author: Gardiner, J. Bronson, J. Weight, J.

text:
    Shindler vs. Houston.
    PUintiffand defendant bargained respecting the sale, by the former to the latter, of & quantity of lumber, piled apart from other lumber," on a dock and in view of the parties at the time of the bargain, and which had before that time been measured and inspected. The parties having agreed as to the price, the plaintiff said to the defendant, "the lumber is yours." The defendant then told the plaintiff to get the Inspector’s bill, and take it to one House, who would pay the amount. This was done the next day, but payment was refused. The price was over fifty dollars. Held, in an action to recover the price, that there was no delivery and acceptance of the lumber, within the meaning of the statute of frauds, and that the sale was therefore void.
    It seems that to constitute a delivery and acceptance of goods, suenas the statute requires, something more than mere words is necessary. Superadded to the language of the contract, there must be some act of the parties, amounting to a transfer of the possession, and an acceptance thereof by the buyer. The case of cumbrous articles is not an exception to this rule.
    On error from the Supreme Court. Houston sued Shindler in the Justices’ Court, of the city of Troy, in assumpsit, for the price of a quantity of lumber. The plaintiff having recovered, the defendant appealed to the Mayor’s Court of that city, and on the trial in that Court, the case was this :— The plaintiff was the owner of about 2070 feet of curled maple plank and scantling, which he had brought to Troy in a boat, and which, after being inspected and measured, was piled on the dock apart from any other lumber. Soon after this, the plaintiff and defendant met at the place where the lumber lay. The plaintiff said to the defendant, “ what will you give for the plank ?” The defendant said he would give three cents a foot. The plaintiff then asked, “ what will you give for the scantling?” The defendant replied, one and a half cents a foot. The plaintiff then said, “the lumber is yours.” The defendant then told the plaintiff to get the Inspector’s bill of it, and carry it to Mr. House, who would pay it. The next day the plaintiff, having procured the Inspector’s bill, presented it to House, who refused to pay it,, on the ground that the instructions he had received from the defendant did not correspond with the plaintiff’s statement of the contract. There was no note or memorandum of the contract in writing, nor was there any evidence of a delivery or acceptance of the lumber, except as above stated. At the prices agreed on, the lumber came to $52 51, no part of which was ever paid. The Mayor’s Court instructed the jury that if they were satisfied that it was the intention of the parties to consider the lumber delivered at the time of the /'"bargain, and that nothing further was agreed or contemplated to be done, in order to change the title in, or possession of the lumber, the plaintiff was entitled to recover; that the sale was not within the statute of frauds, and did not require any note or memorandum in writing, provided they should find from the evidence, that there was a delivery and acceptance the lumber at the time of the bargain. The defendant excepted and the jury found a -verdict for the plaintiff, on which judgment was rendered in his favor. The Supreme Court, "on writ of error to the Mayor’s' Court, affirmed the judgment, {See 1 Denio, 48) and the defendant brings error to this Court.
    IV. Sill, jr., for plaintiff in error,
    insisted, that the sale was within the statute of frauds requiring a. note in writing. There was no acceptance or receipt of the lumber by the vendee within the intent and meaning of the statute. To take the case out of the statute there must be something more than would be sufficient to change the property at common law—something more than would be suEcient to constitute a delivery at common law. There should be, (1) a bargain intended to change the right of property. This is the act of both parties. (2) a delivery of the property and the actual possession to the vendee, discharged of all lien for the purchase money. This is the act of the seller. (3) An acceptance and receipt of the entire property, and actual possession of some part of the goods, as absolute owner, discharged of all lien. These are the acts ef the buyer. There was nothing proved in this case but the bargain. (3 Bos. and Puller, 233; 6 Barn, and Cress. 351; Ch. on Cont. 389, 390; 3 Dowl, and Ryl. 220, 822; 2 Barn, and Cress. 37; 3 Johns. 399; 10 Bing. 101, 376; 5 Barn, and Cress. 857, 5 ; 3 Barn, and Ald., 321, 680; 5 Do., 559; 4 Mees, and W., 155; 1 Dowl, and Ryl. 128; 22 Wend. 659; 1 Carr, and Payne, 272; 3 Barn, and Cress. 1; 2 Carr. and Payne, 532; 4 Maule and Sel 262; 9 Barn. and Cress. 591; 7 T. Rep, 15, 17 ; 1 C. and M., 333 ; 6 Wend., 400; 11 Johns., 284.)

      J. A. Spencer and B. Willard, for defendant in error,
    cited, Bates v. Conklin, 10 Wend. 389 ; Chaplain v. Rogers, 1 East, 192; Jewett v. Warren, 12 Mass. 300 ; 2 Kent. Comm. 500, 501, 4th Ed.

   Gardiner, J.

As no part of the purchase money was paid by the vendee, the. contract above stated was void by the statute of Frauds, (2 R. S. 136, § 3, subd. 3) unless the buyer “accepted and received” the whole or a part of the property sold.

The object of the statute was not only to guard against the dishonesty of parties and the perjury of witnesses, but against the misunderstanding and mistakes of honest men. If the contract is reduced to writing, and “ subscribed by the parties to be charged thereby,” this' object is effectually attained. The writing -becomes' its own interpreter. Where this is omitted but the vendee has paid part of the price, or the vendor has delivered and the buyer has accepted a portion or all of the property, upon the strength of the agreement. These acts not only indicate deliberation and confidence upon the part of the contractors, but they furnished unequivocal evidence of the existence of a contract of some sort between them, although its terms and. provisions must after all depend upon the recollection of witnesses.

The case before us is destitute of all such collateral cvi\dence. No acts of .the party sought to be charged are proved. We are presented with a naked verbal agreement. The declarations relied upon as evidence, of a delivery and acceptance constitute a part of the contract, and of course are obnoxious to all the evils and every objection against which it was the policy of the law to provide.

The acts of part payment, of delivery and acceptance mentioned in the statute are something over and beyond the agreement of which they are a part performance, and which they assume as already existing. The entire absence of such evidence distinguishes the present case from all those that have been cited by the counsel for the plaintiff in support of this action. (Chaplain vs. Rogers, 1 East, 193 ; Jewett vs. Warren, 12 Mass. 311; Riddle vs. Varnum, 20 Pick, 280; 10 Wend., 391; Kent Com., 4th Ed. 500, 501.) The strong ease, from the Pandects of the Column of Granite is not an exception ; for it is fairly to be inferred that the consent of the vendor that the purchaser should take possession was subsequent to the sale.

I am aware that there are cases in which it has been adJjudged, that where the articles sold arc ponderous, a symbolical or constructive delivery will be-equivalent in its legal effect to an actual delivery. The delivery of a key of a warehouse in which goods sold are deposited, furnishes an example of ythiskind. But to aid the plaintiff, an authority must be shown that a stipulation in the contract of the sale, for the delivery of the key or other indicia of possession will constitute a delivery and acceptance within the statute. No such case can be found. The entire contract being void by the statute, the stipulation in reference, to a constructive delivery would fall with the other provisions. In Philips vs. Bristol, (2 B. and C. 511,) the property was sold by an auctioneer and delivered to the purchaser, who after detaining it three or four minutes handed it back saying he was mistaken as to the price. The vendor refused to receive the property, and the jury found that the excuse was false in fact. The verdict was set aside: The Court saying that to satisfy the statute there must be a delivery by the vendor, with an intention of vesting the right of possession in the vendee, and there must be an actual acceptance by the latter with the intent of taking possession as owner.

This, I apprehend, is the correct rule and it is obvious, that it can only be satisfied by something done subsequent to the sale unequivocally indicating the mutual intentions of the parties. Mere words are not sufficient.- (3 Johns. 421.) Declarations accompanying an act and explanatory of it are undoubtedly admissible evidence, as a part of the res gestae. This is all that is established by the modern authorities. (12 Mass., 301; 1 Dallas, 171; 2 Barn, and Cress. 44; 3 J. R. 421).

In a word the statute of fraudulent conveyances and con tracts, pronounced this agreement when made, void, unless the buyer should “ accept and receive some part of the goods.”

The language is unequivocal and demands the action of both parties, for acceptance implies delivery, and there can be no complete delivery without acceptance. The defendant, however, said nothing and did nothing subsequent to the agreement except through his agent to repudiate the contract. There was consequently no evidence of a delivery.

I think, therefore, the learned Recorder erred in submitting that question to the jury, and that the judgment of the Supreme Court should be reversed.

The Statute of Frauds has been pronounced by high authority, (Kent’s Comm. 2 V., 494) to be, in many respects, the most comprehensive, salutary, and important legislative regulation on record, affecting the security of private rights. Its benefits it is believed will be most effectually secured, by rejecting refined distinctions, overlooking the supposed equity of particular cases, and adhering steadily to its language as the best exponent of the intention of the Legislature.

Bronson, J.

On a review, and a more full consideration of the case, I am satisfied that I was in an error in assenting to the judgment which was rendered by the Supreme Court. If we assume that the sale was in all otherrespects complete, the difficulty still remains that there was no delivery of the goods. Nothing was done. As was very justly remarked by the defendant’s counsel, there was nothing but mere words; and the statute plainly requires something more; it calls for acts. (Per Cowen, J., in Archer vs. Zeh, 5 Hill 205.) A writing must be made, part of the purchase money must be paid, or the buyer must accept and receive part of the goods. Mere words of contract, unaccompanied by any act, cannot amount to a delivery. To hold otherwise would be repealing the statute.

