

I do not find it necessary to determine whether, under the circumstances, the payment of the interest by check to the order of the executor and executrix, and handing it in good time to the attorney of one of them, was a good payment or not, for the reason that I think the complainant is entitled to succeed on the other ground taken, viz., the non-payment of the taxes. I think the excuse set up at the hearing for the delay in that payment is quite insufficient, and fails to bring the case within the principle of the cases in which our courts have relieved parties from the effect of failure to make prompt payment.

The principle governing courts of equity in these cases is fully stated by Chancellor Williamson in Baldwin v. Van Vorst, 2 Stock. 581, and agairl by Chancellor Zabriskie in Spring v. Fisk, 6 C. E. Gr. 175. It has been usual to speak of this class of cases as forfeitures proper, such as when a party, by reason of the failure to pay a small sum, is subjected to the loss of a much larger one, or of land of much greater value — for instance, the amount of the real debt mentioned in the Condition of a bond, or where the title to land is lost at law by reason of the nonpayment of a sum of money either advanced by way of loan or due upon a contract to sell land. Against such failures equity relieves, almost as a matter of course. But here, as pointed out by Chancellor Zabriskie in Spring v. Fisk, supra, those elements do not exist. Nothing is lost except the right to a credit, and that depends upon a contractual condition. At the present rate of interest, the right to extend a five per cent, loan can hardly be considered of much value.

It is well settled that mere forgetfulness or oversight will not excuse. De Groot v. McCotter, 4 C. E. Gr. 531 (Court of Appeals); Spring v. Fisk, supra; Voorhis v. Murphy, 11 C. E. Gr. 434; Neale v. Albertson, 12 Stew. Eq. 382 (at p. 386). In the cases in which the courts have relieved there has been either some inability on the part of the mortgagor to find the mortgagee for the purpose of payment, or some waiver on the part of the mortgagee of prompt payment, or something in the nature of a contract to vary the place and time of payment.

There is here no room for mistake or misapprehension as to when the tax matured, or to whom it should be paid. The corporation defendant is stated to be an association of a few rich gentlemen who purchased the mortgaged premises on speculation. They produced a little income, which was collected by one of their number, a Mr. Blakeley, living at Rahway, and it was his practice and duty to pay these taxes. This, in the present instance, he neglected to do, and .no reason or excuse is given for such neglect. The tax bills were sent in December, 1896, by the complainant to Mr. Savage, one of the owners and the solicitor and, at that time, the president of the corporation. So that complainant is in no wise responsible for their non-payment, and it stands wholly without excuse.

As to the willingness and desire of the majority of the legatees of Arkenburgh to have this loan extended, I think I cannot here take that into consideration. The complainant is, undoubtedly, the acting executor. As matters stood at the hearing, the estate has but a small interest in the mortgage. Much the greater part belongs to the Kinseys. The complainant is, in my judgment, properly treating them as having a controlling voice in the matter of its enforcement. His failure to do so might produce serious results for the Arkenburgh estate.

I think the complainant is entitled to a decree.