There may -be a delivery without handling the property, or changing its position. But that is only where the seller does an act by which he relinquishes his dominion over the property, and puts it in the power of the buyer; as by delivering the key of the warehouse in which the goods are deposited, or directing a bailee of the goods to deliver them to the buyer, with the assent of the bailee to hold the property for the new owner. In such case there is, in addition to the words of bargain, an act by which the dominion over the goods is transforred from the seller to the buyer. Here there was no delivery either actual or symbolical.

I shall not review the cases on this subject further than to notice those supposed to favor the plaintiff. In Chaplin vs. Rogers, (1 East. 192,) the buyer had re-sold the property, and his vendee had carried it away. The Court held that there was sufficient evidence to carry the cause to the jury on the question of delivery to and acceptance by the first purchaser. Bates vs Conkling, (10 Wend. 389,) was a writ of error, and the question of delivery did not arise, because, as the Chief Justice remarked, the point was not made in the Court below, where it might have been, obviated by testimony. It was also suggested at the bar, in answer to this case, that the question arose upon a contract for work and labor, rather than a contract of sale. But it would be difficult to maintain that doctrine. (Downs vs. Ross, 23 Wend. 270.) It is enough, however, that what was said in Bates vs. Conkling, about the delivery of cumbersome articles, was but a dictum, and not upon the point in judgment. In Jewett vs. Warren, (12 Mass. 300,) where logs in a boom were sold, there was a bill of parcels ; and no question upon the statute of frauds either was or could be made. The question was, whether there had been a sufficient delivery to constitute the logs a valid pledge. We have not been referred to any modern case, nor have I met with any which will uphold this judgment.

It is undoubtedly true, that it will not always be easy to make an actual delivery of bulky and ponderous articles. But there are other ways of satisfying the statute of frauds. The parties may put their agreement in writing, or the buyer may pay the whole or some part of the purchase money.

I am of opinion that the judgments of the Supreme Court and the Mayor’s Court should be reversed, and a venire de novo be awarded.

Weight, J.

There being no note or memorandum made in writing, of the contract or earnest paid, this is a case within the statute of frauds, unless there was an acceptance and receipt of the whole or a part of the property by the buyer. (2 R. S. 136, § 3.) If there was an acceptance shewn sufficient to take the case out of the operation of the statute, it was of all the lumber, as it is not pretended that the entire property vested in the vendee by the acceptance and receipt of a part thereof. The question, therefore, for consideration upon the facts proved, is whether there was an acceptance and receipt of the lumber by Shindler, the vendee, within" the intent and meaning of the statute.

It is to be regretted that the plain meaning of the statute should ever have been departed from, and that any thing short of an actual delivery and acceptance should have been regarded as satisfying its requirements, when the memorandum was omitted; but another rule of interpretation which admits of a constructive or symbolical delivery has become too firmly established' now to be shaken. The uniform doctrine of the cases, however, has been, that in order to satisfy the statute there must be something more than mere words—that the _agt of acceptmcpand^remwjw^jmquired to dispense with_ a nothin writing, implies more than a simple act of the mind, unless the decision in Elmore vs. Stone (1 Taunton, 458) is an exception. .This case, however, will be found upon examination to be in accordance with other cases, although the acts and’ circumstances relied upon to shew a delivery and acceptance, were extremely slight and equivocal; and hence the case was doubted in Howe vs. Palmer, (3 Barn, and Ald. 324) and Proctor vs. Jones, (2 Carr. and Payne, 534) and has been virtually overruled by subsequent decisions. Far as the doctrine of constructive delivery has been sometimes carried, I have been unable to find any case, that comes up to dispensing with all acts of parties,"and rests wholly upon the memory of witnesses as to the precise form of words to shew a delivery and receipt of the goods. The "learned author of the Commentaries on American Law, cites from the Pandects the doctrine that the consent of the party, upon the spot is sufficient possession of a column of granite, which by its weight and magnitude, was not susceptible of any other delivery. But so far as this citation may be in opposition to the general current of decisions in the Common Law Courts of England and of this country, it is sufficient perhaps to observe that the Roman law has nothing in it analagous to our statue of frauds. In Elmore vs. Stone, expense was incurred by direction of the buyer, and the vendor, at his suggestion, removed the horses out of his sale stable into another, and kept them at livery for him. In Chaplin vs. Rogers (1 East 192) to which we were referred on the argument, the buyer sold part of the hay, which the purchaser had taken away; thus dealing with it as if it were in his actual possession. In the case of Jewett vs. Warren (12 Mass. R. 300) to which we were also referred, no question of delivery under the statute of frauds arose. The sale was not an absolute one, but a pledge of the property. The cases of Elmore vs. Stone and Chaplin vs. Rogers are the most barren of acts indicating delivery, but these are not authority for the doctrine that words, unaccompanied by acts of the parties, are sufficient to satisfy the.statute. ' Indeed, if any case could be shown which proceeds to that extent, and this Court should be inclined to follow it, for all beneficial purposes, the law might as well be stricken from our statute book; for it was this species of evidence,- so vague and unsatisfactory, and so fruitful of frauds and perjuries, that the Legislature aimed to repudiate. So far as I have been able to look into the numerous cases that have arisen under the statute, the controlling principle to be deduced from them is, that when the memorandum is dispensed liith, the statute is not satisfied with any thing'but unequivocal acts of the parties ; not mere words that are liable to be misunderstood and misconstrued, and dwell only in the imperfect memory of witnesses. The question has been, not whether the words used were sufficiently strong to express the intent of Ahe parties, but whether the acts connectedjffiithJhem7Jmthj)f_sgller and buyer, jyere equivocal or unequivocal. The best considered cases hold that there must be a vesting of the possession of the goods in the vendee, as absolute owner, discharged of all lien for the price on the part of the vendor, and an ultimate' acceptance and receiving of the property by the vendee, so unequivocal that he shall have precluded himself from taking any objection to the quantum or quality of the goods.sold. (Chitty on Contracts 390, and cases cited ; Hilliard, on Sales 135, and cases cited; 10 Bing. 102, 384.) But will proof of words alone shew a delivery and acceptance from which consequences like these may be reasonably inferred ? Especially, if those words relate not to the question of delivery and acceptance, but to the contract itself? A. and B. verbally contract for the sale of chattels, for ready money; and without the payment of any. part thereof, A. says “ I deliver the property to you,” or “It is yours,” but there are no acts shewing a change of possession, or from which the fact may be inferred. B. refuses payment. Is the right of the vendor to retain possession as a lien for the price gone ? Or, in the event of a subsequent discovery of a defect in the quantum or quality of the goods, has B. in the absence of all acts on his part shewing an ultimate" acceptance of the possession concluded himself from taking, any objection ? I think not. As Justice Cowen remarks in the case of Archer vs. Zeh (5 Hill, 205). “ One object of the statute was to prevent perjury. The method taken was to have something done; not to rest every thing on mere oral agreement.” The acts of the parties must be of such a character_as to unequivocallyplace the property within the power, and under the exclusive dominion of the buyer. TGs is the doctrine of those cases that have carried the principle of constructive delivery to the utmost limit. Thus, in Searles vs. Keeves (2 Esp. R. 598) a case which arose at a period when the English Courts were more inclined than recently to allow of a constructive delivery and acceptance, where a written order was given by the seller of goods to the buyer, directing the person in whose care the goods were to deliver them, which order was presented by the buyer, it was hold that there was a sufficient delivery within the statute. So, also, in Hollingsworth vs. Napier (3 Caines R. 182) where the vendor delivered to his vendee a bill of parcels for goods lying in a public store, together with an order on the store keeper for their delivery, and the vendee, upon delivering the order demanded the goods, which were turned out to him, and he paid the amount of the storage, marked the bales with his initials, and returned them to the custody of the store keeper, it was held that the statute was satisfied. But in cases like these, it would seem now to be necessary, that the party having the custody of the goods, and who is the agent of the vendor, should recognize the order given to the purchaser, and assent to retain the goods for him. A delivery to the vendee of the key of the warehouse in which the goods are lodged, or other indicia of property, where goods are ponderous and incapable of being handed over from one to another, was said by Lord Kenyon, in Chaplin vs. Rogers (1 East 194) to be tantamount to an actual delivery. In Dodsley vs. Varley (12 Adol. & Ellis, 632) which was an action of assumpsit for wool bargained and sold, the Court said, “We.think that upon the evidence, the place to which the wool was removed may be considered as the defendant’s warehouse, and that he was in actual possession of it as soon as it was weighed and packed.” In these cases, and in a large number of others that might be cited, the circumstances were unequivocal to shew, not merely a delivery to and acceptance of the property in the goods, but, what is always essential, a complete acceptance of the possession, by the buyer. The facts were, more or less strong in the several cases, but the acts of the parties can scarcely be reconciled with any other presumption.

On the other hand, where the acts of the buyer are equivocal, and do not lead irresistibly to the conclusion that there has been a transfer and acceptance' of the possession, the cases qualify the inference to be drawn from them, and hold the contract to be within the statute. In Baldy vs. Parker, (2 B. and C. 37) A. purchased of B.', a trader, several articles, amounting in the whole to ¿670. A. marked with a pencil some of the articles, saw others marked, and helped to cut off others. He then requested that a bill of the goods might be sent to him, which was done, together with the goods, but he declined to accept them. It was held that there was no délivery and acceptance to take the case out of the statute; and Lord C. J. Abbott, in speaking of the exception in the statute, justly remarked that, “ It would be difficult to find words more distinctly denoting an actual transfer of the article from the seller, and an actual taking possession of it by the buyer.” In Carter vs. Touissant, (5 B. and Ald. 855,) the circumstances were, that a horse was sold by verbal contract, but no time fixed for the payment of the price. The horse was to remain with the vendor for 'twenty days, Avithout charge to the vendee. At the expiration of that time he was sent to grass by order of the vendee, and entered as one of the vendor’s horses. The Court held that there was no acceptance of .the horse by the vendee within the meaning of the statute. In Tempest vs. Fitzgerald, (3 Barn, and Ald. 680,) A. agreed to purchase a horse from B. for cash, and take him away within a certain time. About the expiration of that time A rode the horse, and gave directions as t'o his treatment, &c., but requested that he might remain in the possession of B for a further time, at the expiration of which time he promised to take and pay for the horse, to which B. assented. The horse died before A. paid the price or took it away. It was held that there was no sufficient acceptance of the horse to render the vendee liable for the price. In Howe vs. Palmer, (3 B. and Al. 321,) a vendee publicly agreed at a public market, with the agent of the vendor, to purchase twelve bushels of tares, (then in the vendor’s possession constituting part of a larger quantity in bulk,) to remain in the vendor’s possession until called for. The agent, on his return home, measured and set apart the twelve bushels. It was held that in this case there bad been no acceptance, and the action would not lie. In Kent vs. Huskisson, (3 B. and P. 233,) A. verbally ordered from B. a bale of sponge, which was 'sent. The bale was opened and examined, and the sponge returned by B., who at the same time wrote a letter to A., stating that he disapproved thereof. It was held that B. had not accepted the goods. In Proctor vs. Jones, (2 Car. and P. 532,) it was said that the marking of casks of wine, sold by parol, and lying at the London docks, with the initials of the purchaser, at his request and in his presence, was not a sufficient acceptance within the statute, at least if the time of payment had not, when the casks were so marked, been fixed. In Bailey vs. Ogden, (3 John R. 399,) an agreement with the vendor, on a parol contract for the sale of goods, about the storage of the goods, and the delivery by him of the export entry to the agent of the vendor, were held not to be sufficiently certain to amount to a constructive delivery, or to afford an indicium of ownership. Other comparatively recent English and American cases might be cited shewing, as has been said by Mr. Justice Coleridge, that “ the tenor of modern decisions is to give to the'words of. the statute •their fullest effect, and not to allow (so far as it'is possible) of any constructive deliveries and acceptances.”

I think I may affirm with safety that the doctrine is now clearly settled, that there must not only be a delivery by the seller, but an ultimate acceptance of the possession of the goods by the buyer, and that this delivery and acceptance can only be evinced by unequivocal acts independent of the proof of the contract. But if the principles to be deduced from the recent decisions were otherwise, 1 should not be disposed, in the face of the plain and obvious moaning of the statute, to follow them. The "statute of frauds of 29 Car. 2, (and it is in substance re-enacted in this State,) was justly pronounced, nearly half a century since, by an eminent British Judge, “ one of the wisest laws in the statute book.” Its provisions apply with singular wisdom and beneficence, to the daily contracts and practical affairs of mankind,” relieving them of vagueness and uncertainty, and checking, to some extent, “the restless and reckless spirit of litigation.” Whilst this meritorious law is in the statute book, it is our business to enforce it in good faith, and according to its plain letter and spirit, without studying to fritter away its vitality in the attempt to uphold contracts which by its provisions are clearly void.

I am of the opinion that the judgment of the Supreme Court should be reversed.

Boggles, Joses, and Johnsok, Js., concurred.

Jewett, Cii. J., and Gray, J., delivered opinions in favor of affirming the judgment.

Judgment reversed.


source: Caselaw Access Project

author:
Bronson, J. Gardiner, J.,
      Jewett, C. J.,

license: Public Domain

text:
    Vilas & Bacon, Appellants, vs. Jones & Piercy, Respondents.
    The complainants were sureties for C. upon a note given to J. for a usurious loan of money. An action at law was brought upon the note against the complainants, and C, in the name of P., as endorsee. The complainants pleaded the general issue, and gave notice of the defence of usury, but did not verify the notice as required by the usury act of 1837, so as to entitle them to examine the plaintiff as a witness. On the trial, they called as a witness, J., the payee of the note, who stated, on his voire dire, that he was the owner of the note and the plaintiff in interest, and objected to testifying in the cause, and his objection was sustained by the Court. A verdict was taken for the amount equitably due on the note, and judgment was perfected against the complainants and G.; held, that a bill died by the complainants, after judgment at law, for the purpose of obtaining the testimony of C., and for relief against the judgment on the ground of usury, could not be sustained.

      Heldfurtlter, that after judgment at law, the bill could not be sustained on the ground that the complainants, as sureties, were discharged by reason of the holder of the note having extended the time of payment to the principal debtor in consideration of a usurious premium paid by him in advance, it not being shewn that the complainants were prevented from setting up this defence in the action at law, by any fraud or accident, or by the act of the opposite party. And per Bronson, J. and Jewett, C. J., an agreement made by a creditor with the principal debtor, to forbear the payment of the debt in consideration of a usurious premium paid for such forbearance, is void, and therefore cannot operate to discharge the sureties.
    Whether a mere surety is a borrower, within the meaning of the usury act of 1837 (Laws of 1837, p. 487, § i,)¡uere.

    Appeal from Chancery. The appellants, complainants in the Court below, filed their bill in the Court of Chancery against the respondents, in which the case was stated in substance as follows: In April, 1839, Harvey Church borrowed of the defendant, Jones, $200 for six months, and was to pay for the use thereof at the rate of ten per cent, per annum. Church and the complainants, as his sureties, thereupon gave their joint and several note to Jones, at six months, for $210, being the sum loaned and the interest added thereto, including three per cent, for the usurious premium. At the end of the six months it was agreed, between Church and Jones, that the debt should be forborne for six months longer at the same rate of interest, which was then paid in advance by Church. One or more other agreements to extend the time of payment were made at the same usurious rate of interest, which was also paid in advance. The bill insisted that the note was void for usury, also that the complainants, as sureties, were discharged from liability by reason of the time of payment being extended to Church, the principal in the manner above stated. In April, 1842, a suit at law was commenced on the note against Church and the complainants, in the name of the defendant, Pierey, as endorsee of the note. The complainants pleaded to the suit the general issue, and gave notice of their defences above mentioned; but it did not appear that the notice was verified by affidavit. The suit was brought to trial, in May, 1842, and the complainants procured said Jones to attend as a witness, expecting, as the bill averred, to prove the facts above stated by him. But Jones, on being sworn as a witness, stated on his voire dire, that he was the owner of the note, and that the suit was brought for his benefit, and he thereupon objected to testifying in the cause. The Court sustained his objection. ' 'Previous to the trial of the cause, Jones had been applied to by the counsel of the complainants, to learn who was the .owner of the note, and Jones stated that he had sold the note to Pierey, and that Pierey was the owner. The bill however did not shew that this false information was the reason why the complainants did not verify the notice annexed to their plea, so as to enable them to call Jones as a witness to prove the usury, under the act of 1837, or that they had been in any wise misled thereby.
    The bill also alleged, that the facts on which the defence in the suit at law rested, were known only to Church and to Jones; that Church, being a co-defendant in the suit, and Jones, being excused from testifying as above stated, the complainants were unable to establish their defence, and a verdict was taken against them for §167,34, the amount claimed to be due on the note, for which amount and costs of suit, judgment was perfected against them and Church ;■ that Church suffered judgment by default, and that he also refused to join in the bill of complaint; that said Church had instituted nroceedings to be discharged as a bankrupt' under the act of Congress, passed August 19, 1841; that he was duly declared a bankrupt on the 16th of May, 1842, and (as the complainants were informed and believed) that he would be entitled to his discharge, and would receive the same before an order to take proofs could be entered in this cause, so that the complainants could have- the benefit of his testimony to establish the matters of defence- above set forth. The bill algo alledged .that the complainants had released Church from all liability over to them, in consequence of their signing the note as his sureties. The prayer of the bill was for relief against the judgment by injunction to restrain execution and all other proceedings for the collection of the same from the complainants, for answer without oath, &c.
    The respondents severally demurred to the bill for want of equity. The cause was referred for hearing to the Assistant Vice Chancellor of the First Circuit, who allowed the demurrers, and dismissed the bill. The Chancellor on appeal affirmed the order.

      S. Stevens, for appellants.
    The complainants are entitled to relief on the ground of usury. They are to be deemed borrowers within the equity of the act of 1837, so far as regards the remedy given by that act. (Laws of 1837, p. 487; Perine et. al. vs. Striker, 7 Paige 598.) This defence was not available in the suit at law. Church, being a co-defendant in that suit, could not be examined as a. witness. Jones, the payee of the note, the only other person to" whom the facts were known, declined to testify, and his objection was sustained by the Court. (Cook vs. Spaulding, 1 Hill 586.) This presents a case upon which a Court of Equity will relieve after judgment. (Norton vs. Woods, 5 Paige 249; Morse vs. Hovey, 1 Barbour Ch. Rep. 404.)
    Church was not a necessary party to the bill. After suffering judgment at law, by default he could- have no claim to relief in equity •; nor could any decree to be pronounced in this cause affect Mm in any Way. (Story Eq. Pl. §§ 231. 443, 445.)
    The extension of the time of payment given by Jones, the creditor, to Church the principal debtor, without the consent of the complainants, who were mere sureties, discharged them. This defence is personal to themselves, and entitles them to the relief prayed by the bill. (Rathbone vs. Warren, 10 Johns. 587; King vs. Baldwin, 17 do. 384; Miller vs. MeCan, 7 Paige 451; Burge on Suretyship, 197, 211.)

      James Edwards, for the respondents.
    I. The appellants having suffered judgment- at law to pass against them on a trial upon matters which, if proved, constituted a defence at law, and of which they were fully cognizant before the trial, cannot be relieved from such judgment in equity. (Simpson vs. Hart, 4 Johns. Ch. R. 91; Gelston & Schenck vs. Hoyt, 1 Johns. Ch. R. 543; Barker vs. Elkins & Simpson, 1 Johns. Ch. R. 465; Norton vs. Woods, & Paige 249; Bates vs. Bagley, 1 Breese’s R. 60; Cown vs. Price, 1 Bibb’s R. 173; Penny vs. Martin, 4 Johns. Ch. R. 566; Northrup and al. vs. Survivor of Lane and al. 3d Dessausure’s Repts. 324; Bateman vs. Wilson, 1 Sch. and Lefroy R. 201-4; Williams vs. Lee, 3d Atkins’ R. 223 ; Green vs. Dodge and al. 6 Hammond R. 80 ; Thompson vs. Berry, and al. 3d J. Ch. R. 395; Thompson vs. Berry, 17 J. R. 446, on appeal; Duncan vs. Lyon, 3 J. Ch. R. 351; Campbell vs. Morrison, 7 Paige R. 157 ; Mc Vicker vs. Woolcott, 4 J. R. 510; Cowen and Hill’s Hotes, 949, 950.)
    II. The appellants coming into this Court to set up a defence which they might have interposed at law, must do equity before ashing it, and as the verdict was for no more than the original loan with the lawful interest on it, after deducting the payments, equity will not relieve them therefrom on the ground of usury.
    TTT- If the Court erred in excusing Jones from testifying, the remedy was by a bill of exceptions, and not by a bill in equity's (Henry and Pierce vs. The Bank of Salina, 5 Hill 523 ; Stevens vs. White, 5 Hill 548.)
   Bronson, J.

Harvey Church as principal, and the complainants as his sureties, made their joint and several promissory note for two hundred and ten dollars, payable to Jones, who endorsed it to Piercy. After Piercy had sued and recovered judgment on the note at law, against all of the makers, the complainants filed their bill in the Court of Chancery to be relieved against the judgment, on the ground that the note was void for usury; but they neither paid nor offered to pay the money actually loaned, nor the legal interest thereon. Unless the case has been provided for by our recent usury statutes, it is entirely clear that such a bill cannot be maintained. It is a fundamental principle of the Court of Chancery that he who asks equity must do equity; and without an express command of the Legislature, the Court of Chancery never does so unjust a thing as to entertain a bill to annul a contract on the ground of usury, without requiring the debtor to do equity on his part. He must return, or offer to return, what he actually received, with interest. The principle is a familiar one, and I need not cite authorities to support it.

Before examining the statute it is proper to notice, that the bill states, in express terms, that the agreement for the loan which the note was given to secure, was made between Jones and Church; and that the loan was actually made by Jones to Church. And it is not stated that the complainants had any thing to do either with the agreement or the loan.. They only became sureties for the re-payment of the money.

Let us now see what the Legislature has done. It has set aside the rule of equity which has been mentioned, in favor of the “ borrower” of the money, but not in favor of anyone else. (1 R. S. 772, § 8, Stat. 1837, p. 487, § 4.) It will only be necessary to notice the last act, as that goes further than any usury law which preceded it. The 4th section is as follows: Whenever any borrower of money, goods, or things in action, shall file a bill in Chancery for relief or discovery, or both, against any violation of the usury laws,’ it shall not be necessary for Mm to pay, or offer to pay, any interest or principal on the sum or thing loaned.” The word “ borrower” is again used near the close of the section, without anything to enlarge its ordinary signification. There is, I think, no established rule of interpretation which will so enlarge this provision as to make it include the sureties of the borrower. It cannot be carried so far without indulging a latitude of construction which would amount to a new enactment. I am aware that the Chancellor and the late Mr. Justice Sutherland, have respectively intimated an opinion that the surety is a borrower within the meaning of the staute. (Perrine vs. Striker, 7 Paige 602; Livingston vs. Harris, 11 Wend. 336.) But the point was not decided in either case. Both turned upon other grounds; and in the case, before the Chancellor, the bill was filed by the borrower in conjunction with the surety. It may be true, as was remarked by Mr. Justice Sutherland, that there is no reason, in the nature of the case, why the surety should not have all the remedies and means of defence which are given to the principal debtor. But that does not settle the point. The question still remains, whether the Legislature has given the same remedies and means of defence to both. I think not. The agreement to borrow, and the security for the loan, are two things, and the borrower and his surety are two persons. The Legislature has given a new and peculiar remedy to one, and only one, of those two persons; and I see no principle upon which the Courts can so extend the enactment as to make it include both. It is quite possible that the Legislature, in its zeal to regulate this branch i of trade, and make money, cheap when it is scarce, as well as when it is plenty, would have given this new remedy to the surety as well as the borrower, if the thing had been thought of. But if it is a casus omissus in the statute, it is for the Legislature, and not the Courts, to supply the defect. (Jones vs. Smart, 1 T. R. 52.) To bring a case within the statute, it must not only be within the mischief contemplated by the Legislature, but also within the fair import of the words which the Legislature has used. (Brandling vs. Barrington, 6 T. R. 469; Dwar. Stat. 711.) I had occasion to remark, in Waller vs. Harris, (20 Wend. 561,) that the current of authority at the present day was in favor of reading statutes according to the natural and most obvious import of their language, without resorting to subtle or forced constructions for the purpose of either limiting or extending their operation. If we read the statute under consideration, in that way, indeed, if we do not take a most unwarrantable license with the language which the Legislature has used, the word “ borrower” cannot be made to include the borrower, and his surety also. It is true that a majority of the Court of Errors gave a pretty large construction to the word “ plaintiff,” in another section of this statute. (Henry vs. Bank of Salina, 5 Hill 523.) But there was some color for that decision; while, in my judgment, there is no solid ground for saying, that the word “borrower” includes one who did not borrow, and-who had no other connection with the transaction than that of becoming a surety for the man who did borrow.

I have thus far considered the case as though the statute was remedial only, and ought therefore to have a liberal construction. But if the statute is remedial, it is also penal. It not only creates a forfeiture of the debt, but it punishes the lender as a criminal. The very section "under consideration was made for the purpose of bringing about a forfeiture of the money actually loaned. All the books agree that penal statutes are to be construed strictly; and I am not aware of any principle upon which such a usury law as we have can be made an exception to the general rule. There "is, however, no occasion for applying a strict construction in this case.

The conclusion from what has been said may be stated in few words. Church, who borrowed the money refused to join with the complainants in filing the bill; and he is not a party to it in any form. As the bill was not filed by the “borrower,” the case does not come within the provision of the statute which relieves him from the necessity of paying, or offering to pay, the money actually loaned. The complainants are entitied to no such favor, because the statute does not give it to them; and when they go into Chancery they are met by that cardinal principle of the Court, that he who asks equity must do -equity; and as they had not paid, nor offered to repay the the money loaned, with interest, the bill was properly dismissed, so far as relates to the question of usury.

2. There is a further reason why this case-does not come within the statute, and a reason which would exist though Church had joined with the complainants -in filing the bill. This statute, like all other laws which provide a remedy or defence, must be understood' as applying only to a remedy or defence which is set up or pursued before the matter has passed into judgment. It would be strange indeed if a party could wait till after judgment, and then insist on a remedy or defence which might have been available had it been p'ut forward at the proper time. When, therefore, the borrower does not move until after a judgment against him at law, if he can then go into Chancery at all, he cannot do it as a matter of right under this statute, but only as a matter of equity under the general powers of the Court: and when he cannot- come with the statute in his hands, the answer of the Court is, you must dó equity, or offer to do it, before you can be heard.

There are then two reasons why this case does not come within the statute: (1.) the bill was not filed by the borrower of the money ; and (2.) it was not filed until after a judgment had been recovered on the note. And as the statute must be laid out of view, the bill was properly dismissed, because the complainants did not offer to return the money actually loaned, with interest.

II. There is a further difficulty in the way of the complainants : they have appealed to Chancery after a trial and judgment against them at law; and the bill shows no sufficient ground for granting relief. I am still speaking of that branch of the case which rests upon the "charge of .usury.

When a party goes into Chancery after a trial at law, ha must be able to impeach the justice and equity of the verdict; and it must be upon grounds which either could not be made available to him at law, or which he was prevented from setting up .by fraud, accident, or the wrongful act of the other party, without any negligence or other fault on his part. The cases were cited at the bar and I need not repeat them.

The defence was available at law; and the only difficulty which the complainants met with there was, the inability to prove it. The bill states in substance, that Jones was the only witness, and the complainants expected to prove the usury by him. Prior to the trial their counsel applied to Jones to learn who was the owner of the note ; and he answered, that he had sold the note to Piercy, the plaintiff on record in that suit, and he was the owner of it. On the trial, the complainants called Jones, and he testified, that he owned the note.; that the suit was brought for his benefit, and Piercy had no interest in it. The Judge therefore decided that Jones could not be required to testify, without his consent.

To the case thus made by the bill, there are several decisive answers.

1. If Jones told a falsehood m relation to the ownership of the note previous to the trial, there is no allegation in the bill that the complainants were deceived or in any way misled by it," or that they omitted to do anything which would have been done had Jones spoke the truth. There is no charge or statement in'the bill that the declaration of Jones had any influence whatever upon their conduct, or that it contributed in any degree to the defeat which they suffered in making out the defence. We cannot see, from the nature of the case, that the complainants must have been injured by the falsehood; and as they have made no such charge, we cannot presume that they were injured. It would be a new and most dangerous precedent, to allow a party to go into Chancery for a new trial because his adversary had told a falsehood, without showing., or even alleging, that the falsehood had led to the defeat in the trial at law, or been in any degree instrumental in bringing about that result.

2. It may be inferred from the bill, and such also is the suggestion of the- counsel, that Jones was excused from swearing to. the usury, on the' ground that he was the plaintiff in interest, and not being the plaintiff on record, he could not be compelled to answer under the 2d section of the usury act of 1837. That was,an erroneous ruling of the Judge, according to the decision of the Court of Errors in Henry v. Bank of Salina, (5 Hill, 523 ;) and the remedy of the complainants was a bill of exceptions. This is probably the first case on record where a party who has been defeated by an erroneous decision at law, has resorted to a bill in equity, instead of a bill of exceptions, to correct the error. But if it is not the first, I trust it will be the last case where such an experiment will be tried.

In Perrine v. Striker, (7 Paige, 598,) the Chancellor dismissed a bill filed .by the borrower and his surety, on the ground that they had an adequate remedy at law, by examining the plaintiff to prove the usury, under the second section of the act of ’37.' The bill was filed before there had been a trial at law, and in pursuance of the express words of the 4th section of the same statute. If it was proper to dismiss the bill in such a case on the ground that there was an adequate remedy at law, no one can doubt that it was proper to dismiss this bill for the same reason.

3. The Court of Chancery will not aid a party after he has had a trial at law, unless he impeach the justice and equity of the verdict. Now in this case, instead of taking a verdict for the amount of the note with interest, which at the time of the trial was about $245, the plaintiffs took a verdict for only $197,34: and it was stated on the argument by the defendant’s counsel, and admitted by the counsel for the complainants, that this was no more than the sum actually loaned with legal interest, after deducting all payments, according to the statement of those matters made in the bill. This then is a just and equitable verdict; and yet the complainants have gone into Chancery to get rid of it, and bring about a forfeiture of the whole debt. No precedent for such a bill was mentioned at the bar, and I presume none can be found.

III. Another objection to the bill is the want of proper parties. Church and the complainants were joint makers of the note, and they were all sued together. The defence of usury is common alike to all: it is as good a defence for Church, as it is for the complainants; and yet Church has not been made'a party to the bill. The whole controversy cannot be settled in this suit; for another bill may be filed by Church, and the defendants be thus subjected to a double litigation. True, the complainants say, that Church suffered judgment to pass against him by default; and that he refused to put in a plea, or to join with the complainants in filing this bill. But Church has a right to speak for himself; and until he has been heard, either as complainant or defendant, he cannot be concluded by this litigation. In Miller vs. McCan (7 Paige 457,) where the surety was allowed to maintain a bill against the creditor, without making the principal debtor a party, the equity on which the bill was founded was peculiar to the surety, and such as could not under any circumstances be made available to the principal debtor. It is not so here; and the non-joinder of Church is a fatal objection. Briggs vs. Butler (9 Paige 226,) reversing the decree of the V. C. of the 8th Circuit, Clarke V. C. Rep. 517,) is a case in point.

I have now done with that branch of the case in which the complainants ask relief, on the ground that the note was void for usury.

Second. The complainants set up as another ground of defence to the note, that they were sureties for Church; and that after the debt became due, Jones, without their knowledge or consent, gave further day of payment to the principal debtor.

1. The first answer to this branch of the case is, that the complainants have tried or had the opportunity of trying, that matter at law, where it is as good a defence as it is in equity; and no sufficient reason is shewn for a subsequent appeal to the Court of Chancery. A portion of what has been said on the same subject in relation to the other branch of the case, is equally applicable here, and need not, therefore, be repeated. But there is something to be added. It appears from the bill, that the complainants were apprised of the facts before they pleaded at law, and gave notice of this defence with the general issue ; and further, that they went to trial with the knowledge that no one could- prove the defence but Jones or Church. ' As. Church was a party to the record, the complainants knew that he could not be sworn. They say in the bill, that they “ expected” to establish the fact of giving time by the testimony of Jones. That is a falsehood in point of law, if it be not also a falsehood in point of fact. Jones could be called in only one of two characters—either under the usury act, as plaintiff in interest, (Henry v. Bank of Salina, 5 Hill, 523,). or simply as a witness. He could only be called as the plaintiff in interest, for the purpose of proving the usury (Slat. ’37, p. 487, § 2,) and not for any other 'purpose whatever. (Bank of Salina v. Henry, 2 Denio 155, affirmed 1 Comst. See ante 83.) He could not be called as plaintiff, for the purpose of making out the defence of which we are now speaking.

Let us now suppose him called as a witness merely, having no interest in the event of the suit. According to the statements in the bill, the facts to be proved by him to make out this branch of the case were, that he had on several occasions charged and received usury for forbearing ,and giving further day of payment on the note. He must then have been called to prove facts which would show him guilty of a misdemeanor punishable with fine and imprisonment; (Stat. 1837, p. 487, § 6,) and of course he was not obliged to answer. So far as relates to this branch of the case, the objection which he made to giving evidence, was properly allowed by the Court. Now if we assume in favor of the complainants, what is not alleged in the bill, that they were misled by the falsehood imputed to Jones, and acted upon the assumption that ‘he had no interest in the suit, and might therefore be called like any other witness, the complainants must still fail in this branch of their case; for they either knew, or were bound to know, that Jones could not be compelled to testify to the facts which they .proposed to prove by Mm. This disposes of every shadow of excuse set up in the bill for resorting to Chancery for a new trial, after having had a trial at law.

2. There is another answer to this branch of the case which I deem entirely conclusive. Merely giving further time of payment to the principal debtor, without the consent of the surety, is no defence for the latter; time must be given in pursuance of a valid contract for that purpose, which ties the hands of the creditor, so that he cannot sue if he would. If the agreement be not under seal, it must, like other contracts by parol, appear to be founded upon a sufficient legal consideration. In this case the original note was never given up; Jones kept it in "his hands, and might have brought a suit upon it at any time after it fell due, unless he was restrained by some binding agreement. JSTow each and every extension of time mentioned in the bill was made upon an usurious contract, such as is expressly declared to be void by statute. In every instance Church agreed to pay more than the legal rate of interest for the forbearance; and in most of the cases, the payment was actually made. It has not been suggested that a promise to pay usury in future, an engagement that is utterly void, can be regarded as any consideration whatever for a promise by the creditor to extend the time of payment. And undoubtedly he may sue the next moment. And I am wholly unable to see how usury, paid down, can make the case any better. The contract for usury is equally void whether the money is actually paid or only promised to be paid at a future day. The statute has made no distinction; but on the contrary, has declared void all contracts infected with usury. Though the debtor parts with the money, it still belongs to him ; and he may sue the next moment and recover it back. (1 R. S. 772, § 3.) This shows that there is no force in the suggestion, that although the creditor cannot legally receive, the debtor is not forbidden by law to give money at a usurious rate for the forbearance. Although the statute does not in terms say that the debtor shall not give what he pleases for the forbearance, it does so in legal effect; he is put into the same category with infants, femes covert, and persons' non compos mentis, and declared legally incompetent to make a bargain about money where more than seven per cent, is demanded. If he agrees to give more, the agreement is void : and though the agreement be executed by paying the money, it is still void, and the money may be re-called at pleasure. I think it impossible to maintain that either the promise or the payment of usury is a good consideration for a promise by the creditor to give time. It is no consideration at all. The creditor gets no benefit, and the debtor suffers no damage.

This question was not decided in Miller vs. McCan, (7 Paige 451,) for there is nothing to show that it was so much as thought of, either by Court or counsel. I believe the word usury is not even mentioned in the case.

After proceeding thus far, two cases in the Kentucky Court of Appeals, touching this question, have fallen under my observation. (Tudor vs. Goodhue, 1 B. Monroe L. and Eq. Rep. 322; Kenningham vs. Bedford, id. 325.) In the first of those cases it was held, that an agreement by the creditor to extend the time for payment, on a promise by the principal debtor to pay an usurious rate of interest for the forbearance, did not discharge the surety, for the reason that as the promise of the debtor to pay usury was void, there was no consideration for the promise of the creditor to forbear, and consequently no binding contract for time. To that doctrine I fully subscribe. But in the last case, the- usury was paid at the time the creditor promised to forbear; and the Court held that the surety was discharged; that although the contract was void as to the debtor, it was valid as to the creditor; and if he should sue before the expiration of the stipulated forbearance, the other party might have an action for damages. It was likened to a contract between an adult and an infant, where the adult is bound, though the infant is not. Although this decision comes from a learned and highly respectable Court, it has failed to convince my understanding. I am still unable to see how payment of the usury can make the agreement any more binding than it would be on a promise to pay in future. If the Kentucky statute is like ours, it makes all contracts for usury void,, without any distinction between such as are executed in part, and such as are wholly executory ; and it makes the contract void, not one side of it only, but the whole contract, so that neither party is bound by it. If the debtor pays usury for further time, it either operates as a payment of so much money towards the original debt, or else the money may be recovered back at pleasúre. . And in either case, there is no sufficient consideration for a promise of any kind by the creditor. Payment, either in whole or in part, of a debt already due, cannot be a good consideration for a promise by the creditor; for he gets nothing but his own. And if the money paid still belongs to the debtor, and may be recalled at pleasure, the creditor gets nothing at all; and then it seems quite clear that there is no consideration to uphold his promise. The case put by the Court of a contract between an adult and an infant, is not entirely parallel; for there, if the contract fails, it is because one party was not legally competent to make it, and not on account of any vice in the contract itself. But where there is usury, the contract is vicious: it is a thing forbidden by law. Again, very few contracts made by an infant are void; for the most, they are only .voidable; and some of them cannot be avoided. But contracts infected with usury are absolutely void; and they are all void, without exception-

If the usury laws are carried out into all their legitimate consequences when they operate against the creditor, as I think they should be, there is no good reason why they should not be carried to the same extent when they happen to operate in his favor. And as the statute does not declare the contract half good and half bad, but void, I think it altogether void. Neither party is bound, for there is no contract.

I am of opinion that the decree of the Court of Chancery should be affirmed.

Gardiner, J.,

said he concurred in the result of the opinion delivered by Brorsor, J., and also in the opinion upon all the .points except that which holds that a surety is not a borrower within the provisions of the act of 1837.

Jewett, C. J.,

delivered an opinion in favor of affirming the decree. So far as the bill sought relief on the ground of usury, he was of opinion that after a trial at law it was too late, under the circumstances, for the complainants to resort to a Court of Equity to impeach the judgment. The bill did not pretend that they were in any wise misled by the false statement of the' payee of the note, that he had transferred it to Piercy the plaintiff, on the record in the action at law; and if they had verified their notice of the defence of usury according to the provisions of the act of 1837, they might have called the payee, as the .plaintiff in interest, and examined him as a witness. The bill states that they expected to prove the usury by him on the trial, and it may therefore be • presumed that the facts thus alleged, if true, might have been shewn, but for their own fault in omitting to take the necessary steps to entitle themselves to the proof. As to the second ground of relief, he was of opinion that the alleged agreements to forbear the payment of the note, in consideration of usurious premiums paid for such forbearance, were wholly void and therefore could not be set up by the sureties as a ground of discharge. It is conceded, he said, that an agreement to extend the time of payment, in consideration of an executory agreement to pay a usurious premium, is void, and does not suspend the remedy of the creditor against the principal debtor. But the distinction between that case and the case where the agreement is executed on-the part of the debtor by the actual payment of the usurious premium, rests upon no solid foundation. In either case the statute declares the contract void, and the debtor can recover back the money so paid by action.

Upon these grounds he was in favor of affirming the decree of the Chancellor.

The other members of the Court concurred in the conclusion that the decree should be affirmed.

Decree affirmed.


author: Johnson, J. Gray, J.

text:
    Conover vs. The Mutual Insurance Company of Albany.
    A bill of exceptions will not Ke to review the exercise of the discretion of a Circuit Judge on the trial of a cause, in disregarding a variance between the declaration and the proof.
    Where a policy of insurance prohibited an assignment of the interest of 'the assured, “unless by the consent of the company manifested in writing,” and the Secretary, on an application to him at the office of the company, endorsed upon the policy and subscribed a consent, it seems that his authority to do so, in the absence of evidence to the contrary, should be presumed.
    But if it were necessary to prove his'authority, a formal resolution of the Board of Directors need not be shewn. Evidence that the Secretary, he being the sole agent of the company in transacting business at their office, has been in the uniform habit of giving such consent in writing, and made regular entries of his acts in the books of the company, without any objection or repudiation on the part of the company, is enough at least to carry the question of authority to the jury.
    A mortgage given by the insured upon the property covered by the policy, is not an alienation by sale or otherwise within the meaning of the seventh section of the charter. {Laws of 1836, jp, 315 and 44.)
    And notwithstanding such mortgage, and an assignment of the policy to the mortgagee, with the consent of the company, a suit upon the policy to recover for a loss must be brought in the name of the insured.
    On error from the Supreme Court,- where an action was brought by Conover against the Mutual Insurance Company of the city and county of Albany, upon a policy of insurance. On the trial, Conover had a verdict for the amount of the loss in question, on which the Supreme Court rendered judgment in his favor. For the facts, so far as material, see the report of the case in the Supreme Court, (3 Denio 254,) and- the opinion of Johnson, J.

      R. W. Peekham, for plaintiffs in error.

      M. T. Reynolds, for defendant in error.
   Johnson, J.

Whether there was a-variance between the declaration and proof is not material to enquire, as it was at most only such an one as the Circuit Judge might properly disregard on the trial, and upon which no hill of exceptions will lie. (Herk. Ins. Co. vs. Mann, 4 Hill 187; Mappa vs. Pearce, 15 Wend. 669.)

The more material inquiry in this case is whether the consent to the assignment hy the Secretary, Joice, to enable the plaintiff to procure a loan by a mortgage upon the insured property, was binding upon the company. For if that is not so, there is ah end to this suit. The facts are briefly that the agent or attorney of Gridley, the party in interest, called at the company’s office upon Joice, the Secretary, the person regularly in attendance there to transact their business, and stated to him that Gridley proposed to loan to the plaintiff, Conover, $500, and take a mortgage upon the insured pro-; perty, provided he could obtain the consent of the company to' the assignment of the policy as security. That to enable the parties to carry but their arrangement, the Secretary ‘ endorsed the consent upon the policy. Whereupon the $500 were advanced, and the mortgage and assignment executed. Joice testifies that he* was in the habit frequently of giving consent to the assignment of policies for the same purpose, and always supposed he was authorized to do so by the bylaws or some resolution of the directors; though on looking into the by-laws and minutes, as it would seem for the first time on the trial, for some evidence of such authority, he was unable to find it, and thence concluded none such had been given. It further appeared bn the trial that the policy of the President of the company had also been assigned to secure the payment of a mortgage upon his property given after the insurance, and that the consent was endorsed upon it in the same manner' as the one in question. Also upon producing the book of policies where memorandums are entered of such as have been assigned, the consent in every instance was found to have been endorsed by the Secretary, Joice. Most of this evidence was objected to as improper. But I think it was properly admitted, for the purpose of showing not only who was entrusted with the company’s business, but the manner in which transactions of this character had been uniformly conducted.

Some evidence was introduced on the part of the defendant below to show that these acts of their Secretary were' never brought to the knowledge of the Board of Directors, or received their formal ratification. And it is insisted that inasmuch as the Board never, by any formal act, gave their sanction, and the by-laws required the consent in writing of the Directors to any conditional alienation, by-mortgage subsequent to the insurance, the consent in this case was unau,-thorized' and void. I cannot subscribe to this doctrine. The Directors were bound to know the uniform course pursued by their sole agent in the transaction of their business at their office, especially where regular entries of his acts were made in their books, and they must be held responsible on the ground of a tacit assent and approval unless they can show that by a strict vigilance and scrutiny into his acts they were unable to ascertain the course he was pursuing, and could not therefore arrest it or put the public upon their guard. It is enough, it seems to me, that here the party in interest went to the sole place where the business of the company was transacted, and procured what was intended on all hands to be, and I think in effect was, an assent to the execution of the mortgage, as well as the assignment of the policy from one of the principal officers having the sole charge of the business, and that too in the same form as it had been frequently done there. (Bank of Vergennes vs Warren, 7 Hill 91.) .

Incorporated companies whose business is necessarily conducted altogether by agents, should be required at their peril, to see to it that the officers and agents whom they employ, not only know what their powers and duties are, but that they do not habitually and as a part of their system of business transcend those powers. How else are third persons to deal with them with any degree of safety 1 They can have no access to the by-laws and resolutions of the board, and no means of judging in the particular instance whether the officer is or is not within the prescribed limits.

' All that Gridley can he supposed to have known in the case before us would be derived from the face of the policy. There ho would only learn that the interest of the insured therein, was not assignable without the consent of the company manifested in writing in pursuance of the by-laws and endorsed upon the policy. He accordingly repairs to the office where he had a right to suppose he could have the consent manifested and endorsed in the proper form. It is done according to the system and in the form adopted and uniformly pursued there by an officer having charge of the business and who supposed this peculiarly within his province. In the faith that all is right, he advances his money and receives his mortgage and assignment. No objection is made to this or numerous similar transactions, and even after the fire, payment is refused,upon an entirely different ground. Clearly, as it seems to me, the company are not now at liberty to dispute or deny the authority of their Secretary to endorse the consent in question. • The objection that the execution of the mortgage avoided the policy, was not distinctly made on the trial. But had it been made there as distinctly as.it is here it could have been of no avail, as it sufficiently appears that the only object the company could have in giving the consent was to enable Conover to borrow money by a mortgage upon the insured property.

Nor are we called upon to decide whether the absolute alienation by Conover after the assignment of the policy is a good defence, as the point was not raised on the trial. But if we were, I do not see how the interest of Gridley, the assignee, could be affected by it. (Traders Ins. Co. vs. Roberts, 9 Wend. 404.) The judgment, I think, should be affirmed.

Gray, J.

One ground of the motion for a nonsuit made on the trial was, that there .Was no proof that the Secretary of the Company had authority to consent to the assignment of the policy of insurance. On this point I cannot entertain a doubt that the evidence was pertinent and sufficient to carry the cause to the jury; and the jury having found in favor of the existence of the authority, their verdict is conclusive as to'this branch of the case.

It was insisted, on the part of the plaintiffs in error, that the mortgage giv.en by the defendant in error to Gridley, was an alienation of the property insured within the meaning of the seventh section of the act according to which this Company was incorporated, (Stat. 1836, p. 44, § 7,) and therefore that it avoided the policy. The language is, “whenever any property insured with this corporation shall be alienated by sale or otherwise, the policy shall thereupon be void,” &c. The Legislature without doubt used the word in the ordinary sense which belongs to it, and it seems to me quite clear that it does'not embrace a mortgage which creates but a lien or security, and does not transfer the title.

27or did the policy become void by reason of the 13th bylaw of the Company, requiring, when a mortgage is given by the insured, that he shall make a written representation thereof to the Company. It may fairly be presumed from the evidence in the case, and the jury have so found, that this requirement was complied with, or that it was dispensed with by tire authority of the Company.

If the "giving of the mortgage by the insured had been an alienation of the property within the seventh section of the, act, the action would have to be brought in the name of the assignee of the policy; but as the case was not within that section, the suit was properly brought in the name of Conover. (Jessel vs. Williamsburgh Ins. Co. 3 Hill 88; Mann vs. Herkimer Ins. Co. 4 Hill 187.)

I see no error in the judgment, and am of opinion that the same should be affirmed.

Judgment affirmed.


author: Gardiner, J.,

text:
    Mattison vs. Baucus.
    Where, in a mortgage of personal property, it was provided that the mortgagor should permit the mortgagee to “have, possess, occupy, and enjoy,” the mort gaged property, whenever he should demand the same, and after, the mortgagor had absconded, the mortgagee took possession of the property by virtue of the mortgage; held, that the interest of the mortgagor was not the subject of levy upon execution, although the debt secured by the mortgage had not, at the time of the levy, become due.
    It seems that the interest of a mortgagor of personal property, even before for feiture, where he has not the right of possession for a definite period, is but a right of redemption merely, which is not the subject of levy and sale upon execution.
    On. error from the Supreme Court. Mattison sued Baucus in trover in a Justice’s Court, in the county of Rensselaer, and recovered judgment. The defendant appealed to the ' Common Pleas of that county, where the cause was tried in 1844, and the plaintiff again recovered judgment for the value of the property in question. A hill of exceptions was taken by the defendant on that trial, and a writ of error brought by him into the Supreme Court, where the judgment of the Common Pleas was reversed, and a venire de novo awarded. A judgment record of such reversal being made up, Mattison now brings error to this Court. The facts, so far as material to the decision of the Court, are stated in the opinion of Gardiner, J.

      T. Q. Ripley, for plaintiff in error.

      J. Pierson, for defendant in error.
   Gardiner, J.,

delivered the opinion of the Court. Upon the trial in the Common Pleas, the plaintiff gave evidence tending to prove a judgment in favor of one Basset against John Foster, for $20,66, and execution issued upon the same and delivered to Mattison, the plaintiff, who was a constable, by virtue of which he levied upon the property in question in July, 1839, then being in possession of one Lyon. It further-appeared -that Foster, the judgment debtor, had previously and on the 11th day of June, 1839, executed a chattel mortgage of said property, in due form of law, to Lyon, to secure a debt owing by the former to the latter, of $48,16, with interest, to be paid in six months from the date of said mortgage. The mortgage contained a provision, that the said Foster should permit Lyon, his executors, &c., to have, possess, occupy and enjoy, the said articles of property, whenever he or they should demand the same.” It also appeared that Foster had absconded, and that Lyon had taken possession of the property, under the mortgage, prior to the levy by Mattison, and that the property had been converted subsequent to the said levy by the defendant, Baucus, who took it from the possession of Lyon, the mortgagee, where it had remained from the time of the levy to. the time of the conversion by the defendant. It was also proved, that after the conversion aforesaid, and subsequent to the bringing of the appeal, Bassett, the judgment creditor, took an assignment of the mort gage from Lyon, which he held at the time of the trial in the Common Pleas.

The defendant moved for a nonsuit upon various grounds, among others, “ that the plaintiff never acquired any possession by his pretended levy so as to enable him to maintain, trespass or trover. That the actual and legal possession of the property was in Lyon, under the mortgage from Foster.” The Common Pleas refused.to nonsuit, and the defendant excepted. The Court directed the jury to find a verdict for the plaintiff for $56,47, being the whole value of the property, to which direction the defendant also excepted.

Both of the exceptions are well taken. Cases in the Supreme Court and the Court of Errors, recognize the principle, that the interest of a mortgagor having a right to redeem, and the right to the possession of the mortgaged property for a definite period, may be sold upon execution. (Marsh vs. Lawrence, 4 Cow. 467; Otis vs. Wood, 3 Wend. 500 ; Baily vs. Burton, 8 Wend. 347-8 ; 10 Wend. 322; 17 Wend. 57.)

The debt secured by the mortgage to Lyon, was not payable, according to the provisions of that instrument, until the month of December, 1839. Foster, the mortgagor, had therefore a right of redemption. But by the express terms of the mortgage, the mortgagee “was at all times, upon demand, éntitled to possess, occupy, and enjoy,” the property mortgaged, and the case shows that he had taken and held possession at the time of the levy. The interest of Foster, the mortgagor and judgment debtor, was a right of redemption only, a mere chose in action, not the subject of levy and sale upon execution, according to the authorities cited, unless united with a right to the possession for a definite period. (3 Wend, 500.)

The levy therefore by the plaintiff, was wholly inoperative. It gave no lien upon the property, and consequently no right to maintain this action. <

The nonsuit should therefore have been granted, and the judgment of the Supreme Court reversing that of the Common Pleas was right. It is unnecessary to consider the other questions made at the trial, as the point decided will dispose of the cause finally.

Judgment affirmed.

Jones, Johnson and Wright, Js., dissented.


author: ' Gbay, J. Jewett, Ch. J.

text:
    Cornelia Dodge, Appellant, vs. Ralph Manning, Harmanus Becker, and Alexander Boyd, Respondents.
    A testator by his will, made in T804, gave all his real and personal estate to his wife during her life, and after her death to his grandson. To his granddaughter he gave a legacy, to be paid by his grandson, “out of the estate, in one year after he should become of age. The grandson became of age in 1820, but the widow’s life estate did not terminate until 1832 ¡ held) that the legacy was not payable until the latter period, and therefore that a bill filed soon afterwards, to recover the legacy, was not liable to a presumption of payment from lapse of time.
    The grandson, in 1826, mortgaged the real estate which he took under the will and portions of it were purchased by the respondents, with notice of the .ega cy, at a sale upon the foreclosure of the mortgage. Upon bill filed by the legatee agninstthe respondents and the grandson, further held) that the grandson, by accepting the estate, became personally liable for the legacy, that the legacy was an equitable charge upon the real estate', but that the respondents should not be charged in respect to the real estate in their hands, except in case of a deficiency after the remedy should be exhausted against the grandson.
    Appeal from Chancery. The appellant .filed her hill before the Vice Chancellor of the Fourth Circuit, against the respondents and John B. Borst, in which the case was stated in substance as follows: John I. Becker, of Middleburgh, Schoharie county, died in or about the year 1804, having first made his last will and testament, by which, after devising twenty acres of land to his daughter Caty, the wife of Michael Borst, he gave all the residue of his estate, real and personal, to his wife Cornelia during her life, and after her death to the defendant, John B. Borst, who was his grand-son, if he should arrive at the age of twenty-one years. To his grand-danghter Cornelia, the appellant, he gave a legacy of two hundred and fifty dollars, to he paid out of his estate by his said grandson, John B. Borst, in one year after he should arrive at the age of twenty-one. If 'John B. Borst should not arrive at the age of twenty-one, then the estate was, by the will, given over to Peter Borst, who was in that case directed to pay the legacy out of the estate. Other legacies were also given by the will to the testator’s other grand-children, with the same direction as to their payment. The testator’s wife Cornelia, and two other persons, were appointed executors. John B. Borst became of age in 1820, and Cornelia, the testator’s widow, died in 1832. ,In the year 1826, John B. Borst executed a mortgage upon the real estate so devised to him, to George Maxwell, to secure the payment of §6,000. In July, 1834, this mortgage having been foreclosed in Chancery, the premises covered by it were sold by a master, under the decree, in separate parcels, and the respondents and J. B. Borst ■became the purchasers separately, subject to the payment of the legacy to the appellant, and entered into possession of the premises respectively purchased by them. The prayer of the bill was, that the defendants, or such of them as ought to do so, might be decreed to pay the legacy and interest, and if necessary, -that the premises in their possession might be sold, &c., and for general relief.'
    The defendant, John B. Borst, answered separately admitting the facts charged in the bill.
    The respondents answered, admitting that the legacy was mentioned as a charge upon the land at the time they purchased, but denying that they purchased in any manner subject to the legacy, averring also that the mortgage under which they purchased was not subject to the legacy, and that the sale under the decree was absolute. They also alleged that the legacy had been paid, and if not, they insisted that John B. Borst, by accepting the devise, became personally liable therefor, and that it" was ah equitable lien upon so much of the premises as was owned by him. The answer also set up, that the testator left personal estate to an amount sufficient to pay the legacies.- A replication was filed to the respondents’ answer, and proof was taken, which is not necessary to be stated further than that it related to the allegation of payment, and to what was said about the legacy at the time the defendants purchased at the master’s sale, and that it tended to show that the personal property left by the testator was sufficient to pay all the legacies.
    The Vice Chancellor, on the pleadings and proofs, made a decree declaring that the legacy was a charge on the real estate purchased by the defendants respectively, that the complainant was entitled to. recover the same, and directing a reference to compute, the amount and apportion the _ same among the defendants according to their respective bids, &c. The respondents appealed to the Chancellor, who reversed the, decree of the Vice .Chancellor, and directed the bill to be dis- . missed as to them, with costs, upon the ground principally, that from the evidence in connection with the lapse of time, it appeared satisfactorily to him that the legacy had been paid. He however made a decree against the defendant, John B. Borst, for the payment of the legacy and costs of suit, and charged the portion of the premises owned by him with such payment. The complainant appealed to this.Court.
    IV. Hill, Jr., for appellant.

      M. T. Reynolds, for respondents.
   ' Gbay, J.

One of the reasons, if not the principal one, assigned by the Chancellor for a decree dismissing the bill as to the respondents, is, that the legacy to recover which the bill was filed, had been paid; and this conclusion is supposed to be. justified by the lapse of time and the' evidence of one of the witnesses. If I do not misapprehend the effect of the will, no presumption of payment can be derived from the lapse of time. It is true that according to one clause in the will the legacy became payable in one year after John B. Borst attained his majority, which was in 1820; but it was directed to be paid by Borst out of the estate” given to him, and on looking at the whole will it is entirely clear that he was not to have the estate, until the death of his grand-mother, the testator’s widow, which did not occur until 1832. It seems to me, therefore, that the legacy did not become due until the period last named, and it is not pretended that the time which elapsed between that period and the filing of the bill, would warrant in the slightest, degree a presumption of payment. As. to the evidence taken on this point, we are all of opinion, that there was nothing in it to justify the conclusion at which the Chancellor arrived.

The decision of the Vice Chancellor charged all the defendants with the payment of the legacy and costs, without any discrimination founded upon the equitable right of the respondents to insist, that the defendant, John B. Borst, and the real and personal estate of the testator in his hands, should be first charged, and that a resort should not be had to the estate purchased by them, until the remedy against Borst should first be exhausted. In this respect I am of opinion that the Vice Chancellor erred. ' It is true, that by the provisions of the will, the legacy in question became an equitable charge upon all the real estate devised to Borst, of which that purchased by the respondents respectively, at the master’s sale, is a part. But the devisee, by accepting the real and personal estate devised and bequeathed to him, became personally liable for the payment of the legacies which the will directed him to pay. He is therefore primarily liable, and the remedy should first be exhausted against him and the real and personal estate of' the testator remaining in his hands, before the respondents should be charged in respect to the real estate purchased by them. If they had purchased expressly subject to the payment of the legacy, that of itself might have made the estate in their hands directly and primarily chargeable. But I concur with the Chancellor that there is nothing in the evidence to justify the inference that they purchased in that manner. The. admission in their answer, as well as the evidence, merely shews that they, had notice of the existence of the legacy. If the decree of the Chancellor, therefore, had modified that of the Vice Chancellor in accordance with these views, it would, in my judgment, have been a correct disposition of the case. But as the Chancellor’s decree directs the bill to be dismissed, as to the respondents, with costs, it should be reversed, and a decree should be entered charging the lands pxxrchased by them .with the payment of the legacy and costs of sixit., so far as there may be a-deficiency after the appellant shall have exhausted her-remedy against the defendant, John B. Borst.

Jewett, Ch. J.

By the terms of the will, the legacy given to the complainant was to be paid out of the estate of the testator, by John B. Borst, sole devisee and legatee of all the property of the testator, (except twenty acres of land devised to another) real and personal, subject to the life estate therein devised and bequeathed to the testator’s widow. The legacy thus given became an equitable lien upon the reversionary interest, as well in the real as personal property, so devised and bequeathed to Borst; and a personal charge upon him in case of his acceptance of the testator’s bounty, in respect to the estate devised and bequeathed to him. (Harris vs. Fly, 7 Paige 421; Glen vs. Fisher, 6 Johns. Chy. 35.)

. J. B. Borst accepted the devise. That is shown by the mortgage upon the real estate devised, executed by him to Maxwell, in 1826, containing a power of sale. He thereby became personally bound to pay the legacy given to the complainant according to the terms of the will, which a Court of Equity will compel him to discharge. As between him and the complainant, it is not material for her to show, that he had procured an account and payment from the executors of the testator, of the proceeds of the personal estate prior to the filing of her bill. She may sustain her claim against him personally, and enforce her lien against any of the property devised or bequeathed to him remaining in his hands, without calling upon the executors of the testator for an account and payment; although it would have been competent for her to have made the executors parties with him, and thereby reached the personal fund in his hands, that being the primary fund for the payment of her legacy.

But as between the complainant and the defendants, Manning, Becker and Boyd, they have an equitable right as against her, to insist that she shall first exhaust her remedy, not only •as against Borst personally, but as against that portion of the property, real and personal, remaining in his hands, or to which he is entitled, before she can enforce her lien as against that portion of the property purchased by them on the sale under the mortgage foreclosure.

Although the complainant’s legacy in equity is a prior lien upon all of the estate given to Borst by the will, for its satisfaction, yet that portion of it remaining in the hands of Borst and the proceeds of the personal estate to which he is entitled,, is primarily liable for its payment in exoneration of those portions which have been purchased by Manning, Becker and Boyd. If the bill showed that the personal estate had been exhausted in the course of administration, or that the persons who are accountable for it are not responsible, or that it had been accounted for and paid or delivered to Borst, or if the executors in whose hands the same remained, were parties to this suit; in either case the complainant might have been entitled, in case her legacy remained unpaid, to a decree .for payment and satisfaction out of that portion of the real estate so purchased by Manning, Becker and Boyd, for so much as should remain unpaid after applying what should be received under a decree against Borst personally, and for sale of that portion of the property remaining in his hands, and after the application of the avails of the personal estate undisposed of by him. But the complainant has failed to present by her bill such a case tia will entitle her to a decree to enforce her lien as against the devised premises in the hands of Manning, Becker and Boyd, in the event that she does not. obtain satisfaction under a decree against Borst, and for the sale of that portion of the premises still remaining in his hands, on the ground that it does not appear but that the personal estate still remains in the hands of the executors which might be reached and applied upon or in .satisfaction of her demand.

The Chancellor dismissed the bill as against Manning, Becker, and Boyd, on the ground that there was sufficient evidence to show that the complainant’s legacy had been paid to Dodge, her husband, in his life time. I have considered the evidence relied on to show that- fact, and am constrained to say that I am unable to come to that conclusion. There are^ it is true, some circumstances which render it quite probable that payment was made as is alleged, but I do not see in the case- any thing beyond that, that should be deemed proof of the fact. The testimony of Hezekiah Manning, the only witness ’ to that point, falls far short of it. In- my judgment it amounts to but little else than an inference of the witness founded upon conjecture. But'from the view which I have taken of the case, I am of opinion that the decree was right, and should be affirmed.

Broesoe, J.,- also delivered an opinion in favor of affirming the decree, substantially upon the grounds stated in the opinion of Jewett, On. J.

The other Judges concurred in the résult of the opinion delivered by Gray, J., and therefore it was

Ordered accordingly.